Culture and Character
To Our Clients and Friends:
The two of us have worked at Jefferies for a combined 39 years. We have survived challenging times and direct assaults, but that is what happens when you are working with partners to build a business that will endure. We have always met challenges honestly and directly, and we will not stop or back down now.
We are not devoid of issues or problems at Jefferies, and we believe even one example of bad behavior or the smallest of fines, lawsuits, or penalties is one too many. However, we would gladly put our track record of compliance and regulatory focus up against the record of any one of our major competitors.
This past week has been beyond painful for us, as a child-custody case has led to groundless questions about the integrity of our firm. As you may have read, our partner who is in the middle of all this has taken a voluntary leave to focus on his personal life and the best interests of his two children. This is a terribly sad situation and our hearts go out to him and his family.
As the week progressed, the media and some of our major competitors have piled on, using categorically denied allegations made by one individual as the basis to launch a judgment of everything Jefferies. While we would like to ignore the tabloids, the blogs and whoever is feeding them, we know they continue to scrounge around for more random tidbits to string together, and we just cannot sit by silently. We are proud that the one thing that has allowed Jefferies to persevere and, more often than not, prosper, is our attitude. Jefferies’ culture is based on integrity, putting our clients first, a truly entrepreneurial spirit, transparency, tenacity and humility. It is the driving force that enabled Jefferies to grow from a firm with $7 million of net income in 1990 to a firm that today has a $45 billion balance sheet, north of $3 billion in annual net revenues (with over half from Investment Banking), and a global full service platform with 3,850 employee-partners.
Although if other companies found themselves in this unfortunate current predicament, they might step back and just send in the lawyers, we did something different, in keeping with who we are and the quality of the people who are our partners. The two of us sat down with each person named in the custody case documents and talked it all through. We then had similar discussions with other folks on our healthcare team and in other parts of our firm. We wanted to know what they all thought. We wanted to gauge for ourselves whether any of our own understanding of our culture was inaccurate. What we found was exactly what we expected – hard-working people doing their best for clients and for Jefferies.
With that confirmation, we went to our partners in healthcare investment banking yesterday afternoon and said, “The two of us are going to go take a drug test, and do you want to join us?” Our Global Head of Investment Banking and the three other investment bankers mentioned in the custody-case papers as alleged serial drug abusers stood up and each said, “I do.” They were deeply offended by the allegations and were eager to have the opportunity to set the record straight. Every one of our other healthcare Managing Directors then volunteered to come with us. They were not even mentioned in any document, but they chose to do this to show solidarity with their partners and also prove that suggestions of rampant drug use are pure fabrication. The two of us can of course attest that all tests came back drug-free. Obviously, none of us anticipated the events of the last week or volunteering to take a drug test, so this was truly a random drug test. To be frank, we are embarrassed that we even have to discuss these matters, but this should put to rest the heart of the allegations about our firm. Sometimes truth does come in a jar.
As for the “media,” we must carefully and respectfully question whether this past week was approached with objectivity and balance. One reporter publicly confirmed that a CEO of a top 5 bank personally emailed him the lurid details of the lawsuit, and we also have heard directly from other reporters that they also are getting information and encouragement to pile on from some of our competitors. When Jefferies competes, we do it in the financial markets by trying our best to help our clients succeed, not by spreading baseless rumors and lies in order to damage our peers. We expect you will hear more lies about us and even hear from reporters who would like to dredge up old news because, at this point, there is absolutely nothing new to write about the unfortunate custody proceeding. We are aware that there is an ongoing campaign that includes calling former employees to get “dirt” to string together fabricated themes of “bad people” and a “broken culture.” Nobody wants to hear from the hard-working Jefferies people who deliver for our clients every day across our firm, our thousands of satisfied and loyal clients, or the thousands of us at Jefferies who are proud of our firm and our culture. Good news does not sell newspapers, but you, our clients, know us and know how we do business. We believe our work for each of you, our results over time and our enviable regulatory record speak louder than any of this titillating nonsense.
Honesty, Integrity, and Humility — we have tried to live by these guideposts and will continue to do so, regardless of what distorted old stories or made up new ones are slung at Jefferies. We will focus on doing the best job possible for the considerable business you have entrusted us with. In closing, let us extend our sincere apologies for the distraction of this past week. The two of us are available to meet or speak with any of you at any time. We look forward to getting back to what we do – putting our clients first, always.
Rich and Brian
Chairman and CEO
Chairman of the Executive Committee