Jefferies CEO: We Were Defrauded by First Brands.

Jefferies Financial Group is Experiencing Issues with First Brands

Jefferies Financial Group highlighted in a notification to the U.S. Securities and Exchange Commission (SEC) the statements made by CEO Rich Handler during the investor day.

Handler stated that the details of their exposure to First Brands Group were shared more transparently over the weekend. However, he emphasized that they do not have definite information regarding what exactly is happening at First Brands.

Handler summarized the situation by saying, “Our personal opinion is that we believe we have been defrauded.”

Industry Developments and Initial Reactions

Handler mentioned that he has spoken with many CEOs and investors in the industry, expressing that the overall economic environment is quite good. Nevertheless, he reported that similar issues have been faced by competitor companies, though he believes these do not constitute a systemic problem.

Handler pointed out that such situations in the financial sector generally serve as an early warning, but he indicated that they do not observe such a situation at present.

Decline in Bank Stocks and Concerns

Recently, bank stocks have lost value due to concerns regarding problematic loans. Zions Bank, based in Utah, announced in its filing with the SEC that irregularities were detected in two commercial loans and revealed a loss of 50 million dollars.

Western Alliance Bank, based in Arizona, also announced it has filed a lawsuit against a borrower for fraud. These disclosures regarding banks' loan portfolios have led to a decline in bank stocks.

Shares of Jefferies Financial Group, which are at risk due to loans made to First Brands Group, which filed for bankruptcy last month, fell more than 10 percent yesterday. However, as of 10:00 PM Turkey time, the company’s shares rose by more than 6 percent.