FXCM seeks to distance itself from Global Brokerage problems

Maria Nikolova

As Global Brokerage faces a number of legal cases and risks default in case of NASDAQ delisting, FXCM seeks to distance itself from the company, which has a 50.1% equity ownership and a minority economic interest in it.

fxcm

FXCM is apparently seeking to distance itself from Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc, as Global Brokerage faces a rising number of legal cases and risks default in case of delisting from NASDAQ.

In a press release out earlier today, FXCM claimed that it has “no responsibility or obligation for GLBR’s debt or other obligations”. Nevertheless, the company admitted that Global Brokerage is a shareholder of FXCM with 50.1% equity ownership and a minority economic interest.

The announcement comes as Global Brokerage’s share prices remain low, thus keeping alive the risk of a possible NASDAQ delisting of the broker. Global Brokerage has earlier warned that a delisting would result in a default.

In the meantime, Global Brokerage, other FXCM businesses based in the US, as well as former principals, are facing a growing volume of legal cases in US courts, with the center of litigation being the New York Southern District Court. There are two main class action lawsuits against the company and its former managers there – the “mega lawsuit” brought by plaintiffs who had bought shares and other securities in the company before the February 6, 2017, as well as another lawsuit brought by former customers of the US broker who claim to have suffered damages as a result of the allegedly misleading “NDD” claims of FXCM and its relationship with Effex Capital.

The repayment of the loan to Leucadia progresses, with FXCM stating today that $66.7 million remains outstanding on the Leucadia loan. FXCM has used $46.7 million of proceeds from the sale of its stake in FastMatch to pay down the Leucadia loan and expects additional paydowns in the coming months. The company did not specify where the money for these paydowns will come from. It is actively marketing for sale Lucid Markets and V3 Markets, but thus far there have been no announcements on an actual buyer.

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