NEW YORK (TheStreet) -- Shares of FXCM (FXCM) were falling 7.9% to $1.98 Monday following reports that a pension fund is suing the online foreign exchange market broker for allegedly misleading investors.
In the complaint, the International Union of Operating Engineers Local No. 478 Pension Fund accused FXCM of fraud and artificially inflating its stock price, according to Reuters. The complaint said FXCM claimed its currency trading model was "extremely low-risk" and that volatility in the foreign exchange markets was good for the company.
The pension fund is seeking a class action status for shareholders who purchased shares of FXCM between June 11, 2013 and January 20, 2015. FXCM stock lost 90% of its value in January after the Swiss National Bank ended a policy that allowed the franc to trade freely against the euro on Janaury 15, 2015.
FXCM told Reuters is will vigorously defend the allegations in the lawsuit.
The lawsuit comes after FXCM reported a loss of $8.35 a share for the first quarter as the company pays back the $300 million loan it received from Leucadia (LUK) in January. The company reported revenue of $215.19 million for the first quarter, a 159.8% increase from the year-ago quarter.
TheStreet Ratings team rates FXCM INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FXCM INC (FXCM) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, poor profit margins and feeble growth in its earnings per share."