Connect with us

Hi, what are you looking for?

Jewish Business News

Business

FXCM Bailout by Richard Handler and Leucadia Might Be Just a Band-Aid

Richard B. Handler,   CEO of Jefferies Group Speaks At The Milken Scholars Program Alumni Symposium

The last minute bailout of FXCM with a $300 million loan from Leucadia may turn out to be only a bandaid as the stock of FXCM plummeted when details of the deal were announced, according to Bloomberg. The trouble began for FXCM when the Swiss Central Bank announced that it would not longer cap the Swiss Franc against the euro. This spelt trouble for FXCM, which was in danger of breaching capital requirements, which would have forced a shutdown of the company.

The stock fell to $1.63 although it was riding at $12.63 last week, and perked up to $4 when the bailout was announced. In exchange for lending FXCM the needed $300 loan, repayment would be at an interest of 10% and could rise to 17%. Leucadia would have a sizeable share of dividend increases, and would have a large stake if FXCM would sell itself, which is becoming increasingly likely. Analyst Willliam Katz of Citigroup said the Lecuadia loan, negotiated by CEO Richard Handler, “essentially wiped out” the value of FXCM shares. However, Katz explained that FXCM didn’t have a lot of options, and each one threatened the value of the company. FXCM is a cautionary tale in having exposure only to foreign exchange markets, as Katz told Bloomberg, “Things happened so quickly. That’s the lesson of having a lot of leverage in a retail FX trading account. It doesn’t leave a margin for error.”

Please help us out :
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at office@jewishbusinessnews.com.
Thank you.

Meanwhile, CEO Richard Handler is having his own problems with Jefferies as shareholders think Leucadia underpaid when it bought Jefferies. Shareholders demand $70 million. They blame Richard Handler for having negotiations which didn’t not include Jefferies’ independent directors, and allege that Handler, who is chief executive of both companies, wanted to grab power. Leucadia already owned 29% of Jefferies prior to the deal and paid $2.5 billion. Mr. Handler denies allegations, but says he is settling, “solely to eliminate the uncertainty, burden and expense of further protracted litigation.”

Newsletter



Advertisement

You May Also Like

World News

In the 15th Nov 2015 edition of Israel’s good news, the highlights include:   ·         A new Israeli treatment brings hope to relapsed leukemia...

Entertainment

The Movie The Professional is what made Natalie Portman a Lolita.

Travel

After two decades without a rating system in Israel, at the end of 2012 an international tender for hotel rating was published.  Invited to place bids...

VC, Investments

You may not become a millionaire, but there is a lot to learn from George Soros.