How Jefferies Financial Group is Leveraging its Stake to Takeover FXCM

New York, NY - July 10, 2023 - In recent SEC filings, Jefferies Financial Group, Inc. (NYSE: JEF), a multinational independent investment bank and financial services company, has divulged revealing insights into its ongoing relationship with Forex Capital Markets (FXCM), an industry-leading provider of online foreign exchange trading services.

Jefferies confirmed a significant 50% voting interest in FXCM, which grants it considerable influence over the forex platform's decision-making processes through seats on its board of directors. This strategic alliance has facilitated an augmentation of FXCM's capital, with Jefferies extending further financial support. In the three and six months leading to the end of May 2023, Jefferies channeled an additional $5.0 million and $10.0 million into FXCM, respectively.

Maintaining a strong equity presence, Jefferies held interests of $46.6 million and $59.7 million in FXCM as of May 31, 2023, and November 30, 2022, respectively. Further cementing this fiscal relationship, Jefferies has furnished a senior secured term loan to FXCM, valued at $38.1 million and $35.1 million on the above-stated dates. This loan plays a crucial role in FXCM's financial strategy, enabling it to grow its foreign exchange trading business.

The crux of FXCM's assets comprises brokerage receivables, other financial instruments, and operational assets pertinent to its foreign exchange trading business. However, the company's financial landscape experienced a significant shakeup earlier this year.

In March 2023, Global Brokerage Inc. (“GLBR”) was subjected to an involuntary bankruptcy petition. The petition was filed by certain noteholders against GLBR and its subsidiary, Global Brokerage Holdings LLC (“Holdings”), which also possesses a 50% voting equity interest in FXCM.

In an unexpected turn of events, all of FXCM's assets and Holdings' equity interest in FXCM are pledged as collateral to Jefferies. This is related to the senior secured term loan agreement, with Jefferies displaying intent to leverage its rights under the inter-creditor agreement, contractual arrangements, and the term loan. This move is seemingly designed to safeguard Jefferies' interests and maintain the stability of FXCM amid the tumultuous financial environment.

Jefferies is actively seeking to lift the automatic stay in the bankruptcy proceedings and enforce its rights under the term loan and related agreements. If successful, Jefferies will emerge as the sole owner of FXCM, effectively amplifying its foothold in the online foreign exchange trading industry.

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About Jefferies Financial Group, Inc.

Jefferies Financial Group Inc. is a diversified financial services company engaged in investment banking and capital markets, asset management, and direct investing. Jefferies Group LLC, its primary operating subsidiary, is the largest independent, global, full-service investment banking firm headquartered in the U.S.