Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Forward-Looking Statements
This report may contain or incorporate by reference certain
“forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934 and/or the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include
statements about our future and statements that are not
historical or current facts. These forward-looking statements are
often preceded by the words “should,” “expect,” “believe,”
“intend,” “may,” “will,” “would,” “could” or similar expressions.
Forward-looking statements may contain expectations regarding
revenues, earnings, operations and other results, and may include
statements of future performance, plans and objectives. Forward-
looking statements also include statements pertaining to our
strategies for future development of our business and products.
Forward-looking statements represent only our belief regarding
future events, many of which by their nature are inherently
uncertain. It is possible that the actual results may differ, possibly
materially, from the anticipated results indicated in these
forward-looking statements. Information regarding important
factors that could cause actual results to differ, perhaps
materially, from those in our forward-looking statements is
contained in this report and other documents we file. You should
read and interpret any forward-looking statement together with
these documents, including the following:
• the description of our business contained in this report under
the caption “Business”;
• the risk factors contained in this report under the caption “Risk
Factors”;
• the discussion of our analysis of financial condition and results
of operations contained in this report under the caption
“Management’s Discussion and Analysis of Financial Condition
and Results of Operations” herein;
• the discussion of our risk management policies, procedures
and methodologies contained in this report under the caption
“Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Risk Management” herein;
• the consolidated financial statements and notes to the
consolidated financial statements contained in this report; and
• cautionary statements we make in our public documents,
reports and announcements.
Any forward-looking statement speaks only as of the date on
which that statement is made. We undertake no obligation to
update any forward-looking statement to reflect events or
circumstances that occur after the date on which the statement
is made, except as required by applicable law.
Our business, by its nature, does not produce predictable or
necessarily recurring earnings. Our results in any given period
can be materially affected by conditions in global financial
markets, economic conditions generally and our own activities
and positions. For a further discussion of the factors that may
affect our future operating results, refer to the risk factors
contained in this report under the caption “Risk Factors”.
Our results of operations for the years ended November 30, 2025
(“ 2025 ”) and November 30, 2024 (“ 2024 ”) are discussed below.
For a discussion of our results of operations for the year ended
November 30, 2023 (“ 2023 ”) and our 2024 results of operations
as compared to our 2023 results of operations, refer to
“Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in Part II, Item 7 of our Annual Report
Form 10-K for the year ended November 30, 2024 , which was
filed with the SEC on January 28, 2025 .
Jefferies Financial Group Inc.
Consolidated Results of Operations
Overview
$ in thousands
% Change
Net revenues ....................................................
Non-interest expenses ....................................
Earnings from continuing operations
before income taxes ...................................
Income tax expense from continuing
operations ....................................................
Net earnings from continuing operations .....
Net (losses) earnings from discontinued
operations, net of income taxes ...............
Net losses attributable to noncontrolling
interests .......................................................
Preferred stock dividends ...............................
Net earnings attributable to common
shareholders ................................................
Effective tax rate from continuing
operations ...................................................
$ in thousands
% Change
Net revenues ....................................................
Non-interest expenses ....................................
Earnings from continuing operations
before income taxes ...................................
Income tax expense from continuing
operations ....................................................
Net earnings from continuing operations .....
Net losses from discontinued operations,
net of income taxes ....................................
Net losses attributable to noncontrolling
interests .......................................................
Net losses attributable to redeemable
noncontrolling interests .............................
Preferred stock dividends ...............................
Net earnings attributable to common
shareholders ................................................
Effective tax rate from continuing
operations ...................................................
N/M — Not Meaningful
Executive Summary
Year Ended November 30, 2025 Versus November 30, 2024
Net earnings attributable to common shareholders were
$630.8 million and $669.3 million for the year ended November
30, 2025 and 2024 , respectively.
Our effective tax rate was 21.2% , and 29.2% for the year ended
November 30, 2025 and 2024 , respectively.
The remainder of our “Consolidated Results of Operations” is
presented on a detailed product and expense basis. Our
“Revenues by Source” is reported along the following business
lines: Investment Banking, Equities, Fixed Income and Asset
Management.
At November 30, 2025 , we had 7,787 employees globally across
all of our consolidated subsidiaries within our Investment
Banking and Capital Markets and Asset Management reportable
segments, compared to 7,822 at November 30, 2024 . Included
within our global headcount are 1,797 employees at
November 30, 2025 and 2,063 employees at November 30, 2024
of our Stratos, Tessellis, HomeFed and M Science subsidiaries.
Revenues by Source
We present our results as two reportable business segments:
Investment Banking and Capital Markets and Asset Management.
Additionally, corporate activities are fully allocated to each of
these reportable business segments.
Net revenues presented for our Investment Banking and Capital
Markets reportable segment include allocations of interest
income and interest expense as we assess the profitability of
these businesses inclusive of these costs, including the net
interest cost of allocated short- and long-term debt, which is a
function of the mix of each business’s associated assets and
liabilities and the related funding costs.
Debt valuation adjustments on derivative contracts, gains and
losses on investments held in deferred compensation plans,
foreign currency transaction gains or losses or certain other
corporate income items are not considered by management in
assessing the financial performance of our operating businesses
and are, therefore, not reported as part of our business segment
results.
$ in thousands
Amount
% of Net
Revenues
Amount
% of Net
Revenues
% Change
Advisory .................................
Equity underwriting ...............
Debt underwriting ..................
Other investment banking ....
Total Investment Banking ...
Equities ...................................
Fixed income .........................
Total Capital Markets ..........
Total Investment Banking
and Capital Markets (1) .
Asset management fees
and revenues ..................
Investment return ..................
Allocated net interest (2) .....
Other investments,
inclusive of net interest ..
Total Asset Management ....
Other .......................................
Net revenues .........................
$ in thousands
Amount
% of Net
Revenues
Amount
% of Net
Revenues
% Change
Advisory ..................................
Equity underwriting ...............
Debt underwriting ..................
Other investment banking ....
Total Investment Banking ...
Equities ...................................
Fixed income .........................
Total Capital Markets ..........
Total Investment Banking
and Capital Markets (1) .
Asset management fees
and revenues ...................
Investment return ..................
Allocated net interest (2) .....
Other investments,
inclusive of net interest ..
Total Asset Management ....
Other .......................................
Net revenues .........................
N/M — Not Meaningful
(1) Allocated net interest is not separately disaggregated for Investment Banking
and Capital Markets. This presentation is aligned to our Investment Banking
and Capital Markets internal performance measurement.
(2) Allocated net interest represents an allocation to Asset Management of our
long-term debt interest expense, net of interest income on our Cash and cash
equivalents and other sources of liquidity. Allocated net interest has been
disaggregated to increase transparency and to make clearer actual
Investment return. We believe that aggregating Investment return and
November 2025 Form 10-K
Allocated net interest would obscure the Investment return by including an
amount that is unique to our credit spreads, debt maturity profile, capital
structure, liquidity risks and allocation methods.
Beginning in the fourth quarter of 2024, revenues from corporate
equity derivative transactions historically included within Other
investment banking net revenues were reclassified to Equities net
revenues as the underlying business has matured and has
started to generate meaningful revenues. Prior year amounts
have been revised to conform to this reclassification change to
the current year reporting.
Investment Banking Revenues
Investment banking is composed of revenues from:
• advisory services with respect to mergers and acquisitions,
debt financing, restructurings and private capital transactions;
• underwriting services, which include debt underwriting and
placement services related to investment grade debt, high yield
bonds, leveraged loans, emerging market debt, global
structured notes, municipal debt, mortgage-backed and asset-
backed securities; equity underwriting and placement services
related to equity offerings, preferred stock, and equity-linked
securities; and loan syndication;
• our 50% share of net earnings from our Jefferies Finance joint
venture;
• our 45% share of net earnings from our commercial real estate
joint venture, Berkadia (which includes commercial mortgage
origination and servicing) as well as investment sales;
• Foursight, our wholly-owned subsidiary engaged in the lending
and servicing of automobile loans (until the sale in April 2024);
• securities and loans received or acquired in connection with
our investment banking activities; and
• certain revenue-sharing agreements with SMBC primarily
associated with investment banking transactions.
Deals Completed
Advisory transactions ......................................
Public and private equity and convertible
offerings ........................................................
Public and private debt financings .................
Aggregate Value
$ in billions
Advisory transactions ......................................
Public and private equity and convertible
offerings ........................................................
Public and private debt financings .................
Year Ended November 30, 2025 Versus November 30, 2024
Investment banking net revenues were $3.79 billion , up 10.0%
compared to $3.44 billion for the prior year period.
Advisory net revenues of $2.15 billion reflect a record year, an
increase of 18.4% compared to $1.81 billion for the prior year
period, driven by market share gains and increased overall
market opportunity.
Total underwriting net revenues were $1.64 billion , up 10.3%
compared to $1.49 billion for the prior year period. Solid net
revenues in Debt underwriting were driven by an increase in
mergers and acquisition activity across most sectors and
collateralized loan origination activity. Equity underwriting net
revenues declined due to reduced transaction activity across
most sectors, reflecting a broad industry slowdown in the first-
half of 2025. However, by June, market conditions began to
strengthen and transaction volumes accelerated as economic
and market clarity improved. Over 40% of our annual Equity
underwriting net revenues were generated in the fourth quarter of
Other investment banking net revenues were $3.0 million ,
compared to net revenues of $144.1 million for the prior year
period. A significant portion of the decrease is attributable to the
prior year’s inclusion of Foursight’s operating revenues as well as
the gain on the sale of Foursight in April 2024. The current year
also includes mark-to-market net losses on certain investment
positions compared to mark-to-market net gains in the prior year
period. Additionally, performance of our Berkadia joint venture
increased while performance of our Jefferies Finance joint
venture was lower than the prior year period.
Our investment banking momentum and backlog remains strong,
continuing the trend we saw during the second half of 2025,
although the extent and timing of its realization is always subject
to change. Backlog snapshots are subject to limitations as the
time frame for the realization of revenues from these expected
transactions varies and is influenced by factors we do not
control. Transactions not included in the estimate may occur, and
expected transactions may be modified or cancelled.
Equities Net Revenues
Equities is composed of net revenues from:
• services provided to our clients from which we earn
commissions or spread revenue by executing, settling and
clearing transactions for clients;
• advisory services offered to clients;
• financing, securities lending and other prime brokerage
services offered to clients, including capital introductions and
outsourced trading;
• corporate equity derivative transactions; and
• wealth management services.
Year Ended November 30, 2025 Versus November 30, 2024
Equities net revenues were a record $1.91 billion , up 19.8%
compared to $1.59 billion for the prior year period, as market
share gains and overall strong client activity drove stronger
results in our prime services, global electronic trading, Europe
and Asia equity cash, equity options and corporate derivatives
businesses, many of which have been key areas of focus and
investment in prior years. These increases were partially offset by
lower revenues from our U.S. equity cash business.
Fixed Income Net Revenues
Fixed income is composed of net revenues from:
• executing transactions for clients and making markets in
securitized products, investment grade, high-yield, distressed,
emerging markets, municipal, sovereign and emerging markets
securities and loans;
• customized products and corporate hedging and foreign
currency solutions through derivative products; and
• financing and other structuring services.
Jefferies Financial Group Inc.
Year Ended November 30, 2025 Versus November 30, 2024
Fixed income net revenues were $909.9 million , down 22.0%
compared to $1.17 billion for the prior year period, as a result of
lower global activity levels and volatility in credit spreads for the
first-half of 2025 meaningfully impacting the overall trading
environment. Strong results from our global structured solutions
business were offset by lower results in our distressed trading,
municipals, emerging markets, corporates and rates businesses.
Asset Management
We operate a diversified alternative asset management platform
through our Leucadia Asset Management division that provides
institutional clients with a broad range of investment strategies,
both directly and through our strategic affiliated asset managers.
Certain affiliated managers also benefit from access to our
global marketing and distribution platform, as well as operational
infrastructure and support. Our asset management business
makes seed and additional strategic investments directly in
alternative asset management separately managed accounts and
co-mingled funds where we act as the asset manager or in
affiliated asset managers where we have strategic relationships
and participate in the revenues or profits of the affiliated
manager.
Asset management fees and revenues primarily consist of:
• Management and performance fees from funds and accounts
managed by us;
• Placement and distribution fees for raising capital from
investors; and
• Revenue from strategic affiliated asset managers where we are
entitled to portions of their operating revenues and income
based on our ownership interests in the affiliates.
Fees and revenues are generally tied to the value of assets under
management and the performance of those assets.
Performance-based fees are earned when returns exceed
specified benchmarks or performance targets and are typically
recognized annually generally in our first quarter, once they
become fixed and determinable and are not subject to significant
reversal.
We also generate an investment return from capital invested in
our managed funds and in funds managed by our affiliated asset
managers. Additionally, we earn revenues from other
investments, including our portfolio of real estate development
activities, foreign exchange trading, and telecommunications
operations.
$ in thousands
% Change
Asset management fees and other ..
Revenue from strategic affiliates (1)
Total asset management fees and
revenues ..........................................
Investment return ................................
Allocated net interest ..........................
Other investments ...............................
Total Asset Management ..................
$ in thousands
% Change
Asset management fees:
Asset management fees and other ..
Revenue from strategic affiliates (1)
Total asset management fees and
revenues ..........................................
Investment return ................................
Other investments ...............................
Allocated net interest ..........................
Total Asset Management ..................
N/M — Not Meaningful
(1) Amounts include our share of fees received by affiliated asset management
companies with which we have revenue and profit share arrangements, as
well as earnings on our ownership interest in affiliated asset managers.
Year Ended November 30, 2025 Versus November 30, 2024
Asset management fees and revenues were $140.9 million , up
36.2% compared to $103.5 million for the prior year period,
primarily reflecting higher performance fees on funds managed
by us and through our strategic affiliates.
Investment return was $177.8 million , down 16.2% compared to
$212.2 million for the prior year period, primarily driven by a pre-
tax loss of $30.0 million related to our investment in Point Bonita.
Other investments net revenues were $467.5 million , down 15.0%
compared to $550.1 million for the prior year period, as
performance from Stratos and HomeFed was lower than the prior
year period, as well as net losses recognized on certain
investments in the current year period compared to net gains in
the prior year period.
Assets Under Management
Assets under management (“AUM”) represents the assets we
manage or are managed by our affiliated asset managers with
whom we have revenue sharing arrangements. AUM primarily
refers to the basis of assets from which we are entitled to earn
fees and revenues though the measure also includes funds and
separately managed accounts for which we do not charge fees.
AUM includes:
• the net asset value of a fund or separately managed account
managed by us or our affiliated managers and may include an
agreed target AUM utilizing leverage;
• unfunded capital commitments to a fund; and
• the fair value of any invested capital in our consolidated funds
or separately managed accounts.
Net asset value generally refers to the fair value the assets less
the liabilities of a fund or account.
November 2025 Form 10-K
Assets under management:
$ in millions
Net asset value seeded by us:
Jefferies funds or separately managed
accounts ..............................................................
Our affiliates funds or separately managed
accounts ..............................................................
Total net asset value of Jefferies’ invested
capital (1) .............................................................
Fair value of investment purchased with
leverage ................................................................
Total AUM attributed to Jefferies as investor ....
Net asset value of third-party investors:
Jefferies funds or separately managed
accounts (2) ........................................................
Our affiliates funds or separately managed
accounts (3) ........................................................
Total AUM attributed to third-party investors ....
Unfunded capital commitments ............................
Aggregated AUM .....................................................
(1) Revenues related to the investments made by us are presented in Investment
return within the results of our asset management businesses.
(2) We earn asset management fees as a result of the third-party investments,
which are presented in Asset management fees and revenues within the
results of our asset management business.
(3) Revenues from our share of fees received by affiliated asset managers are
presented in Revenue from strategic affiliates within the results of our asset
management business. November 30, 2024 includes an adjustment of
$3.02 billion .
Our definition of assets under management may differ from the
calculations of other asset managers; and as a result, this
measure may not be comparable to similar measures presented
by other asset managers. Our definition of AUM may differ from
that referenced in any of our investment management
agreements, differs from the manner in which “Regulatory Assets
Under Management” is reported to the SEC on Form ADV, and
includes assets for which we do not act as an asset manager.
In addition to our investments directly in Jefferies’ and our
strategic affiliates funds and separately managed accounts, we
have capital invested in other equity method investees as part of
our asset management busine ss of $174.0 million and
$81.0 million at November 30, 2025 and November 30, 2024,
respectively.
Other
Other revenues include foreign currency transaction gains or
losses, debt valuation adjustments on derivative contracts, gains
and losses on investments held in deferred compensation plans
or certain other corporate income items that are not attributed to
business segments as management does not consider such
amounts in assessing the financial performance of our operating
businesses.
Non-interest Expenses
$ in thousands
% Change
Compensation and benefits ...........
Brokerage and clearing fees ..........
Underwriting costs ..........................
Technology and communications
Occupancy and equipment rental .
Business development ...................
Professional services .....................
Depreciation and amortization ......
Cost of sales ....................................
Other ..................................................
Total non-interest expenses .........
$ in thousands
% Change
Compensation and benefits ...........
Brokerage and clearing fees ..........
Underwriting costs ..........................
Technology and communications
Occupancy and equipment rental .
Business development ...................
Professional services .....................
Depreciation and amortization ......
Cost of sales ....................................
Other ..................................................
Total non-interest expenses .........
Total Non-interest Expenses
Year Ended November 30, 2025 Versus November 30, 2024
Non-interest expenses were $6.47 billion , an increase of 7.4% ,
compared to $6.03 billion for the prior year.
Compensation and Benefits
Compensation and benefits expense consists of salaries,
benefits, commissions, annual cash compensation and share-
based awards and the amortization of share-based and cash
compensation awards to employees.
Cash and share-based awards granted to employees may contain
provisions such that employees who terminate their employment
or are terminated without cause may continue to vest in their
awards, so long as those awards are not forfeited as a result of
other forfeiture provisions (primarily non-compete clauses) of
those awards. Accordingly, the compensation expense for a
portion of awards granted at year end as part of annual
compensation is recorded during the year of the award.
Compensation and benefits expense includes amortization
expense associated with these awards to the extent vesting is
contingent on future service. In addition, certain awards to our
Chief Executive Officer and our President contain performance
conditions and the awards are amortized over their service
periods.
Compensation and benefits expense for 2025 was $3.86 billion
compared to $3.66 billion for 2024 . A significant portion of our
compensation expense is highly variable with net revenues.
Compensation and benefits expense as a percentage of Net
revenues was 52.6% for 2025 compared with 52.0% for 2024 .
Compensation expense related to the amortization of share- and
cash-based awards amounted to $621.5 million for 2025
compared to $513.7 million for 2024 .
Jefferies Financial Group Inc.
At November 30, 2025 , we had 7,787 employees globally across
all of our consolidated subsidiaries within our Investment
Banking and Capital Markets and Asset Management reportable
segments, compared to 7,822 at November 30, 2024 . Included
within our global headcount are 1,797 employees at
November 30, 2025 and 2,063 employees at November 30, 2024
of our Stratos, Tessellis, HomeFed, and M Science subsidiaries.
Non-interest Expenses (Excluding Compensation and Benefits)
Year Ended November 30, 2025 Versus November 30, 2024
Non-compensation expenses as a percentage of Net revenues
was 35.6% compared to 33.7% for the current year and the prior
year period, respectively, and was impacted by the following:
• Brokerage and clearing fees were higher by $56.5 million
primarily due to increased global equities trading volumes, as
we continue to gain market share globally.
• Technology and communication were higher by $51.5 million
related to the continued development of various trading and
management systems as well as higher data related costs in
investment banking.
• Business development was higher by $52.2 million due to
increased deal related costs and increased expenses related to
business travel, conferences and other events.
• Other expenses were higher by $53.2 million compared to the
prior year period, as charitable donations increased
$17.0 million compared to the prior year period. Other
expenses for the current year also include a write-down on
certain assets held for sale. Other expenses for the prior year
period include bad debt expenses of $26.2 million largely
related to the shutdown of Weiss. In addition, the prior year
period includes activity from Foursight, which was sold in April
Income Taxes
Year Ended November 30, 2025 Versus November 30, 2024
The provision for income taxes on continuing operations was
$184.6 million and $293.2 million for the year ended November
30, 2025 and 2024 , respectively, representing an effective tax rate
of 21.2% , and 29.2% , respectively. The lower rate was primarily
driven by the resolution of certain state and local tax matters.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was
signed into law. The OBBBA permanently extends and modifies
certain domestic and international provisions from the 2017 Tax
Cuts and Jobs Act and phases out certain provisions from the
2022 Inflation Reduction Act. Certain domestic provisions have
retroactive effects beginning in 2025, while the international
provisions are generally effective for years beginning after
December 31, 2025. The OBBBA did not materially impact our
fiscal 2025 results.
Business Developments
On September 19, 2025, we and the SMBC Group announced a
significant expansion of our strategic alliance originally
established in 2021. Key provisions include:
• The planned formation of a joint venture in Japan to integrate
our global equities platform with SMBC Group’s domestic
equity research, sales, trading, and equity capital markets
businesses, expected to launch in January 2027;
• Expansion of joint sponsor coverage in EMEA, targeting larger
sponsors with our combined investment banking and
corporate banking capabilities;
• SMBC Group’s intent to increase its economic ownership from
14.5% to up to 20% (on an as-converted and fully diluted basis),
while maintaining less than 5% voting interest; and
• SMBC Group’s commitment to provide approximately $2.5
billion in new credit facilities to us and Jefferies Finance.
These initiatives are designed to deepen the partnership, leverage
complementary strengths, and deliver enhanced services to
clients.
On December 9, 2025, we entered into an agreement to acquire a
50% interest in Hildene Holding Company, LLC, parent of Hildene
Capital Management, LLC, a credit-focused asset manager with
approximately $18.0 billion of assets under management. We will
contribute our existing revenue share, a portion of our interest in
an existing Hildene-managed fund, and $340.0 million in cash for
our interest. Hildene’s principals will contribute their ownership
interests and approximately $250.0 million of fund and related
equity interests. Additionally, subsequent to the transaction,
Hildene’s insurance underwriting and annuity reinsurance will
expand. Closing is expected in the third quarter of 2026, subject
to customary approvals.
Accounting Developments
For a discussion of recently issued accounting developments and
their impact on our consolidated financial statements, refer to
Note 3, Accounting Developments in our consolidated financial
statements included in this Annual Report on Form 10-K.
Critical Accounting Estimates
Our consolidated financial statements are prepared in conformity
with U.S. generally accepted accounting principles (“U.S. GAAP”),
which requires management to make estimates and
assumptions that affect the amounts reported in our
consolidated financial statements and related notes. Actual
results can and may differ from estimates. These differences
could be material to our consolidated financial statements.
We believe our application of U.S. GAAP and the associated
estimates are reasonable. Our accounting estimates are
reevaluated, and adjustments are made when facts and
circumstances dictate a change. Historically, we have found our
application of accounting policies to be appropriate, and actual
results have not differed materially from those determined using
necessary estimates.
For further discussions of the following significant accounting
policies and other significant accounting policies, refer to Note 2,
Summary of Significant Accounting Policies in our consolidated
financial statements included in this Annual Report on Form 10-
November 2025 Form 10-K
Valuation of Financial Instruments
Financial instruments owned and Financial instruments sold, not
yet purchased are recorded at fair value. The fair value of a
financial instrument is the amount that would be received to sell
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (the exit
price). Unrealized gains or losses are generally recognized in
Principal transactions revenues in our Consolidated Statements
of Earnings.
For information on the composition of our Financial instruments
owned and Financial instruments sold, not yet purchased
recorded at fair value, refer to Note 5, Fair Value Disclosures in
our consolidated financial statements included in this Annual
Report on Form 10-K.
Fair Value Hierarchy – In determining fair value, we maximize the
use of observable inputs and minimize the use of unobservable
inputs by requiring that observable inputs be used when
available. Observable inputs are inputs that market participants
would use in pricing the asset or liability based on market data
obtained from independent sources. Unobservable inputs reflect
our assumptions that market participants would use in pricing
the asset or liability developed based on the best information
available in the circumstances. We apply a hierarchy to
categorize our fair value measurements broken down into three
levels based on the transparency of inputs, where Level 1 uses
observable prices in active markets and Level 3 uses valuation
techniques that generally incorporate significant unobservable
inputs. Greater use of management judgment is required in
determining fair value when inputs are less observable or
unobservable in the marketplace, such as when the volume or
level of trading activity for a financial instrument has decreased
and when certain factors suggest that observed transactions
may not be reflective of orderly market transactions. Judgment
must be applied in determining the appropriateness of available
prices, particularly in assessing whether available data reflects
current prices and/or reflects the results of recent market
transactions. Prices or quotes are weighed when estimating fair
value with greater reliability placed on information from
transactions that are considered to be representative of orderly
market transactions.
Fair value is a market-based measure; therefore, when market
observable inputs are not available, our judgment is applied to
reflect those judgments that a market participant would use in
valuing the same asset or liability. The availability of observable
inputs can vary for different products. We use prices and inputs
that are current as of the measurement date even in periods of
market disruption or illiquidity. The valuation of financial
instruments categorized within Level 3 of the fair value hierarchy
involves the greatest extent of management judgment. Refer to
Note 2, Summary of Significant Accounting Policies and Note 5,
Fair Value Disclosures in our consolidated financial statements
included in this Annual Report on Form 10-K for further
information on the definitions of fair value, Level 1, Level 2 and
Level 3 and related valuation techniques.
For information on the composition of our Financial instruments
owned and Financial instruments sold, not yet purchased
recorded at fair value and the composition of activity of our Level
3 assets and Level 3 liabilities, refer to Note 5, Fair Value
Disclosures in our consolidated financial statements included in
this Annual Report on Form 10-K.
Controls Over the Valuation Process for Financial Instruments –
Our Independent Price Verification Group, independent of the
trading function, plays an important role in determining that our
financial instruments are appropriately valued and that fair value
measurements are reliable. This is particularly important where
prices or valuations that require inputs are less observable. In the
event that observable inputs are not available, the control
processes are designed to assure that the valuation approach
utilized is appropriate and consistently applied and that the
assumptions are reasonable. In addition, recently executed
comparable transactions and other observable market data are
considered for purposes of validating assumptions underlying
the model.
Income Taxes
Significant judgment is required in estimating our provision for
income taxes. In determining the provision for income taxes, we
must make judgments and interpretations about how to apply
inherently complex tax laws to numerous transactions and
business events. In addition, we must make estimates about the
amount, timing and geographic mix of future taxable income,
which includes various tax planning strategies to utilize tax
attributes and deferred tax assets before they expire.
We record a valuation allowance to reduce our net deferred tax
asset to the amount that is more likely than not to be realized. We
are required to consider all available evidence, both positive and
negative, and to weigh the evidence when determining whether a
valuation allowance is required and the amount of such valuation
allowance. Generally, greater weight is required to be placed on
objectively verifiable evidence when making this assessment, in
particular on recent historical operating results.
We also record reserves for unrecognized tax benefits based on
our assessment of the probability of successfully sustaining tax
filing positions. Management exercises significant judgment
when assessing the probability of successfully sustaining tax
filing positions, and in determining whether a contingent tax
liability should be recorded and if so, estimating the amount. If
our tax filing positions are successfully challenged, payments
could be required that are in excess of reserved amounts or we
may be required to reduce the carrying amount of our net
deferred tax asset, either of which could be significant to our
financial condition or results of operations.
Impairment of Equity Method Investments
We evaluate equity method investments for impairment when
operating losses or other factors may indicate a decrease in
value which is other than temporary. We consider a variety of
factors including economic conditions nationally and in an
investment’s geographic area of operation, adverse changes in
the industry in which an investment operates, declines in
business prospects, deterioration in earnings, increasing costs of
operations and other relevant factors specific to the
investee. Whenever we believe conditions or events indicate that
one of these investments might be significantly impaired, we
generally obtain from such investee updated cash flow
projections and obtain other relevant information related to
assessing the overall valuation of the investee. Utilizing this
information, we assess whether the investment is considered to
be other-than-temporarily impaired. To the extent an investment
is deemed to be other-than-temporarily impaired, an impairment
charge is recognized for the amount, if any, by which the
investment’s book value exceeds our estimate of the
investment’s fair value.
Jefferies Financial Group Inc.
In the first quarter of 2023, we performed a valuation of our
equity method investment in Golden Queen as forecasts of the
expected future production of gold and silver from its mine had
declined from previous periods. Our estimate of fair value was
based on a discounted cash flow analysis, which included
management’s projections of future Golden Queen cash flows
and a discount rate of 11.0%. As a result, an impairment loss of
$22.1 million was recorded in Other income for the three months
ended February 28, 2023. During the three months ended May 31,
2023, we recognized an additional impairment loss of $7.3
million primarily due to further declines in cash flows at Golden
Queen During the three months ended August 31, 2023, we
recognized an additional impairment loss of $27.8 million
primarily based on our estimate of what could be recognized in a
sale transaction for the investment. In the fourth quarter of 2023,
we sold Golden Queen and recognized a gain of $1.7 million on
the sale.
Goodwill
At November 30, 2025 , goodwill recorded in our Consolidated
Statements of Financial Condition is $1.84 billion ( 2.4% of total
assets). The nature and accounting for goodwill is discussed in
Note 2, Summary of Significant Accounting Policies , and Note 12,
Goodwill and Intangible Assets , in our consolidated financial
statements included in this Annual Report on Form 10-K.
Goodwill must be allocated to reporting units and tested for
impairment at least annually, or when circumstances or events
make it more likely than not that an impairment occurred.
Goodwill is tested by comparing the estimated fair value of each
reporting unit with its carrying value. Our annual goodwill
impairment testing date for a substantial portion of our reporting
units is August 1 and November 30 for other identified reporting
units. The results of our annual tests did not indicate any
goodwill impairment.
Estimating the fair value of a reporting unit requires management
judgment and often involves the use of estimates and
assumptions that could have a significant effect on whether or
not an impairment charge is recorded and the magnitude of such
a charge. Estimated fair values for our reporting units utilize
market valuation methods that incorporate price-to-earnings and
price-to-book multiples of comparable public companies and/or
projected cash flows. Under the market valuation approach, the
key assumptions are the selected multiples and our internally
developed projections of future profitability, growth and return on
equity for each reporting unit. The weight assigned to the
multiples requires judgment in qualitatively and quantitatively
evaluating the size, profitability and the nature of the business
activities of the reporting units as compared to the comparable
publicly-traded companies. Under the income approach the key
assumptions include our internally developed projections of
future cash flows, growth rates, and risk adjusted discount rates
which are sensitive to the interest rate environment and capital
market conditions. The valuation methodology for our reporting
units is sensitive to management’s forecasts of future
profitability, which are a significant component of the valuation
and come with a level of uncertainty regarding trading volumes
and capital market transaction levels. In addition, as the fair
values determined under the market valuation approach
represent a noncontrolling interest, we apply a control premium
to arrive at the estimate fair value of each reporting unit on a
controlling basis.
We use allocated tangible equity plus allocated goodwill and
intangible assets for the carrying amount of each reporting unit.
The amount of tangible equity allocated to a reporting unit is
based on our cash capital model deployed in managing our
businesses, which seeks to approximate the capital a business
would require if it were operating independently. For further
information on our Cash Capital Policy, refer to the Liquidity,
Financial Condition and Capital Resources section herein.
Intangible assets are allocated to a reporting unit based on either
specifically identifying a particular intangible asset as pertaining
to a reporting unit or, if shared among reporting units, based on
an assessment of the reporting unit’s benefit from the intangible
asset in order to generate results.
For certain of our reporting units included within Other
investments we may first assess qualitative factors to determine
whether it is more likely than not that the fair value of the
reporting unit is less than its carrying amount. If we determine on
the basis of this qualitative assessment that it is not more likely
than not that a reporting unit’s fair value is less than its carrying
amount, we place reliance on our qualitative assessment and no
quantitative calculation of the fair value of the reporting unit is
performed.
Carrying values of goodwill by reporting unit:
November 30,
$ in millions
Investment banking ...................................................................
Equities and wealth management ...........................................
Fixed income ..............................................................................
Asset management ...................................................................
Other investments .....................................................................
Total .............................................................................................
The results of our annual assessments indicated that all of our
reporting units had a fair value in excess of their carrying
amounts. Our valuation methodologies and the assessment of
qualitative factors are sensitive to management’s forecasts of
future probability. At November 30, 2025, our Stratos reporting
unit with allocated goodwill of $5.5 million is the most sensitive
to the forecast assumptions used in our market approach
valuation. Reductions in trading volumes and/or a decline in
performance from the expected levels assumed in our forecast
could cause a decline in the estimated fair value of our Stratos
reporting unit and a resulting impairment of a portion of our
goodwill.
Refer to Note 4, Business Acquisitions and Discontinued
Operations and Note 12, Goodwill and Intangible Assets in our
consolidated financial statements included in this Annual Report
on Form 10-K for further details on goodwill.
Liquidity, Financial Condition and Capital Resources
Our CFO and Global Treasurer are responsible for developing and
implementing our liquidity, funding and capital management
strategies. These policies are determined by the nature and
needs of our day-to-day business operations, business
opportunities, regulatory obligations, and liquidity requirements.
November 2025 Form 10-K
Our actual levels of capital, total assets and financial leverage are
a function of a number of factors, including asset composition,
business initiatives and opportunities, regulatory requirements,
rating agency ratios and cost and availability of both long term
and short-term funding. We have historically maintained a
balance sheet consisting of a large portion of our total assets in
cash and liquid marketable securities. The liquid nature of these
assets provides us with flexibility in financing and managing our
business.
We also own a legacy portfolio of businesses and investments
that are reflected as consolidated subsidiaries, equity
investments or securities. Over the most recent years, we
completed several critical steps to substantially liquidate our
legacy Other investments portfolio of businesses, including the
sales of Foursight in April 2024 and the wholesale operations of
OpNet in August 2024.
In keeping with our strategy of returning excess liquidity to
shareholders, during the year ended November 30, 2025 , we
returned an aggregate of $432.6 million to shareholders primarily
in the form of $374.1 million in cash dividends and the
repurchase of 735,426 common shares for a total of $58.5
million at a weighted average price of $79.57 per share in
connection with the net share settlement for tax purposes of
stock awards under our equity compensation plans.
We maintain modest leverage to support our investment grade
ratings. The growth of our balance sheet is supported by our
equity and we have quantitative metrics in place to monitor
leverage and double leverage. Our capital plan is robust, in order
to sustain our operating model through stressed conditions. We
maintain adequate financial resources to support business
activities in both normal and stressed market conditions,
including a buffer in excess of our regulatory, or other internal or
external, requirements. Our access to funding and liquidity is
stable and efficient to ensure that there is sufficient liquidity to
meet our financial obligations in normal and stressed market
conditions.
In January 2026, we issued $1.5 billion aggregate principal
amount of 5.500% Senior Notes due 2036 .
Our Balance Sheet
A business unit level balance sheet and cash capital analysis are
prepared and reviewed with senior management on a weekly
basis. As a part of this balance sheet review process, capital is
allocated to all assets and gross balance sheet limits are
adjusted, as necessary. This process ensures that the allocation
of capital and costs of capital are incorporated into business
decisions. The goals of this process are to protect the firm’s
platform, enable our businesses to remain competitive, maintain
the ability to manage capital proactively and hold businesses
accountable for both balance sheet and capital usage.
We actively monitor and evaluate our financial condition and the
composition of our assets and liabilities. We continually monitor
our overall securities inventory, including the inventory turnover
rate, which confirms the liquidity of our overall assets. A
significant portion of our financial instruments are valued on a
daily basis and we monitor and employ balance sheet limits for
our various businesses.
November 30,
$ in millions
% Change
Total assets ...........................................
Cash and cash equivalents ..................
Cash and securities segregated and
on deposit for regulatory
purposes or deposited with
clearing and depository
organizations ....................................
Financial instruments owned ..............
Financial instruments sold, not yet
purchased .........................................
Total Level 3 assets ..............................
Securities borrowed ..............................
Securities purchased under
agreements to resell ........................
Total securities borrowed and
securities purchased under
agreements to resell .......................
Securities loaned ...................................
Securities sold under agreements to
repurchase ........................................
Total securities loaned and
securities sold under agreements
to repurchase ...................................
Total assets at November 30, 2025 and 2024 were $76.01 billion
and $64.36 billion , respectively, an increase of 18.1% . During the
year ended November 30, 2025 , average total assets were higher
by 5.1% than total assets at November 30, 2025 .
Our total Financial instruments owned inventory was $27.72
billion and $24.14 billion at November 30, 2025 and 2024 ,
respectively. During the year ended November 30, 2025 , our total
Financial instruments owned increased primarily due to
increased client facilitation trades in corporate equity securities
largely in connection with our growing prime brokerage business,
derivative contracts and loans at fair value, partially offset by a
decrease in U.S. government and agency securities. Financial
instruments sold, not yet purchased inventory was $13.32 billion
at November 30, 2025 , an increase of 21.0% from $11.01 billion
at November 30, 2024 , with the increase primarily driven by
increases in corporate equity securities and derivative contracts,
partially offset by a decrease in U.S. government and agency
securities. Our overall net inventory position was $14.40 billion
and $13.13 billion at November 30, 2025 and 2024 , respectively,
with the increase primarily due to increases in derivative
contracts, investments at fair value and corporate debt.
Level 3 assets:
$ in millions
November 30,
Percent
November 30,
Percent
Investment Banking ............
Equities and Fixed Income .
Asset Management (1) .......
Other ......................................
Total ......................................
(1) At November 30, 2025 and 2024 , $195.8 million and $218.3 million ,
respectively, are attributed to Other investments within our Asset Management
reportable segment.
Securities financing assets and liabilities include financing for
our financial instruments trading activity, matched book
transactions and mortgage finance transactions. Matched book
transactions accommodate customers, as well as obtain
securities for the settlement and financing of inventory positions.
Our average month end balance of total reverse repos and stock
borrows during year ended November 30, 2025 was 23.4% higher
than the balance at November 30, 2025 . Our average month end
Jefferies Financial Group Inc.
balance of total repos and stock loans during the year ended
November 30, 2025 was 34.4% higher than the balance at
November 30, 2025 .
Select information related to repurchase agreements:
Year Ended November 30,
$ in millions
Securities Purchased Under Agreements to
Resell:
Year end ..............................................................
Month end average ............................................
Maximum month end ........................................
Securities Sold Under Agreements to
Repurchase:
Year end ..............................................................
Month end average ............................................
Maximum month end ........................................
Fluctuations in the balance of our repurchase agreements from
period to period and intraperiod are dependent on business
activity in those periods. Additionally, the fluctuations in the
balances of our securities purchased under agreements to resell
are influenced in any given period by our clients’ balances and
our clients’ desires to execute collateralized financing
arrangements via the repurchase market or via other financing
products. Average balances and period end balances will
fluctuate based on market and liquidity conditions and we
consider the fluctuations intraperiod to be typical for the
repurchase market.
Leverage Ratios:
November 30,
$ in millions
Total assets ..................................................................
Total equity ...................................................................
Total shareholders’ equity ..........................................
Deduct: Goodwill and intangible assets, net ............
Tangible shareholders’ equity ...................................
Leverage ratio (1) .........................................................
Tangible gross leverage ratio (2) ...............................
(1) Leverage ratio equals total assets divided by total equity.
(2) Tangible gross leverage ratio (a non-GAAP financial measure) equals total
assets less goodwill and identifiable intangible assets, net divided by tangible
shareholders’ equity. The tangible gross leverage ratio is used by rating
agencies in assessing our leverage ratio.
Liquidity Management
The key objectives of the liquidity management framework are to
support the successful execution of our business strategies
while ensuring sufficient liquidity through the business cycle and
during periods of financial and idiosyncratic distress. Our liquidity
management policies are designed to mitigate the potential risk
that we may be unable to access adequate financing to service
our financial obligations without material franchise or business
impact.
The principal elements of our liquidity management framework
are our Cash Capital Policy, our assessment of Modeled Liquidity
Outflow (“MLO”) and our Contingency Funding Plan (“CFP”).
Liquidity Management Framework . Our Liquidity Management
Framework is based on a model of a potential liquidity
contraction over a one-year time period. This incorporates
potential cash outflows during a market or our idiosyncratic
liquidity stress event, including, but not limited to, the following:
• Repayment of all unsecured debt maturing within one year and
no incremental unsecured debt issuance;
• Maturity rolloff of outstanding letters of credit with no further
issuance and replacement with cash collateral;
• Higher margin requirements than currently exist on assets on
securities financing activity, including repurchase agreements
and other secured funding including central counterparty
clearinghouses;
• Liquidity outflows related to possible credit downgrade;
• Lower availability of secured funding;
• Client cash withdrawals;
• The anticipated funding of outstanding investment and loan
commitments; and
• Certain accrued expenses and other liabilities and fixed costs.
Cash Capital Policy . We maintain a cash capital model that
measures long-term funding sources against requirements.
Sources of cash capital include our equity, mezzanine equity and
the noncurrent portion of long-term borrowings. Uses of cash
capital include the following:
• Illiquid assets such as equipment, goodwill, net intangible
assets, exchange memberships, deferred tax assets and
certain investments;
• A portion of securities inventory and other assets not expected
to be financed on a secured basis in a credit stressed
environment ( i.e. , margin requirements); and
• Drawdowns of unfunded commitments.
To ensure that we do not need to liquidate inventory in the event
of a funding stress, we seek to maintain surplus cash capital. Our
total long-term capital of $23.14 billion at November 30, 2025
exceeded our cash capital requirements.
MLO . Our businesses are diverse, and our liquidity needs are
determined by many factors, including market movements,
collateral requirements and client commitments, all of which can
change dramatically in a difficult funding environment. During a
liquidity stress, credit-sensitive funding, including unsecured debt
and some types of secured financing agreements, may be
unavailable, and the terms ( e.g. , interest rates, collateral
provisions and tenor) or availability of other types of secured
financing may change. As a result of our policy to ensure we have
sufficient funds to cover what we estimate may be needed in a
liquidity stress, we hold more cash and unencumbered securities
and have greater long-term debt balances than our businesses
would otherwise require. As part of this estimation process, we
calculate an MLO that could be experienced in a liquidity stress.
MLO is based on a scenario that includes both a market-wide
stress and firm-specific stress, characterized by some or all of
the following elements:
• Global recession, default by a medium-sized sovereign, low
consumer and corporate confidence, and general financial
instability.
• Severely challenged market environment with material declines
in equity markets and widening of credit spreads.
• Damaging follow-on impacts to financial institutions leading to
the failure of a large bank.
• A firm-specific crisis potentially triggered by material losses,
reputational damage, litigation, executive departure, and/or a
ratings downgrade.
November 2025 Form 10-K
The following are the critical modeling parameters of the MLO:
• Liquidity needs over a 30-day scenario.
• A two-notch downgrade of our long-term senior unsecured
credit ratings.
• No support from government funding facilities.
• A combination of contractual outflows, such as upcoming
maturities of unsecured debt, and contingent outflows ( e.g .,
actions though not contractually required, we may deem
necessary in a crisis). We assume that most contingent
outflows will occur within the initial days and weeks of a
stress.
• No diversification benefit across liquidity risks. We assume
that liquidity risks are additive.
The calculation of our MLO under the above stresses and
modeling parameters considers the following potential
contractual and contingent cash and collateral outflows:
• All upcoming maturities of unsecured long-term debt,
promissory notes and other unsecured funding products
assuming we will be unable to issue new unsecured debt or
rollover any maturing debt.
• Repurchases of our outstanding long-term debt in the ordinary
course of business as a market maker.
• A portion of upcoming contractual maturities of secured
funding activity due to either the inability to refinance or the
ability to refinance only at wider haircuts ( i.e. , on terms which
require us to post additional collateral). Our assumptions
reflect, among other factors, the quality of the underlying
collateral and counterparty concentration.
• Collateral postings to counterparties due to adverse changes in
the value of our over-the-counter (“OTC”) derivatives and other
outflows due to trade terminations, collateral substitutions,
collateral disputes, collateral calls or termination payments
required by a two-notch downgrade in our credit ratings.
• Variation margin postings required due to adverse changes in
the value of our outstanding exchange-traded derivatives and
any increase in initial margin and guarantee fund requirements
by derivative clearing houses.
• Liquidity outflows associated with our prime services business,
including withdrawals of customer credit balances, and a
reduction in customer short positions.
• Liquidity outflows to clearing banks to ensure timely
settlements of cash and securities transactions.
• Draws on our unfunded commitments considering, among
other things, the type of commitment and counterparty.
• Other upcoming large cash outflows, such as employee
compensation, tax and dividend payments, with no expectation
of future dividends from any subsidiaries.
Based on the sources and uses of liquidity calculated under the
MLO scenarios, we determine, based on a calculated surplus or
deficit, additional long-term funding that may be needed versus
funding through the repurchase financing market and consider
any adjustments that may be necessary to our inventory balances
and cash holdings. At November 30, 2025 , we had sufficient
excess liquidity to meet all contingent cash outflows detailed in
the MLO for at least 30 days without balance sheet reduction. We
regularly refine our model to reflect changes in market or
economic conditions and our business mix.
CFP . Our CFP ensures the ability to access adequate liquid
financial resources to meet liquidity shortfalls that may arise in
emergency situations. The CFP triggers the following actions:
• Sets out the governance for managing liquidity during a
liquidity crisis;
• Identifies key liquidity and capital early warning indicators that
will help guide the response to the liquidity crisis;
• Identifies the actions and escalation procedures should we
experience a liquidity crisis including coordination amongst
senior management and the Board of Directors;
• Sets out the sources of funding available during a liquidity
crisis;
• Sets out the communication plan during a liquidity crisis for
key external stakeholders including regulators, relationship
banks, rating agencies and funding counterparties; and
• Sets out an action plan to source additional funding.
Sources of Liquidity
Financial instruments that are cash and cash equivalents or are
deemed by management to be generally readily convertible into
cash, marginable or accessible for liquidity purposes within a
relatively short period of time:
$ in thousands
November 30,
Average
Balance
Quarter Ended
November 30,
November 30,
Cash and cash equivalents:
Cash in banks .............................................
Money market investments (2) ...............
Total cash and cash equivalents ............
Other sources of liquidity:
Debt securities owned and securities
purchased under agreements to
resell (3) ................................................
Other (4) ......................................................
Total other sources ...................................
Total cash and cash equivalents and
other liquidity sources .......................
Total cash and cash equivalents and
other liquidity sources as % of Total
assets ....................................................
Total cash and cash equivalents and
other liquidity sources as % of Total
assets less goodwill and intangible
assets ....................................................
(1) Average balances are calculated based on weekly balances.
(2) At November 30, 2025 and 2024 , $10.12 billion and $8.21 billion , respectively,
was invested in U.S. government money funds that invest primarily in cash,
securities issued by the U.S. government and U.S. government-sponsored
entities, and repurchase agreements that are fully collateralized by cash or
government securities. The remaining balances at November 30, 2025 and
2024 are primarily invested in AAA-rated prime money funds. The average
balance of U.S. government money funds for the quarter ended November 30,
2025 was $6.60 billion .
(3) Consists of unencumbered high-quality sovereign government securities and
reverse repurchase agreements collateralized by U.S. government securities
and other high quality sovereign government securities; deposits with a central
bank within the European Economic Area, United Kingdom, Canada, Australia,
Japan, Switzerland or the U.S.; and securities issued by a designated
multilateral development bank and reverse repurchase agreements with
underlying collateral composed of these securities.
(4) Other includes unencumbered inventory representing an estimate of the
amount of additional secured financing that could be reasonably expected to
be obtained from our Financial instruments owned that are currently not
pledged after considering reasonable financing haircuts.
Jefferies Financial Group Inc.
In addition to the cash balances and liquidity pool presented
above, the majority of financial instruments (both long and short)
in our trading accounts are actively traded and readily
marketable. At November 30, 2025 , we had the ability to readily
obtain repurchase financing for 71.8% of our inventory at haircuts
of 10% or less, which reflects the liquidity of our inventory. In
addition, as a matter of our policy, all of these assets have
internal capital assessed, which is in addition to the funding
haircuts provided in the securities finance markets. Additionally,
certain of our Financial instruments owned primarily consisting
of loans and investments are predominantly funded by long term
capital. Under our cash capital policy, we model capital allocation
levels that are more stringent than the haircuts used in the
market for secured funding; and we maintain surplus capital at
these more stringent levels. We continually assess the liquidity of
our inventory based on the level at which we could obtain
financing in the marketplace for a given asset. Assets are
considered to be liquid if financing can be obtained in the
repurchase market or the securities lending market at collateral
haircut levels of 10% or less.
Financial instruments by asset class that we consider to be of a
liquid nature and the amount of such assets that have not been
pledged as collateral:
November 30,
$ in thousands
Liquid Financial
Instruments
Unencumbered
Liquid Financial
Instruments (1)
Liquid Financial
Instruments
Unencumbered
Liquid Financial
Instruments (1)
Corporate equity
securities .............
Corporate debt
securities .............
U.S. government,
agency and
municipal
securities .............
Other sovereign
obligations ..........
Agency mortgage-
backed
securities (2) .......
Loans and other
receivables ..........
Total ...........................
(1) Unencumbered liquid balances represent assets that can be sold or used as
collateral for a loan but have not been.
(2) Consists solely of agency mortgage-backed securities issued by the Federal
Home Loan Mortgage Corporation (“Freddie Mac”), the Federal National
Mortgage Association (“Fannie Mae”) and the Government National Mortgage
Association (“Ginnie Mae”).
In addition to being able to be readily financed at reasonable
haircut levels, we estimate that each of the individual securities
within each asset class above could be sold into the market and
converted into cash within three business days under normal
market conditions, assuming that the entire portfolio of a given
asset class was not simultaneously liquidated. There are no
restrictions on the unencumbered liquid securities, nor have they
been pledged as collateral.
Sources of Funding and Capital Resources
Our assets are funded by equity capital, senior debt, securities
loaned, securities sold under agreements to repurchase,
customer free credit balances, bank loans and other payables.
Secured Financing
We rely principally on readily available secured funding to finance
our inventory of financial instruments owned and financial
instruments sold. Our ability to support increases in total assets
is largely a function of our ability to obtain short- and
intermediate-term secured funding, primarily through securities
financing transactions. We finance a portion of our long inventory
and cover some of our short inventory by pledging and borrowing
securities in the form of repurchase or reverse repurchase
agreements (collectively “repos”), respectively. A portion of our
cash and noncash repurchase financing activities is used as
collateral that is considered eligible collateral by central clearing
corporations. Central clearing corporations are situated between
participating members who borrow cash and lend securities (or
vice versa); accordingly, repo participants contract with the
central clearing corporation and not one another individually.
Therefore, counterparty credit risk is borne by the central clearing
corporation which mitigates the risk through initial margin
demands and variation margin calls from repo participants. The
comparatively large proportion of our total repo activity that is
eligible for central clearing reflects the high quality and liquid
composition of the inventory we carry in our trading books. For
those asset classes not eligible for central clearing house
financing, we seek to execute our bi-lateral financings on an
extended term basis and the tenor of our repurchase and reverse
repurchase agreements generally exceeds the expected holding
period of the assets we are financing. The weighted average
maturity of cash and noncash repurchase agreements for non-
clearing corporation eligible funded inventory is approximately
eight months at November 30, 2025 .
Our ability to finance our inventory via central clearinghouses and
bi-lateral arrangements is augmented by our ability to draw bank
loans on an uncommitted basis under our various banking
arrangements. At November 30, 2025 , short-term borrowings,
which must be repaid within one year or less include bank loans,
overdrafts and borrowings under revolving credit facilities.
Letters of credit are used in the normal course of business
mostly to satisfy various collateral requirements in favor of
exchanges in lieu of depositing cash or securities. Average short-
term borrowings outstanding were $1.26 billion and $1.25 billion
for the year ended November 30, 2025 and 2024 , respectively.
At November 30, 2025 and 2024 , our borrowings under bank
loans in Short-term borrowings were $533.8 million and
$414.5 million , respectively. Our borrowings include credit
facilities that contain certain covenants that, among other things,
require us to maintain a specified level of tangible net worth,
require a minimum regulatory net capital requirement for our U.S.
broker-dealer, Jefferies LLC, and impose certain restrictions on
the future indebtedness of certain of our subsidiaries that are
borrowers. Interest is based on rates at spreads over the federal
funds rate or other adjusted rates, as defined in the various credit
agreements, or at a rate as agreed between the bank and us in
reference to the bank’s cost of funding. At November 30, 2025 ,
we were in compliance with all covenants under these credit
facilities.
In addition to the above financing arrangements, we issue notes
backed by eligible collateral under master repurchase
agreements, which provide an additional financing source for our
inventory (our “repurchase agreement financing program”). The
notes issued under the program are presented within Other
secured financings. At November 30, 2025 , the outstanding notes
totaled $2.27 billion , bear interest primarily at a spread over the
Secured Overnight Funding Rate (“SOFR”) and mature from
December 2025 to October 2028 .
For additional details on our repurchase agreement financing
program, refer to Note 9, Variable Interest Entities in our
consolidated financial statements included in this Annual Report
on Form 10-K.
November 2025 Form 10-K
Total Long-Term Capital
At November 30, 2025 and 2024 , we had total long-term capital
of $23.14 billion and $21.66 billion , respectively, resulting in a
long-term debt to equity capital ratio of 1.17:1 and 1.12:1 ,
respectively.
November 30,
$ in thousands
Unsecured Long-Term Debt (1) ..................................
Total Mezzanine Equity ...............................................
Total Equity ...................................................................
Total Long-Term Capital ............................................
(1) Amounts at November 30, 2025 and 2024 exclude our secured long-term debt.
The amount at November 30, 2024 excludes $8.5 million of our 5.500%
Callable Note as the note matured on February 22, 2025, $5.4 million of our
6.000% Callable Note as the note matured on June 16, 2025, $6.2 million of
our 4.500% Callable Note as the note matured on July 22, 2025, and
$500.0 million of our 5.100% Callable Note as the note matured on September
15, 2025. The amount at November 30, 2025 excludes $869.5 million of our
Callable Notes as the note matures on April 16, 2026, and $45.2 million of our
Floating Senior Notes as the note matures on June 19, 2026. The amounts at
November 30, 2025 and 2024 also exclude $102.7 million and $157.6 million ,
respectively, of structured notes as the notes mature within one year.
Long-Term Debt
During the year ended November 30, 2025 , long-term debt
increased by $2.37 billion to $15.90 billion at November 30, 2025 ,
as presented in our Consolidated Statements of Financial
Condition. This increase is primarily due to proceeds of
$1.07 billion from the issuances of unsecured senior notes,
$698.7 million from net issuances of structured notes,
$1.65 billion from increased subsidiaries’ borrowings, and
$296.1 million from currency losses on foreign currency
borrowings. These increases were partially offset by repayments
of $1.42 billion on our unsecured senior notes.
At November 30, 2025 , our unsecured long-term debt has a
weighted average maturity of approximately 7.4 years.
At November 30, 2025 and 2024 , our borrowings under several
credit facilities classified within Long-term debt in our
Consolidated Statements of Financial Condition amounted to
$803.2 million and $775.3 million , respectively. Interest on these
credit facilities is based on an adjusted SOFR plus a spread or
other adjusted rates, as defined in the various credit agreements.
The credit facility agreements contain certain covenants that,
among other things, require us to maintain specified levels of
tangible net worth and liquidity amounts, certain credit and rating
levels and impose certain restrictions on future indebtedness of
and require specified levels of regulated capital and cash
reserves for certain of our subsidiaries. At November 30, 2025 ,
we were in compliance with all covenants under theses credit
facilities.
For further information, refer to Note 17, Borrowings , in our
consolidated financial statements included in this Annual Report
on Form 10-K.
Long-term debt ratings:
Rating
Outlook
Moody’s Investors Service .........................................
Baa2
Stable
Standard & Poor’s ........................................................
BBB
Stable
Fitch Ratings .................................................................
BBB+
Stable
Jefferies LLC
Jefferies
International
Limited
Jefferies GmbH
Rating
Outlook
Rating
Outlook
Rating
Outlook
Moody’s
Investors
Service ..........
Baa1
Stable
Baa1
Stable
Baa1
Stable
Standard &
Poor’s ............
BBB+
Stable
BBB+
Stable
BBB+
Stable
Access to external financing to finance our day-to-day operations,
as well as the cost of that financing, is dependent upon various
factors, including our debt ratings. Our current debt ratings are
dependent upon many factors, including industry dynamics,
operating and economic environment, operating results,
operating margins, earnings trend and volatility, balance sheet
composition, liquidity and liquidity management, our capital
structure, our overall risk management, business diversification
and our market share and competitive position in the markets in
which we operate. Deterioration in any of these factors could
impact our credit ratings. While certain aspects of a credit rating
downgrade are quantifiable pursuant to contractual provisions,
the impact on our business and trading results in future periods
is inherently uncertain and depends on a number of factors,
including the magnitude of the downgrade, the behavior of
individual clients and future mitigating action taken by us.
In January 2026, we issued $1.5 billion aggregate principal
amount of 5.500% Senior Notes due 2036.
Equity Capital
Common Stock
At November 30, 2025 and 2024 , we had 565,000,000 authorized
shares of voting common stock with a par value of $1.00 per
share and had 206,296,167 and 205,504,272 common shares
outstanding, respectively. At November 30, 2025 , we had
16,202,612 share-based awards that do not require the holder to
pay any exercise price and 5,064,740 stock options that require
the holder to pay a weighted average exercise price of $22.69 per
share.
The Board of Directors has authorized the repurchase of
common stock up to $250.0 million under a share repurchase
program. We did not purchase any shares under our share
repurchase program during the year ended November 30, 2025 .
Treasury stock repurchases during the year ended November 30,
2025 represent repurchases of common stock for net-share tax
withholding under our equity compensation plan.
Dividends
Year Ended November 30, 2025
Declaration Date
Record Date
Payment Date
Per Common
Share Amount
January 8, 2025
February 14, 2025
February 27, 2025
March 26, 2025
May 19, 2025
May 29, 2025
June 25, 2025
August 18, 2025
August 29, 2025
September 29, 2025
November 17, 2025
November 26, 2025
On January 8, 2025, the Board of Directors increased our
quarterly dividend from $0.35 to $0.40 per common share. On
January 7, 2026 , the Board of Directors declared a dividend of
$0.40 per common share to be paid on February 27, 2026 to
common shareholders of record at February 17, 2026 .
The payment of dividends is subject to the discretion of our
Board of Directors and depends upon general business
conditions and other factors that our Board of Directors may
deem to be relevant.
Jefferies Financial Group Inc.
Non-Voting Common Stock
On June 28, 2023 , shareholders approved an Amended and
Restated Certificate of Incorporation, which authorized the
issuance of 35,000,000 shares of non-voting common stock with
a par value of $1.00 per share (the “Non-Voting Common
Shares”). The Non-Voting Common Shares are entitled to share
equally, on a per share basis, with the voting common stock, in
dividends and distributions. Upon the effectiveness of the
Amended and Restated Certificate of Corporation on June 30,
2023, the number of authorized shares of common stock
remains at 600,000,000 shares, composed of 565,000,000 shares
of voting common stock and 35,000,000 shares of Non-Voting
Common Shares.
Preferred Stock
On April 27, 2023, we established Series B Non-Voting
Convertible Preferred Shares with a par value of $1.00 per share
(“Series B Preferred Stock”) and designated 70,000 shares as
Series B Preferred Stock. The Series B Preferred Stock has a
liquidation preference of $17,500 per share and rank senior to our
voting common stock upon dissolution, liquidation or winding up
of Jefferies Financial Group Inc. Each share of Series B Preferred
Stock is automatically convertible into 500 shares of non-voting
common stock, subject to certain anti-dilution adjustments, three
years after issuance. The Series B Preferred Stock participates in
cash dividends and distributions alongside our voting common
stock on an as-converted basis.
Additionally, on April 27, 2023 , we entered into an Exchange
Agreement with Sumitomo Mitsui Banking Corporation (“SMBC”),
which entitles SMBC to exchange shares of our voting common
stock for shares of the Series B Preferred Stock at a rate of 500
shares of voting common stock for one share of Series B
Preferred Stock. The Exchange Agreement is limited to 55,125
shares of Preferred Stock and SMBC is required to pay $1.50 per
share of voting common stock so exchanged. As of November
30, 2025, SMBC had exchanged approximately 27.6 million
shares of voting common stock for 55,125 shares of Series B
Preferred Stock. At November 30, 2025 , SMBC owns
approximately 15.7% of our common stock on an as-converted
basis and 14.3% on a fully-diluted, as-converted basis. The CEO
of Sumitomo Mitsui Financial Group, Inc. serves on our Board of
Directors. Additionally, Refer to Note 23, Related Party
Transactions for further information regarding transactions with
SMBC.
On September 19, 2025, our Board of Directors established Series
B-1 Non-Voting Convertible Preferred Shares with a par value of
$1.00 per share (“Series B-1 Preferred Stock”) and designated
17,500 shares as Series B-1 Preferred Stock. The Series B-1
Preferred Stock has a liquidation preference of $500 per share
and ranks senior to our voting common stock and equal to the
Series B Preferred Stock upon dissolution, liquidation or winding
up of Jefferies Financial Group Inc. Each share of Series B-1
Preferred Stock is automatically convertible into 500 shares of
non-voting common stock as soon as such non-voting common
stock exists, subject to certain anti-dilution adjustments. The
Series B-1 Preferred Stock also participates in cash dividends
and distributions alongside our voting common stock on an as-
converted basis.
Additionally, on September 19, 2025, we entered into an amended
and restated Exchange Agreement (the “Amended and Restated
Exchange Agreement”) with SMBC, which entitles SMBC to
exchange shares of our voting common stock for shares of the
Series B-1 Preferred Stock at a rate of 500 shares of voting
common stock for one share of Series B-1 Preferred Stock. The
Amended and Restated Exchange Agreement is limited to 17,500
shares of Series B-1 Preferred Stock. Under the Amended and
Restated Exchange Agreement, SMBC is permitted to increase its
economic ownership in the Company to up to 20% on an as-
converted and fully diluted basis, while continuing to own less
than 5% of a voting interest in the Company.
During the year ended November 30, 2025 and 2024 , we paid
cash dividends of $44.1 million and $31.9 million , respectively,
with respect to the Series B Preferred stock.
The payment of dividends is subject to the discretion of our
Board of Directors and depends upon general business
conditions and other factors that our Board of Directors may
deem to be relevant.
Net Capital
Jefferies LLC is a broker-dealer registered with the SEC and a
member firm of the Financial Industry Regulatory Authority
(“FINRA”) and is subject to the SEC Uniform Net Capital Rule
(“Rule 15c3-1”), which requires the maintenance of minimum net
capital, and has elected to calculate minimum capital
requirements using the alternative method permitted by Rule
15c3-1 in calculating net capital. Jefferies LLC, as a dually-
registered U.S. broker-dealer and futures commission merchant
(“FCM”), is also subject to Regulation 1.17 of the Commodity
Futures Trading Commission (“CFTC”) under the Commodity
Exchange Act, which sets forth minimum financial requirements.
The minimum net capital requirement in determining excess net
capital for a dually registered U.S. broker-dealer and FCM is equal
to the greater of the requirement under SEA Rule 15c3-1 or CFTC
Regulation 1.17. FINRA is the designated examining authority for
Jefferies LLC and the National Futures Association (“NFA”) is the
designated self-regulatory organization (“DSRO”) for Jefferies
LLC as an FCM.
Jefferies Financial Services, Inc. (“JFSI”) is registered with the
SEC as a Security-Based Swap Dealer (“SBS Dealer”) and an OTC
Derivatives Dealer (“OTCDD”) subject to the SEC’s SBS dealer
regulatory rules and the SEC’s net capital requirements. JFSI is
also registered as a swap dealer with the CFTC and is subject to
the CFTC’s regulatory capital requirements pursuant to the
minimum financial requirements for swap dealers. Additionally,
as a registered member firm, JFSI is subject to the net capital
requirements of the NFA. The SEC is the designated examining
authority for JFSI in its capacity as an SBS Dealer and OTCDD,
while the NFA is the DSRO for JFSI, as a CFTC registered swap
dealer.
Certain non-U.S. subsidiaries are subject to capital adequacy
requirements as prescribed by the regulatory authorities in their
respective jurisdictions. This includes Jefferies International
Limited (“JIL”), which is subject to the regulatory supervision and
requirements of the Financial Conduct Authority in the U.K. and
Jefferies GmbH, which is subject to the regulatory supervision of
the German Federal Financial Supervisory Authority.
November 2025 Form 10-K
At November 30, 2025 , net capital and excess net capital were as
follows:
$ in thousands
Net
Capital
Excess Net
Capital
Jefferies LLC .................................................................
JFSI - SEC ......................................................................
JFSI - CFTC ...................................................................
JIL (1) .............................................................................
Jefferies GmbH (1) ......................................................
(1) Represents an equivalent capital requirement in the respective jurisdiction.
At November 30, 2025 , Jefferies LLC, JFSI, JIL and Jefferies
GmbH are in compliance with their applicable requirements.
The regulatory capital requirements referred to above may
restrict our ability to withdraw capital from our regulated
subsidiaries.
At November 30, 2025 and 2024 , $5.93 billion and $4.96 billion ,
respectively, of net assets of our consolidated subsidiaries are
restricted as to the payment of cash dividends, or the ability to
make loans or advances to the parent company. At November 30,
2025 and 2024 , $5.30 billion and $4.54 billion , respectively, of
these assets are restricted as they reflect regulatory capital
requirements or require regulatory approval prior to the payment
of cash dividends and advances to the parent company.
Customer Protection and Segregation Requirement
As a registered broker dealer that clears and carries customer
accounts, Jefferies LLC is subject to the customer protection
provisions under SEC Rule 15c3-3 and is required to compute
reserve formula requirement for customer accounts and deposit
cash or qualified securities into a special reserve bank account
for the exclusive benefit of customers. At November 30, 2025 ,
Jefferies LLC had $846.7 million in cash and qualified U.S.
Government securities on deposit in special reserve bank
accounts for the exclusive benefit of customers.
As a registered broker dealer that clears and carries proprietary
accounts of brokers or dealers (commonly referred to as “PAB”),
Jefferies LLC is also required to compute a reserve requirement
for PABs pursuant to SEC Rule 15c3-3. At November 30, 2025 ,
Jefferies LLC had $475.1 million in cash and qualified U.S.
Government securities in special reserve bank accounts for the
exclusive benefit of PABs.
The qualified securities meeting the 15c3-3 customer and PAB
requirements are included in Cash and securities segregated and
Securities purchased under agreements to resell.
JFSI is exempt from the CFTC and SEC segregation rules.
Other Developments
In February 2022, Russia invaded Ukraine. Following Russia’s
invasion, the U.S., the U.K., and the European Union governments,
among others, developed coordinated financial and economic
sanctions targeting Russia that, in various ways, constrain
transactions with numerous Russian entities, including major
Russian banks and individuals; transactions in Russian sovereign
debt; and investment, trade and financing to, from, or in Ukraine.
We do not have any operations in Russia or any clients with
significant Russian operations and we have minimal market risk
related to securities of companies either domiciled or operating
in Russia. We continue to closely monitor the status of global
sanctions and restrictions, trading conditions related to Russian
securities and the credit risk and nature of our counterparties.
Global markets continue to experience disruption and volatility
following the geopolitical instability from the ongoing conflicts
along Israel’s border with the Gaza Strip and elsewhere in the
Middle East, including the ongoing tensions between Israel and
Iran. Our investments and assets in our growing business in the
Persian Gulf, Saudi Arabia and Israel, as well as the related global
macroeconomic climate, could be negatively affected by
consequences from this geopolitical and military conflict in the
region. We continue to monitor these and other geopolitical
conflicts, including recent developments between the United
States, Venezuela and other Latin American countries, and
assess their potential impact on our business.
Throughout 2025, the United States introduced actions to
increase import tariffs at various rates, including on certain
products imported from almost all countries. Other countries
have responded with retaliatory actions or plans for retaliatory
actions. Some of these tariff announcements have since been
followed by announcements of limited exemptions and
temporary pauses, and wholly new arrangements with key trading
partners of the United States. These actions have led to
increased economic uncertainty, and could negatively impact
global supply chains and trade flow. The potential impact of
tariffs on corporate earnings remains uncertain. We continue to
closely monitor the impact of these matters on our business.
Beginning on September 24, 2025, First Brands Group, LLC and
certain of its affiliates (“First Brands”) filed voluntary petitions for
Chapter 11 bankruptcy protection. First Brands is an aftermarket
auto parts manufacturer that sells its products to major auto-
parts retailers (the “Obligors”). As of that date, Point Bonita
Capital, a division of Leucadia Asset Management (“LAM”),
managed on behalf of third-party institutional and other investors
an approximately $3 billion portfolio of trade-finance assets,
which was supported by total invested equity of $1.9 billion, of
which $113 million, or 5.9%, is owned by LAM. Since 2019, the
portfolio has included purported accounts receivable purchased
from First Brands and arising from the sale of First Brands’
products to Obligors. The purchase of receivables in this fashion
is called factoring, and as of the Chapter 11 filing the Point Bonita
portfolio had approximately $715 million in purported receivables
due from retailers, including Walmart, AutoZone, NAPA, O’Reilly
Auto Parts, and Advanced Auto Parts, with First Brands, as the
servicer, responsible for collecting and remitting the Obligors’
payments to Point Bonita. For almost six years until September
15, 2025, Point Bonita always had been paid on time and in full.
On September 15, 2025, First Brands stopped directing timely
transfers of funds to Point Bonita.
The First Brands bankruptcy proceedings have uncovered what is
alleged to be a massive fraud that has resulted in the bankrupt
estate bringing claims against its former CEO, its former
Executive Vice President, one of its significant financing
counterparties, and various related entities to recover billions of
dollars in allegedly fraudulent transfers. As it relates to factoring,
the alleged fraudulent activities included First Brands selling
certain receivables more than once, selling receivables that had
been inflated in amount, and selling fabricated receivables. The
Company is exerting every effort to maximize the recovery of
assets from First Brands and from the various Obligors. That
process will take months to years to complete and, given the
fraud, the recovery is uncertain.
Separately, Apex Credit Partners LLC (“Apex”), a wholly owned
subsidiary of Jefferies Finance, 50%-owned by us, manages on
behalf of third-party institutional and other investors certain CLOs
that invest in broadly syndicated loans with approximately $4.5
billion in assets under management. 12 CLOs managed by Apex
Jefferies Financial Group Inc.
own approximately $49 million in the aggregate of First Brands’
term loans (including PIK interest) and $9 million of First Brands’
debtor-in-possession term loans, which is approximately 1% of
the CLO assets managed by Apex. Additionally, approximately, $1
million of First Brands’ term loans (including PIK interest) and
$0.2 million of debt-in-possession term loans were transferred
from an Apex-managed CLO warehouse to Apex in anticipation of
a CLO closing expected to occur at the end of January. Apex
beneficially own a portion of the equity tranche and other senior
tranches in an amount to comply with applicable securitization
risk-retention rules and in certain instances such additional
amounts which are not material.
Off-Balance Sheet Arrangements
We have contractual commitments arising in the ordinary course
of business for securities loaned or purchased under agreements
to resell, repurchase agreements, future purchases and sales of
foreign currencies, securities transactions on a when-issued
basis, purchases and sales of corporate loans in the secondary
market and underwriting. Each of these financial instruments and
activities contains varying degrees of off-balance sheet risk
whereby the fair values of the securities underlying the financial
instruments may be in excess of, or less than, the contract
amount. The settlement of these transactions is not expected to
have a material effect upon our consolidated financial
statements.
In the normal course of business, we engage in other off balance-
sheet arrangements, including derivative contracts. Neither
derivatives’ notional amounts nor underlying instrument values
are reflected as assets or liabilities in our Consolidated
Statements of Financial Condition. Rather, the fair values of
derivative contracts are reported in our Consolidated Statements
of Financial Condition as Financial instruments owned or
Financial instruments sold, not yet purchased as applicable.
Derivative contracts are reflected net of cash paid or received
pursuant to credit support agreements and are reported on a net
by counterparty basis when a legal right of offset exists under an
enforceable master netting agreement. For additional information
about our accounting policies and our derivative activities, refer
to Note 2, Summary of Significant Accounting Policies , in our
consolidated financial statements included in Part II, Item 8 of
our Annual Report on Form 10-K for the year ended November 30,
2024 and Note 5, Fair Value Disclosures and Note 6, Derivative
Financial Instruments in our consolidated financial statements
included in this Annual Report on Form 10-K.
Contractual Obligations
Subsequent to November 30, 2025 and on or before January 31,
2026 , we expect to make cash payments of $1.94 billion related
to year-end compensation awards for fiscal 2025. Refer to Note
14, Compensation Plans in our consolidated financial statements
included in this Annual Report on Form 10-K for further
information.
Risk Management
Overview
Risk is an inherent part of our business and activities. The extent
to which we properly and effectively identify, assess, monitor and
manage each of the various types of risk involved in our activities
is critical to our financial soundness, viability and profitability.
Accordingly, we have a comprehensive risk management
approach, with a formal governance structure and policies and
procedures outlining frameworks and processes to identify,
assess, monitor and manage risk. Principal risks involved in our
business activities include market, credit, liquidity and capital,
operational, model and strategic risk. Legal and compliance, new
business and reputational risk are also included within our
principal risks.
Risk management is a multifaceted process that requires
communication, judgment and knowledge of financial products
and markets. Our risk management process encompasses the
active involvement of executive and senior management, and
also many departments independent of the revenue-producing
business units, including Risk Management, Operations,
Information Technology, Compliance, Legal and Finance. Our risk
management policies, procedures and methodologies are flexible
in nature and are subject to ongoing review and modification.
In achieving our strategic business objectives, our risk appetite
incorporates keeping our clients’ interests as top priority and
ensuring we are in compliance with applicable laws, rules and
regulations, as well as adhering to the highest ethical standards.
We undertake prudent risk-taking that protects the capital base
and franchise, utilizing risk limits and tolerances that avoid
outsized risk-taking. We maintain a diversified business mix and
avoid significant concentrations to any sector, product,
geography or activity and set quantitative concentration limits to
manage this risk. We consider contagion, second order effects
and correlation in our risk assessment process and actively seek
out value opportunities of all sizes. We manage the risk of
opportunities larger than our approved risk levels through risk
sharing and risk distribution, sell-down and hedging as
appropriate. We have a limited appetite for illiquid assets and
complex derivative financial instruments. We maintain the asset
quality of our balance sheet through conducting trading activity in
liquid markets and generally ensure high turnover of our
inventory. We subject less liquid positions and derivative financial
instruments to particular scrutiny and use a wide variety of
specific metrics, limits and constraints to manage these risks.
We protect our reputation and franchise, as well as our standing
within the market. We operate a federated approach to risk
management and assign risk oversight responsibilities to a
number of functions with specific areas of focus.
For discussion of liquidity and capital risk management, refer to
the “Liquidity, Financial Condition and Capital Resources” section
herein.
Governance and Risk Management Structure
Our Board of Directors (“Board”) and Risk and Liquidity Oversight
Committee (“Committee”) . Our Board and Committee play an
important role in reviewing our risk management process and
risk appetite. The Committee assists the Board in its oversight of:
(i) our enterprise risk management, (ii) our capital, liquidity and
funding guidelines and policies and (iii) the performance of our
Global Chief Risk Officer (“CRO”). Our CRO and Global Treasurer
meet with the Committee on no less than a quarterly basis to
present our risk profile and liquidity profile and to respond to
questions. Our Chief Information Officer also meets with the
Committee at least semi-annually to receive and review reports
related to any exposure to cybersecurity risk and our plans and
programs to mitigate and respond to cybersecurity risks.
Additionally, our risk management team continuously monitors
our various businesses, the level of risk the businesses are taking
and the efficacy of potential risk mitigation strategies and
presents this information to our senior management and the
Committee.
Our Board also fulfills its risk oversight role through the
operations of its various committees, including its Audit
Committee, through review of our financial statements, internal
audit function and internal control over financial reporting, as well
November 2025 Form 10-K
as through assisting the Board with our legal and regulatory
compliance and overseeing our Code of Business Practice. The
Audit Committee is also updated on risk controls at each of its
regularly scheduled meetings.
Internal Audit, which reports to the Audit Committee of the Board
and includes professionals with a broad range of audit and
industry experience, including risk management expertise, is
responsible for independently assessing and validating key
controls within our risk management framework.
We make extensive use of internal committees to govern risk
taking and ensure that business activities are properly identified,
assessed, monitored and managed. The Risk Management
Committee (“RMC”) and membership comprises our Chief
Executive Officer, President, CFO, CRO and Global Treasurer. Our
other risk related committees govern risk taking and ensure that
business activities are properly managed for their area of
oversight.
Risk Committees
• Risk Management Committee (RMC) - the principal committee
that governs our risk taking activities. The RMC meets weekly
to discuss our risk profile and discuss business or market
trends and their potential impact on the business. The RMC
approves our limits as a whole and across risk categories and
business lines, reviews limit breaches, approves risk policies
and stress testing methodologies and is supported by other
Committees including:
◦ Credit Risk Committee - provides review and approval of
counterparties and credit limits.
◦ Model Governance Committee - oversees all model risk
matters throughout the model life cycle, from model
identification and initiation, model development, model
validation/approval and model risk control.
◦ Stress Testing Committee - provides review, approval and
oversees implementation of our stress testing framework
and methodologies.
• Operating Committee - brings together the managers of all
control areas and the business line chief operating officers,
whereby each department presents issues regarding current
and proposed business. This committee provides the key
forum for coordination and communication between the
control managers entirely focused on our activities as a whole.
• Asset / Liability Committee - seeks to ensure effective
management and control of the balance sheet in terms of risk
profile, adequacy of capital and liquidity resources and funding
profile and strategy. The committee is responsible for
developing, implementing and enforcing our liquidity, funding
and capital policies. This includes recommendations for
capital and balance sheet size, as well as the allocation of
capital to our businesses.
• Independent Price Verification Committee - establishes our
valuation policies and procedures and is responsible for
independently validating the fair value of our financial
instruments. The committee, which comprises stakeholders
represented by the CFO, Internal Audit, Risk Management and
Controllers, meets monthly to assess and approve the results
of our inventory price testing.
• New Business Committee - reviews new business, products and
activities and extensions of existing businesses, products and
activities that may introduce materially different or greater
risks than those of a business’ existing activities. The new
business approval process is a key control over new business
activity. The objectives are to notify all relevant functions of the
intention to introduce a new product, business or activity, to
share information between functions and to ensure there is a
thorough understanding of the proposal.
Risk Considerations
We apply a comprehensive framework of limits on a variety of
key metrics to constrain the risk profile of our business activities.
The size of the limits reflects our risk appetite for a certain
activity under normal business conditions. Key metrics included
in our risk management framework include inventory position
and exposure limits on a gross and net basis, scenario analysis
and stress tests, Value-at-Risk (“VaR”), sensitivities, exposure
concentrations, aged inventory, Level 3 assets, counterparty
exposure, leverage and cash capital.
Market Risk
Market risk is defined as the risk of loss due to fluctuations in the
market value of financial assets and liabilities attributable to
changes in market variables.
Our market risk principally arises from interest rate risk, from
exposure to changes in the yield curve, the volatility of interest
rates, and credit spreads, and from equity price risks from
exposure to changes in prices and volatilities of individual
equities, equity baskets and equity indices. In addition,
commodity price risk results from exposure to the changes in
prices and volatilities of individual commodities, commodity
baskets and commodity indices, and foreign exchange risk
results from changes in foreign currency rates.
Market risk is present in our capital markets business through
market making, proprietary trading, underwriting and investing
activities and is present in our asset management business
through investments in separately managed accounts and direct
investments in funds. Given our involvement in a broad set of
financial products and markets, market risk exposures are
diversified and economic hedges are established as appropriate.
Market risk is monitored and managed through a set of key risk
metrics such as VaR, stress scenarios, risk sensitivities and
position exposures. Limits are set on the key risk metrics to
monitor and control the risk exposure ensuring that it is in line
with our risk appetite. Our risk appetite, including the market risk
limits, is periodically reviewed to reflect business strategy and
market environment. Material risk changes, top/emerging risks
and limit utilizations/breaches are highlighted through risk
reporting and escalated as necessary.
Trading is principally managed through front office trader
mandates, where each trader is provided a specific mandate in
line with our product registry. Mandates set out the activities,
currencies, countries and products that a desk is permitted to
trade in and set the limits applicable to a desk. Traders are
responsible for knowing their trading limits and trading in a
manner consistent with their mandate.
VaR
VaR is a statistical estimate of the potential loss from adverse
market movements over a specified time horizon within a
specified probability (confidence level). It provides a common
risk measure across financial instruments, markets and asset
classes. We estimate VaR using a model that simulates revenue
and loss distributions by applying historical market changes to
the current portfolio. We calculate a one-day VaR using a one-
year look-back period measured at a 95% confidence level.
Jefferies Financial Group Inc.
As with all measures of VaR, our estimate has inherent
limitations due to the assumption that historical changes in
market conditions are representative of the future. Furthermore,
the VaR model measures the risk of a current static position over
a one-day horizon and might not capture the market risk over a
longer time horizon where moves may be more extreme.
Previous changes in market risk factors may not generate
accurate predictions of future market movements. While we
believe the assumptions and inputs in our risk model are
reasonable, we could incur losses greater than the reported VaR.
Consequently, this VaR estimate is only one of a number of tools
we use in our daily risk management activities.
VaR at
November 30,
Daily Firmwide VaR
$ in millions
Daily VaR for 2025
Risk Categories
Average
High
Low
Interest Rates and Credit
Spreads .............................
Equity Prices ........................
Currency Rates ....................
Commodity Prices ..............
Diversification Effect (1) ....
Firmwide VaR (2) ................
VaR at
November 30,
Daily Firmwide VaR
$ in millions
Daily VaR for 2024
Risk Categories
Average
High
Low
Interest Rates and Credit
Spreads .............................
Equity Prices ........................
Currency Rates ....................
Commodity Prices ..............
Diversification Effect (1) ....
Firmwide VaR (2) ................
(1) The diversification effect is not applicable for the maximum and minimum
VaR values as the firmwide VaR and the VaR values for the four risk categories
might have occurred on different days during the period.
(2) The aggregated VaR presented here is less than the sum of the individual
components ( i.e. , interest rate risk, foreign exchange rate risk, equity risk and
commodity price risk) due to the benefit of diversification among the four risk
categories. Diversification benefit equals the difference between aggregated
VaR and the sum of VaRs for the four risk categories and arises because the
market risk categories are not perfectly correlated.
VaR for our capital markets trading activities, which excludes the
impact on VaR for each component of market risk from our asset
management activities, by interest rate and credit spreads, equity,
currency and commodity products using the past 365 days of
historical data:
VaR at
November 30,
Daily Capital Markets VaR
$ in millions
Daily VaR for 2025
Risk Categories
Average
High
Low
Interest Rates and Credit
Spreads .............................
Equity Prices ........................
Currency Rates ....................
Commodity Prices ..............
Diversification Effect (1) ....
Capital Markets VaR (2) ....
VaR at
November 30,
Daily Capital Markets VaR
$ in millions
Daily VaR for 2024
Risk Categories
Average
High
Low
Interest Rates and Credit
Spreads .............................
Equity Prices ........................
Currency Rates ....................
Commodity Prices ..............
Diversification Effect (1) ....
Capital Markets VaR (2) ....
(1) The diversification effect is not applicable for the maximum and minimum
VaR values as the capital markets VaR and the VaR values for the four risk
categories might have occurred on different days during the period.
(2) The aggregated VaR presented here is less than the sum of the individual
components ( i.e. , interest rate risk, foreign exchange rate risk, equity risk and
commodity price risk) due to the benefit of diversification among the four risk
categories. Diversification benefit equals the difference between aggregated
VaR and the sum of VaRs for the four risk categories and arises because the
market risk categories are not perfectly correlated.
November 2025 Form 10-K
Our average daily firmwide VaR decreased to $11.23 million for 2025 from $13.13 million for 2024 , driven by lower equity exposures,
partially offset by an increase in exposures to movements in currency rates. The average daily capital markets VaR decreased to $7.64
million for 2025 from $8.53 million for 2024 driven by lower equity exposures, partially offset by an increase in exposures to movements
in currency rates and a lower diversification effect.
The efficacy of the VaR model is tested by comparing our actual daily net revenues for those positions included in the calculation of
VaR with the daily VaR estimate. This evaluation is performed at various levels, from the overall level down to specific business lines.
For the VaR model, revenue is defined as principal transactions revenues, trading related commissions, revenue from securitization
activities and net interest income. VaR backtesting methodologies differ for regulated entities with approved capital models.
For a 95% confidence one day VaR model ( i.e. , no intra-day trading), assuming current changes in market value are consistent with the
historical changes used in the calculation, losses would not be expected to exceed the VaR estimates more than twelve times on an
annual basis ( i.e. , once in every 20 days). During 2025 , there were three days when the aggregate net trading loss exceeded the 95% one
day VaR.
The chart below presents our daily firmwide VaR and capital markets VaR over the last four quarters. In the last quarter of 2025 , the
firmwide VaR decrease was driven by lower equity exposures, partially offset by an increase in exposures to movements in currency
rates.
Daily Net Trading Revenue
There were 23 days with firmwide trading losses out of a total of 250 trading days in 2025 . The histogram below presents the
distribution of our actual daily net trading revenue for substantially all of our activities (in millions):
Jefferies Financial Group Inc.
Other Risk Measures
The VaR model does not include certain positions that are best measured and monitored using sensitivity analysis. Risk Management
has additional procedures in place to assure that the level of potential loss driven by those positions not in the VaR model arising from
market movements are within acceptable levels. Such procedures include performing stress tests and profit and loss analysis. The
table below presents the potential reduction in earnings associated with a 10% stress of the fair value of the positions that are not
included in the VaR model at November 30, 2025 :
$ in thousands
10% Sensitivity
Investment in funds and other (1) ..........................................................................................................................................................................
Private investments ..................................................................................................................................................................................................
Corporate debt securities in default .......................................................................................................................................................................
Trade claims ..............................................................................................................................................................................................................
(1) Primarily includes investments in hedge funds, fund of funds and private equity funds classified within Level 3 of the fair value hierarchy and excluded from the fair value
hierarchy based on net asset value.
The impact of changes in our own credit spreads on our structured notes for which the fair value option was elected is not included in
VaR. The estimated credit spread risk sensitivity for each one basis point widening in our own credit spreads on financial liabilities for
which the fair value option was elected was an increase in value of approximately $2.0 million at November 30, 2025 , which is included
in other comprehensive income.
Other Risk
We are also subject to interest rate risk on our long-term fixed interest rate debt. Generally, the fair market value of debt securities with
a fixed interest rate will increase as interest rates fall, and the fair market value will decrease as interest rates rise. The following table
represents principal cash flows by expected maturity dates and the related weighted-average interest rate on those maturities for our
consolidated long-term debt obligations, inclusive of any related interest rate hedges. For the variable rate borrowings, the weighted-
average interest rates are based on the rates in effect at the reporting date. Our market risk with respect to foreign currency exposure
on our long-term debt is also presented in the table below. For additional information, refer to Note 17, Borrowings in our consolidated
financial statements included in this Annual Report on Form 10-K.
Expected Maturity Date (Fiscal Years)
$ in thousands
Thereafter
Total
Fair Value
Rate Sensitive Liabilities:
Fixed Interest Rate Borrowings
Weighted-Average Interest Rate
Variable Interest Rate Borrowings
Weighted-Average Interest Rate
Borrowings with Foreign Currency Exposure
Weighted-Average Interest Rate
Stress Tests and Scenario Analysis
Stress tests are used to analyze the potential impact of specific
events or extreme market moves on the current portfolio both
firm-wide and within business segments. Stress testing is an
important part of our risk management approach because it
allows us to quantify our exposure to tail risks, highlight potential
loss concentrations, undertake risk/reward analysis, set risk
controls and overall assess and mitigate our risk.
We employ a range of stress scenarios, which comprise both
historical market price and rate changes and hypothetical market
environments, and generally involve simultaneous changes of
many risk factors. Indicative market changes in the scenarios
include, but are not limited to, a large widening of credit spreads,
a substantial decline in equities markets, significant moves in
selected emerging markets, large moves in interest rates and
changes in the shape of the yield curve.
Unlike our VaR, which measures potential losses within a given
confidence interval, stress scenarios do not have an associated
implied probability. Rather, stress testing is used to estimate the
potential loss from market moves that tend to be larger than
those embedded in the VaR calculation. Stress testing
complements VaR to cover for potential limitations of VaR such
as the breakdown in correlations, non-linear risks, tail risk and
extreme events and capturing market moves beyond the
confidence levels assumed in the VaR calculations.
Stress testing is performed and reported at least weekly as part
of our risk management process and on an ad hoc basis in
response to market events or concerns. Current stress tests
provide estimated revenue and loss of the current portfolio
through a range of both historical and hypothetical events. The
stress scenarios are reviewed and assessed at least annually so
that they remain relevant and up to date with market
developments. Additional hypothetical scenarios are also
conducted on a sub-portfolio basis to assess the impact of any
relevant idiosyncratic stress events as needed.
November 2025 Form 10-K
Counterparty Credit Risk
Credit risk is the risk of loss due to adverse changes in a
counterparty’s credit worthiness or its ability or willingness to
meet its financial obligations in accordance with the terms and
conditions of a financial contract.
We are exposed to credit risk as a trading counterparty to other
broker-dealers and customers, as a counterparty to derivative
contracts, as a direct lender and through extending loan
commitments and providing securities-based lending and as a
member of exchanges and clearing organizations. Credit
exposure exists across a wide range of products, including cash
and cash equivalents, loans, securities finance transactions and
over-the-counter derivative contracts. The main sources of credit
risk are:
• Loans and lending arising in connection with our investment
banking and capital markets activities, which reflects our
exposure at risk on a default event with no recovery of loans.
Current exposure represents loans that have been drawn by the
borrower and lending commitments that are outstanding. In
addition, credit exposures on forward settling traded loans are
included within our loans and lending exposures for
consistency with the balance sheet categorization of these
items. Loans and lending also arise in connection with our
portion of a Secured Revolving Credit Facility that is with us
and Massachusetts Mutual Life Insurance Company, to be
funded equally, to support loan underwritings by Jefferies
Finance. For further information on this facility, refer to Note
10, Investments in our consolidated financial statements
included in this Annual Report on Form 10-K. In addition, we
have loans outstanding to certain of our officers and
employees (none of whom are executive officers or directors).
For further information on these employee loans, refer to Note
23, Related Party Transactions in our consolidated financial
statements included in this Annual Report on Form 10-K.
• Securities and margin financing transactions, which reflect our
credit exposure arising from reverse repurchase agreements,
repurchase agreements and securities lending agreements to
the extent the fair value of the underlying collateral differs from
the contractual agreement amount and from margin provided
to customers.
• OTC derivatives, which are reported net by counterparty when a
legal right of setoff exists under an enforceable master netting
agreement. OTC derivative exposure is based on a contract at
fair value, net of cash collateral received or posted under credit
support agreements. In addition, credit exposures on forward
settling trades are included within our derivative credit
exposures.
• Cash and cash equivalents, which includes both interest-
bearing and non-interest-bearing deposits at banks.
Credit is extended to counterparties in a controlled manner and in
order to generate acceptable returns, whether such credit is
granted directly or is incidental to a transaction. All extensions of
credit are monitored and managed as a whole to limit exposure
to loss related to credit risk. Credit risk is managed according to
the Credit Risk Management Policy, which sets out the process
for identifying counterparty credit risk, establishing counterparty
limits, and managing and monitoring credit limits. The policy
includes our approach for:
• Client on-boarding and approving counterparty credit limits;
• Negotiating, approving and monitoring credit terms in legal and
master documentation;
• Determining the analytical standards and risk parameters for
ongoing management and monitoring credit risk books;
• Actively managing daily exposure, exceptions and breaches;
and
• Monitoring daily margin call activity and counterparty
performance.
Counterparty credit exposure limits are granted within our credit
ratings framework, as detailed in the Credit Risk Management
Policy. The Credit Risk Department assesses counterparty credit
risk and sets credit limits at the counterparty master agreement
level. Limits must be approved by appropriate credit officers and
initiated in our credit and trading systems before trading
commences. All credit exposures are reviewed against approved
limits on a daily basis.
Our Secured Revolving Credit Facility, which supports loan
underwritings by Jefferies Finance, is governed under separate
policies other than the Credit Risk Management Policy and is
approved by our Board. The loans outstanding to certain of our
officers and employees are extended pursuant to a review by our
most senior management.
Current counterparty credit exposures at November 30, 2025 and
2024 are summarized in the tables below and provided by credit
quality, region and industry. Credit exposures presented take
netting and collateral into consideration by counterparty and
master agreement. Collateral taken into consideration includes
both collateral received as cash as well as collateral received in
the form of securities or other arrangements. Current exposure is
the loss that would be incurred on a particular set of positions in
the event of default by the counterparty, assuming no recovery.
Current exposure equals the fair value of the positions less
collateral. Issuer risk is the credit risk arising from inventory
positions (for example, corporate debt securities and secondary
bank loans). Issuer risk is included in our country risk exposure
within the following tables.
Jefferies Financial Group Inc.
Counterparty Credit Exposure by Credit Rating
Loans and Lending
Securities and Margin
Finance
OTC Derivatives
Total
Cash and
Cash Equivalents
Total with Cash and
Cash Equivalents
$ in millions
November
November
November
November
November
November
November
November
November
November
November
November
AAA Range
AA Range
A Range
BBB Range
BB or Lower
Unrated
Total
Counterparty Credit Exposure by Region
Loans and Lending
Securities and Margin
Finance
OTC Derivatives
Total
Cash and
Cash Equivalents
Total with Cash and
Cash Equivalents
$ in millions
November
November
November
November
November
November
November
November
November
November
November
November
Asia-Pacific/Latin
America/Other
Europe and the Middle
East
North America
Total
Counterparty Credit Exposure by Industry
Loans and Lending
Securities and Margin
Finance
OTC Derivatives
Total
Cash and
Cash Equivalents
Total with Cash and
Cash Equivalents
$ in millions
November
November
November
November
November
November
November
November
November
November
November
November
Asset Managers, Funds
and Investment
Advisors (1)(2)
Banks, Broker-Dealers (2)
Corporates (2)
As Agent Banks (2)
Other (2)
Total
(1) Includes a $250.0 million secured revolving credit facility to Jefferies Finance at November 30, 2025.
(2) Prior period amounts have been revised to conform with the current period presentation.
November 2025 Form 10-K
Country Risk Exposure
Country risk is the risk that events or developments that occur in the general environment of a country or countries due to economic,
political, social, regulatory, legal or other factors, will affect the ability of obligors of the country to honor their obligations. We define the
country of risk as the country of jurisdiction or domicile of the obligor and monitor country risk resulting from both trading positions and
counterparty exposure, which may not include the offsetting benefit of any financial instruments utilized to manage market risk. The
following tables reflect our top exposures at November 30, 2025 and 2024 to the sovereign governments, corporations and financial
institutions in those non- U.S. countries in which we have net long issuer and counterparty exposure:
November 30, 2025
Issuer Risk
Counterparty Risk
Issuer and Counterparty Risk
$ in millions
Fair Value of
Long Debt
Securities
Fair Value of
Short Debt
Securities
Net Derivative
Notional
Exposure
Loans and
Lending
Securities and
Margin
Finance
OTC
Derivatives
Cash and
Cash
Equivalents
Excluding
Cash and
Cash
Equivalents
Including
Cash and
Cash
Equivalents
Canada
United Kingdom
Hong Kong
Australia
France
Japan
Spain
India
Sweden
Taiwan
Total
November 30, 2024
Issuer Risk
Counterparty Risk
Issuer and Counterparty Risk
$ in millions
Fair Value of
Long Debt
Securities
Fair Value of
Short Debt
Securities
Net Derivative
Notional
Exposure
Loans and
Lending
Securities and
Margin
Finance
OTC
Derivatives
Cash and
Cash
Equivalents
Excluding
Cash and
Cash
Equivalents
Including
Cash and
Cash
Equivalents
Canada
United Kingdom
France
Hong Kong
Spain
Netherlands
Japan
Australia
India
Italy
Total
Operational Risk
Operational risk is the risk of financial or non-financial impact,
resulting from inadequate or failed internal processes, people
and systems or from external events. We interpret this definition
as including not only financial loss or gain but also other negative
impacts to our objectives such as reputational impact, legal/
regulatory impact and impact on our clients. Third-party risk is
also included as a subset of operational risk and is defined as the
potential threat presented to us, our employees or clients from
our supply chain and other third parties used to perform a
process, service or activity on our behalf.
Our Operational Risk framework includes governance as well as
operational risk processes, comprises operational risk event
capture and analysis, risk and control self-assessments,
operational risk key indicators, action tracking, risk monitoring
and reporting, deep dive risk assessments, new business
approvals and vendor risk management. Each revenue producing
and support department is responsible for the management and
reporting of operational risks and the implementation of the
Operational Risk Management Policy and processes within the
department with regular operational risk training provided to our
employees.
Operational risk events are mapped to risk categories used for
the consistent classification of risk data to support root cause
and trend analysis, which includes:
• Fraud and Theft
• Clients and Business Practices
• Market Conduct / Regulatory Compliance
• Business Disruption
• Technology
• Data Protection and Privacy
• Trading
• Transaction and Process Management
• People
• Cybersecurity
• Vendor Risk
Our Operational Risk Management Policy and operational risk
management framework, infrastructure, methodology, processes,
guidance and oversight of the operational risk processes are
centralized and consistent firmwide and, additionally, subject to
regional and legal entity operational risk governance, as required.
Jefferies Financial Group Inc.
We also maintain a Third-Party (“Vendor”) Risk Management
Policy and Framework to ensure adequate control and monitoring
over our critical third parties, which includes processes for
conducting periodic reviews covering areas of risk including
financial health, information security, privacy, business continuity
management, disaster recovery and operational risk of our
vendors.
Model Risk
Model risk refers to the risk of loss resulting from decisions that
are based on the output of models, due to errors or weaknesses
in the design and development, implementation or improper use
of models. We use quantitative models primarily to value certain
financial assets and liabilities and to monitor and manage our
risk. Model risk is a function of the model materiality, frequency
of use, complexity and uncertainty around inputs and
assumptions used in a given model. Robust model risk
management is a core part of our risk management approach
and is overseen through our risk governance structure and risk
management controls.
Legal and Compliance Risk
Legal and compliance risk includes the risk of noncompliance
with applicable legal and regulatory requirements. We are subject
to extensive regulation in the different jurisdictions in which we
conduct our business. We have various procedures addressing
issues such as regulatory capital requirements, sales and trading
practices, use of and safekeeping of customer funds, credit
granting, collection activities, anti-money laundering and record
keeping. These risks also reflect the potential impact that
changes in local and international laws and tax statutes have on
the economics and viability of current or future transactions. In
an effort to mitigate these risks, we continuously review new and
pending regulations and legislation and participate in various
industry interest groups. We also maintain an anonymous hotline
for employees or others to report suspected inappropriate
actions by us or by our employees or agents.
New Business Risk
New business risk refers to the risks of entering into a new line of
business or offering a new product. By entering a new line of
business or offering a new product, we may face risks that we are
unaccustomed to dealing with and may increase the magnitude
of the risks we currently face. The New Business Committee
reviews proposals for new businesses and new products to
determine if we are prepared to handle the additional or
increased risks associated with entering into such activities.
Reputational Risk
We recognize that maintaining our reputation among clients,
investors, regulators and the general public is an important
aspect of minimizing legal and operational risks. Maintaining our
reputation depends on a large number of factors, including the
selection of our clients and the conduct of our business
activities. We seek to maintain our reputation by screening
potential clients and by conducting our business activities in
accordance with high ethical standards. Our reputation and
business activity can be affected by statements and actions of
third parties, even false or misleading statements by them. We
actively monitor public comment concerning us and are vigilant
in seeking to assure accurate information and perception
prevails.
