‘I Want My Two Dollars!’ Lembex Owners Hit with Lawsuit

Selling a Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term business once is hard enough, doing it twice takes a special combination of skill and luck. Filling that category is the owners of little known Lembex Financial Group. While the Lembex brand never made it as a household brand, the firm was sold to Saxo Bank on April 2nd 2012 for approximately $4 million (according to Saxo filings, the exact figure was DKK 22.4 million). The operation included both an Israeli facing brokerage as well as a Maltese incorporated ‘Global’ unit. For Saxo Bank, the acquisition could be depicted as strategic rather than opportunistic (the bank filed the majority of the value of deal as goodwill).

After buying a 25% stake in MetaTrader technology provider Leverate, Saxo Bank became first involved with the MT4 platform and was on its way to begin offering the product. Acquiring Lembex provided Saxo the access to an established MT4 broker that was also a Leverate customer to begin testing the business environment of the MetaTrader platform. Lembex operations and staff was brought under the ForexTrading.com brand, Saxo’s CySEC CySEC The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision Read this Term licensed broker targeted towards retail MT4 clients. However, that initiative was short lived, and by November 2012, Saxo announced that it was closing its Israel office, Lembex’s main sales location. The news was followed by the shuttering of the ForexTrading.com brand and the re-launch of MT4 directly under the Saxo Bank name.

For Lembex’s owners, the sale to Saxo Bank followed a previous deal in 2010 where they had sold Finexo to SafeCap (better known as Markets.com). The sale included several smaller brands, but was limited to only the global unit. Not included in the sale was Finexo Israel, which eventually was renamed Lembex with its global division expanded shortly thereafter. Similar to the Saxo Bank deal, Finexo was viewed to have been sold for a premium.

Story Hasn’t Ended - Management Lawsuit

While the deals rewarded the Lembex and Finexo owners, it created turbulence among employees who were transferred to new companies, lost their jobs, and sometimes both. For senior management though, following the first sale to SafeCap, there were promises of a payout in the event of another sale. Apparently though these arrangements have been yet to pan out. According to a report by Israeli business news portal Calcalist, three former Lembex executives have filed a lawsuit in Tel Aviv courts, against Lembex’s owners, Gil Baserglick, Elon Bezalely and Aryeh Fried for NIS1.3 million ($357,000). The case stems on commitments the former managers, Lembex’s CEO, Head of Business Development, and Head of Sales, received from ownership in the event of a deal. According to the court documents, the three received contracts that rewarded them between 2-3% payouts of an acquisition.

Following the Saxo Bank acquisition, the court claim explains that the three approached the owners about their bonuses, but were brushed back and never received clarity on how much and when would the payment occur. Although receiving assurances that they would be compensated, the three managers claim that the Lembex owners have yet to pay them and have tied excuses based on the way the deal was structured with Saxo Bank as well as needing to fulfill final calculations.

What remains to be seen now is how the owners will respond to the charges, if at all, and whether there will be a third chapter and a new brokerage emerging from the trio. With the case entering the courts, its represents that the long-time Finexo/Lembex managers have given up on their former bosses, and their future in the forex industry ultimately won’t be tied with any new initiatives from Lembex’s former owners.