Jefferies Reports Seven Days of Trading Losses as VaR Falls

Jan 28, 2014 9:15 am ET

(Updates with prior year’s result in first paragraph, value-at-risk in fifth.)

Jan. 28 (Bloomberg) -- Jefferies Group LLC, the investment bank owned by Leucadia National Corp., reported seven days of trading losses in the fiscal fourth quarter, an increase from one day a year earlier.

The figure brings to 32 the total number of days with losses in the fiscal year ended Nov. 30, New York-based Jefferies said today in its annual filing with the U.S. Securities and Exchange Commission. Almost half the year’s daily losses were fueled by fluctuations in investments in KCG Holdings Inc. and Harbinger Group Inc., the bank said.

“Excluding trading losses associated with the daily marking to market of both of our positions in Knight Capital and Harbinger, in the year ended November 30, 2013, there would have been 17 days with trading losses, of which 4 occurred in the fourth quarter,” Jefferies said in the filing outlining full- year results. KCG was formed when Chicago-based Getco LLC bought Knight Capital Group Inc.

Jefferies Chief Executive Officer Richard Handler reported last month that fiscal fourth-quarter profit rose 68 percent as stock underwriting more than doubled and investment-banking revenue reached a record. Jefferies has a stake of about 14 percent in KCG, and holds 13 percent of Phil Falcone’s Harbinger Group, which has units that sell products from insurance to batteries.

Jefferies’s average daily value-at-risk, a measure of potential trading losses, declined 2.2 percent to $10.43 million for the fiscal year, according to the filing. Risks tied to interest rates and commodities prices fell, while equity-price risk climbed, Jefferies said.

Leucadia gained 11 percent in the 12 months through yesterday in trading in New York, where the company is based.

--Editors: Dan Kraut, Steven Crabill