Jefferies Financial Group Inc. (JEF) FY 2024 MD&A

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, 2024

(“2024”) and November 30, 2023 (“2023”) are discussed below.

For a discussion of our results of operations for the year ended

November 30, 2022 (“2022”) and our 2023 results of operations

as compared to our 2022 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, 2023, which was

filed with the SEC on January 26, 2024.

Consolidated Results of Operations

Overview

N/M — Not Meaningful

Executive Summary

Consolidated Results

•Net revenues were $7.03 billion for 2024, up 49.7% compared

to $4.70 billion for 2023, reflecting strength across all lines of

business primarily due to market share gains and a stronger

overall market for our services.

•Earnings from continuing operations before income taxes were

$1.01 billion for 2024, up 183.8% compared to $354.3 million

for 2023.

•Our overall results were strong for 2024, driven by strength and

continued momentum in Investment Banking and Equities.

•Net earnings from discontinued operations (including gain on

disposal), net of income taxes were $3.7 million and reflects

the current year results of OpNet offset by a gain on the sale of

OpNet, which closed in August 2024.

Business Results

•Investment banking net revenues were $3.44 billion for 2024,

up 51.6% compared to $2.27 billion for 2023. Advisory net

revenues were $1.81 billion, up 51.1% compared to $1.20

billion for 2023, primarily attributable to market share gains

and increased overall market opportunity. Total underwriting

net revenues were $1.49 billion for 2024, up 53.4% compared

to $970.5 million for 2023, due to increased equity and debt

underwriting activity as a result of a more robust equity and

general capital markets environment.

•Equities net revenues were $1.59 billion for 2024, up 39.8%

compared to $1.14 billion for 2023, attributable to market

share gains, increased volumes and more favorable trading

opportunities driving stronger results across most of our

equities business lines

•Fixed income net revenues were $1.17 billion, up 6.8%

compared to $1.09 billion for 2023, driven by stronger results

from our distressed trading and securitized markets

businesses, partially offset by reduced activity in our global

structured solutions business and less favorable results across

our emerging markets, credit e-trading, corporates, and

municipal securities businesses, which were particularly strong

in the prior fiscal year.

•Asset management net revenues were $803.7 million for 2024,

compared to $188.3 million for 2023. Investment return for

2024 were higher on improved performance across a number

of our investment strategies, partially offset by $36.2 million of

revenue losses associated with our investment in Weiss. Other

investments net revenues for the current year were

meaningfully higher than the prior year largely due to the

inclusion of Stratos and Tessellis in our overall results as these

entities became consolidated subsidiaries in the fourth quarter

of 2023.

Non-interest Expenses

•Compensation and benefits expense was $3.66 billion for

2024, an increase of $1.12 billion, or 44.3%, compared to $2.54

billion for 2023. Compensation and benefits expense as a

percentage of Net revenues was 52.0% for 2024, compared to

53.9% for 2023. The ratio for 2024 was impacted by the

consolidation of Stratos and Tessellis, which have lower

compensation ratios.

•Non-compensation expenses were $2.37 billion for 2024, an

increase of $558.8 million, or 30.9%, compared to $1.81 billion

for 2023. The increase in non-compensation expenses is

primarily attributed to increased brokerage and clearing fees

associated with increased trading volumes and higher

technology and communication and business development

expenses. Other expenses include bad debt expenses largely

related to our losses associated with Weiss Strategy Advisers

upon its shutdown in the first quarter of 2024. In addition, Non-

compensation expenses were higher due to the inclusion of

Stratos and Tessellis as operating subsidiaries, particularly

impacting depreciation and amortization expense, following

the consolidation of these entities in the fourth quarter of 2023,

partially offset by the impact of the spin-off of Vitesse Energy

in January 2023 and sale of Foursight in April 2024. The

increased cost of sales for 2024 reflects increased sales

activity within our HomeFed real estate subsidiary. Non-

compensation expenses as a percentage of Net revenues

improved from 38.5% in 2023 to 33.7% in 2024 as our revenue

growth outpaced expense growth. The ratio includes our Other

investments portfolio, which have higher non-compensation

expense ratios.

Headcount

•At November 30, 2024, we had 7,822 employees globally

across all of our consolidated subsidiaries within our

Investment Banking and Capital Markets and Asset

Management reportable segments, an increase of 258

employees from our headcount of 7,564 at November 30, 2023.

Included within our global headcount are 2,063 employees of

our Stratos, Tessellis, HomeFed and M Science subsidiaries.

During the past year, we have increased the number of our

Investment Banking Managing Directors and related staff,

along with additional technology and corporate staff to support

our growth and strategic priorities.

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. Beginning in fiscal 2024, we

now refer to “Merchant banking” as “Other investments” in our

Asset Management reportable segment.

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 the net interest revenue or expense

associated with the respective activities, 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.

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.

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 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 corporate lending joint

venture, Jefferies Finance;

•our 45% share of net earnings from our commercial real estate

joint venture, Berkadia (which includes commercial mortgage

origination and servicing);

•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 business opportunities.

Investment banking net revenues were $3.44 billion for 2024, up

51.6% compared to $2.27 billion for 2023. We have made

extensive investments in our investment banking business,

including a significant number of professional hires, particularly

at the managing director level, and have expanded our

capabilities across sectors and regions, which has led to market

share gains.

Advisory net revenues were $1.81 billion for 2024, up 51.1%

compared to $1.20 billion for 2023, driven by market share gains

attributable to an increase in transaction levels across most

sectors in the global mergers and acquisitions markets.

Total underwriting net revenues were $1.49 billion for 2024, up

53.4% compared to $970.5 million for 2023, due to increased

equity and debt underwriting activity as a result of a more robust

equity and general capital markets environment.

Other investment banking net revenues were $144.1 million for

2024, compared to $102.9 million for 2023. Results from our

share of the net earnings of our Jefferies Finance joint venture

increased, as net revenues were slightly improved and certain

investment and loan losses incurred in 2023 were not repeated.

Revenues from our share of the net earnings of our Berkadia joint

venture increased from the prior year period primarily driven by

higher interest income and servicing fees attributable to a larger

and growing loan servicing portfolio, as well as an increase in

sales volumes. In addition, during the current year, we recognized

a $24.2 million gain from the sale of Foursight. Other investment

banking revenue also includes net gains on investments and

revenue from our strategic alliance with SMBC.

Our investment banking backlog remains robust and we see

signs that underwriting and mergers and acquisitions activity in

the upcoming year will remain strong, although execution is

always uncertain and dependent on market conditions. 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 also 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.

Equities net revenues were $1.59 billion for 2024, an increase of

39.8% compared to $1.14 billion in 2023, attributable to market

share gains, increased volumes and more favorable trading

opportunities driving stronger results across most of our equities

business lines. Results in our cash and electronic trading

businesses significantly increased over the prior year period.

Results in our prime services business were also strong and

revenue from equity derivative transactions has continued to

grow as the business continues to mature.

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.

Fixed income net revenues were $1.17 billion for 2024, up 6.8%

compared to $1.09 billion in 2023, driven by stronger results from

our distressed trading and securitized markets businesses,

partially offset by reduced activity in our global structured

solutions business and lower results across our emerging

markets, credit e-trading, corporates, and municipal securities

businesses, which were particularly strong in the prior fiscal year.

Asset Management

We operate a diversified alternative asset management platform

offering institutional clients a range of investment strategies

directly and through our affiliated asset managers. We provide

certain of our affiliated asset managers access to our global

marketing and distribution platform, as well as operational

infrastructure and support. We often invest our own capital in the

strategies offered by us and associated third-party asset

managers in which we have an interest.

Asset management revenues include the following:

•management and performance fees from funds and accounts

managed by us;

•revenue from affiliated asset managers where we are entitled

to portions of their revenues and/or profits, as well as earnings

on our ownership interests in our affiliated asset managers;

•investment income from our capital invested in and managed

by us and our affiliated asset managers; and

•revenues from investments held in our other investments

portfolio, including consolidated operations from real estate

development activities, foreign exchange trading (Stratos

consolidated from the beginning of the fourth quarter of 2023)

and telecommunications activities related to Tessellis

(consolidated at the end of the fourth quarter of 2023) as well

as OpNet (from the at the end of the fourth quarter of 2023

through its sale in August 2024) and investments in certain

public equity securities and private companies. Prior fiscal

years include revenues from oil and gas activities until the spin-

off of our interest in Vitesse Energy in January 2023.

Asset management fees and revenues are impacted by the level

of assets under management and the performance return of

those assets, for the most part on an absolute basis, and, in

certain cases, relative to a benchmark or hurdle. These

components can be affected by financial markets, profits and

losses in the applicable investment portfolios and client capital

activity. Further, asset management fees vary with the nature of

investment management services. The terms under which clients

may terminate our investment management agreements, and the

requisite notice period for such termination, varies depending on

the nature of the investment vehicle and the liquidity of the

portfolio assets. In some instances, performance fees and

similar revenues are recognized once a year, when they become

fixed and determinable and are not probable of being

significantly reversed, typically in December. As a result, a

significant portion of our performance fees and similar revenues

generated from investment returns in a calendar year are

recognized in our following fiscal year.

(1)These 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.

Asset management fees and revenues were $103.5 million for

2024, compared to $93.7 million for 2023, reflecting higher

management and performance fees on funds managed by us,

partially offset by a decrease in revenues from our strategic

affiliates.

Investment return was $212.2 million for 2024, compared to

$154.5 million for 2023, with the increase driven by improved

returns generated across a number of our fund strategies,

partially offset by losses of $36.2 million associated with our

investment in Weiss.

Other investments net revenues were $550.1 million for 2024,

compared to negative net revenues of $(10.3) million for 2023,

with the increase primarily driven by the consolidation of Stratos

and Tessellis in the fourth quarter of 2023, partially offset by the

spin-off of Vitesse Energy in January 2023. Additionally, during

the current year, Other investments net revenues include net

gains on investment positions compared to losses  recognized in

the prior fiscal year on certain positions.

Assets Under Management

Aggregate net asset values or net asset value equivalent 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)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 businesses.

(3)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 businesses.

The tables below include third-party and other assets under

management by us, excluding those of our affiliated asset

managers.

Assets under management by predominant asset class:

Change in assets under management:

Assets under management are based on the net asset value or

net asset value equivalent of a fund plus unfunded capital

commitments to the fund, the net asset value equivalents of

separately managed accounts and the fair value of any invested

capital in our consolidated funds and separately managed

accounts. Assets under management is generally based on how

fee and revenues are calculated and the measure also includes

funds and separately managed accounts for which we do not

charge fees.

Our definition of assets under management is not based on any

definition contained in any of our investment management

agreements and differs from the manner in which “Regulatory

Assets Under Management” is reported to the SEC on Form ADV.

Asset Management Investments

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.

Investments by type of asset manager:

(1)Due to the level or nature of an investment in a fund, we may consolidate that

fund; and accordingly, the assets and liabilities of the fund are included in the

representative line items in our consolidated financial statements. At

November 30, 2024 and 2023, $11.3 million and $11.9 million, respectively,

represent net investments in funds that have been consolidated in our

financial statements.

(2)Where we have investments in a separately managed account, the assets and

liabilities of such account are presented in our consolidated financial

statements within each respective line item.

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

Non-interest expenses were $6.03 billion for 2024, an increase of

$1.68 billion, or 38.7%, compared to $4.35 billion for 2023,

primarily due to an increase in overall business activity and

compensation expense. Non-compensation expenses are also

impacted by the inclusion of Stratos and Tessellis as operating

subsidiaries following the consolidation of these entities in the

fourth quarter of 2023, partially offset by the impact of the spin-

off of Vitesse Energy in January 2023 and the sale of Foursight in

April 2024.

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 and a portion of cash awards

granted to employees as part of year end compensation generally

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 market and

performance conditions and the awards are amortized over their

service periods.

Compensation and benefits expense was $3.66 billion for 2024

compared to $2.54 billion for 2023. A significant portion of our

compensation expense is highly variable with net revenues.

Compensation and benefits expense as a percentage of Net

revenues was 52.0% for 2024 and 53.9% for 2023. The ratio for

2024 was impacted by the consolidation of Stratos and Tessellis,

which have much lower compensation rates proportionate to net

revenues.

Compensation expense related to the amortization of share- and

cash-based awards amounted to $513.7 million for 2024

compared to $370.0 million for 2023.

At November 30, 2024, we had 7,822 employees globally across

all of our consolidated subsidiaries within our Investment

Banking and Capital Markets and Asset Management reportable

segments, an increase of 258 employees from our headcount of

7,564 at November 30, 2023. Included within our global

headcount are 2,063 employees of our Stratos, Tessellis,

HomeFed, and M Science subsidiaries. During the past year, we

have increased the number of our Investment Banking Managing

Directors and related staff along with additional technology and

corporate staff to support our growth and strategic priorities.

Refer to Note 15, Compensation Plans included in this Annual

Report on Form 10-K, for further details on compensation and

benefits.

Non-interest Expenses (Excluding Compensation and Benefits)

Non-interest expenses, excluding Compensation and benefits, as

a percentage of Net revenues improved from 38.5% in 2023 to

33.7% in 2024 as our revenue growth outpaced expense growth.

The ratio includes our Other investments portfolio, which has a

higher non-compensation expense ratio.

Non-interest expenses was impacted by the following:

•Brokerage and clearing fees were higher by $66.0 million due

to increased trading volumes.

•Technology and communication were higher by $69.6 million

related to the continued development of various trading and

management systems and increased market data costs.

•Business development was higher by $105.9 million reflecting

increased investment banking advisory and capital markets

underwriting activity.

•Professional services expenses were higher by $29.8 million

primarily on increased transaction related legal fees

associated with capital markets transaction and litigation as

well as consulting fees paid to outsourced vendors related to

strategic technology investment initiatives.

•Cost of sales and depreciation and amortization expenses

were higher by $255.0 million primarily reflecting the

consolidation of Stratos and Tessellis, partially offset by the

spin-off of Vitesse Energy in January 2023 and sale of

Foursight in April 2024.

Income Taxes

•The provision for income taxes on continuing operations was

$293.2 million for 2024, equating to an effective tax rate of

29.2%, compared to $91.9 million for 2023, equating to an

effective tax rate of 25.9%. The higher rate for 2024 is largely

due to a smaller tax benefit from share-based awards in the

current year.

•The Organization for Economic Co-operation and Development

(“OECD”) Pillar Two Model Rules (“Pillar Two”) for the global

15% minimum tax have been adopted in a number of

jurisdictions in which we operate. Pillar Two will be applicable

to us beginning December 1, 2024 and we do not expect a

material impact on our income tax expense for the year ended

November 30, 2025.

Refer to Note 20, Income Taxes in our consolidated financial

statements included in this Annual Report on Form 10-K, for

further details on income taxes.

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 6, 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 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 6,

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 6, 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. Where a pricing model is used to

determine fair value, these control processes include reviews of

the pricing model’s theoretical soundness and appropriateness

by risk management personnel with relevant expertise who are

independent from the trading desks. 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 resulting in a carrying value our investment of $16.8

million at May 31, 2023. During the three months ended August

31, 2023, we recognized an additional impairment loss of $27.8

million, which reduced the carrying value of our investment to

zero and also reduced the carrying value of shareholder loans to

Golden Queen to $8.8 million at August 31, 2023. The impairment

for the three months ended August 31, 2023 was 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.

We had an equity method interest in Stratos with rights to a

majority of all distributions in respect of Stratos. In the fourth

quarter of 2022, we had a triggering event to test our investment

in Stratos for impairment. We estimated the fair value of our

equity interest in Stratos based primarily on a discounted cash

flow valuation model. The discounted cash flow valuation model

used inputs including management’s projections of future Stratos

cash flows and a discount rate of 23.0%. The estimated fair value

of our equity investment in Stratos was $61.7 million as of the

date of our impairment evaluation, which was $25.3 million lower

than our prior carrying value. We concluded that the decline in fair

value was other than temporary and as result incurred a $25.3

million impairment charge. During 2023, we obtained 100% of the

interests in Stratos and now account for Stratos as a wholly

owned subsidiary. Refer to Note 4, Business Acquisitions in our

consolidated financial statements included in this Annual Report

on Form 10-K.

Goodwill

At November 30, 2024, goodwill recorded in our Consolidated

Statements of Financial Condition is $1.83 billion (2.8% of total

assets). The nature and accounting for goodwill is discussed in

Note 2, Summary of Significant Accounting Policies, and Note 13,

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.

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.

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. 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.

Carrying values of goodwill by reporting unit:

Refer to Note 4, Business Acquisitions and Note 13, 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

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

spin-off of Vitesse Energy in January 2023 and the sales of

Golden Queen in November 2023, 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, 2024, we

returned an aggregate of $347.3 million to shareholders primarily

in the form of $303.0 million in cash dividends and the

repurchases of $1.1 million common shares for a total of $44.3

million at a weighted average price of $40.72 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.

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, 2024 and 2023 were $64.36 billion

and $57.91 billion, respectively, an increase of 11.1%. During

2024, average total assets were approximately 10.3% higher than

total assets at November 30, 2024.

Our total Financial instruments owned inventory was $24.14

billion and $21.75 billion at November 30, 2024 and 2023,

respectively. During the year ended November 30, 2024, our total

Financial instruments owned increased primarily due to the

increase in corporate equity securities. Financial instruments

sold, not yet purchased inventory was $11.01 billion at

November 30, 2024, a decrease of 2.2% from $11.25 billion at

November 30, 2023, with the decrease primarily driven by

decreases in sovereign obligations and derivative contracts,

partially offset by increases in corporate equity and debt

securities. Our overall net inventory position was $13.13 billion

and $10.50 billion at November 30, 2024 and 2023, respectively,

with the increase primarily due to an increases in corporate

equity securities.

Level 3 assets:

(1)At November 30, 2024 and 2023, $218.3 million and $121.4 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 2024 were 34.4% higher than the November 30,

2024 balance. Our average month end balance of total repos and

stock loans during 2024 were 23.8% higher than the

November 30, 2024 balance.

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 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 $21.66 billion at November 30, 2024

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, 2024, 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, 2024 and 2023, $8.21 billion and $5.90 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, 2024 and

2023 are primarily invested in AAA-rated prime money funds. The average

balance of U.S. government money funds for the quarter ended November 30,

2024 was $5.07 billion.

(3)Consists of 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, 2024, we had the ability to readily

obtain repurchase financing for 77.0% 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)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”).

(2)Unencumbered liquid balances represent assets that can be sold or used as

collateral for a loan but have not been.

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. During 2024, an

average of approximately 61.0% of our cash and noncash

repurchase financing activities used collateral that was

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

six months at November 30, 2024.

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, 2024, 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 daily

short-term borrowings outstanding were $1.25 billion and $787.9

million for 2024 and 2023, respectively.

At November 30, 2024 and 2023, our borrowings under bank

loans in Short-term borrowings were $414.5 million and

$937.1 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, 2024,

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 provides 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, 2024, the outstanding notes

totaled $2.11 billion, bear interest at a spread over the Secured

Overnight Funding Rate (“SOFR”) or the Euro Short-Term Rate

(“ESTER”) and mature from December 2024 to October 2026.

For additional details on our repurchase agreement financing

program, refer to Note 10, Variable Interest Entities in our

consolidated financial statements included in this Annual Report

on Form 10-K.

Total Long-Term Capital

At November 30, 2024 and 2023, we had total long-term capital

of $21.66 billion and $17.70 billion, respectively, resulting in a

long-term debt to equity capital ratio of 1.12:1 and 0.81:1,

respectively. Refer to “Equity Capital” herein for further

information on our change in total equity.

(1)The amounts at November 30, 2024 and 2023 exclude our secured long-term

debt. The amount at November 30, 2023 excludes $544.2 million of our 1%

Euro Medium Term Notes as the note fully matured on July 19, 2024. The

amount at November 30, 2024 excludes $8.5 million of our 5.500% Callable

Note as the note matures on February 22, 2025, $5.4 million of our 6.000%

Callable Note as the note matures on June 16, 2025, $6.2 million of our

4.500% Callable Note as the note matures on July 22, 2025, and $500.0 million

of our 5.100% Callable Note as the note matures on September 15, 2025. The

amounts at November 30, 2024 and 2023 exclude $157.6 million and $51.0

million, respectively, of structured notes as the senior notes mature within one

year.

Long-Term Debt

During 2024, long-term debt increased by $3.83 billion to $13.53

billion at November 30, 2024, as presented in our Consolidated

Statements of Financial Condition. This increase is primarily due

to proceeds of $3.98 billion from the issuances of unsecured

senior notes, $487.0 million from net issuances of structured

notes, $254.8 million from increased subsidiaries borrowings,

and valuation losses on structured notes of $175.7 million. These

increases were partially offset by a $350.0 million paydown of a

revolving credit facility and repayments of $720.5 million on our

unsecured senior notes.

At November 30, 2024, our unsecured long-term debt has a

weighted average maturity of approximately 7.5 years.

At November 30, 2024 and 2023 our borrowings under several

credit facilities classified within Long-term debt in our

Consolidated Statements of Financial Condition amounted to

$775.3 million and $735.2 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, 2024,

we were in compliance with all covenants under theses credit

facilities.

For further information, refer to Note 18, Borrowings, in our

consolidated financial statements included in this Annual Report

on Form 10-K.

Our long-term debt ratings at November 30, 2024 are as follows:

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 connection with certain over-the-counter derivative contract

arrangements and certain other trading arrangements, we may be

required to provide additional collateral to counterparties,

exchanges and clearing organizations in the event of a credit

rating downgrade. At November 30, 2024, the amount of

additional collateral that could be called by counterparties,

exchanges and clearing organizations under the terms of such

agreements in the event of a downgrade of our long-term credit

rating below investment grade was $120.1 million. For certain

foreign clearing organizations, credit rating is only one of several

factors employed in determining collateral that could be called.

The above represents management’s best estimate for additional

collateral to be called in the event of a credit rating downgrade.

The impact of additional collateral requirements is considered in

our CFP and calculation of MLO, as described above.

Equity Capital

Common Stock

At November 30, 2024 and 2023, we had 565,000,000 authorized

shares of voting common stock with a par value of $1.00 per

share and had 205,504,272 and 210,626,642 common shares

outstanding, respectively. At November 30, 2024, we had

15,768,229 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 2024. Treasury stock repurchases

during 2024 represent repurchases of common stock for net-

share withholding under our equity compensation plan.

In February 2023, our mandatorily redeemable convertible

preferred shares were converted into 4,654,362 common shares.

Dividends

On January 8, 2025, the Board of Directors increased our

quarterly dividend from $0.35 to $0.40 per common share to be

paid on February 27, 2025 to common shareholders of record at

February 14, 2025.

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.

Series B 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. During the year-

ended November 30, 2023, SMBC exchanged 21.0 million shares

of voting common stock for 42,000 shares of Series B Preferred

Stock and we received cash of $31.5 million in connection with

the exchange. As a result of the exchange, our equity attributed

to our voting common stock decreased by $21.0 million, our

equity attributed to the Series B Preferred Stock increased by

$42,000 and additional paid-in capital increased by $52.4 million.

On June 20, 2024, SMBC exchanged an additional 6.6 million

shares of voting common stock for 13,125 shares of Series B

Preferred Stock and we received $9.8 million from SMBC in

connection with the exchange. Following this exchange, SMBC

increased its ownership to 11.8% of our common stock on an as-

converted basis and 10.9% on a fully-diluted, as-converted basis.

As a result, the CEO of Sumitomo Mitsui Financial Group, Inc.

was elected and now serves on our Board of Directors. On

September 19, 2024, SMBC purchased 9.2 million shares of our

common stock. At November 30, 2024, SMBC owns

approximately 15.8% of our common stock on an as-converted

basis and 14.5% on a fully-diluted, as-converted basis. Refer to

Note 24, Related Party Transactions for further information

regarding transactions with SMBC.

During the year ended November 30, 2024 and 2023, we paid

cash dividends of $31.9 million and $12.6 million, respectively,

with respect to the Series B Preferred Stock.

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 (“CEA”), 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. Accordingly, 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 pursuant

to Rule 18a-1. 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 under CFTC Regulation 23.101. Additionally, as a

registered member firm, JFSI is subject to the net capital

requirements of the NFA. Accordingly, 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 which is subject to the regulatory supervision and

requirements of the Financial Conduct Authority (“FCA”) in the

U.K. Jefferies International Limited’s’ own funds requirement

represents the highest of the permanent minimum capital

requirement, fixed overheads requirement and k-factor

requirements set out in the Investment Firms Prudential Regime

(“IFPR”) under the FCA’s MIFIDPRU sourcebook.

At November 30, 2024, Jefferies LLC’s and JFSI’s  net capital and

excess net capital were as follows (in thousands):

In addition, the equivalent capital requirements for Jefferies

International Limited, on a consolidated basis, is a total capital of

$1,781.0 million and an excess capital of $1,054.0 million at

November 30, 2024.

At November 30, 2024, Jefferies LLC, JFSI and JIL 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.

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 a

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, 2024,

Jefferies LLC had $142.6 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, 2024,

Jefferies LLC had $581.9 million in cash and qualified U.S.

Government securities in special reserve bank accounts for the

exclusive benefit of PABs.

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.

In October 2023, Hamas attacked Israel. Our investments and

assets in our growing Israeli business could be negatively

affected by consequences from the geopolitical and military

conflict in the region. We continue to closely monitor the status

of global sanctions and restrictions arising from the conflict.

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,

2023 and Note 6, Fair Value Disclosures and Note 7, Derivative

Financial Instruments in our consolidated financial statements

included in this Annual Report on Form 10-K.

Contractual Obligations

Subsequent to November 30, 2024 and on or before January 31,

2025, we expect to make cash payments of $1.82 billion related

to year-end compensation awards for fiscal 2024. Refer to Note

15, 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. The Audit Committee has responsibility for risk

oversight in connection with its review of our financial

statements, internal audit function and internal control over

financial reporting, as well as 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 $13.13 million for 2024 from $13.57 million for 2023 driven by overall lower interest rate

and credit spread exposures across the capital markets desks, partially offset by an increase in equity exposure in our asset

management business. The average daily capital markets VaR decreased to $8.53 million for 2024 from $9.13 million for 2023 driven

by lower interest rate and credit spread exposures.

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 2024, there was one day 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 2024, VaR

increase was driven by average increase in equity exposures in asset management.

Daily Net Trading Revenue

There were 19 days with firmwide trading losses out of a total of 251 trading days in 2024. The histogram below presents the

distribution of our actual daily net trading revenue for substantially all of our trading activities for 2024 (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, 2024:

(1)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 $1.6 million at November 30, 2024, 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 18, 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

11, 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

24, 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, 2024 and

2023 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.

For additional information regarding credit exposure to OTC derivative contracts, refer to Note 7, Derivative Financial Instruments in our

consolidated financial statements included in this Annual Report on Form 10-K.

Country Risk Exposure

Country risk is the risk that events or developments that occur in the general environment of a country or countries due to economic,

political, social, regulatory, legal or other factors, will affect the ability of obligors of the country to honor their obligations. We define the

country of risk as the country of jurisdiction or domicile of the obligor and monitor country risk resulting from both trading positions and

counterparty exposure, which may not include the offsetting benefit of any financial instruments utilized to manage market risk. The

following tables reflect our top exposures at November 30, 2024 and 2023 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.