Jefferies Reports $80M Max Loss Exposure due to FXCM Involvement

Fazzaco learned that Jefferies Financial Group Inc (NYSE:JEF), an investment bank and financial services firm, has officially submitted its quarterly report to the Securities and Exchange Commission (SEC) for the three months ending August 31, 2022, which outlines, inter alia, its partnership with FXCM Group, LLC (FXCM), an online Forex trading services provider.

According to reports, FXCM witnessed year-on-year decrease in its 2021 revenue and posted total assets of $401.2 million in its latest financial statements. Jefferies, due to its involvement with FXCM, put maximum exposure to loss to the total of  the carrying value of the term loan ($30.1 million) and the investment in associated company ($49.9 million) at August 31, 2022, less than $103.1 million estimated at the end of May 2022.

Jefferies invests in FXCM and associated companies with a senior secured term loan due May 6, 2023 (outstanding principle of $39.6 million as of August 31, 2022). Besides, the company holds 50% voting interest in FXCM and is entitled to a majority of all payouts related to the stock of FXCM.

In addition, a forex prime brokerage agreement was signed between Jefferies and FXCM in 2017, based on which,  Jefferies Group assumed liabilities of $0.6 million and $0.7 million respectively at August 31, 2022 and November 30, 2021.

Most recently, Jefferies has posted 21% yearly decline in net revenues​ during Q3 FY22.