14 March, AtoZForex, Lagos – Forex Capital Markets (FXCM) has released its latest annual report. As expected, the report contains ample information regarding the company’s business activities within the past year. It is however interesting to note its proceedings in regards to the historic SNB Black Swan event. Furthermore, the report includes the estimated costs of the FXCM Cybersecurity investigation, following the cyber attack on the broker dated back to October 2015.
Costs of FXCM Cybersecurity investigation
In October, the firm reported that is had been the victim of a criminal FXCM cybersecurity incident involving unauthorized access to customer information. They received an email from a hacker claiming to have unlawful access to customer information. The firm cooperated with federal law enforcement and launched and completed a full investigation, working with a leading cybersecurity firm.
As regards the cyber attack incident that rocked the firm last year, it was clarified in the report that expenses incurred for the investigation, costs of communications with customers, remediation activities associated with the incident as well as other professional costs totaled about $700 million. They further clarified that even though such incidents are covered by insurance, “the coverage is subject to deductibles and may not be sufficient to entirely reduce the exposure to losses relating to this matter.”
See also: FXCM rebrands, new Leucadia MoU signed
FXCM Leucadia loan break down
Breaking down the status of the FXCM Leucadia loan repayment, the deal involves a “$300 million two-year senior secured term loan with rights to a variable proportion of certain distributions in connection with an FXCM sale of assets or certain other events”, it is important to note that Leucadia still holds a right to require a sale of FXCM beginning in January 2018. The initial interest payable on the loan is 10% per annum, increasing by 1.5% per annum each quarter, not to exceed 20.5% per annum.
Further breakdown includes 100% until amounts due under the loan are repaid; 50% of the next $350 million; then 90% of the next $500 million (this was an amount initially set at a range between $500 million to $680 million and based on payments made by FXCM to us through April 16, 2015, this amount became $500 million); and 60% of all amounts thereafter.
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