Falling FXCM Share Prices Trigger Margin Call for Company Co-Founder

Reporting insider transactions, FXCM reported that co-founder and Managing Director and Global Head of Dealing Eduard Yusupov sold just over a million shares last week. The sale came as Yusupov had pledged 1,200,000 shares of FXCM as margin with a broker, using the equity value to open positions in other securities in the market.

As the value of the FXCM shares tanked due to the company’s losses from the Swiss franc volatility, Yusupov’s broker foreclosed on the entire 1,200,000 amount, which led to selling nearly the entire amount last week. It is not known whether other positions in the account were also liquidated to cover falling balance levels. Following the sale, equity controlled by Yusupov, which include trust accounts in the name of family members now total 3,733,356 shares.

From trading in the mid-teens before the Swiss franc crisis, Yusupov’s shares were sold between $2.29 and $2.41 last week. While affecting major holders adversely, the stock devaluation also could become a hindrance for the firm in retaining talent with options that may now be underwater. So far, we haven’t yet heard of any wave of managers and other employees leaving the broker.

However, that may be tied to existing employees waiting around to see the results of any possible non-core asset sales which have been announced, and how that affects the overall company.