0000096223falseNovember 302020Q312,793,08012,058,52211600,000,000600,000,000259,245,885291,644,15357,216,72724,818,459758141196000545,054758141545,25024,6219,59713,63612,314000024,6219,59713,63612,31445,6691,98413,4378,791224030616645,4451,98413,1318,957000000016100016100002201206583612201206583610.150.1250.450.375us-gaap:AccountingStandardsUpdate201602MemberP1YP1Y50117,609111,06027,67324,8008,0425,3665.505.50750,000750,0006.6256.625250,000250,0002.3750550,8756.8756.875750,000750,0002.252.254,7744,4075.1255.125750,000600,0001.001.00596,725550,8754.854.85750,000750,0006.456.45350,000350,0004.154.151,000,0001,000,0006.256.25500,000500,0006.506.50400,000400,000P4YP3Y0545,0543061660161658361P3D500000096223jef:JefferiesFinanceLlcMemberjef:LeveragedFinanceArrangementMembersrt:MinimumMemberjef:JefferiesFinanceLlcMember2020-12-012021-05-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________

FORM 10-Q


			☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~August~~May 31, ~~2020~~2021


			☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-5721

JEFFERIES FINANCIAL GROUP INC.

(Exact name of registrant as specified in its Charter)

New York

13-2615557

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

520 Madison Avenue

New York,

New York

10022

(Address of principal executive offices)

(Zip Code)

(212) 460-1900

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

______________________

Securities registered or to be registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $1 per share	JEF	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of each of the issuer's classes of common stock at ~~October 8, 2020~~June 30, 2021 was ~~255,434,677.~~247,037,420.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

~~August~~May 31, ~~2020~~2021 and November 30, ~~2019~~2020

(Dollars in thousands, except par value)

(Unaudited)

August 31,
2020 November 30, 2019
ASSETS
Cash and cash equivalents $ 8,426,832 $ 7,678,821
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations 986,117 796,797
Financial instruments owned, at fair value (including securities pledged of $12,793,080 and $12,058,522): 17,986,721 16,895,741
Loans to and investments in associated companies 1,539,356 1,652,957
Securities borrowed 7,268,413 7,624,642
Securities purchased under agreements to resell 5,327,391 4,299,598
Securities received as collateral, at fair value 4,413 9,500
Receivables 5,029,136 5,744,106
Property, equipment and leasehold improvements, net 915,896 385,029
Intangible assets, net and goodwill 1,914,542 1,922,934
Other assets 2,375,171 2,450,109
Total assets (1) $ 51,773,988 $ 49,460,234
LIABILITIES
Short-term borrowings $ 805,381 $ 548,490
Financial instruments sold, not yet purchased, at fair value 10,994,556 10,532,460
Securities loaned 1,929,737 1,525,140
Securities sold under agreements to repurchase 7,258,972 7,504,670
Other secured financings 3,376,257 3,070,611
Obligation to return securities received as collateral, at fair value 4,413 9,500
Lease liabilities 598,363 0
Payables, expense accruals and other liabilities 8,792,748 8,179,013
Long-term debt 8,419,837 8,337,061
Total liabilities (1) 42,180,264 39,706,945
Commitments and contingencies
MEZZANINE EQUITY
Redeemable noncontrolling interests 24,273 26,605
Mandatorily redeemable convertible preferred shares 125,000 125,000
EQUITY
Common shares, par value $1 per share, authorized 600,000,000 shares; 259,245,885 and 291,644,153 shares issued and outstanding, after deducting 57,216,727 and 24,818,459 shares held in treasury 259,246 291,644
Additional paid-in capital 3,083,137 3,627,711
Accumulated other comprehensive income (loss) (196,407) (273,039)
Retained earnings 6,264,689 5,933,389
Total Jefferies Financial Group Inc. shareholders' equity 9,410,665 9,579,705
Noncontrolling interests 33,786 21,979
Total equity 9,444,451 9,601,684
Total $ 51,773,988 $ 49,460,234


	May 31, 2021		November 30, 2020
ASSETS
Cash and cash equivalents	$	8,443,206	$	9,055,148
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	901,381		604,321
Financial instruments owned, at fair value (including securities pledged of $13,000,756 and $13,065,585)	19,937,830		18,124,577
Loans to and investments in associated companies	1,728,115		1,686,563
Securities borrowed	6,720,683		6,934,762
Securities purchased under agreements to resell	6,917,225		5,096,769
Securities received as collateral, at fair value	0		7,517
Receivables	8,131,943		6,608,767
Property, equipment and leasehold improvements, net	903,010		897,204
Intangible assets, net and goodwill	1,912,480		1,913,467


Other assets	2,383,096		2,189,257
Total assets (1)	$	57,978,969	$	53,118,352

LIABILITIES
Short-term borrowings	$	475,834	$	764,715
Financial instruments sold, not yet purchased, at fair value	11,971,970		10,017,600
Securities loaned	2,277,423		1,810,748
Securities sold under agreements to repurchase	7,079,322		8,316,269
Other secured financings	4,131,597		3,288,384
Obligation to return securities received as collateral, at fair value	0		7,517
Lease liabilities	570,341		584,807
Payables, expense accruals and other liabilities	12,394,362		10,388,072
Long-term debt	8,823,245		8,352,039
Total liabilities (1)	47,724,094		43,530,151

Commitments and contingencies	0		0

MEZZANINE EQUITY
Redeemable noncontrolling interests	34,511		24,676
Mandatorily redeemable convertible preferred shares	125,000		125,000

EQUITY
Common shares, par value $1 per share, authorized 600,000,000 shares; 247,031,705 and 249,750,542 shares issued and outstanding, after deducting 69,432,003 and 66,712,070 shares held in treasury	247,032		249,751
Additional paid-in capital	2,849,487		2,911,223
Accumulated other comprehensive income (loss)	(363,998)		(288,917)
Retained earnings	7,340,113		6,531,836
Total Jefferies Financial Group Inc. shareholders' equity	10,072,634		9,403,893
Noncontrolling interests	22,730��		34,632
Total equity	10,095,364		9,438,525
Total	$	57,978,969	$	53,118,352

(1) Total assets include assets related to variable interest entities of ~~$637.5~~$617.7 million and ~~$645.8~~$566.1 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively, and Total liabilities include liabilities related to variable interest entities of ~~$3,377.3~~$4,131.5 million and ~~$3,071.1~~$3,291.3 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively. See Note 7 for additional information related to variable interest entities.

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Operations

For the periods ended ~~August~~May 31, ~~2020~~2021 and ~~2019~~2020

(In thousands, except per share amounts)

(Unaudited)


	For the Three Months Ended				For the Six Months Ended
	May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Revenues:
Commissions and other fees	$	222,624	$	242,972	$	459,393	$	422,402
Principal transactions	361,023		393,338		1,280,924		798,202
Investment banking	1,000,700		387,491		2,004,312		979,493
Interest income	230,448		236,732		470,945		563,098
Manufacturing revenues	184,092		85,379		321,939		162,986
Other	167,442		31,619		332,404		143,614
Total revenues	2,166,329		1,377,531		4,869,917		3,069,795
Interest expense of Jefferies Group	215,822		229,942		432,468		535,878
Net revenues	1,950,507		1,147,589		4,437,449		2,533,917

Expenses:
Compensation and benefits	831,242		598,467		2,003,785		1,268,660
Cost of sales	143,847		80,771		239,406		153,214
Floor brokerage and clearing fees	76,810		75,479		153,226		134,660
Interest expense	19,943		21,160		40,310		42,714
Depreciation and amortization	39,440		40,366		78,207		79,836
Selling, general and other expenses	341,560		249,118		613,497		546,956
Total expenses	1,452,842		1,065,361		3,128,431		2,226,040

Income before income taxes and loss related to associated companies	497,665		82,228		1,309,018		307,877
Loss related to associated companies	(23,526)		(6,721)		(34,094)		(74,576)
Income before income taxes	474,139		75,507		1,274,924		233,301
Income tax provision	120,820		31,962		339,056		77,735



Net income	353,319		43,545		935,868		155,566
Net loss attributable to the noncontrolling interests	669		2,580		1,412		4,709
Net loss attributable to the redeemable noncontrolling interests	234		198		1,003		480
Preferred stock dividends	(1,626)		(1,404)		(3,252)		(2,826)
Net income attributable to Jefferies Financial Group Inc. common shareholders	$	352,596	$	44,919	$	935,031	$	157,929

Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income	$	1.33	$	0.16	$	3.51	$	0.53

Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income	$	1.30	$	0.16	$	3.43	$	0.53

For the Three Months Ended For the Nine Months Ended
August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019
Revenues:
Commissions and other fees $ 204,032 $ 171,000 $ 626,434 $ 493,560
Principal transactions 623,283 (20,920) 1,421,485 465,451
Investment banking 615,837 410,796 1,595,330 1,126,479
Interest income 219,843 410,467 782,941 1,243,278
Manufacturing revenues 119,751 82,565 282,737 248,227
Other 42,753 169,248 186,367 351,544
Total revenues 1,825,499 1,223,156 4,895,294 3,928,539
Interest expense of Jefferies Group 209,329 366,378 745,207 1,141,661
Net revenues 1,616,170 856,778 4,150,087 2,786,878
Expenses:
Compensation and benefits 760,837 446,882 2,029,497 1,367,034
Cost of sales 82,657 85,773 235,871 233,109
Floor brokerage and clearing fees 66,743 50,858 201,403 163,113
Interest expense 21,512 23,663 64,226 69,819
Depreciation and amortization 39,520 39,880 119,356 110,600
Selling, general and other expenses 237,712 268,742 784,668 718,910
Total expenses 1,208,981 915,798 3,435,021 2,662,585
Income (loss) before income taxes and income (loss) related to associated companies 407,189 (59,020) 715,066 124,293
Income (loss) related to associated companies 5,053 72,283 (69,523) 121,766
Income before income taxes 412,242 13,263 645,543 246,059
Income tax provision (benefit) 107,403 (36,131) 185,138 (522,626)
Net income 304,839 49,394 460,405 768,685
Net (income) loss attributable to the noncontrolling interests 324 116 5,033 (759)
Net (income) loss attributable to the redeemable noncontrolling interests 650 242 1,130 (47)
Preferred stock dividends (1,404) (1,275) (4,230) (3,827)
Net income attributable to Jefferies Financial Group Inc. common shareholders $ 304,409 $ 48,477 $ 462,338 $ 764,052
Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income $ 1.08 $ 0.16 $ 1.58 $ 2.44
Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income $ 1.07 $ 0.15 $ 1.57 $ 2.41

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

For the periods ended ~~August~~May 31, ~~2020~~2021 and ~~2019~~2020

(In thousands)

(Unaudited)

For the Three Months Ended For the Nine Months Ended
August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019
Net income $ 304,839 $ 49,394 $ 460,405 $ 768,685
Other comprehensive income (loss):
Net unrealized holding gains (losses) on investments arising during the period, net of income tax provision (benefit) of $(7), $58, $141 and $196 (22) 198 411 577
Less: reclassification adjustment for net (gains) losses included in net income, net of income tax provision (benefit) of $0, $0, $0 and $(545,054) 0 0 0 (543,178)
Net change in unrealized holding gains (losses) on investments, net of income tax provision (benefit) of $(7), $58, $141 and $545,250 (22) 198 411 (542,601)
Net unrealized foreign exchange gains (losses) arising during the period, net of income tax provision (benefit) of $24,621, $(9,597), $13,636 and $(12,314) 70,758 (30,070) 35,815 (39,263)
Less: reclassification adjustment for foreign exchange (gains) losses included in net income, net of income tax provision (benefit) of $0,$0, $0 and $0 0 0 0 0
Net change in unrealized foreign exchange gains (losses), net of income tax provision (benefit) of $24,621, $(9,597), $13,636 and $(12,314) 70,758 (30,070) 35,815 (39,263)
Net unrealized gains (losses) on instrument specific credit risk arising during the period, net of income tax provision (benefit) of $(45,669), $1,984, $13,437 and $8,791 (133,915) 5,889 39,373 26,040
Less: reclassification adjustment for instrument specific credit risk (gains) losses included in net income, net of income tax provision (benefit) of $(224), $0, $306 and $(166) 656 0 (898) 493
Net change in unrealized instrument specific credit risk gains (losses), net of income tax provision (benefit) of $(45,445), $1,984, $13,131 and $8,957 (133,259) 5,889 38,475 26,533
Net unrealized gains (losses) on cash flow hedges arising during the period, net of income tax provision (benefit) of $0, $0, $0 and $0 0 0 0 0
Less: reclassification adjustment for cash flow hedges (gains) losses included in net income (loss), net of income tax provision (benefit) of $0, $0, $0 and $161 0 0 0 (470)
Net change in unrealized cash flow hedges gains (losses), net of income tax provision (benefit) of $0, $0, $0 and $(161) 0 0 0 (470)
Net pension gains (losses) arising during the period, net of income tax provision (benefit) of $0, $0, $0 and $0 0 0 0 0
Reclassification adjustment for pension (gains) losses included in net income, net of income tax provision (benefit) of $(220), $(120), $(658) and $(361) 644 355 1,931 1,063
Net change in pension liability, net of income tax provision (benefit) of $220, $120, $658 and $361 644 355 1,931 1,063
Other comprehensive income (loss), net of income taxes (61,879) (23,628) 76,632 (554,738)
Comprehensive income 242,960 25,766 537,037 213,947
Comprehensive (income) loss attributable to the noncontrolling interests 324 116 5,033 (759)
Comprehensive (income) loss attributable to the redeemable noncontrolling interests 650 242 1,130 (47)
Preferred stock dividends (1,404) (1,275) (4,230) (3,827)
Comprehensive income attributable to Jefferies Financial Group Inc. common shareholders $ 242,530 $ 24,849 $ 538,970 $ 209,314


	For the Three Months Ended				For the Six Months Ended
	May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020

Net income	$	353,319	$	43,545	$	935,868	$	155,566
Other comprehensive income (loss):
Net unrealized holding gains (losses) on investments arising during the period, net of income tax provision (benefit) of $(8), $67, $(27) and $148	(27)		196		(87)		433
Less: reclassification adjustment for net (gains) losses included in net income, net of income tax provision (benefit) of $0, $0, $0 and $0	0		0		0		0
Net change in unrealized holding gains (losses) on investments, net of income tax provision (benefit) of $(8), $67, $(27) and $148	(27)		196		(87)		433

Net unrealized foreign exchange gains (losses) arising during the period, net of income tax provision (benefit) of $1,348, $(7,838), $4,601 and $(10,985)	3,393		(25,710)		14,476		(34,943)
Less: reclassification adjustment for foreign exchange (gains) losses included in net income, net of income tax provision (benefit) of $0, $0, $0 and $0	0		0		0		0
Net change in unrealized foreign exchange gains (losses), net of income tax provision (benefit) of $1,348, $(7,838), $4,601 and $(10,985)	3,393		(25,710)		14,476		(34,943)

Net unrealized gains (losses) on instrument specific credit risk arising during the period, net of income tax provision (benefit) of $(6,327), $51,167, $(28,509) and $59,106	(18,948)		150,040		(88,162)		173,288
Less: reclassification adjustment for instrument specific credit risk (gains) losses included in net income, net of income tax provision (benefit) of $849, $444, $920 and $530	(2,637)		(1,302)		(2,859)		(1,554)
Net change in unrealized instrument specific credit risk gains (losses), net of income tax provision (benefit) of $(7,176), $50,723, $(29,429) and $58,576	(21,585)		148,738		(91,021)		171,734





Net pension gains (losses) arising during the period, net of income tax provision (benefit) of $0, $0, $0 and $0	0		0		0		0
Reclassification adjustment for pension (gains) losses included in net income, net of income tax provision (benefit) of $(264), $(214), $(525) and $(438)	765		648		1,551		1,287
Net change in pension liability, net of income tax provision (benefit) of $264, $214, $525 and $438	765		648		1,551		1,287

Other comprehensive income (loss), net of income taxes	(17,454)		123,872		(75,081)		138,511

Comprehensive income	335,865		167,417		860,787		294,077
Comprehensive loss attributable to the noncontrolling interests	669		2,580		1,412		4,709
Comprehensive loss attributable to the redeemable noncontrolling interests	234		198		1,003		480
Preferred stock dividends	(1,626)		(1,404)		(3,252)		(2,826)
Comprehensive income attributable to Jefferies Financial Group Inc. common shareholders	$	335,142	$	168,791	$	859,950	$	296,440

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019~~2020

(In thousands)

(Unaudited)

For the Nine Months Ended
August 31, 2020 August 31, 2019
Net cash flows from operating activities:
Net income $ 460,405 $ 768,685
Adjustments to reconcile net income to net cash provided by (used for) operations:
Deferred income tax provision 106,501 8,148
Recognition of accumulated other comprehensive income lodged taxes 0 (544,583)
Depreciation and amortization of real estate, property, equipment and leasehold improvements 109,877 100,679
Other amortization 7,942 (13,252)
Share-based compensation 29,554 37,036
Provision for doubtful accounts 32,344 21,375
(Income) loss related to associated companies 91,805 (193,380)
Distributions from associated companies 54,916 249,895
Net (gains) losses related to property and equipment, and other assets 59,125 (56,706)
Lease expense 67,555 —
Lease payments (59,155) —
Net change in:
Securities deposited with clearing and depository organizations (20,955) (153)
Financial instruments owned, at fair value (1,038,140) 123,734
Securities borrowed 382,907 (1,410,295)
Securities purchased under agreements to resell (979,989) (1,772,192)
Receivables from brokers, dealers and clearing organizations 261,569 268,321
Receivables from customers of securities operations 524,860 329,504
Other receivables (42,659) (47,657)
Other assets (153,557) (100,165)
Financial instruments sold, not yet purchased, at fair value 366,737 921,280
Securities loaned 387,692 387,016
Securities sold under agreements to repurchase (260,144) (346,031)
Payables to brokers, dealers and clearing organizations (81,905) (169,021)
Payables to customers of securities operations 128,167 422,840
Trade payables, expense accruals and other liabilities 651,918 (328,902)
Other 220,488 92,502
Net cash provided by (used for) operating activities 1,307,858 (1,251,322)
Net cash flows from investing activities:
Acquisitions of property, equipment and leasehold improvements, and other assets (146,416) (164,165)
Proceeds from disposals of property and equipment, and other assets 4,847 20,134
Acquisitions, net of cash acquired 0 100,743
Advances on notes, loans and other receivables (601,068) (333,198)
Collections on notes, loans and other receivables 546,676 202,516
Loans to and investments in associated companies (1,390,779) (172,493)
Capital distributions and loan repayments from associated companies 1,372,779 31,269
Purchases of investments (other than short-term) (906) (2,995)
Proceeds from maturities of investments 2,025 531,104
Proceeds from sales of investments 19,939 890,259
Other 4,499 0
Net cash provided by (used for) investing activities $ (188,404) $ 1,103,174


	For the Six Months Ended
	May 31, 2021		May 31, 2020

Net cash flows from operating activities:
Net income	$	935,868	$	155,566
Adjustments to reconcile net income to net cash provided by (used for) operations:

Deferred income tax provision (benefit)	(40,537)		25,176

Depreciation and amortization of real estate, property, equipment and leasehold improvements	72,670		73,450
Other amortization	10,970		5,719
Share-based compensation	64,257		20,684
Provision for doubtful accounts	48,939		22,979

(Income) loss related to associated companies	(118,950)		100,712
Distributions from associated companies	39,449		51,860
Net losses related to property and equipment, and other assets	4,609		55,867


Net change in:
Securities deposited with clearing and depository organizations	(23,788)		(61,212)
Financial instruments owned, at fair value	(1,795,263)		(1,763,950)
Securities borrowed	219,788		1,142,449
Securities purchased under agreements to resell	(1,811,829)		(14,988)
Receivables from brokers, dealers and clearing organizations	(601,333)		(1,224,653)
Receivables from customers of securities operations	(834,886)		409,989
Other receivables	(91,089)		(8,007)
Other assets	(88,072)		(210,659)
Financial instruments sold, not yet purchased, at fair value	1,937,962		(809,728)
Securities loaned	461,500		438,246
Securities sold under agreements to repurchase	(1,244,181)		1,159,948
Payables to brokers, dealers and clearing organizations	2,020,160		405,873
Payables to customers of securities operations	(61,147)		(153,116)
Lease liabilities	(27,349)		(30,760)
Trade payables, expense accruals and other liabilities	17,124		199,297
Other	(76,458)		170,218


Net cash provided by (used for) operating activities	(981,586)		160,960

Net cash flows from investing activities:
Acquisitions of property, equipment and leasehold improvements, and other assets	(56,766)		(120,708)




Advances on notes, loans and other receivables	(284,616)		(414,031)
Collections on notes, loans and other receivables	172,609		384,528
Loans to and investments in associated companies	(1,988,158)		(1,382,827)
Capital distributions and loan repayments from associated companies	2,025,728		1,344,570




Other	2,391		25,050


Net cash used for investing activities	$	(128,812)	$	(163,418)

(continued)

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows, continued

For the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019~~2020

(In thousands)

(Unaudited)


		For the Nine Months Ended							For the Six Months Ended
		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020

Net cash flows from financing activities:	Net cash flows from financing activities:					Net cash flows from financing activities:
Issuance of debt, net of issuance costs	Issuance of debt, net of issuance costs	$	2,362,574	$	2,493,735	Issuance of debt, net of issuance costs	$	1,276,311	$	1,850,147

Repayment of debt	Repayment of debt	(2,121,748)		(2,141,271)		Repayment of debt	(1,153,478)		(1,930,381)
Net change in other secured financings	Net change in other secured financings	303,893		972,296		Net change in other secured financings	842,190		(325,234)
Net change in bank overdrafts	Net change in bank overdrafts	(37,758)		(9,028)		Net change in bank overdrafts	49,187		(3,126)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	(1,719)		(2,481)		Distributions to noncontrolling interests	(13,266)		(216)
Contributions from noncontrolling interests	Contributions from noncontrolling interests	18,558		6,771		Contributions from noncontrolling interests	3,434		17,504
Purchase of common shares for treasury	Purchase of common shares for treasury	(623,469)		(372,849)		Purchase of common shares for treasury	(130,097)		(495,253)
Dividends paid	Dividends paid	(122,871)		(112,455)		Dividends paid	(99,501)		(83,436)
Other	Other	821		792		Other	1,207		575

Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	(221,719)		835,510		Net cash provided by (used for) financing activities	775,987		(969,420)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	19,723		(18,243)		Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	4,755		(13,547)

Net increase in cash, cash equivalents and restricted cash		917,458		669,119
Net decrease in cash, cash equivalents and restricted cash						Net decrease in cash, cash equivalents and restricted cash	(329,656)		(985,425)

Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	8,480,435		6,012,662		Cash, cash equivalents and restricted cash at beginning of period	9,664,972		8,480,435

Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	9,397,893	$	6,681,781	Cash, cash equivalents and restricted cash at end of period	$	9,335,316	$	7,495,010

The following presents our cash, cash equivalents and restricted cash by category within the Consolidated Statements of Financial Condition to the total of the same amounts in the Consolidated Statements of Cash Flows above (in thousands):


	May 31, 2021		May 31, 2020

Cash and cash equivalents	$	8,443,206	$	6,883,881
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	843,356		572,725
Other assets	48,754		38,404
Total cash, cash equivalents and restricted cash	$	9,335,316	$	7,495,010

August 31, 2020 August 31, 2019
Cash and cash equivalents $ 8,426,832 $ 6,011,350
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations 930,174 623,363
Other assets 40,887 47,068
Total cash, cash equivalents and restricted cash $ 9,397,893 $ 6,681,781

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the three months ended ~~August~~May 31, ~~2020~~2021 and ~~2019~~2020

(In thousands, except par value and per share amounts)

(Unaudited)

Jefferies Financial Group Inc. Common Shareholders
Common
Shares
$1 Par
Value Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income (Loss) Retained
Earnings Subtotal Noncontrolling
Interests Total
Balance, June 1, 2020 $ 267,111 $ 3,191,893 $ (134,528) $ 6,002,078 $ 9,326,554 $ 34,559 $ 9,361,113
Net income attributable to Jefferies
Financial Group Inc. common
shareholders 304,409 304,409 304,409
Net loss attributable to the
noncontrolling interests 0 (324) (324)
Other comprehensive loss, net of taxes (61,879) (61,879) (61,879)
Contributions from noncontrolling interests 0 1,054 1,054
Distributions to noncontrolling interests 0 (1,503) (1,503)
Share-based compensation expense 8,870 8,870 8,870
Purchase of common shares for treasury (7,888) (120,329) (128,217) (128,217)
Dividends ($0.15 per common share) (41,798) (41,798) (41,798)
Other 23 2,703 2,726 0 2,726
Balance, August 31, 2020 $ 259,246 $ 3,083,137 $ (196,407) $ 6,264,689 $ 9,410,665 $ 33,786 $ 9,444,451


	Jefferies Financial Group Inc. Common Shareholders
	Common Shares $1 Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Subtotal		Noncontrolling Interests		Total

Balance, March 1, 2021	$	246,703	$	2,804,243	$	(346,544)	$	7,041,460	$	9,745,862	$	32,496	$	9,778,358


Net income attributable to Jefferies Financial Group Inc. common shareholders							352,596		352,596				352,596
Net loss attributable to the noncontrolling interests									0		(669)		(669)
Other comprehensive loss, net of taxes					(17,454)				(17,454)				(17,454)
Contributions from noncontrolling interests									0		3,354		3,354
Distributions to noncontrolling interests									0		(11,793)		(11,793)

Share-based compensation expense			43,579						43,579				43,579
Change in fair value of redeemable noncontrolling interests			(3,715)						(3,715)				(3,715)

Dividends ($0.20 per common share)							(53,943)		(53,943)				(53,943)
Other	329		5,380						5,709		(658)		5,051
Balance, May 31, 2021	$	247,032	$	2,849,487	$	(363,998)	$	7,340,113	$	10,072,634	$	22,730	$	10,095,364

Jefferies Financial Group Inc. Common Shareholders
Common
Shares
$1 Par
Value Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income (Loss) Retained
Earnings Subtotal Noncontrolling
Interests Total
Balance, June 1, 2019 $ 290,687 $ 3,559,156 $ (242,824) $ 6,246,852 $ 9,853,871 $ 23,490 $ 9,877,361
Net income attributable to Jefferies
Financial Group Inc. common
shareholders 48,477 48,477 48,477
Net loss attributable to the
noncontrolling interests 0 (116) (116)
Other comprehensive loss, net of taxes (23,628) (23,628) (23,628)
Contributions from noncontrolling interests 0 66 66
Issuance of shares for HomeFed acquisition 9,295 168,585 177,880 3,900 181,780
Share-based compensation expense 12,150 12,150 12,150
Change in fair value of redeemable noncontrolling interests (2,558) (2,558) (2,558)
Purchase of common shares for treasury (401) (7,740) (8,141) (8,141)
Dividends ($0.125 per common share) (40,015) (40,015) (40,015)
Other 287 2,119 2,406 (1) 2,405
Balance, August 31, 2019 $ 299,868 $ 3,731,712 $ (266,452) $ 6,255,314 $ 10,020,442 $ 27,339 $ 10,047,781


	Jefferies Financial Group Inc. Common Shareholders
	Common Shares $1 Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Subtotal		Noncontrolling Interests		Total

Balance, March 1, 2020	$	277,109	$	3,329,633	$	(258,400)	$	6,000,613	$	9,348,955	$	36,950	$	9,385,905


Net income attributable to Jefferies Financial Group Inc. common shareholders							44,919		44,919				44,919
Net loss attributable to the noncontrolling interests									0		(2,580)		(2,580)
Other comprehensive income, net of taxes					123,872				123,872				123,872
Contributions from noncontrolling interests									0		404		404
Distributions to noncontrolling interests									0		(216)		(216)


Share-based compensation expense			10,737						10,737				10,737
Change in fair value of redeemable noncontrolling interests			2,311						2,311				2,311


Purchase of common shares for treasury	(10,130)		(156,407)						(166,537)				(166,537)
Dividends ($0.15 per common share)							(43,454)		(43,454)				(43,454)
Other	132		5,619						5,751		1		5,752
Balance, May 31, 2020	$	267,111	$	3,191,893	$	(134,528)	$	6,002,078	$	9,326,554	$	34,559	$	9,361,113

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019~~2020

(In thousands, except par value and per share amounts)

(Unaudited)

Jefferies Financial Group Inc. Common Shareholders
Common
Shares
$1 Par
Value Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income (Loss) Retained
Earnings Subtotal Noncontrolling
Interests Total
Balance, December 1, 2019 $ 291,644 $ 3,627,711 $ (273,039) $ 5,933,389 $ 9,579,705 $ 21,979 $ 9,601,684
Net income attributable to Jefferies
Financial Group Inc. common
shareholders 462,338 462,338 462,338
Net loss attributable to the
noncontrolling interests 0 (5,033) (5,033)
Other comprehensive income, net of taxes 76,632 76,632 76,632
Contributions from noncontrolling interests 0 18,558 18,558
Distributions to noncontrolling interests 0 (1,719) (1,719)
Share-based compensation expense 29,554 29,554 29,554
Change in fair value of redeemable noncontrolling interests 3,875 3,875 3,875
Purchase of common shares for treasury (32,756) (589,499) (622,255) (622,255)
Dividends ($0.45 per common share) (131,038) (131,038) (131,038)
Other 358 11,496 11,854 1 11,855
Balance, August 31, 2020 $ 259,246 $ 3,083,137 $ (196,407) $ 6,264,689 $ 9,410,665 $ 33,786 $ 9,444,451


	Jefferies Financial Group Inc. Common Shareholders
	Common Shares $1 Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Subtotal		Noncontrolling Interests		Total

Balance, December 1, 2020	$	249,751	$	2,911,223	$	(288,917)	$	6,531,836	$	9,403,893	$	34,632	$	9,438,525
Cumulative effect of the adoption of accounting standards							(19,915)		(19,915)				(19,915)
Balance, December 1, 2020, as adjusted	249,751		2,911,223		(288,917)		6,511,921		9,383,978		34,632		9,418,610
Net income attributable to Jefferies Financial Group Inc. common shareholders							935,031		935,031				935,031
Net loss attributable to the noncontrolling interests									0		(1,412)		(1,412)
Other comprehensive loss, net of taxes					(75,081)				(75,081)				(75,081)
Contributions from noncontrolling interests									0		3,434		3,434
Distributions to noncontrolling interests									0		(13,266)		(13,266)

Share-based compensation expense			64,257						64,257				64,257
Change in fair value of redeemable noncontrolling interests			(10,773)						(10,773)				(10,773)
Purchase of common shares for treasury	(5,103)		(124,994)						(130,097)				(130,097)
Dividends ($0.40 per common share)							(106,839)		(106,839)				(106,839)
Other	2,384		9,774						12,158		(658)		11,500
Balance, May 31, 2021	$	247,032	$	2,849,487	$	(363,998)	$	7,340,113	$	10,072,634	$	22,730	$	10,095,364

Jefferies Financial Group Inc. Common Shareholders
Common
Shares
$1 Par
Value Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income (Loss) Retained
Earnings Subtotal Noncontrolling
Interests Total
Balance, December 1, 2018 $ 307,515 $ 3,854,847 $ 288,286 $ 5,610,218 $ 10,060,866 $ 18,391 $ 10,079,257
Net income attributable to Jefferies
Financial Group Inc. common
shareholders 764,052 764,052 764,052
Net income attributable to the
noncontrolling interests 0 759 759
Other comprehensive loss, net of taxes (554,738) (554,738) (554,738)
Contributions from noncontrolling interests 0 6,771 6,771
Distributions to noncontrolling interests 0 (2,481) (2,481)
Issuance of shares for HomeFed acquisition 9,295 168,585 177,880 3,900 181,780
Share-based compensation expense 37,036 37,036 37,036
Change in fair value of redeemable noncontrolling interests (1,437) (1,437) (1,437)
Purchase of common shares for treasury (17,891) (337,389) (355,280) (355,280)
Dividends ($0.375 per common share) (118,956) (118,956) (118,956)
Other 949 10,070 11,019 (1) 11,018
Balance, August 31, 2019 $ 299,868 $ 3,731,712 $ (266,452) $ 6,255,314 $ 10,020,442 $ 27,339 $ 10,047,781


	Jefferies Financial Group Inc. Common Shareholders
	Common Shares $1 Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Subtotal		Noncontrolling Interests		Total

Balance, December 1, 2019	$	291,644	$	3,627,711	$	(273,039)	$	5,933,389	$	9,579,705	$	21,979	$	9,601,684


Net income attributable to Jefferies Financial Group Inc. common shareholders							157,929		157,929				157,929
Net loss attributable to the noncontrolling interests									0		(4,709)		(4,709)
Other comprehensive income, net of taxes					138,511				138,511				138,511
Contributions from noncontrolling interests									0		17,504		17,504
Distributions to noncontrolling interests									0		(216)		(216)


Share-based compensation expense			20,684						20,684				20,684
Change in fair value of redeemable noncontrolling interests			3,875						3,875				3,875


Purchase of common shares for treasury	(24,868)		(469,170)						(494,038)				(494,038)
Dividends ($0.30 per common share)							(89,240)		(89,240)				(89,240)
Other	335		8,793						9,128		1		9,129
Balance, May 31, 2020	$	267,111	$	3,191,893	$	(134,528)	$	6,002,078	$	9,326,554	$	34,559	$	9,361,113

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1. Nature of Operations

Jefferies Financial Group Inc. ("Jefferies," "we," "our" or the "Company") is ~~a diversified financial services company~~ engaged in investment banking and capital markets, asset management and direct investing. Jefferies Group LLC ("Jefferies Group"), our largest subsidiary, was established in 1962 and is now the largest independent U.S.-headquartered global full-service ~~global~~integrated investment banking ~~firm headquartered in the U.S.~~and securities firm.

Jefferies Group operates in 2 business segments: Investment Banking and Capital Markets, and Asset Management. Investment Banking and Capital Markets includes investment banking, capital markets and other related services. Investment banking provides underwriting and financial advisory services to clients across most industry sectors in the Americas, Europe and Asia. Capital markets businesses operate across the spectrum of equities and fixed income ~~and foreign exchange~~ products. ~~Related services include, among other things, prime brokerage and equity finance, research and strategy, corporate lending and real estate finance.~~

Our Asset Management segment ~~includes both the operations of Leucadia Asset Management ("LAM") as well as the~~comprises all asset management operations, including those within Jefferies Group. Within Asset Management, we manage, invest in and provide services to a diverse group of alternative asset management platforms across a spectrum of investment strategies and asset classes. Asset Management offers institutional clients an innovative range of investment strategies through its affiliated managers.

Merchant Banking is where we own a portfolio of businesses and investments, including Linkem (fixed wireless broadband services in Italy); Vitesse Energy, LLC ("Vitesse Energy Finance"~~) and JETX Energy, LLC ("JETX Energy"~~) (oil and gas production and development); real estate, primarily HomeFed LLC ("HomeFed"); Idaho Timber (manufacturing); and FXCM Group, LLC ("FXCM") (provider of online foreign exchange trading services). Our Merchant Banking businesses and investments also included National Beef Packing Company, LLC ("National Beef") (beef processing), prior to its sale in November 2019 and Spectrum Brands Holdings, Inc. ("Spectrum Brands") (consumer products), prior to its distribution to our shareholders in October 2019. The structure of each of our investments was tailored to the unique opportunity each transaction presented. Our investments may be reflected in our consolidated results as consolidated subsidiaries, equity investments, securities or in other ways, depending on the structure of our specific holdings.

We own approximately 42% of the common shares of Linkem, as well as convertible preferred shares and warrants. If all of our convertible preferred stock was converted and warrants were exercised, it would increase our ownership to approximately 56% of Linkem's common equity at August 31, 2020. Linkem provides residential broadband services in Italy using LTE technologies deployed over the 3.5 GHz spectrum band and is preparing to upgrade its service to 5G. Linkem is accounted for under the equity method.

Vitesse Energy Finance is our 97% owned consolidated subsidiary that acquires and invests in non-operated working interests and royalties predominantly in the Bakken Shale oil field in North Dakota. JETX Energy is our 98% owned consolidated subsidiary that currently has non-operated working interests and acreage in east Texas.

HomeFed is our 100% owned consolidated subsidiary that owns and develops residential and mixed use real estate properties. Prior to July 1, 2019, we owned approximately 70% of HomeFed and accounted for it under the equity method. On July 1, 2019, we completed a merger with HomeFed by which we acquired the remaining common stock of HomeFed. From July 1, 2019, the results of HomeFed are reflected on a consolidated basis.

~~Idaho Timber is our 100% owned consolidated subsidiary engaged in the manufacture and distribution of various wood products.~~

Our investment in FXCM and associated companies consists of a senior secured term loan due February 15, 2021 ($71.6 million principal outstanding at August 31, 2020), a 50% voting interest in FXCM and rights to a majority of all distributions in respect of the equity of FXCM.

Note 2. Basis of Presentation and Significant Accounting Policies

Our unaudited interim consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and footnotes which are normally included in our Form 10-K. These financial statements reflect all adjustments (consisting of normal recurring items or items discussed herein) that management believes are necessary to fairly state results for the interim periods presented. Results of operations for interim periods are not necessarily indicative of annual results of operations. For a detailed discussion about the Company's significant accounting policies, see Note 2, Significant Accounting Policies, included in our Annual Report on Form 10-K for the year ended November 30, ~~2019~~2020 ("~~2019~~2020 10-K").

The preparation of these financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") requires us to make estimates and assumptions that affect the reported amounts in the financial statements and disclosures of contingent assets and liabilities. On an ~~on-going~~ongoing basis, we evaluate all of these estimates and assumptions. The most important of these estimates and assumptions relate to fair value measurements, compensation and benefits, asset impairment, the ability to realize deferred tax assets, the recognition and measurement of uncertain tax positions and contingencies. Although these and other estimates and assumptions are based on the best available information, actual results could be different from these estimates.

During the ~~nine~~six months ended ~~August~~May 31, ~~2020,~~2021, other than the following, there were no significant changes made to the Company's significant accounting policies. The accounting policy changes are attributable to the adoption of the Financial Accounting Standards Board ("FASB") guidance on ~~leases~~credit losses on financial instruments (the "new ~~lease~~credit loss standard") on December 1, ~~2019. These lease~~2020. The credit loss policy updates ~~are~~were applied using a modified retrospective ~~approach.~~approach, through a cumulative-effect adjustment to retained earnings upon adoption. Reported financial information for the historical comparable period was not revised and continues to be reported under the accounting standards in effect during the historical periods.

~~Lease Accounting~~Credit Losses

Foursight Capital, our wholly-owned subsidiary, is an auto loan originator and servicer. Provision for credit losses are charged to income in amounts sufficient to maintain an allowance for credit losses inherent in Foursight Capital's finance receivables held for investment. The allowance for credit losses is established systematically by management based on the determination of the amount of credit losses inherent in the finance receivables held for investment as of the reporting date. All finance receivables held for investment of Foursight Capital are collectively evaluated for impairment. Management's estimate of expected credit losses is based on an evaluation of relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the future collectability of the reported amounts. Foursight Capital uses static pool modeling techniques to determine the allowance for loan losses expected over the remaining life of the receivables, which is supplemented by management judgment. Expected losses are estimated for groups of accounts aggregated by monthly vintage.

Generally, the expected losses are projected based on historical loss experience over the last eight years, more heavily weighted toward recent performance when determining the allowance to result in an estimate that is more reflective of the current internal and external environments. Foursight Capital's estimate of expected credit losses includes a reasonable and supportable forecast period of two years and then reverts to an estimate based on historical losses. Foursight Capital reviews charge-off experience factors, contractual delinquency, historical collection rates, the value of underlying collateral and other information to make the necessary judgments as to credit losses expected in the portfolio as of the reporting date. While management utilizes the best information available to make its evaluations, changes in macroeconomic conditions, interest rate environments, or both, may significantly impact the assumptions and inputs used in determining the allowance for credit losses. Foursight Capital's charge-off policy is based on a loan by loan review of delinquent finance receivables.

Other financial assets measured at amortized cost are presented at the net amount expected to be collected and the measurement of credit losses and any expected increases or decreases in expected credit losses are recognized in earnings. The estimate of expected credit losses involves judgment and is based on an assessment over the life of the financial instrument taking into consideration forecasts of expected future economic conditions. In evaluating secured financing receivables (reverse repurchases agreements, securities borrowing arrangements and margin loans), the underlying collateral maintenance provisions are taken into consideration. The underlying contractual collateral maintenance for significantly all of Jefferies Group's secured financing receivables requires that the counterparty continually adjust the collateralization amount, securing the credit exposure on these contracts. Collateralization levels for Jefferies Group's secured financing receivables are initially established based upon the counterparty, the type of acceptable collateral that is monitored daily and adjusted to mitigate the potential of any credit losses. Credit losses are not recognized for secured financing receivables where the underlying collateral's fair value is equal to or exceeds the asset's amortized cost basis. In cases where the collateral's fair value does not equal or exceed the amortized cost basis, the allowance for credit losses, if any, is limited to the difference between the fair value of the collateral at the reporting date and the amortized cost basis of the financial assets.

Our receivables from brokers, dealers, and clearing organizations include deposits of cash with exchange clearing organizations to meet margin requirements, amounts due from clearing organizations for daily variation settlements, securities failed-to-deliver or receive, receivables and payables for fees and commissions, and receivables arising from unsettled securities or loans transactions. These receivables generally do not give rise to material credit risk and have a remote probability of default either because of their short-term nature or due to the credit protection framework inherent in the design and operations of brokers, dealers and clearing organizations. As such, generally, no allowance for credit losses is held against these receivables.

For ~~leases with an original term longer than one year, lease liabilities are initially recognized on~~all other financial assets measured at amortized cost, we estimate expected credit losses over the ~~lease commencement~~financial assets' life as of the reporting date based on ~~the present value of the future minimum lease payments over the lease term, including non-lease components such as fixed common area maintenance costs~~relevant information about past events, current conditions, and ~~other fixed costs for generally all leases. A corresponding right of use ("ROU") asset is initially recognized equal to the lease liability adjusted for any lease prepayments, initial direct costs~~reasonable and lease incentives. The ROU assets are included in Property, equipment and leasehold improvements, net and the lease liabilities are included in Lease liabilities in the Consolidated Statement of Financial Condition.

The discount rates used in determining the present value of leases represent our collateralized borrowing rate considering each lease's term and currency of payment. The lease term includes options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Certain leases have renewal options that can be exercised at the discretion of the Company. Lease expense is generally recognized on a straight-line basis over the lease term and included in Selling, general and other expenses in the Consolidated Statement of Operations. See Note 12 for further information.supportable forecasts.

Receivables

At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, Receivables include receivables from brokers, dealers and clearing organizations of ~~$2,755.8~~$4,730.8 million and ~~$3,011.0~~$4,161.8 million, respectively, and receivables from customers of securities operations of ~~$956.8~~$2,121.8 million and ~~$1,490.9~~$1,286.9 million, respectively.

Our subsidiary, Foursight Capital, had ~~auto~~automobile loan receivables of ~~$734.5~~$746.9 million and ~~$741.2~~$694.2 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively. Of these amounts, ~~$600.5~~$592.7 million and ~~$621.2~~$532.4 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively, were in securitized vehicles. See Notes 6 and 7 for additional information on Foursight Capital's securitization activities. Based primarily on ~~Beacon~~ credit scores, Foursight Capital classifies its ~~auto loan~~finance receivables held for investment as prime, near-prime and sub-prime based on the perceived credit risk at origination and generally considers prime receivables as those with a ~~Beacon~~credit score of 680 and above, near-prime with scores between 620 and 679 and sub-prime with scores below 620. The credit quality classification at ~~August~~both May 31, ~~2020~~2021 and November 30, ~~2019~~2020 was approximately 14% ~~and 15%~~ prime, ~~52% and 53%~~54% near-prime and ~~34%~~32% sub-prime.

A rollforward of the allowance for credit losses for the three and ~~32% sub-prime, respectively.~~six months ended May 31, 2021 and 2020 is as follows (in thousands):


	For the Three Months Ended				For the Six Months Ended
	May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Beginning balance	$	76,392	$	34,038	$	53,926	$	34,018
Adjustment for change in accounting principle for current expected credit losses	0		0		26,519		0
Provision for doubtful accounts (1)	45,672		12,109		48,939		22,979
Charge-offs, net of recoveries (1)	(42,810)		(7,341)		(50,130)		(18,191)

Ending balance	$	79,254	$	38,806	$	79,254	$	38,806

(1) The three and six months ended May 31, 2021 includes a $39.0 million bad debt expense related to our prime brokerage business.

Other Investments

At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, the Company had other investments (classified as Other assets and Loans to and investments in associated companies) in which fair values are not readily determinable, aggregating ~~$104.8~~$61.8 million and ~~$172.8~~$90.2 million, respectively. Impairments recognized on these investments were ~~$0.3~~$0.6 million and ~~$2.3~~$20.6 million during the three and six months

ended ~~August~~May 31, 2020, ~~and 2019, respectively, and $20.9 million and $2.3 million~~respectively. There were 0 impairments on these investments during the ~~nine~~three and six months ended ~~August~~May 31, ~~2020 and 2019, respectively .~~2021.

Capitalization of Interest

We capitalize interest on qualifying HomeFed real estate assets. ~~During~~Capitalized interest of $2.2 million and $2.4 million during the three ~~and nine~~ months ended ~~August~~May 31, 2021 and 2020, ~~capitalized interest of $1.6~~respectively, and $4.1 million and ~~$6.4~~$4.8 million during the six months ended May 31, 2021 and 2020, respectively, was allocated among all of HomeFed's projects that are currently under development.

Payables, expense accruals and other liabilities

At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, Payables, expense accruals and other liabilities include payables to brokers, dealers and clearing organizations of ~~$2,546.5~~$5,351.6 million and ~~$2,621.7~~$3,325.8 million, respectively, and payables to customers of securities operations of ~~$3,936.8~~$4,190.4 million and ~~$3,808.6~~$4,249.7 million, respectively.

Supplemental Cash Flow Information

For the Nine Months Ended
August 31, 2020 August 31, 2019
(In thousands)
Cash paid during the year for:
Interest $ 880,853 $ 1,257,311
Income tax payments (refunds), net $ (13,514) $ 25,825

During the nine months ended August 31, 2019, we had $178.8 million in non-cash investing activities related to the issuance of common stock for the acquisition of the remaining common stock of HomeFed.

In June 2019, we entered into a Membership Interest Purchase Agreement ("MIPA") which provided for each of the owners of National Beef to purchase, in the aggregate, 100% of the ownership interests in Iowa Premium, LLC ("Iowa Premium"). The funds used to acquire Iowa Premium were provided by way of a permitted distribution from National Beef to its owners, of which our proportionate share was approximately $49.0 million. The distribution from National Beef and the acquisition of Iowa Premium are included in our Consolidated Statement of Cash Flows for the nine months ended August 31, 2019. Immediately following the acquisition, we contributed our ownership interest in Iowa Premium to National Beef, which was a non-cash investing activity.


	For the Six Months Ended
	May 31, 2021		May 31, 2020
	(In thousands)
Cash paid during the year for:
Interest	$	444,939	$	584,009
Income tax payments (refunds), net	$	337,720	$	(5,330)

Accounting Developments - Accounting Standards Adopted in Current Annual Reporting Period

~~Leases~~. We adopted the new lease standard on December 1, 2019 using a modified retrospective transition approach. Accordingly, reported financial information for historical comparable periods is not revised and continues to be reported under the accounting standards in effect during those historical periods. We elected not to reassess whether existing contracts are or contain leases, or the lease classification and initial direct costs of existing leases upon transition. At transition on December 1, 2019, the adoption of this standard resulted in the recognition of operating ROU assets of $545.8 million and operating lease liabilities of $614.9 million reflected in Property, equipment and leasehold improvements, net and Lease liabilities in the Consolidated Statement of Financial Condition, respectively. Finance lease ROU assets and finance lease liabilities were not material and are reflected in Property, equipment and leasehold improvements, net and Lease liabilities in the Consolidated Statement of Financial Condition, respectively.

~~Derivatives and Hedging.~~ In August 2017, the FASB issued new guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. We adopted the guidance in the first quarter of fiscal 2020 and the adoption did not have a material impact on our consolidated financial statements.

~~Accounting Developments - Accounting Standards to be Adopted in Future Periods~~

Financial Instruments - Credit Losses. In June 2016, the FASB issued new guidance which provides for estimating credit losses on ~~certain types of~~ financial ~~instruments~~assets measured at amortized cost by introducing an approach based on expected ~~losses. The~~losses over the financial asset's entire life, recorded at inception or purchase. We adopted the new credit loss guidance ~~is effective~~on December 1, 2020 and applied a modified retrospective approach through a cumulative-effect adjustment to retained earnings upon adoption. At transition on December 1, 2020, the new accounting guidance's adoption resulted in an increase in the ~~first quarter~~allowance for credit losses of ~~fiscal 2021. We are currently evaluating~~$26.5 million with a corresponding decrease in retained earnings of $19.9 million, net of tax. The increase is primarily attributable to a $30.1 million increase in the ~~impact~~allowance for credit losses in Foursight Capital's portfolio of finance receivables held for investment. Foursight Capital estimates expected credit losses on its portfolio using analysis of historical portfolio performance data as well as external economic factors that management considers to be relevant to the ~~new guidance~~credit losses expected in the portfolio. This is partially offset by a $3.6 million decrease in the allowance for credit losses at Jefferies Group that is attributable to applying a revised provisioning methodology based on ~~our consolidated financial statements.~~historical loss experience for its investment banking fee receivables.

We have determined expected credit losses to be immaterial upon adoption for our other financial instruments within the scope of the guidance. A significant portion of our financial instruments within the scope of the guidance represent secured financing receivables (reverse repurchase agreements, secured borrowing arrangements, and margin loans) that are substantially collateralized. For our secured financing receivables, we have concluded that the impact upon adoption was immaterial because the contractual collateral maintenance provisions require that the counterparty continually adjust the amount of collateralization securing the credit exposure on these contracts. Collateralization levels for our secured financing receivables are initially established based upon the counterparty, the type of acceptable collateral that is monitored daily and adjusted to mitigate the potential of any credit losses. For the remaining financial instruments within the guidance's scope, the expected credit losses were also determined to be immaterial considering the counterparty's credit quality, an insignificant history of credit losses, or the short-term nature of the credit exposures.

Goodwill. In January 2017, the FASB issued new guidance which simplifies goodwill impairment testing. ~~The~~We adopted the guidance ~~is effective~~ in the first quarter of fiscal ~~2021. We do~~2021 and the adoption did not ~~believe the new guidance will~~ have a material impact on our consolidated financial statements.

Defined Benefit Plans. In August 2018, the FASB issued new guidance to improve the effectiveness of disclosure requirements on defined benefit pension plans and other ~~postretirement~~post-retirement plans. ~~The~~We adopted the guidance ~~is effective~~ in the first quarter of fiscal ~~2021. We do~~2021 and the adoption did not ~~believe the new guidance will~~ have a material impact on our consolidated financial statements.

Internal-Use Software. In August 2018, the FASB issued new guidance which amends the definition of a hosting arrangement and requires that the customer in a hosting arrangement that is a service contract capitalize certain implementation costs as if the arrangement was an internal-use software project. ~~The~~We adopted the guidance ~~is effective~~ in the first quarter of fiscal ~~2021. We are currently evaluating~~2021 and elected to apply the ~~impact of~~guidance prospectively to implementation costs incurred after the ~~new guidance~~adoption date. The adoption did not have an impact on our consolidated financial ~~statements.~~statements on the adoption date.

Consolidation. In October 2018, the FASB issued new guidance which requires indirect interests held through related parties under common control arrangements be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. ~~The~~We adopted the guidance ~~is effective~~ in the first quarter of fiscal ~~2021. We are currently evaluating~~2021 and the adoption did not have a material impact ~~of the new guidance~~ on our consolidated financial statements.

Income Taxes. In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and to provide more consistent application to improve the comparability of financial statements. ~~The~~We adopted the guidance ~~is effective~~ in the first quarter of fiscal ~~2022. We are currently evaluating~~2021 and the adoption did not have a material impact ~~of the new guidance on our consolidated financial statements.~~

~~Reference Rate Reform~~. In March 2020, the FASB issued new guidance which provides optional exceptions for applying GAAP to contracts, hedge accounting relationships or other transactions affected by reference rate reform. The optional exceptions can be elected through December 31, 2022. We are currently evaluating the impact of applying the optional exceptions on our consolidated financial statements.

Note 3. Fair Value Disclosures

The following is a summary of our financial assets and liabilities that are accounted for at fair value on a recurring basis, excluding Investments at fair value based on net asset value ("NAV") of ~~$928.2~~$908.9 million and ~~$586.9~~$965.4 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively, by level within the fair value hierarchy (in thousands):

August 31, 2020
Level 1 Level 2 Level 3 Counterparty
and
Cash
Collateral
Netting (1) Total
Assets:
Financial instruments owned, at fair value:
Corporate equity securities $ 2,594,722 $ 63,256 $ 77,941 $ — $ 2,735,919
Corporate debt securities 0 2,720,644 23,269 — 2,743,913
Collateralized debt obligations and
collateralized loan obligations
0 68,287 36,122 — 104,409
U.S. government and federal agency securities 3,164,472 92,036 0 — 3,256,508
Municipal securities 0 358,292 0 — 358,292
Sovereign obligations 1,686,522 877,334 0 — 2,563,856
Residential mortgage-backed securities 0 975,166 28,317 — 1,003,483
Commercial mortgage-backed securities 0 1,091,406 4,663 — 1,096,069
Other asset-backed securities 0 48,734 63,337 — 112,071
Loans and other receivables 0 2,117,162 162,941 — 2,280,103
Derivatives 2,897 2,086,407 52,195 (1,611,815) 529,684
Investments at fair value 0 45,156 172,498 — 217,654
FXCM term loan 0 0 56,542 — 56,542
Total financial instruments owned, at fair value, excluding investments at fair value based on NAV $ 7,448,613 $ 10,543,880 $ 677,825 $ (1,611,815) $ 17,058,503
Loans to and investments in associated
companies $ 0 $ 8,404 $ 34,688 $ — $ 43,092
Securities received as collateral, at fair value $ 4,413 $ 0 $ 0 $ — $ 4,413
Liabilities:
Financial instruments sold, not yet purchased, at fair value:
Corporate equity securities $ 2,295,391 $ 12,533 $ 4,367 $ — $ 2,312,291
Corporate debt securities 0 1,448,558 148 — 1,448,706
U.S. government and federal agency securities 2,722,907 0 0 — 2,722,907
Sovereign obligations 1,452,399 1,096,176 0 — 2,548,575
Commercial mortgage-backed securities 0 0 35 — 35
Loans 0 1,432,113 46,594 — 1,478,707
Derivatives 1,031 2,207,365 74,620 (1,799,681) 483,335
Total financial instruments sold, not yet purchased, at fair value $ 6,471,728 $ 6,196,745 $ 125,764 $ (1,799,681) $ 10,994,556
Short-term borrowings $ 0 $ 21,829 $ 0 $ — $ 21,829
Other secured financings $ 0 $ 0 $ 3,402 $ — $ 3,402
Long-term debt $ 0 $ 891,845 $ 630,260 $ — $ 1,522,105
Obligation to return securities received as collateral, at fair value $ 4,413 $ 0 $ — $ — $ 4,413


	May 31, 2021
	Level 1		Level 2		Level 3		Counterparty and Cash Collateral Netting (1)		Total
Assets:
Financial instruments owned, at fair value:
Corporate equity securities	$	2,998,198	$	125,957	$	86,451	$	—	$	3,210,606
Corporate debt securities	0		3,735,169		7,985		—		3,743,154
Collateralized debt obligations and collateralized loan obligations	0		186,271		26,561		—		212,832
U.S. government and federal agency securities	3,505,313		167,456		0		—		3,672,769
Municipal securities	0		363,812		0		—		363,812
Sovereign obligations	1,203,666		1,110,548		0		—		2,314,214
Residential mortgage-backed securities	0		811,879		6,033		—		817,912
Commercial mortgage-backed securities	0		572,370		1,176		—		573,546
Other asset-backed securities	0		393,495		70,555		—		464,050
Loans and other receivables	0		2,768,540		190,412		—		2,958,952
Derivatives	2,793		2,888,792		55,394		(2,546,358)		400,621
Investments at fair value	0		6,518		230,834		—		237,352
FXCM term loan	0		0		59,155		—		59,155

Total financial instruments owned, at fair value, excluding investments at fair value based on NAV	$	7,709,970	$	13,130,807	$	734,556	$	(2,546,358)	$	19,028,975

Loans to and investments in associated companies	$	0	$	0	$	37,287	$	—	$	37,287










Liabilities:
Financial instruments sold, not yet purchased, at fair value:
Corporate equity securities	$	2,313,048	$	3,660	$	4,462	$	—	$	2,321,170
Corporate debt securities	0		2,053,152		927		—		2,054,079
U.S. government and federal agency securities	2,155,547		0		0		—		2,155,547

Sovereign obligations	1,062,934		1,149,771		0		—		2,212,705

Commercial mortgage-backed securities	0		0		35		—		35
Loans	0		2,325,115		20,389		—		2,345,504
Derivatives	1,049		3,615,868		282,452		(3,016,439)		882,930
Total financial instruments sold, not yet purchased, at fair value	$	5,532,578	$	9,147,566	$	308,265	$	(3,016,439)	$	11,971,970


Other secured financings	$	0	$	0	$	2,493	$	—	$	2,493
Long-term debt	$	0	$	1,024,877	$	795,098	$	—	$	1,819,975


		November 30, 2019																			November 30, 2020
		Level 1		Level 2		Level 3		Counterparty and Cash Collateral Netting (1)		Total			Level 1		Level 2		Level 3		Counterparty and Cash Collateral Netting (1)		Total
Assets:	Assets:											Assets:
Financial instruments owned, at fair value:	Financial instruments owned, at fair value:											Financial instruments owned, at fair value:
Corporate equity securities	Corporate equity securities	$	2,507,164	$	218,403	$	58,426	$	—	$	2,783,993	Corporate equity securities	$	2,475,887	$	58,159	$	75,904	$	—	$	2,609,950
Corporate debt securities	Corporate debt securities	0		2,472,245		7,490		—		2,479,735		Corporate debt securities	0		2,954,236		23,146		—		2,977,382
Collateralized debt obligations and collateralized loan obligations	Collateralized debt obligations and collateralized loan obligations	0		124,225		28,788		—		153,013		Collateralized debt obligations and collateralized loan obligations	0		64,155		17,972		—		82,127
U.S. government and federal agency securities	U.S. government and federal agency securities	2,101,624		158,618		0		—		2,260,242		U.S. government and federal agency securities	2,840,025		91,653		0		—		2,931,678
Municipal securities	Municipal securities	0		742,326		0		—		742,326		Municipal securities	0		453,881		0		—		453,881
Sovereign obligations	Sovereign obligations	1,330,026		1,405,827		0		—		2,735,853		Sovereign obligations	1,962,346		591,342		0		—		2,553,688
Residential mortgage-backed securities	Residential mortgage-backed securities	0		1,069,066		17,740		—		1,086,806		Residential mortgage-backed securities	0		1,100,849		21,826		—		1,122,675
Commercial mortgage-backed securities	Commercial mortgage-backed securities	0		424,060		6,110		—		430,170		Commercial mortgage-backed securities	0		736,291		2,003		—		738,294
Other asset-backed securities	Other asset-backed securities	0		303,847		42,563		—		346,410		Other asset-backed securities	0		103,611		79,995		—		183,606
Loans and other receivables	Loans and other receivables	0		2,460,551		114,080		—		2,574,631		Loans and other receivables	0		2,610,746		134,636		—		2,745,382
Derivatives	Derivatives	2,809		1,833,907		14,889		(1,433,197)		418,408		Derivatives	1,523		2,013,942		21,678		(1,556,136)		481,007
Investments at fair value	Investments at fair value	0		32,688		205,412		—		238,100		Investments at fair value	0		6,122		213,946		—		220,068
FXCM term loan	FXCM term loan	0		0		59,120		—		59,120		FXCM term loan	0		0		59,455		—		59,455
Total financial instruments owned, at fair value, excluding investments at fair value based on NAV	Total financial instruments owned, at fair value, excluding investments at fair value based on NAV	$	5,941,623	$	11,245,763	$	554,618	$	(1,433,197)	$	16,308,807	Total financial instruments owned, at fair value, excluding investments at fair value based on NAV	$	7,279,781	$	10,784,987	$	650,561	$	(1,556,136)	$	17,159,193

Securities purchased under agreements to resell		$	0	$	0	$	25,000	$	—	$	25,000
Loans to and investments in associated companies												Loans to and investments in associated companies	$	0	$	8,603	$	40,185	$	—	$	48,788
Securities received as collateral, at fair value	Securities received as collateral, at fair value	$	9,500	$	0	$	0	$	—	$	9,500	Securities received as collateral, at fair value	$	7,517	$	0	$	0	$	—	$	7,517

Liabilities:	Liabilities:											Liabilities:
Financial instruments sold, not yet purchased, at fair value:	Financial instruments sold, not yet purchased, at fair value:											Financial instruments sold, not yet purchased, at fair value:
Corporate equity securities	Corporate equity securities	$	2,755,601	$	7,438	$	4,487	$	—	$	2,767,526	Corporate equity securities	$	2,046,441	$	9,046	$	4,434	$	—	$	2,059,921
Corporate debt securities	Corporate debt securities	0		1,471,142		340		—		1,471,482		Corporate debt securities	0		1,237,631		141		—		1,237,772
U.S. government and federal agency securities	U.S. government and federal agency securities	1,851,981		0		0		—		1,851,981		U.S. government and federal agency securities	2,609,660		0		0		—		2,609,660
Sovereign obligations	Sovereign obligations	1,363,475		941,065		0		—		2,304,540		Sovereign obligations	1,050,771		624,740		0		—		1,675,511
Residential mortgage-backed securities												Residential mortgage-backed securities	0		477		0		—		477
Commercial mortgage-backed securities	Commercial mortgage-backed securities	0		0		35		—		35		Commercial mortgage-backed securities	0		0		35		—		35
Loans	Loans	0		1,600,228		9,463		—		1,609,691		Loans	0		1,776,446		16,635		—		1,793,081
Derivatives	Derivatives	871		2,066,455		92,057		(1,632,178)		527,205		Derivatives	551		2,391,556		47,695		(1,798,659)		641,143
Total financial instruments sold, not yet purchased, at fair value	Total financial instruments sold, not yet purchased, at fair value	$	5,971,928	$	6,086,328	$	106,382	$	(1,632,178)	$	10,532,460	Total financial instruments sold, not yet purchased, at fair value	$	5,707,423	$	6,039,896	$	68,940	$	(1,798,659)	$	10,017,600

Short-term borrowings	Short-term borrowings	$	0	$	20,981	$	0	$	—	$	20,981	Short-term borrowings	$	0	$	5,067	$	0	$	—	$	5,067
Other secured financings												Other secured financings	$	0	$	0	$	1,543	$	—	$	1,543
Long-term debt	Long-term debt	$	0	$	735,216	$	480,069	$	—	$	1,215,285	Long-term debt	$	0	$	1,036,217	$	676,028	$	—	$	1,712,245
Obligation to return securities received as collateral, at fair value	Obligation to return securities received as collateral, at fair value	$	9,500	$	0	$	0	$	—	$	9,500	Obligation to return securities received as collateral, at fair value	$	7,517	$	0	$	0	$	—	$	7,517

(1)Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.

The following is a description of the valuation basis, including valuation techniques and inputs, used in measuring our financial assets and liabilities that are accounted for at fair value on a recurring basis:

Corporate Equity Securities

•Exchange-Traded Equity Securities: Exchange-traded equity securities are measured based on quoted closing exchange prices, which are generally obtained from external pricing services, and are categorized within Level 1 of the fair value

hierarchy, otherwise they are categorized within Level 2 of the fair value hierarchy. To the extent these securities are actively traded, valuation adjustments are not applied.

•Non-Exchange-Traded Equity Securities: Non-exchange-traded equity securities are measured primarily using broker

quotations, pricing data from external pricing services and prices observed from recently executed market transactions and are categorized within Level 2 of the fair value hierarchy. Where such information is not available, non-exchange-traded equity securities are categorized within Level 3 of the fair value hierarchy and measured using valuation techniques involving quoted prices of or market data for comparable companies, similar company ratios and multiples (e.g., price/Earnings before interest, taxes, depreciation and amortization ("EBITDA"), price/book value), discounted cash flow analyses and transaction prices observed from subsequent financing or capital issuance by Jefferies Group. When using pricing data of comparable companies, judgment must be applied to adjust the pricing data to account for differences between the measured security and the comparable security (e.g., issuer market capitalization, yield, dividend rate, geographical concentration).

•Equity Warrants: Non-exchange-traded equity warrants are measured primarily ~~using pricing data~~ from ~~external pricing services,~~observed prices ~~observed from~~on recently executed market transactions and broker quotations and are categorized within Level 2 of the fair value hierarchy. Where such information is not available, non-exchange-traded equity warrants are generally categorized within Level 3 of the fair value hierarchy and can be measured using third-party valuation services or the Black-Scholes model with key inputs impacting the valuation including the underlying security price, implied volatility, dividend yield, interest rate curve, strike price and maturity date.

Corporate Debt Securities

•Investment Grade Corporate Bonds: Investment grade corporate bonds are measured primarily using pricing data from external pricing services and broker quotations, where available, prices observed from recently executed market transactions and bond spreads or credit default swap spreads of the issuer adjusted for basis differences between the swap curve and the bond curve. Investment grade corporate bonds measured using these valuation methods are categorized within Level 2 of the fair value hierarchy. If broker quotes, pricing data or spread data is not available, alternative valuation techniques are used including cash flow models incorporating interest rate curves, single name or index credit default swap curves for comparable issuers and recovery rate assumptions. Investment grade corporate bonds measured using alternative valuation techniques are categorized within Level 2 or Level 3 of the fair value hierarchy and are a limited portion of our investment grade corporate bonds.

•High Yield Corporate and Convertible Bonds: A significant portion of our high yield corporate and convertible bonds are categorized within Level 2 of the fair value hierarchy and are measured primarily using broker quotations and pricing data from external pricing services, where available, and prices observed from recently executed market transactions of institutional size. Where pricing data is less observable, valuations are categorized within Level 3 of the fair value hierarchy and are based on pending transactions involving the issuer or comparable issuers, prices implied from an issuer's subsequent financing or recapitalization, models incorporating financial ratios and projected cash flows of the issuer and market prices for comparable issuers.

Collateralized Debt Obligations and Collateralized Loan Obligations

Collateralized debt obligations ("CDOs") and collateralized loan obligations ("CLOs") are measured based on prices observed from recently executed market transactions of the same or similar security or based on valuations received from third-party brokers or data providers and are categorized within Level 2 or Level 3 of the fair value hierarchy depending on the observability and significance of the pricing inputs. Valuation that is based on recently executed market transactions of similar securities incorporates additional review and analysis of pricing inputs and comparability criteria, including, but not limited to, collateral type, tranche type, rating, origination year, prepayment rates, default rates and loss severity.

U.S. Government and Federal Agency Securities

•U.S. Treasury Securities: U.S. Treasury securities are measured based on quoted market prices obtained from external pricing services and categorized within Level 1 of the fair value hierarchy.

•U.S. Agency Debt Securities: Callable and non-callable U.S. agency debt securities are measured primarily based on quoted market prices obtained from external pricing services and are generally categorized within Level 1 or Level 2 of the fair value hierarchy.

Municipal Securities

Municipal securities are measured based on quoted prices obtained from external pricing services, where available, or recently executed independent transactions of comparable size and are generally categorized within Level 2 of the fair value hierarchy.

Sovereign Obligations

Sovereign government obligations are measured based on quoted market prices obtained from external pricing services, where available, or recently executed independent transactions of comparable size. Sovereign government obligations, with consideration given to the country of issuance, are generally categorized within Level 1 or Level 2 of the fair value hierarchy.

Residential Mortgage-Backed Securities

•Agency Residential Mortgage-Backed Securities: Agency residential mortgage-backed securities include mortgage pass-through securities (fixed and adjustable rate), collateralized mortgage obligations and principal-only and interest-only (including inverse interest-only) securities. Agency residential mortgage-backed securities are generally measured using recent transactions, pricing data from external pricing services or expected future cash flow techniques that incorporate prepayment models and other prepayment assumptions to amortize the underlying mortgage loan collateral and are categorized within Level 2 or Level 3 of the fair value hierarchy. We use prices observed from recently executed transactions to develop market-clearing spread and yield ~~curve~~ assumptions. Valuation inputs with regard to the underlying collateral incorporate factors such as weighted average coupon, loan-to-value, credit scores, geographic location, maximum and average loan size, originator, servicer and weighted average loan age.

•Non-Agency Residential Mortgage-Backed Securities: The fair value of non-agency residential mortgage-backed securities is determined primarily using pricing data from external pricing services, where available, and discounted cash flow methodologies and securities are categorized within Level 2 or Level 3 of the fair value hierarchy based on the observability and significance of the pricing inputs used. Performance attributes of the underlying mortgage loans are evaluated to estimate pricing inputs, such as prepayment rates, default rates and the severity of credit losses. Attributes of the underlying mortgage loans that affect the pricing inputs include, but are not limited to, weighted average coupon; average and maximum loan size; loan-to-value; credit scores; documentation type; geographic location; weighted average loan age; originator; servicer; historical prepayment, default and loss severity experience of the mortgage loan pool; and delinquency rate. Yield curves used in the discounted cash flow models are based on observed market prices for comparable securities and published interest rate data to estimate market yields. In addition, broker quotes, where available, are also referenced to compare prices primarily on interest-only securities.

Commercial Mortgage-Backed Securities

•Agency Commercial Mortgage-Backed Securities: Government National Mortgage Association ("GNMA") project loan bonds are measured based on inputs corroborated from and benchmarked to observed prices of recent securitization transactions of similar securities with adjustments incorporating an evaluation of various factors, including prepayment speeds, default rates and cash flow structures. Federal National Mortgage Association ("FNMA") Delegated Underwriting and Servicing ("DUS") mortgage-backed securities are generally measured by using prices observed from recently executed market transactions to estimate market-clearing spread levels for purposes of estimating fair value. GNMA project loan bonds and FNMA DUS mortgage-backed securities are categorized within Level 2 of the fair value hierarchy.

•Non-Agency Commercial Mortgage-Backed Securities: Non-agency commercial mortgage-backed securities are measured using pricing data obtained from external pricing services, prices observed from recently executed market transactions or based on expected cash flow models that incorporate underlying loan collateral characteristics and performance. Non-agency commercial mortgage-backed securities are categorized within Level 2 or Level 3 of the fair value hierarchy depending on the observability of the underlying inputs.

Other Asset-Backed Securities

Other asset-backed securities include, but are not limited to, securities backed by auto loans, credit card receivables, student loans and other consumer loans and are categorized within Level 2 or Level 3 of the fair value hierarchy. Valuations are primarily determined using pricing data obtained from external pricing services, broker quotes and prices observed from recently executed market transactions. In addition, recent transaction data from comparable deals is deployed to develop market clearing yields and cumulative loss assumptions. The cumulative loss assumptions are based on the analysis of the underlying collateral and comparisons to earlier deals from the same issuer to gauge the relative performance of the deal.

Loans and Other Receivables

•Corporate Loans: Corporate loans categorized within Level 2 of the fair value hierarchy are measured based on market consensus pricing service quotations. Where available, market price quotations from external pricing services are reviewed to ensure they are supported by transaction data. Corporate loans categorized within Level 3 of the fair value hierarchy are measured based on price quotations that are considered to be less transparent, for example, derived using market prices for debt securities of the same creditor and estimates of future cash flows incorporating assumptions regarding creditor default and recovery rates and consideration of the issuer's capital structure.

•Participation Certificates in Agency Residential Loans: Valuations of participation certificates in agency residential loans are based on observed market prices of recently executed purchases and sales of similar loans and data provider pricing. The loan participation certificates are categorized within Level 2 of the fair value hierarchy given the observability and volume of recently executed transactions and availability of data provider pricing.

•Project Loans and Participation Certificates in GNMA Project and Construction Loans: Valuations of participation certificates in GNMA project and construction loans are based on inputs corroborated from and benchmarked to observed prices of recent securitizations with similar underlying loan collateral to derive an implied spread. Securitization prices are adjusted to estimate the fair value of the loans to account for the arbitrage that is realized at the time of securitization. The measurements are categorized within Level 2 of the fair value hierarchy given the observability and volume of recently executed transactions.

•Consumer Loans and Funding Facilities: Consumer and small business whole loans and related funding facilities are valued based on observed market transactions and incorporating valuation inputs including, but not limited to, delinquency and default rates, prepayment rates, borrower characteristics, loan risk grades and loan age. These assets are categorized within Level 2 or Level 3 of the fair value hierarchy.

•Escrow and Claim Receivables: Escrow and claim receivables are categorized within Level 3 of the fair value hierarchy where fair value is estimated based on reference to market prices and implied yields of debt securities of the same or similar issuers. Escrow and claim receivables are categorized within Level 2 of the fair value hierarchy where fair value is based on recent observations in the same receivable.

Derivatives

•Listed Derivative Contracts: Listed derivative contracts that are actively traded are measured based on quoted exchange prices, broker quotes or vanilla option valuation models, such as Black-Scholes, using observable valuation inputs from the principal market or consensus pricing services. Exchange quotes and/or valuation inputs are generally obtained from external vendors and pricing services. Broker quotes are validated directly through observable and tradeable quotes. Listed derivative contracts that use unadjusted exchange close prices are generally categorized within Level 1 of the fair value hierarchy. All other listed derivative contracts are generally categorized within Level 2 of the fair value hierarchy.

•Over-the-Counter ("OTC") Derivative Contracts: OTC derivative contracts are generally valued using models, whose inputs reflect assumptions that we believe market participants would use in valuing the derivative in a current transaction. Where available, valuation inputs are calibrated from observable market data. For many OTC derivative contracts, the valuation models do not involve material subjectivity as the methodologies do not entail significant judgment and the inputs to valuation models do not involve a high degree of subjectivity as the valuation model inputs are readily observable or can be derived from actively quoted markets. OTC derivative contracts are primarily categorized within Level 2 of the fair value hierarchy given the observability and significance of the inputs to the valuation models. Where significant inputs to the valuation are unobservable, derivative instruments are categorized within Level 3 of the fair value hierarchy.

OTC options include OTC equity, foreign exchange, interest rate and commodity options measured using various valuation models, such as Black-Scholes, with key inputs including the underlying security price, foreign exchange spot rate, commodity price, implied volatility, dividend yield, interest rate curve, strike price and maturity date. Discounted cash flow models are utilized to measure certain OTC derivative contracts including the valuations of our interest rate swaps, which incorporate observable inputs related to interest rate curves, valuations of our foreign exchange forwards and swaps, which incorporate observable inputs related to foreign currency spot rates and forward curves and valuations of our commodity swaps and forwards, which incorporate observable inputs related to commodity spot prices and forward curves. Discounted cash flow models are also utilized to measure certain variable funding note swaps, which are backed by CLOs and incorporate constant prepayment rate, constant default rate and loss severity assumptions. Credit default swaps include both index and single-name credit default swaps. Where available, external data is used in measuring index credit default swaps and single-name credit default swaps. For commodity and equity total return swaps, market prices are generally observable for the underlying asset and used as the basis for measuring the fair value of the derivative contracts. Total return swaps executed on other underlyings are measured based on valuations received from external pricing services.

•Oil Futures Derivatives: Vitesse Energy Finance uses swaps and call and put options in order to reduce exposure to future oil price fluctuations. Vitesse Energy Finance accounts for the derivative instruments at fair value, which are classified as either Level 1 or Level 2 within the fair value hierarchy. Fair values classified as Level 1 are measured based on quoted closing exchange prices obtained from external pricing services and Level 2 are determined under the income valuation technique using an option-pricing model that is based on directly or indirectly observable inputs.

Investments at Fair Value

Investments at fair value include investments in hedge funds, fund of funds and private equity funds, which are measured at the NAV of the funds, provided by the fund managers and are excluded from the fair value hierarchy. Investments at fair value also include direct equity investments in private companies, which are measured at fair value using valuation techniques involving quoted prices of or market data for comparable companies, similar company ratios and multiples (e.g., price/EBITDA, price/book value), discounted cash flow analyses ~~contingent claims analysis~~ and transaction prices observed for subsequent financing or capital issuance by the company. Direct equity investments in private companies are categorized within Level 2 or Level 3 of the fair value hierarchy.

The following tables present information about our investments in entities that have the characteristics of an investment company (in thousands):


		Fair Value (1)		Unfunded Commitments			Fair Value (1)		Unfunded Commitments
August 31, 2020
May 31, 2021						May 31, 2021
Equity Long/Short Hedge Funds (2)	Equity Long/Short Hedge Funds (2)	$	322,020	$	0	Equity Long/Short Hedge Funds (2)	$	363,945	$	0
Equity Funds (3)	Equity Funds (3)	31,477		13,510		Equity Funds (3)	37,019		12,283
Commodity Fund (4)		16,204		0
Commodity Funds (4)						Commodity Funds (4)	23,311		0
Multi-asset Funds (5)	Multi-asset Funds (5)	558,452		0		Multi-asset Funds (5)	406,405		0
Other Funds (6)	Other Funds (6)	65		0		Other Funds (6)	78,175		21,750
Total	Total	$	928,218	$	13,510	Total	$	908,855	$	34,033

November 30, 2019
November 30, 2020						November 30, 2020
Equity Long/Short Hedge Funds (2)	Equity Long/Short Hedge Funds (2)	$	291,593	$	0	Equity Long/Short Hedge Funds (2)	$	328,096	$	0
Equity Funds (3)	Equity Funds (3)	44,576		14,621		Equity Funds (3)	33,221		12,408
Commodity Fund (4)		16,025		0
Commodity Funds (4)						Commodity Funds (4)	17,747		0
Multi-asset Funds (5)	Multi-asset Funds (5)	234,583		0		Multi-asset Funds (5)	561,236		0
Other Funds (6)	Other Funds (6)	157		0		Other Funds (6)	25,084		5,000
Total	Total	$	586,934	$	14,621	Total	$	965,384	$	17,408

(1)Where fair value is calculated based on NAV, fair value has been derived from each of the funds' capital statements.

(2)This category includes investments in hedge funds that invest, long and short, primarily in both public and private equity securities in domestic and international markets. At ~~August~~both May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, approximately 94% of the fair value of investments in this category cannot be redeemed because these investments include restrictions that do not allow for redemption before December 31, 2021. At both May 31, 2021 and November 30, 2020, approximately 6% ~~and 6%, respectively,~~of the fair value of investments in this category are redeemable quarterly with 60 days prior written notice.

(3)The investments in this category include investments in equity funds that invest in the equity of various U.S. and foreign private companies. These investments cannot be redeemed; instead distributions are received through the liquidation of the underlying assets of the funds, which are primarily expected to be liquidated in approximately one to ~~eight~~seven years.

(4)This category includes investments in a hedge fund that invests, long and short, primarily in commodities. Investments in this category are redeemable quarterly with 60 days prior written notice.

(5)This category includes investments in hedge funds that invest, long and short, primarily in multi-asset securities in domestic and international markets in both the public and private sectors. At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, investments representing approximately ~~58%~~80% and 5%57%, respectively, of the fair value of investments in this category are redeemable monthly with ~~30 or~~ 60 days prior written notice.

(6)This category includes investments in a fund that invests in ~~loans secured by a first trust deed on property, domestic~~short-term trade receivables and ~~international public high yield debt, private high yield investments, senior bank loans, public leveraged equities, distressed debt~~payables that are expected to generally be outstanding between 90 to 120 days and ~~private equity investments and there are no redemption provisions.~~short-term credit instruments. This category also includes investments in a fund ~~of funds~~ that invests in ~~various private equity funds that are managed by us~~distressed and ~~have no redemption provisions.~~special situations long and short credit strategies across sectors and asset types. Investments in ~~the fund of funds~~this category are ~~gradually being liquidated, however, the timing of when the proceeds will be received is uncertain.~~redeemable quarterly with 90 days prior written notice.

Investments at fair value also include our investment in The We Company. We invested $9.0 million in The We Company in 2013 and currently own less than 1% of The We Company. Our interest in The We Company is reflected in Financial instruments owned, at fair value of $9.6 million and $53.8 million at August 31, 2020 and November 30, 2019, respectively.

Investment in FXCM

Our investment in FXCM and associated companies consists of a senior secured term loan due February 15, ~~2021~~2022 ($71.6 million principal outstanding at ~~August~~May 31, ~~2020)~~2021), a 50% voting interest in FXCM and rights to a majority of all distributions in respect of the equity of FXCM. Our investment in the FXCM term loan is reported within Financial instruments owned, at fair value in the Consolidated Statements of Financial Condition. We classify our equity investment in FXCM in the Consolidated Statements of Financial Condition as Loans to and investments in associated companies, as we have the ability to significantly influence FXCM through our seats on the board of directors.

We estimate the fair value of our term loan by using a valuation model with inputs including management's assumptions concerning the amount and timing of expected cash flows, the loan's implied credit rating and effective yield. Because of these inputs and the degree of judgment involved, we have categorized our term loan within Level 3 of the fair value hierarchy.

Loans to and Investments in Associated Companies

Corporate bonds are measured primarily using pricing data from external pricing services and are categorized within Level 2 of the fair value hierarchy. Non-exchange-traded equity warrants with no pricing from external pricing services are generally categorized within Level 3 of the fair value hierarchy. The warrants are measured using the Black-Scholes model with key inputs impacting the valuation including the underlying security price, implied volatility, interest rate curve, strike price and maturity date.

~~Securities Purchased Under Agreements to Resell~~

Securities purchased under agreements to resell may include embedded call features. The valuation of these instruments is based on review of expected future cash flows, interest rates, funding spreads and the fair value of the underlying collateral. Securities purchased under agreements to resell are categorized within Level 3 of the fair value hierarchy due to limited observability of the embedded derivative and unobservable credit spreads.

Other Secured Financings

Other secured financings that are accounted for at fair value are classified within Level 3 of the fair value hierarchy. Fair value is based on estimates of future cash flows incorporating assumptions regarding recovery rates.

Securities Received as ~~Collateral/~~Collateral and Obligations to Return Securities Received as Collateral

In connection with securities-for-securities transactions in which we are the lender of securities and are permitted to sell or repledge the securities received as collateral, we report the fair value of the collateral received and the related obligation to return the collateral. Valuation is based on the price of the underlying security and is categorized within the corresponding leveling guidance above and is specific for each asset type. These financial instruments are typically categorized within Level 1 of the fair value hierarchy.

Short-term Borrowings and Long-term Debt

Short-term borrowings that are accounted for at fair value include equity-linked notes, which are generally categorized within Level 2 of the fair value hierarchy, as the fair value is based on the price of the underlying equity security. Long-term debt includes variable rate, fixed-to-floating rate, equity-linked notes, constant maturity swap, digital and Bermudan structured notes. These are valued using various valuation models that incorporate Jefferies Group's own credit spread, market price quotations from external pricing sources referencing the appropriate interest rate curves, volatilities and other inputs as well as prices for transactions in a given note during the period. Long-term debt notes are generally categorized within Level 2 of the fair value hierarchy where market trades have been observed during the ~~quarter,~~period or model pricing is available, otherwise ~~they~~the notes are categorized within Level 3.

Nonrecurring Fair Value Measurements

HomeFed has a 49% membership interest in the RedSky JZ Fulton Investors ("RedSky JZ Fulton Mall") joint venture, which owns a property in Brooklyn, New York. The property consists of 14 separate tax lots, divided into 2 development sites which may be redeveloped with buildings consisting of up to 540,000 square feet of floor area development rights. During the

three months ended February 29, 2020, difficulties were encountered with attempts to refinance debt within the investment. We viewed this, combined with a softening of the Brooklyn, New York real estate market during the quarter, as a triggering event and evaluated HomeFed's equity method investment in RedSky JZ Fulton Mall to determine if there was an impairment. In connection with this evaluation, we obtained an appraisal which reflected a reduction in the value of the investment in comparison to an earlier appraisal obtained shortly before the beginning of the quarter. The appraisal was based off of Level 3 inputs consisting of prices of comparable properties and the appraisal indicated that the value of the property was worth less than the debt outstanding. HomeFed recorded an impairment charge of $55.6 million within Income (loss) related to associated companies during the ~~nine~~six months ended ~~August~~May 31, 2020, which represented all of its carrying value in the joint venture.

Due to a decline in oil and gas prices during the second quarter of 2020, Vitesse Energy Finance performed impairment analyses on its proven oil and gas properties in the Denver-Julesburg Basin ("DJ Basin") of Wyoming and Colorado and the Bakken Shale oil field in North Dakota. Vitesse Energy Finance first determined the estimated undiscounted cash flows based on the reserves and costs utilized in its reserve report and then updated those cash flows based on strip pricing as of May 31, 2020. The expected undiscounted future net cash flows were then compared to the end of quarter net carrying value of the oil and gas properties. No impairment of the Bakken Shale oil field assets was necessary as the undiscounted future net cash flows significantly exceeded the carrying value of these assets. As undiscounted future net cash flows were lower than the carrying value of the DJ Basin properties, Vitesse Energy Finance then determined the estimated fair value of the proven properties. To measure the estimated fair value of its proven properties, Vitesse Energy Finance used unobservable Level 3 inputs, including a 10.0% discount rate and estimated future cash flows from its reserve report. The estimated fair value of Vitesse Energy Finance's proven oil and gas properties in the DJ Basin totaled $26.8 million, which was $13.2 million lower than the carrying value as of the end of the second quarter of 2020. As a result, an impairment charge of $13.2 million was recorded in Selling, general and other expenses during the ~~nine~~three and six months ended ~~August~~May 31, 2020.

Due to a decline in oil and gas prices during the first quarter of 2020, JETX Energy, LLC ("JETX Energy"), an oil and gas production and development subsidiary, performed an impairment analysis for its oil and gas properties in the East Eagle Ford. JETX Energy first determined the estimated undiscounted cash flows based on the reserves and costs utilized in its reserve report and then updated those cash flows based on strip pricing as of February 29, 2020. The expected undiscounted future net cash flows were then compared to the end of quarter net carrying value of the proven properties. As the undiscounted future net cash flows were lower than the carrying value, JETX Energy then determined the estimated fair value of the proven properties. To measure the estimated fair value of its proven properties, JETX Energy used unobservable Level 3 inputs, including a 10.0% discount rate and estimated future cash flows from its reserve report. The estimated fair value of JETX Energy's proven oil and gas properties in the East Eagle Ford totaled $9.6 million, which was $33.0 million lower than the carrying value as of the end of first quarter of 2020. As a result, an impairment charge of $33.0 million was recorded in Selling, general and other expenses during the ~~nine~~six months ended ~~August~~May 31, 2020.

Level 3 Rollforwards

The following is a summary of changes in fair value of our financial assets and liabilities that have been categorized within Level 3 of the fair value hierarchy for the three months ended ~~August~~May 31, ~~2020~~2021 (in thousands):


Three Months Ended August 31, 2020
		Balance, May 31, 2020		Total gains/ losses (realized and unrealized) (1)		Purchases		Sales		Settlements		Issuances		Net transfers into (out of) Level 3		Balance, August 31, 2020		Changes in unrealized gains/losses included in earnings relating to instruments still held at August 31, 2020 (1)			Balance, February 28, 2021		Total gains/ losses (realized and unrealized) (1)		Purchases		Sales		Settlements		Issuances		Net transfers into (out of) Level 3		Balance, May 31, 2021		Changes in unrealized gains/losses included in earnings relating to instruments still held at May 31, 2021 (1)
Assets:	Assets:																			Assets:
Financial instruments owned, at fair value:	Financial instruments owned, at fair value:																			Financial instruments owned, at fair value:
Corporate equity securities	Corporate equity securities	$	76,140	$	(597)	$	779	$	0	$	0	$	0	$	1,619	$	77,941	$	(597)	Corporate equity securities	$	102,065	$	7,997	$	448	$	(24,561)	$	0	$	0	$	502	$	86,451	$	(4,971)
Corporate debt securities	Corporate debt securities	25,178		(889)		4		(394)		0		0		(630)		23,269		(881)		Corporate debt securities	6,811		1,292		4,116		(5,870)		(132)		0		1,768		7,985		963
CDOs and CLOs	CDOs and CLOs	31,551		3,813		39		(7,539)		(2,318)		0		10,576		36,122		159		CDOs and CLOs	33,199		7,478		4,287		(37,324)		(1,203)		0		20,124		26,561		2,888

Residential mortgage-backed securities	Residential mortgage-backed securities	22,339		1,240		0		0		(774)		0		5,512		28,317		1,262		Residential mortgage-backed securities	21,692		205		0		0		(612)		0		(15,252)		6,033		(36)
Commercial mortgage-backed securities	Commercial mortgage-backed securities	4,461		202		0		0		0		0		0		4,663		198		Commercial mortgage-backed securities	2,671		201		0		0		(1,696)		0		0		1,176		(824)
Other asset-backed securities	Other asset-backed securities	86,062		(1,585)		3,313		0		(7,442)		0		(17,011)		63,337		(5,101)		Other asset-backed securities	60,594		3,575		12,835		(1,099)		(14,408)		0		9,058		70,555		819
Loans and other receivables	Loans and other receivables	121,129		13,109		18,492		(13,897)		(355)		0		24,463		162,941		13,440		Loans and other receivables	149,084		2,814		26,948		(8,070)		(156)		0		19,792		190,412		706
Investments at fair value	Investments at fair value	154,238		24,179		7,183		0		(13,102)		0		0		172,498		23,030		Investments at fair value	219,541		26,775		6,634		(17,085)		(5,031)		0		0		230,834		11,318
FXCM term loan	FXCM term loan	53,765		2,777		0		0		0		0		0		56,542		2,777		FXCM term loan	62,132		(2,977)		0		0		0		0		0		59,155		(2,977)
Loans to and investments in associated companies	Loans to and investments in associated companies	0		0		0		0		0		0		34,688		34,688		0		Loans to and investments in associated companies	39,397		(2,110)		0		0		0		0		0		37,287		(2,110)

Liabilities:	Liabilities:																			Liabilities:
Financial instruments sold, not yet purchased, at fair value:	Financial instruments sold, not yet purchased, at fair value:																			Financial instruments sold, not yet purchased, at fair value:
Corporate equity securities	Corporate equity securities	$	4,190	$	(12)	$	0	$	0	$	0	$	0	$	189	$	4,367	$	12	Corporate equity securities	$	4,443	$	42	$	(23)	$	0	$	0	$	0	$	0	$	4,462	$	(40)
Corporate debt securities	Corporate debt securities	163		(15)		0		0		0		0		0		148		15		Corporate debt securities	1,571		(22)		(665)		27		0		0		16		927		(38)

Commercial mortgage-backed securities	Commercial mortgage-backed securities	140		0		(140)		35		0		0		0		35		0		Commercial mortgage-backed securities	35		0		(35)		35		0		0		0		35		0
Loans	Loans	10,674		6,636		(23,001)		3,558		0		0		48,727		46,594		(6,591)		Loans	14,916		(7)		(637)		6,330		44		0		(257)		20,389		(167)
Net derivatives (2)	Net derivatives (2)	45,131		(12,175)		(1,404)		13,089		(648)		0		(21,568)		22,425		12,007		Net derivatives (2)	305,506		(8,965)		(36)		33,715		593		0		(103,755)		227,058		8,372
Other secured financings	Other secured financings	0		(617)		0		0		0		4,019		0		3,402		617		Other secured financings	2,168		0		0		0		0		325		0		2,493		0
Long-term debt (1)	Long-term debt (1)	497,040		130,463		0		0		0		5,749		(2,992)		630,260		(42,163)		Long-term debt (1)	723,115		15,986		0		0		0		28,565		27,432		795,098		3,057

(1)Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in the Consolidated Statements of Operations. Changes in instrument specific credit risk related to structured notes within long-term debt are included in the Consolidated Statements of Comprehensive Income (Loss), net of tax. Changes in unrealized gains/losses included in other comprehensive income (loss) for instruments still held at ~~August~~May 31, ~~2020~~2021 were losses of ~~$88.3~~$19.0 million during the three months ended ~~August~~May 31, 2021.

(2)Net derivatives represent Financial instruments owned, at fair value - Derivatives and Financial instruments sold, not yet purchased, at fair value - Derivatives.

Analysis of Level 3 Assets and Liabilities for the three months ended May 31, 2021

During the three months ended May 31, 2021, transfers of assets of $57.8 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•Loans and other receivables of $20.9 million, CDOs and CLOs of $20.1 million and other asset-backed securities of $13.5 million due to reduced pricing transparency.

During the three months ended May 31, 2021, transfers of assets of $21.8 million from Level 3 to Level 2 are primarily attributed to:

•Residential mortgage-backed securities of $15.3 million and other asset-backed securities of $4.4 million due to greater pricing transparency supporting classification into Level 2.

During the three months ended May 31, 2021, transfers of liabilities of $78.1 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•Net derivatives of $50.5 million and structured notes within long-term debt of $27.4 million due to reduced pricing and market transparency.

During the three months ended May 31, 2021, transfers of liabilities of $154.7 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to:

•Net derivatives of $154.2 million due to greater pricing transparency.

Net gains on Level 3 assets were $45.3 million and net losses on Level 3 liabilities were $7.0 million for the three months ended May 31, 2021. Net gains on Level 3 assets were primarily due to increased market values across investments at fair value, corporate equity securities, CDOs and CLOs and other asset-backed securities. Net losses on Level 3 liabilities were primarily due to increased valuations of structured notes within long-term debt, partially offset by decreases in certain derivatives.


	Balance, February 29, 2020		Total gains/ losses (realized and unrealized) (1)		Purchases		Sales		Settlements		Issuances		Net transfers into (out of) Level 3		Balance, May 31, 2020		Changes in unrealized gains/ losses included in earnings relating to instruments still held at May 31, 2020 (1)
Assets:
Financial instruments owned, at fair value:
Corporate equity securities	$	103,683	$	(5,346)	$	63	$	(68)	$	0	$	0	$	(22,192)	$	76,140	$	(5,247)
Corporate debt securities	25,090		(1,480)		328		(365)		(1)		0		1,606		25,178		(1,464)
CDOs and CLOs	29,784		(12,374)		0		(8,471)		(2,598)		0		25,210		31,551		(16,451)


Residential mortgage-backed securities	16,970		(1,773)		1,380		0		(7)		0		5,769		22,339		(1,733)
Commercial mortgage-backed securities	4,264		53		0		0		0		0		144		4,461		53
Other asset-backed securities	41,903		(2,380)		11,038		0		(8,490)		0		43,991		86,062		(5,087)
Loans and other receivables	103,243		(1,113)		45,984		(46,939)		(128)		0		20,082		121,129		(1,069)
Investments at fair value	184,507		(59,962)		10,599		(91)		0		0		19,185		154,238		(59,962)
FXCM term loan	61,628		(7,863)		0		0		0		0		0		53,765		(7,863)



Liabilities:
Financial instruments sold, not yet purchased, at fair value:
Corporate equity securities	$	4,275	$	(60)	$	0	$	0	$	0	$	0	$	(25)	$	4,190	$	60
Corporate debt securities	767		(23)		(20)		0		0		0		(561)		163		0

Commercial mortgage-backed securities	35		0		0		105		0		0		0		140		0
Loans	7,859		1,015		(2,785)		3,290		0		0		1,295		10,674		(1,015)
Net derivatives (2)	110,843		(32,744)		(10,810)		33,196		(603)		0		(54,751)		45,131		34,259
Long-term debt (1)	543,463		(92,480)		0		0		0		66,916		(20,859)		497,040		664

(1)Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in the Consolidated Statements of Operations. Changes in instrument specific credit risk related to structured notes within long-term debt are included in the Consolidated Statements of Comprehensive Income (Loss), net of tax. Changes in unrealized gains (losses) included in other comprehensive income (loss) for instruments still held at May 31, 2020 were gains of $91.8 million during the three months ended May 31, 2020.

(2)Net derivatives represent Financial instruments owned, at fair value - Derivatives and Financial instruments sold, not yet purchased, at fair value - Derivatives.

Analysis of Level 3 Assets and Liabilities for the three months ended ~~August~~May 31, 2020

During the three months ended ~~August~~May 31, 2020, transfers of assets of ~~$64.5~~$127.5 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•~~Loans and other receivables~~Other asset-backed securities of ~~$31.8~~$44.5 million, CDOs and CLOs of ~~$19.5~~$29.6 million, loans and other ~~asset-backed securities~~receivables of ~~$5.8~~$20.7 million and ~~residential mortgage-backed securities~~investments at fair value of ~~$5.5~~$19.2 million due to reduced pricing transparency.

~~During the three months ended August 31, 2020, transfers of assets into Level 3 also include $34.7 million related to Loans to and investments in associated companies.~~

2122

During the three months ended ~~August~~May 31, 2020, transfers of assets of ~~$39.9~~$33.7 million from Level 3 to Level 2 are primarily attributed to:

•~~Other asset-backed~~Corporate equity securities of ~~$22.9~~$26.2 million and CDOs and CLOs of ~~$8.9 million and loans and other receivables of $7.4~~$4.4 million due to greater pricing transparency supporting classification into Level 2.

During the three months ended ~~August~~May 31, 2020, transfers of liabilities of ~~$54.4~~$23.7 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•~~Loans~~Net derivatives of ~~$50.1~~$11.4 million and ~~net derivatives~~structured notes within long-term debt of ~~$4.1~~$11.1 million due to reduced pricing and market transparency.

During the three months ended ~~August~~May 31, 2020, transfers of liabilities of ~~$30.0~~$98.6 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to:

•~~Net~~Structured notes within long-term debt of $31.9 million and net derivatives of ~~$25.6 million and structured notes of $3.0~~$66.1 million due to greater pricing and market pricing transparency.

Net ~~gains~~losses on Level 3 assets were ~~$42.2~~$92.2 million and net ~~losses~~gains on Level 3 liabilities were $124.3 million for the three months ended ~~August~~May 31, 2020. Net ~~gains~~losses on Level 3 assets were primarily due to ~~increased~~decreased market values across CDOs and CLOs, investments at fair value, ~~loans and other receivables, CDOs and CLOs~~corporate equity securities and the FXCM term ~~loan, partially offset by decreased market values across other asset-backed securities.~~loan. Net ~~losses~~gains on Level 3 liabilities were primarily due to ~~increased~~decreased valuations of certain structured notes ~~partially offset by decreased~~within long-term debt and market values across derivatives.

The following is a summary of changes in fair value of our financial assets and liabilities that have been categorized within Level 3 of the fair value hierarchy for the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 (in thousands):


Nine Months Ended August 31, 2020
		Balance, November 30, 2019		Total gains/ losses (realized and unrealized) (1)		Purchases		Sales		Settlements		Issuances		Net transfers into (out of) Level 3		Balance, August 31, 2020		Changes in unrealized gains/losses included in earnings relating to instruments still held at August 31, 2020 (1)			Balance, November 30, 2020		Total gains/ losses (realized and unrealized) (1)		Purchases		Sales		Settlements		Issuances		Net transfers into (out of) Level 3		Balance, May 31, 2021		Changes in unrealized gains/losses included in earnings relating to instruments still held at May 31, 2021 (1)
Assets:	Assets:																			Assets:
Financial instruments owned, at fair value:	Financial instruments owned, at fair value:																			Financial instruments owned, at fair value:
Corporate equity securities	Corporate equity securities	$	58,426	$	(3,914)	$	3,406	$	(13,555)	$	0	$	0	$	33,578	$	77,941	$	(775)	Corporate equity securities	$	75,904	$	11,299	$	8,288	$	(37,297)	$	0	$	0	$	28,257	$	86,451	$	(3,683)
Corporate debt securities	Corporate debt securities	7,490		(162)		285		(489)		(602)		0		16,747		23,269		(591)		Corporate debt securities	23,146		2,466		4,370		(5,960)		(132)		0		(15,905)		7,985		1,492
CDOs and CLOs	CDOs and CLOs	28,788		(8,000)		10,883		(20,935)		(6,847)		0		32,233		36,122		(20,739)		CDOs and CLOs	17,972		10,616		16,510		(35,251)		(1,427)		0		18,141		26,561		6,808

Residential mortgage-backed securities	Residential mortgage-backed securities	17,740		(1,347)		7,625		0		(496)		0		4,795		28,317		(1,811)		Residential mortgage-backed securities	21,826		33		799		(784)		(1,126)		0		(14,715)		6,033		88
Commercial mortgage-backed securities	Commercial mortgage-backed securities	6,110		232		0		0		(1,785)		0		106		4,663		807		Commercial mortgage-backed securities	2,003		158		1,119		(393)		(1,696)		0		(15)		1,176		(740)
Other asset-backed securities	Other asset-backed securities	42,563		(3,495)		29,096		(664)		(22,125)		0		17,962		63,337		(13,012)		Other asset-backed securities	79,995		6,373		34,476		(27,647)		(26,465)		0		3,823		70,555		1,158
Loans and other receivables	Loans and other receivables	114,080		966		309,982		(208,958)		(57,371)		0		4,242		162,941		1,291		Loans and other receivables	134,636		17,580		37,431		(50,556)		(273)		0		51,594		190,412		14,146
Investments at fair value	Investments at fair value	205,412		(62,415)		42,771		(168)		(13,102)		0		0		172,498		(64,263)		Investments at fair value	213,946		103,032		11,489		(47,244)		(8,573)		0		(41,816)		230,834		80,099
FXCM term loan	FXCM term loan	59,120		(2,578)		0		0		0		0		0		56,542		(2,578)		FXCM term loan	59,455		(300)		0		0		0		0		0		59,155		(300)
Loans to and investments in associated companies	Loans to and investments in associated companies	0		0		0		0		0		0		34,688		34,688		0		Loans to and investments in associated companies	40,185		(2,898)		0		0		0		0		0		37,287		(2,898)
Securities purchased under agreements to resell		25,000		0		0		0		(25,000)		0		0		0		0

Liabilities:	Liabilities:																			Liabilities:
Financial instruments sold, not yet purchased, at fair value:	Financial instruments sold, not yet purchased, at fair value:																			Financial instruments sold, not yet purchased, at fair value:
Corporate equity securities	Corporate equity securities	$	4,487	$	258	$	(567)	$	0	$	0	$	0	$	189	$	4,367	$	98	Corporate equity securities	$	4,434	$	64	$	(23)	$	0	$	0	$	0	$	(13)	$	4,462	$	(62)
Corporate debt securities	Corporate debt securities	340		(261)		(325)		394		0		0		0		148		20		Corporate debt securities	141		1,349		(563)		0		0		0		0		927		(414)

Commercial mortgage-backed securities	Commercial mortgage-backed securities	35		0		(35)		35		0		0		0		35		0		Commercial mortgage-backed securities	35		0		(35)		35		0		0		0		35		0
Loans	Loans	9,463		2,986		(5,760)		38,531		0		0		1,374		46,594		(3,366)		Loans	16,635		1,441		(6,872)		8,817		0		0		368		20,389		(884)
Net derivatives (2)	Net derivatives (2)	77,168		(63,367)		(6,732)		26,656		(1,567)		0		(9,733)		22,425		60,257		Net derivatives (2)	26,017		16,813		(82)		66,304		506		0		117,500		227,058		(17,358)
Other secured financings	Other secured financings	0		(617)		0		0		0		4,019		0		3,402		617		Other secured financings	1,543		0		0		0		0		950		0		2,493		0
Long-term debt (1)	Long-term debt (1)	480,069		10,851		0		0		(2,000)		202,046		(60,706)		630,260		(28,153)		Long-term debt (1)	676,028		41,064		0		0		0		50,295		27,711		795,098		20,565

(1)Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in the Consolidated Statements of Operations. Changes in instrument specific credit risk related to structured notes within long-term debt are included in the Consolidated Statements of Comprehensive Income (Loss), net of tax. Changes in unrealized gains/losses included in other comprehensive income (loss) for instruments still held at ~~August~~May 31, 2021 were losses of $61.6 million during the six months ended May 31, 2021.

(2)Net derivatives represent Financial instruments owned, at fair value - Derivatives and Financial instruments sold, not yet purchased, at fair value - Derivatives.

Analysis of Level 3 Assets and Liabilities for the six months ended May 31, 2021

During the six months ended May 31, 2021, transfers of assets of $99.7 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•Loans and other receivables of $58.3 million, CDOs and CLOs of $18.2 million, corporate equity securities of $11.0 million and other asset-backed securities of $10.5 million due to reduced pricing transparency.

During the six months ended May 31, 2021, transfers of assets of $70.3 million from Level 3 to Level 2 or Level 1 are primarily attributed to:

•Investments at fair value of $24.2 million, corporate debt securities of $17.5 million, residential mortgage-backed securities of $14.7 million, other asset-backed securities of $6.7 million and loans and other receivables of $6.7 million due to greater pricing transparency supporting classification into Level 2 or Level 1.

During the six months ended May 31, 2021, transfers of liabilities of $162.9 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•Net derivatives of $134.8 million and structured notes within long-term debt of $27.7 million due to reduced pricing and market transparency.

During the six months ended May 31, 2021, transfers of liabilities of $17.3 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to:

•Net derivatives of $17.3 million due to greater pricing transparency.

Net gains on Level 3 assets were $148.4 million and net losses on Level 3 liabilities were $60.7 million for the six months ended May 31, 2021. Net gains on Level 3 assets were primarily due to increased market values across investments at fair value, corporate equity securities, CDOs and CLOs, other asset-backed securities and loans and other receivables. Net losses on Level 3 liabilities were primarily due to increased valuations of structured notes within long-term debt and certain derivatives.

The following is a summary of changes in fair value of our financial assets and liabilities that have been categorized within Level 3 of the fair value hierarchy for the six months ended May 31, 2020 (in thousands):


	Balance, November 30, 2019		Total gains/ losses (realized and unrealized) (1)		Purchases		Sales		Settlements		Issuances		Net transfers into (out of) Level 3		Balance, May 31, 2020		Changes in unrealized gains/ losses included in earnings relating to instruments still held at May 31, 2020 (1)
Assets:
Financial instruments owned, at fair value:
Corporate equity securities	$	58,426	$	(12,972)	$	3,016	$	(2,017)	$	0	$	0	$	29,687	$	76,140	$	(12,899)
Corporate debt securities	7,490		1,560		766		(479)		(602)		0		16,443		25,178		1,190
CDOs and CLOs	28,788		(13,589)		9,426		(11,849)		(4,122)		0		22,897		31,551		(17,410)


Residential mortgage-backed securities	17,740		(2,248)		2,062		0		(10)		0		4,795		22,339		(2,195)
Commercial mortgage-backed securities	6,110		(95)		0		0		(1,660)		0		106		4,461		(680)
Other asset-backed securities	42,563		(2,848)		33,917		(664)		(17,361)		0		30,455		86,062		(7,226)
Loans and other receivables	114,080		(5,348)		116,047		(76,227)		(56,998)		0		29,575		121,129		(8,989)
Investments at fair value	205,412		(86,594)		35,588		(168)		0		0		0		154,238		(86,594)
FXCM term loan	59,120		(5,355)		0		0		0		0		0		53,765		(5,355)

Securities purchased under agreements to resell	25,000		0		0		0		(25,000)		0		0		0		0

Liabilities:
Financial instruments sold, not yet purchased, at fair value:
Corporate equity securities	$	4,487	$	216	$	(513)	$	0	$	0	$	0	$	0	$	4,190	$	140
Corporate debt securities	340		(27)		(150)		0		0		0		0		163		5

Commercial mortgage-backed securities	35		0		(35)		140		0		0		0		140		0
Loans	9,463		1,072		(12,958)		3,290		0		0		9,807		10,674		(1,075)
Net derivatives (2)	77,168		(44,729)		(11,088)		38,823		(1,010)		0		(14,033)		45,131		32,211
Long-term debt (1)	480,069		(101,267)		0		0		0		175,498		(57,260)		497,040		(4,802)

(1)Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in the Consolidated Statements of Operations. Changes in instrument specific credit risk related to structured notes within long-term debt are included in the Consolidated Statements of Comprehensive Income (Loss), net of tax. Changes in unrealized gains (losses) included in other comprehensive income (loss) for instruments still held at May 31, 2020 were gains of ~~$17.3~~$106.1 million during the ~~nine~~six months ended ~~August~~May 31, 2020.

(2)Net derivatives represent Financial instruments owned, at fair value - Derivatives and Financial instruments sold, not yet purchased, at fair value - Derivatives.

Analysis of Level 3 Assets and Liabilities for the ~~nine~~six months ended ~~August~~May 31, 2020

During the ~~nine~~six months ended ~~August~~May 31, 2020, transfers of assets of ~~$132.0~~$148.5 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•Corporate equity securities of ~~$36.6~~$37.0 million, loans and other receivables of $33.5 million, other asset-backed securities of $31.1 million, CDOs and CLOs of ~~$34.1~~$22.9 million ~~other asset-backed securities of $23.5 million,~~and corporate debt securities of ~~$18.6 million and loans and other receivables of $13.4~~$18.3 million due to reduced pricing transparency.

During the ~~nine~~six months ended ~~August 31, 2020, transfers of assets into Level 3 also include $34.7 million related to Loans to and investments in associated companies.~~

~~During the nine months ended August~~May 31, 2020, transfers of assets of ~~$22.3~~$14.6 million from Level 3 to Level 2 are primarily attributed to:

•~~Loans~~Corporate equity securities of $7.3 million and loans and other receivables of ~~$9.2 million, other asset-backed securities of $5.6 million and corporate equity securities of $3.1~~$4.0 million due to greater pricing transparency supporting classification into Level 2.

During the ~~nine~~six months ended ~~August~~May 31, 2020, transfers of liabilities of ~~$37.3~~$37.0 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•Net derivatives of ~~$35.2~~$26.2 million and loans of $10.8 million due to reduced pricing transparency.

During the ~~nine~~six months ended ~~August~~May 31, 2020, transfers of liabilities of ~~$106.2~~$98.5 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to:

•Structured notes within long-term debt of ~~$60.7~~$57.3 million and net derivatives of ~~$45.0~~$40.2 million due to greater market and pricing transparency.

Net losses on Level 3 assets were ~~$80.7~~$127.5 million and net gains on Level 3 liabilities were ~~$50.1~~$144.7 million for the ~~nine~~six months ended ~~August~~May 31, 2020. Net losses on Level 3 assets were primarily due to decreased market values across investments at fair value, CDOs and CLOs, corporate equity securities, ~~other assets-backed securities and~~ the FXCM term ~~loan.~~loan and loans other receivables. Net gains on Level 3 liabilities were primarily due to decreased market ~~values across derivatives, partially offset by increased~~ valuations of certain structured ~~notes.~~

~~The following is a summary of changes in fair value of our financial assets~~notes within long-term and ~~liabilities that have been categorized within Level 3 of the fair value hierarchy for the three months ended August 31, 2019 (in thousands):~~

Three Months Ended August 31, 2019
Balance, May 31 2019 Total gains/ losses (realized and unrealized) (1) Purchases Sales Settlements Issuances Net transfers into (out of) Level 3 Balance, August 31, 2019 Changes in
unrealized gains/ losses included in earnings relating to instruments still held at
August 31, 2019 (1)
Assets:
Financial instruments owned, at fair value:
Corporate equity securities $ 59,572 $ 12,547 $ 16,508 $ (17,502) $ 0 $ 0 $ (20,255) $ 50,870 $ 12,067
Corporate debt securities 8,346 (3,072) 1,175 (1,942) (85) 0 4,866 9,288 (3,047)
CDOs and CLOs 25,912 (1,499) 0 0 (609) 0 6,454 30,258 (2,097)
Residential mortgage-backed securities 17,266 (1,917) 0 (65) (22) 0 2,667 17,929 (1,435)
Commercial mortgage-backed securities 12,530 (2,003) 0 (1,703) (3,362) 0 0 5,462 (3,143)
Other asset-backed securities 43,185 (1,689) 13,497 (6,975) (5,500) 0 (7,920) 34,598 (1,068)
Loans and other receivables 98,484 (2,847) 26,921 (33,409) (1,287) 0 (12,299) 75,563 (2,392)
Investments at fair value 408,739 (152,162) 1,067 (296) 0 0 35,135 292,483 (152,162)
FXCM term loan 56,600 2,293 0 0 (303) 0 0 58,590 2,293
Securities purchased under
agreements to resell 25,000 0 0 0 0 0 0 25,000 0
Liabilities:
Financial instruments sold, not yet purchased, at fair value:
Corporate equity securities $ 221 $ 401 $ (221) $ 0 $ (190) $ 0 $ 0 $ 211 $ (35)
Corporate debt securities 669 (650) (34) 0 (369) 0 1,586 1,202 649
Commercial mortgage-backed securities 0 0 0 35 0 0 0 35 0
Loans 9,428 (520) (10,281) 5,384 0 0 12,619 16,630 531
Net derivatives (2) 47,449 (19,519) 0 6,766 (14) 0 16,081 50,763 18,507
Long-term debt (1) 236,562 7,455 0 0 0 114,641 (10,595) 348,063 (8,162)

~~(1)~~Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in the Consolidated Statements of Operations. Changes in instrument specific credit risk related to structured notes are included in the Consolidated Statements of Comprehensive Income (Loss), net of tax. Changes in unrealized gains/losses included in other comprehensive income (loss) for instruments still held at August 31, 2019 were gains of $0.7 million during the three months ended August 31, 2019.

~~(2)Net derivatives represent Financial instruments owned, at fair value - Derivatives and~~ ~~Financial instruments sold, not yet purchased, at fair value~~ ~~- Derivatives.~~

~~Analysis of Level 3 Assets and Liabilities for the three months ended August 31, 2019~~

~~During the three months ended August 31, 2019, transfers of assets of $79.0 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:~~

•~~Investments at fair value of $35.1 million and loans and other receivables of $23.7 million due to reduced pricing transparency.~~

~~During the three months ended August 31, 2019, transfers of assets of $70.3 million from Level 3 to Level 2 are primarily attributed to:~~

•~~Loans and other receivables of $36.0 million and corporate equity securities of $22.1 million due to greater pricing transparency supporting classification into Level 2.~~

~~During the three months ended August 31, 2019, transfers of liabilities of $43.5 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:~~

•~~Net derivatives of $17.6 million, loans of $13.3 million and structured notes of $11.0 million due to reduced market and pricing transparency.~~

~~During the three months ended August 31, 2019, transfers of liabilities of $23.8 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to:~~

•~~Structured notes of $21.6 million due to greater market transparency.~~

Net losses on Level 3 assets were $150.3 million and net gains on Level 3 liabilities were $12.8 million for the three months ended August 31, 2019. Net losses on Level 3 assets were primarily due to decreased market values across investments at fair value, corporate debt securities, loans and other receivables and commercial mortgage-backed securities, partially offset by increased market values in the FXCM term loan and across corporate equity securities. Net gains on Level 3 liabilities were primarily due to decreased market values across certain derivatives.

The following is a summary of changes in fair value of our financial assets and liabilities that have been categorized within Level 3 of the fair value hierarchy for the nine months ended August 31, 2019 (in thousands):

Nine Months Ended August 31, 2019
Balance, November 30, 2018 Total gains/ losses
(realized and unrealized) (1) Purchases Sales Settlements Issuances Net transfers
into (out of)
Level 3 Balance, August 31, 2019 Changes in
unrealized gains/ losses included in earnings relating to instruments still held at
August 31, 2019 (1)
Assets:
Financial instruments owned, at fair value:
Corporate equity securities $ 52,192 $ 15,499 $ 23,172 $ (25,431) $ (669) $ 0 $ (13,893) $ 50,870 $ 14,071
Corporate debt securities 9,484 (4,904) 6,080 (10,544) (553) 0 9,725 9,288 (5,325)
CDOs and CLOs 36,105 (4,320) 48,112 (43,230) (3,014) 0 (3,395) 30,258 (6,781)
Residential mortgage-backed securities 19,603 (2,573) 2,166 (2,022) (171) 0 926 17,929 (2,166)
Commercial mortgage-backed securities 10,886 (2,196) 11 (2,023) (6,638) 0 5,422 5,462 (4,326)
Other asset-backed securities 53,175 (929) 14,698 (2,494) (30,623) 0 771 34,598 (961)
Loans and other receivables 46,985 3,933 178,069 (166,496) (8,379) 0 21,451 75,563 682
Investments at fair value 396,254 (119,110) 42,579 (18,598) 0 0 (8,642) 292,483 (119,110)
FXCM term loan 73,150 (8,669) 1,500 0 (7,391) 0 0 58,590 (8,669)
Securities purchased under
agreements to resell 0 0 0 0 0 25,000 0 25,000 0
Liabilities:
Financial instruments sold, not yet purchased, at fair value:
Corporate equity securities $ 0 $ 401 $ 0 $ 0 $ (190) $ 0 $ 0 $ 211 $ (35)
Corporate debt securities 522 (867) 0 0 (524) 0 2,071 1,202 867
Commercial mortgage-backed securities 0 0 0 35 0 0 0 35 0
Loans 6,376 (1,342) (8,553) 9,929 0 0 10,220 16,630 1,583
Net derivatives (2) 21,614 (48,746) (2,829) 16,313 1,609 0 62,802 50,763 40,052
Long-term debt (1) 200,745 (5,286) 0 0 (11,250) 204,710 (40,856) 348,063 (4,517)

~~(1)~~Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in the Consolidated Statements of Operations. Changes in instrument specific credit risk related to structured notes are included in the Consolidated Statements of Comprehensive Income (Loss), net of tax. Changes in unrealized gains (losses) included in other comprehensive income (loss) for instruments still held at August 31, 2019 were gains of $9.8 million during the nine months ended August 31, 2019.

~~(2)Net derivatives represent Financial instruments owned, at fair value - Derivatives and~~ ~~Financial instruments sold, not yet purchased, at fair value~~ ~~- Derivatives.~~

~~Analysis of Level 3 Assets and Liabilities for the nine months ended August 31, 2019~~

~~During the nine months ended August 31, 2019, transfers of assets of $60.2 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:~~

•~~Loans and other receivables of $30.6 million, other asset-backed securities of $10.8 million and corporate debt securities of $10.5 million due to reduced pricing transparency.~~

~~During the nine months ended August 31, 2019, transfers of assets of $47.8 million from Level 3 to Level 2 are primarily attributed to:~~

•Corporate equity securities of $14.8 million, other asset-backed securities of $10.0 million, loans and other receivables of $9.2 million and investments at fair value of $8.6 million due to greater pricing transparency supporting classification into Level 2.

~~During the nine months ended August 31, 2019, transfers of liabilities of $98.3 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:~~

•~~Net derivatives of $64.5 million and structured notes of $20.8 million due to reduced market and pricing transparency.~~

~~During the nine months ended August 31, 2019, transfers of liabilities of $64.1 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to:~~

•~~Structured notes of $61.7 million due to greater market transparency.~~

Net losses on Level 3 assets were $123.3 million and net gains on Level 3 liabilities were $55.8 million for the nine months ended August 31, 2019. Net losses on Level 3 assets were primarily due to decreased market values across investments at fair value, the FXCM term loan, corporate debt securities and CDOs and CLOs, partially offset by increased market values across corporate equity securities. Net gains on Level 3 liabilities were primarily due to decreased market values across derivatives and valuations of certain structured notes.

Quantitative Information about Significant Unobservable Inputs used in Level 3 Fair Value Measurements

The tables below present information on the valuation techniques, significant unobservable inputs and their ranges for our financial assets and liabilities, subject to threshold levels related to the market value of the positions held, measured at fair value on a recurring basis with a significant Level 3 balance. The range of unobservable inputs could differ significantly across different firms given the range of products across different firms in the financial services sector. The inputs are not representative of the inputs that could have been used in the valuation of any one financial instrument (i.e., the input used for valuing one financial instrument within a particular class of financial instruments may not be appropriate for valuing other financial instruments within that given class). Additionally, the ranges of inputs presented below should not be construed to represent uncertainty regarding the fair values of our financial instruments; rather, the range of inputs is reflective of the differences in the underlying characteristics of the financial instruments in each category.

For certain categories, we have provided a weighted average of the inputs allocated based on the fair values of the financial instruments comprising the category. We do not believe that the range or weighted average of the inputs is indicative of the reasonableness of uncertainty of our Level 3 fair values. The range and weighted average are driven by the individual financial instruments within each category and their relative distribution in the population. The disclosed inputs when compared with the inputs as disclosed in other periods should not be expected to necessarily be indicative of changes in our estimates of unobservable inputs for a particular financial instrument as the population of financial instruments comprising the category will vary from period to period based on purchases and sales of financial instruments during the period as well as transfers into and out of Level 3 each period.


August 31, 2020
May 31, 2021												May 31, 2021
		Fair Value (in thousands)		Valuation Technique	Significant Unobservable Input(s)	Input/Range							Weighted Average			Fair Value (in thousands)		Valuation Technique	Significant Unobservable Input(s)			Input/Range					Weighted Average
Financial instruments owned, at fair value	Financial instruments owned, at fair value														Financial instruments owned, at fair value

Corporate equity securities	Corporate equity securities	$	77,442									Corporate equity securities		$	86,344
Non-exchange-traded securities	Non-exchange-traded securities			Market approach	Price	$1		to	$213	$84		Non-exchange-traded securities				Market approach		Price	$1		to	$213			$75
					EBITDA multiple	$3		to	$4	$3								Transaction level	$1						—
																		EBITDA multiple	7.4						—
																Volatility benchmarking		Volatility	40	%	to	70%			50	%

Corporate debt securities	Corporate debt securities	$	23,269	Market approach	Price	$69							—		Corporate debt securities	$	7,985	Scenario analysis	Estimated recovery percentage			20	%	to	44%		30	%
				Scenario analysis	Estimated recovery percentage	22%							—

CDOs and CLOs	CDOs and CLOs	$	36,122	Discounted cash flows	Constant prepayment rate	2	%	to	20%	19	%	CDOs and CLOs		$	26,466	Discounted cash flows		Constant prepayment rate	2	%	to	20%			19	%
					Constant default rate	1	%	to	2%	2	%							Constant default rate	1	%	to	2%			2	%
					Loss severity	25	%	to	50%	28	%							Loss severity	25	%	to	55%			27	%
					Discount rate/yield	6	%	to	26%	17	%							Discount rate/yield	6	%	to	37%			19	%
				Scenario analysis	Estimated recovery percentage	2	%	to	35%	24	%					Market approach		Transaction level	$100						—

Residential mortgage- backed securities	Residential mortgage- backed securities	$	28,317	Discounted cash flows	Cumulative loss rate	2	%	to	32%	5	%	Residential mortgage- backed securities		$	6,033	Discounted cash flows		Discount rate/yield	3%						—
					Duration (years)	1.0 year		to	13.0 years	9.7 years								Cumulative loss rate	2%						—
					Discount rate/yield	4	%	to	14%	5	%							Duration (years)	2.4 years						—

Commercial mortgage- backed securities		$	4,663	Scenario analysis	Estimated recovery percentage	44%							—

Other asset-backed securities	Other asset-backed securities	$	63,337	Discounted cash flows	Cumulative loss rate	7	%	to	72%	18	%	Other asset-backed securities		$	70,555	Discounted cash flows		Discount rate/yield	3	%	to	13%			10	%
					Duration (years)	0.3 years		to	4.2 years	1.8 years								Cumulative loss rate	8	%	to	79%			16	%
					Discount rate/yield	4	%	to	15%	10	%							Duration (years)	0.7 years		to	2.3 years			1.5 years
				Market approach	Price	$100							—					Market approach	Price			$100					—

Loans and other receivables	Loans and other receivables	$	104,212	Market approach	Price	$6		to	$100	$76		Loans and other receivables		$	190,412	Market approach		Price	$31		to	$101			$72
				Scenario analysis	Estimated recovery percentage	2	%	to	100%	62	%							Transaction level	$98						—
																Scenario analysis		Estimated recovery percentage	0	%	to	100%			87	%

Derivatives	Derivatives	$	50,637									Derivatives		$	54,085
Loans total return swaps				Market approach	Price	$97		to	$99	$98
Equity Options												Equity Options				Volatility benchmarking		Volatility	41	%	to	88%			54	%
Interest rate swaps	Interest rate swaps			Market approach	Basis points upfront	3		to	20	9		Interest rate swaps				Market approach		Basis points upfront	1.0		to	10.7			5.0

Investments at fair value	Investments at fair value	$	76,654									Investments at fair value		$	193,808
Private equity securities	Private equity securities			Market approach	Price	$2		to	$169	$42		Private equity securities				Market approach		Price	$5		to	$169			$24
																		EBITDA multiple	21.1						—
																		Holding period (years)	0.5 years		to	1.1 years			0.9 years
																Volatility benchmarking		Volatility	19	%	to	43%			30	%
				Scenario analysis	Estimated recovery percentage	33%							—					Scenario analysis	Estimated recovery percentage			11%					—
					Discount rate/yield	19	%	to	21%	20	%							Discount rate/yield	13	%	to	21%			16	%
					Revenue growth	0%							—						Revenue growth			0%					—

Investment in FXCM	Investment in FXCM	$	56,542									Investment in FXCM		$	59,155
Term loan	Term loan			Discounted cash flows	Term based on the pay off (years)	0 months		to	1.5 years	1.5 years		Term loan				Discounted cash flows		Term based on the pay off (years)	0 months		to	1.7 years			1.7 years

Loans to and investments in associated companies	Loans to and investments in associated companies	$	34,688									Loans to and investments in associated companies
Non-exchange-traded warrants	Non-exchange-traded warrants			Market approach	Underlying stock price	$506							—		Non-exchange-traded warrants	$	37,287	Market approach	Underlying stock price			$636					—
					Underlying stock price	€15		to	€18	€17								Underlying stock price	€15		to	€18			€17
					Volatility	23	%	to	59%	25	%							Volatility	25	%	to	62%			30	%


Financial instruments sold, not yet purchased, at fair value												Financial instruments sold, not yet purchased, at fair value
Corporate equity securities												Corporate equity securities		$	4,462	Market approach		Price	$1						—

Corporate debt securities												Corporate debt securities		$	927	Scenario analysis		Estimated recovery percentage	20%						—

Loans												Loans		$	20,389	Market approach		Price	$31		to	$92			$46
																Scenario analysis		Estimated recovery percentage	5	%	to	87%			37	%

Derivatives												Derivatives		$	282,452
Equity options												Equity options				Volatility benchmarking		Volatility	26	%	to	61%			45	%
Loans total return swaps												Loans total return swaps				Market approach		Price	$0.2						—
Interest rate swaps												Interest rate swaps				Market approach		Basis points upfront	1.0		to	19.5			7.5

Other secured financings												Other secured financings		$	2,493	Scenario analysis		Estimated recovery percentage	19	%	to	100%			66	%

Long-term debt												Long-term debt
Structured notes												Structured notes		$	795,098	Market approach		Price	$88		to	$110			$103
																		Price	€0		to	€111			€102

August 31, 2020
Fair Value
(in thousands)
Valuation
Technique
Significant
Unobservable Input(s)
Input/Range
Weighted
Average
Financial instruments sold, not yet purchased, at fair value
Corporate equity securities $ 4,367 Market approach Transaction level $1 —
Corporate debt securities $ 148 Scenario analysis Estimated recovery percentage 22% —
Loans $ 46,594 Market approach Price $31 to $97 $70
Scenario analysis Estimated recovery percentage 2% —
Derivatives $ 69,615
Equity options Volatility benchmarking Volatility 32 % to 46% 39 %
Interest rate swaps Market approach Basis points upfront 3 to 20 9
Unfunded commitments Price $97 to $99 $98
Other secured financings $ 3,402 Scenario analysis Estimated recovery percentage 60 % to 100% 79 %
Long-term debt
Structured notes $ 630,260 Market approach Price $77 to $105 $99
Price €69 to €107 €91

November 30, 2019
Fair Value
(in thousands) Valuation
Technique Significant
Unobservable Input(s) Input/Range Weighted
Average
Financial instruments owned, at fair value
Corporate equity securities $ 29,017
Non-exchange-traded
securities Market approach Price $1 to $140 $55
Underlying stock price $3 to $5 $4
Corporate debt securities $ 7,490 Scenario analysis Estimated recovery percentage 23 % to 85% 46 %
Volatility 44% —
Credit spread 750 —
Underlying stock price £0.4 —
CDOs and CLOs $ 28,788 Discounted cash flows Constant prepayment rate 20% —
    Constant default rate 1 % to 2% 2 %
    Loss severity 25 % to 37% 29 %
    Discount rate/yield 12 % to 21% 15 %
Scenario analysis Estimated recovery percentage 3.25 % to 36.5% 25 %
Residential mortgage-
backed securities $ 17,740 Discounted cash flows Cumulative loss rate 2% —
    Duration (years) 6.3 years —
    Discount rate/yield 3% —
Commercial mortgage-
backed securities $ 6,110 Discounted cash flows Cumulative loss rate 7.3% —
    Duration (years) 0.2 years —
Discount rate/yield 85% —
Scenario analysis Estimated recovery percentage 44% —
Other asset-backed securities $ 42,563 Discounted cash flows Cumulative loss rate 7 % to 31% 16 %
    Duration (years) 0.5 years to 3 years 1.5 years
    Discount rate/yield 7 % to 15% 11 %
Loans and other receivables $ 112,574 Market approach Price $36 to $100 $90
Scenario analysis Estimated recovery percentage 87 % to 104% 99 %
Discounted cash flows Term based on the pay off (years) 0 months to 0.1 years 0.1 years
Derivatives $ 13,826
Interest rate swaps     Market approach Basis points upfront 0 to 16 6
Unfunded commitments Price $88 —
Equity options Volatility benchmarking Volatility 45% —
Investments at fair value $ 157,504
Private equity securities Market approach Price $8 to $250 $80
Scenario analysis Discount rate/yield 19 % to 21% 20 %
Revenue growth 0% —
Investment in FXCM $ 59,120
Term loan Discounted cash flows Term based on the pay off (years) 0 months to 1.2 years 1.2 years
Securities purchased under agreements to resell $ 25,000 Market approach Spread to 6 month LIBOR 500 —
Duration (years) 1.5 years —


November 30, 2019
November 30, 2020												November 30, 2020
														Fair Value (in thousands)		Valuation Technique		Significant Unobservable Input(s)	Input/Range				Weighted Average

Financial instruments owned, at fair value												Financial instruments owned, at fair value
Corporate equity securities												Corporate equity securities		$	75,409
Non-exchange-traded securities												Non-exchange-traded securities				Market approach		Price	$1		to	$213	$86
																		EBITDA multiple	4.0		to	8.0	5.7

Corporate debt securities												Corporate debt securities		$	23,146	Market approach		Price	$69				—
																Scenario analysis		Estimated recovery percentage	20	%	to	44%	30	%

CDOs and CLOs												CDOs and CLOs		$	17,972	Discounted cash flows		Constant prepayment rate	20%				0
																		Constant default rate	2%				0
																		Loss severity	25	%	to	30%	26	%
																		Discount rate/yield	14	%	to	28%	20	%
																Scenario analysis		Estimated recovery percentage	2	%	to	34%	23	%

Residential mortgage- backed securities												Residential mortgage- backed securities		$	21,826	Discounted cash flows		Cumulative loss rate	2	%	to	3%	3	%
																		Loss severity	35	%	to	50%	36	%
																		Duration (years)	2.0 years		to	12.9 years	5.1 years
																		Discount rate/yield	3	%	to	12%	4	%

Other asset-backed securities												Other asset-backed securities		$	67,816	Discounted cash flows		Cumulative loss rate	1	%	to	28%	11	%
																		Loss severity	50	%	to	85%	54	%
																		Duration (years)	0.2 years		to	2.1 years	1.3 years
																		Discount rate/yield	1	%	to	16%	9	%
																Market approach		Price	$100				—

Loans and other receivables												Loans and other receivables		$	76,049	Market approach		Price	$31		to	$100	$84
																Scenario analysis		Estimated recovery percentage	19	%	to	100%	52	%

Derivatives												Derivatives		$	19,951
Equity options												Equity options				Volatility benchmarking		Volatility	47%				—
Interest rate swaps												Interest rate swaps				Market approach		Basis points upfront	1.2		to	8.0	4.8

Investments at fair value												Investments at fair value		$	96,906
Private equity securities												Private equity securities				Market approach		Price	$1		to	$169	$29
																Scenario analysis		Estimated recovery percentage	17%				—
																		Discount rate/yield	19	%	to	21%	20	%
																		Revenue growth	0%				—

Investment in FXCM												Investment in FXCM		$	59,455
Term loan												Term loan				Discounted cash flows		Term based on the pay off (years)	0 months		to	1.2 years	1.2 years

Loans to and investments in associated companies												Loans to and investments in associated companies
Non-exchange-traded warrants												Non-exchange-traded warrants		$	40,185	Market approach		Underlying stock price	$778		to	$805	$792
																		Underlying stock price	€15		to	€19	��16
																		Volatility	25	%	to	55%	30	%
		Fair Value (in thousands)		Valuation Technique	Significant Unobservable Input(s)	Input/Range							Weighted Average

Financial instruments sold, not yet purchased, at fair value	Financial instruments sold, not yet purchased, at fair value																Financial instruments sold, not yet purchased, at fair value
Corporate equity securities	Corporate equity securities	$	4,487	Market approach	Transaction level	$1							—		Corporate equity securities	$	4,434	Market approach	Price			$1			—

Corporate debt securities												Corporate debt securities		$	141	Scenario analysis		Estimated recovery percentage	20%				—

Loans	Loans	$	9,463	Market approach	Price	$50		to	$100	$88		Loans		$	16,635	Market approach		Price	$31		to	$99	$55
				Scenario analysis	Estimated recovery percentage	1%							—

Derivatives	Derivatives	$	92,057									Derivatives		$	46,971
Equity options	Equity options			Volatility benchmarking	Volatility	21	%	to	61%	43	%	Equity options				Volatility benchmarking		Volatility	33	%	to	50%	42	%
Interest rate swaps	Interest rate swaps			Market approach	Basis points upfront	0		to	22	13		Interest rate swaps				Market approach		Basis points upfront	1.2		to	8.0	5.4
Cross currency swaps					Basis points upfront	2							—
Unfunded commitments					Price	$88							—

Other secured financings												Other secured financings		$	1,543	Scenario analysis		Estimated recovery percentage	19	%	to	55%	45	%

Long-term debt	Long-term debt											Long-term debt
Structured notes	Structured notes	$	480,069	Market approach	Price	$84		to	$108	$96		Structured notes		$	676,028	Market approach		Price	$100				—
					Price	€74		to	€103	€91								Price	€76		to	€113	€99

The fair values of certain Level 3 assets and liabilities that were determined based on third-party pricing information, unadjusted past transaction prices or a percentage of the reported enterprise fair value are excluded from the above tables. At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, asset exclusions consisted of ~~$156.6~~$39.7 million and ~~$79.9~~$192.0 million, respectively, primarily

comprised of certain investments at fair value, CDOs and CLOs, other asset-backed securities, commercial mortgage-backed securities, certain derivatives, loans and other receivables and corporate equity securities. At ~~August 31, 2020 and~~ November 30, ~~2019,~~2020, liability exclusions consisted of ~~$5.0~~$0.8 million, ~~and $0.4 million, respectively,~~ primarily comprised of certain derivatives and commercial mortgage-backed securities.

For recurring fair value measurements categorized within Level 3 of the fair value hierarchy, the uncertainty of the fair value measurement due to the use of significant unobservable inputs and interrelationships between those unobservable inputs (if any) are described below:

•~~Corporate~~Non-exchange-traded securities, corporate equity securities, corporate debt securities, CDOs and CLOs, loans and other receivables, ~~certain derivatives,~~ other asset-backed securities, private equity securities, certain derivatives, loans to and investments in associated companies ~~securities purchased under agreements to resell~~ and structured notes using a market approach valuation technique. A significant increase (decrease) in the ~~transaction level of corporate equity securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the~~ price of the private equity securities, non-exchange-traded securities, ~~unfunded commitments,~~corporate equity securities, corporate debt securities, other asset-backed securities, loans and other receivables, total return swaps or structured notes would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the transaction level of non-exchange-traded securities, CDOs and CLOs and loans and other receivables would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the EBITDA multiple related to ~~corporate~~non-exchange traded securities and private equity securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the holding period of the private equity securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the underlying stock price of ~~corporate equity securities or~~ non-exchange-traded warrants would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the volatility of the underlying stock price of non-exchange-traded warrants would result in a significantly higher (lower) fair value measurement. ~~A significant increase (decrease) in the yield or duration, in isolation, of securities purchased under agreements to resell would result in a significantly lower (higher) fair value measurement.~~ Depending on whether we are a receiver or (payer) of basis points upfront, a significant increase in basis points would result in a significant increase (decrease) in the fair value measurement of ~~cross currency and~~ interest rate swaps.

•Loans and other receivables, CDOs and CLOs, ~~commercial mortgage-backed securities,~~ corporate debt securities, private equity securities and other secured financings using scenario analysis. A significant increase (decrease) in the possible recovery rates of the cash flow outcomes underlying the financial instrument would result in a significantly higher (lower) fair value ~~measurement. A significant increase (decrease) in the price of the underlying assets of~~measurement for the financial instruments would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the volatility of the underlying stock price would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the credit spread of the financial instrument would result in a significantly lower (higher) fair value measurement.instrument. A significant increase (decrease) in the discount rate/yield underlying the investment would result in a significantly lower (higher) fair value measurement. A significant increase (decrease) in the revenue growth underlying the investment would result in a significantly higher (lower) fair value measurement.

•CDOs and CLOs, residential mortgage-backed securities, ~~commercial mortgage-backed securities,~~ other asset-backed securities ~~loans and other receivables~~ and the FXCM term loan using a discounted cash flow valuation technique. A significant increase (decrease) in isolation in the constant default rate, loss severity or cumulative loss rate would result in a significantly lower (higher) fair value measurement. The impact of changes in the constant prepayment rate and duration would have differing impacts depending on the capital structure and type of security. A significant increase (decrease) in the discount rate/security yield would result in a significantly lower (higher) fair value measurement. A

significant increase (decrease) in term based on the time to pay off the loan would result in a lower (higher) fair value measurement.

•Derivative equity options, non-exchange-traded securities and private equity securities using volatility benchmarking. A significant increase (decrease) in volatility would result in a significantly higher (lower) fair value measurement.

Fair Value Option Election

We have elected the fair value option for all loans and loan commitments made by our investment banking and capital markets businesses. These loans and loan commitments include loans entered into by our investment banking division in connection with client bridge financing and loan syndications, loans purchased by our leveraged credit trading desk as part of our bank loan trading activities and mortgage and consumer loan commitments, purchases and fundings in connection with mortgage-backed and other asset-backed securitization activities. Loans and loan commitments originated or purchased by our leveraged credit and mortgage-backed businesses are managed on a fair value basis. Loans are included in Financial instruments owned, at fair value and loan commitments are included in Financial instruments owned, at fair value and Financial instruments sold, not yet purchased, at fair value in the Consolidated Statements of Financial Condition. The fair value option election is not applied to loans made to affiliate entities as such loans are entered into as part of ongoing, strategic business ventures. Loans to affiliate entities are included in Loans to and investments in associated companies in the Consolidated Statements of Financial Condition and are accounted for on an amortized cost basis. We have also elected the fair value option for certain of our structured notes, which are managed by our investment banking and capital markets businesses and are included in Long-term debt and Short-term borrowings in the Consolidated Statements of Financial Condition. We have elected the fair value option for certain financial instruments held by subsidiaries as the investments are risk managed on a fair value basis. The fair value option has been elected for certain other secured financings that arise in connection with our securitization activities and other structured financings. Other secured financings, receivables from brokers, dealers and clearing organizations, receivables from customers of securities operations, other receivables, payables to brokers, dealers and clearing organizations and payables to

customers of securities operations, are accounted for at cost plus accrued interest rather than at fair value; however, the recorded amounts approximate fair value due to their liquid or short-term nature.

The following is a summary of gains (losses) due to changes in instrument specific credit risk on loans, other receivables and debt instruments and gains (losses) due to other changes in fair value on short-term borrowings ~~other secured financings~~ and long-term debt measured at fair value under the fair value option (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Financial instruments owned, at fair value:	Financial instruments owned, at fair value:									Financial instruments owned, at fair value:
Loans and other receivables	Loans and other receivables	$	1,704	$	2,040	$	(11,256)	$	(5,458)	Loans and other receivables	$	15,520	$	(13,926)	$	23,259	$	(10,830)

Financial instruments sold, not yet purchased, at fair value:	Financial instruments sold, not yet purchased, at fair value:									Financial instruments sold, not yet purchased, at fair value:
Loans	Loans	$	367	$	0	$	(610)	$	0	Loans	$	(363)	$	127	$	(363)	$	127
Loan commitments	Loan commitments	1,875		(443)		464		(1,200)		Loan commitments	0		1,750		0		1,089

Short-term borrowings:	Short-term borrowings:									Short-term borrowings:
Changes in instrument specific credit risk (1)	Changes in instrument specific credit risk (1)	$	(23)	$	0	$	(92)	$	0	Changes in instrument specific credit risk (1)	$	0	$	35	$	0	$	91
Other changes in fair value (2)	Other changes in fair value (2)	(1,115)		0		(959)		0		Other changes in fair value (2)	0		(644)		0		(881)

Other secured financings:
Other changes in fair value (2)		$	617	$	0	$	617	$	0

Long-term debt:	Long-term debt:									Long-term debt:
Changes in instrument specific credit risk (1)	Changes in instrument specific credit risk (1)	$	(177,801)	$	6,922	$	49,369	$	34,414	Changes in instrument specific credit risk (1)	$	(32,247)	$	197,737	$	(122,898)	$	227,169
Other changes in fair value (2)	Other changes in fair value (2)	(9,943)		(46,003)		(78,567)		(93,311)		Other changes in fair value (2)	6,846		(30,982)		86,113		(68,624)

(1) Changes in instrument specific credit risk related to structured notes are included in the Consolidated Statements of Comprehensive Income (Loss), net of tax.

(2) Other changes in fair value are included in Principal transactions revenues in the Consolidated Statements of Operations.

The following is a summary of the ~~amount~~amounts by which contractual principal ~~exceeds~~is greater than (less than) fair value for loans and other receivables, long-term debt and short-term borrowings and other secured financings measured at fair value under the fair value option (in thousands):


		August 31, 2020		November 30, 2019			May 31, 2021		November 30, 2020
Financial instruments owned, at fair value:	Financial instruments owned, at fair value:					Financial instruments owned, at fair value:
Loans and other receivables (1)	Loans and other receivables (1)	$	1,839,249	$	1,546,516	Loans and other receivables (1)	$	5,809,031	$	1,662,647

Loans and other receivables on nonaccrual status and/or 90 days or greater past due (1) (2)	Loans and other receivables on nonaccrual status and/or 90 days or greater past due (1) (2)	334,504		197,215		Loans and other receivables on nonaccrual status and/or 90 days or greater past due (1) (2)	135,054		287,889
Long-term debt and short-term borrowings	Long-term debt and short-term borrowings	74,197		74,408		Long-term debt and short-term borrowings	$	(75,025)	$	(42,819)
Other secured financings	Other secured financings	923		0		Other secured financings	$	2,782	$	2,782

(1) Interest income is recognized separately from other changes in fair value and is included in Interest income in the Consolidated Statements of Operations.

(2) Amounts include ~~all~~ loans and other receivables 90 days or greater past due by which contractual principal exceeds fair value of ~~$29.0~~$36.5 million and ~~$22.2~~$30.0 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively.

The aggregate fair value of ~~our~~ loans and other receivables on nonaccrual status and/or 90 days or greater past due was ~~$162.6~~$67.4 million and ~~$127.0~~$69.7 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively, which includes loans and other receivables 90 days or greater past due of ~~$13.3~~$26.2 million and ~~$24.8~~$3.8 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively.

As of November 30, 2018, we owned 7,514,477 common shares of Spectrum Brands, representing approximately 15% of Spectrum Brands outstanding common shares. The change in the fair value of our investment in Spectrum Brands aggregated $24.0 million and $48.8 million for the three and nine months ended August 31, 2019, respectively. We distributed the Spectrum Brands shares through a special pro rata dividend effective on October 11, 2019 to stockholders of record as of the close of business on September 30, 2019. We recorded a $451.1 million dividend as of the September 16, 2019 declaration date, which was equal to the fair value of Spectrum Brands shares at that time.

We believe accounting for these investments at fair value better reflects the economics of these investments, and quoted market prices for these investments provide an objectively determined fair value at each balance sheet date.

Financial Instruments Not Measured at Fair Value

Certain of our financial instruments are not carried at fair value but are recorded at amounts that approximate fair value due to their liquid or short-term nature and generally negligible credit risk. These financial assets include Cash and cash equivalents and Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations and would generally be presented within Level 1 of the fair value hierarchy. Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations includes U.S. Treasury securities with a fair value of ~~$55.9~~$58.0 million and ~~$35.0~~$34.2 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively.

Note 4. Derivative Financial Instruments

Derivative Financial Instruments

Derivative activities are recorded at fair value in the Consolidated Statements of Financial Condition in Financial instruments owned, at fair value and Financial instruments sold, not yet purchased, at fair value, net of cash paid or received under credit support agreements and on a net counterparty basis when a legally enforceable right to offset exists under a master netting agreement. Predominantly, we enter into derivative transactions to satisfy the needs of our clients and to manage our own exposure to market and credit risks resulting from our trading activities. In addition, we apply hedge accounting to (1) an interest rate ~~swap~~swaps that ~~has~~have been designated as a fair value ~~hedge~~hedges of the changes in fair value due to the benchmark interest rate for certain fixed rate senior long-term debt and (2) forward foreign exchange contracts designated as hedges to offset the change in the value of certain net investments in foreign operations. See Notes 3 and 1918 for additional disclosures about derivative financial instruments.

Derivatives are subject to various risks similar to other financial instruments, including market, credit and operational risk. The risks of derivatives should not be viewed in isolation, but rather should be considered on an aggregate basis along with our other trading-related activities. We manage the risks associated with derivatives on an aggregate basis along with the risks associated with proprietary trading as part of our firm wide risk management policies.

In connection with our derivative activities, we may enter into International Swaps and Derivatives Association, Inc. master netting agreements or similar agreements with counterparties.

The following tables present the fair value and related number of derivative contracts at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019~~2020 categorized by type of derivative contract and the platform on which these derivatives are transacted. The fair value of assets/liabilities represents our receivable/payable for derivative financial instruments, gross of counterparty netting and cash collateral received and pledged. The following tables also provide information regarding (1) the extent to which, under enforceable master netting arrangements, such balances are presented net in the Consolidated Statements of Financial Condition as appropriate under GAAP and (2) the extent to which other rights of setoff associated with these arrangements exist and could have an effect on our financial position (in thousands, except contract amounts).

Assets Liabilities
Fair Value Number of
Contracts (2) Fair Value Number of
Contracts (2)
August 31, 2020 (1)
Derivatives designated as accounting hedges:
Interest rate contracts:
Cleared OTC $ 70,159 1 $ 0 0
Foreign exchange contracts:
Bilateral OTC 0 0 393 2
Total derivatives designated as accounting hedges 70,159 393
Derivatives not designated as accounting hedges:
Interest rate contracts:
Exchange-traded 781 48,453 73 69,918
Cleared OTC 75,125 3,894 168,467 4,199
Bilateral OTC 689,581 1,480 316,196 621
Foreign exchange contracts:
Exchange-traded 0 0 0 245
Bilateral OTC 416,298 13,561 391,542 13,450
Equity contracts:
Exchange-traded 507,083 906,465 517,384 775,309
Bilateral OTC 351,744 1,939 879,876 1,945
Commodity contracts:
Exchange-traded 0 2,073 0 1,503
Bilateral OTC 25,447 2,287 0 0
Credit contracts:
Cleared OTC 3,165 15 5,567 13
Bilateral OTC 2,116 11 3,518 10
Total derivatives not designated as accounting hedges 2,071,340 2,282,623
Total gross derivative assets/liabilities:
Exchange-traded 507,864 517,457
Cleared OTC 148,449 174,034
Bilateral OTC 1,485,186 1,591,525
Amounts offset in Consolidated Statement of Financial Condition (3):
Exchange-traded (504,400) (504,400)
Cleared OTC (144,200) (145,706)
Bilateral OTC (963,215) (1,149,575)
Net amounts in the Consolidated Statement of Financial Condition (4) $ 529,684 $ 483,335

~~(continued)~~

3331


		Assets					Liabilities					Assets			Liabilities
		Fair Value		Number of Contracts (2)	Fair Value		Number of Contracts (2)		Fair Value		Number of Contracts (2)	Fair Value		Number of Contracts (2)
November 30, 2019 (1)
May 31, 2021 (1)								May 31, 2021 (1)
Derivatives designated as accounting hedges:	Derivatives designated as accounting hedges:							Derivatives designated as accounting hedges:
Interest rate contracts:	Interest rate contracts:							Interest rate contracts:
Cleared OTC	Cleared OTC	$	28,663	1	$	0	0	Cleared OTC	$	46,580	1	$	38,941	1
Foreign exchange contracts:								Foreign exchange contracts:
Bilateral OTC								Bilateral OTC	0		0	45,157		11
Total derivatives designated as accounting hedges	Total derivatives designated as accounting hedges	28,663			0			Total derivatives designated as accounting hedges	46,580			84,098

Derivatives not designated as accounting hedges:	Derivatives not designated as accounting hedges:							Derivatives not designated as accounting hedges:
Interest rate contracts:	Interest rate contracts:							Interest rate contracts:
Exchange-traded	Exchange-traded	1,191		65,226	103		38,464	Exchange-traded	2,232		27,499	829		54,731
Cleared OTC	Cleared OTC	213,224		3,329	284,433		3,443	Cleared OTC	6,335		4,288	29,428		4,217
Bilateral OTC	Bilateral OTC	421,700		1,325	258,857		738	Bilateral OTC	469,243		1,424	340,671		992
Foreign exchange contracts:	Foreign exchange contracts:							Foreign exchange contracts:
Exchange-traded		0		256	0		199

Bilateral OTC	Bilateral OTC	191,218		9,257	187,836		9,187	Bilateral OTC	686,254		16,056	666,153		15,946
Equity contracts:	Equity contracts:							Equity contracts:
Exchange-traded	Exchange-traded	717,494		1,714,538	962,535		1,481,388	Exchange-traded	1,397,909		1,190,684	1,452,191		1,118,612

Bilateral OTC	Bilateral OTC	248,720		4,731	445,241		4,271	Bilateral OTC	327,272		2,703	1,293,010		2,554
Commodity contracts:	Commodity contracts:							Commodity contracts:
Exchange-traded	Exchange-traded	0		5,524	0		4,646	Exchange-traded	259		2,455	40		2,253

Bilateral OTC	Bilateral OTC	20,600		4,084	391		359	Bilateral OTC	0		1	14,337		1,225
Credit contracts:	Credit contracts:							Credit contracts:

Cleared OTC	Cleared OTC	2,514		13	5,768		12	Cleared OTC	7,664		21	12,556		42
Bilateral OTC	Bilateral OTC	6,281		25	14,219		28	Bilateral OTC	3,231		13	6,056		12
Total derivatives not designated as accounting hedges	Total derivatives not designated as accounting hedges	1,822,942			2,159,383			Total derivatives not designated as accounting hedges	2,900,399			3,815,271

Total gross derivative assets/liabilities:	Total gross derivative assets/liabilities:							Total gross derivative assets/liabilities:
Exchange-traded	Exchange-traded	718,685			962,638			Exchange-traded	1,400,400			1,453,060
Cleared OTC	Cleared OTC	244,401			290,201			Cleared OTC	60,579			80,925
Bilateral OTC	Bilateral OTC	888,519			906,544			Bilateral OTC	1,486,000			2,365,384
Amounts offset in Consolidated Statement of Financial Condition (3):
Amounts offset in the Consolidated Statement of Financial Condition (3):								Amounts offset in the Consolidated Statement of Financial Condition (3):
Exchange-traded	Exchange-traded	(688,871)			(688,871)			Exchange-traded	(1,391,808)			(1,391,808)
Cleared OTC	Cleared OTC	(222,869)			(266,900)			Cleared OTC	(60,157)			(64,519)
Bilateral OTC	Bilateral OTC	(521,457)			(676,407)			Bilateral OTC	(1,094,393)			(1,560,112)
Net amounts in the Consolidated Statement of Financial Condition (4)	Net amounts in the Consolidated Statement of Financial Condition (4)	$	418,408		$	527,205		Net amounts in the Consolidated Statement of Financial Condition (4)	$	400,621		$	882,930

(continued)


	Assets			Liabilities
	Fair Value		Number of Contracts (2)	Fair Value		Number of Contracts (2)
November 30, 2020 (1)
Derivatives designated as accounting hedges:
Interest rate contracts:
Cleared OTC	$	67,381	1	$	6,891	1
Foreign exchange contracts:
Bilateral OTC	0		0	3,306		11
Total derivatives designated as accounting hedges	67,381			10,197

Derivatives not designated as accounting hedges:
Interest rate contracts:
Exchange-traded	2,442		52,620	439		42,611
Cleared OTC	17,379		3,785	114,524		4,307
Bilateral OTC	626,210		1,493	317,534		466
Foreign exchange contracts:
Exchange-traded	0		0	0		180

Bilateral OTC	297,165		15,005	277,706		15,050
Equity contracts:
Exchange-traded	558,304		1,147,486	564,951		971,938

Bilateral OTC	429,304		2,374	1,125,944		2,421
Commodity contracts:
Exchange-traded	64		3,207	0		2,654

Bilateral OTC	13,190		1,556	0		0
Credit contracts:

Cleared OTC	24,696		39	26,298		31
Bilateral OTC	1,008		11	2,209		11
Total derivatives not designated as accounting hedges	1,969,762			2,429,605

Total gross derivative assets/liabilities:
Exchange-traded	560,810			565,390
Cleared OTC	109,456			147,713
Bilateral OTC	1,366,877			1,726,699
Amounts offset in the Consolidated Statement of Financial Condition (3):
Exchange-traded	(546,989)			(546,989)
Cleared OTC	(109,228)			(111,654)
Bilateral OTC	(899,919)			(1,140,016)
Net amounts in the Consolidated Statement of Financial Condition (4)	$	481,007		$	641,143

(1) Exchange-traded derivatives include derivatives executed on an organized exchange. Cleared OTC derivatives include derivatives executed bilaterally and subsequently novated to and cleared through central clearing counterparties. Bilateral OTC derivatives include derivatives executed and settled bilaterally without the use of an organized exchange or central clearing counterparty.

(2) Number of exchange-traded contracts may include open futures contracts. The unsettled fair value of these futures contracts is included in Receivables and Payables, expense accruals and other liabilities in the Consolidated Statements of Financial Condition.

(3) Amounts netted include both netting by counterparty and for cash collateral paid or received.

(4) We have not received or pledged additional collateral under master netting agreements and/or other credit support agreements that is eligible to be offset beyond what has been offset in the Consolidated Statements of Financial Condition.

3432

The following table provides information related to gains (losses) recognized in Interest expense of Jefferies Group in the Consolidated Statements of Operations ~~on a~~related to fair value ~~hedge~~hedges (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Interest rate swaps	Interest rate swaps	$	834	$	28,052	$	47,303	$	69,843	Interest rate swaps	$	(1,671)	$	22,004	$	(45,462)	$	46,469
Long-term debt	Long-term debt	1,634		(28,519)		(45,539)		(72,288)		Long-term debt	5,215		(22,306)		52,026		(47,173)
Total	Total	$	2,468	$	(467)	$	1,764	$	(2,445)	Total	$	3,544	$	(302)	$	6,564	$	(704)

The following table provides information related to gains (losses) on net investment hedges recognized in Net unrealized foreign exchange gains (losses), a component of ~~Other~~Accumulated other comprehensive income (loss), in the Consolidated Statements of Comprehensive Income (Loss) (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Foreign exchange contracts	Foreign exchange contracts	$	(393)	$	0	$	(393)	$	0	Foreign exchange contracts	$	(21,906)	$	0	$	(63,406)	$	0
Total	Total	$	(393)	$	0	$	(393)	$	0	Total	$	(21,906)	$	0	$	(63,406)	$	0

The following table presents unrealized and realized gains (losses) on derivative contracts which are primarily recognized in Principal transactions revenues in the Consolidated Statements of Operations, which are utilized in connection with our client activities and our economic risk management activities (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Interest rate contracts	Interest rate contracts	$	(35,462)	$	(89,864)	$	(40,630)	$	(193,715)	Interest rate contracts	$	21,364	$	(4,079)	$	(20,760)	$	(5,168)
Foreign exchange contracts	Foreign exchange contracts	4,418		(1,839)		2,534		269		Foreign exchange contracts	24,243		437		71,072		(1,884)
Equity contracts	Equity contracts	(32,782)		2,236		113,253		(118,354)		Equity contracts	(3,315)		9,147		(93,012)		146,035
Commodity contracts	Commodity contracts	(18,716)		2,285		42,049		4,057		Commodity contracts	(6,720)		44,172		(25,069)		60,765
Credit contracts	Credit contracts	(179)		2,687		14,205		11,600		Credit contracts	(2,864)		12,554		(2,043)		14,384
Total	Total	$	(82,721)	$	(84,495)	$	131,411	$	(296,143)	Total	$	32,708	$	62,231	$	(69,812)	$	214,132

The net gains (losses) on derivative contracts in the table above are one of a number of activities comprising our business activities and are before consideration of economic hedging transactions, which generally offset the net gains (losses) included above. We substantially mitigate our exposure to market risk on our cash instruments through derivative contracts, which generally provide offsetting revenues, and we manage the risk associated with these contracts in the context of our overall risk management framework.

OTC Derivatives. The following tables set forth by remaining contract maturity the fair value of OTC derivative assets and liabilities as reflected in the Consolidated Statement of Financial Condition at ~~August~~May 31, ~~2020~~2021 (in thousands):


		OTC Derivative Assets (1) (2) (3)																			OTC Derivative Assets (1) (2) (3)
		0-12 Months		1-5 Years		Greater Than 5 Years		Cross- Maturity Netting (4)		Total			0-12 Months		1-5 Years		Greater Than 5 Years		Cross- Maturity Netting (4)		Total
Commodity swaps, options and forwards		$	18,611	$	6,836	$	0	$	0	$	25,447

Equity options and forwards	Equity options and forwards	21,437		44,672		15,160		(25,445)		55,824		Equity options and forwards	$	51,619	$	2,347	$	17,573	$	(18,453)	$	53,086

Credit default swaps												Credit default swaps	0		666		3,369		(1)		4,034
Total return swaps	Total return swaps	74,923		19,764		2,872		(14,666)		82,893		Total return swaps	83,513		14,032		0		(3,120)		94,425
Foreign currency forwards, swaps and options	Foreign currency forwards, swaps and options	63,570		28,993		0		(4,477)		88,086		Foreign currency forwards, swaps and options	97,410		4,454		0		(1,262)		100,602

Fixed income forwards												Fixed income forwards	17,702		0		0		0		17,702
Interest rate swaps, options and forwards	Interest rate swaps, options and forwards	94,956		204,309		222,482		(45,025)		476,722		Interest rate swaps, options and forwards	53,624		124,028		145,490		(39,642)		283,500
Total	Total	$	273,497	$	304,574	$	240,514	$	(89,613)	728,972		Total	$	303,868	$	145,527	$	166,432	$	(62,478)	553,349
Cross product counterparty netting	Cross product counterparty netting									(22,759)		Cross product counterparty netting									(12,172)
Total OTC derivative assets included in Financial instruments owned, at fair value	Total OTC derivative assets included in Financial instruments owned, at fair value									$	706,213	Total OTC derivative assets included in Financial instruments owned, at fair value									$	541,177

(1)At ~~August~~May 31, ~~2020,~~2021, we held net exchange-traded derivative assets, other derivative assets and other credit agreements with a fair value of ~~$25.1~~$18.3 million, which are not included in this table.

3533

(2)OTC derivative assets in the table above are gross of collateral received. OTC derivative assets are recorded net of collateral received in the Consolidated Statements of Financial Condition. At ~~August~~May 31, ~~2020,~~2021, cash collateral received was ~~$201.6~~$158.8 million.

(3)Derivative fair values include counterparty netting within product category.

(4)Amounts represent the netting of receivable balances with payable balances for the same counterparty within product category across maturity categories.

OTC Derivative Liabilities (1) (2) (3)
0-12 Months 1-5 Years Greater Than
5 Years Cross-Maturity
Netting (4) Total
Equity options and forwards $ 15,474 $ 370,915 $ 156,839 $ (25,445) $ 517,783
Credit default swaps 12 1,108 0 0 1,120
Total return swaps 58,888 103,567 0 (14,666) 147,789
Foreign currency forwards, swaps and options 55,541 11,792 34 (4,477) 62,890
Fixed income forwards 1,404 0 0 0 1,404
Interest rate swaps, options and forwards 42,132 80,469 72,462 (45,025) 150,038
Total $ 173,451 $ 567,851 $ 229,335 $ (89,613) 881,024
Cross product counterparty netting (22,759)
Total OTC derivative liabilities included in Financial instruments sold, not yet purchased, at fair value $ 858,265


	OTC Derivative Liabilities (1) (2) (3)
	0-12 Months		1-5 Years		Greater Than 5 Years		Cross-Maturity Netting (4)		Total
Commodity swaps, options and forwards	$	11,088	$	3,249	$	0	$	0	$	14,337
Equity options and forwards	14,879		523,306		161,290		(18,453)		681,022
Credit default swaps	17		2,607		7,101		(1)		9,724
Total return swaps	123,588		308,799		1,243		(3,120)		430,510
Foreign currency forwards, swaps and options	127,194		2,222		0		(1,262)		128,154
Fixed income forwards	19,941		0		0		0		19,941
Interest rate swaps, options and forwards	29,813		53,418		132,556		(39,642)		176,145
Total	$	326,520	$	893,601	$	302,190	$	(62,478)	1,459,833
Cross product counterparty netting									(12,172)
Total OTC derivative liabilities included in Financial instruments sold, not yet purchased, at fair value									$	1,447,661

(1)At ~~August~~May 31, ~~2020,~~2021, we held net exchange-traded derivative liabilities, other derivative liabilities and other credit agreements with a fair value of ~~$14.5~~$64.2 million, which are not included in this table.

(2)OTC derivative liabilities in the table above are gross of collateral pledged. OTC derivative liabilities are recorded net of collateral pledged in the Consolidated Statements of Financial Condition. At ~~August~~May 31, ~~2020,~~2021, cash collateral pledged was ~~$389.5~~$628.9 million.

(3)Derivative fair values include counterparty netting within product category.

(4) Amounts represent the netting of receivable balances with payable balances for the same counterparty within product category across maturity categories.

At ~~August~~May 31, ~~2020,~~2021, the counterparty credit quality with respect to the fair value of our OTC derivative assets was as follows (in thousands):


Counterparty credit quality (1):
A- or higher	$	~~139,436~~127,260
BBB- to BBB+	~~15,949~~33,398
BB+ or lower	~~353,564~~192,047
Unrated	~~197,264~~188,472
Total	$	~~706,213~~541,177

(1) We utilize internal credit ratings determined by the Jefferies Group's Risk Management department. Credit ratings determined by Jefferies Group Risk Management use methodologies that produce ratings generally consistent with those produced by external rating agencies.

3634

Credit Related Derivative Contracts

The external credit ratings of the underlyings or referenced assets for our written credit related derivative contracts are as follows (in millions):

External Credit Rating
Investment Grade Non-investment grade Unrated Total Notional
August 31, 2020
Credit protection sold:
Index credit default swaps $ 2.0 $ 45.9 $ 0 $ 47.9
Single name credit default swaps 0 6.2 0.2 6.4
November 30, 2019
Credit protection sold:
Index credit default swaps $ 3.0 $ 32.0 $ 0 $ 35.0
Single name credit default swaps 3.4 29.0 1.5 33.9


	External Credit Rating
	Investment Grade		Non-investment grade		Unrated		Total Notional
May 31, 2021
Credit protection sold:
Index credit default swaps	$	163.2	$	70.0	$	0	$	233.2
Single name credit default swaps	81.8		6.2		0.2		88.2

November 30, 2020
Credit protection sold:
Index credit default swaps	$	62.0	$	262.8	$	0	$	324.8
Single name credit default swaps	0		6.2		0.2		6.4

Contingent Features

Certain of Jefferies Group's derivative instruments contain provisions that require its debt to maintain an investment grade credit rating from each of the major credit rating agencies. If Jefferies Group's debt ~~were~~was to fall below investment grade, it would be in violation of these provisions and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on the derivative instruments in liability positions. The following table presents the aggregate fair value of all derivative instruments with such credit-risk-related contingent features that are in a liability position, the collateral amounts posted or received in the normal course of business and the potential collateral we would have been required to return and/or post additionally to our counterparties if the credit-risk-related contingent features underlying these agreements were triggered (in millions).


		August 31, 2020		November 30, 2019			May 31, 2021		November 30, 2020
Derivative instrument liabilities with credit-risk-related contingent features	Derivative instrument liabilities with credit-risk-related contingent features	$	191.4	$	42.9	Derivative instrument liabilities with credit-risk-related contingent features	$	508.2	$	284.6
Collateral posted	Collateral posted	(120.6)		(3.1)		Collateral posted	(209.9)		(129.8)
Collateral received	Collateral received	64.5		114.1		Collateral received	155.7		141.4
Return of and additional collateral required in the event of a credit rating downgrade below investment grade (1)	Return of and additional collateral required in the event of a credit rating downgrade below investment grade (1)	135.3		154.0		Return of and additional collateral required in the event of a credit rating downgrade below investment grade (1)	454.0		296.2

(1) These potential outflows include initial margin received from counterparties at the execution of the derivative contract. The initial margin will be returned if counterparties elect to terminate the contract after a downgrade.

Other Derivatives

Vitesse Energy Finance uses swaps and call and put options in order to reduce exposure to future oil price fluctuations. Vitesse Energy Finance accounts for the derivative instruments at fair value. The gains and losses associated with the change in fair value of the derivatives are recorded in Other revenues.

Note 5. Collateralized Transactions

Our repurchase agreements and securities borrowing and lending arrangements are generally recorded at cost in the Consolidated Statements of Financial Condition, which is a reasonable approximation of their fair values due to their short-term nature. We enter into secured borrowing and lending arrangements to obtain collateral necessary to effect settlement, finance inventory positions, meet customer needs or re-lend as part of dealer operations. We monitor the fair value of the securities loaned and borrowed on a daily basis as compared with the related payable or receivable, and request additional collateral or return excess collateral, as appropriate. We pledge financial instruments as collateral under repurchase agreements, securities lending agreements and other secured arrangements, including clearing arrangements. Our agreements with counterparties generally contain contractual provisions allowing the counterparty the right to sell or repledge the collateral. Pledged securities

owned that can be sold or repledged by the counterparty are included in Financial instruments owned, at fair value, and noted parenthetically as Securities pledged in the Consolidated Statements of Financial Condition.

In instances where we receive securities as collateral in connection with securities-for-securities transactions in which we are the lender of securities and are permitted to sell or repledge the securities received as collateral, we report the fair value of the collateral received and the related obligation to return the collateral ~~is reported~~ in the Consolidated Statements of Financial Condition.

The following tables set forth the carrying value of securities lending arrangements, repurchase agreements and obligation to return securities received as collateral, at fair value, by class of collateral pledged and remaining contractual maturity (in thousands):

Collateral Pledged Securities Lending Arrangements Repurchase Agreements Obligation to Return Securities Received as Collateral, at Fair Value Total
August 31, 2020
Corporate equity securities $ 1,317,023 $ 176,221 $ 4,413 $ 1,497,657
Corporate debt securities 605,527 1,661,854 0 2,267,381
Mortgage-backed and asset-backed securities 0 1,680,052 0 1,680,052
U.S. government and federal agency securities 7,187 12,187,529 0 12,194,716
Municipal securities 0 180,837 0 180,837
Sovereign obligations 0 2,636,878 0 2,636,878
Loans and other receivables 0 1,313,667 0 1,313,667
Total $ 1,929,737 $ 19,837,038 $ 4,413 $ 21,771,188
November 30, 2019
Corporate equity securities $ 1,314,395 $ 129,558 $ 0 $ 1,443,953
Corporate debt securities 191,311 1,730,526 0 1,921,837
Mortgage-backed and asset-backed securities 0 1,745,145 0 1,745,145
U.S. government and federal agency securities 19,434 10,863,997 9,500 10,892,931
Municipal securities 0 498,202 0 498,202
Sovereign obligations 0 3,016,563 0 3,016,563
Loans and other receivables 0 772,926 0 772,926
Total $ 1,525,140 $ 18,756,917 $ 9,500 $ 20,291,557


Collateral Pledged	Securities Lending Arrangements		Repurchase Agreements		Obligation to Return Securities Received as Collateral, at Fair Value		Total
May 31, 2021

Corporate equity securities	$	1,845,840	$	157,948	$	0	$	2,003,788
Corporate debt securities	401,275		2,370,242		0		2,771,517
Mortgage-backed and asset-backed securities	0		1,293,794		0		1,293,794
U.S. government and federal agency securities	18,562		10,035,319		0		10,053,881
Municipal securities	0		289,739		0		289,739
Sovereign obligations	11,746		2,180,790		0		2,192,536
Loans and other receivables	0		955,107		0		955,107
Total	$	2,277,423	$	17,282,939	$	0	$	19,560,362

November 30, 2020
Corporate equity securities	$	1,371,978	$	157,912	$	7,517	$	1,537,407
Corporate debt securities	369,218		1,869,844		0		2,239,062
Mortgage-backed and asset-backed securities	0		1,547,140		0		1,547,140
U.S. government and federal agency securities	14,789		7,149,992		0		7,164,781
Municipal securities	0		278,470		0		278,470
Sovereign obligations	54,763		2,763,032		0		2,817,795
Loans and other receivables	0		1,392,883		0		1,392,883
Total	$	1,810,748	$	15,159,273	$	7,517	$	16,977,538


		Contractual Maturity																			Contractual Maturity
		Overnight and Continuous		Up to 30 Days		31 to 90 Days		Greater than 90 Days		Total			Overnight and Continuous		Up to 30 Days		31 to 90 Days		Greater than 90 Days		Total
August 31, 2020
May 31, 2021												May 31, 2021
Securities lending arrangements												Securities lending arrangements	$	861,554	$	0	$	598,203	$	817,666	$	2,277,423
Repurchase agreements												Repurchase agreements	8,251,453		2,894,885		2,811,683		3,324,918		17,282,939

Total												Total	$	9,113,007	$	2,894,885	$	3,409,886	$	4,142,584	$	19,560,362

November 30, 2020												November 30, 2020
Securities lending arrangements	Securities lending arrangements	$	630,163	$	0	$	553,062	$	746,512	$	1,929,737	Securities lending arrangements	$	636,256	$	59,735	$	459,455	$	655,302	$	1,810,748
Repurchase agreements	Repurchase agreements	10,606,433		1,695,229		4,243,474		3,291,902		19,837,038		Repurchase agreements	5,510,476		1,747,526		5,019,885		2,881,386		15,159,273
Obligation to return securities received as collateral, at fair value	Obligation to return securities received as collateral, at fair value	4,413		0		0		0		4,413		Obligation to return securities received as collateral, at fair value	7,517		0		0		0		7,517
Total	Total	$	11,241,009	$	1,695,229	$	4,796,536	$	4,038,414	$	21,771,188	Total	$	6,154,249	$	1,807,261	$	5,479,340	$	3,536,688	$	16,977,538

November 30, 2019
Securities lending arrangements		$	694,821	$	0	$	672,969	$	157,350	$	1,525,140
Repurchase agreements		6,614,026		1,556,260		8,988,528		1,598,103		18,756,917
Obligation to return securities received as collateral, at fair value		0		0		9,500		0		9,500
Total		$	7,308,847	$	1,556,260	$	9,670,997	$	1,755,453	$	20,291,557

We receive securities as collateral under resale agreements, securities borrowing transactions and customer margin loans. We also receive securities as collateral in connection with securities-for-securities transactions in which we are the lender of securities. In many instances, we are permitted by contract to rehypothecate the securities received as collateral. These securities may be used to secure repurchase agreements, enter into securities lending transactions, satisfy margin requirements

on derivative transactions or cover short positions. At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, the approximate fair value of securities received as collateral by us that may be sold or repledged was ~~$29.9~~$33.0 billion and ~~$28.7~~$25.9 billion, respectively. At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, a substantial portion of the securities received have been sold or repledged.

Offsetting of Securities Financing Agreements

To manage our exposure to credit risk associated with securities financing transactions, we may enter into master netting agreements and collateral arrangements with counterparties. Generally, transactions are executed under standard industry agreements, including, but not limited to, master securities lending agreements (securities lending transactions) and master repurchase agreements (repurchase transactions).

The following table provides information regarding repurchase agreements, securities borrowing and lending arrangements and

securities received as collateral, at fair value, and obligation to return securities received as collateral, at fair value, that are recognized in the Consolidated Statements of Financial Condition and (1) the extent to which, under enforceable master netting arrangements, such balances are presented net in the Consolidated Statements of Financial Condition as appropriate under GAAP and (2) the extent to which other rights of setoff associated with these arrangements exist and could have an effect on our consolidated financial position.


(In thousands)	(In thousands)	Gross Amounts		Netting in Consolidated Statements of Financial Condition		Net Amounts in Consolidated Statements of Financial Condition		Additional Amounts Available for Setoff (1)		Available Collateral (2)		Net Amount (3)		(In thousands)	Gross Amounts		Netting in Consolidated Statements of Financial Condition		Net Amounts in Consolidated Statements of Financial Condition		Additional Amounts Available for Setoff (1)		Available Collateral (2)		Net Amount (3)
Assets at August 31, 2020
Assets at May 31, 2021														Assets at May 31, 2021
Securities borrowing arrangements														Securities borrowing arrangements	$	6,720,683	$	0	$	6,720,683	$	(493,650)	$	(2,083,503)	$	4,143,530
Reverse repurchase agreements														Reverse repurchase agreements	17,120,842		(10,203,617)		6,917,225		(618,350)		(6,259,927)		38,948

Liabilities at May 31, 2021														Liabilities at May 31, 2021
Securities lending arrangements														Securities lending arrangements	$	2,277,423	$	0	$	2,277,423	$	(493,650)	$	(1,718,328)	$	65,445
Repurchase agreements														Repurchase agreements	17,282,939		(10,203,617)		7,079,322		(618,350)		(5,933,921)		527,051

Assets at November 30, 2020														Assets at November 30, 2020
Securities borrowing arrangements	Securities borrowing arrangements	$	7,268,413	$	0	$	7,268,413	$	(429,615)	$	(1,691,674)	$	5,147,124	Securities borrowing arrangements	$	6,934,762	$	0	$	6,934,762	$	(395,342)	$	(1,706,046)	$	4,833,374
Reverse repurchase agreements	Reverse repurchase agreements	17,905,457		(12,578,066)		5,327,391		(144,353)		(5,141,297)		41,741		Reverse repurchase agreements	11,939,773		(6,843,004)		5,096,769		(412,327)		(4,578,560)		105,882
Securities received as collateral, at fair value	Securities received as collateral, at fair value	4,413		—		4,413		—		—		4,413		Securities received as collateral, at fair value	7,517		0		7,517		0		0		7,517

Liabilities at August 31, 2020
Liabilities at November 30, 2020														Liabilities at November 30, 2020
Securities lending arrangements	Securities lending arrangements	$	1,929,737	$	0	$	1,929,737	$	(429,615)	$	(1,467,230)	$	32,892	Securities lending arrangements	$	1,810,748	$	0	$	1,810,748	$	(395,342)	$	(1,397,550)	$	17,856
Repurchase agreements	Repurchase agreements	19,837,038		(12,578,066)		7,258,972		(144,353)		(6,622,623)		491,996		Repurchase agreements	15,159,273		(6,843,004)		8,316,269		(412,327)		(7,122,422)		781,520
Obligation to return securities received as collateral, at fair value	Obligation to return securities received as collateral, at fair value	4,413		—		4,413		—		—		4,413		Obligation to return securities received as collateral, at fair value	7,517		0		7,517		0		0		7,517

Assets at November 30, 2019
Securities borrowing arrangements		$	7,624,642	$	0	$	7,624,642	$	(361,394)	$	(1,479,433)	$	5,783,815
Reverse repurchase agreements		15,551,845		(11,252,247)		4,299,598		(291,316)		(3,929,977)		78,305
Securities received as collateral, at fair value		9,500		—		9,500		—		—		9,500

Liabilities at November 30, 2019
Securities lending arrangements		$	1,525,140	$	0	$	1,525,140	$	(361,394)	$	(970,799)	$	192,947
Repurchase agreements		18,756,917		(11,252,247)		7,504,670		(291,316)		(6,663,807)		549,547
Obligation to return securities received as collateral, at fair value		9,500		—		9,500		—		—		9,500

(1)Under master netting agreements with our counterparties, we have the legal right of offset with a counterparty, which incorporates all of the counterparty's outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by a counterparty in the event of a counterparty's default, but which are not netted in the Consolidated Statements of Financial Condition because other netting provisions of GAAP are not met.

(2)Includes securities received or paid under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty's rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements.

(3)At ~~August~~May 31, ~~2020,~~2021, amounts include ~~$5,089.0~~$4,032.0 million of securities borrowing arrangements, for which we have received securities collateral of ~~$4,921.2~~$3,904.7 million, and ~~$439.7~~$520.0 million of repurchase agreements, for which we have pledged securities collateral of ~~$451.6~~$533.6 million, which are subject to master netting agreements, but we have not determined the agreements to be legally enforceable. At November 30, ~~2019,~~2020, amounts include ~~$5,683.4~~$4,757.8 million of securities borrowing arrangements, for which we have received securities collateral of ~~$5,523.6~~$4,617.0 million, and ~~$439.7~~$720.0 million of repurchase agreements, for which we have pledged securities collateral of ~~$447.5~~$733.9 million, which are subject to master netting agreements, but we have not determined the agreements to be legally enforceable.

Cash and Securities Segregated and on Deposit for Regulatory Purposes or Deposited with Clearing and Depository Organizations

Cash and securities segregated in accordance with regulatory regulations and deposited with clearing and depository organizations ~~and segregated in accordance with regulatory regulations~~ totaled ~~$986.1~~$901.4 million and ~~$796.8~~$604.3 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively. Segregated cash and securities consist of deposits in accordance with Rule 15c3-3 of the Securities Exchange Act of 1934, which subjects Jefferies LLC as a broker-dealer carrying customer accounts to requirements related to maintaining cash or qualified securities in segregated special reserve bank accounts for the exclusive benefit of its customers.

Note 6. Securitization Activities

We engage in securitization activities related to corporate loans, mortgage loans, consumer loans and mortgage-backed and other asset-backed securities. In our securitization transactions, we transfer these assets to special purpose entities ("SPEs") and act as the placement or structuring agent for the beneficial interests sold to investors by the SPE. A significant portion of our securitization transactions are the securitization of assets issued or guaranteed by U.S. government agencies. These SPEs generally meet the criteria of variable interest entities ("VIEs"); however, we generally do not consolidate the SPEs ~~are generally not consolidated~~ as we are not considered the primary beneficiary for these SPEs.

We account for our securitization transactions as sales, provided we have relinquished control over the transferred assets. Transferred assets are carried at fair value with unrealized gains and losses reflected in Principal transactions revenues in the Consolidated Statements of Operations prior to the identification and isolation for securitization. Subsequently, revenues recognized upon securitization are reflected as net underwriting revenues. We generally receive cash proceeds in connection with the transfer of assets to an SPE. We may, however, have continuing involvement with the transferred assets, which is limited to retaining one or more tranches of the securitization (primarily senior and subordinated debt securities in the form of mortgage-backed and other asset-backed securities or CLOs). These securities are included in Financial instruments owned, at fair value in the Consolidated Statements of Financial Condition and are generally initially categorized as Level 2 within the fair value hierarchy.

The following table presents activity related to our securitizations that were accounted for as sales in which we had continuing involvement (in millions):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Transferred assets	Transferred assets	$	983.9	$	789.3	$	4,794.3	$	2,894.4	Transferred assets	$	3,146.5	$	1,475.8	$	6,730.0	$	3,810.4
Proceeds on new securitizations	Proceeds on new securitizations	983.9		789.3		4,794.3		2,966.3		Proceeds on new securitizations	3,146.5		1,475.7		6,729.6		3,810.4
Cash flows received on retained interests	Cash flows received on retained interests	6.3		16.8		18.6		47.2		Cash flows received on retained interests	5.1		7.2		11.1		11.7

We have no explicit or implicit arrangements to provide additional financial support to these SPEs, have no liabilities related to these SPEs and do not have any outstanding derivative contracts executed in connection with these securitization activities at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019.~~2020.

The following table summarizes our retained interests in SPEs where we transferred assets and have continuing involvement and received sale accounting treatment (in millions):

August 31, 2020 November 30, 2019
Securitization Type
Total
Assets Retained
Interests Total
Assets Retained
Interests
U.S. government agency residential mortgage-backed securities $ 928.7 $ 12.4 $ 10,671.7 $ 103.3
U.S. government agency commercial mortgage-backed securities 439.2 138.3 1,374.8 45.8
CLOs 3,419.9 41.8 3,006.7 58.4
Consumer and other loans 884.0 45.6 1,149.3 71.8


	May 31, 2021				November 30, 2020
Securitization Type	Total Assets		Retained Interests		Total Assets		Retained Interests
U.S. government agency residential mortgage-backed securities	$	447.8	$	6.2	$	562.5	$	7.8
U.S. government agency commercial mortgage-backed securities	2,224.0		114.5		2,461.2		205.2
CLOs	3,702.0		91.9		3,345.5		39.5
Consumer and other loans	1,693.3		95.1		1,290.6		56.6

Total assets represent the unpaid principal amount of assets in the SPEs in which we have continuing involvement and are presented solely to provide information regarding the size of the transactions and the size of the underlying assets supporting our retained interests, and are not considered representative of the risk of potential loss. Assets retained in connection with a securitization transaction represent the fair value of the securities of one or more tranches issued by an SPE, including senior and subordinated tranches. Our risk of loss is limited to this fair value amount, which is included in total Financial instruments owned, at fair value in the Consolidated Statements of Financial Condition.

Although not obligated, in connection with secondary market-making activities we may make a market in the securities issued by these SPEs. In these market-making transactions, we buy these securities from and sell these securities to investors. Securities purchased through these market-making activities are not considered to be continuing involvement in these SPEs. To the extent we purchased securities through these market-making activities and we are not deemed to be the primary beneficiary of the VIE, these securities are included in agency and non-agency mortgage-backed and asset-backed securitizations in the nonconsolidated VIEs section presented in Note 7.

Foursight Capital also utilizes SPEs to securitize automobile loans receivable. These SPEs are VIEs and our subsidiary is the primary beneficiary; the related assets and the secured borrowings are recognized in the Consolidated Statements of Financial Condition. These secured borrowings do not have recourse to our subsidiary's general credit. See Note 7 for further information on securitization activities and VIEs.

Note 7. Variable Interest Entities

VIEs are entities in which equity investors lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary. The primary beneficiary is the party who has both (1) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (2) an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity.

Our variable interests in VIEs include debt and equity interests, equity interests in associated companies, commitments, guarantees and certain fees. Our involvement with VIEs arises primarily from the following activities, but also includes other activities discussed below:

•Purchases of securities in connection with our trading and secondary market-making activities;

•Retained interests held as a result of securitization ~~activities, including the resecuritization of mortgage-backed and other asset-backed securities and the securitization of mortgage, corporate and consumer loans;~~activities;

•Acting as placement agent and/or underwriter in connection with client-sponsored securitizations;

•Financing of agency and non-agency mortgage-backed and other asset-backed securities;

•Warehouse funding arrangements for client-sponsored consumer and mortgage loan vehicles and CLOs through participation agreements, forward sale agreements, reverse repurchase agreements and revolving loan and note commitments; and

•Loans to, investments in and fees from various investment vehicles.

We determine whether we are the primary beneficiary of a VIE upon our initial involvement with the VIE and we reassess whether we are the primary beneficiary of a VIE on an ongoing basis. Our determination of whether we are the primary beneficiary of a VIE is based upon the facts and circumstances for each VIE and requires judgment. Our considerations in determining the VIE's most significant activities and whether we have power to direct those activities include, but are not limited to, the VIE's purpose and design and the risks passed through to investors, the voting interests of the VIE, management, service and/or other agreements of the VIE, involvement in the VIE's initial design and the existence of explicit or implicit financial guarantees. In situations where we have determined that the power over the VIE's significant activities is shared, we assess whether we are the party with the power over the most significant activities. If we are the party with the power over the most significant activities, we meet the "power" criteria of the primary beneficiary. If we do not have the power over the most significant activities or we determine that decisions require consent of each sharing party, we do not meet the "power" criteria of the primary beneficiary.

We assess our variable interests in a VIE both individually and in aggregate to determine whether we have an obligation to absorb losses of or a right to receive benefits from the VIE that could potentially be significant to the VIE. The determination of whether our variable interest is significant to the VIE requires judgment. In determining the significance of our variable interest, we consider the terms, characteristics and size of the variable interests, the design and characteristics of the VIE, our involvement in the VIE and our market-making activities related to the variable interests.

4139

Consolidated VIEs

The following table presents information about our consolidated VIEs (in millions). The assets and liabilities in the table below are presented prior to consolidation and thus a portion of these assets and liabilities are eliminated in consolidation.


		August 31, 2020						November 30, 2019							May 31, 2021				November 30, 2020
		Secured Funding Vehicles		Other		Secured Funding Vehicles		Other			Secured Funding Vehicles		Other		Secured Funding Vehicles		Other
Cash (1)	Cash (1)	$	0	$	1.2	$	0	$	1.2	Cash (1)	$	0	$	1.2	$	0	$	1.2
Financial instruments owned, at fair value(2)	Financial instruments owned, at fair value(2)	0		3.6		0		0.3		Financial instruments owned, at fair value(2)	0		0.2		0		5.2
Securities purchased under agreements to resell ~~(2)~~(3)	Securities purchased under agreements to resell ~~(2)~~(3)	2,919.8		0		2,467.3		0		Securities purchased under agreements to resell ~~(2)~~(3)	3,535.2		0		2,908.9		0

Receivables	Receivables	581.9		13.5		605.6		0		Receivables	549.2		22.5		510.6		12.9

Other		37.8		0.1		38.7		0
Other assets (4)										Other assets (4)	75.9		0.2		46.4		0.1
Total assets	Total assets	$	3,539.5	$	18.4	$	3,111.6	$	1.5	Total assets	$	4,160.3	$	24.1	$	3,465.9	$	19.4

Financial instruments sold, not yet purchased, at fair value	Financial instruments sold, not yet purchased, at fair value	$	0	$	2.1	$	0	$	0	Financial instruments sold, not yet purchased, at fair value	$	0	$	0	$	0	$	2.5
Other secured financings ~~(3)~~(5)	Other secured financings ~~(3)~~(5)	3,502.9		0		3,068.6		0		Other secured financings ~~(3)~~(5)	4,129.1		0		3,425.0		0

Other liabilities ~~(4)~~(6)	Other liabilities ~~(4)~~(6)	3.7		0.4		20.1		0.2		Other liabilities ~~(4)~~(6)	2.0		0.8		1.8		0.4
Total liabilities	Total liabilities	$	3,506.6	$	2.5	$	3,088.7	$	0.2	Total liabilities	$	4,131.1	$	0.8	$	3,426.8	$	2.9

(1)Approximately ~~$0.6~~$1.2 million and $0.7 million of the cash ~~amount~~amounts at ~~August~~May 31, 2021 and November 30, 2020, ~~represents~~respectively, represent cash on deposit with a related consolidated ~~entity~~entities and isare eliminated in consolidation.

(2)Approximately $0.2 million of financial instruments owned, at fair value, at May 31, 2021, are with related consolidated entities, which are eliminated in consolidation.

(3)Securities purchased under agreements to resell primarily represent amounts due under collateralized transactions on related consolidated entities, which are eliminated in consolidation.

~~(3)~~(4)Approximately ~~$130.1~~$30.2 million and $9.7 million of the other assets at May 31, 2021 and November 30, 2020, respectively, represent intercompany receivables with related consolidated entities, which are eliminated in consolidation.

(5)Approximately $138.2 million of the other secured financings ~~amount~~ at ~~August 31,~~November 30, 2020 isare with related consolidated entities, which isare eliminated in consolidation.

~~(4)~~(6)~~Includes $1.8~~Approximately $0.3 million and ~~$17.9~~$0.3 million of the other liabilities at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively, ofrepresent intercompany payables ~~that~~with related consolidated entities, which are eliminated in consolidation.

~~Securitization~~Secured Funding Vehicles. We are the primary beneficiary of asset-backed financing vehicles to which we sell agency and non-agency residential and commercial mortgage loans and asset-backed securities pursuant to the terms of a master repurchase agreement. Our variable interests in these vehicles consist of our collateral margin maintenance obligations under the master repurchase agreement, which we manage, and retained interests in securities issued. The assets of these VIEs consist of reverse repurchase agreements, which are available for the benefit of the vehicle's debt holders.

At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, Foursight Capital is the primary beneficiary of SPEs it utilized to securitize automobile loans receivable. Foursight Capital acts as the servicer for which it receives a fee, and owns an equity interest in the SPEs. The notes issued by the SPEs are secured solely by the assets of the SPEs and do not have recourse to Foursight Capital's general credit and the assets of the VIEs are not available to satisfy any other debt. During the ~~nine~~six months ended ~~August~~May 31, ~~2020,~~2021, automobile loan receivables aggregating ~~$223.3~~$250.4 million were securitized by Foursight Capital in connection with a secured borrowing offering. The majority of the proceeds from issuance of the secured borrowing were used to pay down Foursight Capital's ~~two~~2 credit facilities.

Other. We are the primary beneficiary of certain investment vehicles set up for the benefit of our employees. We manage and invest alongside our employees in these vehicles. The assets of these VIEs consist of private equity securities and are available for the benefit of the entities' equity holders. Our variable interests in these vehicles consist of equity securities. The creditors of these VIEs do not have recourse to our general credit and each such VIE's assets are not available to satisfy any other debt.

4240

Nonconsolidated VIEs

The following table presents information about our variable interests in nonconsolidated VIEs (in millions):


		Carrying Amount						Maximum Exposure to Loss				VIE Assets	Carrying Amount				Maximum Exposure to Loss		VIE Assets
		Assets		Liabilities									Assets		Liabilities
August 31, 2020
May 31, 2021										May 31, 2021
CLOs	CLOs	$	66.3	$	1.4	$	470.4	$	6,509.5	CLOs	$	145.3	$	2.4	$	1,089.7	$	6,684.9
Consumer loan and other asset-backed vehicles		308.4		0		435.0		2,300.4
Asset-backed vehicles										Asset-backed vehicles	265.6		0		421.2		2,584.6
Related party private equity vehicles	Related party private equity vehicles	18.6		0		29.6		50.7		Related party private equity vehicles	23.7		0		34.6		67.2

Other investment vehicles	Other investment vehicles	853.9		0		1,053.4		16,210.4		Other investment vehicles	949.9		0		1,088.7		14,736.7
Total	Total	$	1,247.2	$	1.4	$	1,988.4	$	25,071.0	Total	$	1,384.5	$	2.4	$	2,634.2	$	24,073.4

November 30, 2019
November 30, 2020										November 30, 2020
CLOs	CLOs	$	152.6	$	0.6	$	505.3	$	7,845.0	CLOs	$	60.7	$	0.2	$	642.7	$	6,849.1
Consumer loan and other asset-backed vehicles		358.3		0		490.6		2,354.8
Asset-backed vehicles										Asset-backed vehicles	251.6		0		377.2		2,462.7
Related party private equity vehicles	Related party private equity vehicles	23.0		0		34.3		71.4		Related party private equity vehicles	19.0		0		30.0		53.0

Other investment vehicles	Other investment vehicles	574.0		0		766.1		9,255.0		Other investment vehicles	899.9		0		1,042.9		15,735.5
Total	Total	$	1,107.9	$	0.6	$	1,796.3	$	19,526.2	Total	$	1,231.2	$	0.2	$	2,092.8	$	25,100.3

Our maximum exposure to loss often differs from the carrying value of the variable interests. The maximum exposure to loss is dependent on the nature of the variable interests in ~~the~~our VIEs and is limited to the notional amounts of certain loan and equity commitments and guarantees. Our maximum exposure to loss does not include the offsetting benefit of any financial instruments that may be utilized to hedge the risks associated with our variable interests and is not reduced by the amount of collateral held as part of a transaction with a VIE.

Collateralized Loan Obligations. Assets collateralizing the CLOs include bank loans, participation interests, ~~and~~ sub-investment grade and senior secured U.S. ~~loans.~~loans and senior secured Euro denominated corporate leveraged loans and bonds. We underwrite securities issued in CLO transactions on behalf of sponsors and provide advisory services to the sponsors. We may also sell corporate loans to the CLOs. Our variable interests in connection with CLOs where we have been involved in providing underwriting and/or advisory services consist of the following:

•Forward sale agreements whereby we commit to sell, at a fixed price, corporate loans and ownership interests in an entity holding such corporate loans to CLOs;

•Warehouse funding arrangements in the form ~~of participation~~of:

◦Participation interests in corporate loans held by CLOs and commitments to fund such participation interests; and

◦Reverse repurchase agreements with collateral margin maintenance obligations and commitments to fund such reverse repurchase agreements;

•Trading positions in securities issued in a CLO ~~transaction;~~transactions; and

•Investments in variable funding notes issued by CLOs.

Asset-Backed Vehicles. We provide financing and lending related services to certain client-sponsored VIEs in the form of revolving funding note agreements, revolving credit facilities, forward purchase agreements and reverse repurchase agreements. The underlying assets, which are collateralizing the vehicles, are primarily composed of unsecured consumer loans, mortgage loans and trade claims. In addition, we may provide structuring and advisory services and act as an underwriter or placement agent for securities issued by the vehicles. We do not control the activities of these entities.

Related Party Private Equity Vehicles. We committed to invest in private equity funds (the "JCP Funds", including Jefferies Group's interests in Jefferies Capital Partners V L.P. and the Jefferies SBI USA Fund L.P. (together, "JCP Fund V")) managed by Jefferies Capital Partners, LLC (the "JCP Manager"). Additionally, we committed to invest in the general partners of the JCP Funds (the "JCP General Partners") and the JCP Manager. Our variable interests in the JCP Funds, JCP General Partners and JCP Manager (collectively, the "JCP Entities") consist of equity interests that, in total, provide us with limited and general partner investment returns of the JCP Funds, a portion of the carried interest earned by the JCP General Partners and a portion of the management fees earned by the JCP Manager. At ~~August~~both May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, our total equity commitment in the JCP Entities was $133.0 million, ~~and $133.0 million, respectively,~~ of which ~~$122.0~~$122.1 million and ~~$121.7~~$122.0 million, respectively, had been funded. The carrying value of our equity investments in the JCP Entities was ~~$18.6~~$23.7 million and ~~$23.0~~$19.0 million at ~~August~~May 31, ~~2020~~ 2021

and November 30, ~~2019,~~2020, respectively. Our exposure to loss is limited to the total of our carrying value and unfunded equity commitment. The assets of the JCP Entities primarily consist of private equity and equity related investments.

Other Investment Vehicles. The carrying amount of our equity investment was ~~$853.9~~$949.9 million and ~~$574.0~~$899.9 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively. Our unfunded equity commitment related to these investments totaled ~~$199.6~~$138.7 million and ~~$192.1~~$143.0 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively. Our exposure to loss is limited to the total of our carrying value and unfunded equity commitment. These investment vehicles have assets primarily consisting of private and public equity investments, debt instruments, trade and insurance claims and various oil and gas assets.

Mortgage-Backed and Other Asset-Backed Secured Funding Vehicles. In connection with our secondary trading and market-making activities, we buy and sell agency and non-agency mortgage-backed securities and other asset-backed securities, which are issued by third-party securitization SPEs and are generally considered variable interests in VIEs. Securities issued by securitization SPEs are backed by residential mortgage loans, U.S. agency collateralized mortgage obligations, commercial mortgage loans, CDOs and CLOs and other consumer loans, such as installment receivables, auto loans and student loans. These securities are accounted for at fair value and included in Financial instruments owned, at fair value in the Consolidated Statements of Financial Condition. We have no other involvement with the related SPEs and therefore do not consolidate these entities.

We also engage in underwriting, placement and structuring activities for third-party-sponsored securitization trusts generally through agency (FNMA ("Fannie Mae"), Federal Home Loan Mortgage Corporation ("Freddie Mac") or GNMA ("Ginnie Mae")) or non-agency-sponsored SPEs and may purchase loans or mortgage-backed securities from ~~third parties~~third-parties that are subsequently transferred into the securitization trusts. The securitizations are backed by residential and commercial mortgage, home equity and auto loans. We do not consolidate agency-sponsored securitizations as we do not have the power to direct the activities of the SPEs that most significantly impact their economic performance. Further, we are not the servicer of non-agency-sponsored securitizations and therefore do not have power to direct the most significant activities of the SPEs and accordingly, do not consolidate these entities. We may retain unsold senior and/or subordinated interests at the time of securitization in the form of securities issued by the SPEs.

At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, we held ~~$1,808.6~~$1,418.2 million and ~~$1,453.5~~$1,571.6 million of agency mortgage-backed securities, respectively, and ~~$130.8~~$239.2 million and ~~$134.8~~$252.0 million of non-agency mortgage-backed and other asset-backed securities, respectively, as a result of our secondary trading and market-making activities, and underwriting, placement and structuring activities. Our maximum exposure to loss on these securities is limited to the carrying value of our investments in these securities. These mortgage-backed and other asset-backed secured funding vehicles discussed are not included in the above table containing information about our variable interests in nonconsolidated VIEs.

FXCM is considered a VIE and our term loan and equity ownership are variable interests. We have determined that we are not the primary beneficiary of FXCM because we do not have the power to direct the activities that most significantly impact FXCM's performance. Therefore, we do not consolidate FXCM and we account for our equity interest under the equity method as an investment in an associated company. FXCM reported total assets of $397.7 million in its latest financial statements. Our maximum exposure to loss as a result of our involvement with FXCM is limited to the carrying value of the term loan ($~~56.5~~59.2 million) and the investment in associated company ($~~80.3~~64.1 million), which totaled ~~$136.8~~$123.3 million at ~~August~~May 31, ~~2020.~~2021. FXCM is not included in the above table containing information about our variable interests in nonconsolidated VIEs.

4442

Note 8. Loans to and Investments in Associated Companies

A summary of Loans to and investments in associated companies accounted for under the equity method of accounting during the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019~~2020 is as follows (in thousands):


		Loans to and investments in associated companies as of beginning of period		Income (losses) related to associated companies		Income (losses) primarily related to Jefferies Group's associated companies (1)		Contributions to (distributions from) associated companies, net		Other		Loans to and investments in associated companies as of end of period			Loans to and investments in associated companies as of beginning of period		Income (losses) related to associated companies		Other income (losses) related to associated companies (1)		Contributions to (distributions from) associated companies, net		Other		Loans to and investments in associated companies as of end of period

2021														2021
Jefferies Finance														Jefferies Finance	$	693,201	$	0	$	60,835	$	(21,817)	$	0	$	732,219
Berkadia														Berkadia	301,152		0		60,672		(505)		(57)		361,262

FXCM (2)														FXCM (2)	73,920		(10,120)		0		0		328		64,128

Linkem (3)														Linkem (3)	198,991		(19,943)		0		(8,783)		0		170,265

Real estate associated companies														Real estate associated companies	168,678		(3,117)		0		(11,854)		0		153,707
Other (3)														Other (3)	250,621		(914)		31,537		(34,709)		(1)		246,534
Total														Total	$	1,686,563	$	(34,094)	$	153,044	$	(77,668)	$	270	$	1,728,115

2020	2020													2020
Jefferies Finance	Jefferies Finance	$	673,867	$	0	$	(65,681)	$	10,107	$	0	$	618,293	Jefferies Finance	$	673,867	$	0	$	(47,950)	$	27,547	$	0	$	653,464
Berkadia	Berkadia	268,949		0		40,373		(36,615)		510		273,217		Berkadia	268,949		0		21,925		(36,562)		472		254,784

FXCM (2)	FXCM (2)	70,223		9,956		0		0		161		80,340		FXCM (2)	70,223		6,252		0		0		(243)		76,232

Linkem (3)		194,847		(21,754)		0		35,103		(2,149)		206,047
Linkem														Linkem	194,847		(19,809)		0		35,242		3,825		214,105

Real estate associated companies (4) (5)		255,309		(50,910)		0		(34,505)		0		169,894
Other (3)		189,762		(6,815)		3,026		(3,643)		9,235		191,565
Total		$	1,652,957	$	(69,523)	$	(22,282)	$	(29,553)	$	7,757	$	1,539,356

2019
Jefferies Finance		$	728,560	$	0	$	1,035	$	(58,682)	$	0	$	670,913
Berkadia		245,228		0		72,231		(47,682)		722		270,499
National Beef (6)		653,630		137,918		0		(72,767)		(10)		718,771
FXCM (2)		75,031		(5,589)		0		3,500		(134)		72,808

Linkem		165,157		(20,696)		0		82,178		(8,226)		218,413
HomeFed (4)		337,542		7,902		0		0		(345,444)		0
Real estate associated companies(4)	Real estate associated companies(4)	87,074		1,536		0		(3,054)		198,273		283,829		Real estate associated companies(4)	255,309		(53,442)		0		(31,784)		0		170,083
Other	Other	125,110		695		(1,652)		(13,958)		869		111,064		Other	189,762		(7,577)		(111)		(186)		9,237		191,125
Total	Total	$	2,417,332	$	121,766	$	71,614	$	(110,465)	$	(153,950)	$	2,346,297	Total	$	1,652,957	$	(74,576)	$	(26,136)	$	(5,743)	$	13,291	$	1,559,793

(1)Primarily related to Jefferies Group and classified in Other revenues.

(2)As further described in Note 3, our investment in FXCM includes both our equity method investment in FXCM and our term loan with FXCM. Our equity method investment is included in Loans to and investments in associated companies and our term loan is included in Financial instruments owned, at fair value in the Consolidated Statements of Financial Condition.

(3)Loans to and investments in associated companies at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019~~2020 include loans and debt securities aggregating ~~$100.2~~$104.1 million and ~~$70.2~~$104.1 million, respectively, related to Linkem and Other.

(4)During the third quarter of 2019, we completed a merger with HomeFed by which we acquired the remaining common stock of HomeFed. From July 1, 2019, the results of HomeFed are reflected on a consolidated basis. From July 1, 2019, HomeFed's equity method investments are included in Real estate associated companies.

~~(5)~~Income (loss) related to Real estate associated companies for the ~~nine~~three and six months ended ~~August~~May 31, 2020 includes a non-cash charge of $6.9 million to fully write-off the value of HomeFed's interest in the Brooklyn Renaissance Plaza hotel due to the significant impact of the global novel coronavirus ("COVID-19") during the second quarter of 2020 and, for the six months ended May 31, 2020, includes a non-cash charge of $55.6 million to fully write-off the value of HomeFed's RedSky JZ Fulton Mall joint venture investment related to a softening of the Brooklyn real estate market.

~~(6)On November 29, 2019, we sold our remaining equity interest in National Beef.~~

Income (losses) related to associated companies includes the following (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
National Beef		$	0	$	75,867	$	0	$	137,918

FXCM	FXCM	3,704		(573)		9,956		(5,589)		FXCM	$	(4,658)	$	7,890	$	(10,120)	$	6,252

Linkem	Linkem	(1,945)		(12,115)		(21,754)		(20,696)		Linkem	(10,836)		(6,624)		(19,943)		(19,809)
HomeFed		0		8,419		0		7,902

Real estate associated companies	Real estate associated companies	2,532		464		(50,910)		1,536		Real estate associated companies	(9,168)		(428)		(3,117)		(53,442)
Other	Other	762		221		(6,815)		695		Other	1,136		(7,559)		(914)		(7,577)
Total	Total	$	5,053	$	72,283	$	(69,523)	$	121,766	Total	$	(23,526)	$	(6,721)	$	(34,094)	$	(74,576)

~~Income~~

Other income (losses) ~~primarily~~related to associated companies (primarily related to Jefferies ~~Group's associated companies (primarily~~Group and classified in Other revenues) includes the following (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Jefferies Finance	Jefferies Finance	$	(17,731)	$	(6,901)	$	(65,681)	$	1,035	Jefferies Finance	$	33,250	$	(53,069)	$	60,835	$	(47,950)
Berkadia	Berkadia	18,448		24,286		40,373		72,231		Berkadia	30,654		31		60,672		21,925
Other	Other	3,137		(92)		3,026		(1,652)		Other	1,234		(1,857)		31,537		(111)
Total	Total	$	3,854	$	17,293	$	(22,282)	$	71,614	Total	$	65,138	$	(54,895)	$	153,044	$	(26,136)

Jefferies Finance

Through Jefferies Group, we own 50% of Jefferies Finance LLC ("Jefferies Finance"), a joint venture entity pursuant to an agreement with Massachusetts Mutual Life Insurance Company ("MassMutual"). Jefferies Finance is a commercial finance company that structures, underwrites and ~~arranges~~syndicates primarily senior secured loans to corporate borrowers. Jefferies Finance conducts its operations primarily through 2 business lines, Leveraged Finance Arrangement and Portfolio & Asset Management. The Leveraged Finance Arrangement business line participates in transactions typically ranging from $250 million to $1.5 billion for borrowers. Loans are originated primarily through the investment banking efforts of Jefferies LLC. The Portfolio & Asset Management business line, collectively referred to as Jefferies ~~Finance may also underwrite and arrange other debt products such as second lien term, bridge and mezzanine loans, as well as related equity co-investments. In addition, Jefferies Finance~~Credit Partners, is a ~~registered investment advisor under the Investment Advisers Act~~private credit platform that manages more than $10.0 billion of ~~1940~~proprietary and ~~through two of its wholly-owned subsidiaries, Apex Credit Partners LLC~~third party capital invested across commingled funds, separately managed accounts and ~~JFIN Asset Management LLC, acts as an investment advisor for various loan funds and CLOs managing direct lending and broadly syndicated loan products.~~CLOs.

At ~~August~~May 31, ~~2020,~~2021, Jefferies Group and MassMutual each had equity commitments to Jefferies Finance of $750.0 million. At ~~August~~May 31, ~~2020, $652.4~~2021, $676.8 million of Jefferies Group's commitment was funded. The investment commitment is scheduled to expire on March 1, ~~2021~~2022 with automatic one year extensions absent a 60-day termination notice by either party.

Jefferies Finance has executed a Secured Revolving Credit Facility with Jefferies Group and MassMutual, to be funded equally, to support loan underwritings by Jefferies Finance, which bears interest based on the interest rates of the related Jefferies Finance underwritten loans and is secured by the underlying loans funded by the proceeds of the facility. The total Secured Revolving Credit Facility is a committed amount of $500.0 million at ~~August~~May 31, ~~2020.~~2021. Advances are shared equally between Jefferies Group and MassMutual. The facility is scheduled to mature on March 1, ~~2021~~2022 with automatic one year extensions absent a 60-day termination notice by either party. At ~~August~~May 31, ~~2020,~~2021, $0.0 million of Jefferies Group's $250.0 million commitment was funded. Jefferies Group recognized interest income and unfunded commitment fees related to the facility of ~~$0.4~~$1.3 million and ~~$0.3~~$1.5 million during the three months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$3.0~~$1.9 million and ~~$0.9~~$2.6 million during the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

The following summarizes activity related to our other transactions with Jefferies Finance (in millions):

For the Three Months Ended For the Nine Months Ended
August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019
Origination and syndication fee revenues (1) $ 42.4 $ 44.6 $ 123.9 $ 135.8
Origination fee expenses (1) 3.8 8.2 12.4 21.8
CLO placement fee revenues (2) 1.3 1.0 1.7 2.3
Underwriting fees (3) 0 2.9 0.3 3.9
Service fees (4) 13.5 12.3 49.4 50.6


	For the Three Months Ended				For the Six Months Ended
	May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020

Origination and syndication fee revenues (1)	$	145.4	$	43.8	$	215.7	$	81.5
Origination fee expenses (1)	20.5		3.0		32.8		8.6
CLO placement fee revenues (2)	1.3		0		3.7		0.4
Underwriting fees (3)	0		0		0.5		0.3
Service fees (4)	14.0		10.7		45.5		35.9

(1) Jefferies Group engages in ~~debt underwriting transactions with Jefferies Finance related to~~ the ~~originations~~origination and ~~syndications~~syndication of loans underwritten by Jefferies Finance. In connection with such services, Jefferies Group earned fees, which are recognized in Investment banking revenues in the Consolidated Statements of Operations. In addition, Jefferies Group paid fees to Jefferies Finance in respect of certain loans originated by Jefferies Finance, which are recognized in Selling, general and other expenses in the Consolidated Statements of Operations.

(2) Jefferies Group acts as a placement agent for CLOs managed by Jefferies Finance, for which Jefferies Group recognized fees, which are included in Investment banking revenues in the Consolidated Statements of Operations. At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, Jefferies Group held securities issued by CLOs managed by Jefferies Finance, which are included in Financial instruments owned, at fair value.

(3) Jefferies Group acted as underwriter in connection with term loans issued by Jefferies Finance.

(4) Under a service agreement, Jefferies Group charges Jefferies Finance for services provided.

In connection with non-U.S. dollar loans originated by Jefferies Finance to borrowers who are investment banking clients of Jefferies Group, Jefferies Group has entered into an agreement to indemnify Jefferies Finance with respect to any foreign currency exposure.

At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, we had receivables from Jefferies Finance, included ~~within~~in Other assets in the Consolidated Statements of Financial Condition of ~~$13.2~~$31.6 million and ~~$17.2~~$24.2 million, respectively. At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, we had payables to Jefferies Finance, related to cash deposited with Jefferies Group, included in Payables, expense accruals and other liabilities in the Consolidated Statements of Financial Condition of ~~$13.7~~$1.8 million and $13.7 million, respectively. At November 30, 2019, we had a payable to Jefferies Finance, related to its lending transactions, included in Payables, expense accruals and other liabilities in the Consolidated Statement of Financial Condition of $17.6 million.

On March 28, 2019, Jefferies Group entered into a promissory note with Jefferies Finance with a principal amount of $1.0 billion, the proceeds of which were used in connection with Jefferies Group's investment banking loan syndication activities. Jefferies Group repaid Jefferies Finance the entire outstanding principal amount of this note on May 15, 2019. Interest paid on the note of $3.8 million is included in Interest expense of Jefferies Group within the Consolidated Statement of Operations for the nine months ended August 31, 2019.

Berkadia

Berkadia is a commercial mortgage banking and servicing joint venture formed in 2009 with Berkshire Hathaway Inc. We and Berkshire Hathaway each contributed $217.2 million of equity capital to the joint venture and each have a 50% membership interest in Berkadia. We are entitled to receive 45% of the profits. Berkadia originates commercial/multifamily real estate loans that are sold to U.S. government agencies, and ~~originates and brokers commercial/multifamily mortgage loans which are not part of government agency programs.~~other investors. Berkadia also is an investment sales advisor focused on the multifamily industry. Berkadia is a servicer of commercial real estate loans in the U.S., performing primary, master and special servicing functions for U.S. government agency programs, commercial mortgage-backed securities transactions, banks, insurance companies and other financial institutions.

Berkadia uses all of the proceeds from the commercial paper sales of an affiliate of Berkadia to fund new mortgage loans, servicer advances, investments and other working capital requirements. Repayment of the commercial paper is supported by a $1.5 billion surety policy issued by a Berkshire Hathaway insurance subsidiary and corporate guaranty, and we have agreed to reimburse Berkshire Hathaway for one-half of any losses incurred thereunder. At ~~August~~May 31, ~~2020,~~2021, the aggregate amount of commercial paper outstanding was $1.47 billion.

~~National Beef~~

National Beef processes and markets fresh and chilled boxed beef, ground beef, beef by-products, consumer-ready beef and pork, and wet blue leather for domestic and international markets. On November 29, 2019, we sold our remaining equity interest in National Beef.

FXCM

We have a 50% voting interest in FXCM, a provider of online foreign exchange trading services. We account for our equity interest in FXCM on a one month lag. We are amortizing our basis difference between the estimated fair value and the underlying book value of FXCM customer relationships, technology and tradename over their respective useful lives (weighted average life of 11 years).

FXCM is considered a VIE and our term loan and equity interest are variable interests. We have determined that we are not the primary beneficiary of FXCM because we do not have the power to direct the activities that most significantly impact FXCM's performance. Therefore, we do not consolidate FXCM.

Linkem

We own approximately 42% of the common shares of Linkem, the largest fixed wireless broadband services provider in Italy. In addition, we own convertible preferred stock, which is automatically convertible to common shares in 2022, and warrants. If all of our convertible preferred stock was converted and warrants were exercised, it would increase our ownership to approximately 56% of Linkem's common equity at ~~August~~May 31, ~~2020.~~2021. We have approximately 48% of the total voting securities of Linkem. Additionally, we have made shareholder loans to Linkem with principal outstanding of ~~$102.0~~$104.3 million at ~~August~~May 31, ~~2020. These shareholder loans bear interest at 5% per annum and are due June 30, 2024.~~2021. We account for our equity interest in Linkem on a two month lag.

~~HomeFed~~

HomeFed develops and owns residential and mixed-use real estate properties. Through June 30, 2019, we owned an approximate 70% equity interest of HomeFed's outstanding common shares; however, we had contractually agreed to limit our voting rights such that we would not be able to vote more than 45% of HomeFed's total voting securities voting on any matter, assuming all HomeFed shares not owned by us were voted. Since we did not control HomeFed, our investment in HomeFed was accounted for under the equity method as an investment in an associated company. We accounted for our equity interest in HomeFed on a two month lag.

On July 1, 2019, we completed a merger with HomeFed by which we acquired the remaining common stock of HomeFed. During the three months ended August 31, 2019, we recognized a $72.1 million non-cash pre-tax gain in Other revenues on the remeasurement of our prior 70% interest in HomeFed to fair value. From July 1, 2019, the results of HomeFed are reflected on a consolidated basis.

Real Estate Associated Companies

Real estate equity method investments primarily consist of HomeFed's interests in Brooklyn Renaissance Plaza and Hotel and 54 Madison. These equity interests are accounted for on a two month lag.

Brooklyn Renaissance Plaza is comprised of a hotel operated by Marriott, an office building complex and a parking garage located in Brooklyn, New York. HomeFed owns a 25.8% equity interest in the hotel and a 61.25% equity interest in the office building and garage. Although HomeFed has a majority interest in the office building and garage, it does not have control, but only has the ability to exercise significant influence on this investment. As such, HomeFed accounts for the office building and garage under the equity method of accounting. We are amortizing our basis difference between the estimated fair value and the underlying book value of Brooklyn Renaissance office building and garage over the respective useful lives (weighted average life of 39 years). Due to the significant impact of COVID-19 during the second quarter of 2020, HomeFed recorded an impairment charge of $6.9 million within Income (loss) related to associated companies during the nine months ended August 31, 2020, which represented all of its carrying value ~~in the~~ ~~Brooklyn Renaissance Plaza hotel.~~

We own approximately 48.1% of 54 Madison, a fund that seeks long-term capital appreciation through investment in real estate development and similar projects. 54 Madison invests both in projects which they consolidate and projects where they have significant influence and utilize the equity method of accounting. Based on total committed capital of the 54 Madison fund, all projects of this fund have already been identified and launched. We have 2 of the 4 seats on the 54 Madison investment committee and have significant influence over the fund, including a number of protective rights such as the right to block material investments, divestitures and changes outside of agreed upon parameters.

~~Other~~

The following table provides required summarized data for certain equity method investments, including those accounted for under the fair value option. The table includes Berkadia for the nine months ended August 31, 2020 and 2019, and National Beef for the nine months ended August 31, 2019 (in thousands):

For the Nine Months Ended
August 31, 2020 August 31, 2019
Revenues $ 716,182 $ 6,972,754
Income from continuing operations before extraordinary items $ 89,716 $ 622,553
Net income $ 89,716 $ 622,553

Note 9. Intangible Assets, Net and Goodwill

A summary of Intangible assets, net and goodwill is as follows (in thousands):


		August 31, 2020		November 30, 2019			May 31, 2021		November 30, 2020
Indefinite-lived intangibles:	Indefinite-lived intangibles:					Indefinite-lived intangibles:
Exchange and clearing organization membership interests and registrations	Exchange and clearing organization membership interests and registrations	$	7,874	$	8,273	Exchange and clearing organization membership interests and registrations	$	7,928	$	7,884

Amortizable intangibles:	Amortizable intangibles:					Amortizable intangibles:
Customer and other relationships, net of accumulated amortization of $117,609 and $111,060		53,396		59,575
Trademarks and tradenames, net of accumulated amortization of $27,673 and $24,800		101,207		103,790
Customer and other relationships, net of accumulated amortization of $124,438 and $119,694						Customer and other relationships, net of accumulated amortization of $124,438 and $119,694	47,300		51,285
Trademarks and tradenames, net of accumulated amortization of $30,682 and $28,585						Trademarks and tradenames, net of accumulated amortization of $30,682 and $28,585	99,247		100,255

Other, net of accumulated amortization of $8,042 and $5,366		8,640		11,316
Other, net of accumulated amortization of $10,183 and $8,953						Other, net of accumulated amortization of $10,183 and $8,953	6,499		7,729
Total intangible assets, net	Total intangible assets, net	171,117		182,954		Total intangible assets, net	160,974		167,153

Goodwill:	Goodwill:					Goodwill:
Investment Banking and Capital Markets (1) (2)		1,560,255		1,556,810
Investment Banking and Capital Markets (1)						Investment Banking and Capital Markets (1)	1,568,336		1,563,144
Asset Management ~~(1)~~	Asset Management ~~(1)~~	143,000		143,000		Asset Management ~~(1)~~	143,000		143,000
Real estate	Real estate	36,711		36,711		Real estate	36,711		36,711
Other operations	Other operations	3,459		3,459		Other operations	3,459		3,459
Total goodwill	Total goodwill	1,743,425		1,739,980		Total goodwill	1,751,506		1,746,314

Total intangible assets, net and goodwill	Total intangible assets, net and goodwill	$	1,914,542	$	1,922,934	Total intangible assets, net and goodwill	$	1,912,480	$	1,913,467

(1) As discussed further in Note 23, during the first quarter of 2020, we changed our internal structure with regard to our operating segments. As a result, we created a separate operating segment that consists of the asset management activity previously included within our Investment Banking, Capital Markets and Asset Management segment. In order to reallocate goodwill that was previously contained in our Investment Banking, Capital Markets and Asset Management segment to the newly created Investment Banking and Capital Markets segment and the Asset Management segment, we performed a fair value analysis of the components.

Estimated fair values were determined based on valuation techniques that we believe market participants would use and included price-to-earnings, price-to-book multiples and discounted cash flow techniques. Based on the relative fair values of each of the components, $143.0 million of the total $1,699.8 million goodwill within the historical Investment Banking, Capital Markets and Asset Management segment was allocated to the new Asset Management segment. In order to compare results with prior periods, we have recast November 30, 2019 goodwill in the same manner. We performed an impairment test immediately before and after the reallocation of goodwill between the new segments and the results of the impairment test did not indicate any goodwill impairment.

~~(2)~~ The increase in Investment Banking and Capital Markets goodwill during the ~~nine~~six months ended ~~August~~May 31, ~~2020,~~2021, primarily relates to translation adjustments.

Amortization expense on intangible assets was ~~$3.7~~$3.6 million and ~~$4.0~~$3.9 million for the three months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$11.5~~$7.2 million and ~~$10.6~~$7.7 million for the ~~nine~~six months ended ~~August~~May 31, 2021 and 2020, ~~and 2019,~~ respectively.

The estimated aggregate future amortization expense for the intangible assets for each of the next five years is as follows (in thousands):


Remainder of current year	Remainder of current year	$	3,673	Remainder of current year	$	7,179
2021		14,457
2022	2022	11,180		2022	11,134
2023	2023	9,945		2023	9,900
2024	2024	9,189		2024	9,143
2025				2025	8,632

We performed our annual impairment testing of goodwill within the Investment Banking and Capital Markets, and Asset Management segments as of August 1, 2020. The quantitative goodwill impairment test is performed at our reporting unit level and consists of two steps. In the first step, the fair value of the reporting unit is compared with its carrying value, including goodwill and allocated intangible assets. If the fair value is in excess of the carrying value, the goodwill for the reporting unit is considered not to be impaired. If the fair value is less than the carrying value, then a second step is performed in order to measure the amount of the impairment loss, if any, which is based on comparing the implied fair value of the reporting unit’s goodwill to the carrying value of the reporting unit’s goodwill.

The estimated fair value of both the Investment Banking and Capital Markets segment and the Asset Management segment are based on valuation techniques that we believe market participants would use, although the valuation process requires significant judgment and often involves the use of significant estimates and assumptions. The methodologies we utilize in estimating fair value include price-to-earnings and price-to-book multiples of comparable public companies and/or projected cash flows. In addition, as the fair values determined under the market approach represent a noncontrolling interest, we applied a control premium to arrive at the estimated fair value of our reporting units on a controlling basis. An independent valuation specialist was engaged to assist with the valuation process at August 1, 2020. The results of our annual goodwill impairment test for both the Investment Banking and Capital Markets segment and the Asset Management segment did not indicate any goodwill impairment.

We performed our annual impairment testing of intangible assets with an indefinite useful life, which consists of exchange and clearing organization membership interests and registrations within our Investment Banking and Capital Markets segment, at August 1, 2020. We also deemed it appropriate to consider the impact of the global novel coronavirus pandemic as a triggering event and performed an interim impairment test for our indefinite-lived intangible assets at May 31, 2020. At May 31, 2020 and August 1, 2020, we elected to perform a quantitative assessment of membership interests and registrations that have available quoted sales prices as well as certain other membership interests and registrations that have declined in utilization. Qualitative assessments were performed on the remainder of our indefinite-life intangible assets. In applying our quantitative assessment at both May 31, 2020 and August 1, 2020, we recognized immaterial impairment losses on certain exchange membership interests and registrations. With regard to our qualitative assessment of the remaining indefinite-life intangible assets, based on our assessment of market conditions, the utilization of the assets and the replacement costs associated with the assets, we concluded that it is not more likely than not that the intangible assets are impaired.

Note 10. Short-Term Borrowings

Our short-term borrowings, which mature in one year or less, are as follows (in thousands):


		August 31, 2020		November 30, 2019			May 31, 2021		November 30, 2020
Bank loans (1)	Bank loans (1)	$	776,752	$	527,509	Bank loans (1)	$	469,034	$	752,848

Floating rate puttable notes (1)	Floating rate puttable notes (1)	6,800		0		Floating rate puttable notes (1)	6,800		6,800
Equity-linked notes (2)	Equity-linked notes (2)	21,829		20,981		Equity-linked notes (2)	0		5,067
Total short-term borrowings	Total short-term borrowings	$	805,381	$	548,490	Total short-term borrowings	$	475,834	$	764,715

(1) These short-term borrowings are recorded at cost in the Consolidated Statements of Financial Condition, which is a reasonable approximation of their fair values due to their liquid and short-term nature.

(2) See Note 3 for further information on these notes.

At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, the weighted average interest rate on short-term borrowings outstanding was ~~1.83%~~1.49% and ~~3.24%~~1.87% per annum, respectively.

During the nine months ended August 31, 2020, we issued floating rate puttable notes with a principal amount of $6.8 million and equity-linked notes with a principal amount of $5.0 million, and our equity-linked notes with a principal amount of $5.2 million matured on March 13, 2020. Subsequent to quarter-end, on October 7, 2020, our equity-linked notes with a principal amount of $15.1 million matured.

One of Jefferies Group's subsidiaries has a credit facility agreement ("Jefferies Group Credit Facility") with JPMorgan Chase Bank, N.A. under which it has borrowed for a committed amount of $246.0 million at August 31, 2020, which is included inOur bank loans. Interest is based on an annual alternative base rate or an adjusted London Interbank Offered Rate ("LIBOR"), as defined in the Jefferies Group Credit Facility. The Jefferies Group Credit Facility containsloans include facilities that contain certain covenants that, among other things, require Jefferies Group ~~LLC~~ to maintain a specified level of tangible net ~~worth. The covenants also require the borrower to maintain specified leverage amounts~~worth and impose certain restrictions on the ~~borrower's~~ future ~~indebtedness. During the nine months ended August~~indebtedness of certain of Jefferies Group's subsidiaries that are borrowers. At May 31, ~~2020,~~2021, Jefferies Group was in compliance with all ~~debt~~ covenants under ~~the Jefferies Group Credit Facility.~~

~~One of Jefferies Group's subsidiaries has~~these facilities. Our facilities, which are with a ~~credit facility agreement with the Royal Bank of Canada ("RBC Credit Facility") for a committed amount of $200.0~~bank and are included within bank loans, were $413.0 million ~~which is included in bank loans.~~and $746.0 million at May 31, 2021 and November 30, 2020, respectively. Interest is based on a rate per annum equal to LIBOR plus an applicable margin of 2.05%. The RBC Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain a specified level of tangible net worth. The covenants also impose certain restrictions onat spreads over the ~~borrower's future indebtedness. At August 31, 2020, Jefferies Group was~~Federal Funds Rate, as defined in ~~compliance with all debt covenants under~~ the ~~RBC Credit Facility.~~credit agreements.

~~The Bank of New York Mellon~~In addition, a bank has agreed to make revolving intraday credit advances to Jefferies Group ("Intraday Credit Facility") ~~to Jefferies Group~~ for an aggregate committed amount of $150.0 million. The Intraday Credit Facility is structured so that advances are generally repaid before the end of each business day. However, if an advance is not repaid by the end of any business day, the advance is converted to an overnight loan. Intraday loans accrue interest at a rate of 0.12%. Interest is charged based on the number of minutes in a day the advance is outstanding. Overnight loans are charged interest at the base rate plus 3% on a daily basis. The base rate is the higher of the federal funds rate plus 0.50% or the prime rate in effect at that time. The Intraday Credit Facility contains financial covenants, which include a minimum regulatory net capital requirement for Jefferies ~~Group.~~Group's U.S. broker-dealer, Jefferies LLC. At ~~August~~May 31, ~~2020,~~2021, Jefferies Group was in compliance with all debt covenants under the Intraday Credit Facility.

5147

Note 11. Long-Term Debt

The principal amount (net of unamortized discounts, premiums and debt issuance costs), stated interest rate and maturity date of outstanding debt are as follows (dollars in thousands):


		August 31, 2020		November 30, 2019			May 31, 2021		November 30, 2020
Parent Company Debt:	Parent Company Debt:					Parent Company Debt:
Senior Notes:	Senior Notes:					Senior Notes:
5.50% Senior Notes due October 18, 2023, $750,000 principal	5.50% Senior Notes due October 18, 2023, $750,000 principal	$	745,558	$	744,606	5.50% Senior Notes due October 18, 2023, $750,000 principal	$	746,551	$	745,883
6.625% Senior Notes due October 23, 2043, $250,000 principal	6.625% Senior Notes due October 23, 2043, $250,000 principal	246,814		246,772		6.625% Senior Notes due October 23, 2043, $250,000 principal	246,858		246,828
Total long-term debt – Parent Company	Total long-term debt – Parent Company	992,372		991,378		Total long-term debt – Parent Company	993,409		992,711

Subsidiary Debt (non-recourse to Parent Company):	Subsidiary Debt (non-recourse to Parent Company):					Subsidiary Debt (non-recourse to Parent Company):
Jefferies Group:	Jefferies Group:					Jefferies Group:
2.375% Euro Medium Term Notes, due May 20, 2020, $0 and $550,875 principal		0		550,622
6.875% Senior Notes, due April 15, 2021, $750,000 principal		761,430		774,738
2.25% Euro Medium Term Notes, due July 13, 2022, $4,774 and $4,407 principal		4,613		4,204
5.125% Senior Notes, due January 20, 2023, $750,000 and $600,000 principal		760,999		610,023
1.00% Euro Medium Term Notes, due July 19, 2024, $569,725 and $550,875 principal		594,965		548,880
2.25% Euro Medium Term Notes, due July 13, 2022, $0 and $4,779 principal						2.25% Euro Medium Term Notes, due July 13, 2022, $0 and $4,779 principal	0		4,638
5.125% Senior Notes, due January 20, 2023, $750,000 principal						5.125% Senior Notes, due January 20, 2023, $750,000 principal	757,670		759,901
1.00% Euro Medium Term Notes, due July 19, 2024, $611,400 and $597,350 principal						1.00% Euro Medium Term Notes, due July 19, 2024, $611,400 and $597,350 principal	609,952		595,700
4.85% Senior Notes, due January 15, 2027, $750,000 principal (1)	4.85% Senior Notes, due January 15, 2027, $750,000 principal (1)	814,873		768,931		4.85% Senior Notes, due January 15, 2027, $750,000 principal (1)	788,749		809,039
6.45% Senior Debentures, due June 8, 2027, $350,000 principal	6.45% Senior Debentures, due June 8, 2027, $350,000 principal	369,662		371,426		6.45% Senior Debentures, due June 8, 2027, $350,000 principal	367,824		369,057
4.15% Senior Notes, due January 23, 2030, $1,000,000 principal	4.15% Senior Notes, due January 23, 2030, $1,000,000 principal	989,342		988,662		4.15% Senior Notes, due January 23, 2030, $1,000,000 principal	990,044		989,574
2.75% Senior Notes, due October 15, 2032, $500,000 principal (1)						2.75% Senior Notes, due October 15, 2032, $500,000 principal (1)	454,096		485,134
6.25% Senior Debentures, due January 15, 2036, $500,000 principal	6.25% Senior Debentures, due January 15, 2036, $500,000 principal	510,943		511,260		6.25% Senior Debentures, due January 15, 2036, $500,000 principal	510,611		510,834
6.50% Senior Notes, due January 20, 2043, $400,000 principal	6.50% Senior Notes, due January 20, 2043, $400,000 principal	419,931		420,239		6.50% Senior Notes, due January 20, 2043, $400,000 principal	419,611		419,826
Structured Notes (2)	Structured Notes (2)	1,522,105		1,215,285		Structured Notes (2)	1,819,975		1,712,245
Jefferies Group Revolving Credit Facility	Jefferies Group Revolving Credit Facility	189,571		189,088		Jefferies Group Revolving Credit Facility	248,764		189,732
Jefferies Group Secured Credit Facility						Jefferies Group Secured Credit Facility	375,000		0
Jefferies Group Secured Bank Loan	Jefferies Group Secured Bank Loan	50,000		50,000		Jefferies Group Secured Bank Loan	50,000		50,000
HomeFed EB-5 Program debt	HomeFed EB-5 Program debt	189,335		140,739		HomeFed EB-5 Program debt	197,463		191,294
HomeFed construction loan		45,638		0
HomeFed construction loans						HomeFed construction loans	49,407		45,471
Foursight Capital Credit Facilities	Foursight Capital Credit Facilities	99,802		98,260		Foursight Capital Credit Facilities	109,168		129,000
Vitesse Energy Finance Revolving Credit Facility	Vitesse Energy Finance Revolving Credit Facility	104,256		103,050		Vitesse Energy Finance Revolving Credit Facility	81,502		97,883
Other		0		276

Total long-term debt – subsidiaries	Total long-term debt – subsidiaries	7,427,465		7,345,683		Total long-term debt – subsidiaries	7,829,836		7,359,328

Long-term debt	Long-term debt	$	8,419,837	$	8,337,061	Long-term debt	$	8,823,245	$	8,352,039

(1) ~~Amount includes losses~~The carrying value of ~~$45.5~~these senior notes include a net gain of $52.0 million and ~~$72.3~~a net loss of $47.2 million during the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, associated with an interest rate ~~swap~~swaps based on ~~its~~ designation as a fair value ~~hedge.~~hedges. See Note 4 for further information.

(2) These structured notes contain various interest rate payment terms and are accounted for at fair value, with changes in fair value resulting from a change in the instrument specific credit risk presented in Accumulated other comprehensive income (loss) and changes in fair value resulting from non-credit components recognized in Principal transactions revenues. Gains and losses in the fair value of structured notes resulting from non-credit components are recognized within Other operating activities in the Consolidated Statements of Cash Flow.

Subsidiary Debt:

During the ~~nine~~six months ended ~~August~~May 31, ~~2020, Jefferies Group's 2.375% Euro Medium Term Notes matured and were repaid. Additionally, during the nine months ended August 31, 2020,~~2021, structured notes with a total principal amount of approximately ~~$244.4~~$59.5 million, net of retirements, ~~and an additional $150.0 million principal amount of 5.125% Senior Notes due 2023~~ were issued by Jefferies Group. ~~Subsequent to quarter-end, on October 7, 2020, Jefferies Group issued 2.75% Senior Notes with a principal amount of $500.0 million, due 2032.~~

During April 2021, Jefferies Group ~~has~~entered into a ~~senior secured revolving credit facility~~Revolving Credit Facility ("Jefferies Group Revolving Credit Facility") with a group of commercial banks ~~for~~following the maturity of its previous revolving credit facility. At May 31, 2021, borrowings under the Jefferies Group Revolving Credit Facility amounted to $248.8 million. Interest is based on an ~~aggregate principal amount of $190.0 million.~~adjusted London Interbank Offered Rate ("LIBOR"), as defined in the credit agreement. The Jefferies Group Revolving Credit Facility contains certain covenants that, among other things, ~~requires~~require Jefferies Group LLC to maintain specified ~~level~~levels of tangible net worth and

5248

liquidity amounts, and ~~imposes~~impose certain restrictions on future indebtedness of and ~~requires~~require specified levels of regulated capital for certain of ~~Jefferies Group's~~its subsidiaries. ~~Interest is based on an annual alternative base rate or an adjusted LIBOR, as defined in~~Throughout the ~~Jefferies Group Revolving Credit Facility. The obligations~~period and at May 31, 2021, no instances of ~~certain of Jefferies Group's subsidiaries under~~noncompliance with the Jefferies Group Revolving Credit Facility ~~are secured by substantially all~~covenants occurred and Jefferies Group expects to remain in compliance given its ~~assets.~~current liquidity and anticipated funding requirements given its business plan and profitability expectations.

During May 2021, Jefferies Group entered into a Secured Credit Facility agreement ("Jefferies Group Secured Credit Facility") with a bank under which it has borrowed $375.0 million at May 31, 2021. Interest is based on a rate per annum at spreads over an Adjusted LIBOR Rate, as defined in the credit agreement. The Jefferies Group Secured Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain a specified level of tangible net worth. The covenants also require the borrower to maintain specified leverage amounts and impose certain restrictions on the borrower's future indebtedness. At ~~August~~May 31, ~~2020,~~2021, Jefferies Group was in compliance with ~~the~~all debt covenants under the Jefferies Group ~~Revolving~~Secured Credit Facility.

One of Jefferies Group's subsidiaries has a Loan and Security Agreement with a bank for a term loan with a principal amount of $50.0 million ("Jefferies Group Secured Bank Loan"). This Jefferies Group Secured Bank Loan matures on September 27, 2021 and is collateralized by certain trading securities. Interest on the Jefferies Group Secured Bank Loan is 1.25% plus LIBOR. The agreement contains certain covenants that, among other things, restrict lien or encumbrance upon any of the pledged collateral. At ~~August~~May 31, ~~2020,~~2021, Jefferies Group was in compliance with all covenants under the Loan and Security Agreement.

HomeFed funds certain of its real estate projects in part by raising funds under the Immigrant Investor Program administered by the U.S. Citizenship and Immigration Services pursuant to the Immigration and Nationality Act ("EB-5 Program"). This program was created to stimulate the U.S. economy through the creation of jobs and capital investments in U.S. companies by foreign investors. This debt is secured by certain real estate of HomeFed. At ~~August~~May 31, ~~2020,~~2021, HomeFed was in compliance with all debt covenants which include, among other requirements, limitations on incurrence of debt, collateral requirements and restricted use of proceeds. Primarily all of HomeFed's EB-5 Program debt matures in 2024 and 2025.

At ~~August~~May 31, ~~2020,~~2021, HomeFed has a construction ~~loan agreement~~loans with an aggregate committed amount of ~~$58.9~~$162.7 million. The proceeds are being used for construction at certain of its real estate projects. The outstanding principal amount of the ~~loan bears~~loans bear interest based on ~~the~~spreads of 2.15% to 3.15%, over 30-day LIBOR, ~~plus 3.15%,~~ subject to adjustment on the first of each calendar ~~month~~month. At May 31, 2021, the weighted average interest rate on these loans was 3.21%. The loans mature between June 2021 and ~~matures on March 1, 2021, with 1 12-month extension subject to certain conditions as set forth in the loan agreement. The loan is~~May 2024 and are collateralized by the property underlying the related project with a guarantee by HomeFed. At ~~August~~May 31, 2021 and November 30, 2020, ~~$45.8~~$50.8 million and $46.2 million, respectively, was outstanding under the construction loan ~~agreement.~~agreements.

At ~~August~~May 31, ~~2020,~~2021, Foursight Capital's credit facilities consisted of 2 warehouse credit commitments aggregating $175.0 ~~million, which mature in May 2021.~~million. One of the credit facilities matures in May 2023 and bears interest based on the ~~three month~~one-month LIBOR plus a credit spread fixed through its maturity and the other credit facility matures in October 2022 and bears interest based on ~~the one month LIBOR~~a commercial paper rate plus a credit spread fixed through its maturity. As a condition of the credit facilities, Foursight Capital is obligated to maintain cash reserves to comply with the hedging requirements of the credit commitment. The credit facilities are secured by first priority liens on ~~auto~~automobile loan receivables owed to Foursight Capital of approximately ~~$124.0~~$135.9 million at ~~August~~May 31, ~~2020.~~2021. At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019, $100.1~~2020, $109.3 million and ~~$98.7~~$129.3 million, respectively, was outstanding under Foursight Capital's credit facilities.

Vitesse Energy Finance has a revolving credit facility with a syndicate of banks that matures in April 2023 and has a maximum borrowing base of $120.0 million at ~~August~~May 31, ~~2020.~~2021. Amounts outstanding under the facility at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019~~2020 were ~~$105.0~~$82.0 million and ~~$104.0~~$98.5 million, respectively. Borrowings under the facility have been made as Eurodollar loans that bear interest at adjusted LIBOR plus a spread ranging from 2.5% to 3.5% based on the borrowing base utilization percentage. The credit facility is guaranteed by Vitesse Energy Finance's subsidiaries and is collateralized with a minimum of 85% of Vitesse Energy Finance's proved reserve value of its oil and gas properties. Vitesse Energy Finance's borrowing base is subject to regular re-determination on or about April 1 and October 1 of each year based on proved oil and ~~natural~~ gas reserves, hedge positions and estimated future cash flows from these reserves calculated using future commodity pricing provided by Vitesse Energy Finance's lenders.

~~Note 12. Leases~~

We enter into lease and sublease agreements primarily for office space across our geographic locations. Finance lease ROU assets and finance lease liabilities are not material. Information related to operating leases in the Consolidated Statement of Financial Condition at August 31, 2020 is as follows (in thousands, except lease term and discount rate):



~~Property, equipment and leasehold improvements, net - ROU assets~~	$	~~521,278~~

~~Weighted average:~~
~~Remaining lease term (in years)~~	~~10.8 years~~
~~Discount rate~~	~~2.9~~		%

The following table presents the maturities of our operating lease liabilities and a reconciliation to the Lease liabilities included in the Consolidated Statement of Financial Condition at August 31, 2020 (in thousands):

Lease Liabilities
Remainder of 2020 $ 22,271
2021 76,932
2022 74,722
2023 65,220
2024 61,994
2025 and thereafter 403,809
Total undiscounted cash flows 704,948
Less: Difference between undiscounted and discounted cash flows (106,832)
Operating leases amount in the Consolidated Statement of Financial Condition 598,116
Finance leases amount in the Consolidated Statement of Financial Condition 247
Total amount in the Consolidated Statement of Financial Condition $ 598,363

~~The following table presents our lease costs (in thousands):~~

For the Three Months Ended August 31, 2020 For the Nine Months Ended August 31, 2020
Operating lease costs (1) $ 19,425 $ 57,994
Variable lease costs (2) 3,485 9,561
Less: Sublease income (1,973) (5,669)
Total lease cost, net $ 20,937 $ 61,886

~~(1) Includes short-term leases, which are not material.~~

(2) Includes property taxes, insurance costs, common area maintenance, utilities, and other costs that are not fixed. The amount also includes rent increases resulting from inflation indices and periodic market rent reviews.

~~Consolidated Statement of Cash Flows supplemental information is as follows (in thousands):~~


	~~For the Nine Months Ended August 31, 2020~~

~~Cash outflows - lease liabilities~~	$	~~59,155~~
~~Non-cash - ROU assets recorded for new and modified leases~~	$	~~21,438~~

~~Minimum Future Lease Commitments (under Previous GAAP).~~ As lessee, we lease certain premises and equipment under non-cancelable agreements expiring at various dates through 2039 which are operating leases. At November 30, 2019, future minimum annual lease payments under such leases (net of sublease income) were as follows (in thousands):

2020 $ 70,886
2021 73,374
2022 71,464
2023 62,552
2024 59,714
Thereafter 393,995
731,985
Less: sublease income (21,883)
$ 710,102

Rental expense, net of sublease rental income, was $65.6 million, $55.7 million, and $60.2 million for the twelve months ended November 30, 2019, the eleven months ended November 30, 2018 and the twelve months ended December 31, 2017, respectively.

Note ~~13.~~12. Mezzanine Equity

Redeemable Noncontrolling Interests

At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, redeemable noncontrolling interests include other redeemable noncontrolling interests of ~~$24.3~~$34.5 million and ~~$26.6~~$24.7 million, respectively, primarily related to our oil and gas exploration and development businesses.

Mandatorily Redeemable Convertible Preferred Shares

~~In connection with our acquisition of Jefferies Group in March 2013, we issued a new~~We have one series of ~~3.25% Cumulative Convertible Preferred Shares~~callable mandatorily redeemable cumulative convertible preferred shares ("Preferred Shares") ($125.0 million at mandatory redemption value) in exchange for Jefferies Group's outstanding 3.25% Series A-1 Cumulative Convertible Preferred Stock. The Preferred Shares have a 3.25% annual, cumulative cash dividend and are currently convertible into 4,440,863 common shares, an effective conversion price of $28.15 per share. The holders of the Preferred Shares are also entitled to an additional quarterly payment in the event we declare and pay a dividend on our common stock in an amount greater than $0.0625 per common share per quarter. The additional quarterly payment would be paid to the holders of Preferred Shares on an as converted basis and on a per share basis would equal the quarterly dividend declared and paid to a holder of a share of common stock in excess of $0.0625 per share.

In the first quarter of 2020, we increased our quarterly dividend from $0.125 to $0.15 per common share. This increased the preferred stock dividend from $3.8 million for the nine months ended August 31, 2019 to $4.2 million for the nine months ended August 31, 2020. Based on our current quarterly dividend of $0.15 per common share, the effective rate on these Preferred Shares is approximately 4.5%. ~~The~~Our 125,000 Preferred Shares are callable beginning inJanuary 2023 at a price of $1,000 per share, plus accrued interest and are mandatorily redeemable in ~~2038.~~2038 for $125.0 million. The Preferred Shares have a dividend rate equal to the sum of 3.25% annual, cumulative cash dividend, plus an additional quarterly payment based on the amount by which our common stock dividends exceed $0.0625 per common share. The Preferred Shares are currently convertible into 4,440,863 common shares, an effective conversion price of $28.15 per share.

In the first quarter of 2021, we increased our quarterly dividend from $0.15 to $0.20 per common share. This increased the preferred stock dividend from $2.8 million for the six months ended May 31, 2020 to $3.3 million for the six months ended May 31, 2021. Based on the quarterly dividend of $0.20 per common share, the effective rate on these Preferred Shares was approximately 5.2%. In June 2021, our Board of Directors increased our quarterly dividend to $0.25 per share. Based on our current quarterly dividend of $0.25 per common share, the effective rate on these Preferred Shares is approximately 5.9%.

Note ~~14.~~13. Compensation Plans

Restricted Stock and Restricted Stock Units. Restricted stock and restricted stock units ("RSUs") may be granted to new employees as "sign-on" awards, to existing employees as "retention" awards and to certain executive officers as awards for multiple years. Sign-on and retention awards are generally subject to annual ratable vesting over a four year service period and are amortized as compensation expense on a straight-line basis over the related four years. Restricted stock and RSUs are granted to certain senior executives with market, performance and service conditions. Market conditions are incorporated into the grant-date fair value of senior executive awards using a Monte Carlo valuation model. Compensation expense for awards with market conditions is recognized over the service period and is not reversed if the market condition is not met. Awards with performance conditions are amortized over the service period if it is determined that it is probable that the performance condition will be achieved.

~~Stock-Based~~Senior Executive Compensation Plan. In December 2020, the Compensation Committee of our Board of Directors granted certain senior executives nonqualified stock options and stock appreciation rights ("SAR"). The total initial fair value of the stock options and SAR awards were recorded as expense at the time of the grant as both have no future service requirements. The SAR awards will be settled on a cash basis or, at the sole discretion of the Compensation Committee, may be converted irrevocably to a stock-settled award and were initially determined to be liability-classified share-based awards. In March 2021, the Compensation Committee exercised its discretion and converted these to stock-settled awards and at such time they became equity-classified share-based awards. For the three and six months ended May 31, 2021, we recorded $2.2 million and $48.6 million, respectively, of total Compensation and benefits expense relating to the stock options and SAR awards.

Share-Based Compensation Expense. S~~hare-based~~Share-based compensation expense relating to grants made under our share-based compensation plans was ~~$8.9~~$10.1 million (including $2.2 million related to the senior executive stock option and ~~$12.2~~SAR awards, as discussed above) and $10.7 million for the three months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$29.6~~$64.3 million (including $48.6 million related to the senior executive stock option and ~~$37.0~~SAR awards, as discussed above) and $20.7 million for the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Total compensation cost includes the amortization of sign-on, retention and senior executive awards, less forfeitures and clawbacks. The total tax benefit recognized in results of operations related to share-based compensation expenses was ~~$2.3~~$2.1 million and ~~$3.0~~$2.7 million for the three months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$7.5~~$7.2 million and ~~$9.3~~$5.3 million for the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively. At ~~August~~May 31, ~~2020,~~2021, total unrecognized compensation cost related to nonvested share-based compensation plans was ~~$52.4~~$37.8 million; this cost is expected to be recognized over a weighted average period of ~~2.0~~2.1 years.

At ~~August~~May 31, ~~2020,~~2021, there were ~~1,749,000~~1,630,000 shares of restricted stock outstanding with future service required, ~~4,183,000~~2,878,000 RSUs outstanding with future service required (including target RSUs issuable under the senior executive compensation plan), ~~18,449,000~~16,964,000 RSUs outstanding with no future service required, 5,156,000 stock options outstanding and ~~1,105,000~~1,110,000 shares issuable under other plans. Additionally, the Preferred Shares are currently convertible into 4,440,863 common shares at an effective conversion price of $28.15 per share. The maximum potential increase to common shares outstanding resulting from these outstanding awards and the Preferred Shares is ~~23,737,000.~~30,549,000 at May 31, 2021.

Restricted Cash Awards. Jefferies Group provides compensation to certain new and existing employees in the form of loans and/or other cash awards which are subject to ratable vesting terms with service requirements. These awards are amortized to compensation expense over the relevant service period, which is generally considered to start at the beginning of the annual compensation year. At ~~August~~May 31, ~~2020,~~2021, the remaining unamortized amount of the restricted cash awards was ~~$606.2~~$401.5 million and

5550

~~and~~ is included within Other assets in the Consolidated Statement of Financial Condition; this cost is expected to be recognized over a weighted average period of ~~three~~3 years.

Note ~~15.~~14. Accumulated Other Comprehensive Income (Loss)

Activity in accumulated other comprehensive income (loss) is reflected in the Consolidated Statements of Comprehensive Income (Loss) and Consolidated Statements of Changes in Equity but not in the Consolidated Statements of Operations. A summary of accumulated other comprehensive income (loss), net of taxes is as follows (in thousands):


		August 31, 2020		November 30, 2019			May 31, 2021		November 30, 2020
Net unrealized gains on available for sale securities	Net unrealized gains on available for sale securities	$	552	$	141	Net unrealized gains on available for sale securities	$	426	$	513
Net unrealized foreign exchange losses	Net unrealized foreign exchange losses	(156,894)		(192,709)		Net unrealized foreign exchange losses	(142,242)		(156,718)
Net unrealized gains (losses) on instrument specific credit risk		19,586		(18,889)
Net unrealized losses on instrument specific credit risk						Net unrealized losses on instrument specific credit risk	(162,172)		(71,151)

Net minimum pension liability	Net minimum pension liability	(59,651)		(61,582)		Net minimum pension liability	(60,010)		(61,561)
		$	(196,407)	$	(273,039)
Total accumulated other comprehensive income (loss)						Total accumulated other comprehensive income (loss)	$	(363,998)	$	(288,917)

Amounts reclassified out of accumulated other comprehensive income (loss) to net income are as follows (in thousands):

Details about Accumulated Other Comprehensive Income (Loss) Components Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss) Affected Line Item in the
Consolidated Statements
of Operations
For the Nine Months Ended
August 31,
2020 August 31,
2019
Net unrealized gains on available for sale securities, net of income tax provision (benefit) of $0 and $(545,054) $ 0 $ 543,178 Other revenues and Income tax provision
(benefit)
Net unrealized gains (losses) on instrument specific credit risk, net of income tax provision (benefit) of $306 and $(166) 898 (493) Principal transactions revenues
Net unrealized gains on cash flow hedges, net of income tax provision of $0 and $161 0 470 Other revenues
Amortization of defined benefit pension plan actuarial losses, net of income tax benefit of $(658) and $(361) (1,931) (1,063) Selling, general and other expenses, which includes pension expense
Total reclassifications for the period, net of tax $ (1,033) $ 542,092


Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)				Affected Line Item in the Consolidated Statements of Operations
	For the Six Months Ended
	May 31, 2021		May 31, 2020


Net unrealized gains (losses) on instrument specific credit risk, net of income tax provision (benefit) of $920 and $530	$	2,859	$	1,554	Principal transactions revenues

Amortization of defined benefit pension plan actuarial losses, net of income tax benefit of $(525) and $(438)	(1,551)		(1,287)		Selling, general and other expenses, which includes pension expense
Total reclassifications for the period, net of tax	$	1,308	$	267

During the second quarter of 2019, we completed the sale of our available for sale portfolio. In connection therewith, we recognized a tax benefit of $544.6 million during the nine months ended August 31, 2019. Unrealized gains and losses on available for sale securities, and their associated tax impacts, are recorded directly to equity as part of the Accumulated other comprehensive income (loss) balance. Following the portfolio approach, when unrealized gains and losses and their associated tax impacts are recorded at a then current tax rate, and then realized later at a different tax rate, the difference between the tax impact initially recorded in Accumulated other comprehensive income (loss) and the tax impact removed from Accumulated other comprehensive income (loss) upon realization remains in Accumulated other comprehensive income (loss) until the disposal of the portfolio and is referred to as a "lodged tax effect." Large changes in the fair value of our available for sale securities, primarily during 2008 through 2010, combined with fluctuations in our tax rate during those periods, generated a lodged tax benefit of $544.6 million. As a result of steps to improve our Corporate investment management efforts, we sold the remaining portion of our available for sale portfolio in the second quarter of 2019, which resulted in the realization of the $544.6 million tax benefit. While this realization did not impact total equity, it resulted in a tax benefit reflected in the Consolidated Statement of Operations of $544.6 million and, as a result, Retained earnings increased and Accumulated other comprehensive income (loss) decreased by corresponding amounts. The remaining net unrealized gains (losses) on available for sale securities at August 31, 2020 and November 30, 2019 represents Jefferies Group's share of Berkadia's net unrealized gains on available for sale securities recorded under the equity method of accounting.

Note ~~16.~~15. Revenues from Contracts with Customers

The following table presents our total revenues separated for our revenues from contracts with customers and our other sources of revenues (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Revenues from contracts with customers:	Revenues from contracts with customers:									Revenues from contracts with customers:
Commissions and other fees	Commissions and other fees	$	204,032	$	171,000	$	626,434	$	493,560	Commissions and other fees	$	222,624	$	242,972	$	459,393	$	422,402
Investment banking	Investment banking	615,837		410,796		1,595,330		1,126,479		Investment banking	1,000,700		387,491		2,004,312		979,493
Manufacturing revenues	Manufacturing revenues	119,751		82,565		282,737		248,227		Manufacturing revenues	184,092		85,379		321,939		162,986
Other	Other	35,121		70,066		132,975		186,175		Other	84,937		34,077		139,352		97,854
Total revenues from contracts with customers	Total revenues from contracts with customers	974,741		734,427		2,637,476		2,054,441		Total revenues from contracts with customers	1,492,353		749,919		2,924,996		1,662,735

Other sources of revenue:	Other sources of revenue:									Other sources of revenue:
Principal transactions	Principal transactions	623,283		(20,920)		1,421,485		465,451		Principal transactions	361,023		393,338		1,280,924		798,202
Interest income	Interest income	219,843		410,467		782,941		1,243,278		Interest income	230,448		236,732		470,945		563,098
Other	Other	7,632		99,182		53,392		165,369		Other	82,505		(2,458)		193,052		45,760
Total revenues from other sources	Total revenues from other sources	850,758		488,729		2,257,818		1,874,098		Total revenues from other sources	673,976		627,612		1,944,921		1,407,060

Total revenues	Total revenues	$	1,825,499	$	1,223,156	$	4,895,294	$	3,928,539	Total revenues	$	2,166,329	$	1,377,531	$	4,869,917	$	3,069,795

Revenues from contracts with customers are recognized when, or as, we satisfy our performance obligations by transferring the promised goods or services to the customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring our progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised goods or services (the "transaction price"). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of ~~third parties.~~third-parties.

The following provides detailed information on the recognition of our revenues from contracts with customers:

Commissions and Other Fees. We earn commission and other fee revenues by executing, settling and clearing transactions for clients primarily in equity, equity-related and futures products. Trade execution and clearing services, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission revenues associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, are recognized at a point in time on trade-date. Commission revenues are generally paid on settlement date and we record a receivable between trade-date and payment on settlement date. We permit institutional customers to allocate a portion of their gross commissions to pay for research products and other services provided by ~~third parties.~~third-parties. The amounts allocated for those purposes are commonly referred to as soft dollar arrangements. We act as an agent in the soft dollar arrangements as the customer controls the use of the soft dollars and directs our payments to third-party service providers on ~~our~~its behalf. Accordingly, amounts allocated to soft dollar arrangements are netted against commission revenues in the Consolidated Statements of Operations. We also earn investment research fees for the sales of our proprietary investment research when a contract with a client has been identified. The delivery of investment research services represents a distinct performance obligation that is satisfied over time when the performance obligation is to provide ongoing access to a research platform or research analysts, with fees recognized on a straight-line basis over the period in which the performance obligation is satisfied. The performance obligation is satisfied at a point in time when the performance obligation is to provide individual interactions with research analysts or research events, with fees recognized on the interaction date.

We earn account advisory and distribution fees in connection with wealth management services. Account advisory fees are recognized over time using the time-elapsed method as we determined that the customer simultaneously receives and consumes the benefits of investment advisory services as they are provided. Account advisory fees may be paid in advance of a specified service period or in arrears at the end of the specified service period (e.g., quarterly). Account advisory fees paid in advance are initially deferred within Payables, expense accruals and other liabilities in the Consolidated Statements of Financial Condition. Distribution fees are variable and recognized when the uncertainties with respect to the amounts are resolved.

Investment Banking. We provide our clients with a full range of financial advisory and underwriting services. Revenues from financial advisory services primarily consist of fees generated in connection with merger, acquisition and restructuring transactions. Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed, as the performance obligation is to successfully broker a specific transaction. Fees received prior to the completion of the transaction are deferred within Payables, expense accruals and other liabilities in the Consolidated Statements of Financial Condition. Advisory fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. A significant portion of the fees we receive for our advisory services are considered variable as they are contingent upon a future event (e.g., completion of a transaction or third-party emergence from bankruptcy) and are excluded from the transaction price until the uncertainty associated with the variable consideration is subsequently resolved, which is expected to occur upon achievement of the specified milestone. Payment for advisory services are generally due promptly upon completion of a specified milestone or, for retainer fees, periodically over the course of the engagement. We recognize a receivable between the date of completion of the milestone and payment by the customer. Expenses associated with investment banking advisory engagements are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other investment banking advisory related expenses, including expenses incurred related to restructuring assignments, are expensed as incurred. All investment banking advisory expenses are recognized within their respective expense category in the Consolidated Statements of Operations and any expenses reimbursed by our clients are recognized as Investment banking revenues.

Underwriting services include underwriting and placement agent services in both the equity and debt capital markets, including private equity placements, initial public offerings, follow-on offerings and equity-linked convertible securities transactions and structuring, underwriting and distributing public and private debt, including investment grade debt, high yield bonds, leveraged loans, municipal bonds and mortgage-backed and asset-backed securities. Underwriting and placement agent revenues are recognized at a point in time on trade-date, as the client obtains the control and benefit of the underwriting offering at that point. Costs associated with underwriting transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded, and are recorded on a gross basis within underwriting costs in the Consolidated Statements of Operations as we are acting as a principal in the arrangement. Any expenses reimbursed by our clients are recognized as Investment banking revenues.

Asset Management Fees. We earn management and performance fees, recorded in Other revenues, in connection with investment advisory services provided to various funds and accounts, which are satisfied over time and measured using a time elapsed measure of progress as the customer receives the benefits of the services evenly throughout the term of the contract. Management and performance fees are considered variable as they are subject to fluctuation (e.g., changes in assets under management, market performance) and/or are contingent on a future event during the measurement period (e.g., meeting a specified benchmark) and are recognized only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. Management fees are generally based on month-end assets under management or an agreed upon notional amount and are included in the transaction price at the end of each month when the assets under management or notional amount is known. Performance fees are received when the return on assets under management for a specified performance period exceed certain benchmark returns, "high-water marks" or other performance targets. The performance period related to our performance fees is annual or semi-annual. Accordingly, performance fee revenue will generally be recognized only at the end of the performance period to the extent that the benchmark return has been met.

Manufacturing Revenues. Idaho Timber's primary business consists of the sale of lumber that is manufactured or remanufactured at one of its locations. Agreements with customers for these sales specify the type, quantity and price of products to be delivered as well as the delivery date and payment terms. The transaction price is fixed at the time of sale and revenue is generally recognized when the customer takes control of the product.

Disaggregation of Revenue

The following presents our revenues from contracts with customers disaggregated by major business activity and primary geographic regions (in thousands):

Reportable Segments
Investment Banking and Capital Markets (1) Asset Management (1) Merchant Banking (1) Corporate Consolidation Adjustments Total
Three Months Ended August 31, 2020
Major Business Activity:
Equities (2) $ 201,157 $ 0 $ 0 $ 0 $ (281) $ 200,876
Fixed Income (2) 3,156 0 0 0 0 3,156
Investment Banking - Underwriting 444,399 0 0 0 0 444,399
Investment Banking - Advisory 171,438 0 0 0 0 171,438
Asset Management 0 3,127 0 0 0 3,127
Manufacturing revenues 0 0 119,751 0 0 119,751
Oil and gas revenues 0 0 20,946 0 0 20,946
Other revenues 0 0 11,048 0 0 11,048
Total revenues from contracts with customers $ 820,150 $ 3,127 $ 151,745 $ 0 $ (281) $ 974,741
Primary Geographic Region:
Americas $ 684,441 $ 1,758 $ 151,085 $ 0 $ (281) $ 837,003
Europe, Middle East and Africa 90,132 1,369 644 0 0 92,145
Asia 45,577 0 16 0 0 45,593
Total revenues from contracts with customers $ 820,150 $ 3,127 $ 151,745 $ 0 $ (281) $ 974,741
Three Months Ended August 31, 2019
Major Business Activity:
Equities (2) $ 167,528 $ 0 $ 0 $ 0 $ (3) $ 167,525
Fixed Income (2) 3,475 0 0 0 0 3,475
Investment Banking - Underwriting 199,183 0 0 0 (1,737) 197,446
Investment Banking - Advisory 213,350 0 0 0 0 213,350
Asset Management 0 4,647 0 0 0 4,647
Manufacturing revenues 0 0 82,565 0 0 82,565
Oil and gas revenues 0 0 45,012 0 0 45,012
Other revenues 0 0 20,407 0 0 20,407
Total revenues from contracts with customers $ 583,536 $ 4,647 $ 147,984 $ 0 $ (1,740) $ 734,427
Primary Geographic Region:
Americas $ 476,983 $ 3,244 $ 147,501 $ 0 $ (47) $ 627,681
Europe, Middle East and Africa 88,890 1,403 226 0 (1,693) 88,826
Asia 17,663 0 257 0 0 17,920
Total revenues from contracts with customers $ 583,536 $ 4,647 $ 147,984 $ 0 $ (1,740) $ 734,427


	Reportable Segments
	Investment Banking and Capital Markets		Asset Management		Merchant Banking		Corporate		Consolidation Adjustments		Total

Three months ended May 31, 2021
Major Business Activity:
Investment Banking - Advisory	$	390,508	$	0	$	0	$	0	$	0	$	390,508
Investment Banking - Underwriting	610,192		0		0		0		0		610,192
Equities (1)	219,855		0		0		0		(19)		219,836
Fixed Income (1)	2,788		0		0		0		0		2,788
Asset Management	0		2,315		0		0		0		2,315
Manufacturing revenues	0		0		184,092		0		0		184,092
Oil and gas revenues	0		0		45,032		0		0		45,032
Other revenues	0		0		37,590		0		0		37,590
Total revenues from contracts with customers	$	1,223,343	$	2,315	$	266,714	$	0	$	(19)	$	1,492,353

Primary Geographic Region:
Americas	$	962,556	$	2,011	$	265,972	$	0	$	(19)	$	1,230,520
Europe	196,891		304		537		0		0		197,732
Asia Pacific	63,896		0		205		0		0		64,101
Total revenues from contracts with customers	$	1,223,343	$	2,315	$	266,714	$	0	$	(19)	$	1,492,353

Three months ended May 31, 2020
Major Business Activity:
Investment Banking - Advisory	$	182,081	$	0	$	0	$	0	$	0	$	182,081
Investment Banking - Underwriting	205,410		0		0		0		0		205,410
Equities (1)	236,683		0		0		0		(295)		236,388
Fixed Income (1)	6,584		0		0		0		0		6,584
Asset Management	0		3,496		0		0		0		3,496
Manufacturing revenues	0		0		85,379		0		0		85,379
Oil and gas revenues	0		0		15,544		0		0		15,544
Other revenues	0		0		15,037		0		0		15,037
Total revenues from contracts with customers	$	630,758	$	3,496	$	115,960	$	0	$	(295)	$	749,919

Primary Geographic Region:
Americas	$	524,627	$	1,825	$	115,620	$	0	$	(295)	$	641,777
Europe	68,082		1,671		299		0		0		70,052
Asia Pacific	38,049		0		41		0		0		38,090
Total revenues from contracts with customers	$	630,758	$	3,496	$	115,960	$	0	$	(295)	$	749,919

5954


		Reportable Segments																			Reportable Segments
		Investment Banking and Capital Markets (1)		Asset Management (1)		Merchant Banking (1)		Corporate		Consolidation Adjustments		Total			Investment Banking and Capital Markets		Asset Management		Merchant Banking		Corporate		Consolidation Adjustments		Total

Nine months ended August 31, 2020
Six months ended May 31, 2021														Six months ended May 31, 2021
Major Business Activity:	Major Business Activity:													Major Business Activity:
Equities (2)		$	614,089	$	0	$	0	$	0	$	(681)	$	613,408
Fixed Income (2)		13,026		0		0		0		0		13,026
Investment Banking - Advisory														Investment Banking - Advisory	$	701,947	$	0	$	0	$	0	$	0	$	701,947
Investment Banking - Underwriting	Investment Banking - Underwriting	898,653		0		0		0		0		898,653		Investment Banking - Underwriting	1,302,415		0		0		0		(50)		1,302,365
Investment Banking - Advisory		696,677		0		0		0		0		696,677
Equities (1)														Equities (1)	453,394		0		0		0		(188)		453,206
Fixed Income (1)														Fixed Income (1)	6,187		0		0		0		0		6,187
Asset Management	Asset Management	0		12,714		0		0		0		12,714		Asset Management	0		9,741		0		0		0		9,741
Manufacturing revenues	Manufacturing revenues	0		0		282,737		0		0		282,737		Manufacturing revenues	0		0		321,939		0		0		321,939
Oil and gas revenues	Oil and gas revenues	0		0		78,704		0		0		78,704		Oil and gas revenues	0		0		77,041		0		0		77,041
Other revenues	Other revenues	0		0		41,557		0		0		41,557		Other revenues	0		0		52,570		0		0		52,570
Total revenues from contracts with customers	Total revenues from contracts with customers	$	2,222,445	$	12,714	$	402,998	$	0	$	(681)	$	2,637,476	Total revenues from contracts with customers	$	2,463,943	$	9,741	$	451,550	$	0	$	(238)	$	2,924,996

Primary Geographic Region:	Primary Geographic Region:													Primary Geographic Region:
Americas	Americas	$	1,858,137	$	6,250	$	401,484	$	0	$	(681)	$	2,265,190	Americas	$	1,989,472	$	9,108	$	450,310	$	0	$	(238)	$	2,448,652
Europe, Middle East and Africa		237,652		6,464		1,303		0		0		245,419
Asia		126,656		0		211		0		0		126,867
Europe														Europe	360,628		633		906		0		0		362,167
Asia Pacific														Asia Pacific	113,843		0		334		0		0		114,177
Total revenues from contracts with customers	Total revenues from contracts with customers	$	2,222,445	$	12,714	$	402,998	$	0	$	(681)	$	2,637,476	Total revenues from contracts with customers	$	2,463,943	$	9,741	$	451,550	$	0	$	(238)	$	2,924,996

Nine months ended August 31, 2019
Six months ended May 31, 2020														Six months ended May 31, 2020
Major Business Activity:	Major Business Activity:													Major Business Activity:
Equities (2)		$	483,771	$	0	$	0	$	0	$	(283)	$	483,488
Fixed Income (2)		10,072		0		0		0		0		10,072
Investment Banking - Advisory														Investment Banking - Advisory	$	525,239	$	0	$	0	$	0	$	0	$	525,239
Investment Banking - Underwriting	Investment Banking - Underwriting	555,830		0		0		0		(1,737)		554,093		Investment Banking - Underwriting	454,254		0		0		0		0		454,254
Investment Banking - Advisory		572,386		0		0		0		0		572,386
Equities (1)														Equities (1)	412,932		0		0		0		(400)		412,532
Fixed Income (1)														Fixed Income (1)	9,870		0		0		0		0		9,870
Asset Management	Asset Management	0		19,140		0		0		0		19,140		Asset Management	0		9,587		0		0		0		9,587
Manufacturing revenues	Manufacturing revenues	0		0		248,227		0		0		248,227		Manufacturing revenues	0		0		162,986		0		0		162,986
Oil and gas revenues	Oil and gas revenues	0		0		129,029		0		0		129,029		Oil and gas revenues	0		0		57,758		0		0		57,758
Other revenues	Other revenues	0		0		38,006		0		0		38,006		Other revenues	0		0		30,509		0		0		30,509
Total revenues from contracts with customers	Total revenues from contracts with customers	$	1,622,059	$	19,140	$	415,262	$	0	$	(2,020)	$	2,054,441	Total revenues from contracts with customers	$	1,402,295	$	9,587	$	251,253	$	0	$	(400)	$	1,662,735

Primary Geographic Region:	Primary Geographic Region:													Primary Geographic Region:
Americas	Americas	$	1,288,046	$	13,399	$	414,259	$	0	$	(327)	$	1,715,377	Americas	$	1,173,696	$	4,492	$	250,399	$	0	$	(400)	$	1,428,187
Europe, Middle East and Africa		280,605		5,741		683		0		(1,693)		285,336
Asia		53,408		0		320		0		0		53,728
Europe														Europe	147,520		5,095		659		0		0		153,274
Asia Pacific														Asia Pacific	81,079		0		195		0		0		81,274
Total revenues from contracts with customers	Total revenues from contracts with customers	$	1,622,059	$	19,140	$	415,262	$	0	$	(2,020)	$	2,054,441	Total revenues from contracts with customers	$	1,402,295	$	9,587	$	251,253	$	0	$	(400)	$	1,662,735

(1) ~~We now present Asset Management as a separate reporting segment. Prior year amounts have been reclassified to conform to current segment disclosure. See Note 23 for further information.~~

~~(2)~~ Revenues from contracts with customers associated with the equities and fixed income businesses primarily represent commissions and other fee revenue.

6055

Information on Remaining Performance Obligations and Revenue Recognized from Past Performance

We do not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at ~~August~~May 31, ~~2020.~~2021. Investment banking advisory fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price at ~~August~~May 31, ~~2020.~~2021.

We recognized ~~$15.6~~$20.9 million and ~~$9.6~~$7.4 million during the three months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$10.8~~$41.4 million and ~~$27.2~~$10.5 million during the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, of revenues related to performance obligations satisfied (or partially satisfied) in previous periods, mainly due to resolving uncertainties in variable consideration that was constrained in prior periods. In addition, we recognized ~~$4.3~~$5.6 million and ~~$6.0~~$4.5 million during the three months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$14.4~~$8.5 million and ~~$15.8~~$10.1 million during the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, of revenues primarily associated with distribution services, a portion of which relates to prior periods.

Contract Balances

The timing of our revenue recognition may differ from the timing of payment by customers. We record a receivable when revenue is recognized prior to payment and we have an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, we record deferred revenue until the performance obligations are satisfied.

We had receivables related to revenues from contracts with customers of ~~$321.4~~$344.7 million and ~~$263.7~~$332.5 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively. We had no significant impairments related to these receivables during the three and ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019.~~2020.

Our deferred revenue primarily ~~relates~~includes deferred revenue related to our real estate operations and retainer and milestone fees received in investment banking advisory engagements where the performance ~~obligation has~~obligations have not yet been satisfied. Deferred revenues were ~~$18.2~~$35.1 million and ~~$12.8~~$14.8 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively, which are recorded as Payables, expense accruals and other liabilities in the Consolidated Statements of Financial Condition. During the three months ended ~~August~~May 31, ~~2020,~~2021, we recognized ~~$19.1~~$4.1 million of deferred revenue from the balance at ~~May 31, 2020.~~February 28, 2021. During the three months ended ~~August~~May 31, ~~2019,~~2020, we recognized ~~$9.6~~$7.2 million of deferred revenue from the balance at February 29, 2020. During the six months ended May 31, ~~2019. During the nine months ended August 31, 2020,~~2021, we recognized ~~$9.3~~$9.4 million of deferred revenue from the balance at November 30, ~~2019.~~2020. During the ~~nine~~six months ended ~~August~~May 31, ~~2019,~~2020, we recognized ~~$9.8~~$7.9 million of deferred revenue from the balance at November 30, ~~2018.~~2019.

Contract Costs

We capitalize costs to fulfill contracts associated with investment banking advisory engagements where the revenue is recognized at a point in time and the costs are determined to be recoverable. Capitalized costs to fulfill a contract are recognized at the point in time that the related revenue is recognized.

At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, capitalized costs to fulfill a contract were ~~$2.8~~$1.2 million and ~~$4.8~~$1.8 million, respectively, which are recorded in Receivables in the Consolidated Statements of Financial Condition. We recognized expenses of $0.8 million and ~~$1.6~~$1.8 million,during the three months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$3.6~~$1.8 million and ~~$3.8~~$3.7 millionduring the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, related to costs to fulfill a contract that were capitalized as of the beginning of the period. There were no significant impairment charges recognized in relation to these capitalized costs during the three and ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019.~~2020.

Note ~~17.~~16. Income Taxes

The aggregate amount of gross unrecognized tax benefits related to uncertain tax positions was ~~$374.1~~$454.0 million (including ~~$81.4~~$97.2 million for interest) at ~~August~~May 31, ~~2020,~~2021, of which ~~$233.2~~$272.2 million related to Jefferies Group, and was ~~$327.3~~$401.4 million (including ~~$67.2~~$87.1 million for interest) at November 30, ~~2019,~~2020, of which ~~$181.2~~$234.0 million related to Jefferies Group. If recognized, such amounts would lower our effective tax rate. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. No material penalties were accrued for the ~~nine~~three and six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019.~~2020.

The net deferred tax asset was ~~$312.6~~$452.5 million and ~~$462.5~~$393.7 million at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively. The deferred tax asset is predominately attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, the largest component of which relates to compensation and benefits.

The statute of limitations with respect to our federal income tax returns has expired for all years through ~~2015.~~2016. We are currently under examination by various ~~major~~ tax jurisdictions. Prior to becoming a wholly-owned subsidiary, Jefferies Group filed a consolidated U.S. federal income tax return with its qualifying subsidiaries and was subject to income tax in various states, municipalities and foreign jurisdictions and Jefferies Group is also currently under examination by various ~~major~~ tax jurisdictions. We do not expect that resolution of these examinations will have a significant effect on the Consolidated Statements of Financial Condition, but could have a significant impact on the Consolidated Statements of Operations for the period in which resolution occurs.

Our provision for income taxes for the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 was ~~$185.1~~$339.1 million, representing an effective tax rate of ~~28.7%~~26.6%.

Our ~~benefit~~provision for income taxes for the ~~nine~~six months ended ~~August~~May 31, ~~2019~~2020 was ~~$522.6 million. During the second quarter of 2019, we completed the sale of our available for sale portfolio. In connection therewith, we recognized a tax benefit of $544.6~~$77.7 million, during the nine months ended August 31, 2019. Unrealized gains and losses on available for sale securities, and their associated tax impacts, are recorded directly to equity as part of the Accumulated other comprehensive income (loss) balance. Following the portfolio approach, when unrealized gains and losses and their associated tax impacts are recorded at a then currentrepresenting an effective tax rate and then realized later at a different tax rate, the difference between the tax impact initially recorded in Accumulated other comprehensive income (loss) and the tax impact removed from Accumulated other comprehensive income (loss) upon realization remains in Accumulated other comprehensive income (loss) until the disposal of the portfolio and is referred to as a "lodged tax effect." Large changes in the fair value of our available for sale securities, primarily during 2008 through 2010, combined with fluctuations in our tax rate during those periods, generated a lodged tax benefit of $544.6 million. As a result of steps to improve our Corporate investment management efforts, we sold the remaining portion of our available for sale portfolio in the second quarter of 2019, which resulted in the realization of the $544.6 million tax benefit. While this realization did not impact total equity, it resulted in a tax benefit reflected in the Consolidated Statement of Operations of $544.6 million and, as a result, Retained earnings increased and Accumulated other comprehensive income (loss) decreased by corresponding amounts.33.3%.

Note ~~18.~~17. Common Share and Earnings Per Common Share

Basic and diluted earnings per share amounts were calculated by dividing net income by the weighted average number of common shares outstanding. The numerators and denominators used to calculate basic and diluted earnings per share are as follows (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Numerator for earnings per share:	Numerator for earnings per share:									Numerator for earnings per share:
Net income attributable to Jefferies Financial Group Inc. common shareholders	Net income attributable to Jefferies Financial Group Inc. common shareholders	$	304,409	$	48,477	$	462,338	$	764,052	Net income attributable to Jefferies Financial Group Inc. common shareholders	$	352,596	$	44,919	$	935,031	$	157,929
Allocation of earnings to participating securities (1)	Allocation of earnings to participating securities (1)	(1,945)		(316)		(2,921)		(4,667)		Allocation of earnings to participating securities (1)	(2,178)		(288)		(5,470)		(988)
Net income attributable to Jefferies Financial Group Inc. common shareholders for basic earnings per share	Net income attributable to Jefferies Financial Group Inc. common shareholders for basic earnings per share	302,464		48,161		459,417		759,385		Net income attributable to Jefferies Financial Group Inc. common shareholders for basic earnings per share	350,418		44,631		929,561		156,941
Adjustment to allocation of earnings to participating securities related to diluted shares (1)	Adjustment to allocation of earnings to participating securities related to diluted shares (1)	17		(7)		5		29		Adjustment to allocation of earnings to participating securities related to diluted shares (1)	43		(9)		107		(11)
Mandatorily redeemable convertible preferred share dividends	Mandatorily redeemable convertible preferred share dividends	1,404		0		4,230		3,827		Mandatorily redeemable convertible preferred share dividends	1,626		0		3,252		0
Net income attributable to Jefferies Financial Group Inc. common shareholders for diluted earnings per share	Net income attributable to Jefferies Financial Group Inc. common shareholders for diluted earnings per share	$	303,885	$	48,154	$	463,652	$	763,241	Net income attributable to Jefferies Financial Group Inc. common shareholders for diluted earnings per share	$	352,087	$	44,622	$	932,920	$	156,930

Denominator for earnings per share:	Denominator for earnings per share:									Denominator for earnings per share:
Weighted average common shares outstanding	Weighted average common shares outstanding	263,062		296,834		273,035		298,322		Weighted average common shares outstanding	246,937		269,362		248,144		278,022
Weighted average shares of restricted stock outstanding with future service required	Weighted average shares of restricted stock outstanding with future service required	(1,787)		(2,008)		(1,837)		(1,903)		Weighted average shares of restricted stock outstanding with future service required	(1,618)		(1,832)		(1,540)		(1,862)
Weighted average RSUs outstanding with no future service required	Weighted average RSUs outstanding with no future service required	19,420		15,462		18,761		14,419		Weighted average RSUs outstanding with no future service required	17,961		19,234		18,225		18,429
Denominator for basic earnings per share – weighted average shares	Denominator for basic earnings per share – weighted average shares	280,695		310,288		289,959		310,838		Denominator for basic earnings per share – weighted average shares	263,280		286,764		264,829		294,589
Stock options	Stock options	0		0		0		0		Stock options	1,152		0		646		0
Senior executive compensation plan awards	Senior executive compensation plan awards	0		1,609		475		2,181		Senior executive compensation plan awards	2,219		0		2,032		712
Mandatorily redeemable convertible preferred shares	Mandatorily redeemable convertible preferred shares	4,441		0		4,441		4,162		Mandatorily redeemable convertible preferred shares	4,441		0		4,441		0
Denominator for diluted earnings per share	Denominator for diluted earnings per share	285,136		311,897		294,875		317,181		Denominator for diluted earnings per share	271,092		286,764		271,948		295,301

(1)Represents dividends declared during the period on participating securities plus an allocation of undistributed earnings to participating securities. Net losses are not allocated to participating securities. Participating securities represent restricted stock and RSUs for which requisite service has not yet been rendered and amounted to weighted average shares of ~~1,807,800~~1,638,600 and ~~2,018,000~~1,846,400 for the three months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~1,851,900~~1,561,100 and ~~1,910,700~~1,874,100 for the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Dividends declared on participating securities were not material during the three and ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019.~~2020. Undistributed earnings are allocated to participating securities based upon their right to share in earnings if all earnings for the period had been distributed.

For the three months ended August 31, 2019, shares related to the mandatorily redeemable convertible preferred shares were not included in the computation of diluted per share amounts as the effect was antidilutive.

Our Board of Directors from time to time has authorized the repurchase of our common shares. In January ~~2019, the Board of Directors approved a $500.0 million share repurchase authorization and in January~~ 2020, the Board of Directors approved an increase of $250.0 million to the share repurchase ~~authorization. Additionally,~~authorization and in ~~connection with the HomeFed merger on July 1, 2019, our Board of Directors authorized the repurchase of an additional 9.25 million shares in the open market. In~~ March 2020, the Board of Directors approved an additional share repurchase authorization of $100 million. In June 2020, the Board of Directors increased the share repurchase authorization by $176.7 million to $250.0 million. During the nine months ended August 31, 2020, we purchased a total of 32,659,910 of our common shares for an aggregate purchase price of $619.9 million, or an average price of $18.98 per share. At August 31, 2020, we had approximately $122.0 million available for future purchases. Inand in September 2020, the Board of Directors increased the share repurchase authorization toby $128.0 million. In January 2021, the Board of Directors increased the share repurchase authorization by $192.8 million and in March 2021, the Board of Directors increased the share repurchase authorization by $127.5 million. During the six months ended May 31, 2021, we purchased a total of 5,000,000 of our common shares for an aggregate purchase price of $127.5 million, or an average price of $25.51 per share. At May 31, 2021, we had approximately $250.0 million ~~including the $122.0 million.~~

available for future purchases.

Note ~~19.~~18. Commitments, Contingencies and Guarantees

Commitments

The following table summarizes commitments associated with certain business activities at ~~August~~May 31, ~~2020~~2021 (in millions):


		Expected Maturity Date																					Expected Maturity Date
		2020		2021		2022 and 2023		2024 and 2025		2026 and Later		Maximum Payout			2021		2022		2023 and 2024		2025 and 2026		2027 and Later		Maximum Payout
Equity commitments (1)	Equity commitments (1)	$	59.3	$	161.9	$	78.3	$	11.1	$	12.2	$	322.8	Equity commitments (1)	$	113.4	$	126.3	$	25.4	$	10.7	$	33.7	$	309.5
Loan commitments (1)	Loan commitments (1)	0		296.0		35.0		0		0		331.0		Loan commitments (1)	4.1		260.0		34.0		61.3		0		359.4

Underwriting commitments	Underwriting commitments	64.0		0		0		0		0		64.0		Underwriting commitments	231.8		0		0		0		0		231.8
Forward starting reverse repos (2)	Forward starting reverse repos (2)	6,184.5		0		0		0		0		6,184.5		Forward starting reverse repos (2)	6,715.3		0		0		0		0		6,715.3
Forward starting repos (2)	Forward starting repos (2)	3,870.8		100.0		0		0		0		3,970.8		Forward starting repos (2)	5,212.3		0		0		0		0		5,212.3
Other unfunded commitments (1)	Other unfunded commitments (1)	0		136.4		0		5.1		0		141.5		Other unfunded commitments (1)	155.6		63.2		336.4		0		0		555.2
		$	10,178.6	$	694.3	$	113.3	$	16.2	$	12.2	$	11,014.6
Total														Total	$	12,432.5	$	449.5	$	395.8	$	72.0	$	33.7	$	13,383.5

(1)Equity commitments, loan commitments and other unfunded commitments are generally presented by contractual maturity date. The amounts, however, are ~~however~~ mostly available on demand.

(2)At ~~August~~May 31, ~~2020, $6,183.8~~2021, $6,714.8 million within forward starting securities purchased under agreements to resell and ~~$3,670.6 million within~~all of the forward starting securities sold under agreements to repurchase settled within three business days.

Equity Commitments. Equity commitments include a commitment to invest in Jefferies Group's joint venture, Jefferies Finance, and commitments to invest in private equity funds and in Jefferies Capital Partners, LLC, the manager of the private equity funds, which consists of a team led by our President and a Director. At ~~August~~May 31, ~~2020,~~2021, Jefferies Group's outstanding commitments relating to Jefferies Capital Partners, LLC and its private equity funds were ~~$11.2~~$10.8 million.

See Note 8 for additional information regarding Jefferies Group's investment in Jefferies Finance.

Additionally, at ~~August~~May 31, ~~2020,~~2021, we had other outstanding equity commitments to invest up to ~~$214.0~~$225.5 million into various other investments.

Loan Commitments. From time to time we make commitments to extend credit to investment banking and other clients in loan syndication and acquisition finance, and ~~securities transactions and~~ to ~~SPE sponsors in connection with the funding of CLO and other asset-backed transactions.~~strategic affiliates. These commitments and any related drawdowns of these facilities typically have fixed maturity dates and are contingent on certain representations, warranties and contractual conditions applicable to the borrower. At ~~August~~May 31, ~~2020,~~2021, we had ~~$80.0~~$104.0 million of outstanding loan commitments to ~~clients.~~clients and $1.0 million to strategic affiliates.

Loan commitments outstanding at ~~August~~May 31, ~~2020~~2021 also include Jefferies Group's portion of the outstanding secured revolving credit facility provided to Jefferies Finance to support loan underwritings by Jefferies Finance. At ~~August~~May 31, ~~2020,~~2021, $0.0 million of Jefferies Group's $250.0 million commitment was funded.

Underwriting Commitments. In connection with investment banking activities, we may from time to time provide underwriting commitments to our clients in connection with capital raising transactions.

Forward Starting Reverse Repos and Repos. We enter into commitments to take possession of securities with agreements to resell on a forward starting basis and to sell securities with agreements to repurchase on a forward starting basis that are primarily secured by U.S. government and agency securities.

Other Unfunded Commitments. Other unfunded commitments include obligations in the form of revolving notes, warehouse financings and debt securities to provide financing to asset-backed and CLO vehicles. Upon advancing funds, drawn amounts are collateralized by the assets of an entity.

Contingencies

We and our subsidiaries are parties to legal and regulatory proceedings that are considered to be either ordinary, routine litigation incidental to their business or not significant to our consolidated financial position. We and our subsidiaries are also involved, from time to time, in other exams, investigations and similar reviews (both formal and informal) by governmental and self-regulatory agencies regarding our businesses, certain of which may result in judgments, settlements, fines, penalties or other injunctions. We do not believe that any of these actions will have a significant adverse effect on our consolidated financial position or liquidity, but any amounts paid could be significant to results of operations for the period.

Guarantees

Derivative Contracts. Our dealer activities cause us to make markets and trade in a variety of derivative instruments. Certain derivative contracts that we have entered into meet the accounting definition of a guarantee under GAAP, including credit default swaps, written foreign currency options and written equity put options. On certain of these contracts, such as written interest rate caps and foreign currency options, the maximum payout cannot be quantified since the increase in interest or foreign exchange rates are not contractually limited by the terms of the contract. As such, we have disclosed notional values as a measure of our maximum potential payout under these contracts.

The following table summarizes the notional amounts associated with our derivative contracts meeting the definition of a guarantee under GAAP at ~~August~~May 31, ~~2020~~2021 (in millions):


		Expected Maturity Date																					Expected Maturity Date
Guarantee Type	Guarantee Type	2020		2021		2022 and 2023		2024 and 2025		2026 and Later		Notional/ Maximum Payout		Guarantee Type	2021		2022		2023 and 2024		2025 and 2026		2027 and Later		Notional/ Maximum Payout
Derivative contracts – non-credit related	Derivative contracts – non-credit related	$	6,295.6	$	4,149.9	$	6,458.1	$	1,345.6	$	52.0	$	18,301.2	Derivative contracts – non-credit related	$	10,052.6	$	5,851.3	$	9,272.7	$	398.3	$	12.2	$	25,587.1
Written derivative contracts – credit related	Written derivative contracts – credit related	0		0		1.0		5.4		0		6.4		Written derivative contracts – credit related	0		0		6.4		81.8		0		88.2
Total derivative contracts	Total derivative contracts	$	6,295.6	$	4,149.9	$	6,459.1	$	1,351.0	$	52.0	$	18,307.6	Total derivative contracts	$	10,052.6	$	5,851.3	$	9,279.1	$	480.1	$	12.2	$	25,675.3

The derivative contracts deemed to meet the definition of a guarantee under GAAP are before consideration of hedging transactions and only reflect a partial or "one-sided" component of any risk exposure. Written equity options and written credit default swaps are often executed in a strategy that is in tandem with long cash instruments (e.g., equity and debt securities). We substantially mitigate our exposure to market risk on these contracts through hedges, such as other derivative contracts and/or cash instruments, and we manage the risk associated with these contracts in the context of our overall risk management framework. We believe notional amounts overstate our expected payout and that fair value of these contracts is a more relevant measure of our obligations. ~~The~~At May 31, 2021, the fair value of derivative contracts meeting the definition of a guarantee is approximately ~~$197.9 million at August 31, 2020.~~$173.7 million.

Berkadia. We have agreed to reimburse Berkshire Hathaway for up to one-half of any losses incurred under a $1.5 billion surety policy securing outstanding commercial paper issued by an affiliate of Berkadia. At ~~August~~May 31, ~~2020,~~2021, the aggregate amount of commercial paper outstanding was $1.47 billion.

HomeFed. For real estate development projects, HomeFed is generally required to obtain infrastructure improvement bonds at the beginning of construction work and warranty bonds upon completion of such improvements. These bonds are issued by surety companies to guarantee satisfactory completion of a project and provide funds primarily to a municipality in the event HomeFed is unable or unwilling to complete certain infrastructure improvements. As HomeFed develops the planned area and the municipality accepts the improvements, the bonds are released. Should the respective municipality or others draw on the bonds for any reason, certain of HomeFed's subsidiaries would be obligated to pay. At ~~August~~May 31, ~~2020,~~2021, the aggregate amount of infrastructure improvement bonds outstanding was ~~$67.6~~$73.5 million.

Other Guarantees. We are members of various exchanges and clearing houses. In the normal course of business, we provide guarantees to securities clearing houses and exchanges. These guarantees generally are required under the standard membership agreements, such that members are required to guarantee the performance of other members. Additionally, if a member becomes unable to satisfy its obligations to the clearing house, other members would be required to meet these shortfalls. To mitigate these performance risks, the exchanges and clearing houses often require members to post collateral. Our obligations under such guarantees could exceed the collateral amounts posted. Our maximum potential liability under these arrangements cannot be quantified; however, the potential for us to be required to make payments under such guarantees is deemed remote.

Accordingly, no liability has been recognized for these arrangements. Additionally, we provide certain indemnifications in connection with third-party clearing and execution arrangements whereby a ~~third party~~third-party may clear and settle transactions on behalf of our clients. These indemnifications generally have standard contractual terms and are entered into in the ordinary course of business. Our obligations in respect of such transactions are secured by the assets in our client's account, as well as any proceeds received from the transactions cleared and settled on behalf of our client. However, we believe that it is unlikely we would have to make any material payments under these arrangements and no material liabilities related to these indemnifications have been recognized.

Standby Letters of Credit. At ~~August~~May 31, ~~2020,~~2021, we provided guarantees to certain counterparties in the form of standby letters of credit totaling ~~$22.0~~$8.6 million. Standby letters of credit commit us to make payment to the beneficiary if the guaranteed party fails to fulfill its obligation under a contractual arrangement with that beneficiary. Since commitments associated with these collateral instruments may expire unused, the amount shown does not necessarily reflect the actual future cash funding requirement. Primarily all letters of credit expire within one year.

Note ~~20.~~19. Net Capital Requirements

Jefferies LLC operates as a broker-dealer registered with the ~~SEC~~U.S. Securities and Exchange Commission ("SEC") and a member firm of the Financial Industry Regulatory Authority ("FINRA"). Jefferies LLC is subject to the ~~Securities and Exchange Commission~~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 Rule 1.17 of the Commodity Futures Trading Commission ("CFTC"), 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 Rule 15c3-1 or CFTC Rule 1.17.

Jefferies LLC's net capital and excess net capital at ~~August~~May 31, ~~2020~~2021 were ~~$1,612.5~~$1,518.2 million and ~~$1,531.9~~$1,394.5 million, respectively.

FINRA is the designated examining authority for Jefferies LLC and the National Futures Association is the designated self-regulatory organization for Jefferies LLC as an FCM.

Certain other U.S. and non-U.S. subsidiaries of Jefferies Group are subject to capital adequacy requirements as prescribed by the regulatory authorities in their respective jurisdictions, including Jefferies International Limited, which is authorized and regulated by the Financial Conduct Authority in the United Kingdom.

The regulatory capital requirements referred to above may restrict our ability to withdraw capital from Jefferies Group's regulated subsidiaries. Some of our other consolidated subsidiaries also have credit agreements which may restrict the payment of cash dividends, or the ability to make loans or advances to the parent company.

6660

Note ~~21.~~20. Other Fair Value Information

The carrying amounts and estimated fair values of our principal financial instruments that are not recognized at fair value on a recurring basis are as follows (in thousands):


		August 31, 2020						November 30, 2019							May 31, 2021				November 30, 2020
		Carrying Amount		Fair Value		Carrying Amount		Fair Value			Carrying Amount		Fair Value		Carrying Amount		Fair Value
Receivables:	Receivables:									Receivables:
Notes and loans receivable (1)	Notes and loans receivable (1)	$	768,290	$	783,476	$	775,501	$	784,053	Notes and loans receivable (1)	$	784,496	$	811,366	$	727,492	$	744,424

Financial Liabilities:	Financial Liabilities:									Financial Liabilities:
Short-term borrowings (2)	Short-term borrowings (2)	$	783,552	$	783,552	$	548,490	$	548,490	Short-term borrowings (2)	$	475,834	$	475,834	$	759,648	$	759,648
Long-term debt (3)	Long-term debt (3)	$	6,897,732	$	7,525,896	$	7,121,776	$	7,569,837	Long-term debt (3)	7,003,270		7,814,194		6,639,794		7,495,642

(1)Notes and loans receivable: The fair values are estimated principally based on a discounted future cash flows model using market interest rates for similar instruments. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy.

(2)Short-term borrowings: The fair values of short-term borrowings carried at cost are estimated to be the carrying amount due to their short maturities. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy.

(3)Long-term debt: The fair values are estimated using quoted prices, pricing information obtained from external data providers and, for certain variable rate debt, is estimated to be the carrying amount. If measured at fair value in the financial statements, these financial instruments would be classified as Level 2 and Level 3 in the fair value hierarchy.

Note ~~22.~~21. Related Party Transactions

Jefferies Capital Partners Related Funds. Jefferies Group has equity investments in the JCP Manager and in private equity funds (including JCP Fund V), which are managed by a team led by our President and a Director ("Private Equity Related Funds"). Reflected in the Consolidated Statements of Financial Condition at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019~~2020 are Jefferies Group's equity investments in Private Equity Related Funds of ~~$18.6~~$23.7 million and ~~$23.0~~$19.0 million, respectively. Net gains (losses) from Jefferies Group's investment in JCP Fund V aggregating ~~$2.0~~$5.0 million and ~~$(2.5)~~$(7.0) million for the three months ended ~~August~~May 31, 2021 and 2020, respectively, and ~~2019, respectively, $(3.5)~~$4.5 million and ~~$(1.9)~~$(5.5) million for the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, were recorded in Principal transactions revenues. Gains (losses) for other funds were not material. For further information regarding our commitments and funded amounts to the Private Equity Related Funds, see Notes 7 and 1918.

Special Purpose Acquisition Companies.. Jefferies Group earned investment banking revenues during the three and six months ended May 31, 2021 of $10.5 million and $24.0 million, respectively, for services provided to special purpose acquisition companies we have co-sponsored.

Berkadia Commercial Mortgage, LLC. At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, Jefferies Group has commitments to purchase ~~$325.6~~$544.1 million and ~~$360.4~~$401.0 million, respectively, in agency commercial mortgage-backed securities from Berkadia.

FXCM. Jefferies Group entered into a foreign exchange prime brokerage agreement with FXCM in 2017. In connection with the foreign exchange contracts entered into under this agreement, Jefferies Group had $0.6 million and $2.7 million ~~and $9.9 million~~ at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively, included in Payables, expense accruals and other liabilities in the Consolidated Statements of Financial Condition.

Officers, Directors and Employees. We had ~~$40.8~~$36.4 million and ~~$44.8~~$38.9 million of loans outstanding to certain officers and employees (none of whom are an executive officer or director of the Company) at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively. Receivables from and payables to customers include balances arising from officers', directors' and employees' individual security transactions. These transactions are subject to the same regulations as all customer transactions and are provided on substantially the same terms.

~~Jefferies Finance.~~ During November 2019, we purchased $65.3 million of loan receivables from Jefferies Finance which settled during the nine months ended August 31, 2020. See Note 8 for additional information on transactions with Jefferies Finance.

6761

Note ~~23.~~22. Segment Information

We are ~~a diversified financial services company~~ engaged in investment banking and capital markets, asset management and direct investing. During the first quarter of 2020, we changed our internal structure with regard to our operating segments. Previously, our segments consisted of (1) Investment Banking, Capital Markets and Asset Management, which included all of the financial results of Jefferies Group; (2) Merchant Banking; and (3) Corporate. In the first quarter of 2020, we appointed co-Presidents of Asset Management and created a separate operating segment that consists of the asset management activity previously included in our Investment Banking, Capital Markets and Asset Management segment, together with asset management activity previously included in our Merchant Banking segment. In order to compare results with prior periods, we have recast our segment results for the three and nine months ended August 31, 2019.

The Investment Banking and Capital Markets segment includes investment banking, capital markets and other related services. Investment banking provides underwriting and financial advisory services to clients across most industry sectors in the Americas, Europe and ~~Asia.~~Asia Pacific. Capital markets businesses operate across the spectrum of equities and fixed income ~~and foreign exchange~~ products. ~~Related services include, among other things, prime brokerage and equity finance, research and strategy, corporate lending and real estate finance.~~

Our Asset Management segment ~~includes both the operations of LAM as well as the~~comprises all asset management operations, including those within Jefferies Group. Within Asset Management, we manage, invest in and provide services to a diverse group of alternative asset management platforms across a spectrum of investment strategies and asset classes. Asset Management offers institutional clients an innovative range of investment strategies through its affiliated managers.

Merchant Banking consists of our various merchant banking businesses and investments, primarily including Linkem, Vitesse Energy Finance and JETX Energy, real estate, Idaho Timber ~~FXCM~~ and The We Company. Our Merchant Banking businesses and investments also included National Beef, prior to its sale in November 2019 and Spectrum Brands, prior to its distribution to shareholders in October 2019.FXCM.

Corporate assets primarily consist of cash and cash ~~equivalents, financial instruments owned and the deferred tax asset (exclusive of Jefferies Group's deferred tax asset).~~equivalents. Corporate revenues primarily include interest income.

6862

Certain information concerning our segments is presented in the following ~~table. Consolidated subsidiaries are reflected as of the date a majority controlling interest was acquired.~~table (in thousands):


		For the Three Months Ended						For the Nine Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			For the Three Months Ended				For the Six Months Ended
		(In thousands)															May 31, 2021		May 31, 2020	May 31, 2021	May 31, 2020
Net revenues:	Net revenues:									Net revenues:
Reportable Segments:	Reportable Segments:									Reportable Segments:
Investment Banking and Capital Markets	Investment Banking and Capital Markets	$	1,274,115	$	757,362	$	3,451,776	$	2,274,884	Investment Banking and Capital Markets	$	1,572,964	$	1,028,832	$	3,532,473	$	2,177,661
Asset Management	Asset Management	118,558		20,341		146,278		95,448		Asset Management	54,554		7,391		281,288		27,720
Merchant Banking	Merchant Banking	220,887		73,754		532,608		391,825		Merchant Banking	318,828		107,162		616,331		311,721
Corporate	Corporate	591		8,967		11,908		22,134		Corporate	724		1,525		1,314		11,317
Total net revenues related to reportable segments	Total net revenues related to reportable segments	1,614,151		860,424		4,142,570		2,784,291		Total net revenues related to reportable segments	1,947,070		1,144,910		4,431,406		2,528,419

Consolidation adjustments	Consolidation adjustments	2,019		(3,646)		7,517		2,587		Consolidation adjustments	3,437		2,679		6,043		5,498
Total consolidated net revenues		$	1,616,170	$	856,778	$	4,150,087	$	2,786,878
Total consolidated revenues										Total consolidated revenues	$	1,950,507	$	1,147,589	$	4,437,449	$	2,533,917

Income (loss) before income taxes:	Income (loss) before income taxes:									Income (loss) before income taxes:
Reportable Segments:	Reportable Segments:									Reportable Segments:
Investment Banking and Capital Markets	Investment Banking and Capital Markets	$	281,323	$	86,194	$	745,814	$	283,892	Investment Banking and Capital Markets	$	426,558	$	214,534	$	969,841	$	464,491
Asset Management	Asset Management	87,604		(7,403)		25,122		2,011		Asset Management	11,055		(41,553)		192,520		(62,482)
Merchant Banking	Merchant Banking	70,747		(35,381)		(57,592)		48,537		Merchant Banking	58,998		(74,716)		166,615		(128,339)
Corporate	Corporate	(15,618)		(11,779)		(36,226)		(47,007)		Corporate	(12,099)		(12,854)		(32,576)		(20,608)
Income before income taxes related to reportable segments	Income before income taxes related to reportable segments	424,056		31,631		677,118		287,433		Income before income taxes related to reportable segments	484,512		85,411		1,296,400		253,062
Parent Company interest	Parent Company interest	(14,114)		(14,770)		(39,773)		(44,298)		Parent Company interest	(13,829)		(12,878)		(27,731)		(25,659)
Consolidation adjustments	Consolidation adjustments	2,300		(3,598)		8,198		2,924		Consolidation adjustments	3,456		2,974		6,255		5,898
Total consolidated income before income taxes	Total consolidated income before income taxes	$	412,242	$	13,263	$	645,543	$	246,059	Total consolidated income before income taxes	$	474,139	$	75,507	$	1,274,924	$	233,301

Depreciation and amortization expenses:	Depreciation and amortization expenses:									Depreciation and amortization expenses:
Reportable Segments:	Reportable Segments:									Reportable Segments:
Investment Banking and Capital Markets	Investment Banking and Capital Markets	$	22,225	$	20,754	$	61,322	$	56,672	Investment Banking and Capital Markets	$	20,778	$	19,981	$	41,462	$	39,097
Asset Management	Asset Management	2,018		512		4,776		1,472		Asset Management	489		2,133		968		2,758
Merchant Banking	Merchant Banking	14,408		17,784		50,627		49,904		Merchant Banking	17,295		17,378		34,035		36,219
Corporate	Corporate	869		830		2,631		2,552		Corporate	878		874		1,742		1,762

Total consolidated depreciation and amortization expenses	Total consolidated depreciation and amortization expenses	$	39,520	$	39,880	$	119,356	$	110,600	Total consolidated depreciation and amortization expenses	$	39,440	$	40,366	$	78,207	$	79,836

						August 31, 2020		November 30, 2019							May 31, 2021		November 30, 2020
						(In thousands)
Identifiable Assets Employed:	Identifiable Assets Employed:									Identifiable Assets Employed:
Reportable Segments:	Reportable Segments:									Reportable Segments:
Investment Banking and Capital Markets	Investment Banking and Capital Markets					$	43,887,885	$	40,523,223	Investment Banking and Capital Markets					$	49,723,982	$	44,835,126
Asset Management	Asset Management					3,192,277		3,313,716		Asset Management					2,770,954		3,231,059
Merchant Banking	Merchant Banking					3,225,735		3,285,671		Merchant Banking					3,330,832		3,173,064
Corporate	Corporate					1,927,243		2,432,119		Corporate					2,433,940		2,178,699
Identifiable assets employed related to reportable segments						52,233,140		49,554,729
Identifiable assets related to reportable segments										Identifiable assets related to reportable segments					58,259,708		53,417,948

Consolidation adjustments	Consolidation adjustments					(459,152)		(94,495)		Consolidation adjustments					(280,739)		(299,596)
Total consolidated assets	Total consolidated assets					$	51,773,988	$	49,460,234	Total consolidated assets					$	57,978,969	$	53,118,352

Interest expense classified as a component of Net revenues relates to Jefferies Group. For the three months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, interest expense classified as a component of Expenses was primarily comprised of parent company interest ($~~14.1~~13.8 million and ~~$14.8~~$12.9 million, respectively) and Merchant Banking ($~~7.4~~6.1 million and ~~$8.9~~$8.3 million, respectively). For the ~~nine~~six months ended ~~August~~May 31, ~~2020~~2021 and ~~2019,~~2020, interest expense classified as a component of Expenses was primarily comprised of parent company interest ($~~39.8~~27.7 million and ~~$44.3~~$25.7 million, respectively) and Merchant Banking ($~~24.5~~12.6 million and ~~$25.5~~$17.1 million, respectively).

7063


Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations.

Statements included in this report may contain forward-looking statements. See "Cautionary Statement for Forward-Looking Information" below. The following should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations, Risk Factors and the description of our businesses included in our Annual Report on Form 10-K for the year ended November 30, ~~2019~~2020 (the ~~"2019~~"2020 10-K").

Results of Operations

We are ~~a diversified financial services company~~ engaged in investment banking and capital markets, asset management and direct investing. During the first quarter of 2020, we changed our internal structure with regard to our operating segments. Previously, our segments consisted of (1) Investment Banking, Capital Markets and Asset Management, which included all of the financial results of Jefferies Group, ~~LLC ("Jefferies Group"); (2) Merchant Banking; and (3) Corporate. In~~our largest subsidiary, is now the ~~first quarter, we appointed co-Presidents of Asset Management and created~~largest independent full-service global investment banking firm headquartered in the U.S. The following tables present a separate fourth operating segment that consists of the asset management activity previously included in our Investment Banking, Capital Markets and Asset Management segment, together with asset management activity previously included in our Merchant Banking segment. In order to compare results with prior periods, we have recast our segment results for the three and nine months ended August 31, 2019. The discussion that follows is presented on the basissummary of our ~~recast segments.~~financial results.

A summary of results of operations for the ~~third~~second quarter of ~~2020~~2021 is as follows (in thousands):

Investment Banking and Capital Markets Asset Management Merchant Banking Corporate Parent Company Interest Consolidation Adjustments Total
Net revenues $ 1,274,115 $ 118,558 $ 220,887 $ 591 $ — $ 2,019 $ 1,616,170
Expenses:
Compensation and benefits 719,822 10,652 20,573 9,790 — — 760,837
Cost of sales (1) 60,640 6,103 82,657 — — — 149,400
Interest expense (2) — — 7,398 — 14,114 — 21,512
Depreciation and amortization 22,225 2,018 14,408 869 — — 39,520
Selling, general and other expenses 190,105 12,181 30,157 5,550 — (281) 237,712
Total expenses 992,792 30,954 155,193 16,209 14,114 (281) 1,208,981
Income (loss) before income taxes and income related to associated companies 281,323 87,604 65,694 (15,618) (14,114) 2,300 407,189
Income related to associated companies — — 5,053 — — — 5,053
Income (loss) before income taxes $ 281,323 $ 87,604 $ 70,747 $ (15,618) $ (14,114) $ 2,300 $ 412,242
Income tax provision 107,403
Net income $ 304,839


	Investment Banking and Capital Markets			Asset Management			Merchant Banking			Corporate		Parent Company Interest		Consolidation Adjustments		Total

Net revenues	$	1,572,964		$	54,554		$	318,828		$	724	$	—	$	3,437	$	1,950,507

Expenses:
Compensation and benefits	774,549			21,671			27,987			7,035		—		—		831,242
Cost of sales	66,211		(1)	10,599		(1)	143,847			—		—		—		220,657
Interest expense	—			—			6,114		(2)	—		13,829		—		19,943
Depreciation and amortization	20,778			489			17,295			878		—		—		39,440
Selling, general and other expenses	284,868			10,740			41,061			4,910		—		(19)		341,560
Total expenses	1,146,406			43,499			236,304			12,823		13,829		(19)		1,452,842
Income (loss) before income taxes and loss related to associated companies	426,558			11,055			82,524			(12,099)		(13,829)		3,456		497,665
Loss related to associated companies	—			—			(23,526)			—		—		—		(23,526)
Income (loss) before income taxes	$	426,558		$	11,055		$	58,998		$	(12,099)	$	(13,829)	$	3,456	474,139
Income tax provision																120,820


Net income																$	353,319

(1) Includes Floor brokerage and clearing fees.

(2) Interest expense within Merchant Banking of ~~$7.4~~$6.1 million for the ~~third~~second quarter of ~~2020,~~2021, primarily includes ~~$6.4~~$5.3 million for Foursight Capital and ~~$1.0~~$0.8 million for Vitesse Energy, LLC ("Vitesse Energy Finance").

7164

A summary of results of operations for the first ~~nine months~~half of ~~2020~~2021 is as follows (in thousands):


		Investment Banking and Capital Markets		Asset Management		Merchant Banking		Corporate		Parent Company Interest		Consolidation Adjustments		Total			Investment Banking and Capital Markets			Asset Management			Merchant Banking			Corporate		Parent Company Interest		Consolidation Adjustments		Total

Net revenues	Net revenues	$	3,451,776	$	146,278	$	532,608	$	11,908	$	—	$	7,517	$	4,150,087	Net revenues	$	3,532,473		$	281,288		$	616,331		$	1,314	$	—	$	6,043	$	4,437,449

Expenses:	Expenses:															Expenses:
Compensation and benefits	Compensation and benefits	1,892,567		59,375		51,736		25,819		—		—		2,029,497		Compensation and benefits	1,880,761			44,456			55,999			22,569		—		—		2,003,785
Cost of sales ~~(1)~~	Cost of sales ~~(1)~~	181,115		20,288		235,871		—		—		—		437,274		Cost of sales ~~(1)~~	132,785		(1)	20,441		(1)	239,406			—		—		—		392,632
Interest expense ~~(2)~~	Interest expense ~~(2)~~	—		—		24,453		—		39,773		—		64,226		Interest expense ~~(2)~~	—			—			12,579		(2)	—		27,731		—		40,310
Depreciation and amortization	Depreciation and amortization	61,322		4,776		50,627		2,631		—		—		119,356		Depreciation and amortization	41,462			968			34,035			1,742		—		—		78,207
Selling, general and other expenses	Selling, general and other expenses	570,958		36,717		157,990		19,684		—		(681)		784,668		Selling, general and other expenses	507,624			22,903			73,603			9,579		—		(212)		613,497
Total expenses	Total expenses	2,705,962		121,156		520,677		48,134		39,773		(681)		3,435,021		Total expenses	2,562,632			88,768			415,622			33,890		27,731		(212)		3,128,431
Income (loss) before income taxes and loss related to associated companies	Income (loss) before income taxes and loss related to associated companies	745,814		25,122		11,931		(36,226)		(39,773)		8,198		715,066		Income (loss) before income taxes and loss related to associated companies	969,841			192,520			200,709			(32,576)		(27,731)		6,255		1,309,018
Loss related to associated companies	Loss related to associated companies	—		—		(69,523)		—		—		—		(69,523)		Loss related to associated companies	—			—			(34,094)			—		—		—		(34,094)
Income (loss) before income taxes	Income (loss) before income taxes	$	745,814	$	25,122	$	(57,592)	$	(36,226)	$	(39,773)	$	8,198	645,543		Income (loss) before income taxes	$	969,841		$	192,520		$	166,615		$	(32,576)	$	(27,731)	$	6,255	1,274,924
Income tax provision	Income tax provision													185,138		Income tax provision																339,056

Net income	Net income													$	460,405	Net income																$	935,868

(1) Includes Floor brokerage and clearing fees.

(2) Interest expense within Merchant Banking of ~~$24.5~~$12.6 million for the first ~~nine months~~half of ~~2020,~~2021, primarily includes ~~$20.8~~$10.8 million for Foursight Capital and ~~$3.6~~$1.8 million for Vitesse Energy Finance.

A summary of results for the ~~third~~second quarter of ~~2019~~2020 is as follows (in thousands):

Investment Banking and Capital Markets Asset Management Merchant Banking Corporate Parent Company Interest Consolidation Adjustments Total
Net revenues $ 757,362 $ 20,341 $ 73,754 $ 8,967 $ — $ (3,646) $ 856,778
Expenses:
Compensation and benefits 400,071 18,557 16,804 11,450 — — 446,882
Cost of sales (1) 51,358 (500) 85,773 — — — 136,631
Interest expense (2) — — 8,893 — 14,770 — 23,663
Depreciation and amortization 20,754 512 17,784 830 — — 39,880
Selling, general and other expenses 198,985 9,442 51,897 8,466 — (48) 268,742
Total expenses 671,168 28,011 181,151 20,746 14,770 (48) 915,798
Income (loss) before income taxes and income related to associated companies 86,194 (7,670) (107,397) (11,779) (14,770) (3,598) (59,020)
Income related to associated companies — 267 72,016 — — — 72,283
Income (loss) before income taxes $ 86,194 $ (7,403) $ (35,381) $ (11,779) $ (14,770) $ (3,598) 13,263
Income tax benefit (36,131)
Net income $ 49,394


	Investment Banking and Capital Markets			Asset Management			Merchant Banking			Corporate		Parent Company Interest		Consolidation Adjustments		Total

Net revenues	$	1,028,832		$	7,391		$	107,162		$	1,525	$	—	$	2,679	$	1,147,589

Expenses:
Compensation and benefits	551,821			26,502			13,973			6,171		—		—		598,467
Cost of sales	67,601		(1)	7,878		(1)	80,771			—		—		—		156,250
Interest expense	—			—			8,282		(2)	—		12,878		—		21,160
Depreciation and amortization	19,981			2,133			17,378			874		—		—		40,366
Selling, general and other expenses	174,895			12,431			54,753			7,334		—		(295)		249,118
Total expenses	814,298			48,944			175,157			14,379		12,878		(295)		1,065,361
Income (loss) before income taxes and loss related to associated companies	214,534			(41,553)			(67,995)			(12,854)		(12,878)		2,974		82,228
Loss related to associated companies	—			—			(6,721)			—		—		—		(6,721)
Income (loss) before income taxes	$	214,534		$	(41,553)		$	(74,716)		$	(12,854)	$	(12,878)	$	2,974	75,507
Income tax provision																31,962


Net income																$	43,545

(1) Includes Floor brokerage and clearing fees.

(2) Interest expense within Merchant Banking of ~~$8.9~~$8.3 million for the ~~third~~second quarter of ~~2019,~~2020, primarily includes ~~$7.6~~$7.0 million for Foursight Capital and $1.2 million for Vitesse Energy Finance.

7265

A summary of results for the first ~~nine months~~half of ~~2019~~2020 is as follows (in thousands):


		Investment Banking and Capital Markets		Asset Management		Merchant Banking		Corporate		Parent Company Interest		Consolidation Adjustments		Total			Investment Banking and Capital Markets			Asset Management			Merchant Banking			Corporate		Parent Company Interest		Consolidation Adjustments		Total

Net revenues	Net revenues	$	2,274,884	$	95,448	$	391,825	$	22,134	$	—	$	2,587	$	2,786,878	Net revenues	$	2,177,661		$	27,720		$	311,721		$	11,317	$	—	$	5,498	$	2,533,917

Expenses:	Expenses:															Expenses:
Compensation and benefits	Compensation and benefits	1,231,915		48,749		44,638		41,732		—		—		1,367,034		Compensation and benefits	1,172,745			48,723			31,163			16,029		—		—		1,268,660
Cost of sales ~~(1)~~	Cost of sales ~~(1)~~	148,712		14,401		233,109		—		—		—		396,222		Cost of sales ~~(1)~~	120,475		(1)	14,185		(1)	153,214			—		—		—		287,874
Interest expense ~~(2)~~	Interest expense ~~(2)~~	—		—		25,521		—		44,298		—		69,819		Interest expense ~~(2)~~	—			—			17,055		(2)	—		25,659		—		42,714
Depreciation and amortization	Depreciation and amortization	56,672		1,472		49,904		2,552		—		—		110,600		Depreciation and amortization	39,097			2,758			36,219			1,762		—		—		79,836
Selling, general and other expenses	Selling, general and other expenses	553,693		29,422		111,275		24,857		—		(337)		718,910		Selling, general and other expenses	380,853			24,536			127,833			14,134		—		(400)		546,956
Total expenses	Total expenses	1,990,992		94,044		464,447		69,141		44,298		(337)		2,662,585		Total expenses	1,713,170			90,202			365,484			31,925		25,659		(400)		2,226,040
Income (loss) before income taxes and income related to associated companies		283,892		1,404		(72,622)		(47,007)		(44,298)		2,924		124,293
Income related to associated companies		—		607		121,159		—		—		—		121,766
Income (loss) before income taxes and loss related to associated companies																Income (loss) before income taxes and loss related to associated companies	464,491			(62,482)			(53,763)			(20,608)		(25,659)		5,898		307,877
Loss related to associated companies																Loss related to associated companies	—			—			(74,576)			—		—		—		(74,576)
Income (loss) before income taxes	Income (loss) before income taxes	$	283,892	$	2,011	$	48,537	$	(47,007)	$	(44,298)	$	2,924	246,059		Income (loss) before income taxes	$	464,491		$	(62,482)		$	(128,339)		$	(20,608)	$	(25,659)	$	5,898	233,301
Income tax benefit														(522,626)
Income tax provision																Income tax provision																77,735

Net income	Net income													$	768,685	Net income																$	155,566

(1) Includes Floor brokerage and clearing fees.

(2) Interest expense within Merchant Banking of ~~$25.5~~$17.1 million for the first ~~nine months~~half of ~~2019,~~2020, primarily includes ~~$21.7~~$14.4 million for Foursight Capital and ~~$3.5~~$2.6 million for Vitesse Energy Finance.

The composition of our financial results has varied over time and we expect will continue to ~~evolve over time.~~evolve. Our strategy is designed to transform Jefferies into a pure financial services firm and, as such, we are focused on the development of our Investment Banking and Capital Markets, and Asset Management segments, while we continue to realize the value of or otherwise transform our investments in Merchant Banking. The following factors and events should be considered in evaluating our financial results as they impact comparisons:

Our financial results for the ~~third~~second quarter of 2021 were impacted by:

•Record quarterly investment banking net revenues of $1,033.7 million, including record advisory net revenues of $390.5 million, record debt underwriting net revenues of $285.7 million and equity underwriting net revenues of $324.5 million;

•Quarterly combined capital markets net revenues of $500.1 million, including equities net revenues of $242.9 million and fixed income net revenues of $257.2 million;

•Asset Management revenues (before allocated net interest) of $66.0 million; and

•Pre-tax income of $59.0 million related to our Merchant Banking businesses reflecting record quarterly results from Idaho Timber and mark-to-market increases in the value of several of our investments in public and private companies.

Our financial results for the first half of 2021 were impacted by:

•Record six month investment banking net revenues of $2,067.2 million, including record advisory net revenues of $701.9 million, equity underwriting net revenues of $819.3 million, and record debt underwriting net revenues of $483.1 million;

•Record six month combined capital markets net revenues of $1,394.5 million, including record equities net revenues of $774.0 million and fixed income net revenues of $620.6 million;

•Record six month Asset Management revenues (before allocated net interest) of $303.1 million; and

•Pre-tax income of $166.6 million related to our Merchant Banking businesses reflecting record six month results from Idaho Timber and mark-to-market increases in the value of several of our investments in public and private companies.

Our financial results for the second quarter of 2020 were impacted by:

•~~Record pre-tax income of $363.4 million from Jefferies Group reflecting record quarterly total~~Investment banking net revenues of ~~$1,383.4~~$316.3 million, ~~including:~~

◦~~Record Investment Banking net revenues of $588.8 million,~~ including ~~record~~ equity underwriting net revenues of ~~$305.4~~$124.4 million, advisory net revenues of ~~$171.4~~$182.1 million and debt underwriting net revenues of ~~$139.0~~$81.0 million;

◦•Combined ~~Capital Markets~~capital markets net revenues of ~~$655.2~~$730.3 million, including ~~record~~ equities net revenues of ~~$318.8~~$237.1 million and fixed income net revenues of ~~$336.3~~$493.1 million; ~~and~~

◦•~~Record~~ Asset Management revenues (before allocated net interest) of ~~$122.3 million.~~$20.4 million; and

•Pre-tax ~~income~~loss of ~~$70.7~~$74.7 million related to our Merchant Banking businesses reflecting:

◦~~Record quarterly~~Positive impact of hedging gains at Vitesse Energy Finance, solid results ~~from~~at Idaho ~~Timber;~~Timber and a record quarter for FXCM; offset by

◦A $44.2 million non-cash charge to write down the value of our investment in WeWork;

◦Non-cash charge of $13.2 million to write down Vitesse Energy Finance's oil and gas assets in the Denver-Julesburg Basin ("DJ Basin"), reflecting a significant decrease in oil and gas prices;

◦A total of $12.2 million of non-cash write-downs of HomeFed LLC's ("HomeFed") interests in a hotel and a retail center significantly impacted by the external events of the second quarter; and

◦$~~54.5~~19.3 million inof mark-to-market unrealized ~~increases~~decreases in the values of some of our investments in public ~~companies; and~~

◦~~A decrease in the fair value of Vitesse Energy Finance's hedges, as oil prices appreciated during the quarter.~~companies.

Our financial results for the first ~~nine months~~half of 2020 were impacted by:

•~~Record pre-tax income of $771.6 million from Jefferies Group reflecting total record~~Investment banking net revenues of ~~$3,588.5~~$893.7 million, ~~including:~~

◦~~Record nine months Investment Banking net revenues of $1,482.6 million,~~ including ~~record nine months advisory net revenues of $696.7 million, record~~ equity underwriting net revenues of ~~$561.5~~$256.1 million, advisory net revenues of $525.2 million and debt underwriting net revenues of ~~$337.2~~$198.2 million;

◦•~~Record combined nine months Capital Markets~~Combined capital markets net revenues of ~~$1,879.3~~$1,224.1 million, including equities net revenues of ~~$801.6~~$482.8 million and fixed income net revenues of ~~$1,077.7~~$741.3 million; ~~and~~

◦•~~Record~~ Asset Management revenues (before allocated net interest) of ~~$173.4 million.~~$51.4 million; and

•Pre-tax loss of ~~$57.6~~$128.3 million related to our Merchant Banking businesses reflecting:

◦Positive contributions from Vitesse Energy Finance, Idaho Timber and FXCM;

◦A gain of $61.5 million from effective short-term hedges against mark-to-market and fair value decreases in some of our other investments within Merchant Banking;

◦A $44.2 million non-cash charge to ~~write-down~~write down the value of our investment in ~~The We Company~~WeWork;

◦$45.2 million of mark-to-market unrealized decreases in ~~light~~the values of ~~SoftBank Group's withdrawal~~some of ~~its $3 billion tender offer and The We Company's current performance outlook;~~our investments in public companies;

◦Non-cash charges of $67.8 million related to write-downs of real estate investments at HomeFed; and

◦Non-cash ~~charge~~charges of $13.2 million to ~~write-down~~write down Vitesse Energy Finance's oil and gas assets in the DJ Basin and $33.0 million to ~~write-down~~write down the value of our investment in JETX Energy, LLC ("JETX Energy") to reflect the decline in oil prices.

~~Our financial results for the third quarter of 2019 were impacted by:~~

•~~Pre-tax income of $83.1 million and total net revenues of $777.2 million from Jefferies Group, reflecting solid performance in equities, fixed income, investment banking and asset management;~~

•~~Pre-tax loss of $35.4 million related to our Merchant Banking businesses reflecting:~~

◦~~A $146.0 million non-cash charge to write-down the value of our investment in The We Company;~~

◦~~A $72.1 million pre-tax gain related to the purchase of the remaining interest in HomeFed; and~~

◦~~$75.9 million of income from associated companies in respect of our 31% investment in National Beef Packing Company, LLC ("National Beef").~~

~~Our financial results for the first nine months of 2019 were impacted by:~~

•~~A nonrecurring tax benefit of $544.6 million related to the closing of our available for sale portfolio, which triggered the realization of lodged tax benefits from earlier years;~~

•Pre-tax income of $300.8 million and net revenues of $2,364.7 million from Jefferies Group reflecting strong performance in equities, fixed income and asset management, but below-normal results in investment banking due to the severe market downturn in December 2018, which heavily muted issuance activity. This was exacerbated by the five-week shutdown of the U.S. Government in late December 2018 and January 2019, which further dampened new issue transactions in the capital markets and had a lag effect on Jefferies Group's advisory revenues;

•~~Pre-tax income of $48.5 million related to our Merchant Banking businesses reflecting:~~

◦~~A $112.9 million non-cash charge to write-down the value of our investment in The We Company;~~

◦~~$55.5 million in mark-to-market unrealized decreases in the values of some of our investments in public companies;~~

◦~~A $72.1 million pre-tax gain related to the purchase of the remaining interest in HomeFed; and~~

◦~~$137.9 million of income from associated companies in respect of our 31% investment in National Beef.~~

During March 2020, the global novel coronavirus ("COVID-19") pandemic and initial actions taken in response wreaked havoc on the global economy and all financial markets, and adversely affected our businesses. Subsequently, with various government actions and more clarity from the U.S. Federal Reserve Bank on future interest rate policy, the equity markets have experienced strong rebound and a supportive trading environment for investors has emerged along with renewed activity in the equity and debt new issue capital markets. Jefferies Group has experienced strong market volumes and increased client activity across its capital markets business with considerably improved performance. Jefferies Group's investment banking backlog remains solid and its current level of incoming new business is strong. We continue to monitor the impact of the pandemic on the operations and value of our investments. Our leadership is continuously monitoring circumstances around COVID-19, as well as economic and capital market conditions, and providing frequent communications to both our clients and our employees.

Investment Banking and Capital Markets

A summary of results of operations for our Investment Banking and Capital Markets segment is as follows (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020

Net revenues	Net revenues	$	1,274,115	$	757,362	$	3,451,776	$	2,274,884	Net revenues	$	1,572,964	$	1,028,832	$	3,532,473	$	2,177,661

Expenses:	Expenses:									Expenses:
Compensation and benefits	Compensation and benefits	719,822		400,071		1,892,567		1,231,915		Compensation and benefits	774,549		551,821		1,880,761		1,172,745
Floor brokerage and clearing fees	Floor brokerage and clearing fees	60,640		51,358		181,115		148,712		Floor brokerage and clearing fees	66,211		67,601		132,785		120,475
Depreciation and amortization	Depreciation and amortization	22,225		20,754		61,322		56,672		Depreciation and amortization	20,778		19,981		41,462		39,097
Selling, general and other expenses	Selling, general and other expenses	190,105		198,985		570,958		553,693		Selling, general and other expenses	284,868		174,895		507,624		380,853
Total expenses	Total expenses	992,792		671,168		2,705,962		1,990,992		Total expenses	1,146,406		814,298		2,562,632		1,713,170

Income before income taxes	Income before income taxes	$	281,323	$	86,194	$	745,814	$	283,892	Income before income taxes	$	426,558	$	214,534	$	969,841	$	464,491

Our Investment Banking and Capital Markets segment comprises many business units, with many interactions and much integration among them. Business activities include the sales, trading, origination and advisory effort for various equity, fixed income, commodities, foreign exchange and advisory services. Our Investment Banking and Capital Markets segment business, by its nature, does not produce predictable or necessarily recurring revenues or 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.

Revenues by Source

Net revenues presented for our Investment Banking and Capital Markets 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 long-term debt, which is a function of the mix of each business's associated assets and liabilities and the related funding costs. The following provides a summary of net revenues by source (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020

Advisory	Advisory	$	171,438	$	213,350	$	696,677	$	572,386	Advisory	$	390,508	$	182,081	$	701,947	$	525,239

Equity underwriting	Equity underwriting	305,380		97,494		561,455		256,853		Equity underwriting	324,462		124,383		819,268		256,075
Debt underwriting	Debt underwriting	139,019		101,689		337,198		306,977		Debt underwriting	285,730		81,027		483,147		198,179
Total underwriting	Total underwriting	444,399		199,183		898,653		563,830		Total underwriting	610,192		205,410		1,302,415		454,254

Other investment banking	Other investment banking	(27,013)		(9,108)		(112,776)		(7,116)		Other investment banking	32,971		(71,234)		62,796		(85,763)
Total investment banking	Total investment banking	588,824		403,425		1,482,554		1,129,100		Total investment banking	1,033,671		316,257		2,067,158		893,730

Equities	Equities	318,824		193,229		801,596		573,851		Equities	242,949		237,131		773,965		482,772
Fixed income	Fixed income	336,347		148,334		1,077,673		518,346		Fixed income	257,197		493,144		620,556		741,326
Total capital markets	Total capital markets	655,171		341,563		1,879,269		1,092,197		Total capital markets	500,146		730,275		1,394,521		1,224,098

Other	Other	30,120		12,374		89,953		53,587		Other	39,147		(17,700)		70,794		59,833

Total Investment Banking and Capital Markets (1) (2)		$	1,274,115	$	757,362	$	3,451,776	$	2,274,884
Total Investment Banking and Capital Markets (1)										Total Investment Banking and Capital Markets (1)	$	1,572,964	$	1,028,832	$	3,532,473	$	2,177,661

(1)Includes net interest revenues of $3.3 million and $30.4 million for the third quarter of 2020 and 2019, respectively, and $5.4 million and $51.4 million for the first nine months of 2020 and 2019, respectively.

~~(2)~~Allocated net interest is not separately disaggregated in presenting our Investment Banking and Capital Markets reportable segment within our Net Revenues by Source. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.

Investment Banking Revenues

Investment banking is comprised of revenues from:

• advisory services with respect to mergers and acquisitions and restructurings and recapitalizations;

•underwriting services, which include underwriting and placement services related to corporate debt, municipal bonds, mortgage-backed and asset-backed securities and equity and equity-linked securities and loan syndication;

• our 50% share of net earnings from Jefferies Group's corporate lending joint venture, Jefferies Finance LLC ("Jefferies Finance"); and

• securities and loans received or acquired in connection with our investment banking activities.

The following table sets forth our investment banking activities (dollars in billions):

Deals Completed Aggregate Value
For the Three Months Ended For the Nine Months Ended For the Three Months Ended For the Nine Months Ended
August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019
Advisory transactions (1) 48 51 149 147 $ 29.3 $ 110.2 $ 110.3 $ 211.3
Public and private debt financings 213 292 449 565 $ 72.2 $ 43.7 $ 185.4 $ 124.7
Public and private equity and convertible offerings (2) 99 45 205 115 $ 34.5 $ 14.2 $ 71.7 $ 34.6

(1) The number of advisory deals completed includes nine and three restructuring and recapitalization transactions during the third quarter of 2020 and 2019, respectively, and nineteen and twelve restructuring and recapitalization transactions during the first nine months of 2020 and 2019, respectively.

(2) We acted as sole or joint bookrunner on 99 and 44 offerings during the third quarter of 2020 and 2019, respectively, and 199 and 112 offerings during the first nine months of 2020 and 2019, respectively.


	Deals Completed				Aggregate Value
	For the Three Months Ended		For the Six Months Ended		For the Three Months Ended				For the Six Months Ended
	May 31, 2021	May 31, 2020	May 31, 2021	May 31, 2020	May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020

Advisory transactions	64	35	129	101	$	71.1	$	23.3	$	153.3	$	81.0
Public and private equity and convertible offerings	104	50	220	106	$	37.9	$	25.4	$	81.7	$	37.2
Public and private debt financings	201	84	364	236	$	105.9	$	43.6	$	182.6	$	113.2

Investment banking revenues for the second quarter of 2021 were a record of $1.03 billion, compared with $316.3 million for the ~~third~~second quarter of 2020, ~~of $588.8 million, compared with $403.4 million for the third quarter of 2019,~~ reflecting record revenues in ~~equity~~investment banking advisory and debt underwriting and solid performance in ~~debt~~equity underwriting, ~~partially offset by lower revenues in mergers~~as the global economy continues to improve and ~~acquisitions.~~market conditions stabilize. Our

~~Our underwriting revenues for the third quarter of 2020 were $444.4 million, an increase of 123.1% from $199.2 million~~investment in the prior year quarter, due to record results in equity underwriting and solid performance in debt underwriting as clients took advantage of both a strong rebound in equity valuations, and in loan and bond prices to raise capital. Our advisory revenues were $171.4 million, or 19.6% lower than the prior year quarter, primarily due to the impact of the uncertainty created by COVID-19 on initiating and completing merger and acquisition transactions. From equity and debt underwriting activities, we generated $305.4 million and $139.0 million in revenues, respectively, for the third quarter of 2020, compared with $97.5 million and $101.7 million in revenues, respectively, for the third quarter of 2019.

~~Other~~our investment banking ~~revenues were a loss of $27.0 million for the third quarter of 2020, compared~~franchise and our strategy to lead with ~~a loss of $9.1 million for the third quarter of 2019. Other~~our investment banking ~~revenues during the third quarter of 2020 include a net loss of $11.8 million from our~~platform has delivered increased market share of the net results of the Jefferies Finance joint venture, reflecting losses related to reserves recorded on the loan portfolio during the current year quarter, primarily due to the impact of COVID-19 on the markets and economy. This compares with a net loss of $8.2 millionas is reflected in the third quarter of 2019 from our share of the net results of the Jefferies Finance joint venture, which included $12.5 million in costs from refinancing its debt. The results in both quarters also include the amortization of costs and allocated interest expense related to our investment in the Jefferies Finance business.

Investment banking revenues were a record $1,482.6 million for the first nine months of 2020, compared with $1,129.1 million for the first nine months of 2019, reflecting record performance in mergers and acquisitions, record results in equity underwriting and solid performance in debt underwriting. The prior year period results were impacted by the significant industry-wide decline in equity and leverage finance activity across the U.S. and Europe during the period.global rankings.

Our advisory revenues were a record ~~$696.7~~$390.5 million, up ~~$124.3~~$208.4 million, or ~~21.7% higher than~~114.5% compared to the prior year ~~period,~~comparable quarter, reflecting record performance in our mergers and acquisitions ~~business.~~ business as a result of the increased number of transactions and higher average transaction deal values, as the mergers and acquisitions markets held strong due to the record low interest rate environment.

Our underwriting revenues for the ~~first nine months~~second quarter of ~~2020~~2021 were ~~$898.7~~a record $610.2 million, an increase of ~~$334.8~~197.1%, from $205.4 million ~~or 59.4%, from~~in the same period last year, ~~due to~~with record ~~results~~net revenues of $285.7 million in debt underwriting and strong quarterly net revenues in equity underwriting of $324.5 million, as companies continued to take advantage of the record low interest rate environment to access the debt capital markets and ~~solid performance~~clients took advantage of the strong equity environment to raise equity capital in ~~debt~~almost all sectors. In addition, our equity underwriting ~~with broad contributions across sectors. From equity and debt~~

results in the current year quarter were driven by growth in initial public offerings, including our underwriting activities ~~we generated $561.5 million~~on 14 Special Purpose Acquisition Companies ("SPACs") offerings and ~~$337.2 million in revenues, respectively, for the first nine months of 2020, compared with $256.9 million and $307.0 million in revenues, respectively, for the first nine months of 2019.~~other SPAC-related transactions.

Other investment banking revenues were ~~a loss of $112.8~~$33.0 million for the ~~first nine months~~second quarter of ~~2020,~~2021, compared with a loss of ~~$7.1~~$71.2 million for the ~~first nine months~~second quarter of ~~2019.~~2020. Other investment banking revenues during the ~~first nine months~~second quarter of ~~2020~~2021 include arecord net ~~loss~~revenues of ~~$51.1~~$41.7 million from ~~our~~Jefferies Group's share of the net ~~results~~earnings of the Jefferies Finance joint venture, ~~reflecting~~compared with a net loss of $49.7 million in the second quarter of 2020. Strong results in the second quarter of 2021 reflect higher loan arrangement volumes due to continued strength in the leveraged finance markets as borrowers took advantage of the low interest rate environment and strong volumes in the mergers and acquisition markets. Results in second quarter of 2020 reflect unrealized losses related to the ~~write-down~~write down of commitments and loans held-for-sale, as well as reserves recorded on the loan portfolio, ~~during the current year period,~~ primarily due to the impact of COVID-19 on the markets and the economy. ~~This compares~~The second quarter of 2020 also included unrealized write-downs of private equity investments received or acquired in connection with our investment banking activities. Our Other investment banking revenues in both periods are reduced by allocated interest expense and the amortization of costs related to the investment in the Jefferies Finance business.

At May 31, 2021, our backlog of potential net revenues from future transactions was at a record level. As an indicator of net revenues in a given future period, backlog is subject to limitations. 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.

Investment banking revenues for the first half of 2021 were a record of $2.07 billion, compared with $893.7 million for the first half of 2020, reflecting record six months revenues in equity and debt underwriting and in mergers and acquisitions.

Our advisory revenues were a six months record of $701.9 million for the first half of 2021, up $176.7 million, or 33.6% higher than the prior year comparable period, primarily due to a significant increase in the number of deals and higher average transaction deal values, across most sectors, as the mergers and acquisitions markets held strong with high levels of activity due to the record low interest rate environment and the surge in the stock market.

Our underwriting revenues for the first half of 2021 were a six months record of $1.30 billion, an increase of 186.7%, from $454.3 million in the prior year comparable period, with record six months net revenues in equity underwriting of $819.3 million and record six months net revenues of ~~$15.7~~$483.1 million in debt underwriting, as clients took advantage of the strong equity environment to raise equity capital in almost all sectors and companies continued to take advantage of the low rate environment to access the debt capital markets with high levels of activity in the leveraged loan new issuance markets and record levels of high yield bond refinancing activity. In addition, our equity underwriting results in the first ~~nine months~~half of ~~2019~~2021 include revenues of $191.9 million generated from our underwriting activities on 36 SPAC offerings and other SPAC-related transactions.

Other investment banking revenues were $62.8 million for the first half of 2021, compared with a loss of $85.8 million for the first half of 2020. Other investment banking revenues during the first half of 2021 include net revenues of $72.3 million from our share of the net ~~results~~earnings of the Jefferies Finance joint venture, ~~and $12.5~~compared with a net loss of $39.3 million in ~~costs from refinancing its debt. Other investment banking~~the first half of 2020. Strong results in the first half of 2021 reflect high loan arrangement volumes due to continued strength in the leveraged finance markets as borrowers took advantage of the low interest rate environment, as well as a reduction in loan loss reserves. The results during the first ~~nine months~~half of 2020 included a higher level of reserves recorded on the loan portfolio and unrealized losses related to the write-down of certain equity investments due to the impact of COVID-19 on the markets and the economy. Results in the first half of 2021 also include revenues from mark-to-market activity on SPAC and SPAC-related transactions. The first half of 2020 also ~~includes a $28.5 million write-down~~included unrealized write-downs of a private equity ~~investment. The results~~investments received or acquired in ~~the first nine months of 2020~~connection

with our investment banking activities. Our Other investment banking revenues in both periods are reduced by allocated interest expense and ~~2019 also include~~ the amortization of costs ~~and allocated interest expense~~ related to ~~our~~the investment in the Jefferies Finance business.

Equities Net Revenues

Equities are comprised 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 ~~outsourced trading~~ and other prime brokerage services offered to ~~clients;~~clients, including capital intelligence and outsourced trading; and

•wealth management ~~services, which include providing clients access to all of our institutional execution capabilities.~~services.

Total ~~record~~ equities net revenues ~~were $318.8~~of $242.9 million for the ~~third~~second quarter of 2021, a record for a second quarter and an increase of 2.5%, compared with $237.1 million for the second quarter of 2020, ~~an increase~~as our equities franchise continues to gain market share and perform well in a market environment with a broad decline in market volumes and lower levels of ~~65.0%, compared with $193.2 million for the third quarter of 2019, driven by record results in our core equities business. Our strong performance was a result~~client activity across several segments of the continued expansion of our business both from a product and geographic perspective, as well as increased market volumes. We continued to see expansion across our client franchise as we believe we provided consistent and exceptional advisory and execution capabilities to our clients globally throughout this unprecedented period.market.

Our results include record net revenues in our Asia cash equities businesses, which were driven by our recent expansion and investment across Asian markets, as well as in our domestic and international convertibles businesses, which continue to be market leading and part of our globalization strategy. The majority of our businesses had higher results in the third quarter of 2020 as compared to the prior year period.

~~Results in our~~ global cash equities ~~businesses were driven by increased client activity, which is~~business declined in the U.S., as a result of ~~higher~~lower client activity and changes in market ~~volumes~~dynamics, while our international franchise in Europe and ~~the~~across Asia Pacific continued ~~globalization of our advisory and execution franchise. The growth in our record global convertibles business was~~to grow, driven by ~~higher trading volumes and volatility, increased primary issuance,~~ongoing momentum, market share gains and increased client ~~flow. The higher results in our global~~activity. Our electronic trading ~~business were driven by increased global market volumes~~businesses in Europe and ~~volatility. Our exchange traded funds business~~Asia Pacific had ~~higher results driven by increased~~continued growth and momentum, while our U.S. electronic trading ~~revenues and the market environment.~~

~~Our equity options~~ business had lower revenues, as ~~compared to~~our results in the prior year comparable quarter reflected record revenues driven by ~~a decline in trading results and client activity.~~significantly higher global market volatility. Results in our prime services ~~business~~franchise, consisting of prime brokerage, outsourced trading and securities finance, were ~~lower~~higher driven by increased client balances and improved trading in our securities finance franchise, as well as continued growth in outsourced trading for hedge fund clients, partially offset by decreased client activity in other areas as well as muted money market revenue as a result of ~~the market environment, partially offset~~low short-term interest rates. Our equity derivatives business had higher quarterly results driven by ~~the expansion~~an increase in client activity and ~~momentum~~improved trading results due to a strengthening of our ~~outsourced~~human capital. Our global convertibles franchise had increased revenues both in the U.S. and internationally, driven by improved trading ~~franchise.~~results and market conditions.

The increase in our global equities net revenues is also ~~included gains on certain block positions, as compared with~~reflective of losses on certain block positions in the ~~prior~~second quarter of 2020 that were not repeated in the current year ~~quarter.~~

~~In May 2020, Greenwich Associates named Jefferies Group as the top firm in helping clients navigate the markets as COVID-19 significantly impacted equity markets in mid-March, causing volatility~~quarter and ~~increased trading volumes. These~~our second quarter of 2021 results were based on a survey they had recently conducted of more than 75 buy-side institutions evaluating brokers' performances in providing clients with liquidity, hedging solutions, market color and insights.also include mark-to-market losses from SPAC-related activity.

Total equities net revenues were ~~a record $801.6~~$774.0 million for the first ~~nine months~~half of ~~2020,~~2021, an increase of ~~39.7%~~60.3%, compared with ~~$573.9~~$482.8 million for the first ~~nine months~~half of ~~2019,~~2020, driven by ~~strong~~all-time six months record results in predominately all our equities businesses and across ~~most businesses. Our strong performance was a result of the continued expansion~~each of our business both from a product and geographic perspective, increased market volumes and strong client activity and the continued momentum across our client franchise. We increased our market share globallycore regions in the first half of ~~this~~2021. Our equities franchise continues to gain market share and benefited significantly from the favorable trading environment and SPAC-related activity in the U.S., particularly in the first quarter of the current year.

In the current year, we received recognition from leading third-party market surveys. Our international convertibles franchise was ranked 1st in both European and ~~remain positioned to be able to respond to~~Asian, excluding Japan, convertibles by Greenwich Associates. Bloomberg ranked our ~~clients' dynamic needs.~~electronic trading platform as 2nd in the U.S. Hedgeweek named us as the Best U.S. Prime Broker and we doubled the number of analysts ranked in the Japanese Institutional Investor survey.

Our ~~overall~~cash equities business had record results ~~included record net revenues~~globally and across each region ~~including~~in the ~~Americas,~~U.S., Europe and ~~Asia. Our regional businesses are continuing~~Asia Pacific. Overall, our cash equities results were driven by significant client activity, meaningful trading revenue and SPAC-related activity. Record results in our electronic trading business were driven by higher commissions and growth in our European and Asia Pacific businesses. Overall, our international electronic trading franchise continued to benefit from our globalization and expansion ~~as well as~~strategy. Our prime services franchise, consisting of prime brokerage, outsourced trading and securities finance, had record results driven by higher balances and increased client activity, improved trading in our ~~globalization strategy across advisory~~securities finance business, and ~~execution~~continued growth and momentum in our outsourced trading franchise. Our global convertibles franchise had record results driven by strong trading activity and continued market-leading competitive positioning. Results in our equity derivatives business were significantly higher at record levels, driven by improved trading results and higher commission levels.

7770

capabilities. On a product basis, our overall results included record net revenues in our Europe and Asia-Pacific cash equities businesses and across most of our individual global businesses including electronic trading and convertibles. Our electronic trading and convertibles franchises continued to maintain several market-leading positions, while our cash equities franchise continued to improve market share and competitive positioning across the Americas, Europe, and Asia.

Results in our global cash equities businesses were driven by increased client activity, market volumes and improved trading. While global market volumes and higher volatility drove an increase in commissions, our results in Asia-Pacific were also driven by our expansion and investment in the region across advisory and execution capabilities. The record growth in our global convertibles business was driven by strong primary and secondary trading activity and higher volatility. Our global electronic trading business achieved record results, which were driven by increased global market volumes, volatility, and the continued strength of the global platform. Our exchange traded funds business had higher results driven by increased trading revenues and the market environment.

The increase and record results in our global equities business was partially offset by lower revenues in our prime services and equity options businesses. Results in our prime services business were driven by the overall market environment, partially offset by the growth of our outsourced trading franchise. Results in our equity options business were driven by lower client volumes and trading results.

Fixed Income Net Revenues

Fixed income is comprised of net revenues from:

•executing transactions for clients and making markets in securitized products, investment grade, high-yield, distressed, emerging markets, municipal and sovereign securities and bank loans, as well as foreign exchange execution on behalf of clients;

•interest rate derivatives and credit derivatives; and

•financing services offered to clients.

Fixed income net revenues totaled ~~$336.3~~$257.2 million for the ~~third~~second quarter of ~~2020, an increase~~2021, a decrease of ~~126.7%~~47.8% from net revenues of ~~$148.3~~$493.1 million for the ~~third~~second quarter of ~~2019,~~2020, driven by ~~continued strong~~reduced trading volumes and client activity across most products and ~~geographies.~~regions, as the momentum we experienced in 2020 and the first quarter of 2021 dissipated due to increasing inflation expectations, treasury yield volatility and tightening spreads. The second quarter of 2020, which was an all-time record quarter for our fixed income businesses, benefited significantly from increased trading opportunities as a result of the U.S. Federal Reserve Bank and other government interventions to support the markets.

Net revenues in the second quarter of 2021 were higher in our U.S. securitized markets group due to strong demand in the securitization markets, as compared with the second quarter of 2020. Revenues also improved as a result of ongoing investments in our European securitized markets business. In addition, the second quarter of 2021 results benefited from trading gains in our municipal securities business compared to the equivalent prior year comparable quarter when markets experienced a significant sell-off due to the impact of COVID-19.

Our results in the second quarter of 2021 include lower revenues in our U.S. and International rates businesses due to a decline in trading opportunities, compared with the second quarter of 2020, which experienced record trading volumes as the effect of COVID-19 and the associated government support impacted the markets. Lower results across our global credit franchise and emerging markets business were driven by a decline in revenues across most regions and products due to reduced client activity and lower levels of volatility in the second quarter of 2021, as these businesses benefited significantly from the government support of the credit markets in the second quarter of 2020.

Fixed income net revenues totaled $620.6 million for the ~~third~~first half of 2021, a decrease of 16.3% from net revenues of $741.3 million for the first half of 2020, driven by reduced trading volumes across most products and regions in the second quarter of the current year period. While the first half of 2021 revenues decreased from that of the first half of 2020, fixed income results produced the second best six month fixed income revenue period on record with the first half of 2020 representing an all-time record six month results. The first half of 2020 significantly benefited from strong trading volumes due to extremely active markets and high levels of volatility during the period, as a result of the U.S. Federal Reserve Bank and other government interventions to support the markets.

Net revenues in the first half of 2021 were higher in our U.S. and international securitized markets groups ~~due to~~on increased demand ~~in the securitization markets~~ for most of these product classes, as compared with the ~~prior year quarter which included~~first half of 2020. Our revenues also benefited from ongoing investments across our European credit franchise. In addition, the first half of 2021 results benefited from trading ~~losses~~gains in our municipal securities business compared to the first half of 2020 when markets experienced a significant sell-off due to ~~declining yields and a flattening and inverted U.S. Treasury yield curve.~~the impact of COVID-19.

~~Strong performance~~Our results include lower revenues in our U.S. and International rates businesses due to a decline in trading opportunities, which were impacted by lower levels of volatility during the first half of 2021, as the first half of 2020 benefited from significant government interventions. Lower results across our ~~credit businesses, including our leveraged credit, European and~~ Asian credit, ~~and~~ investment grade corporates and emerging markets businesses, ~~reflected healthy global capital markets~~as well as our high yield and loan trading businesses, resulted from a decline in revenues across most regions and products due to reduced client activity and ~~tightening credit spreads. Our global emerging markets business similarly benefited~~lower levels of volatility in the ~~current year quarter, with~~first half of 2021, as these businesses benefited significantly from the government support of the credit markets ~~driving increased client trading activity and opportunities.~~in the first half of 2020.

~~The current year quarter results also included improved revenues in our municipal securities business, which benefited from the return of investors to the municipals market as spreads tightened.~~

Fixed income net revenues totaled a record $1,077.7 million for the first nine months of 2020, an increase of 107.9% from net revenues of $518.3 million for the first nine months of 2019, primarily due to strong trading volumes, as clients continued to navigate through uncertainty, and the businesses having successfully managed through the markets' high level of volatility during the period.

Our U.S. rates business had record net revenues in the current year period, benefiting from increased volatility and bid-offer spreads. Similarly, our international rates business performed strongly in comparable market conditions, but also underperformed in the prior year period, as concerns over Brexit and economic challenges in other European countries limited trading opportunities.

Our leveraged credit, European and Asian credit and investment grade corporates businesses generated robust revenues across regions due to increased client activity and higher levels of volatility during the current year period. Similarly, revenues from our global emerging markets business benefited from more favorable market conditions driving strong investor demand, as well as an increase in new issuance.

Revenues in our U.S. securitized markets group were higher due to an increase in demand in the securitization markets, as client interest improved for structured products in the latter part of the current year period. The current year period results were partially offset by trading losses in our municipal securities business, which was impacted by the significant sell-off in the

7871

~~second quarter of the current year period before experiencing a return in investor demand in the third quarter of the current year period.~~

Other

Other is comprised of revenues from:

•Berkadia Commercial Mortgage Holding LLC ("Berkadia") and other investments (other than Jefferies Finance, which is included in Other investment banking);

•principal investments in private equity and hedge funds managed by ~~third parties~~third-parties or related parties and are not part of our asset management platform; and

•investments held as part of employee benefit plans, including deferred compensation plans (for which we incur an equal and offsetting amount of compensation ~~expenses)~~expense).

~~Net~~Our other net revenues ~~from our other business category were $30.1~~totaled $39.1 million for the ~~third~~second quarter of ~~2020,~~2021, an increase of ~~$17.7~~$56.8 million compared with a net ~~revenues~~loss of ~~$12.4~~$17.7 million for the ~~third~~second quarter of ~~2019.~~2020.

Results in the ~~third~~second quarter of ~~2020~~2021 include net revenues of ~~$18.5~~$30.7 million due to our share of the net income of Berkadia due to higher mortgage origination, compared with ~~$24.3 million~~negligible revenues from Berkadia in the ~~third~~second quarter of ~~2019. The results~~2020. Results in the ~~third~~second quarter of 2020 ~~also include unrealized mark-to-market gains related to certain investments, compared with mark-to-market losses in the third quarter of 2019.~~

Net revenues from our other business category totaled $90.0 million for the first nine months of 2020, an increase of $36.4 million compared with $53.6 million for the first nine months of 2019. The results in the first nine months of 2020 include gains of $61.5 million from hedges that were bought and sold in the first quarter as we took a more cautious risk position due to the onset of the COVID-19 pandemic.

Results in the first nine months of 2020 also include net revenues of $40.4 million due to our share of the net income of Berkadia compared with $72.2 million in the first nine months of 2019. The lower net revenues in the current year period are due to the impairment of mortgage servicing rights as a result of lower interest rates, higher loan loss provisions and a decline in loan originations due to the impact of ~~COVID-19~~COVID-19.

The results in the second quarter of 2021 also include unrealized net mark-to-market gains related to certain investments, compared with mark-to-market losses in the ~~current year.~~second quarter of 2020.

Our other net revenues totaled $70.8 million for the first half of 2021, an increase of $11.0 million compared with net revenues of $59.8 million for the first half of 2020.

The results for the first half of 2020 included gains of $61.5 million from macro hedges that were bought and sold in the first half of 2020 at the onset of the COVID-19 pandemic.

Results in the first half of 2021 include net revenues of $60.7 million due to our share of the net income of Berkadia compared with $21.9 million in the first half of 2020. The lower results in the first half of 2020 are due to the impairment of mortgage servicing rights as a result of lower interest rates, higher loan loss provisions and a decline in loan originations due to the impact of COVID-19.

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 induring the year of the award. Compensation and benefits expense includes amortization expense associated with these awards to the extent ~~there are respective~~vesting is contingent on future ~~service periods.~~service. In addition, the senior executive awards contain market and performance ~~conditions.~~conditions and the awards are amortized over their service periods.

The following table provides a summary of compensation and benefits expense (in thousands):


	For the Three Months Ended				For the Six Months Ended
	May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020

Compensation expense without future service requirements	$	721,569	$	472,430	$	1,786,479	$	1,010,266
Amortization of share-based and cash-based awards	52,980		79,391		94,282		162,479
Total Compensation and benefits expense	$	774,549	$	551,821	$	1,880,761	$	1,172,745

Compensation and benefits expense increased in line with the significant increase in our net ~~revenues.~~revenues in the second quarter and first half of 2021. A significant portion of compensation expense ~~remains~~is highly variable. Compensation and benefits as a percentage of Net revenues were 56.5% and 52.8% for the third quarter of 2020 and 2019, respectively, and 54.8% and 54.2% for the first nine months of 2020 and 2019, respectively. Compensation expense related to the amortizationvariable with net revenues. Amortization of share-based and cash-based awards ~~amounted~~decreased in the second quarter and first half of 2021 as compared to ~~$73.4 million and $78.8 million for~~ the ~~third quarter~~same periods in 2020 as a result of ~~2020 and 2019, respectively, and $235.9 million and $224.3 million for~~ the ~~first nine months of 2020 and 2019, respectively.~~accelerated amortization recognized in the year ended November 30, 2020.

Non-Compensation Expenses

Non-compensation expenses include floor brokerage and clearing fees, underwriting costs, technology and communications expense, occupancy and equipment rental expense, business development, professional services, bad debt provision, impairment charges, depreciation and amortization expense and other costs. All of these expenses, other than floor brokerage and clearing fees and depreciation and amortization expense, are included in Selling, general and other expenses in the Consolidated Statements of Operations.

Non-compensation expenses were ~~$273.0~~$371.9 million for the ~~third~~second quarter of ~~2020,~~2021, an increase of ~~$1.9~~$109.4 million, ~~or 0.7%,~~ compared with ~~$271.1~~$262.5 million in the ~~third~~second quarter of 2019. Non-compensation expenses as a percentage of Net revenues were 21.4% and 35.8% for the third quarter of 2020 and 2019, respectively, demonstrating the operating leverage inherent in our business.

The increase in non-compensation expenses was primarily due to higher underwriting costs primarily due to an increase in the number of transactions and higher Floor brokerage and clearing fees due to an increase in trading volumes across the equities and fixed income businesses. The increase was also due to higher technology and communication expenses primarily related to increased market data and connectivity usage and costs associated with the development of various trading systems and continued costs associated with a largely remote working environment. The increase in non-compensation expenses was partially offset by lower business development expenses as business travel and hosted events were curtailed due to COVID-19.

~~Non-compensation expenses were $813.4 million for the first nine months of 2020, an increase of $54.3 million, or 7.2%, compared with $759.1 million in the first nine months of 2019.~~2020. Non-compensation expenses as a percentage of Net revenues were 23.6% and ~~33.4%~~25.5% for the ~~first nine months~~second quarter of ~~2020~~2021 and ~~2019,~~2020, respectively, demonstrating the operating leverage inherent in our business.

The increase in non-compensation expenses was primarily due to higher ~~Floor brokerage and clearing fees due to an increase in trading volumes primarily across our equities businesses, as well as in the fixed income businesses and higher~~ underwriting costs, primarily due to record investment banking net revenues resulting from an increase in the ~~number~~volume of ~~transactions. The increase was also due to~~investment banking transactions and higher technology and communication expenses, primarily related to costs associated with the development of various trading systems and increased market data ~~and connectivity usage and~~ costs associated with business growth. The increase also included higher business development expenses as a result of higher costs associated with the increase in investment banking activity and higher professional services expenses primarily due to an increase in legal and consulting fees due to the increase in activity in certain of our ~~move to a largely remote working environment. Non-compensation expense~~businesses. The increase is also ~~increased~~ due to higher other expenses, ~~which~~primarily due to an increase in our bad debt expense mostly related to our prime brokerage business. Results in the second quarter of 2020 included our charitable donations of $8.6 million, in memory of Peg Broadbent, Jefferies Group's longstanding, esteemed CFO who tragically died from complications of COVID-19 in March 2020.

Non-compensation expenses were $681.9 million for the first half of 2021, an increase of $141.5 million, compared with $540.4 million in the first half of 2020. Non-compensation expenses as a percentage of Net revenues were 19.3% and 24.8% for the first half of 2021 and 2020, respectively, demonstrating the operating leverage inherent in our business.

The increase in non-compensation expenses was primarily due to higher floor brokerage and clearing fees due to record net revenues in equities and strong net revenues in fixed income resulting from an increase in trading volumes. The increase was also due to higher underwriting costs, primarily due to record investment banking net revenues resulting from an increase in the

volume of investment banking transactions. The increase also included higher technology and communication expenses, primarily related to costs associated with the development of various trading systems and increased market data costs due to business growth and higher professional services expenses primarily due to an increase in legal and consulting fees due to the increase in activity in certain of our businesses.

Results in the first half of 2021 also included higher other expenses, primarily due to an increase in our bad debt expense mostly related to our prime brokerage business. Non-compensation expenses in the first half of 2021 also included our charitable donations of $7.7 million to approximately 130 charities around our planet that promote diversity and inclusion, support COVID-19 relief efforts, help Texas relief and support, protect and sustain our environment and strive to help humanity in other meaningful ways. The first half of 2020 included our charitable donations of $8.6 million, in memory of Peg Broadbent, Jefferies Group's longstanding, esteemed CFO who tragically died from complications of COVID-19 in March 2020 and our $2.4 million donation made to various charities in support of the Australian wildfire relief effort. ~~The increase in non-compensation expenses was partially offset by lower business development expenses as business travel and hosted events were curtailed due to COVID-19.~~

Asset Management

~~We are building~~Our asset management business is a diversified alternative asset management platform ~~that supports~~offering institutional clients an innovative range of investment strategies through us and ~~develops focused funds and managed accounts by distinct management teams. In the early stages of some~~our affiliated asset managers. We provide certain of our ~~offerings, we~~affiliated asset managers access to fully integrated global operational infrastructure and support. This may ~~invest directly in funds that we manage; we may also make investments or provide services in connection with revenue sharing agreements. In the first quarter~~include strategy and product development, daily operations and finance-related activities, compliance, legal and human resources support, as well as all aspects of ~~2020, we reorganized our segments to separately report our Asset Management businesses. In connection with this change, we have reclassified the prior periods to conform to our current presentation.~~business development.

A summary of results of operations for our Asset Management segment is as follows (in thousands):

For the Three Months Ended For the Nine Months Ended
August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019
Net revenues $ 118,558 $ 20,341 $ 146,278 $ 95,448
Expenses:
Compensation and benefits 10,652 18,557 59,375 48,749
Floor brokerage and clearing fees 6,103 (500) 20,288 14,401
Depreciation and amortization 2,018 512 4,776 1,472
Selling, general and other expenses 12,181 9,442 36,717 29,422
Total expenses
30,954 28,011 121,156 94,044
Income (loss) before income taxes and income related to associated companies 87,604 (7,670) 25,122 1,404
Income related to associated companies — 267 — 607
Income (loss) before income taxes $ 87,604 $ (7,403) $ 25,122 $ 2,011


	For the Three Months Ended				For the Six Months Ended
	May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020

Net revenues	$	54,554	$	7,391	$	281,288	$	27,720

Expenses:
Compensation and benefits	21,671		26,502		44,456		48,723
Floor brokerage and clearing fees	10,599		7,878		20,441		14,185
Depreciation and amortization	489		2,133		968		2,758
Selling, general and other expenses	10,740		12,431		22,903		24,536
Total expenses	43,499		48,944		88,768		90,202
Income (loss) before income taxes	$	11,055	$	(41,553)	$	192,520	$	(62,482)

Revenues

Asset management net revenues include the following:

• Total asset management fees: management and performance fees from funds and accounts managed by us;

•~~revenue~~ Revenue from arrangements with strategic ~~partners pursuant to agreements~~affiliates: revenues from affiliated asset managers in which we hold interests that entitle us to portions of ~~our partners'~~their revenues and/or ~~profits;~~profits, as well as earnings on our ownership interests in our affiliated asset managers; and

• Investment return: this includes investment income from ~~our investments~~capital invested in and managed by us and our affiliated asset ~~management business and other strategic partners.~~managers.

80The key components of asset management revenues are the level of assets under management and the performance return, 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 authority, and the requisite notice period for such termination, varies depending on the nature of the investment vehicle and the liquidity of the portfolio assets. Performance fees and similar revenues are generally recognized once a year, typically in December, when they become fixed and determinable and are not probable of being significantly reversed. As a result, performance fees and similar revenues are generally realized and recognized in the first quarter of our fiscal year creating a timing lag between investment returns generated in a calendar year with the associated performance fees recognized in our following fiscal year .

The following summarizes the results of our Asset Management businesses revenues by asset class (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020

Asset management fees:	Asset management fees:									Asset management fees:
Equities	Equities	$	1,215	$	825	$	5,226	$	3,922	Equities	$	624	$	1,073	$	5,623	$	4,011
Multi-asset	Multi-asset	1,912		3,822		7,488		15,218		Multi-asset	1,691		2,423		4,118		5,576
Total asset management fees	Total asset management fees	3,127		4,647		12,714		19,140		Total asset management fees	2,315		3,496		9,741		9,587

Revenues from arrangements with strategic partners (1)		5,159		880		14,814		1,791
Revenues from arrangements with strategic affiliates (1)										Revenues from arrangements with strategic affiliates (1)	20,175		1,340		79,058		2,631
Total asset management fees and revenues	Total asset management fees and revenues	8,286		5,527		27,528		20,931		Total asset management fees and revenues	22,490		4,836		88,799		12,218

Investment return (2) (3)		123,271		24,102		155,426		105,464
Allocated net interest (2) (4)		(12,999)		(9,288)		(36,676)		(30,947)

Investment return (2)										Investment return (2)	43,503		15,540		214,327		39,179
Allocated net interest (2)										Allocated net interest (2)	(11,439)		(12,985)		(21,838)		(23,677)
Total Asset Management	Total Asset Management	$	118,558	$	20,341	$	146,278	$	95,448	Total Asset Management	$	54,554	$	7,391	$	281,288	$	27,720

(1)~~These~~The amounts include our share of fees received by ~~third party~~affiliated asset management companies with which we have revenue and profit share ~~arrangements.~~arrangements, as well as earnings on our ownership interest in affiliated asset managers.

(2)~~Net revenues attributed to the Investment return in our Asset Management segment have been disaggregated to separately present Investment return and~~ Allocated net interest ~~(see footnote 4 below). This disaggregation is intended~~represents the allocation of long-term debt interest expense to Asset Management, 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.

~~(3)~~Includes net interest expense of $6.0 million and $2.0 million for the third quarter of 2020 and 2019, respectively, and $19.6 million and $3.7 million for the first nine months of 2020 and 2019, respectively.

~~(4)~~Allocated net interest represents the allocation of long-term debt interest expense to our Asset Management reportable segment, net of interest income on Cash and cash equivalents and other sources of liquidity.

Asset management net revenues for the ~~third~~second quarter of 2021 were $54.6 million, significantly higher than $7.4 million recorded in the second quarter of 2020, driven by investments in new platforms, higher investment returns across many platforms and an increase in asset management fees and revenues. The results in the second quarter of 2020 were ~~a record $118.6 million, meaningfully higher than the $20.3 million recorded in the third quarter~~impacted by lower investment returns from certain of ~~2019, primarily as a result of higher investment returns. Since the prior year quarter, we made capital~~our investments in ~~several new~~ separately managed accounts and ~~funds. In addition,~~funds due to the impact of COVID-19 on the markets and economy. Results in the second quarter of 2021 include $22.5 million in management, performance and similar fees and revenues earned directly or through our ~~results reflect improved performance across most of our historical platforms.~~strategic affiliates, as compared with $4.8 million in the prior year comparable quarter.

Asset management net revenues for the first ~~nine months~~half of 2021 were a six month record of $281.3 million, significantly higher than $27.7 million recorded in the first half of 2020, driven by meaningfully higher investment returns across most platforms, investments in new platforms and a substantial increase in asset management fees and revenues. The results in the first half of 2020 were ~~a record $146.3 million, compared with $95.4 million for the first nine months~~impacted by lower investment returns from certain of ~~2019, primarily as a result of higher investment returns. Since the prior year period, we made capital~~our investments in ~~several new~~ separately managed accounts and ~~funds. In addition,~~funds due to the impact of COVID-19 on the markets and economy. Results in the first half of 2021 include $88.8 million in management, performance and similar fees and revenues earned directly or through our ~~results reflect improved performance across most~~strategic affiliates, as compared with $12.2 million in the first half of 2020. Performance fees and similar revenues are generally realized and recognized once a year in the first quarter of our ~~historical platforms. The current~~fiscal year ~~period also included higher revenues from our share of fees received by third party asset management companies with which we have revenue~~ and ~~profit share arrangements.~~

~~Our investment returns were generated though fund investments and separately managed accounts. The following table reflects amounts invested by asset manager (in thousands):~~

August 31,
2020 November 30, 2019
Jefferies Financial Group Inc., as manager:
Fund investments (1) $ 231,987 $ 240,804
Separately managed accounts (2) 355,668 489,617
Total 587,655 730,421
Third-party, as manager:
Fund investments (3) 641,998 306,554
Separately managed accounts (2) 334,196 266,484
Investments in asset managers 109,211 114,161
Total 1,085,405 687,199
Total asset management investments (4) $ 1,673,060 $ 1,417,620

~~(1) Due~~are attributable to ~~the level or nature of an investment~~performance realized in ~~a fund, we may consolidate that fund; and accordingly, the assets and liabilities~~respect of the fund are included in the representative line items in the consolidated financial statements. At August 31, 2020 and November 30, 2019, $0.1 million and $22.6 million, respectively, represent net investments in funds that have been consolidated incalendar year ending during our ~~financial statements.~~

(2) Where we have investments in a separately managed account, the assets and liabilities of such account are presented in the Consolidated Statements of Financial Condition within each respective line item.

~~(3) The increase for the~~ first ~~nine months of 2020 was primarily due to an investment in a new fund in the current year period.~~

(4) Of the $1,673.1 million total invested in the funds at August 31, 2020, $1,227.1 million was sourced from the proceeds of long-term and permanent capital. At August 31, 2020 and November 30, 2019, Jefferies Group has borrowed $446.0million and $135.0 million, respectively, under credit facility agreements, which are secured by a combination of our investment in a fund managed by us, with a carrying value of $231.7 million and $218.1 million at August 31, 2020 and November 30, 2019, respectively, and our investment in certain funds managed by third-parties with a carrying value of $623.4 million at August 31, 2020.

fiscal quarter.

Expenses

The ~~increase~~decrease in expenses in the ~~third~~second quarter and first ~~nine months~~half of ~~2020~~2021 as compared with the ~~third quarter and first nine months of 2019, respectively,~~same periods in 2020 primarily reflects ~~the expansion of the Asset Management business, additional costs from~~ the wind down of one of our ~~asset management~~ businesses in the second quarter of 2020, partially offset by an increase in Floor brokerage and ~~the dedication of resources previously included~~clearing fees in ~~Corporate.~~2021.

Assets under Management

The tables below include only third-party assets under management by us, excluding those of our affiliated asset managers.

Assets under management by predominant asset class were as follows (in millions):


		August 31, 2020		November 30, 2019			May 31, 2021		November 30, 2020
Assets under management (1):	Assets under management (1):					Assets under management (1):
Equities	Equities	$	444	$	228	Equities	$	326	$	481
Multi-asset ~~(2)~~	Multi-asset ~~(2)~~	178		988		Multi-asset ~~(2)~~	442		293
Total	Total	$	622	$	1,216	Total	$	768	$	774

(1) Assets under management include third-party net assets actively managed by us, including hedge funds and certain managed accounts. The amounts at November 30, 2019 also include $150 million of assets under management in a strategy, which represents a net asset value equivalent of an asset management strategy where we earn performance fees. We may consolidate certain funds and for such consolidated funds, assets under management include the pro-rata portion of third-party net assets in consolidated funds based on the percentage ownership of third-party investors in the consolidated fund. The above amounts do not include assets under management at non-consolidated strategic ~~partners~~affiliates or investments.

~~(2) During the third quarter of 2020, $398 million of these assets under management were liquidated and the funds were returned to the third-party investors.~~

Change in assets under management were as follows (in millions):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Assets under management:

Balance, beginning of period	Balance, beginning of period	$	1,039	$	1,558	$	1,216	$	2,527	Balance, beginning of period	$	773	$	1,140	$	774	$	1,216
Net cash flow in (out)	Net cash flow in (out)	(420)		(164)		(490)		(1,113)		Net cash flow in (out)	4		(49)		(30)		(70)
Net market appreciation (depreciation)	Net market appreciation (depreciation)	3		84		(104)		64		Net market appreciation (depreciation)	(9)		(52)		24		(107)

Balance, end of period	Balance, end of period	$	622	$	1,478	$	622	$	1,478	Balance, end of period	$	768	$	1,039	$	768	$	1,039

The change in assets under management in our wholly-owned managers during the ~~third~~second quarter of ~~2020~~2021 is primarily due to ~~the liquidation and~~ redemptions from certain ~~funds.~~funds that are in the process of being liquidated and net market depreciation during the period, partially offset by new subscriptions and investments from third-parties. The change in assets under management in our wholly-owned managers during the ~~third~~second quarter of ~~2019~~2020 is primarily due to redemptions from certain funds and ~~separately managed accounts.~~market depreciation during the period due to the impact of COVID-19 on the markets and economy. The change in assets under management in our wholly-owned managers during the first ~~nine months~~half of 2021 is primarily due to redemptions from certain funds that are in the process of being liquidated, partially offset by new subscriptions and investments from third-parties and net market appreciation. The change in assets under management in our wholly-owned managers during the first half of 2020 is primarily due to the liquidation and redemptions from certain funds and market depreciation during the ~~period. The~~

~~change in assets under management during the first nine months of 2019 is primarily~~period due to ~~redemptions from certain funds~~the impact of COVID-19 on the markets and ~~separately managed accounts and the dissolution of a fund~~economy, partially offset by new subscriptions and investments from third-parties.

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

In connection with building our business and growing the revenues we participate in via our affiliated managers, 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. Included in the table below at May 31, 2021 are $21.2 million of asset management investments that are in the process of being liquidated due to the wind down of a fund and a separately managed account. Our asset management investments generated an investment return of $43.5 million and $15.5 million for the second quarter of 2021 and 2020, respectively, and $214.3 million and $39.2 million for the first half of 2021 and 2020, respectively. The following table reflects amounts invested by asset manager (in thousands):


	May 31, 2021		November 30, 2020

Jefferies Financial Group Inc., as manager:
Fund investments (1)	$	145,803	$	258,893
Separately managed accounts (2)	300,392		352,084
Total	446,195		610,977

Third-party, as manager:
Fund investments	712,604		650,585
Separately managed accounts (2)	374,329		323,943
Investments in asset managers	170,622		162,268
Total	1,257,555		1,136,796
Total asset management investments	$	1,703,750	$	1,747,773

(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 the consolidated financial statements. At May 31, 2021 and November 30, 2020, $20.1 million and $0.1 million, respectively, represents net investments in funds that have been consolidated in our financial statements.

Collectively, we and our affiliated asset managers have aggregate net asset values or net asset value equivalent assets under management of approximately $29.9 billion and $26.8 billion at May 31, 2021 and November 30, 2020, respectively. Net asset values or net asset value equivalent assets under management are comprised of the fair value of the net assets of a fund, the net capital invested in a separately managed account, par value of collateralized loan obligations or notional account value. These include the following:

•$16.0 billion and $12.6 billion as of May 31, 2021 and November 30, 2020, respectively - This includes the assets under management raised by affiliated asset managers with whom we have an ongoing profit or revenue sharing arrangement. In some instances, due to the timing of payments and crystallization of profits or revenue, the majority of revenue related to these relationships will be realized at their calendar year-end (during our first fiscal quarter).

•$10.6 billion and $10.8 billion as of May 31, 2021 and November 30, 2020, respectively - Asset management activities within Jefferies Finance, our 50/50 joint venture with Massachusetts Mutual Life Insurance Company, which represent the aggregate par value of collateralized loan obligations managed by Jefferies Finance, including those consolidated by Jefferies Finance. Because management evaluates segment performance based on the inclusion of our share of the net earnings of our Jefferies Finance joint venture in our Investment Banking and Capital Markets segment, those activities are excluded from our Asset Management segment results.

•$2.5 billion and $2.6 billion as of May 31, 2021 and November 30, 2020, respectively - Net asset values of investments made by us in funds or separately managed accounts. At times, we will incubate strategies using our own capital during the institutional build-out phase before opening investments to outside capital. This net asset value includes our seed capital of $1.5 billion and $1.5 billion as of May 31, 2021 and November 30, 2020, respectively, in addition to amounts financed of $1.0 billion and $1.1 billion as of May 31, 2021 and November 30, 2020, respectively, invested in funds and separately managed accounts that are managed by us and our affiliated asset managers.

•$0.8 billion and $0.8 billion as of May 31, 2021 and November 30, 2020, respectively - This includes third-party investments actively managed by wholly-owned divisions.

Merchant Banking

~~The composition of our Merchant Banking portfolio has been impacted by a number of transactions during recent years. The following chart reflects the significant components of our portfolio each year:~~

~~Nine Months Ended August 31, 2020~~

~~Nine Months Ended August 31, 2019~~

~~Consolidated Businesses~~

~~Oil and Gas~~

~~HomeFed~~

~~HomeFed beginning July 1~~

~~Idaho Timber~~

~~Associated Companies~~

~~Linkem~~

~~FXCM Equity Investment~~

~~National Beef~~

~~HomeFed prior to July 1~~

~~Other Investments~~

~~The We Company~~

~~FXCM Term Loan~~

~~Spectrum Brands Holdings, Inc. ("Spectrum Brands")~~

A summary of results for Merchant Banking is as follows (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020

Net revenues	Net revenues	$	220,887	$	73,754	$	532,608	$	391,825	Net revenues	$	318,828	$	107,162	$	616,331	$	311,721

Expenses:	Expenses:									Expenses:
Compensation and benefits	Compensation and benefits	20,573		16,804		51,736		44,638		Compensation and benefits	27,987		13,973		55,999		31,163
Cost of sales	Cost of sales	82,657		85,773		235,871		233,109		Cost of sales	143,847		80,771		239,406		153,214
Interest expense	Interest expense	7,398		8,893		24,453		25,521		Interest expense	6,114		8,282		12,579		17,055
Depreciation and amortization	Depreciation and amortization	14,408		17,784		50,627		49,904		Depreciation and amortization	17,295		17,378		34,035		36,219
Selling, general and other expenses	Selling, general and other expenses	30,157		51,897		157,990		111,275		Selling, general and other expenses	41,061		54,753		73,603		127,833
Total expenses	Total expenses	155,193		181,151		520,677		464,447		Total expenses	236,304		175,157		415,622		365,484

Income (loss) before income taxes and income (loss) related to associated companies		65,694		(107,397)		11,931		(72,622)
Income (loss) related to associated companies		5,053		72,016		(69,523)		121,159

Income (loss) before income taxes and loss related to associated companies										Income (loss) before income taxes and loss related to associated companies	82,524		(67,995)		200,709		(53,763)
Loss related to associated companies										Loss related to associated companies	(23,526)		(6,721)		(34,094)		(74,576)
Income (loss) before income taxes	Income (loss) before income taxes	$	70,747	$	(35,381)	$	(57,592)	$	48,537	Income (loss) before income taxes	$	58,998	$	(74,716)	$	166,615	$	(128,339)

8377

A summary of results for Merchant Banking by source is as follows (in thousands):


	Revenues		Expenses		Income (Loss) from Associated Companies		Total Pre-Tax Income (Loss)

For the three months ended May 31, 2021
Oil and gas	$	37,070	$	34,126	$	—	$	2,944
Idaho Timber	184,111		130,263		—		53,848
Real estate	33,971		33,404		(9,168)		(8,601)
Other	63,676		38,511		(14,358)		10,807
Total	$	318,828	$	236,304	$	(23,526)	$	58,998

For the three months ended May 31, 2020
Oil and gas	$	51,694	$	44,133	$	—	$	7,561
Idaho Timber	85,383		78,128		—		7,255
Real estate	10,965		19,510		(428)		(8,973)
Other	(40,880)		33,386		(6,293)		(80,559)
Total	$	107,162	$	175,157	$	(6,721)	$	(74,716)

For the Three Months Ended August 31, 2020 For the Three Months Ended August 31, 2019
Revenues Expenses Income (Loss) from Associated Companies Total Pre-Tax Income (Loss) Revenues Expenses Income (Loss) from Associated Companies Total Pre-Tax Income (Loss)
Oil and gas $ 3,658 $ 28,518 $ — $ (24,860) $ 43,683 $ 51,652 $ — $ (7,969)
Idaho Timber 119,752 89,116 — 30,636 82,599 80,232 — 2,367
Real estate 8,169 10,243 2,532 458 12,343 13,619 8,883 7,607
National Beef — — — — — — 75,867 75,867
Spectrum Brands — — — — 27,202 — — 27,202
Other 89,308 27,316 2,521 64,513 (92,073) 35,648 (12,734) (140,455)
Total $ 220,887 $ 155,193 $ 5,053 $ 70,747 $ 73,754 $ 181,151 $ 72,016 $ (35,381)


		For the Nine Months Ended August 31, 2020														For the Nine Months Ended August 31, 2019											Revenues	Expenses	Income (Loss) from Associated Companies	Total Pre-Tax Income (Loss)
		Revenues		Expenses		Income (Loss) from Associated Companies		Total Pre-Tax Income (Loss)		Revenues		Expenses		Income (Loss) from Associated Companies		Total Pre-Tax Income (Loss)

For the six months ended May 31, 2021																		For the six months ended May 31, 2021
Oil and gas	Oil and gas	$	118,208	$	144,245	$	—	$	(26,037)	$	112,004	$	119,227	$	—	$	(7,223)	Oil and gas	$	50,388	$	68,373	$	—	$	(17,985)
Idaho Timber	Idaho Timber	282,774		240,174		—		42,600		248,325		235,057		—		13,268		Idaho Timber	322,003		229,856		—		92,147
Real estate	Real estate	31,364		40,857		(50,910)		(60,403)		12,438		14,231		9,438		7,645		Real estate	45,643		47,695		(3,117)		(5,169)
National Beef		—		—		—		—		—		—		137,918		137,918
Spectrum Brands		—		—		—		—		58,237		—		—		58,237
Other	Other	100,262		95,401		(18,613)		(13,752)		(39,179)		95,932		(26,197)		(161,308)		Other	198,297		69,698		(30,977)		97,622
Total																		Total	$	616,331	$	415,622	$	(34,094)	$	166,615

For the six months ended May 31, 2020																		For the six months ended May 31, 2020
Oil and gas																		Oil and gas	$	114,550	$	115,727	$	—	$	(1,177)
Idaho Timber																		Idaho Timber	163,022		151,058		—		11,964
Real estate																		Real estate	23,195		30,614		(53,442)		(60,861)
Other																		Other	10,954		68,085		(21,134)		(78,265)
Total	Total	$	532,608	$	520,677	$	(69,523)	$	(57,592)	$	391,825	$	464,447	$	121,159	$	48,537	Total	$	311,721	$	365,484	$	(74,576)	$	(128,339)

Oil and Gas

Oil and gas results for the second quarter of 2021 were lower than the second quarter of 2020 primarily due to increased unrealized losses related to oil hedge derivatives, partially offset by slightly increased production revenues and impairment charges recorded during the second quarter of 2020. Oil and gas net revenues totaled $37.1 million and $51.7 million during the second quarter of 2021 and 2020, respectively, and primarily consist of three components: ~~unrealized gains and losses related to oil hedges, mark-to-market increases and decreases related to a financial instrument held at fair value, and production~~

•Production revenues ~~which also include~~(including the impact of realized gains and losses related to oil ~~hedges. Oil~~hedges) were $42.7 million and ~~gas net~~$40.0 million during the second quarter of 2021 and 2020, respectively. The increase in production revenues ~~include net~~related to increases in oil prices and slightly higher volumes, partially offset by greater realized losses on oil hedges.Production revenues included realized gains (losses) on oil hedges of $(2.8) million and $23.9 million during the second quarter of 2021 and 2020, respectively.

•Net unrealized gains (losses) related to oil hedge derivatives ~~of $(29.7)~~were $(5.6) million and ~~$0.3~~$15.0 million ~~for~~in the ~~third~~second quarter of 2021 and 2020, ~~and 2019, respectively, and $5.2 million and $1.0 million for the first nine months of 2020 and 2019,~~ respectively. ~~The decrease in the fair value of Vitesse Energy Finance's hedges in the third quarter of 2020 is a result of the appreciation of oil prices during the quarter.~~ As discussed further in Note 3 to the consolidated financial statements, Vitesse Energy Finance uses swaps and call and put options ~~in order~~ to reduce exposure to future oil price fluctuations. For the second quarter of 2021, approximately 46% of oil production was hedged at a weighted average price of approximately $53/barrel.

•Mark-to-market gains (losses) related to a financial instrument owned held at fair value were not material for the second quarter of 2021 and $(3.2) million during the second quarter of 2020.

Oil and gas results for the first half of 2021 were lower than the first half of 2020 primarily due to increased unrealized losses related to oil hedge derivatives and decreased production revenues due to curtailed production and decreased development activity in the second half of 2020, partially offset by impairment charges recorded during the first half of 2020. Oil and gas net revenues totaled $50.4 million and $114.6 million during the first half of 2021 and 2020, respectively, and primarily consist of three components:

•Production revenues (including the impact of realized gains and losses related to oil hedges) were $77.9 million and $85.3 million during the first half of 2021 and 2020, respectively. The decrease in production revenues related to lower production across most of the basin due to weather and reduced development activity during the second half of 2020 due to a lower price environment at that time.Production revenues included realized gains (losses) on oil hedges of $(0.1) million and $26.6 million during the first half of 2021 and 2020, respectively.

•Net unrealized gains (losses) related to oil hedge derivatives were $(27.5) million and $34.9 million in the first half of 2021 and 2020, respectively. For the first half of 2021, approximately 58% of oil production was hedged at a weighted average price of approximately $56/barrel. For the remainder of ~~2020, over 100%~~2021, approximately 40% of expected oil production is hedged at a weighted average price of approximately ~~$60/~~$52/barrel.

•

Mark-to-market ~~losses~~gains (losses) related to a financial instrument owned held at fair value were ~~$1.1 million~~immaterial during the first half of 2021 and ~~$0.6 million for the third quarter of 2020 and 2019, respectively, and $6.8 million and $17.6~~$(5.7) million during the first ~~nine months~~half of 2020 and 2019, respectively. Production revenues were $34.5 million and $44.0 million for the third quarter of 2020 and 2019, respectively, and $119.8 million and $128.6 million during the first nine months of 2020 and 2019, respectively.2020.

Total expenses for Oil and gas ~~decreased~~were $34.1 million during the second quarter of 2021 as compared to $44.1 million during the second quarter of 2020. The decrease in expenses was primarily due to a non-cash charge of $13.2 million in the ~~third~~second quarter of 2020 ~~as compared~~ to write down the ~~third quarter~~value of ~~2019, primarily due to lease abandonment charges~~a subset of ~~$15.1 million at JETX~~Vitesse Energy Finance's oil and gas assets located in ~~third quarter~~the DJ Basin, reflecting the impact of ~~2019.~~oil price declines during the quarter. Total expenses for Oil and gas ~~increased in~~were $68.4 million during the first ~~nine months~~half of ~~2020~~2021 as compared to $115.7 million during the first ~~nine months~~half of ~~2019,~~2020. The decrease in expenses was primarily due to non-cash charges in the first half of 2020 of $33.0 million to write down JETX Energy's oil and gas assets to reflect the impact of ~~$33.0~~oil price declines during the period and $13.2 million ~~and~~ to write down Vitesse Energy Finance's oil and gas assets in the DJ ~~Basin of $13.2 million, reflecting the impact of oil price declines, partially offset by lease abandonment charges of $15.1 million at JETX Energy in the first nine months of 2019.~~

Basin.

Idaho Timber

High demand for wood for home improvement and construction ~~as well as limited supply in the timber industry due to COVID-19 related disruptions, has~~ led to favorable pricing and record results for Idaho Timber. Net revenues increased in the ~~third~~second quarter and first ~~nine months~~half of ~~2020~~2021 as compared to the ~~third quarter and first nine months of 2019,~~same periods in 2020, primarily due to ~~an increase~~increases in the average selling price of ~~43%~~141% and ~~12%~~114%, respectively. Subsequent to the second quarter of 2021, lumber prices have declined substantially from recently established all-time highs. These declines could result in reduced revenues and pre-tax income for Idaho Timber in future quarters.

The increase in total expenses for Idaho Timber in the ~~third~~second quarter and first ~~nine months~~half of ~~2020~~2021 as compared to the ~~third quarter and first nine months of 2019~~same periods in 2020 primarily reflects increased ~~compensation expense and a small increase in~~ cost of ~~sales.~~sales and increased compensation expense.

Real Estate

The ~~decrease in real estate revenues in the third quarter of 2020 as compared to the third quarter of 2019, primarily reflects decreased revenues from sales of properties. The~~ increase in real estate revenues ~~for~~and expenses in the second quarter and first ~~nine months~~half of ~~2020~~2021 as compared to the ~~prior year period relates to the acquisition of HomeFed~~same periods in ~~the third quarter of 2019.~~

~~The decrease in real estate expenses in the third quarter of~~ 2020 ~~as compared to the third quarter of 2019,~~ primarily reflects ~~decreased~~increased revenues from sales of properties and the related cost of sales of real estate. The increase in real estate expenses for the third quarter and first nine months of 2020 as compared to the prior year periods relates to the acquisition of HomeFed in the third quarter of 2019.

sales. Income (loss) related to ~~real~~Real estate associated companies for the second quarter and first ~~nine months~~half of 2020, includes a non-cash charge of $6.9 million to fully ~~write-off~~write off HomeFed's interest in the Brooklyn Renaissance Plaza hotel related to the significant impact of COVID-19 ~~and~~during the second quarter of 2020. Income (loss) related to real estate associated companies for the first half of 2020, also includes a non-cash charge of $55.6 million to fully ~~write-off~~write off the value of HomeFed's RedSky JZ Fulton ~~Mall~~Investors joint venture investment ~~related~~due to athe softening of the Brooklyn real estate market.

~~National Beef and Spectrum Brands~~

~~Income from associated companies in 2019, reflects our share of National Beef's results prior to our sale in November 2019.~~

Spectrum Brands net revenues reflect changes in the value of our investment. We classified Spectrum Brands as a financial instrument owned, at fair value for which the fair value option was elected and we reflected mark-to-market adjustments in Principal transactions revenues. In September 2019, our Board of Directors approved a distribution to stockholders of our Spectrum Brands shares. We distributed the Spectrum Brands shares through a special pro rata dividend effective on October 11, 2019.

Other

Other revenues for the third quarter and first nine months of 2019 include a $72.1 million pre-tax gain on the remeasurement of our 70% interest in HomeFed to fair value in connection with the acquisition of the remaining common stock of HomeFed.

~~Other revenues also~~ reflect realized and unrealized gains (losses) on financial instruments owned, which are held at fair value, of ~~$60.4~~$27.8 million and ~~$(195.0)~~$(71.3) million for the ~~third~~second quarter of ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$30.1~~$131.3 million and ~~$(202.1)~~$(30.3) million ~~during~~for the first ~~nine months~~half of ~~2020~~2021 and ~~2019,~~2020, respectively. The gains (losses) on financial instruments owned include ~~an unrealized loss on The We Company~~mark-to-market changes in the value of ~~$146.0~~our investments in public companies of $7.8 million and $(16.1) million for the ~~third~~second quarter of ~~2019,~~2021 and ~~$44.2~~2020, respectively, and $91.6 million and ~~$112.9~~$(39.6) million ~~during the first nine months of 2020 and 2019, respectively. The gains on financial instruments owned~~ for the first ~~nine months~~half of 2021 and 2020, respectively. The first half of 2020, also ~~include~~includes a gain of $61.5 million from effective short-term hedges against mark-to-market and fair value decreases in our portfolio investments.

8579

Corporate

A summary of results of operations for Corporate is as follows (in thousands):


		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended				For the Six Months Ended
		August 31, 2020		August 31, 2019		August 31, 2020		August 31, 2019			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020

Net revenues	Net revenues	$	591	$	8,967	$	11,908	$	22,134	Net revenues	$	724	$	1,525	$	1,314	$	11,317

Expenses:	Expenses:									Expenses:
Compensation and benefits	Compensation and benefits	9,790		11,450		25,819		41,732		Compensation and benefits	7,035		6,171		22,569		16,029
Depreciation and amortization	Depreciation and amortization	869		830		2,631		2,552		Depreciation and amortization	878		874		1,742		1,762
Selling, general and other expenses	Selling, general and other expenses	5,550		8,466		19,684		24,857		Selling, general and other expenses	4,910		7,334		9,579		14,134
Total expenses	Total expenses	16,209		20,746		48,134		69,141		Total expenses	12,823		14,379		33,890		31,925

Loss before income taxes	Loss before income taxes	$	(15,618)	$	(11,779)	$	(36,226)	$	(47,007)	Loss before income taxes	$	(12,099)	$	(12,854)	$	(32,576)	$	(20,608)

~~Net revenues primarily include realized and unrealized securities gains and interest income for investments held at the holding company. Total~~Corporate expenses include share-based compensation expense of ~~$3.2~~$3.0 million and ~~$5.3~~$3.9 million for the ~~third~~second quarter of ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$10.5~~$12.0 million and ~~$17.1~~$7.3 million for the first ~~nine months~~half of 2021 and 2020, ~~and 2019,~~ respectively. Share-based compensation expense is higher in the first half of 2021 as it reflects $7.0 million related to the full current fair value of certain share-based grants made during this period, which were fully vested upon grant.

Parent Company Interest

Parent company interest expense totaled ~~$14.1~~$13.8 million and ~~$14.8~~$12.9 million for the ~~third~~second quarter of ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$39.8~~$27.7 million and ~~$44.3~~$25.7 million for the first ~~nine months~~half of 2021 and 2020, ~~and 2019,~~ respectively. ~~In connection with the acquisition of~~We capitalize interest on qualifying HomeFed ~~in the third quarter of 2019, we began capitalizing interest. Capitalized interest was allocated among all of HomeFed's projects that are currently under development.~~real estate assets. Parent company interest capitalized was $1.0 million and $1.9 million during the ~~third~~second quarter of 2021 and ~~first nine months of~~ 2020, ~~was $0.7~~respectively, and $1.9 million and ~~$4.6~~$3.9 million during the first half of 2021 and 2020, respectively.

Income Taxes

Our provisions for income taxes were ~~$107.4~~$120.8 million and ~~$185.1~~$339.1 million, respectively, for the ~~third~~second quarter and first ~~nine months~~half of ~~2020, respectively,~~2021, representing an effective tax rate of ~~26.1%~~25.5% and ~~28.7%~~26.6%, ~~respectively.~~

~~Our benefits for income taxes were $36.1 million and $522.6 million for the third quarter and first nine months of 2019,~~ respectively. Our provisions for income taxes were $32.0 million and $77.7 million, respectively, for the ~~third~~second quarter and first ~~nine months~~half of ~~2019 were reduced by $36.0 million resulting from~~2020, representing an effective tax rate of 42.3% and 33.3%, respectively. The decrease in the ~~reversal~~effective tax rates for the second quarter and first half of ~~deferred tax liabilities that existed at~~2021, as compared to the ~~HomeFed acquisition. Prior~~second quarter and first half of 2020, is primarily due to ~~its consolidation on July 1, 2019, HomeFed was accounted for under~~our substantially higher earnings before income taxes minimizing the equity method as an investment in an associated company. Since we have the intent and ability under the tax law to recover the investment tax-free, the deferred tax liability associated with the equity method investment was derecognized.impact of nondeductible expenses.

As discussed above, during the second quarter of 2019, we completed the sale of our available for sale portfolio. In connection therewith, we recognized a tax benefit of $544.6 million during the first nine months of 2019. Unrealized gains and losses on available for sale securities, and their associated tax impacts, are recorded directly to equity as part of the Accumulated other comprehensive income (loss) balance. Following the portfolio approach, when unrealized gains and losses and their associated tax impacts are recorded at a then current tax rate, and then realized later at a different tax rate, the difference between the tax impact initially recorded in Accumulated other comprehensive income (loss) and the tax impact removed from Accumulated other comprehensive income (loss) upon realization remains in Accumulated other comprehensive income (loss) until the disposal of the portfolio and is referred to as a "lodged tax effect." Large changes in the fair value of our available for sale securities, primarily during 2008 through 2010, combined with fluctuations in our tax rate during those periods, generated a lodged tax benefit of $544.6 million. As a result of steps to improve our Corporate investment management efforts, we sold the remaining portion of our available for sale portfolio in the second quarter of 2019, which resulted in the realization of the $544.6 million tax benefit. While this realization did not impact total equity, it resulted in a tax benefit reflected in the Consolidated Statement of Operations of $544.6 million and, as a result, Retained earnings increased and Accumulated other comprehensive income (loss) decreased by corresponding amounts.

~~Refer to Note 17 in the consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on income taxes.~~

8680

Selected Statement of Financial Condition Data

The tables below reconcile the balance sheet for each of our segments to our consolidated balance sheet (in thousands):

August 31, 2020
Investment Banking and Capital Markets Asset Management Merchant Banking Corporate Consolidation Adjustments Total
Assets
Cash and cash equivalents $ 6,740,091 $ 20,827 $ 196,068 $ 1,469,846 $ — $ 8,426,832
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations 986,117 — — — — 986,117
Financial instruments owned, at fair value 15,249,532 2,401,937 330,527 4,725 — 17,986,721
Loans to and investments in associated companies 892,987 90,743 555,626 — — 1,539,356
Securities borrowed 7,268,413 — — — — 7,268,413
Securities purchased under agreements to resell 5,327,391 — — — — 5,327,391
Securities received as collateral, at fair value 4,413 — — — — 4,413
Receivables 3,690,889 518,901 815,874 3,472 — 5,029,136
Property, equipment and leasehold improvements, net 863,500 8,640 31,401 12,355 — 915,896
Intangible assets, net and goodwill 1,721,410 143,312 49,820 — — 1,914,542
Other assets 1,143,142 7,917 1,246,419 436,845 (459,152) 2,375,171
Total assets 43,887,885 3,192,277 3,225,735 1,927,243 (459,152) 51,773,988
Liabilities
Long-term debt (1) (2) 6,464,031 524,403 439,031 992,372 — 8,419,837
Other liabilities 31,448,625 1,769,065 776,575 225,314 (459,152) 33,760,427
Total liabilities 37,912,656 2,293,468 1,215,606 1,217,686 (459,152) 42,180,264
Redeemable noncontrolling interests — — 24,273 — — 24,273
Mandatorily redeemable convertible preferred shares — — — 125,000 — 125,000
Noncontrolling interests 711 15,853 17,222 — — 33,786
Total Jefferies Financial Group Inc. shareholders' equity $ 5,974,518 $ 882,956 $ 1,968,634 $ 584,557 $ — $ 9,410,665


	May 31, 2021
	Investment Banking and Capital Markets		Asset Management		Merchant Banking		Corporate		Consolidation Adjustments		Total
Assets
Cash and cash equivalents	$	6,211,170	$	10,187	$	212,903	$	2,008,946	$	—	$	8,443,206
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	901,381		—		—		—		—		901,381
Financial instruments owned, at fair value	17,369,745		2,155,636		412,449		—		—		19,937,830
Loans to and investments in associated companies	1,094,769		148,829		484,517		—		—		1,728,115
Securities borrowed	6,720,683		—		—		—		—		6,720,683
Securities purchased under agreements to resell	6,877,107		40,118		—		—		—		6,917,225

Receivables	7,065,093		245,710		821,089		51		—		8,131,943
Property, equipment and leasehold improvements, net	858,193		6,636		28,598		9,583		—		903,010
Intangible assets, net and goodwill	1,721,568		143,320		47,592		—		—		1,912,480
Other assets	904,273		20,518		1,323,684		415,360		(280,739)		2,383,096
Total assets	49,723,982		2,770,954		3,330,832		2,433,940		(280,739)		57,978,969

Liabilities
Long-term debt (1) (2)	6,426,329		965,967		437,540		993,409		—		8,823,245
Other liabilities	37,227,645		878,542		846,996		228,405		(280,739)		38,900,849
Total liabilities	43,653,974		1,844,509		1,284,536		1,221,814		(280,739)		47,724,094

Redeemable noncontrolling interests	—		—		34,511		—		—		34,511
Mandatorily redeemable convertible preferred shares	—		—		—		125,000		—		125,000
Noncontrolling interests	725		5,427		16,578		—		—		22,730
Total Jefferies Financial Group Inc. shareholders' equity	$	6,069,283	$	921,018	$	1,995,207	$	1,087,126	$	—	$	10,072,634

(1) Jefferies Group long-term debt of ~~$7.0~~$7.4 billion at ~~August~~May 31, 2021 is allocated to Investment Banking and Capital Markets, and Asset Management segments based on an internal management view only and may not be reflective of what long-term debt would be on a stand-alone segment basis.

(2) Long-term debt within Merchant Banking of $437.5 million at May 31, 2021, primarily includes $246.9 million for real estate businesses, $81.5 million for Vitesse Energy Finance and $109.2 million for Foursight Capital. At May 31, 2021, Vitesse Energy Finance had $82.0 million drawn out of the maximum $120.0 million borrowing base on its credit facility and Foursight Capital had $109.3 million drawn out of the maximum $175.0 million credit commitment on its credit facilities. See Note 11 in our consolidated financial statements for additional information.


	November 30, 2020
	Investment Banking and Capital Markets		Asset Management		Merchant Banking		Corporate		Consolidation Adjustments		Total
Assets
Cash and cash equivalents	$	7,102,004	$	10,109	$	212,668	$	1,730,367	$	—	$	9,055,148
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	604,321		—		—		—		—		604,321
Financial instruments owned, at fair value	15,249,686		2,534,860		340,031		—		—		18,124,577
Loans to and investments in associated companies	995,730		148,005		542,828		—		—		1,686,563
Securities borrowed	6,934,762		—		—		—		—		6,934,762
Securities purchased under agreements to resell	5,096,769		—		—		—		—		5,096,769
Securities received as collateral, at fair value	7,517		—		—		—		—		7,517
Receivables	5,470,104		378,037		762,382		52		(1,808)		6,608,767
Property, equipment and leasehold improvements, net	847,108		8,121		30,670		11,305		—		897,204
Intangible assets, net and goodwill	1,721,277		143,310		48,880		—		—		1,913,467
Other assets	805,848		8,617		1,235,605		436,975		(297,788)		2,189,257
Total assets	44,835,126		3,231,059		3,173,064		2,178,699		(299,596)		53,118,352

Liabilities
Long-term debt (1) (2)	6,218,797		676,883		463,648		992,711		—		8,352,039
Other liabilities	32,752,740		1,758,373		727,088		239,507		(299,596)		35,178,112
Total liabilities	38,971,537		2,435,256		1,190,736		1,232,218		(299,596)		43,530,151

Redeemable noncontrolling interests	—		—		24,676		—		—		24,676
Mandatorily redeemable convertible preferred shares	—		—		—		125,000		—		125,000
Noncontrolling interests	712		16,677		17,243		—		—		34,632
Total Jefferies Financial Group Inc. shareholders' equity	$	5,862,877	$	779,126	$	1,940,409	$	821,481	$	—	$	9,403,893

(1) Jefferies Group long-term debt of $6.9 billion at November 30, 2020 is allocated to Investment Banking and Capital Markets, and Asset Management segments based on an internal management view only and may not be reflective of what long-term debt would be on a stand-alone segment basis.

(2) Long-term debt within Merchant Banking of ~~$439.0~~$463.6 million at ~~August 31,~~November 30, 2020, primarily includes ~~$235.0~~$236.8 million for real estate businesses, ~~$104.3~~$97.9 million for Vitesse Energy Finance and ~~$99.8~~$129.0 million for Foursight Capital. At ~~August 31,~~November 30, 2020, Vitesse Energy Finance had ~~$105.0~~$98.5 million drawn out of the maximum $120.0 million borrowing base on its credit facility and Foursight Capital had ~~$100.1~~$129.3 million drawn out of the maximum $175.0 million credit commitment on its credit facilities. See Note 11 in our consolidated financial statements for additional information.

8782

November 30, 2019
Investment Banking and Capital Markets Asset Management Merchant Banking Corporate Consolidation Adjustments Total
Assets
Cash and cash equivalents $ 5,561,281 $ 25,255 $ 111,552 $ 1,980,733 $ — $ 7,678,821
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations 796,797 — — — — 796,797
Financial instruments owned, at fair value 13,735,641 2,681,034 363,237 115,829 — 16,895,741
Loans to and investments in associated companies 944,509 83,258 625,190 — — 1,652,957
Securities borrowed 7,624,642 — — — — 7,624,642
Securities purchased under agreements to resell 4,299,598 — — — — 4,299,598
Securities received as collateral, at fair value 9,500 — — — — 9,500
Receivables 4,560,760 369,410 813,675 261 — 5,744,106
Property, equipment and leasehold improvements, net 350,071 796 20,632 13,530 — 385,029
Intangible assets, net and goodwill 1,726,736 143,616 52,582 — — 1,922,934
Other assets 913,688 10,347 1,298,803 321,766 (94,495) 2,450,109
Total assets 40,523,223 3,313,716 3,285,671 2,432,119 (94,495) 49,460,234
Liabilities
Long-term debt (1) (2) 6,391,969 611,389 342,325 991,378 — 8,337,061
Other liabilities 28,523,689 1,896,026 754,560 290,104 (94,495) 31,369,884
Total liabilities 34,915,658 2,507,415 1,096,885 1,281,482 (94,495) 39,706,945
Redeemable noncontrolling interests — — 26,605 — — 26,605
Mandatorily redeemable convertible preferred shares — — — 125,000 — 125,000
Noncontrolling interests 747 3,528 17,704 — — 21,979
Total Jefferies Financial Group Inc. shareholders' equity $ 5,606,818 $ 802,773 $ 2,144,477 $ 1,025,637 $ — $ 9,579,705

(1) Jefferies Group long-term debt of $7.0 billion at November 30, 2019 is allocated to Investment Banking and Capital Markets, and Asset Management segments based on an internal management view only and may not be reflective of what long-term debt would be on a stand-alone segment basis.

(2) Long-term debt within Merchant Banking of $342.3 million at November 30, 2019, primarily includes $140.7 million for real estate businesses, $103.1 million for Vitesse Energy Finance and $98.3 million for Foursight Capital. At November 30, 2019, Vitesse Energy Finance had $104.0 million drawn out of the maximum $170.0 million borrowing base on its credit facility and Foursight Capital had $98.7 million drawn out of the maximum $175.0 million credit commitment on its credit facilities. See Note 11 in our consolidated financial statements for additional information.

The table below presents our capital by significant business and investment (in thousands):

August 31,
2020 November 30, 2019
Jefferies Group $ 6,547,101 $ 6,181,683
Assets held on behalf of Asset Management (excluding Jefferies Group) 310,373 227,908
Merchant Banking:
Oil and gas 543,470 585,493
Real estate 542,377 645,328
  Linkem 206,047 194,847
FXCM 136,882 129,343
  Idaho Timber 92,032 77,914
The We Company 9,608 53,798
Investments in other public companies 178,025 178,593
  Other 260,193 279,161
    Total Merchant Banking
1,968,634 2,144,477
Corporate liquidity and other assets, net of Corporate liabilities including long-term debt 584,557 1,025,637
Total Capital $ 9,410,665 $ 9,579,705


	May 31, 2021		November 30, 2020

Jefferies Group	$	6,740,807	$	6,407,954

Assets held on behalf of Asset Management (excluding Jefferies Group)	249,494		234,049

Merchant Banking:
Oil and gas	493,820		526,642
Real estate	529,967		531,553
Linkem	170,265		198,991
FXCM	123,283		133,375
Idaho Timber	110,829		85,595
Investments in public companies	258,546		192,363
Other	308,497		271,890
Total Merchant Banking	1,995,207		1,940,409

Corporate liquidity and other assets, net of Corporate liabilities including long-term debt	1,087,126		821,481
Total Capital	$	10,072,634	$	9,403,893

Below is a brief description of the captions in the table above:

•Investment Banking and Capital Markets includes ~~our~~ investment banking, capital markets and other related services. Investment banking provides underwriting and financial advisory services to ~~our~~ clients across most industry sectors in the Americas, Europe and Asia. ~~Our capital~~Capital markets businesses operate across the spectrum of equities and fixed income products. ~~Related services include, among other things, prime brokerage and equity finance, research and strategy, corporate lending and real estate finance.~~ Our Investment Banking and Capital Markets businesses are conducted by Jefferies Group, our ~~wholly-owned~~largest subsidiary, ~~which~~and is now the largest independent ~~U.S. headquartered~~full-service global ~~full-service, integrated~~ investment banking ~~and securities firm.~~firm headquartered in the U.S.

•Our Asset Management ~~provides investment~~segment comprises all asset management ~~services to investors in the U.S. and overseas and invests capital in hedge funds, separately managed accounts and third-party asset managers. Under the Leucadia~~operations, including those within Jefferies Group. Within Asset Management, ~~("LAM") umbrella,~~ we manage, invest in and provide services to a diverse group of alternative asset management platforms across a spectrum of investment strategies and asset classes. ~~LAM~~Asset Management offers institutional clients an innovative range of investment strategies through its affiliated managers.

•Merchant Banking:

◦Our oil and gas business primarily consists of Vitesse Energy ~~Finance and JETX Energy.~~Finance. Vitesse Energy Finance is our 97% owned consolidated subsidiary that acquires, invests and ~~invests in~~monetizes non-operated ~~oil and gas~~ working interests and royalties predominantly in the Bakken Shale ~~oil field~~of the Williston Basin in North Dakota. ~~JETX Energy is our 98% owned consolidated subsidiary that currently has non-operated working interests and acreage in east Texas.~~

◦Our real estate assets primarily consist of our 100% ownership of HomeFed, a developer and owner of residential and mixed-use real estate properties in California, New York, Florida, Virginia and South Carolina. HomeFed's key assets include Otay Ranch, a master planned community that is under development in Chula Vista, CA, made up of approximately 4,450 acres of land entitled for 13,050 total units; and Renaissance Plaza, a mixed-use asset in Brooklyn, NY, comprised of an office building, ~~hotel~~garage and ~~garage.~~hotel.

◦We own approximately 42% of the common shares of Linkem, as well as convertible preferred shares and warrants. If all of our convertible preferred stock was converted and warrants were exercised, it would increase our ownership to approximately 56% of Linkem's common equity at ~~August~~May 31, ~~2020.~~2021. Linkem provides residential broadband services in Italy using LTE technologies deployed over the 3.5 GHz spectrum ~~band~~band. Linkem deployed its first 5G towers in late 2020 and ~~is preparing~~plans to ~~upgrade~~rapidly increase its network coverage and service offerings over the coming years as it upgrades to ~~5G.~~5G, adds subscribers and leverages its assets. Linkem is accounted for under the equity method.

◦Our investment in FXCM and associated companies consists of a senior secured term loan due February 15, ~~2021~~2022 ($71.6 million principal outstanding at ~~August~~May 31, ~~2020)~~2021), a 50% voting interest in FXCM and rights to a majority of

all distributions in respect of the equity in FXCM. FXCM is a provider of online foreign exchange trading, contract for difference trading, spread betting and related services.

◦Idaho Timber is our 100% owned consolidated subsidiary engaged in the manufacture and distribution of various wood products.

◦We invested $9.0 million in 2013 in The We Company, which creates collaborative office communities. Currently we own less than 1% of the company. Our interest in The We Company is reflected in Financial instruments owned, at fair value in our financial statements.

•Corporate liquidity and other assets, net of Corporate liabilities, primarily consist of cash and cash equivalents, net of long-term debt and payables, expense accruals and other liabilities, as well as our outstanding mandatorily redeemable convertible preferred shares.

Liquidity and Capital Resources

Parent Company Liquidity

Our strategy focuses on strengthening and expanding our core ~~business~~businesses of Investment Banking and Capital Markets and Asset Management, while continuing to simplify our structure and return capital to our shareholders. We are simplifying our structure through a managed transformation of Merchant Banking, which to date has included divestitures, special distributions to shareholders of assets, as well as transfers of financial assets out of our Merchant Banking portfolio and into Jefferies Group. We anticipate additional transactions as our transformation ~~progresses.~~is completed. Some of these transactions ~~generate~~have generated significant excess liquidity; some of these transactions have also ~~reduce~~reduced the future receipt of periodic distributions from subsidiaries to the parent company.

Parent company liquidity, which includes cash and investments that are easily convertible into cash within a relatively short period of time, total ~~$1,635.1~~$2,206.2 million at ~~August~~May 31, ~~2020~~2021 and are primarily comprised of cash, prime and government money market funds and other publicly traded securities. These are classified in the Consolidated Statement of Financial Condition as cash and cash equivalents and financial instruments owned, at fair value. At ~~August~~May 31, ~~2020, $1,291.2~~2021, $1,831.2 million of this amount is invested in U.S. government money funds that invest at least 99.5% of its total assets 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.

During the first ~~nine months~~half of ~~2020,~~2021, our parent company received cash distributions of ~~$289.3~~$527.8 million from our ~~existing~~ subsidiary businesses, including ~~$206.6~~$400.6 million from Jefferies Group. We also received ~~$113.0~~$83.2 million from ~~divestitures and repayments of advances.~~divestitures.

Our recurring cash requirements, including the payment of interest on our parent company debt, dividends and corporate cash overhead expenses, aggregate approximately ~~$287.6~~$356.2 million on an annual basis. Dividends paid during the first ~~nine months~~half of ~~2020~~2021 of ~~$122.9~~$99.5 million include quarterly dividends of ~~$0.15~~$0.20 per share. In June 2021, our Board of Directors increased our quarterly cash dividend by 25% to $0.25 per share. The payment of dividends is subject to the discretion of our Board of Directors and depends upon general business conditions, legal and contractual restrictions on the payment of dividends and other factors that our Board of Directors may deem to be relevant.

For many years, we ~~have~~ benefited from federal net operating loss carryovers ("NOLs") which ~~have~~ substantially offset our federal cash tax requirements. As a result of ~~the usage~~full utilization of our federal NOLs and other tax attributes, we ~~expect to incur~~are incurring and paying federal ~~cash tax liabilities~~taxes in 2021.

Our primary long-term parent company cash requirement is our $1.0 billion principal outstanding as of ~~August~~May 31, ~~2020~~2021 under our long-term debt, of which $750.0 million is due in 2023 and $250.0 million in 2043. As we generate excess liquidity, we evaluate the best use of the proceeds, which may include reductions to existing debt, share repurchases, special dividends, investments in our businesses, or any of a number of other options available to us.

Shares Outstanding

At November 30, ~~2019,~~2020, we had approximately ~~$203.6~~$57.2 million available for future share ~~repurchases, based on the closing price of Jefferies common shares on November 30, 2019.~~repurchases. In January 2020, the Board of Directors approved an additional $250.0 million share repurchase authorization. In March 2020, having completed the repurchase of shares under the previous authorization, the Board of Directors approved an additional share repurchase authorization of $100 million. In June 2020,2021, the Board of Directors increased the share repurchase authorization by ~~$176.7~~$192.8 million to $250.0 ~~million. During the first nine months of 2020, we purchased a total of 32,659,910 of our common shares for $619.9~~ million ~~or an average price per share of $18.98. At August 31, 2020, we had approximately $122.0 million available for future repurchases. In September 2020,~~and in March 2021, the Board of Directors increased the share repurchase authorization by $127.5 million to $250.0 million. During the first half of 2021, we purchased a total of 5,000,000 of our common shares for $127.5 million, ~~including the $122.0 million.~~

or an average price per share of $25.51. At May 31, 2021, we had approximately $250.0 million available for future repurchases.

At ~~August~~May 31, ~~2020,~~2021, we had outstanding ~~259,245,885~~247,031,705 common shares, ~~and 23,737,000~~20,952,000 share-based awards that do not require the holder to pay any exercise price ~~(potentially~~and 5,156,000 stock options that require the holder to pay an ~~aggregate~~average exercise price of ~~282,982,885 outstanding common shares if all awards become outstanding common shares).~~$23.67 per share. The ~~23,737,000~~20,952,000 share-based awards include the target number of shares under the senior executive award plan. Additionally, we have mandatorily redeemable convertible preferred shares that are currently convertible into 4,440,863 common shares, at an effective conversion price of $28.15 per share. At May 31, 2021, the maximum potential increase to common shares outstanding resulting from these outstanding awards and the preferred shares is 30,549,000 (potentially an aggregate of 277,580,705 outstanding common shares if all awards and preferred shares become outstanding common shares).

Concentration and Liquidity Targets

From time to time in the past, we have accessed public and private credit markets and raised capital in underwritten bond financings. The funds raised have been used by us for general corporate purposes, including for our existing businesses and new investment opportunities. In addition, the ratings of Jefferies are a factor considered by rating agencies that rate the debt of our subsidiary companies, including Jefferies Group, whose access to external financing is important to its day to day operations. Ratings issued by bond rating agencies, subject to change at any time, are as follows:


	Rating	Outlook
Moody's Investors Service (1)	Baa3	~~Stable~~Positive
Standard and Poor's ~~(2)~~	BBB	~~Negative~~Stable
Fitch Ratings	BBB	Stable

(1) On ~~April~~March 15, ~~2020,~~2021, Moody's Investors Service affirmed our rating of Baa3 and ~~rating outlook of stable.~~

~~(2) On April 14, 2020, Standard and Poor's affirmed our rating of BBB and~~ revised our rating outlook from stable to ~~negative.~~positive.

We target specific concentration and liquidity principles although there is no legal requirement to do so.

Concentration Target: As a diversification measure, we limit cash investments such that our single largest investment does not exceed 20% of equity excluding Jefferies Group, and that our next largest investment does not exceed 10% of equity excluding Jefferies Group, in each case measured at the time the investment was made. On this basis, Linkem is our largest investment excluding Jefferies Group and Vitesse Energy Finance is our next largest investment excluding Jefferies Group. There were no investments made during the year that approached 10% of equity excluding Jefferies Group.

Liquidity Target: We hold a parent company liquidity reserve calculated as a minimum of twenty-four months of holding company expenses (excluding non-cash components), parent company interest, and dividends. Maturities of parent company debt within the upcoming year are also included in the target; however, our next maturity is during 2023 so there is no current inclusion.


Liquidity reserve (in thousands):	~~August~~May 31, ~~2020~~2021
Minimum reserve under liquidity target	$	~~575,200~~712,400
Actual liquidity	$	~~1,635,109~~2,206,242

Consolidated Statements of Cash Flows

As discussed above, we have historically relied on our available liquidity to meet short-term and long-term needs, and to make acquisitions of new businesses and investments. Except as otherwise disclosed herein, our operating businesses do not generally require significant funds to support their operating activities. The mix of our operating businesses and investments can change frequently as a result of acquisitions or divestitures, the timing of which is impossible to predict but which often have a significant impact on the Consolidated Statements of Cash Flows in any one period. Further, the timing and amounts of distributions from investments in associated companies may be outside our control. As a result, reported cash flows from operating, investing and financing activities do not generally follow any particular pattern or trend, and reported results in the most recent period should not be expected to recur in any subsequent period.

The following table provides a summary of our cash flows (in thousands):


	Six Months Ended May 31, 2021		Six Months Ended May 31, 2020

Cash, cash equivalents and restricted cash at beginning of period	$	9,664,972	$	8,480,435
Net cash provided by (used for) operating activities	(981,586)		160,960
Net cash used for investing activities	(128,812)		(163,418)
Net cash provided by (used for) financing activities	775,987		(969,420)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	4,755		(13,547)
Cash, cash equivalents and restricted cash at end of period	$	9,335,316	$	7,495,010

Nine Months Ended August 31, 2020 Nine Months Ended August 31, 2019
Cash, cash equivalents and restricted cash at beginning of period $ 8,480,435 $ 6,012,662
Net cash provided by (used for) operating activities 1,307,858 (1,251,322)
Net cash provided by (used for) investing activities (188,404) 1,103,174
Net cash provided by (used for) financing activities (221,719) 835,510
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 19,723 (18,243)
Cash, cash equivalents and restricted cash at end of period $ 9,397,893 $ 6,681,781

During the first ~~nine months~~half of 2021, net cash used for operating activities primarily relates to funds used by Jefferies Group of $875.8 million.

During the first half of 2020, net cash provided by operating activities primarily relates to funds provided by Jefferies Group of ~~$1,187.6~~$92.0 million. Net losses related to property and equipment, and other assets includes ~~the~~ non-cash ~~charge~~charges of ~~$53.3~~$52.9 million to ~~write-down~~write down the value of certain of our investments during the first ~~nine months~~half of 2020.

During the first ~~nine months~~half of ~~2019,~~2021, net cash used for ~~operating~~investing activities ~~primarily relates to funds used by Jefferies Group of $1,452.3 million, including $126.5~~principally reflects $1,988.2 million of loans to and investments in associated companies and $2,025.7 million of capital distributions ~~received~~and loan repayments from associated companies. ~~Net cash used for operating activities for 2019 also includes $121.8 million of distributions from National Beef.~~

During the first ~~nine months~~half of 2020, net cash used for investing activities principally reflects ~~$1,390.8~~$1,382.8 million of loans to and investments in associated companies and ~~$146.4~~$120.7 million for acquisitions of property, equipment and leasehold improvements, and other assets, partially offset by ~~$1,372.8~~$1,344.6 million of capital distributions and loan repayments from associated companies.

During the first ~~nine months~~half of ~~2019,~~2021, net cash provided by ~~investing~~financing activities ~~includes proceeds from maturities~~primarily relates to funds provided by Jefferies Group of ~~investments~~$954.8 million, including funds provided by the issuance of ~~$531.1~~debt of $1,102.6 million and proceeds from ~~sales~~other secured financings of ~~investments~~$765.1 million, partially offset by funds used for the repayment of ~~$890.3~~debt of $951.4 million. ~~Jefferies Group~~Additionally, funds provided by financing activities includes the issuance of debt of $173.7 million and proceeds from other secured financings of $77.1 million in our Merchant Banking segment. This was partially offset by funds used to repurchase common shares for treasury of $130.1 million, funds used for the repayment of ~~$73.6~~debt of $202.0 million ~~for investing activities~~ in ~~2019.~~our Merchant Banking segment and funds used to pay dividends of $99.5 million.

During the first ~~nine months~~half of 2020, net cash used for financing activities primarily relates to funds used to repurchase common shares for treasury of ~~$623.5~~$495.3 million, ~~and~~ funds used to pay dividends of ~~$122.9 million. This was partially offset by~~$83.4 million and funds ~~provided~~used by Jefferies Group of ~~$442.0~~$450.2 million. This includes funds used for the repayment of debt of $1,762.4 million ~~including~~and payment of other secured financings of $369.7 million, partially offset by funds provided by the issuance of debt of ~~$2,085.0 million and~~$1,667.8 million. This was partially offset by proceeds from other secured financings of ~~$323.9~~$44.5 million ~~partially offset by funds used for the repayment of debt of $1,945.8 million.~~

During the first nine months of 2019, net cash provided by financing activities primarily reflects funds generated by Jefferies Group of $1,283.8 million. This includes funds provided by the issuance of debt of $2,326.3 million and proceeds from other secured financings of $940.0 million, partially offset by repayment of debt of $1,977.6 million. Net cash provided by financing activities also reflects funds used to repurchase common shares for treasury of $372.8 million, funds used to pay dividends of $112.5 million and proceeds on secured financings in our Merchant Banking ~~segment of $32.3 million.~~segment.

Jefferies Group Liquidity

General

The Chief Financial Officer and Global Treasurer of Jefferies Group are responsible for developing and implementing liquidity, funding and capital management strategies for Jefferies Group. These policies are determined by the nature and needs of day to day business operations, business opportunities, regulatory obligations and liquidity requirements.

The 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. Jefferies Group has historically maintained a balance sheet consisting of a large portion of total assets in cash and liquid marketable securities, arising principally from traditional securities brokerage and trading activity. The liquid nature of these assets provides flexibility in financing and managing our business.

Jefferies Group maintains modest leverage to support its investment grade ratings. The growth of its balance sheet is supported by its equity and we have quantitative metrics in place to monitor leverage and double leverage. Jefferies ~~Group~~Group's capital plan is

robust, in order to sustain its 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 regulatory, or other internal or external, requirements. Jefferies Group's access to funding and liquidity is stable and efficient to ensure that there is sufficient liquidity to meet its financial obligations in normal and stressed market conditions.

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 the 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 assets and liabilities. The overall securities inventory is continually monitored, including the inventory turnover rate, which confirms the liquidity of overall

assets. Substantially all of Jefferies Group's financial instruments are valued on a daily basis and we monitor and employ balance sheet limits for its various businesses.

At ~~August~~May 31, ~~2020,~~2021, the Consolidated Statement of Financial Condition includes Jefferies Group's Level 3 financial instruments owned, at fair value that are approximately 2% of total financial instruments owned, at fair value.

Securities financing assets and liabilities include financing for 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.

The following table presents period end balance, average balance and maximum balance at any month end within the periods presented for Securities purchased under agreements to resell and Securities sold under agreements to repurchase (in millions):


		Nine Months Ended August 31, 2020		Year Ended November 30, 2019			Six Months Ended May 31, 2021		Year Ended November 30, 2020
Securities purchased under agreements to resell:	Securities purchased under agreements to resell:					Securities purchased under agreements to resell:
Period end	Period end	$	5,327	$	4,300	Period end	$	6,917	$	5,097
Month end average	Month end average	8,282		7,762		Month end average	9,190		8,040
Maximum month end	Maximum month end	12,061		11,589		Maximum month end	12,321		12,061

Securities sold under agreements to repurchase:	Securities sold under agreements to repurchase:					Securities sold under agreements to repurchase:
Period end	Period end	$	7,259	$	7,505	Period end	$	7,079	$	8,316
Month end average	Month end average	13,941		14,686		Month end average	12,142		13,501
Maximum month end	Maximum month end	18,979		19,654		Maximum month end	19,207		18,979

Fluctuations in the balance of repurchase agreements from period to period and intraperiod are dependent on business activity in those periods. Additionally, the fluctuations in the balances of 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.

Liquidity Management

The key objectives of Jefferies Group's liquidity management framework are to support the successful execution of its business strategies while ensuring sufficient liquidity through the business cycle and during periods of financial distress. The liquidity management policies are designed to mitigate the potential risk that adequate financing may not be accessible to service financial obligations without material franchise or business impact.

The principal elements of Jefferies Group's liquidity management framework are the Contingency Funding Plan, the Cash Capital Policy and the assessment of ~~Maximum~~Modeled Liquidity Outflow.

Contingency Funding Plan. Jefferies Group's Contingency Funding Plan 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;

•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. A cash capital model is maintained that measures long-term funding sources against requirements. Sources of cash capital include 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 that is 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 inventory does not need to be liquidated in the event of a funding ~~crisis,~~stress, we seek to maintain surplus cash ~~capital, which is reflected in the leverage ratios Jefferies Group maintains.~~capital. Jefferies Group's total long-term capital of ~~$12.5~~$13.4 billion at ~~August~~May 31, ~~2020~~2021 exceeded its cash capital requirements.

~~Maximum~~Modeled Liquidity Outflow. Jefferies Group's businesses are diverse, and 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 ~~crisis,~~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 Jefferies Group's policy to ensure it has sufficient funds to cover estimates of what may be needed in a liquidity ~~crisis,~~stress, Jefferies Group holds more cash and unencumbered securities and has greater long-term debt balances than the businesses would otherwise require. As part of this estimation process, we calculate a ~~Maximum~~Modeled Liquidity Outflow that could be experienced in a liquidity ~~crisis. Maximum~~stress. Modeled Liquidity Outflow is based on a scenario that includes both a market-wide stress and firm-specific stress.

Based on the sources and uses of liquidity calculated under the ~~Maximum~~Modeled Liquidity Outflow 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 Jefferies Group's inventory balances and cash holdings. At ~~August~~May 31, ~~2020,~~2021, Jefferies Group had sufficient excess liquidity to meet all contingent cash outflows detailed in the ~~Maximum~~Modeled Liquidity Outflow. We regularly refine our model to reflect changes in market or economic conditions and the firm's business mix.

Sources of Liquidity

Within Jefferies Group, the following are 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, as reflected in the Consolidated Statements of Financial Condition (in thousands):


		August 31, 2020		Average Balance Third Quarter 2020 (1)		November 30, 2019			May 31, 2021		Average Second Quarter 2021 (1)		November 30, 2020
Cash and cash equivalents:	Cash and cash equivalents:							Cash and cash equivalents:
Cash in banks	Cash in banks	$	1,431,834	$	2,290,893	$	983,816	Cash in banks	$	2,108,019	$	3,136,547	$	1,979,058

Money market investments (2)	Money market investments (2)	5,317,872		3,304,669		4,584,087		Money market investments (2)	4,112,874		2,971,160		5,132,871
Total cash and cash equivalents	Total cash and cash equivalents	6,749,706		5,595,562		5,567,903		Total cash and cash equivalents	6,220,893		6,107,707		7,111,929

Other sources of liquidity:	Other sources of liquidity:							Other sources of liquidity:
Debt securities owned and securities purchased under agreements to resell (3)	Debt securities owned and securities purchased under agreements to resell (3)	1,122,768		988,506		972,624		Debt securities owned and securities purchased under agreements to resell (3)	1,650,901		1,204,579		1,180,410
Other (4)	Other (4)	216,088		282,436		377,296		Other (4)	387,422		411,235		312,511
Total other sources	Total other sources	1,338,856		1,270,942		1,349,920		Total other sources	2,038,323		1,615,814		1,492,921

Total cash and cash equivalents and other liquidity sources	Total cash and cash equivalents and other liquidity sources	$	8,088,562	$	6,866,504	$	6,917,823	Total cash and cash equivalents and other liquidity sources	$	8,259,216	$	7,723,521	$	8,604,850

(1)Average balances are calculated based on weekly balances.

(2)At ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019, $4,987.0~~2020, $4,098.0 million and ~~$4,496.7~~$5,118.0 million, respectively, was invested in U.S. government money funds that invest at least 99.5% of its total assets 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 ~~$330.9 million and $87.4~~$14.9 million at ~~August~~both May 31, ~~2020~~2021 and November 30, ~~2019,~~2020, respectively, are invested in AAA

rated prime money funds. The average balance of U.S. government money funds for the quarter ended ~~August~~May 31, ~~2020~~2021 was ~~$3,240.4~~$2,955.0 million.

(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, Canada, Australia, Japan, Switzerland or the U.S.; and securities issued by a designated multilateral development bank and reverse repurchase agreements with underlying collateral comprised 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 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 ~~August~~May 31, ~~2020,~~2021, repurchase financing can be readily obtained for ~~74.4%~~approximately 70.8% of Jefferies Group's inventory at haircuts of 10% or less, which reflects the liquidity of the 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 Jefferies Group's financial instruments owned primarily consisting of bank loans, consumer loans and investments are predominantly funded by Jefferies Group's long-term capital. Under Jefferies Group's cash capital policy, capital allocation levels are modeled that are more stringent than the haircuts used in the market for secured funding; and surplus capital is maintained at these more stringent levels. We continually assess the liquidity of Jefferies Group's inventory based on the level at which Jefferies Group 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.

The following summarizes Jefferies Group's financial instruments owned by asset class that are considered to be of a liquid nature and the amount of such assets that have not been pledged as collateral as reflected in the Consolidated Statements of Financial Condition (in thousands):


		August 31, 2020						November 30, 2019							May 31, 2021				November 30, 2020
		Liquid Financial Instruments		Unencumbered Liquid Financial Instruments (2)		Liquid Financial Instruments		Unencumbered Liquid Financial Instruments (2)			Liquid Financial Instruments		Unencumbered Liquid Financial Instruments (2)		Liquid Financial Instruments		Unencumbered Liquid Financial Instruments (2)

Corporate equity securities	Corporate equity securities	$	2,356,376	$	215,732	$	2,403,589	$	256,624	Corporate equity securities	$	2,839,654	$	444,428	$	2,191,536	$	238,129
Corporate debt securities	Corporate debt securities	2,075,043		18,327		1,893,605		29,412		Corporate debt securities	2,579,263		40,672		2,298,591		50,217
U.S. government, agency and municipal securities	U.S. government, agency and municipal securities	3,587,929		140,474		2,894,264		151,414		U.S. government, agency and municipal securities	4,000,885		400,906		3,336,361		110,586
Other sovereign obligations	Other sovereign obligations	2,545,333		998,904		2,633,636		969,800		Other sovereign obligations	2,236,240		1,263,841		2,518,928		1,101,272
Agency mortgage-backed securities (1)	Agency mortgage-backed securities (1)	1,922,293		—		1,757,077		—		Agency mortgage-backed securities (1)	1,952,468		—		1,652,743		—
Loans and other receivables	Loans and other receivables	569,620		—		655,120		—		Loans and other receivables	142,948		—		564,112		—

Total	Total	$	13,056,594	$	1,373,437	$	12,237,291	$	1,407,250	Total	$	13,751,458	$	2,149,847	$	12,562,271	$	1,500,204

(1)Consists solely of agency mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae. These securities include pass-through securities, securities backed by adjustable rate mortgages, collateralized mortgage obligations, commercial mortgage-backed securities and interest- and principal-only securities.

(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 ~~modest~~reasonable haircut levels, it is estimated 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

Jefferies Group's assets are funded by equity capital, senior debt, securities loaned, securities sold under agreements to ~~purchase,~~repurchase, customer free credit balances, bank loans and other payables.

Secured Financing

Readily available secured funding is used to finance Jefferies Group's inventory of financial instruments. Jefferies Group's ability to support increases in total assets is largely a function of the ability to obtain short- and intermediate-term secured funding, primarily through securities financing transactions. Repurchase or reverse repurchase agreements (collectively "repos"), respectively, are used to finance a portion of long inventory and cover some of short inventory by pledging and borrowing securities. ~~Approximately 68.8%~~At May 31, 2021, approximately 64% of Jefferies Group's cash and noncash repurchase financing activities use collateral that is considered eligible collateral by central clearing corporations. During the first half of 2021, an average of approximately 72% of Jefferies Group's 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 Jefferies Group's total repo activity that is eligible for central clearing reflects the high quality and liquid composition of the inventory Jefferies Group carries in its trading books. For those asset classes not eligible for central clearing house financing, Jefferies Group seeks to execute its bi-lateral financings on an extended term basis and the tenor of Jefferies Group's repurchase and reverse repurchase agreements generally exceeds the expected holding period of the assets Jefferies Group is financing. The weighted average maturity of cash and noncash repurchase agreements for non-clearing corporation eligible funded inventory is approximately ~~six~~nine months at ~~August~~May 31, ~~2020.~~2021.

Jefferies Group's ability to finance its inventory via central clearinghouses and bi-lateral arrangements is augmented by Jefferies Group's ability to draw bank loans on an uncommitted basis under its various banking arrangements. At ~~August~~May 31, ~~2020,~~2021, short-term borrowings, which must be repaid within one year or less and include bank loans and overdrafts, borrowings under revolving credit facilities and floating rate puttable notes, ~~and equity-linked notes,~~ totaled ~~$805.4~~$475.8 million. Interest under the bank lines is generally at a spread over the federal funds rate. 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 for Jefferies Group were ~~$643.5~~$825.2 million and ~~$592.3~~$854.5 million for the ~~third~~second quarter and first ~~nine months~~half of ~~2020,~~2021, respectively.

~~Our~~Jefferies Group's short-term borrowings include ~~the following facilities:~~

•~~Credit Facility.~~ One of Jefferies Group's subsidiaries has a credit facility agreement ("Jefferies Group Credit Facility") with JPMorgan Chase Bank, N.A. under which it has borrowed $246.0 million at August 31, 2020. Interest is based on an annual alternative base rate or an adjusted London Interbank Offered Rate ("LIBOR"), as defined in the Jefferies Group Credit Facility. The Jefferies Group Credit Facility containsfacilities that contain certain covenants that, among other things, require ~~Jefferies Group LLC~~it to maintain a specified level of tangible net ~~worth. The covenants also require the borrower to maintain specified leverage amounts~~worth and impose certain restrictions on the ~~borrower's~~ future ~~indebtedness.~~indebtedness of certain of its subsidiaries that are borrowers. At ~~August~~May 31, ~~2020, we were~~2021, Jefferies Group was in compliance with all ~~debt~~ covenants under ~~the Jefferies Group Credit Facility.~~

•~~Royal Bank of Canada ("RBC") Credit Facility. One of~~these facilities. Jefferies Group's ~~subsidiaries has a credit facility agreement~~facilities, which are with ~~the Royal Bank of Canada ("RBC Credit Facility") for a committed amount of $200.0~~various banks and are included within short-term borrowings, at May 31, 2021 were $413.0 million. Interest is based on a rate per annum ~~equal to LIBOR plus an applicable margin~~at spreads over the Federal Funds Rate as defined in the credit agreements.

Jefferies Group's short-term borrowings at May 31, 2021 also include floating rate puttable notes of ~~2.05%. The RBC Credit Facility contains certain covenants that, among~~$6.8 million and other ~~things, requires Jefferies Group LLC to maintain~~bank loans of $56.0 million.

In addition, a specified level of tangible net worth. The covenants also impose certain restrictions on the borrower's future indebtedness. At August 31, 2020, we were in compliance with all debt covenants under the RBC Credit Facility.

•~~Intraday Credit Facility.~~ ~~The Bank of New York Mellon~~bank has agreed to make revolving intraday credit advances ("Jefferies Group Intraday Credit Facility") for an aggregate committed amount of $150.0 million. The Jefferies Group Intraday Credit Facility is structured so that advances are generally repaid before the end of each business day. However, if an advance is not repaid by the end of any business day, the advance is converted to an overnight loan. Intraday loans accrue interest at a rate of 0.12%. Interest is charged based on the number of minutes in a day the advance is outstanding. Overnight loans are charged interest at the base rate plus 3% on a daily basis. The base rate is the higher of the federal funds rate plus 0.50% or the prime rate in effect at that time. The ~~Jefferies Group~~ Intraday Credit Facility contains financial covenants, which include a minimum regulatory net capital requirement for Jefferies Group's U.S. broker-dealer, Jefferies LLC. At ~~August~~May 31, ~~2020, we were~~2021, Jefferies Group was in compliance with all debt covenants under the Jefferies Group Intraday Credit Facility.

In addition to the above financing arrangements, Jefferies Group issues notes backed by eligible collateral under a master repurchase agreement, which provides an additional financing source for its inventory ("repurchase agreement financing program"). The notes issued under the program are presented within Other secured financings in the Consolidated Statements of Financial Condition. At ~~August~~May 31, ~~2020,~~2021, the outstanding notes were ~~$2.8~~$3.5 billion, bear interest at a spread over ~~LIBOR~~London Interbank Offered Rate ("LIBOR") and mature from ~~September 2020~~June 2021 to ~~May 2022.~~April 2023.

Long-Term Debt

Jefferies Group's long-term debt reflected in the Consolidated Statement of Financial Condition at ~~August~~May 31, ~~2020~~2021 is ~~$7.0~~$7.4 billion. Jefferies Group's unsecured long-term debt, ~~excluding~~which excludes its revolving credit facility and the secured bank loan, has a weighted average maturity of approximately ~~9.6~~10.4 years.

During the ~~nine~~six months ended ~~August~~May 31, ~~2020,~~2021, Jefferies Group's ~~2.375% Euro Medium Term Notes matured and were repaid. Additionally, during the nine months ended August 31, 2020,~~long-term debt increased $496.6 million, primarily due to an increase of $375.0 million from its borrowings under Jefferies Group's Secured Credit Facility, approximately $59.5 million of structured notes ~~with a total principal amount of approximately $244.4 million,~~issuances, net of retirements, a $59.0 million net increase due to Jefferies Group's Revolving Credit Facility and ~~an additional $150.0 million principal amount of 5.125% Senior Notes due 2023 were issued~~changes in instrument specific credit risk on its structured notes, partially offset by ~~Jefferies Group.~~losses associated with interest rate swaps based on their designation as fair value hedges. At ~~August~~May 31, ~~2020,~~2021, all of Jefferies Group's structured notes contain various interest rate payment terms and are accounted for at fair value, with changes in fair value resulting from a change in the instrument specific credit risk presented in Accumulated other comprehensive income (loss) and changes in fair value resulting from non-credit components recognized in Principal transactions revenue. The fair value of all of Jefferies Group's structured notes at ~~August~~May 31, ~~2020~~2021 was ~~$1,522.1~~$1,820.0 million. ~~Subsequent to quarter-end, on October 7, 2020, Jefferies Group issued 2.75% Senior Notes with a principal amount of $500.0 million, due 2032.~~

During April 2021, Jefferies Group ~~has~~entered into a Revolving Credit Facility ("Jefferies Group Revolving Credit Facility") with a group of commercial banks ~~for an aggregate principal amount~~following the maturity of ~~$190.0 million.~~its previous revolving credit facility. At ~~August~~May 31, ~~2020,~~2021, borrowings under the Jefferies Group Revolving Credit Facility amounted to ~~$189.6~~$248.8 million. Interest is based on an ~~annual alternative base rate or an~~ adjusted LIBOR Rate, as defined in the ~~Jefferies Group Revolving Credit Facility~~credit agreement. The Jefferies Group Revolving Credit Facility contains certain covenants that, among other things, ~~requires~~require Jefferies Group LLC to maintain specified ~~level~~levels of tangible net worth and liquidity amounts, and ~~imposes~~impose certain restrictions on future indebtedness of and ~~requires~~require specified levels of regulated capital for certain of its subsidiaries. Throughout the period and at ~~August~~May 31, ~~2020,~~2021, no instances of noncompliance with the Jefferies

Group Revolving Credit Facility covenants occurred and ~~we expect~~Jefferies Group expects to remain in compliance given ~~our~~its current liquidity and anticipated funding requirements given ~~our~~its business plan and profitability expectations.

During ~~2019, one~~May 2021, Jefferies Group entered into a Secured Credit Facility agreement ("Jefferies Group Secured Credit Facility") with a bank under which it has borrowed $375.0 million at May 31, 2021. Interest is based on a rate per annum at spreads over an Adjusted LIBOR Rate, as defined in the credit agreement. The Jefferies Group Secured Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain a specified level of tangible net worth. The covenants also require the borrower to maintain specified leverage amounts and impose certain restrictions on the borrower's future indebtedness. At May 31, 2021, Jefferies Group was in compliance with all debt covenants under the Jefferies Group Secured Credit Facility.

One of Jefferies Group's subsidiaries ~~entered into~~has a Loan and Security Agreement with a bank for a term loan with a principal amount of $50.0 million ("Jefferies Group Secured Bank Loan"). This Jefferies Group Secured Bank Loan matures on September 27, 2021 and is collateralized by certain trading securities. Interest on the Jefferies Group Secured Bank Loan is 1.25% plus LIBOR. The agreement contains certain covenants that, among other things, restrict lien or encumbrance upon any of the pledged collateral. At ~~August~~May 31, ~~2020, we were~~2021, Jefferies Group was in compliance with all covenants under the Jefferies Group Loan and Security Agreement.

Jefferies Group's long-term debt ratings are as follows:


	Rating	Outlook
Moody's Investors Service (1)	Baa3	~~Stable~~Positive
Standard and Poor's ~~(2)~~	BBB	~~Negative~~Stable
Fitch Ratings	BBB	Stable

(1) On ~~April~~March 15, ~~2020,~~2021, Moody's Investors Service affirmed Jefferies Group's rating of Baa3 and ~~rating outlook of stable.~~

~~(2) On April 14, 2020, Standard and Poor's affirmed Jefferies Group's rating of BBB and~~ revised its rating outlook from stable to ~~negative.~~positive.

Jefferies Group's access to external financing to finance its day to day operations, as well as the cost of that financing, is dependent upon various factors, including its debt ratings. Jefferies Group's 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, capital structure, overall risk management, business diversification and market share and competitive position in the markets in which it operates. ~~Deteriorations~~Deterioration in any of these factors could impact Jefferies Group's credit ratings. While certain aspects of a credit rating downgrade are quantifiable pursuant to contractual provisions, the impact on 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, weJefferies Group may be required to provide additional collateral to counterparties, exchanges and clearing organizations in the event of a credit rating downgrade. At ~~August~~May 31, ~~2020,~~2021, 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 Jefferies Group's long-term credit rating below investment grade was ~~$76.0~~$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 Jefferies Group's Contingency Funding Plan and calculation of ~~Maximum~~Modeled Liquidity Outflow, as described above.

Ratings issued by credit rating agencies are subject to change at any time.

Net Capital

Jefferies Group operates a broker-dealer, Jefferies LLC, registered with the Securities and Exchange Commission ("SEC") and member firms of the Financial Industry Regulatory Authority ("FINRA"). Jefferies LLC 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 Rule 1.17 of the Commodity Futures Trading Commission ("CFTC"), 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 Rule 15c3-1 or CFTC Rule 1.17. Jefferies LLC's net capital and excess net capital at ~~August~~May 31, ~~2020~~2021 were ~~$1,612.5~~$1,518.2 million and ~~$1,531.9~~$1,394.5 million, respectively.

FINRA is the designated examining authority for Jefferies LLC and the National Futures Association is the designated self-regulatory organization for Jefferies LLC as an FCM.

regulatory supervision and requirements of the Financial Conduct Authority in the United Kingdom ("U.K."). The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") was signed into law on July 21, 2010. The Dodd-Frank Act contains provisions that require the registration of all swap dealers, major swap participants, security-based swap dealers, and/or major security-based swap participants. The CFTC has finalized rules establishing capital requirements and financial reporting requirements for CFTC registered swap dealers not subject to regulation by a banking regulator. ~~We expect that these~~These provisions will result in ~~modifications to the regulatory capital requirements of some~~certain of Jefferies Group's ~~entities, and will result in some of Jefferies Group's other~~ entities becoming subject to regulatory capital requirements for the first time, ~~including~~namely Jefferies Financial Services, Inc., which registered as a swap dealer with the CFTC during January 2013 and Jefferies Financial Products LLC, which registered during August 2014. ~~Jefferies Group may also be required in the future to register one or more additional subsidiaries as security-based swap dealers with the SEC.~~ Compliance with these rules is required by October 6, 2021.

The regulatory capital requirements referred to above may restrict Jefferies Group's ability to withdraw capital from its regulated subsidiaries.

The U.K. formally withdrew from the European Union ("EU") on January 31, 2020 and entered a transition period that is scheduled to expire on December 31, 2020. During the transition period, existing arrangements between the U.K. and EU will remain in place while the U.K. and EU seek to negotiate a free trade agreement that will govern their future trading relationship. We have taken steps to ensure our ability to provide services to our European clients without interruption. As such, we have established a wholly-owned subsidiary of our U.K. broker-dealer in Germany, which has been approved as an authorized Market in Financial Instruments Directive investment firm by the German regulator and which will enable us to conduct business across all of our European investment banking, fixed income and equity platforms. The new entity started trading in 2019 with EU clients with further clients migrating throughout 2020, and our plans contemplate providing sufficient capital pursuant to the regulatory requirements for the planned operations as well pursuant to requirements of relevant clearing organizations.

Some of our other consolidated subsidiaries also have credit agreements which may restrict the payment of cash dividends, or the ability to make loans or advances to the parent company.

Other Developments

The U.K. left the European Union on January 31, 2020 and the current transition period ended on December 31, 2020. On January 1, 2021, Jefferies Group's U.K. broker-dealer, Jefferies International Limited, was no longer able to provide services to European clients under the passport regime. Jefferies Group has taken steps to ensure its ability to provide services to its European clients without interruption by establishing a wholly-owned subsidiary in Germany ("Jefferies GmbH"), which is authorized and regulated in Germany by the Federal Financial Services Authority ("BaFin"). At January 1, 2021, all of Jefferies Group's European clients were migrated to Jefferies GmbH to conduct business across all of Jefferies Group's European investment banking, fixed income and equity platforms. There were no client disruptions or settlement issues experienced after this migration.

Central banks and regulators around the world have convened working groups to find, and implement the transition to, suitable replacements for IBORs. Jefferies Group has an active transition program that focuses on an orderly transition from IBORs to alternative reference rates, including internal operational readiness and risk management. Jefferies Group is identifying, assessing and monitoring risk associated with the expected discontinuation of IBORs, which includes taking steps to update operational processes and models and evaluating legacy contracts for any changes that may be required.

Off-Balance Sheet Risk

Jefferies Group has 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 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 the Consolidated Statements of Financial Condition. Rather, the fair values of derivative contracts are reported in the Consolidated Statements of Financial Condition as Financial instruments owned, at fair value, or Financial instruments sold, not yet purchased, at fair value, 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.

Cautionary Statement for Forward-Looking Information

This report contains or incorporates by reference "forward-looking statements" within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements about our future and statements that are not historical facts. These forward-looking statements are usually preceded by the words "will," "could," "estimates," "expects," "anticipates," "believes," "plans," "intends" and variations of such words 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 include statements pertaining to our strategies for future development of our businesses and products. Forward-looking statements represent only our belief regarding future events, many of which by their nature are inherently uncertain. Future events and actual results could differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in this report and other documents we file. You should read and interpret any forward-looking statement together with these documents, including the following:

•The description of our business and risk factors contained in our Annual Report on Form 10-K for the fiscal year ended November 30, ~~2019~~2020 and filed with the SEC on January 29, ~~2020~~2021 (the ~~"2019~~"2020 10-K") ~~and in Part II, Item 1A herein;~~;

•The discussion and analysis of financial condition and result of operations contained in this report under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" herein;

•The notes to the consolidated financial statements 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 will not 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.

~~100~~93

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The following includes "forward-looking statements" that involve risk and uncertainties. See "Cautionary Statement for Forward-Looking Information" above. Actual results could differ materially from those projected in the forward-looking statements. The discussion of risk is presented separately for Jefferies Group and the balance of our company. Exclusive of Jefferies Group, our market risk arises principally from equity price risk. Information related thereto required under this Item is contained in Item 7A in our ~~2019~~2020 10-K, and is incorporated by reference herein.

Excluding Jefferies Group, Financial instruments owned, at fair value include corporate equity securities with an aggregate fair value of ~~$260.5~~$376.8 million at ~~August~~May 31, ~~2020.~~2021. Assuming a decline of 10% in market prices, the value of these investments could decrease by approximately ~~$26.0~~$37.7 million.

Jefferies Group

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 processes to identify, assess, monitor and manage risk. Principal risks involved in our business activities include market, credit, liquidity and capital, operational, legal and compliance, new business and reputational risk.

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 Jefferies Group's Risk Management, Operations, Compliance, Legal and Finance Departments. 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 at the top of our priority list and ensuring we are in compliance with applicable laws, rules and regulations, as well as adhering to the highest ethical standards. We undertake prudent and conservative 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 oversight 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 with risk oversight responsibilities assigned to those areas of the business that have the appropriate knowledge.

For discussion of liquidity and capital risk management, refer to the "Liquidity and Capital Resources" section herein.

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 tolerance 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, amount of 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

~~101~~94

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 market-making, proprietary trading, underwriting, ~~specialist~~ and investing activities, including our investments in Asset Management separately managed accounts, and is principally managed by diversifying exposures, controlling position sizes, and establishing economic hedges in related securities or derivatives. Due to imperfections in correlations, gains and losses can occur even for positions that are economically hedged. Position limits in trading and inventory accounts are established and monitored on an ongoing basis. Each day, consolidated position and exposure reports are prepared and distributed to various levels of management, which enable management to monitor inventory levels and the results of its trading businesses.

Value-at-Risk

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 on Jefferies Group's trading portfolios 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, the 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.

~~Average~~There was a modest decrease in average daily VaR ~~increased~~ to ~~$10.46 million for the third quarter of 2020 from $9.16~~$15.77 million for the second quarter of ~~2020.~~2021 from $16.02 million for the first quarter of 2021. The ~~increase~~decrease was primarily driven by lower interest rate and credit spread VaR as the volatile period in 2020 driven by the impact of COVID-19 continued ~~market volatility early~~to drop from the one year look-back period. This decrease was partially offset by higher equity price VaR driven by longer beta positioning in ~~the current quarter, as well as increased equity exposure as we continue to build out~~ our Asset Management business ~~partially offset by a decrease in interest rate risk and an increase in~~during the ~~diversification benefit across asset classes and business divisions.~~second quarter of 2021.

The following table illustrates each separate component of VaR for each component of market risk by interest rate and credit spreads, equity, currency and commodity products, as well as for Jefferies Group's overall trading positions using the past 365 days of historical ~~data.~~data (in millions):


		Daily VaR (1) Value-at-Risk in Trading Portfolios
		(In millions)
Daily VaR (1) Value-at-Risk in Trading Portfolios																		Daily VaR (1) Value-at-Risk in Trading Portfolios
Risk Categories	Risk Categories	VaR at August 31, 2020		Daily VaR for the Three Months Ended August 31, 2020										VaR at May 31, 2020		Daily VaR for the Three Months Ended May 31, 2020										Risk Categories	VaR at May 31, 2021		Daily VaR for the Three Months Ended May 31, 2021						VaR at February 28, 2021	Daily VaR for the Three Months Ended February 28, 2021
				Average		High		Low				Average		High		Low					Average		High		Low				Average		High		Low

Interest Rates		$	8.92	$	8.65	$	11.06	$	7.19	$	10.34	$	9.31	$	12.50	$	5.96
Interest Rates and Credit Spreads																		Interest Rates and Credit Spreads	$	4.06	$	5.08	$	10.77	$	3.21	$	10.35	$	8.58	$	11.15	$	5.83
Equity Prices	Equity Prices	9.95		8.16		13.07		4.79		8.69		5.89		9.30		3.68		Equity Prices	15.53		14.83		18.98		10.57		11.36		10.90		15.71		6.17
Currency Rates	Currency Rates	0.26		0.21		2.17		0.12		0.21		0.20		0.39		0.10		Currency Rates	0.06		0.14		0.31		0.06		0.31		0.19		0.31		0.11
Commodity Prices	Commodity Prices	0.37		0.91		1.56		0.24		1.18		0.64		1.18		0.28		Commodity Prices	0.43		0.55		0.77		0.37		0.72		0.42		0.75		0.16
Diversification Effect (2)	Diversification Effect (2)	(5.03)		(7.47)		N/A		N/A		(10.25)		(6.88)		N/A		N/A		Diversification Effect (2)	(3.60)		(4.83)		N/A		N/A		(6.61)		(4.07)		N/A		N/A

Firmwide	Firmwide	$	14.47	$	10.46	$	14.47	$	7.62	$	10.17	$	9.16	$	10.81	$	6.81	Firmwide	$	16.48	$	15.77	$	20.30	$	12.37	$	16.13	$	16.02	$	22.91	$	6.94

(1)For the VaR numbers reported above, a one day time horizon, with a one year look-back period, and a 95% confidence level were used.

(2)The diversification effect is not applicable for the maximum and minimum VaR values as Jefferies Group's firmwide VaR and VaR values for the four risk categories might have occurred on different days during the period.

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.

The primary method used to test the efficacy of the VaR model is to compare actual daily net revenue for those positions included in the VaR calculation with the daily VaR estimate. This evaluation is performed at various levels of the trading portfolio, from the overall level

~~102~~

down to specific business lines. For the VaR model, trading related revenue is defined as principal transactions revenues, trading related commissions, revenue from securitization activities and net interest income.

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, net trading 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 the ~~third~~second quarter of ~~2020,~~2021, results of the evaluation at the aggregate level demonstrated ~~one day~~three days when the net trading loss exceeded the 95% one day ~~VaR.~~VaR due to Jefferies Group's asset management and equity businesses.

The chart below reflects our daily VaR over the last four ~~quarters with~~quarters. The increases from August 2020 through mid-January 2021 were driven by the ~~increase~~high historical volatility observed throughout the initial period in 2020 driven by the impact of COVID-19. The lower trend from January 2021 to the end of February 2021 was driven by exposure reductions. Equity exposure increased at various points in the ~~third~~current year quarter, which was offset as the highly volatile period in 2020 driven by the impact of ~~2020 due to continued market volatility and as certain businesses took advantage~~COVID-19 dropped out of the ~~market rebound.~~one year look-back period.

Daily Net Trading Revenue

There were ~~eight~~20 days with trading losses out of a total of 6564 trading days in the ~~third~~second quarter of ~~2020.~~2021. The loss days during the second quarter of 2021 were primarily driven by SPAC-related activity, certain block positions and certain funds in Jefferies Group's Asset Management business. The histogram below presents the distribution of our actual daily net trading revenue for substantially all of Jefferies Group's trading activities for the ~~third~~second quarter of ~~2020~~2021 (in millions).

~~103~~

Other Risk Measures

Certain positions within financial instruments are not included in the VaR model because VaR is not the most appropriate measure of risk. Accordingly, Jefferies Group's Risk Management has additional procedures in place to assure that the level of potential loss that would arise from market movements are within acceptable levels. Such procedures include performing stress tests, monitoring concentration risk and tracking price target/stop loss levels. The table below presents the potential reduction in net income associated with a 10% stress of the fair value of the positions that are not included in the VaR model at ~~August~~May 31, ~~2020~~2021 (in thousands):


	10% Sensitivity
~~Investments~~Investment in funds (1)	$	~~92,033~~90,021
Private investments	~~20,249~~14,249
Corporate debt securities in default	~~6,770~~11,955
Trade claims	~~4,052~~5,180

(1) Includes investments in hedge funds, fund of funds and private equity funds. For additional information on these investments, see Note 3 in our consolidated financial statements.

VaR also excludes the impact of changes in Jefferies Group's own credit spreads on its structured notes for which the fair value option was elected. The estimated credit spread risk sensitivity for each one basis point widening in ~~our~~Jefferies Group's own credit spreads on financial liabilities for which the fair value option was elected was an increase in value of approximately ~~of $1.2~~$1.7 million at ~~August~~May 31, ~~2020,~~2021, which is included in Accumulated other comprehensive income (loss).

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~~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 its 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 our 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 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 direct lender and through extending loan commitments, as a holder of securities 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 our 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

~~104~~

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 Jefferies Group's Secured Revolving Credit Facility that is with Jefferies Group and Massachusetts Mutual Life Insurance Company, to be funded equally, to support loan underwritings by Jefferies Finance. See Note 8 for additional information on this facility. In addition, Jefferies Group has loans outstanding to certain of its officers and employees (none of whom are executive officers or directors). See Note 2221 for additional information on these employee loans.

•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.

•Over-the-counter derivatives, which are reported net by counterparty when a legal right of setoff exists under an enforceable master netting agreement. Over-the-counter 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 include 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 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 Policy. Jefferies Group's 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.

Jefferies Group's Secured Revolving Credit Facility, which supports loan underwritings by Jefferies Finance, is governed under separate policies other than the Credit Risk Policy and is approved by Jefferies Group's Board of Directors. The loans outstanding to certain of Jefferies Group's officers and employees are extended pursuant to a review by its most senior management.

Current counterparty credit exposures 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 tables below.

The amounts in the tables below are for amounts included in the Consolidated Statements of Financial Condition at ~~August~~May 31, ~~2020~~2021 and November 30, ~~2019~~2020 (in millions).


Counterparty Credit Exposure by Credit Rating
	Loans and Lending				Securities and Margin Finance				OTC Derivatives				Total				Cash and Cash Equivalents				Total with Cash and Cash Equivalents
	At				At				At				At				At				At
	May 31, 2021		November 30, 2020		May 31, 2021		November 30, 2020		May 31, 2021		November 30, 2020		May 31, 2021		November 30, 2020		May 31, 2021		November 30, 2020		May 31, 2021		November 30, 2020
AAA Range	$	—	$	—	$	—	$	1.1	$	—	$	0.1	$	—	$	1.2	$	4,112.9	$	5,132.9	$	4,112.9	$	5,134.1
AA Range	60.0		45.2		104.5		111.7		32.9		9.8		197.4		166.7		14.4		7.8		211.8		174.5
A Range	0.4		0.2		621.5		542.2		178.0		147.2		799.9		689.6		2,092.1		1,967.9		2,892.0		2,657.5
BBB Range	279.6		250.5		129.1		110.2		16.0		18.1		424.7		378.8		1.4		2.2		426.1		381.0
BB or Lower	50.0		50.0		7.2		8.3		134.3		201.6		191.5		259.9		0.1		0.1		191.6		260.0
Unrated	141.0		142.0		—		—		—		0.2		141.0		142.2		—		1.0		141.0		143.2
Total	$	531.0	$	487.9	$	862.3	$	773.5	$	361.2	$	377.0	$	1,754.5	$	1,638.4	$	6,220.9	$	7,111.9	$	7,975.4	$	8,750.3

Counterparty Credit Exposure by Credit Rating
Loans and Lending Securities and
Margin Finance OTC Derivatives Total Cash and Cash
Equivalents Total with Cash and
Cash Equivalents
At At At At At At
August 31, 2020 November 30, 2019 August 31, 2020 November 30, 2019 August 31, 2020 November 30, 2019 August 31, 2020 November 30, 2019 August 31, 2020 November 30, 2019 August 31, 2020 November 30, 2019
AAA Range   $ — $ — $ 0.3 $ 1.5 $ 0.1 $ — $ 0.4 $ 1.5 $ 5,317.9 $ 4,584.1 $ 5,318.3 $ 4,585.6
AA Range   45.1 45.2 100.3 43.0 21.5 3.7 166.9 91.9 3.9 5.3 170.8 97.2
A Range   0.2 1.1 466.2 531.9 133.7 152.4 600.1 685.4 1,425.1 976.3 2,025.2 1,661.7
BBB Range   250.0 250.2 122.5 140.9 24.9 48.3 397.4 439.4 1.5 1.6 398.9 441.0
BB or Lower   40.0 15.0 17.8 6.6 239.7 154.1 297.5 175.7 0.1 — 297.6 175.7
Unrated   98.9 94.2 — — 0.2 6.8 99.1 101.0 1.2 0.6 100.3 101.6
Total   $ 434.2 $ 405.7 $ 707.1 $ 723.9 $ 420.1 $ 365.3 $ 1,561.4 $ 1,494.9 $ 6,749.7 $ 5,567.9 $ 8,311.1 $ 7,062.8


Counterparty Credit Exposure by Region
	Loans and Lending				Securities and Margin Finance				OTC Derivatives				Total				Cash and Cash Equivalents				Total with Cash and Cash Equivalents
	At				At				At				At				At				At
	May 31, 2021		November 30, 2020		May 31, 2021		November 30, 2020		May 31, 2021		November 30, 2020		May 31, 2021		November 30, 2020		May 31, 2021		November 30, 2020		May 31, 2021		November 30, 2020
Asia/Latin America/Other	$	15.0	$	15.0	$	93.5	$	72.6	$	8.6	$	6.9	$	117.1	$	94.5	$	266.6	$	248.4	$	383.7	$	342.9
Europe	0.2		0.1		324.4		313.0		33.7		42.5		358.3		355.6		245.2		96.4		603.5		452.0
North America	515.8		472.8		444.4		387.9		318.9		327.6		1,279.1		1,188.3		5,709.1		6,767.1		6,988.2		7,955.4
Total	$	531.0	$	487.9	$	862.3	$	773.5	$	361.2	$	377.0	$	1,754.5	$	1,638.4	$	6,220.9	$	7,111.9	$	7,975.4	$	8,750.3

~~105~~

Counterparty Credit Exposure by Region
Loans and Lending Securities and
Margin Finance OTC Derivatives Total Cash and Cash
Equivalents Total with Cash and
Cash Equivalents
At At At At At At
August 31, 2020 November 30, 2019 August 31, 2020 November 30, 2019 August 31, 2020 November 30, 2019 August 31, 2020 November 30, 2019 August 31, 2020 November 30, 2019 August 31, 2020 November 30, 2019
Asia/Latin America/Other   $ 15.0 $ 15.0 $ 51.0 $ 50.5 $ 7.1 $ 0.3 $ 73.1 $ 65.8 $ 226.0 $ 100.4 $ 299.1 $ 166.2
Europe   0.1 — 282.0 324.1 62.5 101.1 344.6 425.2 92.1 74.1 436.7 499.3
North America 419.1 390.7 374.1 349.3 350.5 263.9 1,143.7 1,003.9 6,431.6 5,393.4 7,575.3 6,397.3
Total   $ 434.2 $ 405.7 $ 707.1 $ 723.9 $ 420.1 $ 365.3 $ 1,561.4 $ 1,494.9 $ 6,749.7 $ 5,567.9 $ 8,311.1 $ 7,062.8


Counterparty Credit Exposure by Industry	Counterparty Credit Exposure by Industry																																																									Counterparty Credit Exposure by Industry
		Loans and Lending						Securities and Margin Finance						OTC Derivatives						Total											Cash and Cash Equivalents									Total with Cash and Cash Equivalents								Loans and Lending						Securities and Margin Finance						OTC Derivatives				Total	Cash and Cash Equivalents	Total with Cash and Cash Equivalents
		At						At						At						At											At									At								At						At						At				At	At	At
		August 31, 2020		November 30, 2019		August 31, 2020		November 30, 2019		August 31, 2020		November 30, 2019		August 31, 2020		November 30, 2019		August 31, 2020		November 30, 2019		August 31, 2020				November 30, 2019				May 31, 2021			November 30, 2020			May 31, 2021			November 30, 2020			May 31, 2021			November 30, 2020			May 31, 2021			November 30, 2020			May 31, 2021			November 30, 2020			May 31, 2021		November 30, 2020
Asset Managers	Asset Managers	$	0.1	$	—	$	—	$	1.7	$	—	$	—	$	0.1	$	1.7	$	5,317.9	$	4,584.1	$	5,318.0			$	4,585.8	Asset Managers		$	—		$	0.2		$	—		$	—		$	—		$	—		$	—		$	0.2		$	4,112.9		$	5,132.9		$	4,112.9	$	5,133.1
Banks, Broker-dealers	Banks, Broker-dealers	250.2		250.7		513.4		526.7		182.7		206.8		946.3		984.2		1,431.8		983.8		2,378.1				1,968.0		Banks, Broker-dealers		280.0			250.7			656.5			558.6			226.7			178.8			1,163.2			988.1			2,108.0			1,979.0			3,271.2		2,967.1

Corporates	Corporates	106.6		81.3		—		—		228.2		154.4		334.8		235.7		—		—		334.8				235.7		Corporates		150.0			132.7			—			—			128.7			183.9			278.7			316.6			—			—			278.7		316.6
As Agent Banks																								As Agent Banks	—				—			184.1			190.0			—			—			184.1			190.0			—			—			184.1			190.0
Other	Other	77.3		73.7		193.7		195.5		9.2		4.1		280.2		273.3		—		—		280.2				273.3		Other		101.0			104.3			21.7			24.9			5.8			14.3			128.5			143.5			—			—			128.5		143.5
Total	Total	$	434.2	$	405.7	$	707.1	$	723.9	$	420.1	$	365.3	$	1,561.4	$	1,494.9	$	6,749.7	$	5,567.9	$	8,311.1			$	7,062.8	Total		$	531.0		$	487.9		$	862.3		$	773.5		$	361.2		$	377.0		$	1,754.5		$	1,638.4		$	6,220.9		$	7,111.9		$	7,975.4	$	8,750.3

For additional information regarding credit exposure to over-the-counter derivative contracts, see Note 4 in the consolidated financial statements.

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 exposure to the sovereign governments, corporations and financial institutions in those non-U.S. countries in which we have a net long issuer and counterparty exposure, as reflected in the Consolidated Statements of Financial Condition (in millions):


		August 31, 2020																																			May 31, 2021
		Issuer Risk										Counterparty Risk																Issuer and Counterparty Risk					Issuer Risk						Counterparty Risk	Issuer and Counterparty Risk
		Fair Value of Long Debt Securities		Fair Value of Short Debt Securities		Net Derivative Notional Exposure		Loans and Lending		Securities and Margin Finance		OTC Derivatives		Cash and Cash Equivalents		Excluding Cash and Cash Equivalents		Including Cash and Cash Equivalents			Fair Value of Long Debt Securities		Fair Value of Short Debt Securities		Net Derivative Notional Exposure		Loans and Lending		Securities and Margin Finance		OTC Derivatives		Cash and Cash Equivalents		Excluding Cash and Cash Equivalents		Including Cash and Cash Equivalents
Australia		$	35.2	$	(19.6)	$	1,514.3	$	—	$	14.3	$	—	$	13.4	$	1,544.2	$	1,557.6
United Kingdom																				United Kingdom	$	484.1	$	(246.1)	$	(86.0)	$	0.2	$	68.4	$	2.1	$	194.5	$	222.7	$	417.2
Germany	Germany	589.6		(507.8)		894.9		—		68.6		11.5		16.4		1,056.8		1,073.2		Germany	493.3		(321.1)		122.0		—		61.0		13.5		42.5		368.7		411.2
United Kingdom		361.2		(140.5)		(39.1)		0.1		45.3		11.4		71.9		238.4		310.3
Canada																				Canada	148.7		(94.5)		1.1		—		48.0		142.5		6.8		245.8		252.6
Hong Kong	Hong Kong	46.8		(23.1)		—		—		0.2		—		152.0		23.9		175.9		Hong Kong	37.8		(16.3)		—		—		1.1		—		173.0		22.6		195.6
China																				China	522.0		(339.9)		(27.2)		—		—		—		—		154.9		154.9
Ireland																				Ireland	140.6		(6.3)		(0.3)		—		—		—		—		134.0		134.0
Switzerland																				Switzerland	135.1		(58.6)		2.3		—		33.0		7.6		1.8		119.4		121.2
Austria																				Austria	171.3		(56.4)		—		—		—		—		—		114.9		114.9
Netherlands																				Netherlands	393.9		(337.5)		—		—		4.1		0.3		0.1		60.8		60.9
Italy	Italy	1,458.4		(1,094.3)		(212.1)		—		—		0.4		—		152.4		152.4		Italy	1,009.6		(813.0)		(137.5)		—		—		0.1		0.7		59.2		59.9
Canada		343.8		(294.9)		(0.5)		—		21.7		78.7		1.7		148.8		150.5
China		498.1		(372.3)		(22.8)		—		—		—		—		103.0		103.0
Switzerland		110.9		(84.1)		1.1		—		28.1		2.5		3.5		58.5		62.0
Portugal		202.0		(141.0)		(0.4)		—		—		—		—		60.6		60.6
France		501.2		(493.9)		(107.2)		—		124.6		23.6		—		48.3		48.3
Total	Total	$	4,147.2	$	(3,171.5)	$	2,028.2	$	0.1	$	302.8	$	128.1	$	258.9	$	3,434.9	$	3,693.8	Total	$	3,536.4	$	(2,289.7)	$	(125.6)	$	0.2	$	215.6	$	166.1	$	419.4	$	1,503.0	$	1,922.4

~~106~~


		November 30, 2019																																			November 30, 2020
		Issuer Risk										Counterparty Risk																Issuer and Counterparty Risk					Issuer Risk						Counterparty Risk	Issuer and Counterparty Risk
		Fair Value of Long Debt Securities		Fair Value of Short Debt Securities		Net Derivative Notional Exposure		Loans and Lending		Securities and Margin Finance		OTC Derivatives		Cash and Cash Equivalents		Excluding Cash and Cash Equivalents		Including Cash and Cash Equivalents			Fair Value of Long Debt Securities		Fair Value of Short Debt Securities		Net Derivative Notional Exposure		Loans and Lending		Securities and Margin Finance		OTC Derivatives		Cash and Cash Equivalents		Excluding Cash and Cash Equivalents		Including Cash and Cash Equivalents

Netherlands		$	946.0	$	(329.7)	$	(100.1)	$	—	$	42.6	$	0.5	$	—	$	559.3	$	559.3
Italy																				Italy	$	1,929.5	$	(921.6)	$	(618.9)	$	—	$	—	$	0.1	$	—	$	389.1	$	389.1
United Kingdom	United Kingdom	416.1		(199.9)		(124.4)		—		60.7		37.6		54.1		190.1		244.2		United Kingdom	464.0		(235.8)		(46.7)		0.1		67.4		5.2		64.8		254.2		319.0
Italy		1,262.3		(1,192.4)		105.4		—		—		0.4		—		175.7		175.7
France	France	423.4		(296.2)		(93.1)		—		94.2		40.9		—		169.2		169.2		France	357.3		(290.9)		48.3		—		140.8		24.3		—		279.8		279.8
Germany																				Germany	470.7		(352.7)		40.2		—		63.1		11.3		26.7		232.6		259.3
Australia																				Australia	32.7		(17.8)		173.9		—		24.9		—		12.8		213.7		226.5
Hong Kong																				Hong Kong	35.2		(11.8)		0.7		—		0.1		—		157.4		24.2		181.6
Canada	Canada	380.4		(362.2)		7.4		—		0.3		81.2		1.9		107.1		109.0		Canada	417.3		(326.8)		1.3		—		20.4		64.3		2.1		176.5		178.6
Spain		249.2		(137.3)		(25.7)		—		3.3		—		—		89.5		89.5
Japan		76.0		(171.6)		133.8		—		24.7		—		13.2		62.9		76.1
China		283.3		(236.9)		25.6		—		—		—		—		72.0		72.0
Mexico		112.0		(68.3)		13.0		—		—		—		—		56.7		56.7
Germany		238.2		(321.3)		19.3		—		88.3		14.4		13.6		38.9		52.5
Austria																				Austria	151.2		(73.6)		—		—		—		—		—		77.6		77.6
India																				India	50.9		(6.7)		—		—		—		—		24.3		44.2		68.5
Switzerland																				Switzerland	104.0		(72.2)		2.9		—		31.6		1.3		0.4		67.6		68.0
Total	Total	$	4,386.9	$	(3,315.8)	$	(38.8)	$	—	$	314.1	$	175.0	$	82.8	$	1,521.4	$	1,604.2	Total	$	4,012.8	$	(2,309.9)	$	(398.3)	$	0.1	$	348.3	$	106.5	$	288.5	$	1,759.5	$	2,048.0

At ~~August~~May 31, ~~2020,~~2021, we have no material exposure to countries where either sovereign or non-sovereign sectors pose potential default risk as the result of liquidity concerns.

Operational Risk

Operational risk refers to the risk of loss resulting from operations, including, but not limited to, improper or unauthorized execution and processing of transactions, deficiencies in our operating systems, business disruptions and inadequacies or breaches in internal control processes. Our businesses are highly dependent on our ability to process, on a daily basis, a large number of transactions across numerous and diverse markets in many currencies. In addition, the transactions we process have become increasingly complex. If our financial, accounting or other data processing systems do not operate properly or are disabled or if there are other shortcomings or failures in our internal processes, people or systems, we could suffer an impairment to our liquidity, financial loss, a disruption of our businesses, liability to clients, regulatory intervention or reputational damage.

These systems may fail to operate properly or become disabled as a result of events that are wholly or partially beyond our control, including a disruption of electrical or communications services or the inability to occupy one or more of our buildings. The inability of our systems to accommodate an increasing volume of transactions could also constrain our ability to expand our businesses.

We also face the risk of operational failure or termination of any of the clearing agents, exchanges, clearing houses or other financial intermediaries we use to facilitate our securities transactions. Any such failure or termination could adversely affect our ability to effect

100

transactions and manage exposure to risk. In addition, despite the contingency plans we have in place, our ability to conduct business may be adversely impacted by a disruption in the infrastructure that supports our businesses and the communities in which they are located. This may include a disruption involving electrical, communications, transportation or other services used by us or ~~third parties~~third-parties with which we conduct business.

Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. Although we take protective measures and endeavor to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to unauthorized access, computer viruses or other malicious code, and other events that could have a security impact. If one or more of such events occur, this potentially could jeopardize our or our clients' or counterparties' confidential and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our, our clients', our counterparties' or ~~third parties'~~third-parties' operations. We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance maintained by us.

Our Operational Risk framework includes governance, collection of operational risk incidents, proactive operational risk management, and periodic review and analysis of business metrics to identify and recommend controls and process-related enhancements. Each revenue producing and support department is responsible for the management and reporting of operational risks and the implementation of the Operational Risk policy and processes within the department. Operational Risk policy, framework, infrastructure, methodology, processes, guidance and oversight of the operational risk processes are centralized and consistent firm wide and also subject to regional operational risk governance.

~~107~~

Our leadership is continuously monitoring circumstances around COVID-19, as well as economic and capital market conditions, and providing frequent communications to both our clients and our employees. We have adopted enhanced cleaning practices across our offices, have ~~restricted business~~established protocols for office access, travel, meetings and ~~have monitored~~entertainment to ensure the ~~health and welfare~~safety of our ~~employees~~people and ~~worked~~clients, and continue to work actively with ~~many individuals diagnosed with COVID-19. We implemented~~ our employees to navigate the changing environment. Our Business Continuity ~~Planning plan and have~~Plan is operating effectively across a largely ~~moved to a~~ remote working environment across all functions without any significant disruptions to our business or control processes. Additionally, we are working continuously with all of our critical vendors regarding their own pandemic responses to ensure there is minimal impact on our business operations.

Model Risk

Model risk refers to the risk of losses 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.

101

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,~~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.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

The Company's management evaluated, with the participation of the Company's principal executive and principal financial officers, the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of ~~August~~May 31, ~~2020.~~2021. Based on their evaluation, the Company's principal executive and principal financial officers concluded that the Company's disclosure controls and procedures were effective as of ~~August~~May 31, ~~2020.~~2021.

Changes in internal control over financial reporting

There has been no change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company's fiscal quarter ended ~~August~~May 31, ~~2020,~~2021, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

~~108~~102

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

The information set forth in response to this Item 1 is incorporated by reference from the "Contingencies" section in Note ~~19,~~18, Commitments, Contingencies and Guarantees, in the Notes to ~~consolidated financial statements~~Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report, which is incorporated herein by reference.

Item 1A. Risk Factors.

~~The effects~~Information regarding our risk factors appears in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended November 30, 2020. These risk factors describe some of the outbreak of the novel coronavirus (COVID-19) have negatively affected the global economy, the United States economy and the global financial markets, and may disrupt our operations and our clients' operations, which could have an adverse effect on our business, financial condition and results of operations. The ongoing COVID-19 global and national health emergency has caused significant disruption in the international and United States economies and financial markets. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability. The United States now has the world's most reported COVID-19 cases, and all 50 states and the District of Columbia have reported cases of infected individuals. Several states, including New York, where we are headquartered, have declared states of emergency. Similar impacts have been experienced in every country in which we do business. Impacts to our business could be widespread and global, and material impacts may be possible, including the following:

•~~Employees contracting COVID-19~~

•~~Reductions in our operating effectiveness as our employees work from home or disaster-recovery locations~~

•~~Unavailability of key personnel necessary to conduct our business activities~~

•~~Unprecedented volatility in global financial markets~~

•~~Reductions in revenue across our operating businesses~~

•~~Delay in planned entry into, or expansion of, investments or projects in China and surrounding areas~~

•~~Closure of our offices or the offices of our clients~~

•~~De-globalization~~

We are taking precautions to protect the safety and well-being of our employees and customers. However, no assurance can be given that the steps being taken will be deemed to be adequate or appropriate, nor can we predict the level of disruption which will occur to our employee's ability to provide customer support and service.

Although the onset of the COVID-19 pandemic resulted in meaningfully lower stock prices for many companies, as well as the trading prices for our own securities, the markets have not only stabilized but returned to near pre-COVID-19 levels. However, the further spread of the COVID-19 outbreak may materially negatively impact stockassumptions, risks, uncertainties and other securities prices and materially disrupt banking and other financial activity generally and in the areas in which we operate. This would likely result in a decline in demand for our products and services, which would negatively impact our liquidity position and our growth strategy. Any one or more of these developments could have a material adverse effect on our and our consolidated subsidiaries' business, operations, consolidated financial condition, and consolidated results of operations.

~~We may incur losses as a result of unforeseen or catastrophic events, including the emergence of a pandemic, terrorist attacks, extreme weather events or other natural disasters.~~ The occurrence of unforeseen or catastrophic events, including the emergence of a pandemic, such as COVID-19, or other widespread health emergency (or concerns over the possibility of such an emergency), terrorist attacks, extreme terrestrial or solar weather events or other natural disasters, could create economic and financial disruptions, and could lead to operational difficulties (including travel limitations)factors that could ~~impair our ability to manage our businesses.~~

~~Abrupt changes in market and general economic conditions have in the past adversely affected, and may in the future~~ adversely affect our business ~~and profitability and cause volatility~~or that could otherwise result in changes that differ materially from our ~~results of operations.~~ Economic and market conditions have had, and will continue to have, a direct and material impact on our results of operations and financial condition because performance in the financial services industry is heavily influenced by the overall strength of general economic conditions and financial market activity.expectations.

Our investment banking revenue, in the form of advisory services and underwriting, is directly related to general economic conditions and corresponding financial market activity. When the outlook for such economic conditions is uncertain or negative, financial market activity generally tends to decrease, which reduces our investment banking revenues. Reduced expectations of United States economic growth or a

~~109~~

~~decline in the global economic outlook could cause financial market activity to decrease and negatively affect our investment banking revenues.~~

A sustained and continuing market downturn could lead to or exacerbate declines in the number of securities transactions executed for customers and, therefore, to a decline in the revenues we receive from commissions and spreads. Correspondingly, a reduction of prices of the securities we hold in inventory or as investments would lead to reduced revenues.

Revenues from our asset management businesses have been and may continue to be negatively impacted by declining securities prices, as well as widely fluctuating securities prices. Because our asset management businesses hold long and short positions in equity and debt securities, changes in the prices of these securities, as well as any decrease in the liquidity of these securities, may materially and adversely affect our revenues from asset management.

Similarly, our merchant banking businesses may suffer from the above-mentioned impacts of COVID-19 including employee and customer illnesses and quarantines, cancellations of events and travel, reductions in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability. As an example, an overall reduction in business activity has led to a decrease in global demand for oil and natural gas thereby causing lower prices for these commodities. Such dramatic price decreases may have a material adverse effect on our investments in Vitesse Energy Finance and JETX Energy.

In addition, global economic conditions and global financial markets remain vulnerable to the potential risks posed by certain events, which could include, among other things, political and financial uncertainty in the United States and the European Union, renewed concern about China's economy, complications involving terrorism and armed conflicts around the world, or other challenges to global trade or travel, such as might occur in the event of a wider pandemic involving COVID-19. More generally, because our business is closely correlated to the general economic outlook, a significant deterioration in that outlook or realization of certain events would likely have an immediate and significant negative impact on our business and overall results of operations.

~~110~~

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.

The following table presents information on our purchases of our common shares during the ~~third~~second quarter of ~~2020~~2021 (dollars in thousands, except per share amounts):

(a) Total
Number of
Shares
Purchased (1) (b) Average
Price Paid
per Share (c) Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs (2) (d) Approximate Dollar Value of Shares
that May Yet Be
Purchased Under the
Plans or Programs (2)
June 1, 2020 to June 30, 2020 1,596 $ 15.26 — $ 250,000
July 1, 2020 to July 31, 2020 7,200,000 $ 16.17 7,200,000 $ 133,576
August 1, 2020 to August 31, 2020 685,884 $ 17.16 675,000 $ 121,987
Total 7,887,480 7,875,000


	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
March 1, 2020 to March 31, 2021	—	$	—	—	$	250,000
April 1, 2021 to April 30, 2021	—	$	—	—	$	250,000
May 1, 2021 to May 31, 2021	—	$	—	—	$	250,000
Total	—			—

(1)Includes an aggregate 12,480 shares repurchased other than as part of our publicly announced Board authorized repurchase program. We repurchased these securities in connection with our share compensation plans which allow participants to use shares to satisfy certain tax liabilities arising from the vesting of restricted shares and the distribution of restricted share units. The total number of shares purchased does not include unvested shares forfeited back to us pursuant to the terms of our share compensation plans.

~~(2)~~ In ~~June 2020,~~March 2021, the Board of Directors increased the share repurchase authorization by $127.5 million to $250.0 million. At ~~August~~May 31, ~~2020, $122.0~~2021, $250.0 million remains available for future purchases. ~~In September 2020, the Board of Directors increased the share repurchase authorization to $250.0 million, including the $122.0 million.~~

~~111~~103


Item 6.			Exhibits.

See Exhibit Index.

Exhibit Index




31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101			Financial statements from the Quarterly Report on Form 10-Q of Jefferies Financial Group Inc. for the quarter ended ~~August~~May 31, ~~2020,~~2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Changes in Equity and (vi) the Notes to Consolidated Financial Statements.
104			Cover Page Interactive Data File, formatted in iXBRL (included in Exhibit 101).

~~112~~104

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

JEFFERIES FINANCIAL GROUP INC.

(Registrant)

Date: ~~October~~July 9, ~~2020~~2021

By:

/s/ John M. Dalton

Name: John M. Dalton

Title: Vice President and Controller

(Duly Authorized Officer and Chief Accounting Officer)

~~113~~105


Three Months Ended August 31, 2019
	Balance, May 31 2019		Total gains/ losses (realized and unrealized) (1)		Purchases		Sales		Settlements		Issuances		Net transfers into (out of) Level 3		Balance, August 31, 2019		Changes in unrealized gains/ losses included in earnings relating to instruments still held at August 31, 2019 (1)
Assets:
Financial instruments owned, at fair value:
Corporate equity securities	$	59,572	$	12,547	$	16,508	$	(17,502)	$	0	$	0	$	(20,255)	$	50,870	$	12,067
Corporate debt securities	8,346		(3,072)		1,175		(1,942)		(85)		0		4,866		9,288		(3,047)
CDOs and CLOs	25,912		(1,499)		0		0		(609)		0		6,454		30,258		(2,097)


Residential mortgage-backed securities	17,266		(1,917)		0		(65)		(22)		0		2,667		17,929		(1,435)
Commercial mortgage-backed securities	12,530		(2,003)		0		(1,703)		(3,362)		0		0		5,462		(3,143)
Other asset-backed securities	43,185		(1,689)		13,497		(6,975)		(5,500)		0		(7,920)		34,598		(1,068)
Loans and other receivables	98,484		(2,847)		26,921		(33,409)		(1,287)		0		(12,299)		75,563		(2,392)
Investments at fair value	408,739		(152,162)		1,067		(296)		0		0		35,135		292,483		(152,162)
FXCM term loan	56,600		2,293		0		0		(303)		0		0		58,590		2,293

Securities purchased under agreements to resell	25,000		0		0		0		0		0		0		25,000		0

Liabilities:
Financial instruments sold, not yet purchased, at fair value:
Corporate equity securities	$	221	$	401	$	(221)	$	0	$	(190)	$	0	$	0	$	211	$	(35)
Corporate debt securities	669		(650)		(34)		0		(369)		0		1,586		1,202		649

Commercial mortgage-backed securities	0		0		0		35		0		0		0		35		0
Loans	9,428		(520)		(10,281)		5,384		0		0		12,619		16,630		531
Net derivatives (2)	47,449		(19,519)		0		6,766		(14)		0		16,081		50,763		18,507
Long-term debt (1)	236,562		7,455		0		0		0		114,641		(10,595)		348,063		(8,162)


Nine Months Ended August 31, 2019
	Balance, November 30, 2018		Total gains/ losses (realized and unrealized) (1)		Purchases		Sales		Settlements		Issuances		Net transfers into (out of) Level 3		Balance, August 31, 2019		Changes in unrealized gains/ losses included in earnings relating to instruments still held at August 31, 2019 (1)
Assets:
Financial instruments owned, at fair value:
Corporate equity securities	$	52,192	$	15,499	$	23,172	$	(25,431)	$	(669)	$	0	$	(13,893)	$	50,870	$	14,071
Corporate debt securities	9,484		(4,904)		6,080		(10,544)		(553)		0		9,725		9,288		(5,325)
CDOs and CLOs	36,105		(4,320)		48,112		(43,230)		(3,014)		0		(3,395)		30,258		(6,781)


Residential mortgage-backed securities	19,603		(2,573)		2,166		(2,022)		(171)		0		926		17,929		(2,166)
Commercial mortgage-backed securities	10,886		(2,196)		11		(2,023)		(6,638)		0		5,422		5,462		(4,326)
Other asset-backed securities	53,175		(929)		14,698		(2,494)		(30,623)		0		771		34,598		(961)
Loans and other receivables	46,985		3,933		178,069		(166,496)		(8,379)		0		21,451		75,563		682
Investments at fair value	396,254		(119,110)		42,579		(18,598)		0		0		(8,642)		292,483		(119,110)
FXCM term loan	73,150		(8,669)		1,500		0		(7,391)		0		0		58,590		(8,669)

Securities purchased under agreements to resell	0		0		0		0		0		25,000		0		25,000		0

Liabilities:
Financial instruments sold, not yet purchased, at fair value:
Corporate equity securities	$	0	$	401	$	0	$	0	$	(190)	$	0	$	0	$	211	$	(35)
Corporate debt securities	522		(867)		0		0		(524)		0		2,071		1,202		867

Commercial mortgage-backed securities	0		0		0		35		0		0		0		35		0
Loans	6,376		(1,342)		(8,553)		9,929		0		0		10,220		16,630		1,583
Net derivatives (2)	21,614		(48,746)		(2,829)		16,313		1,609		0		62,802		50,763		40,052
Long-term debt (1)	200,745		(5,286)		0		0		(11,250)		204,710		(40,856)		348,063		(4,517)


	Lease Liabilities

Remainder of 2020	$	22,271
2021	76,932
2022	74,722
2023	65,220
2024	61,994
2025 and thereafter	403,809
Total undiscounted cash flows	704,948
Less: Difference between undiscounted and discounted cash flows	(106,832)
Operating leases amount in the Consolidated Statement of Financial Condition	598,116
Finance leases amount in the Consolidated Statement of Financial Condition	247
Total amount in the Consolidated Statement of Financial Condition	$	598,363


	For the Three Months Ended August 31, 2020		For the Nine Months Ended August 31, 2020

Operating lease costs (1)	$	19,425	$	57,994
Variable lease costs (2)	3,485		9,561
Less: Sublease income	(1,973)		(5,669)
Total lease cost, net	$	20,937	$	61,886


2020	$	70,886
2021	73,374
2022	71,464
2023	62,552
2024	59,714
Thereafter	393,995
	731,985
Less: sublease income	(21,883)
	$	710,102