Jefferies Financial Group Inc. (JEF)

Item 2. 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 and risk factors contained in our Annual Report on Form 10-K for the year ended November 30, 2025 and filed with the Securities and Exchange Commission (“SEC”) on January 28, 2026;

•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.

Consolidated Results of Operations

Overview

Executive Summary

Three Months Ended May 31, 2026 Versus May 31, 2025

Net earnings attributable to common shareholders were $226.2 million and $88.0 million for the three months ended May 31, 2026 and 2025, respectively.

Our effective tax rate was 20.8%, and 32.3% for the three months ended May 31, 2026 and 2025, respectively.

Six Months Ended May 31, 2026 Versus May 31, 2025

Net earnings attributable to common shareholders were $382.2 million and $216.0 million for the six months ended May 31, 2026 and 2025, respectively.

Our effective tax rate was 22.4%, and 20.2% for the six months ended May 31, 2026 and 2025, 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 May 31, 2026, we had 7,371 employees globally across all of our consolidated subsidiaries within our Investment Banking and Capital Markets and Asset Management reportable segments, compared to 7,787 at November 30, 2025. Included within our global headcount are 1,334 employees at May 31, 2026 and 1,797 employees at November 30, 2025 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.

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 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.

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, syndication and placement services related to investment grade debt, high yield bonds, leveraged loans, emerging market debt, global structured notes, municipal debt and mortgage-backed and asset-backed securities; and equity underwriting and placement services related to equity offerings, preferred stock and equity-linked securities;

•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;

•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.

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[Excerpt truncated for page length; source filing is linked above.]

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.

Consolidated Results of Operations

Overview

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.

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

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.

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

2025.

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.

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.

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.

Assets under management:

(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 business 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

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.

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

2024.

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-

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.

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:

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.

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.

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:

(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

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:

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:

(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.

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:

(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.

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:

(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.

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.

(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:

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

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.

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.

At November 30, 2025, net capital and excess net capital were as

follows:

(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

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

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.

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.

(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:

(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.

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):

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:

(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.

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.

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.

(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.

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:

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.

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.