To Our Clients:

Accountability and Where the Buck Truly Stops

We are grateful that we can only imagine the pain, embarrassment, sadness and anger that must accompany a CEO when he or she is called before Congress to address a real or perceived misdeed by an individual or a group of people at his or her company.  It does not matter if the situation is due to fraudulent behavior by a group of employees, the near collapse of the financial industry, cover-ups in the tobacco industry, bailouts in the auto industry or pricing in the health care industry.  No rational human being wants to be in the position of being publicly accountable to the political leaders of our great country and to personally defend bad behavior under their leadership.  Imagine for just a moment it is you, alone at the long conference table, adjusting your microphone, raising your right arm and swearing, “to tell the truth, the whole truth, and nothing but the truth, so help you G-d.”

Like most of you, all of us at Jefferies are very proud of our enviable track record of having an ethical culture that stresses the importance of the very best in personal behavior and compliance with all rules.  That said, people are people and very few things in life are black and white, especially when the human condition is involved.  We have certainly had (and will continue to have) our share of painful and embarrassing situations and even the occasional truly bad actor(s) that threatens to tarnish all of us.  Ironically, the more successful a business becomes, headcount and geographic expansion ensues and the odds of an unfortunate surprise increase significantly.  The only way we know to keep the odds of having a problem as low as humanly possible is to have the strongest possible cultural foundation based on true accountability at every level of the organization, including of course at the very top.

Many people are upset in the world today.  Perhaps we can see it most clearly in the current U.S. presidential political contest.  There is a legitimate reason for this anger and polarization.  The dividing line between the “haves” and the “have nots” has never been greater.  Honest hard-working people are having a very hard time affording health care for their families.  Educating their children requires massive personal loans and an uncertain payback.  Wage growth has been non-existent, while taxes remain high.  Quality jobs are scarce and the cost of living has never been higher.  Companies have downsized to rationalize costs and the new jobs that are emerging often require an entirely different set of skills.  The massive infusion of bailout money, low interest rates, and resulting stock market and real estate advances have helped those with the most assets, but have done little to directly improve the lives of the hard-working every day middle class families who are the bedrock of society.  These people are not going to give the “benefit of the doubt” to large corporations or the people that run them, or spend time to truly understand the “nuance” of what really happened in a complicated and messy situation.  They want and deserve “accountability” and they want to know “where the buck truly stops.”   This is whom our political leaders represent, and these hard-working every day real heroes in our world demand and deserve a system that is honest, has integrity and is fair. 

We are not judging any company that is currently in the news concerning congressional hearings.  We are talking about every business and are reminding each of their leaders and employees that “there but for the grace of G-d, go every single one of us.”  The only way we know of maximizing the odds of not having to raise your right hand is to have a culture of integrity, transparency and accountability.  It is our belief that every person that works at Jefferies must take personal accountability for their actions, and the buck stops with each and every one of us.  Our people must be responsible for their choices and behavior every single day.  We at Jefferies demand integrity and insist on immediate escalation the moment anyone in our firm suspects he, she or someone else has a potential issue.  We will always stand tall and defend our people with the presumption that they are good, just, right and innocent.  That said, they all know that they are truly accountable and must take responsibility for their actions.  At the end of the day, so too must we as the ones fortunate enough to be allowed to be called their “leaders.”  Bad behavior has no place in our firm and, when identified and factually proven, we have no choice but to deal swiftly and with regard only for our other thousands of employee-partners, shareholders, bondholders and clients that depend on us every day to do the right thing.  Words alone are not sufficient.  Action must be taken, so integrity can thrive.   At the end of the day, if you are leading a business of any size, you are the one ultimately accountable and the buck stops with you.

Thank you for your trust and confidence, 


Rich and Brian


Chairman of the Board and CEO
Chairman, Executive Committee