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

Retail FX

Italian watchdog red flags Olympus Brokers, UnicoFX and Allfina Group

Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB) has shut down new websites in an ongoing clampdown against firms it accuses of illegally promoting investment products in the country.

Retail FX

XTB revenues hits zł1.45 billion in 2022, Q4 earnings disappoint

Poland-based Forex and CFDs broker, XTB has reported its final results for Q4 of 2022 and the full fiscal year ending on December 31, 2022, showing one of its most successful corporate years.

Executive Moves

Lirunex Limited recruits Waleed Salah as head of MENA sales

Maldives-based brokerage firm Lirunex Limited has secured the services of Waleed Salah, who joined the company in the role of its head of sales for the MENA region.

Executive Moves

Trading 212 parts ways with co-founder Borislav Nedialkov

Trading 212 has a void to fill at its FCA-regulated business in London, following the departure of two key players, Raj Somal and Borislav Nedialkov.

Digital Assets

Binance acquires troubled crypto exchange GOPAX

Binance, the world’s largest digital asset trading platform, has reportedly acquired a majority stake in the troubled South Korea-based cryptocurrency exchange GOPAX.

Digital Assets

Kraken exits Middle East, closes UAE office

Digital currency exchange Kraken will close down its operations in Abu Dhabi, UAE and lay off the majority of its team focused on the Middle East and North Africa.

Industry News

CFTC comments on ION Cleared Derivatives issues after Russian-linked hack

“The ongoing issue is impacting some clearing members’ ability to provide the CFTC with timely and accurate data. As this incident unfolded, it became clear that the submission of data that is required by registrants will be delayed until the trading issues are resolved.”

Industry News

FCA took down 14 times more misleading ads in 2022 thanks to technology

The FCA has made significant improvements to the digital tools it uses to find problem firms and misleading adverts. These improvements have enabled it to work through a much larger number of cases compared with 2021.

Executive Moves

HKEX appoints ex-Goldman Sachs Matthew Cheong to lead platform’s focus on derivatives

“He has worked for a number of the world’s leading investment banks and his experience will be invaluable to HKEX as we continue to enhance our derivatives product offerings and build on our innovative and robust platform business, connecting capital with opportunities.”

<