Jefferies Group LLC is an American multinational investment bank and
financial services company that is headquartered in New York City. The
firm provides clients with capital markets and financial advisory
services, institutional brokerage, securities research, and asset
management. This includes mergers and acquisitions, restructuring, and
other financial advisory services.
On November 12, 2012, Jefferies announced its merger with Leucadia
National Corporation, its largest shareholder. At that time, Leucadia
common shares were trading at $21.14 per share. As of December 31,
2015, Leucadia shares were trading at $17.39 per share. Jefferies
remains independent and is the largest operating company within
On March 1, 2013, along with the closing of the merger, Jefferies
& Company, Inc. was converted to a limited liability company and
re-branded as Jefferies LLC. It is a subsidiary of Jefferies Group
LLC, which itself is a subsidiary of Leucadia.
1.4 2010 onward
4 External links
Jefferies was founded by Boyd Jefferies in 1962. The firm started with
$30,000 in borrowed capital, which Boyd Jefferies used to purchase a
seat on the Pacific Coast Stock Exchange. In the early years, the
firm was a successful trader and pioneer in what would be called the
"third market", which allowed for the trading of listed stocks
directly between institutional investors in an over-the-counter style,
providing liquidity and anonymity to buyers. In addition to its third
market niche, Jefferies pioneered use of the split commissions in
1964. By 1965, Jefferies had joined the Detroit, Midwest, Boston, and
Philadelphia stock exchanges. In 1967, the company joined the New York
Stock Exchange (NYSE), opening a five-person office in New York. The
growing third market helped Jefferies become the seventh largest firm
in size and trading on the NYSE during those years.
Jefferies was acquired in 1969 by Minneapolis-based Investors
Diversified Services (IDS), the second largest U.S. financial services
company at the time, and resigned all its stock exchange
memberships. Jefferies saw the acquisition as a means to increase
the size of its institutional business with additional capital.
However, because IDS did not derive at least 50 percent of its gross
income from broker-dealer operations, Jefferies had to quit the New
York exchange under Exchange Rule 318. In 1971, IDS and Jefferies
filed an antitrust lawsuit against the exchange, seeking $6 million in
damages. Jefferies and its parent company claimed that the NYSE Big
Board was an illegal monopoly and that exclusion had placed the
company at a competitive disadvantage. In 1973 the presiding judge
informed the NYSE that he planned to rule in Jefferies favour.
Membership was opened to brokerage firms owned by other kinds of
companies, so long as 80 percent of brokerage was conducted with the
public. Jefferies rejoined the exchange in March 1973.
The period during which IDS owned Jefferies was tumultuous and
ultimately in September 1973 Boyd Jefferies bought back the company,
then based in Los Angeles. By 1977, Jefferies had expanded with
offices in Los Angeles, New York, Chicago, Dallas, Boston, and
Jefferies went public on October 13, 1983, with an initial offering of
1.75 million shares at $13 per share. By 1984, according to Business
Week, Jefferies was among the ten most profitable publicly held
brokerages. International expansion led the company
to develop a new overseas office in London, headed by Frank Baxter. In
1986, Baxter became president and chief operating officer, returning
to New York to manage the company.
In 1987, Boyd Jefferies was charged by the government and the
Securities and Exchange Commission
Securities and Exchange Commission with two securities violations:
"parking" stock for a customer
Ivan Boesky and a customer margin
violation. Jefferies, who had also earlier testified against Boesky,
pleaded guilty; receiving a fine and a probation barring him from the
securities industry for five years. The company itself was not charged
but its brokerage unit was censured by the SEC. Boyd Jefferies
resigned from the company in 1987.
Frank Baxter took over as CEO in 1987 and under his leadership the
company focused on diversification, moving beyond its third market
niche. In 1990, Jefferies derived approximately 80 percent of its
revenues from equity block trades. In that year, following the
collapse of Los Angeles-based Drexel Burnham Lambert, the fifth
largest investment bank at the time, Jefferies hired 60 of its bankers
and traders, including Jefferies' current chairman and CEO, Richard B.
Handler. The hires marked the firm's entry into the high yield
markets and investment banking. Three years later Jefferies launched
its first sector-focused investment banking effort by hiring a group
of bankers from Howard Weil, an oil and gas specialty boutique. In
March 1994, Jefferies acquired a 25% stake in BBY Ltd, an Australian
stockbroking and corporate advisory firm.
Baxter's expansion plans also included global expansion in electronic
trading, corporate finance, international convertible sales and
derivative sales. Jefferies also moved quickly into the fourth market:
off-exchange, computer-based (electronic) trading. In the fourth
market the broker's position was eliminated by the Portfolio System
for Institutional Trading (POSIT) that traded portfolios and matched
buyers and sellers automatically. The company created a wholly owned
Investment Technology Group in 1987 to run POSIT.
Investment Technology Group was eventually spun off as a separate
public company in 1999.
In January 2000 Frank Baxter stepped down as president of Jefferies
and relinquished the CEO title later that year. In January 2001,
Chairman and CEO; and John Shaw became sole president
and COO. Handler and Shaw set out to build a fully integrated
investment bank and to develop a merchant bank. The new leadership
proposed to give equity to every employee and diversify the firm's
revenue with asset management, a more aggressive buildup of investment
banking and merchant banking. In September 2001, the firm moved its
Los Angeles to New York. During this period,
Jefferies built its investment banking division primarily by acquiring
boutique advisory firms with specific sector expertise, most notably
Randall & Dewey (energy) and Broadview (technology). Significant
acquisitions during this period included:
FS Private Investments, renamed Jefferies Capital Partners, 2001
Lawrence Helfant, a NYSE Floor Broker Unit, August 2001
Investment Partners, an aerospace and defense advisory
firm, December 2002
Broadview International, a technology-focused advisory firm, December
Randall & Dewey, an energy-focused advisory firm, February 2005
Helix, a private equity fund placement firm, May 2005
LongAcre Partners, a media advisory firm, May 2007
Putnam Lovell, a financial services advisory firm, July 2007
Depfa First Albany Securities, municipal securities, March 2009
Bache & Co., FX, commodities and options trading, July 2011
Hoare Govett, corporate broking, February 2012
Beginning in 2008, Jefferies took advantage of the dislocation created
during the credit crisis to enter several new business segments,
including mortgage-backed securities and municipal bonds.[citation
needed] On June 17, 2009, after several primary dealers, including
Lehman Brothers, Bear Stearns, and Merrill Lynch, either collapsed or
were acquired by other firms, Jefferies was named one of just 17
primary dealers participating in the New York Fed's open-market buying
and selling of securities and Treasury auctions and providing market
information to the New York Fed.
Beginning in 2009 the firm expanded its European businesses. Its new
European Rates unit, based in London, became an official member of the
Federal Republic of Germany's bidding group in October 2009, a
Gilt-Edged Market Maker (GEMM) appointed jointly by the UK Debt
Management Office and
London Stock Exchange, and was recognized as
a Dutch Primary Dealer by the Dutch State Treasury, both in
December 2009. Additionally, in February 2010 Jefferies was appointed
as an EBT (Especialistas em Bilhetes do Tesouro) for Treasury Bills
and as an OMP (Operadores de Mercado Primário) for long-term bonds by
the Portuguese Treasury and Government Debt Agency (Instituto de
Gestão da Tesouraria e do Crédito Público, IGCP). Jefferies is
also providing liquidity across the whole spectrum of other European
In June 2009 the firm hired more than 35 healthcare-focused investment
banking professionals from UBS. UBS’s health care group, then led by
Benjamin Lorello, was a major moneymaker for the firm. The group had
closed more than $567 billion in transactions since 2005, generating
in excess of $1 billion in revenues for UBS. Since moving to
Jefferies, the healthcare group has been ranked the #1 bookrunner in
number of healthcare follow-on equity transactions and the #1 ranked
financial advisor in number of healthcare M&A
In November 2011, Jefferies was accused by Egan-Jones of having 77% of
its shareholder's equity tied up in the same illiquid sovereign debt
securities that just toppled MF Global. This was accompanied by a
concurrent large-scale short seller attack and a campaign of what
turned out to be misinformation. Handler and the management team
responded with unprecedented immediacy and transparency, collapsed 75%
of the position to prove the bonds were hedged and highly liquid,
sharply reduced the rest of Jefferies balance sheet and publicly
addressed every false accusation. This aggressive and unconventional
response resulted in an evenutual 100% increase in Jefferies share
price from the November lows. Leucadia, a 29% shareholder, later
called this event Jefferies' "finest hour."
On April 16, 2012 Jefferies CEO
Richard Handler and
Chairman of the
Executive Committee Brian Friedman formed the Jefferies Global Senior
Advisory Board which includes James D Robinson III, Lord Hollick,
Michael Goldstein, Bernard Bourigeaud, Dennis Archer, Gilles Pélisson
and Sir David Reid.
On August 1, 2012,
Knight Capital took a pre-tax loss of $440m due to
a trading glitch. On Sunday Aug 5 the company managed to raise
around $400 million from six investors led by Jefferies in an attempt
to stay in business after the trading error. Jefferies CEO Richard
Handler and Executive Committee Chair Brian Friedman structured and
led the rescue and Jefferies purchased $125 million of the $400
million investment and became Knight's largest shareholder.
On November 12, 2012, Jefferies announced its merger with Leucadia,
its largest (28%) shareholder. Leucadia is often referred to as a Baby
Berkshire because of its similarities to Berkshire Hathaway. Jefferies
was valued at $3.8 billion and at the time of the acquisition the
newly combined company had $9.4 billion of shareholder's equity, over
$5 billion of cash, and $4 billion of net operating loss ("NOL") tax
credits. Jefferies remains independent and is the largest operating
company within Leucadia.
Richard Handler became CEO of Leucadia while
retaining his position as CEO of Jefferies. Brian Friedman became
President of Leucadia while retaining his duties at Jefferies. Ian
Cumming retired as CEO of Leucadia and remains a Board Member and Joe
Chairman of Leucadia.
In September 2014, Jefferies announced a $500 million deal with
CircleBack Lending, which was the largest of its kind at the time.
They aimed to leverage their experience with securitization markets to
structure securities upheld by CircleBack Lending assets, which could
then be rated and sold to an array of investors. In June 2015, the
first securitization from this deal took place, totaling $106
Jefferies has coverage groups spanning across all industries including
Aerospace & Defense, Business Services, CleanTech, Consumer &
Retail, Energy, Financial Institutions Group, Financial Sponsors,
Gaming & Leisure, Healthcare, Industrials, Maritime, Media, Public
Finance, Real Estate & Lodging, Technology, and
The firm also provides investors fundamental research and trade
execution in equity, equity-linked, and fixed income securities,
including corporate bonds, United States government and agency
securities, repo finance, mortgage- and asset-backed securities,
municipal bonds, whole loans, and emerging market debt, as well as
commodities and derivatives. In addition, Jefferies provides asset
management services and products to institutions and other investors.
The Group Global Headquarters located in New York City, European
Headquarters located in
London & Asia Headquarters located in Hong
Kong, Jefferies has over 30 offices worldwide including Boston,
Houston, Los Angeles,
San Francisco and
Chicago as well as in leading
financial centers around the world that include Frankfurt, Zürich,
Amsterdam, Singapore, Shanghai, Tokyo, and Mumbai.
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July 22, 2013.
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Los Angeles Times. Retrieved July 22, 2013.
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March 19, 1998. Retrieved July 22, 2013.
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Primary Dealer". New York Times. Retrieved July 22, 2013.
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Government Bond Market". Business Wire. December 10, 2009. Retrieved
July 22, 2013.
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Agency". Business Wire. December 17, 2009. Retrieved July 22,
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Specialist in Portugal". Business Wire. February 2, 2010. Retrieved
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UBS Accuses Jefferies of Raiding Health Care Group. The New York
Times, June 25, 2009
^ Jefferies Healthcare. Jefferies Website, March 26, 2013
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has a big impact". Crain's New York. Retrieved July 22, 2013.
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April 16, 2012. Retrieved July 22, 2013.
^ Popper, Nathaniel (August 2, 2012). "
Knight Capital Says Trading
Glitch Cost It $440 Million". New York Times. Retrieved July 22,
^ Bunge, Jacob (August 7, 2012). "Loyalty, Profit Drive Knight
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Business Wire. November 12, 2012. Retrieved July 22, 2013.
^ Renton, Peter (23 September 2014). "CircleBack Lending Secures a
Investment from Jefferies". Lend Academy. Lend Academy.
Retrieved 25 August 2015.
^ Gormley, James (26 June 2015). "CircleBack Lending Completes its
Securitization of $106 Million in Consumer Loans". Yahoo
Finance. Yahoo. Retrieved 26 August 2015. [permanent dead link]
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