Turkish Businessman Sues ThinkMarkets for USD 4.6 Million

Fazzaco has learned that ThinkMarkets (brand name of TF Global) was sued by Mr. Suzgun, a Turkish Businessman, for approximately USD 4.6 million. Mr. Suzgun stated that ThinkMarkets "had wrongfully refused to repay...funds in his accounts held with TF Global."

Withdrawal Failure

According to the claim, during the period when TF Global held the accounts for Mr. Suzgun, he deposited and traded USD 15 million, in which about USD 4.6 million was held and controlled by TF Global. 

As per the "Title Transfer Collateral Arrangement" ("the TTCA") dated 10 October 2019 (the "TTCA") entered into between Mr. Suzgun and TF Global, RSI 1 and RSI 2 accounts were subject to the TTCA while RSI 3 was not. That is to say, RS3 would be segregated from Think's own money in accordance with the FCA Client Money Rules.

According to FCA, the TTCA refers to an arrangement by which a client transfers full ownership of a safe custody asset (or an asset which would be a safe custody asset but for the arrangement) to a firm for the purpose of securing or otherwise covering present or future, actual, contingent or prospective obligations, or an arrangement by which a client transfers full ownership of money to a firm for the purpose of securing or otherwise covering present or future, actual, contingent or prospective obligations.

The clause 3 of the TTCA explicitly stated that:

"Money transferred to ThinkMarkets will be recorded by Us as a cash repayment obligation owed by Us to You. On your request, we will transfer an equivalent amount of money back to You where, in our discretion, we consider that the amount of money You have transferred to Us is more than necessary to cover your obligations to Us."

The clause 5 of the TTCA stated that:

"The Client may request a withdrawal of all or part of their funds, the amount paid will be the net of any funds owed to ThinkMarkets. This includes any monies owed due for fees, commissions, negative balances and any other reasonable associated costs."

However, TF Global failed to comply with Mr. Suzgun's demand several times. Even more, TF Global debited from Mr. Suzgun's account RSI 2 and later disabled the account in reliance on "Arbitrary/Arbitrage Trading", "Swaps Abuse", and "Market Abuse".

Since TF Global failed to effect repayment within a reasonable period of time, Mr. Suzgun requested to terminate all agreements and return all his money, which was reiterated in a letter sent by his legal representatives. Nevertheless, Mr. Suzgun received no response.

ThinkMarkets Holding Funds after Termination

TF Global's admitted in a letter sent from its legal representatives to Mr. Suzgun that his funds had been split into two different accounts, with USD 4,280,282.88 held in a de-segregated account under the control of TF Global Markets (Aust) Pty Ltd, an ASIC-licensed broker, and USD 367,359 held with Barclay Bank under TF Global Markets (UK) Limited in a separate account RSI3, which was not subject to the TTCA Agreement.

Mr. Suzgun rejected TF Global's attempt to draw a distinction between monies to which it claimed it was entitled to (USD 4,280,828.88, or the Disputed Funds), and the remaining monies due to Mr. Suzgun (USD 367,035.01, or the Undisputed Funds).

According to the claim, the total funds that should have been treated as client monies were approximately USD 4,647,863.89 prior to the Debit. However, TF Global only held USD 367,035.01 in compliance with the FCA Client Money Rules and the balance of the funds was held by TF Global's associated company TF Australia as its operating account. Witness statement showed that the Funds were transferred between the two associated companies on a rolling basis.

Breaches of Contract

ThinkMarkets wrongfully retained part of Mr. Suzgun's funds and refused to make repayment in excuses of imminent investigations to be finished, "routine monitoring" and "assessing the current Structure & Trading Conditions". Furthermore, TF Global disabled Mr Suzgun's accounts without proper justification.

Interestingly, Clause 40.8 in the claim stated that, quote:

It is to be inferred from admissions made by TF Global's employee...that TF Global's refusal to make the repayments demanded prior to that date came from its improper desire to retain and use monies due to Mr. Suzgun to protect against its own losses. Those losses had arisen as a result of TF Global's own "hedge costs and PNL splits".... TF Global was "in a bit of a hole", and to move forward it required that "we fill some off it and then if you fill some of it, then we can fix the hole."

Loss

It is estimated that Mr. Suzgun has suffered a total loss of USD 4,647,863.89 and also the opportunity to trade and make a profit through investments equivalent to about USD 200,000 per month, had TF Global repaid the funds, not disabled Mr. Suzgun's accounts, and not wrongfully debited USD 4,280,818.88.

Thoughts

Mr. Suzgun is not nobody. He has an established business in trading precious metals and foreign currencies. Even so, his money cannot be guaranteed by a FCA-licensed broker. 

Forex scams are common in the industry, but it's not common to see a regulated and reputable broker deduct a huge amount of money from a single person due to its own admitted mistake. 

How did ThinkMarkets use Mr. Suzgun's money? How will ThinkMarkets respond to Clause 40.8? Will ThinkMarkets fight back? 

Fazzaco will keep track of the case. If you have any clues or information, please send it to news@fazzaco.com.