The 157-page prospectus for FXCM’s 2010 initial public offering warns of the disaster that could follow extreme market volatility, as happened last week.
“We may be unable to close out customer positions at a level where margin posted by the customer is sufficient to cover the customer’s losses,” the prospectus says.
Many businesses might sue customers who refuse to pay up. Not FXCM.
The prospectus goes on to describe what, in hindsight, might seem like a weakness in FXCM’s business plans: “Our policy is generally not to seek to pursue claims for negative equity against our customers.”
In other words, if customers run up big losses, FXCM will be on the hook.
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Date: 2015-01-23 01:32 am (UTC)