Jefferies Group LLC

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Jefferies Group LLC
Jefferies-logo.JPG
Founded 1962
Headquarters North American Headquarters: New York; European Headquarters: London
Key People Richard Handler, Chairman & CEO
Products Investment Banking & Institutional Securities Firm
Website www.jefco.com

Jefferies Group is a global, full service investment banking and institutional securities firm.[1] It has traditionally been a provider to small and midsize hedge fund firms.[2] It is the principal operating subsidiary of Jefferies Group Inc., a publicly traded holding company with an equity market capitalization of approximately $2.95 billion as of June 2012 and revenues of nearly $2.5 billion in 2010.[3]

Jefferies' CEO Richard Handler viewed the advent of the economic downturn of 2008 as an opportunity for Jefferies to expand. The firm hired traders and bankers laid off by credit-crunched rivals despite posting three quarterly losses.[4] It debuted a prime brokerage unit led by six former Bank of America executives in 2008.[5]

In April 2011, Jefferies agreed to pay $430 million to acquire Prudential Bache’s Global Commodities Group.[6] The deal closed on July 1, 2011, and the unit was renamed Jefferies Bache.[7]

In 2012, Leucadia National Corporation bought Jefferies Group in a deal valued at about $3.6 billion.[8] The deal would give Jefferies a deep-pocketed owner as it continued to build out a full-service investment bank. The firm had sought to raise its profile in businesses like merger advising, in part to counterbalance its core business of trading stocks and bonds.[9]

History

Jefferies & Company has its roots in block trading. Institutional investors needed a resource for trading large blocks of stock. Jefferies met that need by matching large institutional buyers and sellers naturally, off the exchange. It quickly became one of the largest firms in size and trading on the NYSE.[10]

In December 2006, private-sector provider of financial regulatory services NASD fined Jefferies & Company, Inc., of New York, $5.5 million for providing more than $1.6 million in improper gifts and entertainment to equity traders employed by FMR Co., Inc.[11]

In November 2011, Handler wrote a six-page letter to clients, shareholders, bondholders, employees and "friends" detailing Jefferies' stable financial condition.[12] This followed the company's cuts to European holdings and rumors that the bank could face liquidity and/or funding problems.[13]

In March 2012, Jefferies Group Inc. announced that it intended to buy bankrupt broker-dealer MF Global's precious metals assets. Trustee James W. Giddens described the agreement with the investment bank as the "best available opportunity" to sell any remaining physical property in his control.[14]

Also in 2012, Jefferies was one of a group of six investors rescued Knight Capital Group by helping to cover a $440 million loss tied to a software glitch. The group took effective control of Knight, now renamed KCG, getting securities representing potential ownership of about 73% of the company.[15]

In January 2014, Jefferies agreed to pay $25 million to resolve criminal and civil probe into its mortgage-backed secutities business. The investigation stemmed from a fraud indictment of its ex-trader, Jesse Litvak, who defrauded investors of more than $2 million on trades of residential MBS from 2009 to 2011.[16][17]

Jefferies Group LLC boosted its stake in KCG Holdings Inc. to 20 percent in March 2014, purchasing an additional 6 million shares in the market maker it helped rescue in 2012. That brought its total holdings to 22.5 million shares.[18]

Jefferies put up its commodities and financial derivatives brokerage for sale in late 2014.[19]

Products and Services

  • Investment Banking
  • Sales & Trading
  • Research & Analysis
  • Asset Management
  • Wealth Management
  • Execution & Securities Services

Key People

References

  1. With Jefferies, The Possibilities For Our Company Are Endless. Jefferies.
  2. In Times Like These. Jefferies.
  3. Jefferies Reports 4th Quarter and 2011 Fiscal Year Financial Results. Jefferies.
  4. Jefferies CEO Sees Chance To Expand In Downturn. Jefferies.
  5. Jefferies & Company, Inc.. Jefferies.
  6. Jefferies To Buy Prudential Commodities For $430 Million. Bloomberg.
  7. Jefferies Completes Acquisition of Prudential Bache. Jefferies.
  8. Leucadia to Acquire Jefferies. New York Times.
  9. Leucadia in $3.6b deal for Jefferies. Boston Globe.
  10. 1960s - A Foundation in Block Trading. Jefferies.
  11. NASD Fines Jefferies & Company $5.5 Million for Providing Improper Gifts and Excessive Entertainment to Fidelity Traders. FINRA.
  12. Jefferies Is The Victim Of Malicious Lies, CEO Argues. Forbes.
  13. Jefferies Says Firm Makes More Cuts in European Holdings. Businessweek.
  14. Jefferies to Buy MF Global Precious-Metals Assets. WSJ.
  15. Loyalty, Profit Drive Knight Rescue. The Wall Street Journal.
  16. Jefferies pays $25 million to settle MBS trading probes. Reuters.
  17. Ex-Jefferies Trader’s Customers Say Lies Part of the Job. Bloomberg.
  18. Jefferies Increase Stake in Market Market KCG to 20%. Bloomberg.
  19. Jefferies CEO Richard Handler turns down bonus. Reuters.
  20. Board of Directors. Jefferies.