Investment bank and financial services firm Jefferies Financial Group Inc (NYSE:JEF) has filed its quarterly report for the three months to end-May 2021 with the Securities and Exchange Commission (SEC), with the report providing an insight into Jefferies’ involvement with FXCM Group LLC (FXCM).

Jefferies has determined that it is not the primary beneficiary of FXCM because it does not have the power to direct the activities that most significantly impact FXCM’s performance. Therefore, it does not consolidate FXCM and it accounts for its equity interest under the equity method as an investment in an associated company.

FXCM reported total assets of $397.7 million in its latest financial statements.

Jefferies’ maximum exposure to loss as a result of its involvement with FXCM is limited to the carrying value of the term loan ($59.2 million) and the investment in associated company ($64.1 million), which totaled $123.3 million at May 31, 2021. This compares with a loss exposure of $130.9 million in the preceding quarter.

Jefferies’ investment in FXCM and associated companies consists of a senior secured term loan due February 15, 2022 ($71.6 million principal outstanding at May 31, 2021), a 50% voting interest in FXCM and rights to a majority of all distributions in respect of the equity 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.