Why Buy “Off the Rack” When Your Custom Tailor Cares So Much and Always Delivers?

To Our Clients

Another year, and we are definitely a little older and hopefully a little wiser. As we start the new calendar year and leave 2012 for the history books, please indulge us for a few minutes as we reminisce a touch and also look forward with great anticipation. It was literally only one year ago today when we shared with you our experience when we chose to aggressively “bare it all” in the face of a gauntlet of serious challenges and false accusations that we needed to address head-on to protect our firm. Well, what a difference a year can make. Put another way, it is amazing what can happen when an organization locks arms and is determined to never give in or give up, regardless of the odds or historical precedent of others in similar situations. Today, instead of fighting to save our company, we believe we are in our strongest position ever, and we are singularly focused on the opportunity we see for the next 10+ years to continue to deliver our platform to best serve you, our clients.

If we are right, we will look back on 2012 as a year of many transitions that bridged the past and the future, and may have witnessed the beginning of true progress in the global cleansing of excessive debt and catastrophic risk. After the latter half of 2011 lost all momentum and sputtered to a disappointing conclusion, 2012 saw some fits and starts but mostly delivered a somewhat positive trend and a reasonable result. We did not permanently solve many of the hardest systemic problems, but we increasingly acknowledged them and at least are beginning the process of making some difficult decisions. Perhaps in a few years, we will see 2012 as the turning point from the aftermath of the severe five-year global crisis to the beginning of a process to restore order and momentum for long-term growth.

For Jefferies, it was a solid year in an okay environment. That said, we went from being a firm that fought mightily in 2011 to keep out the vandals to one that in 2012 led the rescue of another important securities firm, Knight Capital Group. Ultimately, we agreed to merge our firm and form what we believe will be a powerful combination with Leucadia National, a world-class investor, our long-term partner and our largest shareholder. We believe that this combination will give Jefferies an unparalleled platform to serve you and grow our firm.

2013 could be a very solid year, particularly in the equity markets and potentially for building companies. As our strategists say in the next few pages, the ingredients appear to be in place to continue the slow healing of the world economy, especially in the United States and, at an incipient stage, hopefully in Europe as well. The politics and gymnastics in Washington may frustrate us all, but we believe a long-term plan ultimately will be forged that will provide confidence and leadership to the world. Similarly, there may be yet more frustrations and disappointments across the European Community in 2013, but we believe they too must stick together and forge the best solutions they can tolerate. Asia has the benefit of the Chinese leadership transition being completed and it appears the world’s fastest growing region will continue its momentum, albeit at a lesser pace.

It is clear that global interest rates are likely to stay low for at least the entire year, which should help drive momentum across the board, particularly in housing, which has begun to experience a significant rebound. Particularly with some clarity and confidence restored on a fairly global basis, capital investment and mergers and acquisitions should pick up in 2013, which themselves will spur economic growth and momentum in the capital markets. The bottom line is this could be a true transition year and, despite the risks, companies and investors are well-advised to pursue positions to take advantage of this environment.

Our focus at Jefferies in 2013 will continue to be to deliver the best of our entire firm to all our clients. We seek to earn and deserve your trust every day so that we may partner with you to help you achieve your objectives. By serving your interests, our firm’s goals will be achieved. We hope we have distinguished ourselves over the years through the quality of our ideas, our relentlessness, our commitment to execute flawlessly and our passion to serve and succeed. This, in a world where our BBHC (big bank holding company) competitors prioritize cost reductions, which often result in disrupted relationships and reduced services. As they seek to rest on their historic brands and monster balance sheets, we ask that you choose Jefferies as your trading partner or investment banker because we care, we listen to you and we deliver what you want.

Our strategy does not entail optimizing into the most efficient assembly line or factory. Rather, Jefferies is the firm that customizes solutions to your needs and delivers them to your door. We are your full-service tailor shop on Wall Street, in the City of London, in Hong Kong and in markets around the world. We take great pride and pleasure in helping you look and feel good. Perhaps this is an old-fashioned approach to helping investors succeed and businesses grow, but this model has served the world well for decades and it’s who we are at Jefferies. The good news is that today, by selecting Jefferies, you will be supported by a firm with all the capital, skills, experience, products, industry expertise and regional presence to tailor every solution you require. Instead of one size fits all or an insistence that you accept less than a real fit, we will work tirelessly to deliver to you a tailor-made and optimal solution. We want to be the firm with whom you, our clients, most want to work and whom you trust the most to execute what is important to you.

As always, we cannot emphasize enough how personally we take our obligation to you and our mission to serve you. To that end, you also will always find our phone numbers and our email addresses below. We return every phone call, and we personally open our postal mail and every email. You can reach us virtually any time and we hope you will be pleased with the promptness of our response. Jefferies and our 3,804 employee-partners are here to serve you.

We extend our best wishes to you and your family for health, happiness and a successful New Year.

Sincerely, 

Rich and Brian