(Nov 27): The US Securities and Exchange Commission (SEC) is probing Jefferies Financial Group Inc over its relationship to bankrupt auto-parts supplier First Brands Group, according to the Financial Times.
The watchdog is seeking information about whether the bank gave investors in its Point Bonita fund sufficient disclosures about its exposure to First Brands, the FT said, citing two people it didn’t identify. The SEC is also looking into internal controls and potential conflicts within and between different parts of Jefferies, according to the newspaper.
A representative for Jefferies declined to comment, while the SEC didn’t immediately respond to a request seeking comment. The FT said the SEC inquiry is at an early stage and it is not clear whether it will result in any allegations of wrongdoing.
Jefferies shares have tumbled since it disclosed its exposure to First Brands. At Point Bonita, a unit of Jefferies’ Leucadia Asset Management, about a quarter of the US$3 billion portfolio was tied to so-called trade finance agreements running through First Brands. The bank also helped First Brands sell a significant chunk of its long-term loans over the past decade.
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