Jefferies Mulls Recovering Investments in FXCM: SEC Filing

Monday, 10/07/2023 | 09:32 GMT by Jared Kirui

Jefferies plans to recover a loan extended to FXCM, a company partly owned by Global Brokerage.

Global Brokerage's subsidiary is facing an involuntary bankruptcy petition.

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.