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 exchangeExchangeAn exchange is known as a marketplace that supports the t... 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 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.
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.
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