On October 2, 1962, Jefferies was founded with a mission to provide cash equity trading clients?

To Our Clients

On October 2, 1962, Jefferies was founded with a mission to provide cash equity trading clients with the opportunity to trade how and when they wanted. At the time, virtually all trading took place on stock exchanges, limiting privacy and subjecting all orders to high fixed commission rates. Jefferies created a “third market” where clients could have their trades executed anonymously and directly with the other side of the trade, thus minimizing market impact and resulting in the absolute best execution.

Our mission was to best serve the specific needs of each institutional investor. Needless to say, our pioneering effort to deliver for clients caught the ire of many other securities firms at the time, and they sought to quash this burgeoning third market. They very much liked the status quo market structure that protected the brokers’ interests and were determined to keep it, irrespective of how it failed to put clients’ interests ahead of their own. At a later point in our evolution, Jefferies actually had to sue the NYSE to regain our membership rights, and we were successful in getting our rights back. Almost 20 years ago, we developed one of the very first electronic trading systems (POSIT) and ultimately spun it off as part of a separate public company called Investment Technology Group. In many ways, things don’t change. We have devoted almost 50 years to constantly striving to evolve and innovate, with the overriding goal of delivering to our clients innovative solutions to help them invest their assets and build their companies.

In fact, our firm has evolved enormously since we crossed our first block of stock in 1962. Today, Jefferies is the global investment banking firm with over 3,800 employee-partners around the world whose mission is to utilize all our global capabilities and resources to best serve our broad client base. It is interesting that the bank holding companies that have survived and with whom we compete today are now trying to “evolve” from a model that relied on proprietary trading of often illiquid assets to a more “transparent” and “client focused” strategy. The current environment is not easy for anyone in our industry, but at least Jefferies has the luxury of having our core foundation, strategy and culture intact as we strive to navigate the current economic environment.

We are deeply concerned about the current environment. Governments everywhere appear hamstrung to do what is needed and is right. The problems are enormous, complex and rife with political consequences. While there may be a range of solutions and careful thought must be given to achieve the desired ends, the pace of action and the apparent political challenges being mounted are incredibly disappointing (the markets are signaling this loudly and clearly). The financial system cannot handle this type of stress and strain for a prolonged period without drastic implications. In past downturns, pauses and crises, the solution for the most part came from the free markets and the economy. Since 2008, governments, central banks and regulators have taken center stage, as most market mechanisms have been overwhelmed by the challenges. What is needed is a comprehensive and substantial interim underpinning of key market institutions to weather the current environment and allow time for normal processes to work.

Ultimately, sound economic growth can be restored. The same way the U.S. TARP program brought stability to the marketplace and allowed for an orderly, although volatile, path forward, concerted action is needed now in Europe (and involving much of the rest of the globe) to assure that the markets have time to absorb the near-term shocks and reposition for longer-term orderly deleveraging. The need to discipline these institutions or otherwise assure they don’t again take the system to the precipice can be implemented over time. We await the next moves around the globe with a belief that ultimately our leaders will do right by us all, hopefully with a minimum of interim pain.

In closing, we take the occasion of the beginning of our 50th year to thank all of our clients, employees and other partners and supporters for all we have accomplished together in achieving your goals and ours. We remain committed to serving and working with you for many years to come.

Thank you,

Rich and Brian