ATC Brokers withdraws bankruptcy filing after settlement – the real story

LeapRate has learned that Avail Trading Corp., the California-based introducing broker which operates as ATC Brokers, has reached a settlement with its former client George Bos. As reported earlier by LeapRate, Bos had won a lawsuit in Los Angeles Superior Court against ATC and its CEO David Manoukian in January 2016 totaling $1.6 million.

ATC BrokersFollowing the settlement, both ATC and Manoukian withdrew their respective corporate and personal Chapter 11 bankruptcy filings.

Some brief history… Following the judge’s $1.6 million decision in favor of Bos, but before the formal Judgement was signed by the presiding judge, both ATC as a company and Manoukian personally filed separate bankruptcy filings, as ATC and Manoukian were in the process of appealing the initial court decision. The bankruptcy filings protected Manoukian’s personal assets while the appeal would have been ongoing, and allowed ATC to remain onside of NFA net capital requirements and keep operating. (Without the bankruptcy filing, accounting rules would have required ATC to record the $1.6 million court decision as a liability, erasing the company’s net regulatory capital).

It had looked like ATC and Manoukian were going to stick it out in appeals court, believing that the appellate judge would look differently at the situation with Bos. Their main argument was that they neither held Bos’ funds (those were held at FXCM to which ATC had referred Bos), nor did they direct the trading in Bos’ account which had led to large losses. The trades were handled by a third party money manager selected by Bos, not by ATC.

So why did ATC settle?

David Manoukian, ATC Brokers

David Manoukian, ATC Brokers

Something that ATC and Manoukian didn’t expect happened – ATC’s main broker relationship, FXCM Inc (NYSE:FXCM), decided to drop ATC as a referring broker last month and began sending out emails (a copy of which was disclosed exclusively by LeapRate) to all clients which had been referred by ATC, announcing the move and providing instructions for them to move their accounts directly onto FXCM’s Trading Station platform.

So an eventual victory by ATC and Manoukian in appellate court might have been probable in the company’s eyes, but as an appeal would take a lot of time a victory would have come at a price of losing many if not most of their clients. A hollow victory is there ever was one.

Neither ATC nor George Bos (whose attorneys confirmed the settlement to LeapRate) are willing to disclose the amount or other terms of the settlement, having agreed to a mutual non disclosure agreement, typical in these kinds of settlements. Our guess is that it was fairly close to the midpoint between zero (i.e. what ATC believed it would have to pay if it won an appeal), and the $1.6 million judgement. Something in the $500,000 to $800,000 range. But again, the actual number wasn’t disclosed or even hinted to by either party.

So what happens from here for ATC?

Back in business and out of the shadows of bankruptcy, it appears as if ATC will be looking to continue growing its business in both the US and the UK. In the US, ATC will be looking to set up a new broker relationship with another NFA regulated primary Forex dealer, to replace FXCM in its US introducing broker business. Manoukian’s separately owned FCA-regulated UK business, ATC Brokers Ltd, has continued to operate normally as it is a fully functioning ECN broker.

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