$99.5M Max Loss Exposure due to FXCM Involvement, Jefferies Says

Investment bank, financial services provider, Jefferies Financial Group Inc, has filed its annual report for the year to end-November 2021 with the Securities and Exchange Commission (SEC), offering an update on Jefferies'involvement with FXCM Group LLC (FXCM).

In its most recent financial disclosures, FXCM reported total assets of $387.9 million. The maximum loss exposure for Jefferies as a result of its involvement with FXCM is limited to the carrying value of the term loan ($50.5 million) and the investment in associated company ($49.0 million), totaling $99.5 million at he end of November 2021. This is lower than the $109.5 million estimate reported for the quarter to August 31, 2021.

In connection with the foreign exchange contracts entered into under this agreement, Jefferies Group had $0.7 million and $2.7 million at November 30, 2021 and 2020, respectively, included in Payables, expense accruals and other liabilities in the Consolidated Statements of Financial Condition.

Jefferies' investment in FXCM and associated companies consists of a senior secured term loan due February 15, 2022 ($71.6 million principal outstanding at November 30, 2021), a 50% voting interest in FXCM and rights to a majority of all distributions in respect of the equity of FXCM.

At November 30, 2021, Jefferies had an approximately $99.4 million investment in FXCM. Many factors, most of which are outside of Jefferies' control, can affect FXCM's business, including the state of international market and economic conditions which impact trading volume and currency volatility, changes in regulatory requirements and other factors that directly or indirectly affect the results of operations, including the sales and profitability of FXCM, and consequently may adversely affect Jefferies' results of operations or financial condition.