Jefferies Estimates $94.8M Max Loss Exposure Due to FXCM Involvement

Jefferies Financial Group Inc. (Jefferies), a leading global, full-service investment banking and capital markets firm, released its annual report for the year to end-November 2022, revealing its max estimated exposure to loss as a result of its Involvement in FXCM reached $94.8 million.

FXCM is a leading online forex trading and CFD broker based in NewYork. As early as last October, Jefferies stated in its quarterly report to the Securities and Exchange Commission (SEC) that the largest loss caused by its involvement with FXCM was US$80 million​, including US$30.1 million of losses in the carrying value of the term loan and US$49.9 million of losses in the investment in associated company.

The investment company holds equity interests in FXCM of $59.7 million consisting of a 50% voting interest in FXCM and rights to a majority of all distributions in respect of the equity of FXCM.

In the fourth quarter of 2022, a triggering event occurred in Jefferies that tested its investment in FXCM for impairment.

The firm estimated the fair value of its equity interest in FXCM primarily based on a discounted cash flow valuation model. As of the date of the impairment evaluation, the estimated fair value of Jefferies' equity investment in FXCM was $61.7 million. Jefferies believed that this decline in fair value would continue and as result incurred a $25.3 million impairment charge.