FXCM owed $225 million by customers who lost on CHF
- Thread starter m22au
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Jason Rogers
ET Sponsor
January 16, 2015
Leucadia National Corporation and FXCM Announce $300 Million Financing to Permit FXCM to Continue Normal Operations
NEW YORK--(BUSINESS WIRE)-- Leucadia National Corporation (NYSE: LUK) and FXCM (NYSE: FXCM) today announced that Leucadia would be providing $300 million in cash to FXCM and its subsidiaries (collectively "FXCM") that will permit FXCM to meet its regulatory-capital requirements and continue normal operations after yesterday's loss of $225 million due to the unprecedented actions of the Swiss National Bank. Under the terms of the agreements, Leucadia is investing $300 million in cash into FXCM in the form of a $300 million senior secured term loan with a two-year maturity and an initial coupon of 10%. The term loan obligations are guaranteed, on a secured basis, by certain of FXCM's domestic subsidiaries. In addition, Leucadia will receive, in the event of a sale of FXCM or its subsidiaries, a certain percentage of the sale proceeds and, in the event FXCM makes other distributions on account of its equity, a corresponding payment for its own account. This transaction is expected to close this afternoon. Drew Niv, Chief Executive Officer of FXCM, stated: "We could not be more grateful to Leucadia and its team for their rapid and effective response and to our regulators, who have been willing to work with us through this challenging process. Leucadia's support and this financing are by far the best alternative for FXCM, our customers, our shareholders, and all other relevant constituencies. We are pleased to continue to act as the leading online provider of foreign exchange trading and related services to retail and institutional customers worldwide."
Click to see full press release: http://bit.ly/1ua85Ve
Leucadia National Corporation and FXCM Announce $300 Million Financing to Permit FXCM to Continue Normal Operations
NEW YORK--(BUSINESS WIRE)-- Leucadia National Corporation (NYSE: LUK) and FXCM (NYSE: FXCM) today announced that Leucadia would be providing $300 million in cash to FXCM and its subsidiaries (collectively "FXCM") that will permit FXCM to meet its regulatory-capital requirements and continue normal operations after yesterday's loss of $225 million due to the unprecedented actions of the Swiss National Bank. Under the terms of the agreements, Leucadia is investing $300 million in cash into FXCM in the form of a $300 million senior secured term loan with a two-year maturity and an initial coupon of 10%. The term loan obligations are guaranteed, on a secured basis, by certain of FXCM's domestic subsidiaries. In addition, Leucadia will receive, in the event of a sale of FXCM or its subsidiaries, a certain percentage of the sale proceeds and, in the event FXCM makes other distributions on account of its equity, a corresponding payment for its own account. This transaction is expected to close this afternoon. Drew Niv, Chief Executive Officer of FXCM, stated: "We could not be more grateful to Leucadia and its team for their rapid and effective response and to our regulators, who have been willing to work with us through this challenging process. Leucadia's support and this financing are by far the best alternative for FXCM, our customers, our shareholders, and all other relevant constituencies. We are pleased to continue to act as the leading online provider of foreign exchange trading and related services to retail and institutional customers worldwide."
Click to see full press release: http://bit.ly/1ua85Ve
Hahahahaha!!!! FXCM is done! There may be a dead cat bounce but who trusts their name anymore in the long run. Discussions at ForexFactory have been epic. They probably have negative net worth and are now carrying some high cost debt thanks to those bastards that bailed them out.
You seem to ignore the fact that they have clean out all the losers accounts for profit and they still have these losers owing them money. If they tell you how much profit they are making from this, it'd scare you witless.
Why continue to do business with such a company. I also wonder about the legality of going after the losers, saying they owe money on their accounts, when their terms specially disallow this practice. A lot of retail lost big time but they still might drum up enough funds for s class action suit, if they have any money left.
Again, they might make money in the short term but long term they're done because no loser can be stupid enough to trust this company with their dollars again. Only way they come back is if I underestimated the level of stupidity of the losers.
So SNB doing stuff would cause people to blame FXCM ? I don't think people are that stupid, maybe only those at FF.
your brilliance shines through yet again. Ask yourself why FXCM was the only US dealer who nearly went insolvent over this.
As you know, then explain why ? Explain why FXCM gets the blame for SNB's actions.
They did not go insolvent. My personal belief is the whole thing is just a show because for them to do otherwise they would appear even more guilty than they are now.
But there's no question they cleaned up and made tons of profits from the whole thing. They could be just as "generous" as some other shops in forgiving negative balances. What was in the loser accounts was plenty already.
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Tax treatment for a lost deposit in an insolvent financial institution is covered under Section 165 losses. Basically, you need patience to wait for a court to rule it's a "sustained loss" after all recovery efforts and that loss write off can take over a year.
We have content about Section 165 losses in our Trader Tax Center (recapped below) and our blog, where we covered the MF Global and PFG insolvencies. MF Global was Section 165, but PFG was different: it was deemed a theft loss which allowed more generous tax treatment known as the Ponzi ruling. That revenue procedure allows faster write offs with ordinary loss treatment. Otherwise, Section 165 is capital loss treatment, unless you had trader tax status.
If you got caught on the wrong side of the forex trade with the SNB announcement, and your forex broker liquidated your forex positions due to market losses and lack of margin, that's a forex loss, not a deposit loss. If you use the default Section 988 treatment, it's an ordinary loss, but not a business loss without trader tax status, so you need other income to absorb the loss. If you filed a Section 988 capital gains election, it's a capital loss. If you're using Section 1256(g), you can file a Section 1256 loss carry back election for 2015 to carry the loss back three-years to offset Section 1256 gains.
Deposit losses (in our Trader Tax Center)
Many investors, traders and hedge funds got sideswiped by the MF Global and PFG bankruptcies over the past few years. Unfortunately, futures and forex account holders are not afforded government protection like bank account holders with FDIC protection and securities account holders with SIPIC protection. Tax treatment is far better when the IRS declares the loss a “theft loss” and allows application of IRS Revenue Procedure 2009-20, originally enacted to provide tax relief for investors in the Bernie Madoff Ponzi scheme. Theft losses receive ordinary loss treatment plus acceleration of losses on tax returns. Otherwise, Section 165 applies to deposit losses in insolvent financial institutions like MF Global. Investors are stuck choosing between capital loss treatment, which may trigger capital loss limitations, or itemized deduction treatment with various restrictions and haircuts. Business traders with trader tax status benefit from business ordinary loss treatment. Taxpayers with Section 165 losses must wait for the loss to be “sustained” so trustees have ample time for fund recovery. MF Global futures account holders recovered their losses in full, although forex account holders may have some sustained losses. (Read our blogs, PFG investors can deduct theft losses on 2012 tax returns with Rev. Proc. 2009-20 safe harbor relief, and MF Global & PFG Best deposit losses have nuanced tax treatment.)
We have content about Section 165 losses in our Trader Tax Center (recapped below) and our blog, where we covered the MF Global and PFG insolvencies. MF Global was Section 165, but PFG was different: it was deemed a theft loss which allowed more generous tax treatment known as the Ponzi ruling. That revenue procedure allows faster write offs with ordinary loss treatment. Otherwise, Section 165 is capital loss treatment, unless you had trader tax status.
If you got caught on the wrong side of the forex trade with the SNB announcement, and your forex broker liquidated your forex positions due to market losses and lack of margin, that's a forex loss, not a deposit loss. If you use the default Section 988 treatment, it's an ordinary loss, but not a business loss without trader tax status, so you need other income to absorb the loss. If you filed a Section 988 capital gains election, it's a capital loss. If you're using Section 1256(g), you can file a Section 1256 loss carry back election for 2015 to carry the loss back three-years to offset Section 1256 gains.
Deposit losses (in our Trader Tax Center)
Many investors, traders and hedge funds got sideswiped by the MF Global and PFG bankruptcies over the past few years. Unfortunately, futures and forex account holders are not afforded government protection like bank account holders with FDIC protection and securities account holders with SIPIC protection. Tax treatment is far better when the IRS declares the loss a “theft loss” and allows application of IRS Revenue Procedure 2009-20, originally enacted to provide tax relief for investors in the Bernie Madoff Ponzi scheme. Theft losses receive ordinary loss treatment plus acceleration of losses on tax returns. Otherwise, Section 165 applies to deposit losses in insolvent financial institutions like MF Global. Investors are stuck choosing between capital loss treatment, which may trigger capital loss limitations, or itemized deduction treatment with various restrictions and haircuts. Business traders with trader tax status benefit from business ordinary loss treatment. Taxpayers with Section 165 losses must wait for the loss to be “sustained” so trustees have ample time for fund recovery. MF Global futures account holders recovered their losses in full, although forex account holders may have some sustained losses. (Read our blogs, PFG investors can deduct theft losses on 2012 tax returns with Rev. Proc. 2009-20 safe harbor relief, and MF Global & PFG Best deposit losses have nuanced tax treatment.)