The investment banking and financial services firm, Jefferies filed its financial report for the three-month and six-month periods that ended on May 31 with the Securities and Exchange Commission (SEC). The report, which was submitted
on July 7, revealed a tussle between the group and Global Brokerage
Inc. over the ownership of FXCM.
FXCM, also known as Forex
Capital Markets, is a retail foreign exchange brokerage company that is based
in New York. In March, the creditors of Global Brokerage filed an
involuntary bankruptcy petition against a subsidiary business owned by the
broker, Global Brokerage Holdings LLC, which owns 50% of the voting shares of FXCM.
Jefferies’ $35 Million Loan
Jefferies is planning to
petition the bankruptcy court to be allowed to recover the funds invested in
FXCM, Friday’s report stated. FXCM owed Jefferies $35 million as of May 31,
which was extended to the broker as a secured loan facility.
Besides that, Jefferies
disclosed that it owned 50% of the voting
rights in FXCM and had significant influence on the decision of the company due to its members on the Board of Directors. Additionally, the company
contributed $5 million and $10 million, respectively, during the three-month and six-month period which ended on May 31, 2023.
“We have an equity
interest in FXCM, which was worth $46.6 million as of May 31, 2023, and $59.7
million as of November 30, 2022. It consists of a 50% voting interest in FXCM
and a right to a majority of all the distributions of the equity of FXCM,”
Jefferies explained in the report.
Jefferies’ Stake in FXCM
Furthermore, according
to the details, all the equity held by Global Brokerage is pledged as a security
to the debt that Jefferies extended to FXCM. In light of this, Jefferies
believes that if it manages to recover all of the assets pledged as a security, it would have full ownership of FXCM.
Finance
Magnates reported in April that Jefferies had revealed
a loss exposure worth
$80 million between December 2022 and February 2023 due to its investment in
FXCM. However, the investment bank said it had reduced its exposure from
more than $90 million in the previous month.
This article was written by Jared Kirui at www.financemagnates.com.
