Jefferies estimates maximum loss exposure due to involvement with FXCM at $148.2m

Maria Nikolova

This estimate includes the carrying value of the term loan ($73.2 million) and the investment in associated company ($75 million) at November 30, 2018.

Jefferies Financial Group Inc (NYSE:JEF), formerly known as Leucadia National Corporation, has just posted a SEC filing including information about its performance for the 11 months to end-November 2018.

The Group has already provided some key data in a press release published earlier in January. In today’s 10-K filing with the SEC, however, the Group offers more details on its performance and on its investment in FXCM.

It is probably not necessary to remind FinanceFeeds’ readers about the loan that Leucadia extended to FXCM back in January 2015… The loan had an initial interest rate of 10% per annum, increasing by 1.5% per annum each quarter, not to exceed 20.5% per annum. During the eleven months ended November 30, 2018, interest accrued at 20.5% per annum.

During the eleven months ended November 30, 2018, Jefferies received $18.3 million of principal and interest from FXCM and $67.6 million of principal remained outstanding under the term loan as of November 30, 2018. Through November 30, 2018, Jefferies has received cumulatively $349.8 million of principal, interest and fees from its initial $279 million investment in FXCM.

Jefferies has the right, as does Global Brokerage Holdings, the owner of the remaining 50% of FXCM voting interest that is not held by Jefferies, to require a sale of FXCM beginning in January 2018. Distributions to Jefferies under the amended agreements are now: 100% until amounts due under the loan are repaid; 50% of the next $350 million; then 90% of the next $600 million; and 60% of all amounts thereafter.

Jefferies’ maximum exposure to loss as a result of its involvement with FXCM is limited to the carrying value of the term loan ($73.2 million) and the investment in associated company ($75.0 million), which totaled $148.2 million at November 30, 2018. This amount compares to $212.8 million at September 30, 2018.

Read this next

Digital Assets

Top exec at BitMEX pled guilty US Bank Act violations, pays $150K fine

BitMEX’s head of business development, Gregory Dwyer pled guilty to violating the US Bank Secrecy Act (BSA) and allowing customers to use the platform to circumvent the federal anti-money laundering rules.

Retail FX

CySEC slaps €150,000 fine on FXBFI, operator of 101investing brand

The Cyprus Securities and Exchange Commission (CySEC) today announced that it has reached a settlement with FXBFI Broker Financial Invest Ltd, trading as 101investing, ordering the firm to pay €150,000 for violating the Investment Services and Activities and Regulated Markets Law.

Retail FX

X Open Hub expands multi-asset offering with new cryptocurrencies and indices

X Open Hub, a multi-asset liquidity provider, announced today that it has extended its offering with inclusion of 30 new cryptocurrencies and two emerging market indices.

Retail FX

Interactive Brokers now offers 24/7 access to crypto trading

Interactive Brokers Group, Inc. (NASDAQ: IBKR) has widened access to cryptocurrency trading for its clients. Specifically, the discount broker extended trading hours for its cryptocurrency products to be traded 24/7, including on the weekends.

Inside View

Natural Language Generation for Multi-Language Social Media Strategies 

Natural Language Generation (NLG) is a crucial growth area in the digital landscape, with the unique potential to be used across multiple industries.

Market News, Technology

The B2Core Android App is Now Available For Download

The first version of the B2Core Android app is available for download, and it has many beneficial features for users.

Digital Assets

XBO taps custodian Fireblocks ahead of crypto exchange’s launch has integrated with digital asset and crypto technology platform Fireblocks ahead of the crypto exchange’s upcoming launch.

Industry News

Appital raises another £1.7m after integrating with FactSet, FlexTrade, and TS Imagine

“Appital has a proven track record in securing partnerships with major EMS providers, executing brokers and a trading venue to address the lack of efficiency and control over existing bookbuilding and deal distribution processes.”

Digital Assets

Tim Draper backs crypto-focused asset manager OSD in seed round

“The Old Street Digital team is well-positioned to provide access to a range of research-backed, crypto-based investment funds, and we at Draper Associates are excited to support them.”