0000096223jef:~~JefferiesFinanceLlcMemberjef:LeveragedFinanceArrangementMembersrt:MinimumMemberjef:JefferiesFinanceLlcMember2020-12-012021-05-31~~LinkemMember2020-06-012020-08-31

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 ~~May~~August 31, 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 ~~June~~September 30, 2021 was ~~247,037,420.~~245,561,148.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

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

(Dollars in thousands, except par value)

(Unaudited)


		May 31, 2021		November 30, 2020			August 31, 2021		November 30, 2020
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	8,443,206	$	9,055,148	Cash and cash equivalents	$	9,480,914	$	9,055,148
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	901,381		604,321		Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	514,519		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
Financial instruments owned, at fair value (including securities pledged of $12,447,226 and $13,065,585)						Financial instruments owned, at fair value (including securities pledged of $12,447,226 and $13,065,585)	19,735,103		18,124,577
Loans to and investments in associated companies	Loans to and investments in associated companies	1,728,115		1,686,563		Loans to and investments in associated companies	1,744,965		1,686,563
Securities borrowed	Securities borrowed	6,720,683		6,934,762		Securities borrowed	6,212,491		6,934,762
Securities purchased under agreements to resell	Securities purchased under agreements to resell	6,917,225		5,096,769		Securities purchased under agreements to resell	8,011,550		5,096,769
Securities received as collateral, at fair value	Securities received as collateral, at fair value	0		7,517		Securities received as collateral, at fair value	9,853		7,517
Receivables	Receivables	8,131,943		6,608,767		Receivables	7,067,641		6,608,767
Property, equipment and leasehold improvements, net	Property, equipment and leasehold improvements, net	903,010		897,204		Property, equipment and leasehold improvements, net	914,537		897,204
Intangible assets, net and goodwill	Intangible assets, net and goodwill	1,912,480		1,913,467		Intangible assets, net and goodwill	1,905,163		1,913,467

Other assets	Other assets	2,383,096		2,189,257		Other assets	2,440,663		2,189,257
Total assets (1)	Total assets (1)	$	57,978,969	$	53,118,352	Total assets (1)	$	58,037,399	$	53,118,352

LIABILITIES	LIABILITIES					LIABILITIES
Short-term borrowings	Short-term borrowings	$	475,834	$	764,715	Short-term borrowings	$	307,297	$	764,715
Financial instruments sold, not yet purchased, at fair value	Financial instruments sold, not yet purchased, at fair value	11,971,970		10,017,600		Financial instruments sold, not yet purchased, at fair value	12,748,802		10,017,600
Securities loaned	Securities loaned	2,277,423		1,810,748		Securities loaned	1,764,488		1,810,748
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	7,079,322		8,316,269		Securities sold under agreements to repurchase	7,571,813		8,316,269
Other secured financings	Other secured financings	4,131,597		3,288,384		Other secured financings	4,341,348		3,288,384
Obligation to return securities received as collateral, at fair value	Obligation to return securities received as collateral, at fair value	0		7,517		Obligation to return securities received as collateral, at fair value	9,853		7,517
Lease liabilities	Lease liabilities	570,341		584,807		Lease liabilities	562,122		584,807
Payables, expense accruals and other liabilities	Payables, expense accruals and other liabilities	12,394,362		10,388,072		Payables, expense accruals and other liabilities	11,496,986		10,388,072
Long-term debt	Long-term debt	8,823,245		8,352,039		Long-term debt	8,670,728		8,352,039
Total liabilities (1)	Total liabilities (1)	47,724,094		43,530,151		Total liabilities (1)	47,473,437		43,530,151

Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0

MEZZANINE EQUITY	MEZZANINE EQUITY					MEZZANINE EQUITY
Redeemable noncontrolling interests	Redeemable noncontrolling interests	34,511		24,676		Redeemable noncontrolling interests	38,249		24,676
Mandatorily redeemable convertible preferred shares	Mandatorily redeemable convertible preferred shares	125,000		125,000		Mandatorily redeemable convertible preferred shares	125,000		125,000

EQUITY	EQUITY					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
Common shares, par value $1 per share, authorized 600,000,000 shares; 245,557,193 and 249,750,542 shares issued and outstanding, after deducting 70,906,515 and 66,712,070 shares held in treasury						Common shares, par value $1 per share, authorized 600,000,000 shares; 245,557,193 and 249,750,542 shares issued and outstanding, after deducting 70,906,515 and 66,712,070 shares held in treasury	245,557		249,751
Additional paid-in capital	Additional paid-in capital	2,849,487		2,911,223		Additional paid-in capital	2,812,811		2,911,223
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(363,998)		(288,917)		Accumulated other comprehensive income (loss)	(357,973)		(288,917)
Retained earnings	Retained earnings	7,340,113		6,531,836		Retained earnings	7,681,488		6,531,836
Total Jefferies Financial Group Inc. shareholders' equity	Total Jefferies Financial Group Inc. shareholders' equity	10,072,634		9,403,893		Total Jefferies Financial Group Inc. shareholders' equity	10,381,883		9,403,893
Noncontrolling interests	Noncontrolling interests	22,730��		34,632		Noncontrolling interests	18,830		34,632
Total equity	Total equity	10,095,364		9,438,525		Total equity	10,400,713		9,438,525
Total	Total	$	57,978,969	$	53,118,352	Total	$	58,037,399	$	53,118,352

(1) Total assets include assets related to variable interest entities of ~~$617.7~~$836.8 million and $566.1 million at ~~May~~August 31, 2021 and November 30, 2020, respectively, and Total liabilities include liabilities related to variable interest entities of ~~$4,131.5 million~~$4.34 billion and ~~$3,291.3 million~~$3.29 billion at ~~May~~August 31, 2021 and November 30, 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 ~~May~~August 31, 2021 and 2020

(In thousands, except per share amounts)

(Unaudited)


		For the Three Months Ended				For the Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Revenues:	Revenues:									Revenues:
Commissions and other fees	Commissions and other fees	$	222,624	$	242,972	$	459,393	$	422,402	Commissions and other fees	$	214,363	$	204,032	$	673,756	$	626,434
Principal transactions	Principal transactions	361,023		393,338		1,280,924		798,202		Principal transactions	232,110		623,283		1,513,034		1,421,485
Investment banking	Investment banking	1,000,700		387,491		2,004,312		979,493		Investment banking	1,180,620		615,837		3,184,932		1,595,330
Interest income	Interest income	230,448		236,732		470,945		563,098		Interest income	220,278		219,843		691,223		782,941
Manufacturing revenues	Manufacturing revenues	184,092		85,379		321,939		162,986		Manufacturing revenues	118,918		119,751		440,857		282,737
Other	Other	167,442		31,619		332,404		143,614		Other	174,305		42,753		506,709		186,367
Total revenues	Total revenues	2,166,329		1,377,531		4,869,917		3,069,795		Total revenues	2,140,594		1,825,499		7,010,511		4,895,294
Interest expense of Jefferies Group	Interest expense of Jefferies Group	215,822		229,942		432,468		535,878		Interest expense of Jefferies Group	201,610		209,329		634,078		745,207
Net revenues	Net revenues	1,950,507		1,147,589		4,437,449		2,533,917		Net revenues	1,938,984		1,616,170		6,376,433		4,150,087

Expenses:	Expenses:									Expenses:
Compensation and benefits	Compensation and benefits	831,242		598,467		2,003,785		1,268,660		Compensation and benefits	802,243		760,837		2,806,028		2,029,497
Cost of sales	Cost of sales	143,847		80,771		239,406		153,214		Cost of sales	151,510		82,657		390,916		235,871
Floor brokerage and clearing fees	Floor brokerage and clearing fees	76,810		75,479		153,226		134,660		Floor brokerage and clearing fees	68,982		66,743		222,208		201,403
Interest expense	Interest expense	19,943		21,160		40,310		42,714		Interest expense	19,518		21,512		59,828		64,226
Depreciation and amortization	Depreciation and amortization	39,440		40,366		78,207		79,836		Depreciation and amortization	38,677		39,520		116,884		119,356
Selling, general and other expenses	Selling, general and other expenses	341,560		249,118		613,497		546,956		Selling, general and other expenses	277,262		237,712		890,759		784,668
Total expenses	Total expenses	1,452,842		1,065,361		3,128,431		2,226,040		Total expenses	1,358,192		1,208,981		4,486,623		3,435,021

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 and income (loss) related to associated companies										Income before income taxes and income (loss) related to associated companies	580,792		407,189		1,889,810		715,066
Income (loss) related to associated companies										Income (loss) related to associated companies	(27,176)		5,053		(61,270)		(69,523)
Income before income taxes	Income before income taxes	474,139		75,507		1,274,924		233,301		Income before income taxes	553,616		412,242		1,828,540		645,543
Income tax provision	Income tax provision	120,820		31,962		339,056		77,735		Income tax provision	145,700		107,403		484,756		185,138

Net income	Net income	353,319		43,545		935,868		155,566		Net income	407,916		304,839		1,343,784		460,405
Net loss attributable to the noncontrolling interests	Net loss attributable to the noncontrolling interests	669		2,580		1,412		4,709		Net loss attributable to the noncontrolling interests	1,324		324		2,736		5,033
Net loss attributable to the redeemable noncontrolling interests	Net loss attributable to the redeemable noncontrolling interests	234		198		1,003		480		Net loss attributable to the redeemable noncontrolling interests	68		650		1,071		1,130
Preferred stock dividends	Preferred stock dividends	(1,626)		(1,404)		(3,252)		(2,826)		Preferred stock dividends	(1,849)		(1,404)		(5,101)		(4,230)
Net income attributable to Jefferies Financial Group Inc. common shareholders	Net income attributable to Jefferies Financial Group Inc. common shareholders	$	352,596	$	44,919	$	935,031	$	157,929	Net income attributable to Jefferies Financial Group Inc. common shareholders	$	407,459	$	304,409	$	1,342,490	$	462,338

Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:	Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:									Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income	Net income	$	1.33	$	0.16	$	3.51	$	0.53	Net income	$	1.54	$	1.08	$	5.05	$	1.58

Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:	Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:									Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income	Net income	$	1.30	$	0.16	$	3.43	$	0.53	Net income	$	1.50	$	1.07	$	4.93	$	1.57

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

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

(In thousands)

(Unaudited)


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

Net income	Net income	$	353,319	$	43,545	$	935,868	$	155,566	Net income	$	407,916	$	304,839	$	1,343,784	$	460,405
Other comprehensive income (loss):	Other comprehensive income (loss):									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
Net unrealized holding gains (losses) on investments arising during the period, net of income tax provision (benefit) of $(16), $(7), $(43) and $141										Net unrealized holding gains (losses) on investments arising during the period, net of income tax provision (benefit) of $(16), $(7), $(43) and $141	(49)		(22)		(136)		411
Less: reclassification adjustment for net (gains) losses included in net income, net of income tax provision (benefit) of $0, $0, $0 and $0	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		Less: reclassification adjustment for net (gains) losses included in net income, net of income tax provision (benefit) of $0, $0, $0 and $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 change in unrealized holding gains (losses) on investments, net of income tax provision (benefit) of $(16), $(7), $(43) and $141										Net change in unrealized holding gains (losses) on investments, net of income tax provision (benefit) of $(16), $(7), $(43) and $141	(49)		(22)		(136)		411

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)
Net unrealized foreign exchange gains (losses) arising during the period, net of income tax provision (benefit) of $(2,942), $24,621, $1,659 and $13,636										Net unrealized foreign exchange gains (losses) arising during the period, net of income tax provision (benefit) of $(2,942), $24,621, $1,659 and $13,636	(9,203)		70,758		5,273		35,815
Less: reclassification adjustment for foreign exchange (gains) losses included in net income, net of income tax provision (benefit) of $0, $0, $0 and $0	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		Less: reclassification adjustment for foreign exchange (gains) losses included in net income, net of income tax provision (benefit) of $0, $0, $0 and $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 change in unrealized foreign exchange gains (losses), net of income tax provision (benefit) of $(2,942), $24,621, $1,659 and $13,636										Net change in unrealized foreign exchange gains (losses), net of income tax provision (benefit) of $(2,942), $24,621, $1,659 and $13,636	(9,203)		70,758		5,273		35,815

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 unrealized gains (losses) on instrument specific credit risk arising during the period, net of income tax provision (benefit) of $4,352, $(45,669), $(24,157) and $13,437										Net unrealized gains (losses) on instrument specific credit risk arising during the period, net of income tax provision (benefit) of $4,352, $(45,669), $(24,157) and $13,437	13,501		(133,915)		(74,661)		39,373
Less: reclassification adjustment for instrument specific credit risk (gains) losses included in net income, net of income tax provision (benefit) of $(321), $(224), $599 and $306										Less: reclassification adjustment for instrument specific credit risk (gains) losses included in net income, net of income tax provision (benefit) of $(321), $(224), $599 and $306	998		656		(1,861)		(898)
Net change in unrealized instrument specific credit risk gains (losses), net of income tax provision (benefit) of $4,673, $(45,445), $(24,756) and $13,131										Net change in unrealized instrument specific credit risk gains (losses), net of income tax provision (benefit) of $4,673, $(45,445), $(24,756) and $13,131	14,499		(133,259)		(76,522)		38,475

Net pension gains (losses) arising during the period, net of income tax provision (benefit) of $0, $0, $0 and $0	Net pension gains (losses) arising during the period, net of income tax provision (benefit) of $0, $0, $0 and $0	0		0		0		0		Net pension gains (losses) arising during the period, net of income tax provision (benefit) of $0, $0, $0 and $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
Reclassification adjustment for pension (gains) losses included in net income, net of income tax provision (benefit) of $(270), $(220), $(795) and $(658)										Reclassification adjustment for pension (gains) losses included in net income, net of income tax provision (benefit) of $(270), $(220), $(795) and $(658)	778		644		2,329		1,931
Net change in pension liability, net of income tax provision (benefit) of $270, $220, $795 and $658										Net change in pension liability, net of income tax provision (benefit) of $270, $220, $795 and $658	778		644		2,329		1,931

Other comprehensive income (loss), net of income taxes	Other comprehensive income (loss), net of income taxes	(17,454)		123,872		(75,081)		138,511		Other comprehensive income (loss), net of income taxes	6,025		(61,879)		(69,056)		76,632

Comprehensive income	Comprehensive income	335,865		167,417		860,787		294,077		Comprehensive income	413,941		242,960		1,274,728		537,037
Comprehensive loss attributable to the noncontrolling interests	Comprehensive loss attributable to the noncontrolling interests	669		2,580		1,412		4,709		Comprehensive loss attributable to the noncontrolling interests	1,324		324		2,736		5,033
Comprehensive loss attributable to the redeemable noncontrolling interests	Comprehensive loss attributable to the redeemable noncontrolling interests	234		198		1,003		480		Comprehensive loss attributable to the redeemable noncontrolling interests	68		650		1,071		1,130
Preferred stock dividends	Preferred stock dividends	(1,626)		(1,404)		(3,252)		(2,826)		Preferred stock dividends	(1,849)		(1,404)		(5,101)		(4,230)
Comprehensive income attributable to Jefferies Financial Group Inc. common shareholders	Comprehensive income attributable to Jefferies Financial Group Inc. common shareholders	$	335,142	$	168,791	$	859,950	$	296,440	Comprehensive income attributable to Jefferies Financial Group Inc. common shareholders	$	413,484	$	242,530	$	1,273,434	$	538,970

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

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

(In thousands)

(Unaudited)


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

Net cash flows from operating activities:	Net cash flows from operating activities:					Net cash flows from operating activities:
Net income	Net income	$	935,868	$	155,566	Net income	$	1,343,784	$	460,405
Adjustments to reconcile net income to net cash provided by (used for) operations:
Adjustments to reconcile net income to net cash provided by operations:						Adjustments to reconcile net income to net cash provided by operations:

Deferred income tax provision (benefit)	Deferred income tax provision (benefit)	(40,537)		25,176		Deferred income tax provision (benefit)	(32,865)		106,501

Depreciation and amortization of real estate, property, equipment and leasehold improvements	Depreciation and amortization of real estate, property, equipment and leasehold improvements	72,670		73,450		Depreciation and amortization of real estate, property, equipment and leasehold improvements	108,522		109,877
Other amortization	Other amortization	10,970		5,719		Other amortization	17,435		7,942
Share-based compensation	Share-based compensation	64,257		20,684		Share-based compensation	71,219		29,554
Provision for doubtful accounts	Provision for doubtful accounts	48,939		22,979		Provision for doubtful accounts	48,091		32,344

(Income) loss related to associated companies	(Income) loss related to associated companies	(118,950)		100,712		(Income) loss related to associated companies	(125,962)		91,805
Distributions from associated companies	Distributions from associated companies	39,449		51,860		Distributions from associated companies	49,068		54,916
Net losses related to property and equipment, and other assets	Net losses related to property and equipment, and other assets	4,609		55,867		Net losses related to property and equipment, and other assets	10,059		59,125

Net change in:	Net change in:					Net change in:
Securities deposited with clearing and depository organizations	Securities deposited with clearing and depository organizations	(23,788)		(61,212)		Securities deposited with clearing and depository organizations	34,237		(20,955)
Financial instruments owned, at fair value	Financial instruments owned, at fair value	(1,795,263)		(1,763,950)		Financial instruments owned, at fair value	(1,603,274)		(1,038,140)
Securities borrowed	Securities borrowed	219,788		1,142,449		Securities borrowed	724,187		382,907
Securities purchased under agreements to resell	Securities purchased under agreements to resell	(1,811,829)		(14,988)		Securities purchased under agreements to resell	(2,911,738)		(979,989)
Receivables from brokers, dealers and clearing organizations	Receivables from brokers, dealers and clearing organizations	(601,333)		(1,224,653)		Receivables from brokers, dealers and clearing organizations	264,375		261,569
Receivables from customers of securities operations	Receivables from customers of securities operations	(834,886)		409,989		Receivables from customers of securities operations	(581,647)		524,860
Other receivables	Other receivables	(91,089)		(8,007)		Other receivables	(107,228)		(42,659)
Other assets	Other assets	(88,072)		(210,659)		Other assets	(86,865)		(153,557)
Financial instruments sold, not yet purchased, at fair value	Financial instruments sold, not yet purchased, at fair value	1,937,962		(809,728)		Financial instruments sold, not yet purchased, at fair value	2,724,767		366,737
Securities loaned	Securities loaned	461,500		438,246		Securities loaned	(48,397)		387,692
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	(1,244,181)		1,159,948		Securities sold under agreements to repurchase	(748,003)		(260,144)
Payables to brokers, dealers and clearing organizations	Payables to brokers, dealers and clearing organizations	2,020,160		405,873		Payables to brokers, dealers and clearing organizations	708,810		(81,905)
Payables to customers of securities operations	Payables to customers of securities operations	(61,147)		(153,116)		Payables to customers of securities operations	39,890		128,167
Lease liabilities	Lease liabilities	(27,349)		(30,760)		Lease liabilities	(46,991)		(42,920)
Trade payables, expense accruals and other liabilities	Trade payables, expense accruals and other liabilities	17,124		199,297		Trade payables, expense accruals and other liabilities	302,689		651,918
Other	Other	(76,458)		170,218		Other	(67,618)		271,808

Net cash provided by (used for) operating activities		(981,586)		160,960
Net cash provided by operating activities						Net cash provided by operating activities	86,545		1,307,858

Net cash flows from investing activities:	Net cash flows from investing activities:					Net cash flows from investing activities:
Acquisitions of property, equipment and leasehold improvements, and other assets	Acquisitions of property, equipment and leasehold improvements, and other assets	(56,766)		(120,708)		Acquisitions of property, equipment and leasehold improvements, and other assets	(115,998)		(146,416)

Advances on notes, loans and other receivables	Advances on notes, loans and other receivables	(284,616)		(414,031)		Advances on notes, loans and other receivables	(454,916)		(601,068)
Collections on notes, loans and other receivables	Collections on notes, loans and other receivables	172,609		384,528		Collections on notes, loans and other receivables	294,675		546,676
Loans to and investments in associated companies	Loans to and investments in associated companies	(1,988,158)		(1,382,827)		Loans to and investments in associated companies	(2,291,788)		(1,390,779)
Capital distributions and loan repayments from associated companies	Capital distributions and loan repayments from associated companies	2,025,728		1,344,570		Capital distributions and loan repayments from associated companies	2,308,786		1,372,779

Other	Other	2,391		25,050		Other	2,575		30,404

Net cash used for investing activities	Net cash used for investing activities	$	(128,812)	$	(163,418)	Net cash used for investing activities	$	(256,666)	$	(188,404)

(continued)

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows, continued

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

(In thousands)

(Unaudited)


		For the Six Months Ended					For the Nine Months Ended
		May 31, 2021		May 31, 2020			August 31, 2021		August 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	$	1,276,311	$	1,850,147	Issuance of debt, net of issuance costs	$	1,465,707	$	2,362,574

Repayment of debt	Repayment of debt	(1,153,478)		(1,930,381)		Repayment of debt	(1,580,894)		(2,121,748)
Net change in other secured financings	Net change in other secured financings	842,190		(325,234)		Net change in other secured financings	1,051,357		303,893
Net change in bank overdrafts	Net change in bank overdrafts	49,187		(3,126)		Net change in bank overdrafts	(6,350)		(37,758)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	(13,266)		(216)		Distributions to noncontrolling interests	(15,997)		(1,719)
Contributions from noncontrolling interests	Contributions from noncontrolling interests	3,434		17,504		Contributions from noncontrolling interests	3,590		18,558
Purchase of common shares for treasury	Purchase of common shares for treasury	(130,097)		(495,253)		Purchase of common shares for treasury	(181,866)		(623,469)
Dividends paid	Dividends paid	(99,501)		(83,436)		Dividends paid	(161,330)		(122,871)
Other	Other	1,207		575		Other	1,631		821

Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	775,987		(969,420)		Net cash provided by (used for) financing activities	575,848		(221,719)

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	4,755		(13,547)		Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	1,704		19,723

Net decrease in cash, cash equivalents and restricted cash		(329,656)		(985,425)
Net increase in cash, cash equivalents and restricted cash						Net increase in cash, cash equivalents and restricted cash	407,431		917,458

Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	9,664,972		8,480,435		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	$	9,335,316	$	7,495,010	Cash, cash equivalents and restricted cash at end of period	$	10,072,403	$	9,397,893

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			August 31, 2021		August 31, 2020

Cash and cash equivalents	Cash and cash equivalents	$	8,443,206	$	6,883,881	Cash and cash equivalents	$	9,480,914	$	8,426,832
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	843,356		572,725		Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	514,519		930,174
Other assets	Other assets	48,754		38,404		Other assets	76,970		40,887
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	9,335,316	$	7,495,010	Total cash, cash equivalents and restricted cash	$	10,072,403	$	9,397,893

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

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

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

(Unaudited)


		Jefferies Financial Group Inc. Common Shareholders															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			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
Balance, June 1, 2021																Balance, June 1, 2021	$	247,032	$	2,849,487	$	(363,998)	$	7,340,113	$	10,072,634	$	22,730	$	10,095,364

Net income attributable to Jefferies Financial Group Inc. common shareholders	Net income attributable to Jefferies Financial Group Inc. common shareholders							352,596		352,596				352,596		Net income attributable to Jefferies Financial Group Inc. common shareholders							407,459		407,459				407,459
Net loss attributable to the noncontrolling interests	Net loss attributable to the noncontrolling interests									0		(669)		(669)		Net loss attributable to the noncontrolling interests									—		(1,324)		(1,324)
Other comprehensive loss, net of taxes						(17,454)				(17,454)				(17,454)
Other comprehensive income, net of income taxes																Other comprehensive income, net of income taxes					6,025				6,025				6,025
Contributions from noncontrolling interests	Contributions from noncontrolling interests									0		3,354		3,354		Contributions from noncontrolling interests									—		156		156
Distributions to noncontrolling interests	Distributions to noncontrolling interests									0		(11,793)		(11,793)		Distributions to noncontrolling interests									—		(2,731)		(2,731)

Share-based compensation expense	Share-based compensation expense			43,579						43,579				43,579		Share-based compensation expense			6,962						6,962				6,962
Change in fair value of redeemable noncontrolling interests	Change in fair value of redeemable noncontrolling interests			(3,715)						(3,715)				(3,715)		Change in fair value of redeemable noncontrolling interests			1,908						1,908				1,908

Dividends ($0.20 per common share)								(53,943)		(53,943)				(53,943)
Purchase of common shares for treasury																Purchase of common shares for treasury	(1,500)		(50,269)						(51,769)				(51,769)
Dividends ($0.25 per common share)																Dividends ($0.25 per common share)							(66,084)		(66,084)				(66,084)
Other	Other	329		5,380						5,709		(658)		5,051		Other	25		4,723						4,748		(1)		4,747
Balance, May 31, 2021		$	247,032	$	2,849,487	$	(363,998)	$	7,340,113	$	10,072,634	$	22,730	$	10,095,364
Balance, August 31, 2021																Balance, August 31, 2021	$	245,557	$	2,812,811	$	(357,973)	$	7,681,488	$	10,381,883	$	18,830	$	10,400,713


		Jefferies Financial Group Inc. Common Shareholders															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			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
Balance, June 1, 2020																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	Net income attributable to Jefferies Financial Group Inc. common shareholders							44,919		44,919				44,919		Net income attributable to Jefferies Financial Group Inc. common shareholders							304,409		304,409				304,409
Net loss attributable to the noncontrolling interests	Net loss attributable to the noncontrolling interests									0		(2,580)		(2,580)		Net loss attributable to the noncontrolling interests									—		(324)		(324)
Other comprehensive income, net of taxes						123,872				123,872				123,872
Other comprehensive loss, net of income taxes																Other comprehensive loss, net of income taxes					(61,879)				(61,879)				(61,879)
Contributions from noncontrolling interests	Contributions from noncontrolling interests									0		404		404		Contributions from noncontrolling interests									—		1,054		1,054
Distributions to noncontrolling interests	Distributions to noncontrolling interests									0		(216)		(216)		Distributions to noncontrolling interests									—		(1,503)		(1,503)

Share-based compensation expense	Share-based compensation expense			10,737						10,737				10,737		Share-based compensation expense			8,870						8,870				8,870
Change in fair value of redeemable noncontrolling interests				2,311						2,311				2,311

Purchase of common shares for treasury	Purchase of common shares for treasury	(10,130)		(156,407)						(166,537)				(166,537)		Purchase of common shares for treasury	(7,888)		(120,329)						(128,217)				(128,217)
Dividends ($0.15 per common share)	Dividends ($0.15 per common share)							(43,454)		(43,454)				(43,454)		Dividends ($0.15 per common share)							(41,798)		(41,798)				(41,798)
Other	Other	132		5,619						5,751		1		5,752		Other	23		2,703						2,726		—		2,726
Balance, May 31, 2020		$	267,111	$	3,191,893	$	(134,528)	$	6,002,078	$	9,326,554	$	34,559	$	9,361,113
Balance, August 31, 2020																Balance, August 31, 2020	$	259,246	$	3,083,137	$	(196,407)	$	6,264,689	$	9,410,665	$	33,786	$	9,444,451

See notes to interim consolidated financial statements.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

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

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

(Unaudited)


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

Balance, December 1, 2020	Balance, December 1, 2020	$	249,751	$	2,911,223	$	(288,917)	$	6,531,836	$	9,403,893	$	34,632	$	9,438,525	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	Cumulative effect of the adoption of accounting standards							(19,915)		(19,915)				(19,915)		Cumulative effect of the adoption of accounting standards							(19,915)		(19,915)				(19,915)
Balance, December 1, 2020, as adjusted	Balance, December 1, 2020, as adjusted	249,751		2,911,223		(288,917)		6,511,921		9,383,978		34,632		9,418,610		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	Net income attributable to Jefferies Financial Group Inc. common shareholders							935,031		935,031				935,031		Net income attributable to Jefferies Financial Group Inc. common shareholders							1,342,490		1,342,490				1,342,490
Net loss attributable to the noncontrolling interests	Net loss attributable to the noncontrolling interests									0		(1,412)		(1,412)		Net loss attributable to the noncontrolling interests									—		(2,736)		(2,736)
Other comprehensive loss, net of taxes						(75,081)				(75,081)				(75,081)
Other comprehensive loss, net of income taxes																Other comprehensive loss, net of income taxes					(69,056)				(69,056)				(69,056)
Contributions from noncontrolling interests	Contributions from noncontrolling interests									0		3,434		3,434		Contributions from noncontrolling interests									—		3,590		3,590
Distributions to noncontrolling interests	Distributions to noncontrolling interests									0		(13,266)		(13,266)		Distributions to noncontrolling interests									—		(15,997)		(15,997)

Share-based compensation expense	Share-based compensation expense			64,257						64,257				64,257		Share-based compensation expense			71,219						71,219				71,219
Change in fair value of redeemable noncontrolling interests	Change in fair value of redeemable noncontrolling interests			(10,773)						(10,773)				(10,773)		Change in fair value of redeemable noncontrolling interests			(8,865)						(8,865)				(8,865)
Purchase of common shares for treasury	Purchase of common shares for treasury	(5,103)		(124,994)						(130,097)				(130,097)		Purchase of common shares for treasury	(6,603)		(175,263)						(181,866)				(181,866)
Dividends ($0.40 per common share)								(106,839)		(106,839)				(106,839)
Dividends ($0.65 per common share)																Dividends ($0.65 per common share)							(172,923)		(172,923)				(172,923)
Other	Other	2,384		9,774						12,158		(658)		11,500		Other	2,409		14,497						16,906		(659)		16,247
Balance, May 31, 2021		$	247,032	$	2,849,487	$	(363,998)	$	7,340,113	$	10,072,634	$	22,730	$	10,095,364
Balance, August 31, 2021																Balance, August 31, 2021	$	245,557	$	2,812,811	$	(357,973)	$	7,681,488	$	10,381,883	$	18,830	$	10,400,713

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


	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									—		(5,033)		(5,033)
Other comprehensive income, net of income taxes					76,632				76,632				76,632
Contributions from noncontrolling interests									—		18,558		18,558
Distributions to noncontrolling interests									—		(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

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 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 integrated investment banking 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 products.

Our Asset Management segment 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 legacy businesses and investments, including Linkem (fixed wireless broadband services in Italy); Vitesse Energy, LLC ("Vitesse Energy Finance") (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).

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, 2020 ("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 ongoing basis, we evaluate all of these estimates and assumptions.

During the ~~six~~nine months ended ~~May~~August 31, 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 credit losses on financial instruments (the "new credit loss standard") on December 1, 2020. The credit loss policy updates were applied using a modified retrospective 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.

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 all other financial assets measured at amortized cost, we estimate expected credit losses over the financial assets' life as of the reporting date based on relevant information about past events, current conditions, and reasonable and supportable forecasts.

Receivables

At ~~May~~August 31, 2021 and November 30, 2020, Receivables include receivables from brokers, dealers and clearing organizations of ~~$4,730.8 million~~$3.86 billion and ~~$4,161.8 million,~~$4.16 billion, respectively, and receivables from customers of securities operations of ~~$2,121.8 million~~$1.87 billion and ~~$1,286.9 million,~~$1.29 billion, respectively.

Our subsidiary, Foursight Capital, had automobile loan receivables of ~~$746.9~~$785.8 million and $694.2 million at ~~May~~August 31, 2021 and November 30, 2020, respectively. Of these amounts, ~~$592.7~~$761.8 million and $532.4 million at ~~May~~August 31, 2021 and November 30, 2020, respectively, were in securitized vehicles. See Notes 6 and 7 for additional information on Foursight Capital's securitization activities. Based primarily on credit scores, Foursight Capital classifies its 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 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 both ~~May~~August 31, 2021 and November 30, 2020 was approximately 14% prime, 54% near-prime and 32% sub-prime.

A rollforward of the allowance for credit losses related to receivables for the three and ~~six~~nine months ended ~~May~~August 31, 2021 and 2020 is as follows (in thousands):


		For the Three Months Ended				For the Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Beginning balance	Beginning balance	$	76,392	$	34,038	$	53,926	$	34,018	Beginning balance	$	79,254	$	38,806	$	53,926	$	34,018
Adjustment for change in accounting principle for current expected credit losses	Adjustment for change in accounting principle for current expected credit losses	0		0		26,519		0		Adjustment for change in accounting principle for current expected credit losses	—		—		26,519		—
Provision for doubtful accounts (1)	Provision for doubtful accounts (1)	45,672		12,109		48,939		22,979		Provision for doubtful accounts (1)	(848)		9,365		48,091		32,344
Charge-offs, net of recoveries (1)	Charge-offs, net of recoveries (1)	(42,810)		(7,341)		(50,130)		(18,191)		Charge-offs, net of recoveries (1)	(1,777)		(3,349)		(51,907)		(21,540)

Ending balance	Ending balance	$	79,254	$	38,806	$	79,254	$	38,806	Ending balance	$	76,629	$	44,822	$	76,629	$	44,822

(1) The ~~three and six~~nine months ended ~~May~~August 31, 2021 includes a $39.0 million bad debt expense related to our prime brokerage ~~business.~~business, recorded during the second quarter.

Other Investments

At ~~May~~August 31, 2021 and November 30, 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 ~~$61.8~~$47.7 million and $90.2 million, respectively. Impairments recognized on these investments were ~~$0.6~~$0.3 million and ~~$20.6~~$20.9 million during the three and ~~six~~nine months ended ~~May~~August 31, 2020, respectively. There were 0no impairments on these investments during the three and ~~six~~nine months ended ~~May~~August 31, 2021.

Capitalization of Interest

We capitalize interest on qualifying HomeFed real estate assets. Capitalized interest of $2.2 million and ~~$2.4~~$1.6 million during the three months ended ~~May~~August 31, 2021 and 2020, respectively, and ~~$4.1~~$6.4 million and ~~$4.8~~$6.4 million during the ~~six~~nine months ended ~~May~~August 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 ~~May~~August 31, 2021 and November 30, 2020, Payables, expense accruals and other liabilities include payables to brokers, dealers and clearing organizations of ~~$5,351.6 million~~$4.04 billion and ~~$3,325.8 million,~~$3.33 billion, respectively, and payables to customers of securities operations of ~~$4,190.4 million~~$4.29 billion and ~~$4,249.7 million,~~$4.25 billion, respectively.

Supplemental Cash Flow Information


		For the Six Months Ended					For the Nine Months Ended
		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020
		(In thousands)					(In thousands)
Cash paid during the year for:	Cash paid during the year for:					Cash paid during the year for:
Interest	Interest	$	444,939	$	584,009	Interest	$	737,935	$	880,853
Income tax payments (refunds), net	Income tax payments (refunds), net	$	337,720	$	(5,330)	Income tax payments (refunds), net	$	516,714	$	(13,514)

Accounting Developments - Accounting Standards Adopted in Current Annual Reporting Period

Financial Instruments - Credit Losses. In June 2016, the FASB issued new guidance which provides for estimating credit losses on financial assets measured at amortized cost by introducing an approach based on expected losses over the financial asset's entire life, recorded at inception or purchase. We adopted the new credit loss guidance 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 allowance for credit losses of $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 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 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 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. We adopted the guidance in the first quarter of fiscal 2021 and the adoption did not 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 post-retirement plans. We adopted the guidance in the first quarter of fiscal 2021 and the adoption did not 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. We adopted the guidance in the first quarter of fiscal 2021 and elected to apply the guidance prospectively to implementation costs incurred after the adoption date. The adoption did not have an impact on our consolidated financial 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. We adopted the guidance in the first quarter of fiscal 2021 and the adoption did not have a material impact 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. We adopted the guidance in the first quarter of fiscal 2021 and the adoption did not have a material impact 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 ~~$908.9 million~~$1.02 billion and $965.4 million at ~~May~~August 31, 2021 and November 30, 2020, respectively, by level within the fair value hierarchy (in thousands):


		May 31, 2021											August 31, 2021
		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	$	2,998,198	$	125,957	$	86,451	$	—	$	3,210,606	Corporate equity securities	$	2,947,163	$	227,455	$	131,741	$	—	$	3,306,359
Corporate debt securities	Corporate debt securities	0		3,735,169		7,985		—		3,743,154		Corporate debt securities	—		3,251,540		8,156		—		3,259,696
Collateralized debt obligations and collateralized loan obligations	Collateralized debt obligations and collateralized loan obligations	0		186,271		26,561		—		212,832		Collateralized debt obligations and collateralized loan obligations	—		240,315		52,561		—		292,876
U.S. government and federal agency securities	U.S. government and federal agency securities	3,505,313		167,456		0		—		3,672,769		U.S. government and federal agency securities	4,506,638		109,919		—		—		4,616,557
Municipal securities	Municipal securities	0		363,812		0		—		363,812		Municipal securities	—		431,909		—		—		431,909
Sovereign obligations	Sovereign obligations	1,203,666		1,110,548		0		—		2,314,214		Sovereign obligations	1,211,554		963,804		—		—		2,175,358
Residential mortgage-backed securities	Residential mortgage-backed securities	0		811,879		6,033		—		817,912		Residential mortgage-backed securities	—		391,189		1,436		—		392,625
Commercial mortgage-backed securities	Commercial mortgage-backed securities	0		572,370		1,176		—		573,546		Commercial mortgage-backed securities	—		388,073		2,680		—		390,753
Other asset-backed securities	Other asset-backed securities	0		393,495		70,555		—		464,050		Other asset-backed securities	—		246,507		77,433		—		323,940
Loans and other receivables	Loans and other receivables	0		2,768,540		190,412		—		2,958,952		Loans and other receivables	—		2,725,398		150,971		—		2,876,369
Derivatives	Derivatives	2,793		2,888,792		55,394		(2,546,358)		400,621		Derivatives	3,028		2,373,650		22,284		(1,981,853)		417,109
Investments at fair value	Investments at fair value	0		6,518		230,834		—		237,352		Investments at fair value	—		6,313		165,333		—		171,646
FXCM term loan	FXCM term loan	0		0		59,155		—		59,155		FXCM term loan	—		—		58,465		—		58,465

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	$	7,709,970	$	13,130,807	$	734,556	$	(2,546,358)	$	19,028,975	Total financial instruments owned, at fair value, excluding investments at fair value based on NAV	$	8,668,383	$	11,356,072	$	671,060	$	(1,981,853)	$	18,713,662

Loans to and investments in associated companies	Loans to and investments in associated companies	$	0	$	0	$	37,287	$	—	$	37,287	Loans to and investments in associated companies	$	—	$	—	$	36,584	$	—	$	36,584

Securities received as collateral, at fair value												Securities received as collateral, at fair value	$	9,853	$	—	$	—	$	—	$	9,853

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	$	2,313,048	$	3,660	$	4,462	$	—	$	2,321,170	Corporate equity securities	$	2,014,034	$	12,131	$	4,387	$	—	$	2,030,552
Corporate debt securities	Corporate debt securities	0		2,053,152		927		—		2,054,079		Corporate debt securities	—		1,890,158		528		—		1,890,686
U.S. government and federal agency securities	U.S. government and federal agency securities	2,155,547		0		0		—		2,155,547		U.S. government and federal agency securities	3,713,613		—		—		—		3,713,613

Sovereign obligations	Sovereign obligations	1,062,934		1,149,771		0		—		2,212,705		Sovereign obligations	1,165,251		805,760		—		—		1,971,011

Commercial mortgage-backed securities	Commercial mortgage-backed securities	0		0		35		—		35		Commercial mortgage-backed securities	—		—		140		—		140
Loans	Loans	0		2,325,115		20,389		—		2,345,504		Loans	—		2,185,793		25,212		—		2,211,005
Derivatives	Derivatives	1,049		3,615,868		282,452		(3,016,439)		882,930		Derivatives	1,995		3,083,778		189,346		(2,343,324)		931,795
Total financial instruments sold, not yet purchased, at fair value	Total financial instruments sold, not yet purchased, at fair value	$	5,532,578	$	9,147,566	$	308,265	$	(3,016,439)	$	11,971,970	Total financial instruments sold, not yet purchased, at fair value	$	6,894,893	$	7,977,620	$	219,613	$	(2,343,324)	$	12,748,802

Other secured financings	Other secured financings	$	0	$	0	$	2,493	$	—	$	2,493	Other secured financings	$	—	$	—	$	2,493	$	—	$	2,493
Long-term debt	Long-term debt	$	0	$	1,024,877	$	795,098	$	—	$	1,819,975	Long-term debt	$	—	$	1,005,033	$	785,612	$	—	$	1,790,645

Obligation to return securities received as collateral, at fair value												Obligation to return securities received as collateral, at fair value	$	9,853	$	—	$	—	$	—	$	9,853


		November 30, 2020											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	$	2,475,887	$	58,159	$	75,904	$	—	$	2,609,950	Corporate equity securities	$	2,475,887	$	58,159	$	75,904	$	—	$	2,609,950
Corporate debt securities	Corporate debt securities	0		2,954,236		23,146		—		2,977,382		Corporate debt securities	—		2,954,236		23,146		—		2,977,382
Collateralized debt obligations and collateralized loan obligations	Collateralized debt obligations and collateralized loan obligations	0		64,155		17,972		—		82,127		Collateralized debt obligations and collateralized loan obligations	—		64,155		17,972		—		82,127
U.S. government and federal agency securities	U.S. government and federal agency securities	2,840,025		91,653		0		—		2,931,678		U.S. government and federal agency securities	2,840,025		91,653		—		—		2,931,678
Municipal securities	Municipal securities	0		453,881		0		—		453,881		Municipal securities	—		453,881		—		—		453,881
Sovereign obligations	Sovereign obligations	1,962,346		591,342		0		—		2,553,688		Sovereign obligations	1,962,346		591,342		—		—		2,553,688
Residential mortgage-backed securities	Residential mortgage-backed securities	0		1,100,849		21,826		—		1,122,675		Residential mortgage-backed securities	—		1,100,849		21,826		—		1,122,675
Commercial mortgage-backed securities	Commercial mortgage-backed securities	0		736,291		2,003		—		738,294		Commercial mortgage-backed securities	—		736,291		2,003		—		738,294
Other asset-backed securities	Other asset-backed securities	0		103,611		79,995		—		183,606		Other asset-backed securities	—		103,611		79,995		—		183,606
Loans and other receivables	Loans and other receivables	0		2,610,746		134,636		—		2,745,382		Loans and other receivables	—		2,610,746		134,636		—		2,745,382
Derivatives	Derivatives	1,523		2,013,942		21,678		(1,556,136)		481,007		Derivatives	1,523		2,013,942		21,678		(1,556,136)		481,007
Investments at fair value	Investments at fair value	0		6,122		213,946		—		220,068		Investments at fair value	—		6,122		213,946		—		220,068
FXCM term loan	FXCM term loan	0		0		59,455		—		59,455		FXCM term loan	—		—		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	$	7,279,781	$	10,784,987	$	650,561	$	(1,556,136)	$	17,159,193	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

Loans to and investments in associated companies	Loans to and investments in associated companies	$	0	$	8,603	$	40,185	$	—	$	48,788	Loans to and investments in associated companies	$	—	$	8,603	$	40,185	$	—	$	48,788
Securities received as collateral, at fair value	Securities received as collateral, at fair value	$	7,517	$	0	$	0	$	—	$	7,517	Securities received as collateral, at fair value	$	7,517	$	—	$	—	$	—	$	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	$	2,046,441	$	9,046	$	4,434	$	—	$	2,059,921	Corporate equity securities	$	2,046,441	$	9,046	$	4,434	$	—	$	2,059,921
Corporate debt securities	Corporate debt securities	0		1,237,631		141		—		1,237,772		Corporate debt securities	—		1,237,631		141		—		1,237,772
U.S. government and federal agency securities	U.S. government and federal agency securities	2,609,660		0		0		—		2,609,660		U.S. government and federal agency securities	2,609,660		—		—		—		2,609,660
Sovereign obligations	Sovereign obligations	1,050,771		624,740		0		—		1,675,511		Sovereign obligations	1,050,771		624,740		—		—		1,675,511
Residential mortgage-backed securities	Residential mortgage-backed securities	0		477		0		—		477		Residential mortgage-backed securities	—		477		—		—		477
Commercial mortgage-backed securities	Commercial mortgage-backed securities	0		0		35		—		35		Commercial mortgage-backed securities	—		—		35		—		35
Loans	Loans	0		1,776,446		16,635		—		1,793,081		Loans	—		1,776,446		16,635		—		1,793,081
Derivatives	Derivatives	551		2,391,556		47,695		(1,798,659)		641,143		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	$	5,707,423	$	6,039,896	$	68,940	$	(1,798,659)	$	10,017,600	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	$	5,067	$	0	$	—	$	5,067	Short-term borrowings	$	—	$	5,067	$	—	$	—	$	5,067
Other secured financings	Other secured financings	$	0	$	0	$	1,543	$	—	$	1,543	Other secured financings	$	—	$	—	$	1,543	$	—	$	1,543
Long-term debt	Long-term debt	$	0	$	1,036,217	$	676,028	$	—	$	1,712,245	Long-term debt	$	—	$	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	$	7,517	$	0	$	0	$	—	$	7,517	Obligation to return securities received as collateral, at fair value	$	7,517	$	—	$	—	$	—	$	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 from observed prices 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 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 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
May 31, 2021
August 31, 2021						August 31, 2021
Equity Long/Short Hedge Funds (2)	Equity Long/Short Hedge Funds (2)	$	363,945	$	0	Equity Long/Short Hedge Funds (2)	$	462,600	$	—
Equity Funds (3)	Equity Funds (3)	37,019		12,283		Equity Funds (3)	40,651		17,961
Commodity Funds (4)	Commodity Funds (4)	23,311		0		Commodity Funds (4)	23,540		—
Multi-asset Funds (5)	Multi-asset Funds (5)	406,405		0		Multi-asset Funds (5)	398,962		—
Other Funds (6)	Other Funds (6)	78,175		21,750		Other Funds (6)	95,688		6,090
Total	Total	$	908,855	$	34,033	Total	$	1,021,441	$	24,051

November 30, 2020	November 30, 2020					November 30, 2020
Equity Long/Short Hedge Funds (2)	Equity Long/Short Hedge Funds (2)	$	328,096	$	0	Equity Long/Short Hedge Funds (2)	$	328,096	$	—
Equity Funds (3)	Equity Funds (3)	33,221		12,408		Equity Funds (3)	33,221		12,408
Commodity Funds (4)	Commodity Funds (4)	17,747		0		Commodity Funds (4)	17,747		—
Multi-asset Funds (5)	Multi-asset Funds (5)	561,236		0		Multi-asset Funds (5)	561,236		—
Other Funds (6)	Other Funds (6)	25,084		5,000		Other Funds (6)	25,084		5,000
Total	Total	$	965,384	$	17,408	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 ~~both May~~August 31, 2021 and November 30, 2020, approximately 72% and 94%, respectively, 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 August 31, 2021 approximately 22% of the fair value of investments in this category cannot be redeemed because these investments include restrictions that do not allow for redemption before November 30, 2023. At both ~~May~~August 31, 2021 and November 30, 2020, approximately 6% 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 ~~seven~~nine 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 ~~May~~August 31, 2021 and November 30, 2020, investments representing approximately ~~80%~~79% and 57%, respectively, of the fair value of investments in this category are redeemable monthly with 60 days prior written notice.

(6)This category includes investments in a fund that invests in short-term trade receivables and payables that are expected to generally be outstanding between 90 to 120 days and short-term credit instruments. This category also includes investments in a fund that invests in distressed and special situations long and short credit strategies across sectors and asset types. Investments in this category are redeemable quarterly with 90 days prior written notice.

Investment in FXCM

Our investment in FXCM and associated companies consists of a senior secured term loan due February 15, 2022 ($71.6 million principal outstanding at ~~May~~August 31, 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.

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 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.~~above. 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 period or model pricing is available, otherwise 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 ~~six~~nine months ended ~~May~~August 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~~Williston Basin in North ~~Dakota.~~Dakota and Montana. 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~~Williston Basin 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 ~~three and six~~nine months ended ~~May~~August 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 ~~six~~nine months ended ~~May~~August 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 ~~May~~August 31, 2021 (in thousands):


		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)			Balance, May 31, 2021		Total gains/ losses (realized and unrealized) (1)		Purchases		Sales		Settlements		Issuances		Net transfers into (out of) Level 3		Balance, August 31, 2021		Changes in unrealized gains/losses included in earnings relating to instruments still held at August 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	$	102,065	$	7,997	$	448	$	(24,561)	$	0	$	0	$	502	$	86,451	$	(4,971)	Corporate equity securities	$	86,451	$	36,643	$	208	$	(1,488)	$	(16)	$	—	$	9,943	$	131,741	$	37,731
Corporate debt securities	Corporate debt securities	6,811		1,292		4,116		(5,870)		(132)		0		1,768		7,985		963		Corporate debt securities	7,985		405		14,898		(17,317)		(20)		—		2,205		8,156		192
CDOs and CLOs	CDOs and CLOs	33,199		7,478		4,287		(37,324)		(1,203)		0		20,124		26,561		2,888		CDOs and CLOs	26,561		2,539		50,199		(33,234)		(1,518)		—		8,014		52,561		(730)

Residential mortgage-backed securities	Residential mortgage-backed securities	21,692		205		0		0		(612)		0		(15,252)		6,033		(36)		Residential mortgage-backed securities	6,033		(42)		—		(417)		(61)		—		(4,077)		1,436		(14)
Commercial mortgage-backed securities	Commercial mortgage-backed securities	2,671		201		0		0		(1,696)		0		0		1,176		(824)		Commercial mortgage-backed securities	1,176		(103)		1,607		—		—		—		—		2,680		1,530
Other asset-backed securities	Other asset-backed securities	60,594		3,575		12,835		(1,099)		(14,408)		0		9,058		70,555		819		Other asset-backed securities	70,555		30		18,611		(274)		(14,426)		—		2,937		77,433		(3,145)
Loans and other receivables	Loans and other receivables	149,084		2,814		26,948		(8,070)		(156)		0		19,792		190,412		706		Loans and other receivables	190,412		(5,689)		14,796		(29,557)		(10,873)		—		(8,118)		150,971		(4,409)
Investments at fair value	Investments at fair value	219,541		26,775		6,634		(17,085)		(5,031)		0		0		230,834		11,318		Investments at fair value	230,834		3,662		1,185		(1)		(382)		—		(69,965)		165,333		3,661
FXCM term loan	FXCM term loan	62,132		(2,977)		0		0		0		0		0		59,155		(2,977)		FXCM term loan	59,155		(690)		—		—		—		—		—		58,465		(690)
Loans to and investments in associated companies	Loans to and investments in associated companies	39,397		(2,110)		0		0		0		0		0		37,287		(2,110)		Loans to and investments in associated companies	37,287		(703)		—		—		—		—		—		36,584		(703)

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	$	4,443	$	42	$	(23)	$	0	$	0	$	0	$	0	$	4,462	$	(40)	Corporate equity securities	$	4,462	$	(75)	$	—	$	—	$	—	$	—	$	—	$	4,387	$	75
Corporate debt securities	Corporate debt securities	1,571		(22)		(665)		27		0		0		16		927		(38)		Corporate debt securities	927		(7)		—		—		—		—		(392)		528		7

Commercial mortgage-backed securities	Commercial mortgage-backed securities	35		0		(35)		35		0		0		0		35		0		Commercial mortgage-backed securities	35		—		—		105		—		—		—		140		—
Loans	Loans	14,916		(7)		(637)		6,330		44		0		(257)		20,389		(167)		Loans	20,389		(8)		(3,118)		1,710		—		—		6,239		25,212		6
Net derivatives (2)	Net derivatives (2)	305,506		(8,965)		(36)		33,715		593		0		(103,755)		227,058		8,372		Net derivatives (2)	227,058		20,869		(1,868)		—		665		—		(79,662)		167,062		(22,433)
Other secured financings	Other secured financings	2,168		0		0		0		0		325		0		2,493		0		Other secured financings	2,493		—		—		—		—		—		—		2,493		—
Long-term debt (1)	Long-term debt (1)	723,115		15,986		0		0		0		28,565		27,432		795,098		3,057		Long-term debt (1)	795,098		(17,106)		—		—		—		22,330		(14,710)		785,612		13,204

(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~~August 31, 2021 were ~~losses~~gains of ~~$19.0~~$3.9 million during the three months ended ~~May~~August 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~~August 31, 2021

During the three months ended ~~May~~August 31, 2021, transfers of assets of ~~$57.8~~$37.9 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•~~Loans~~Other asset-backed securities of $13.7 million, loans and other receivables of ~~$20.9~~$13.4 million, CDOs and CLOs of ~~$20.1~~$8.0 million and ~~other asset-backed~~corporate debt securities of ~~$13.5~~$2.5 million due to reduced pricing transparency.

During the three months ended ~~May~~August 31, 2021, transfers of assets of ~~$21.8~~$97.0 million from Level 3 to Level 2 or Level 1 are primarily attributed to:

•~~Residential mortgage-backed securities~~Investments at fair value of ~~$15.3~~$60.4 million, loans and other receivables of $21.5 million, other asset-backed securities of ~~$4.4~~$10.7 million and residential mortgage-backed securities of $4.1 million due to greater pricing transparency supporting classification into Level 2.2 or Level 1.

During the three months ended ~~May~~August 31, 2021, transfers of liabilities of ~~$78.1~~$51.8 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•Net derivatives of ~~$50.5~~$32.9 million, loans of $9.7 million and structured notes within long-term debt of ~~$27.4~~$9.2 million due to reduced pricing and market transparency.

During the three months ended ~~May~~August 31, 2021, transfers of liabilities of ~~$154.7~~$140.3 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to:

•Net derivatives of ~~$154.2~~$112.5 million and structured notes within long-term debt of $23.9 million due to greater pricing transparency.

Net gains on Level 3 assets were ~~$45.3~~$36.1 million and net losses on Level 3 liabilities were ~~$7.0~~$3.7 million for the three months ended ~~May~~August 31, 2021. Net gains on Level 3 assets were primarily due to increased market values across corporate equity securities, investments at fair value ~~corporate equity securities,~~and CDOs and CLOs, partially offset by decreased market values of loans and other ~~asset-backed securities.~~receivables. Net losses on Level 3 liabilities were primarily due to increased valuations of ~~structured notes within long-term debt,~~certain derivatives, partially offset by decreases in ~~certain derivatives.~~structured notes within long-term debt.


		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)			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)
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	$	103,683	$	(5,346)	$	63	$	(68)	$	0	$	0	$	(22,192)	$	76,140	$	(5,247)	Corporate equity securities	$	76,140	$	(597)	$	779	$	—	$	—	$	—	$	1,619	$	77,941	$	(597)
Corporate debt securities	Corporate debt securities	25,090		(1,480)		328		(365)		(1)		0		1,606		25,178		(1,464)		Corporate debt securities	25,178		(889)		4		(394)		—		—		(630)		23,269		(881)
CDOs and CLOs	CDOs and CLOs	29,784		(12,374)		0		(8,471)		(2,598)		0		25,210		31,551		(16,451)		CDOs and CLOs	31,551		3,813		39		(7,539)		(2,318)		—		10,576		36,122		159

Residential mortgage-backed securities	Residential mortgage-backed securities	16,970		(1,773)		1,380		0		(7)		0		5,769		22,339		(1,733)		Residential mortgage-backed securities	22,339		1,240		—		—		(774)		—		5,512		28,317		1,262
Commercial mortgage-backed securities	Commercial mortgage-backed securities	4,264		53		0		0		0		0		144		4,461		53		Commercial mortgage-backed securities	4,461		202		—		—		—		—		—		4,663		198
Other asset-backed securities	Other asset-backed securities	41,903		(2,380)		11,038		0		(8,490)		0		43,991		86,062		(5,087)		Other asset-backed securities	86,062		(1,585)		3,313		—		(7,442)		—		(17,011)		63,337		(5,101)
Loans and other receivables	Loans and other receivables	103,243		(1,113)		45,984		(46,939)		(128)		0		20,082		121,129		(1,069)		Loans and other receivables	121,129		13,109		18,492		(13,897)		(355)		—		24,463		162,941		13,440
Investments at fair value	Investments at fair value	184,507		(59,962)		10,599		(91)		0		0		19,185		154,238		(59,962)		Investments at fair value	154,238		24,179		7,183		—		(13,102)		—		—		172,498		23,030
FXCM term loan	FXCM term loan	61,628		(7,863)		0		0		0		0		0		53,765		(7,863)		FXCM term loan	53,765		2,777		—		—		—		—		—		56,542		2,777

Loans to and investments in associated companies																				Loans to and investments in associated companies	—		—		—		—		—		—		34,688		34,688		—

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	$	4,275	$	(60)	$	0	$	0	$	0	$	0	$	(25)	$	4,190	$	60	Corporate equity securities	$	4,190	$	(12)	$	—	$	—	$	—	$	—	$	189	$	4,367	$	12
Corporate debt securities	Corporate debt securities	767		(23)		(20)		0		0		0		(561)		163		0		Corporate debt securities	163		(15)		—		—		—		—		—		148		15

Commercial mortgage-backed securities	Commercial mortgage-backed securities	35		0		0		105		0		0		0		140		0		Commercial mortgage-backed securities	140		—		(140)		35		—		—		—		35		—
Loans	Loans	7,859		1,015		(2,785)		3,290		0		0		1,295		10,674		(1,015)		Loans	10,674		6,636		(23,001)		3,558		—		—		48,727		46,594		(6,591)
Net derivatives (2)	Net derivatives (2)	110,843		(32,744)		(10,810)		33,196		(603)		0		(54,751)		45,131		34,259		Net derivatives (2)	45,131		(12,175)		(1,404)		13,089		(648)		—		(21,568)		22,425		12,007
Other secured financings																				Other secured financings	—		(617)		—		—		—		4,019		—		3,402		617
Long-term debt (1)	Long-term debt (1)	543,463		(92,480)		0		0		0		66,916		(20,859)		497,040		664		Long-term debt (1)	497,040		130,463		—		—		—		5,749		(2,992)		630,260		(42,163)

(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~~August 31, 2020 were ~~gains~~losses of ~~$91.8~~$88.3 million during the three months ended ~~May~~August 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 ~~May~~August 31, 2020

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

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

22During 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.

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

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

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

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

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

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

Net ~~losses~~gains on Level 3 assets were ~~$92.2~~$42.2 million and net ~~gains~~losses on Level 3 liabilities were $124.3 million for the three months ended ~~May~~August 31, 2020. Net ~~losses~~gains on Level 3 assets were primarily due to increased market values across investments at fair value, loans and other receivables, CDOs and CLOs and the FXCM term loan, partially offset by decreased market values across ~~CDOs and CLOs, investments at fair value, corporate equity securities and the FXCM term loan.~~other asset-backed securities. Net ~~gains~~losses on Level 3 liabilities were primarily due to ~~decreased~~increased valuations of certain structured notes within long-term debt, ~~and~~partially offset by decreased 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 ~~six~~nine months ended ~~May~~August 31, 2021 (in thousands):


		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)			Balance, November 30, 2020		Total gains/ losses (realized and unrealized) (1)		Purchases		Sales		Settlements		Issuances		Net transfers into (out of) Level 3		Balance, August 31, 2021		Changes in unrealized gains/losses included in earnings relating to instruments still held at August 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	$	75,904	$	11,299	$	8,288	$	(37,297)	$	0	$	0	$	28,257	$	86,451	$	(3,683)	Corporate equity securities	$	75,904	$	48,741	$	7,900	$	(37,794)	$	(16)	$	—	$	37,006	$	131,741	$	37,146
Corporate debt securities	Corporate debt securities	23,146		2,466		4,370		(5,960)		(132)		0		(15,905)		7,985		1,492		Corporate debt securities	23,146		1,600		1,513		(3,721)		(128)		—		(14,254)		8,156		331
CDOs and CLOs	CDOs and CLOs	17,972		10,616		16,510		(35,251)		(1,427)		0		18,141		26,561		6,808		CDOs and CLOs	17,972		7,666		58,868		(37,277)		(2,201)		—		7,533		52,561		(4,716)

Residential mortgage-backed securities	Residential mortgage-backed securities	21,826		33		799		(784)		(1,126)		0		(14,715)		6,033		88		Residential mortgage-backed securities	21,826		(195)		157		(784)		(291)		—		(19,277)		1,436		(123)
Commercial mortgage-backed securities	Commercial mortgage-backed securities	2,003		158		1,119		(393)		(1,696)		0		(15)		1,176		(740)		Commercial mortgage-backed securities	2,003		134		2,590		(393)		(1,639)		—		(15)		2,680		741
Other asset-backed securities	Other asset-backed securities	79,995		6,373		34,476		(27,647)		(26,465)		0		3,823		70,555		1,158		Other asset-backed securities	79,995		4,770		38,785		(26,642)		(25,966)		—		6,491		77,433		(6,955)
Loans and other receivables	Loans and other receivables	134,636		17,580		37,431		(50,556)		(273)		0		51,594		190,412		14,146		Loans and other receivables	134,636		18,104		51,933		(55,693)		(10,509)		—		12,500		150,971		9,756
Investments at fair value	Investments at fair value	213,946		103,032		11,489		(47,244)		(8,573)		0		(41,816)		230,834		80,099		Investments at fair value	213,946		106,699		12,669		(47,245)		(8,955)		—		(111,781)		165,333		30,027
FXCM term loan	FXCM term loan	59,455		(300)		0		0		0		0		0		59,155		(300)		FXCM term loan	59,455		(990)		—		—		—		—		—		58,465		(990)
Loans to and investments in associated companies	Loans to and investments in associated companies	40,185		(2,898)		0		0		0		0		0		37,287		(2,898)		Loans to and investments in associated companies	40,185		(3,601)		—		—		—		—		—		36,584		(3,601)

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	$	4,434	$	64	$	(23)	$	0	$	0	$	0	$	(13)	$	4,462	$	(62)	Corporate equity securities	$	4,434	$	(12)	$	(22)	$	—	$	—	$	—	$	(13)	$	4,387	$	13
Corporate debt securities	Corporate debt securities	141		1,349		(563)		0		0		0		0		927		(414)		Corporate debt securities	141		375		—		12		—		—		—		528		(375)

Commercial mortgage-backed securities	Commercial mortgage-backed securities	35		0		(35)		35		0		0		0		35		0		Commercial mortgage-backed securities	35		—		(35)		140		—		—		—		140		—
Loans	Loans	16,635		1,441		(6,872)		8,817		0		0		368		20,389		(884)		Loans	16,635		1,308		(7,182)		14,083		—		—		368		25,212		(4,094)
Net derivatives (2)	Net derivatives (2)	26,017		16,813		(82)		66,304		506		0		117,500		227,058		(17,358)		Net derivatives (2)	26,017		33,173		(1,548)		49,871		768		—		58,781		167,062		(33,007)
Other secured financings	Other secured financings	1,543		0		0		0		0		950		0		2,493		0		Other secured financings	1,543		—		—		—		—		950		—		2,493		—
Long-term debt (1)	Long-term debt (1)	676,028		41,064		0		0		0		50,295		27,711		795,098		20,565		Long-term debt (1)	676,028		25,323		—		—		—		58,000		26,261		785,612		31,992

(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~~August 31, 2021 were losses of ~~$61.6~~$57.3 million during the ~~six~~nine months ended ~~May~~August 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~~nine months ended ~~May~~August 31, 2021

During the ~~six~~nine months ended ~~May~~August 31, 2021, transfers of assets of ~~$99.7~~$50.9 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•Loans and other receivables of ~~$58.3~~$17.4 million, ~~CDOs and CLOs~~other asset-backed securities of ~~$18.2~~$12.5 million, corporate equity securities of ~~$11.0~~$10.2 million and ~~other asset-backed securities~~CDOs and CLOs of ~~$10.5~~$7.6 million due to reduced pricing transparency.

During the ~~six~~nine months ended ~~May~~August 31, 2021, transfers of assets of ~~$70.3~~$132.7 million from Level 3 to Level 2 or Level 1 are primarily attributed to:

•Investments at fair value of ~~$24.2~~$84.5 million, residential mortgage-backed securities of $19.3 million, corporate debt securities of $17.5 million, ~~residential mortgage-backed securities of $14.7 million,~~ other asset-backed securities of ~~$6.7~~$6.0 million and loans and other receivables of ~~$6.7~~$4.9 million due to greater pricing transparency supporting classification into Level 2 or Level 1.

During the ~~six~~nine months ended ~~May~~August 31, 2021, transfers of liabilities of ~~$162.9~~$100.0 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•Net derivatives of ~~$134.8~~$73.4 million and structured notes within long-term debt of ~~$27.7~~$26.3 million due to reduced pricing and market transparency.

During the ~~six~~nine months ended ~~May~~August 31, 2021, transfers of liabilities of ~~$17.3~~$14.6 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to:

•Net derivatives of ~~$17.3~~$14.6 million due to greater pricing transparency.

Net gains on Level 3 assets were ~~$148.4~~$182.9 million and net losses on Level 3 liabilities were ~~$60.7~~$60.2 million for the ~~six~~nine months ended ~~May~~August 31, 2021. Net gains on Level 3 assets were primarily due to increased market values across investments at fair value, corporate equity securities, loans and other receivables, CDOs and CLOs and other asset-backed securities, partially offset by decreases in loans to and ~~loans and other receivables.~~investments in associated companies. Net losses on Level 3 liabilities were primarily due to increased valuations of certain derivatives and structured notes within long-term ~~debt and certain derivatives.~~debt.


		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)			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)
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	$	(12,972)	$	3,016	$	(2,017)	$	0	$	0	$	29,687	$	76,140	$	(12,899)	Corporate equity securities	$	58,426	$	(3,914)	$	3,406	$	(13,555)	$	—	$	—	$	33,578	$	77,941	$	(775)
Corporate debt securities	Corporate debt securities	7,490		1,560		766		(479)		(602)		0		16,443		25,178		1,190		Corporate debt securities	7,490		(162)		285		(489)		(602)		—		16,747		23,269		(591)
CDOs and CLOs	CDOs and CLOs	28,788		(13,589)		9,426		(11,849)		(4,122)		0		22,897		31,551		(17,410)		CDOs and CLOs	28,788		(8,000)		10,883		(20,935)		(6,847)		—		32,233		36,122		(20,739)

Residential mortgage-backed securities	Residential mortgage-backed securities	17,740		(2,248)		2,062		0		(10)		0		4,795		22,339		(2,195)		Residential mortgage-backed securities	17,740		(1,347)		7,625		—		(496)		—		4,795		28,317		(1,811)
Commercial mortgage-backed securities	Commercial mortgage-backed securities	6,110		(95)		0		0		(1,660)		0		106		4,461		(680)		Commercial mortgage-backed securities	6,110		232		—		—		(1,785)		—		106		4,663		807
Other asset-backed securities	Other asset-backed securities	42,563		(2,848)		33,917		(664)		(17,361)		0		30,455		86,062		(7,226)		Other asset-backed securities	42,563		(3,495)		29,096		(664)		(22,125)		—		17,962		63,337		(13,012)
Loans and other receivables	Loans and other receivables	114,080		(5,348)		116,047		(76,227)		(56,998)		0		29,575		121,129		(8,989)		Loans and other receivables	114,080		966		309,982		(208,958)		(57,371)		—		4,242		162,941		1,291
Investments at fair value	Investments at fair value	205,412		(86,594)		35,588		(168)		0		0		0		154,238		(86,594)		Investments at fair value	205,412		(62,415)		42,771		(168)		(13,102)		—		—		172,498		(64,263)
FXCM term loan	FXCM term loan	59,120		(5,355)		0		0		0		0		0		53,765		(5,355)		FXCM term loan	59,120		(2,578)		—		—		—		—		—		56,542		(2,578)

Loans to and investments in associated companies																				Loans to and investments in associated companies	—		—		—		—		—		—		34,688		34,688		—
Securities purchased under agreements to resell	Securities purchased under agreements to resell	25,000		0		0		0		(25,000)		0		0		0		0		Securities purchased under agreements to resell	25,000		—		—		—		(25,000)		—		—		—		—

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	$	216	$	(513)	$	0	$	0	$	0	$	0	$	4,190	$	140	Corporate equity securities	$	4,487	$	258	$	(567)	$	—	$	—	$	—	$	189	$	4,367	$	98
Corporate debt securities	Corporate debt securities	340		(27)		(150)		0		0		0		0		163		5		Corporate debt securities	340		(261)		(325)		394		—		—		—		148		20

Commercial mortgage-backed securities	Commercial mortgage-backed securities	35		0		(35)		140		0		0		0		140		0		Commercial mortgage-backed securities	35		—		(35)		35		—		—		—		35		—
Loans	Loans	9,463		1,072		(12,958)		3,290		0		0		9,807		10,674		(1,075)		Loans	9,463		2,986		(5,760)		38,531		—		—		1,374		46,594		(3,366)
Net derivatives (2)	Net derivatives (2)	77,168		(44,729)		(11,088)		38,823		(1,010)		0		(14,033)		45,131		32,211		Net derivatives (2)	77,168		(63,367)		(6,732)		26,656		(1,567)		—		(9,733)		22,425		60,257
Other secured financings																				Other secured financings	—		(617)		—		—		—		4,019		—		3,402		617
Long-term debt (1)	Long-term debt (1)	480,069		(101,267)		0		0		0		175,498		(57,260)		497,040		(4,802)		Long-term debt (1)	480,069		10,851		—		—		(2,000)		202,046		(60,706)		630,260		(28,153)

(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~~August 31, 2020 were gains of ~~$106.1~~$17.3 million during the ~~six~~nine months ended ~~May~~August 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 ~~six~~nine months ended ~~May~~August 31, 2020

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

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

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

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

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

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

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

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

Net losses on Level 3 assets were ~~$127.5~~$80.7 million and net gains on Level 3 liabilities were ~~$144.7~~$50.1 million for the ~~six~~nine months ended ~~May~~August 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 and loans other receivables.~~loan. Net gains on Level 3 liabilities were primarily due to decreased market values across derivatives, partially offset by increased valuations of certain structured notes within ~~long-term and market values across derivatives.~~long-term.

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.


May 31, 2021
August 31, 2021												August 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	$	86,344									Corporate equity securities	$	130,796
Non-exchange-traded securities	Non-exchange-traded securities			Market approach	Price	$1		to	$213	$75		Non-exchange-traded securities			Market approach	Price	$1		to	$366	$125
					Transaction level	$1				—						EBITDA multiple	3.7				—
					EBITDA multiple	7.4				—					Volatility benchmarking	Volatility	41	%	to	52%	43	%
				Volatility benchmarking	Volatility	40	%	to	70%	50	%
Corporate debt securities												Corporate debt securities	$	8,156	Market approach	Price	$13		to	$73	$46
															Scenario analysis	Estimated recovery percentage	20%				—
Corporate debt securities		$	7,985	Scenario analysis	Estimated recovery percentage	20	%	to	44%	30	%

CDOs and CLOs	CDOs and CLOs	$	26,466	Discounted cash flows	Constant prepayment rate	2	%	to	20%	19	%	CDOs and CLOs	$	52,466	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	55%	27	%					Loss severity	25	%	to	60%	28	%
					Discount rate/yield	6	%	to	37%	19	%					Discount rate/yield	7	%	to	30%	15	%
				Market approach	Transaction level	$100				—					Market approach	Price	$100		to	$104	$101
																Transaction level	€100				—
Residential mortgage- backed securities		$	6,033	Discounted cash flows	Discount rate/yield	3%				—
					Cumulative loss rate	2%				—
					Duration (years)	2.4 years				—
Commercial mortgage- backed securities												Commercial mortgage- backed securities	$	2,680	Scenario analysis	Estimated recovery percentage	81%				—

Other asset-backed securities	Other asset-backed securities	$	70,555	Discounted cash flows	Discount rate/yield	3	%	to	13%	10	%	Other asset-backed securities	$	77,433	Discounted cash flows	Discount rate/yield	2	%	to	15%	8	%
					Cumulative loss rate	8	%	to	79%	16	%					Cumulative loss rate	7	%	to	80%	15	%
					Duration (years)	0.7 years		to	2.3 years	1.5 years						Duration (years)	0.7 years		to	2.4 years	1.4 years
				Market approach	Price	$100				—					Market approach	Price	$60		to	$100	$90

Loans and other receivables	Loans and other receivables	$	190,412	Market approach	Price	$31		to	$101	$72		Loans and other receivables	$	149,748	Market approach	Price	$10		to	$100	$69
					Transaction level	$98				—
				Scenario analysis	Estimated recovery percentage	0	%	to	100%	87	%				Scenario analysis	Estimated recovery percentage	8	%	to	100%	87	%

Derivatives	Derivatives	$	54,085									Derivatives	$	20,905
Equity Options	Equity Options			Volatility benchmarking	Volatility	41	%	to	88%	54	%	Equity Options			Volatility benchmarking	Volatility	36	%	to	41%	40	%
Interest rate swaps	Interest rate swaps			Market approach	Basis points upfront	1.0		to	10.7	5.0		Interest rate swaps			Market approach	Basis points upfront	0.8		to	11.2	4.3

Investments at fair value	Investments at fair value	$	193,808									Investments at fair value	$	131,925
Private equity securities	Private equity securities			Market approach	Price	$5		to	$169	$24		Private equity securities			Market approach	Price	$1		to	$169	$37
					EBITDA multiple	21.1				—						EBITDA multiple	19.1				—
					Holding period (years)	0.5 years		to	1.1 years	0.9 years						Revenue multiple	4.9		to	5.1	5.0
				Volatility benchmarking	Volatility	19	%	to	43%	30	%				Volatility benchmarking	Volatility	21	%	to	26%	25	%
				Scenario analysis	Estimated recovery percentage	11%				—					Scenario analysis	Estimated recovery percentage	9%				—
					Discount rate/yield	13	%	to	21%	16	%					Discount rate/yield	13	%	to	21%	17	%
					Revenue growth	0%				—						Revenue growth	0%				—

Investment in FXCM	Investment in FXCM	$	59,155									Investment in FXCM	$	58,465
Term loan	Term loan			Discounted cash flows	Term based on the pay off (years)	0 months		to	1.7 years	1.7 years		Term loan			Discounted cash flows	Term based on the pay off (years)	0 months		to	1.5 years	1.5 years

Loans to and investments in associated companies	Loans to and investments in associated companies											Loans to and investments in associated companies
Non-exchange-traded warrants	Non-exchange-traded warrants	$	37,287	Market approach	Underlying stock price	$636				—		Non-exchange-traded warrants	$	36,584	Market approach	Underlying stock price	$682				—
					Underlying stock price	€15		to	€18	€17						Underlying stock price	€15		to	€18	€17
					Volatility	25	%	to	62%	30	%					Volatility	25	%	to	61%	31	%

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	$	4,462	Market approach	Price	$1				—		Corporate equity securities	$	4,387	Market approach	Price	$1				—

Corporate debt securities	Corporate debt securities	$	927	Scenario analysis	Estimated recovery percentage	20%				—		Corporate debt securities	$	528	Scenario analysis	Estimated recovery percentage	20%				—

Loans	Loans	$	20,389	Market approach	Price	$31		to	$92	$46		Loans	$	25,212	Market approach	Price	$31		to	$92	$62
				Scenario analysis	Estimated recovery percentage	5	%	to	87%	37	%				Scenario analysis	Estimated recovery percentage	50%				—

Derivatives	Derivatives	$	282,452									Derivatives	$	189,346
Equity options	Equity options			Volatility benchmarking	Volatility	26	%	to	61%	45	%	Equity options			Volatility benchmarking	Volatility	26	%	to	56%	43	%
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		Interest rate swaps			Market approach	Basis points upfront	0.1		to	22.1	9.3

Other secured financings	Other secured financings	$	2,493	Scenario analysis	Estimated recovery percentage	19	%	to	100%	66	%	Other secured financings	$	2,493	Scenario analysis	Estimated recovery percentage	19	%	to	100%	59	%

Long-term debt	Long-term debt											Long-term debt
Structured notes	Structured notes	$	795,098	Market approach	Price	$88		to	$110	$103		Structured notes	$	785,612	Market approach	Price	$82		to	$115	$103
					Price	€0		to	€111	€102						Price	€80		to	€112	€85


November 30, 2020	November 30, 2020											November 30, 2020
		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	$	75,409									Corporate equity securities	$	75,409
Non-exchange-traded securities	Non-exchange-traded securities			Market approach	Price	$1		to	$213	$86		Non-exchange-traded securities			Market approach	Price	$1		to	$213	$86
					EBITDA multiple	4.0		to	8.0	5.7						EBITDA multiple	4.0		to	8.0	5.7

Corporate debt securities	Corporate debt securities	$	23,146	Market approach	Price	$69				—		Corporate debt securities	$	23,146	Market approach	Price	$69				—
				Scenario analysis	Estimated recovery percentage	20	%	to	44%	30	%				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		CDOs and CLOs	$	17,972	Discounted cash flows	Constant prepayment rate	20%				—
					Constant default rate	2%				0						Constant default rate	2%				—
					Loss severity	25	%	to	30%	26	%					Loss severity	25	%	to	30%	26	%
					Discount rate/yield	14	%	to	28%	20	%					Discount rate/yield	14	%	to	28%	20	%
				Scenario analysis	Estimated recovery percentage	2	%	to	34%	23	%				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	%	Residential mortgage- backed securities	$	21,826	Discounted cash flows	Cumulative loss rate	2	%	to	3%	3	%
					Loss severity	35	%	to	50%	36	%					Loss severity	35	%	to	50%	36	%
					Duration (years)	2.0 years		to	12.9 years	5.1 years						Duration (years)	2.0 years		to	12.9 years	5.1 years
					Discount rate/yield	3	%	to	12%	4	%					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	%	Other asset-backed securities	$	67,816	Discounted cash flows	Cumulative loss rate	1	%	to	28%	11	%
					Loss severity	50	%	to	85%	54	%					Loss severity	50	%	to	85%	54	%
					Duration (years)	0.2 years		to	2.1 years	1.3 years						Duration (years)	0.2 years		to	2.1 years	1.3 years
					Discount rate/yield	1	%	to	16%	9	%					Discount rate/yield	1	%	to	16%	9	%
				Market approach	Price	$100				—					Market approach	Price	$100				—

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

Derivatives	Derivatives	$	19,951									Derivatives	$	19,951
Equity options	Equity options			Volatility benchmarking	Volatility	47%				—		Equity options			Volatility benchmarking	Volatility	47%				—
Interest rate swaps	Interest rate swaps			Market approach	Basis points upfront	1.2		to	8.0	4.8		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									Investments at fair value	$	96,906
Private equity securities	Private equity securities			Market approach	Price	$1		to	$169	$29		Private equity securities			Market approach	Price	$1		to	$169	$29
				Scenario analysis	Estimated recovery percentage	17%				—					Scenario analysis	Estimated recovery percentage	17%				—
					Discount rate/yield	19	%	to	21%	20	%					Discount rate/yield	19	%	to	21%	20	%
					Revenue growth	0%				—						Revenue growth	0%				—

Investment in FXCM	Investment in FXCM	$	59,455									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		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											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		Non-exchange-traded warrants	$	40,185	Market approach	Underlying stock price	$778		to	$805	$792
					Underlying stock price	€15		to	€19	��16						Underlying stock price	€15		to	€19	€16
					Volatility	25	%	to	55%	30	%					Volatility	25	%	to	55%	30	%

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	$	4,434	Market approach	Price	$1				—		Corporate equity securities	$	4,434	Market approach	Price	$1				—

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

Loans	Loans	$	16,635	Market approach	Price	$31		to	$99	$55		Loans	$	16,635	Market approach	Price	$31		to	$99	$55

Derivatives	Derivatives	$	46,971									Derivatives	$	46,971
Equity options	Equity options			Volatility benchmarking	Volatility	33	%	to	50%	42	%	Equity options			Volatility benchmarking	Volatility	33	%	to	50%	42	%
Interest rate swaps	Interest rate swaps			Market approach	Basis points upfront	1.2		to	8.0	5.4		Interest rate swaps			Market approach	Basis points upfront	1.2		to	8.0	5.4

Other secured financings	Other secured financings	$	1,543	Scenario analysis	Estimated recovery percentage	19	%	to	55%	45	%	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	$	676,028	Market approach	Price	$100				—		Structured notes	$	676,028	Market approach	Price	$100				—
					Price	€76		to	€113	€99						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 ~~May~~August 31, 2021 and November 30, 2020, asset exclusions consisted of ~~$39.7~~$38.5 million and $192.0 million, respectively, ~~primarily~~

primarily comprised of certain investments at fair value, CDOs and CLOs, other asset-backed securities, residential mortgage-backed securities, commercial mortgage-backed securities, certain derivatives, loans and other receivables and corporate equity securities. At August 31, 2021 and November 30, 2020, liability exclusions consisted of $0.1 million and $0.8 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:

•Non-exchange-traded securities, corporate equity securities, corporate debt securities, CDOs and CLOs, loans and other receivables, other asset-backed securities, private equity securities, certain derivatives, loans to and investments in associated companies and structured notes using a market approach valuation technique. A significant increase (decrease) in the price of the private equity securities, non-exchange-traded securities, corporate equity securities, CDOs and CLOs, 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 non-exchange traded securities ~~and~~or private equity securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the ~~holding period of the~~revenue multiple related to private equity securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in 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 volatility of the underlying stock price of non-exchange-traded warrants would result in a significantly higher (lower) 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 interest rate swaps.

•Loans and other receivables, ~~CDOs and CLOs,~~ corporate debt securities, commercial mortgage-backed securities, private equity securities, CDOs and CLOs 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 for the financial 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, other asset-backed securities 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~~its 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 and long-term debt measured at fair value under the fair value option (in thousands):


		For the Three Months Ended				For the Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 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	$	15,520	$	(13,926)	$	23,259	$	(10,830)	Loans and other receivables	$	(7,273)	$	1,704	$	17,600	$	(11,256)

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	$	(363)	$	127	$	(363)	$	127	Loans	$	(574)	$	367	$	945	$	(610)
Loan commitments	Loan commitments	0		1,750		0		1,089		Loan commitments	—		1,875		—		464

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

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

Long-term debt:	Long-term debt:									Long-term debt:
Changes in instrument specific credit risk (1)	Changes in instrument specific credit risk (1)	$	(32,247)	$	197,737	$	(122,898)	$	227,169	Changes in instrument specific credit risk (1)	$	20,478	$	(177,801)	$	(103,751)	$	49,369
Other changes in fair value (2)	Other changes in fair value (2)	6,846		(30,982)		86,113		(68,624)		Other changes in fair value (2)	(26,093)		(9,943)		61,695		(78,567)

(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 amounts by which contractual principal 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):


		May 31, 2021		November 30, 2020			August 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)	$	5,809,031	$	1,662,647	Loans and other receivables (1)	$	5,788,620	$	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)	135,054		287,889		Loans and other receivables on nonaccrual status and/or 90 days or greater past due (1) (2)	123,430		287,889
Long-term debt and short-term borrowings	Long-term debt and short-term borrowings	$	(75,025)	$	(42,819)	Long-term debt and short-term borrowings	$	(73,789)	$	(42,819)
Other secured financings	Other secured financings	$	2,782	$	2,782	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 loans and other receivables 90 days or greater past due by which contractual principal exceeds fair value of ~~$36.5~~$31.8 million and $30.0 million at ~~May~~August 31, 2021 and November 30, 2020, respectively.

The aggregate fair value of loans and other receivables on nonaccrual status and/or 90 days or greater past due was ~~$67.4~~$61.6 million and $69.7 million at ~~May~~August 31, 2021 and November 30, 2020, respectively, which includes loans and other receivables 90 days or greater past due of ~~$26.2~~$16.4 million and $3.8 million at ~~May~~August 31, 2021 and November 30, 2020, respectively.

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 ~~$58.0~~$0.0 million and $34.2 million at ~~May~~August 31, 2021 and November 30, 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) interest rate swaps that have been designated as fair value 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 18 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 ~~May~~August 31, 2021 and November 30, 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				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)
May 31, 2021 (1)
August 31, 2021 (1)								August 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	$	46,580	1	$	38,941	1	Cleared OTC	$	44,100	1	$	22,880	1
Foreign exchange contracts:	Foreign exchange contracts:							Foreign exchange contracts:
Bilateral OTC	Bilateral OTC	0		0	45,157		11	Bilateral OTC	11,180		5	—		—
Total derivatives designated as accounting hedges	Total derivatives designated as accounting hedges	46,580			84,098			Total derivatives designated as accounting hedges	55,280			22,880

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	2,232		27,499	829		54,731	Exchange-traded	2,484		39,884	1,587		44,836
Cleared OTC	Cleared OTC	6,335		4,288	29,428		4,217	Cleared OTC	50,449		4,101	82,597		4,407
Bilateral OTC	Bilateral OTC	469,243		1,424	340,671		992	Bilateral OTC	453,216		1,568	316,259		854
Foreign exchange contracts:	Foreign exchange contracts:							Foreign exchange contracts:

Exchange-traded								Exchange-traded	—		30	—		—

Bilateral OTC	Bilateral OTC	686,254		16,056	666,153		15,946	Bilateral OTC	662,479		16,373	668,138		16,294
Equity contracts:	Equity contracts:							Equity contracts:
Exchange-traded	Exchange-traded	1,397,909		1,190,684	1,452,191		1,118,612	Exchange-traded	742,689		1,259,059	789,866		1,212,193

Bilateral OTC	Bilateral OTC	327,272		2,703	1,293,010		2,554	Bilateral OTC	390,703		3,100	1,319,868		2,219
Commodity contracts:	Commodity contracts:							Commodity contracts:
Exchange-traded	Exchange-traded	259		2,455	40		2,253	Exchange-traded	553		2,077	370		1,679

Bilateral OTC	Bilateral OTC	0		1	14,337		1,225	Bilateral OTC	275		166	15,010		1,220
Credit contracts:	Credit contracts:							Credit contracts:

Cleared OTC	Cleared OTC	7,664		21	12,556		42	Cleared OTC	28,410		27	45,253		51
Bilateral OTC	Bilateral OTC	3,231		13	6,056		12	Bilateral OTC	12,424		19	13,291		16
Total derivatives not designated as accounting hedges	Total derivatives not designated as accounting hedges	2,900,399			3,815,271			Total derivatives not designated as accounting hedges	2,343,682			3,252,239

Total gross derivative assets/liabilities:	Total gross derivative assets/liabilities:							Total gross derivative assets/liabilities:
Exchange-traded	Exchange-traded	1,400,400			1,453,060			Exchange-traded	745,726			791,823
Cleared OTC	Cleared OTC	60,579			80,925			Cleared OTC	122,959			150,730
Bilateral OTC	Bilateral OTC	1,486,000			2,365,384			Bilateral OTC	1,530,277			2,332,566
Amounts offset in the 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	(1,391,808)			(1,391,808)			Exchange-traded	(742,450)			(742,450)
Cleared OTC	Cleared OTC	(60,157)			(64,519)			Cleared OTC	(122,587)			(141,384)
Bilateral OTC	Bilateral OTC	(1,094,393)			(1,560,112)			Bilateral OTC	(1,116,816)			(1,459,490)
Net amounts in the Consolidated Statement of Financial Condition (4)	Net amounts in the Consolidated Statement of Financial Condition (4)	$	400,621		$	882,930		Net amounts in the Consolidated Statement of Financial Condition (4)	$	417,109		$	931,795

(continued)


		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, 2020 (1)	November 30, 2020 (1)							November 30, 2020 (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	$	67,381	1	$	6,891	1	Cleared OTC	$	67,381	1	$	6,891	1
Foreign exchange contracts:	Foreign exchange contracts:							Foreign exchange contracts:
Bilateral OTC	Bilateral OTC	0		0	3,306		11	Bilateral OTC	—		—	3,306		11
Total derivatives designated as accounting hedges	Total derivatives designated as accounting hedges	67,381			10,197			Total derivatives designated as accounting hedges	67,381			10,197

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	2,442		52,620	439		42,611	Exchange-traded	2,442		52,620	439		42,611
Cleared OTC	Cleared OTC	17,379		3,785	114,524		4,307	Cleared OTC	17,379		3,785	114,524		4,307
Bilateral OTC	Bilateral OTC	626,210		1,493	317,534		466	Bilateral OTC	626,210		1,493	317,534		466
Foreign exchange contracts:	Foreign exchange contracts:							Foreign exchange contracts:
Exchange-traded	Exchange-traded	0		0	0		180	Exchange-traded	—		—	—		180

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

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

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

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

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

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


		For the Three Months Ended				For the Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Interest rate swaps	Interest rate swaps	$	(1,671)	$	22,004	$	(45,462)	$	46,469	Interest rate swaps	$	17,665	$	834	$	(27,797)	$	47,303
Long-term debt	Long-term debt	5,215		(22,306)		52,026		(47,173)		Long-term debt	(13,396)		1,634		38,630		(45,539)
Total	Total	$	3,544	$	(302)	$	6,564	$	(704)	Total	$	4,269	$	2,468	$	10,833	$	1,764

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


		For the Three Months Ended				For the Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Foreign exchange contracts	Foreign exchange contracts	$	(21,906)	$	0	$	(63,406)	$	0	Foreign exchange contracts	$	39,778	$	(393)	$	(23,628)	$	(393)
Total	Total	$	(21,906)	$	0	$	(63,406)	$	0	Total	$	39,778	$	(393)	$	(23,628)	$	(393)

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 Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Interest rate contracts	Interest rate contracts	$	21,364	$	(4,079)	$	(20,760)	$	(5,168)	Interest rate contracts	$	(152)	$	(35,462)	$	(20,912)	$	(40,630)
Foreign exchange contracts	Foreign exchange contracts	24,243		437		71,072		(1,884)		Foreign exchange contracts	(38,633)		4,418		32,439		2,534
Equity contracts	Equity contracts	(3,315)		9,147		(93,012)		146,035		Equity contracts	(198,979)		(32,782)		(291,991)		113,253
Commodity contracts	Commodity contracts	(6,720)		44,172		(25,069)		60,765		Commodity contracts	(3,958)		(18,716)		(29,027)		42,049
Credit contracts	Credit contracts	(2,864)		12,554		(2,043)		14,384		Credit contracts	(4,927)		(179)		(6,970)		14,205
Total	Total	$	32,708	$	62,231	$	(69,812)	$	214,132	Total	$	(246,649)	$	(82,721)	$	(316,461)	$	131,411

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 ~~May~~August 31, 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												Commodity swaps, options and forwards	$	132	$	143	$	—	$	—	$	275
Equity options and forwards	Equity options and forwards	$	51,619	$	2,347	$	17,573	$	(18,453)	$	53,086	Equity options and forwards	61,205		36		20,728		(25,243)		56,726
Credit default swaps	Credit default swaps	0		666		3,369		(1)		4,034		Credit default swaps	—		1,028		389		—		1,417
Total return swaps	Total return swaps	83,513		14,032		0		(3,120)		94,425		Total return swaps	78,860		60,206		789		(7,489)		132,366
Foreign currency forwards, swaps and options	Foreign currency forwards, swaps and options	97,410		4,454		0		(1,262)		100,602		Foreign currency forwards, swaps and options	72,545		7,643		—		(8,809)		71,379
Fixed income forwards	Fixed income forwards	17,702		0		0		0		17,702		Fixed income forwards	26,952		—		—		—		26,952
Interest rate swaps, options and forwards	Interest rate swaps, options and forwards	53,624		124,028		145,490		(39,642)		283,500		Interest rate swaps, options and forwards	39,919		104,882		152,622		(33,967)		263,456
Total	Total	$	303,868	$	145,527	$	166,432	$	(62,478)	553,349		Total	$	279,613	$	173,938	$	174,528	$	(75,508)	552,571
Cross product counterparty netting	Cross product counterparty netting									(12,172)		Cross product counterparty netting									(29,988)
Total OTC derivative assets included in Financial instruments owned, at fair value	Total OTC derivative assets included in Financial instruments owned, at fair value									$	541,177	Total OTC derivative assets included in Financial instruments owned, at fair value									$	522,583

(1)At ~~May~~August 31, 2021, we held net exchange-traded ~~derivative assets, other~~ derivative assets and other credit agreements with a fair value of ~~$18.3~~$16.2 million, which are not included in this table.

(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 ~~May~~August 31, 2021, cash collateral received was ~~$158.8~~$121.7 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)											OTC Derivative Liabilities (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	Commodity swaps, options and forwards	$	11,088	$	3,249	$	0	$	0	$	14,337	Commodity swaps, options and forwards	$	12,799	$	2,211	$	—	$	—	$	15,010
Equity options and forwards	Equity options and forwards	14,879		523,306		161,290		(18,453)		681,022		Equity options and forwards	8,209		670,980		136,499		(25,243)		790,445
Credit default swaps	Credit default swaps	17		2,607		7,101		(1)		9,724		Credit default swaps	12		19,268		—		—		19,280
Total return swaps	Total return swaps	123,588		308,799		1,243		(3,120)		430,510		Total return swaps	61,866		270,869		—		(7,489)		325,246
Foreign currency forwards, swaps and options	Foreign currency forwards, swaps and options	127,194		2,222		0		(1,262)		128,154		Foreign currency forwards, swaps and options	67,044		7,113		—		(8,809)		65,348
Fixed income forwards	Fixed income forwards	19,941		0		0		0		19,941		Fixed income forwards	29,254		—		—		—		29,254
Interest rate swaps, options and forwards	Interest rate swaps, options and forwards	29,813		53,418		132,556		(39,642)		176,145		Interest rate swaps, options and forwards	25,013		46,642		112,617		(33,967)		150,305
Total	Total	$	326,520	$	893,601	$	302,190	$	(62,478)	1,459,833		Total	$	204,197	$	1,017,083	$	249,116	$	(75,508)	1,394,888
Cross product counterparty netting	Cross product counterparty netting									(12,172)		Cross product counterparty netting									(29,988)
Total OTC derivative liabilities included in Financial instruments sold, not yet purchased, at fair value	Total OTC derivative liabilities included in Financial instruments sold, not yet purchased, at fair value									$	1,447,661	Total OTC derivative liabilities included in Financial instruments sold, not yet purchased, at fair value									$	1,364,900

(1)At ~~May~~August 31, 2021, we held net exchange-traded ~~derivative liabilities, other~~ derivative liabilities and other credit agreements with a fair value of ~~$64.2~~$50.0 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 ~~May~~August 31, 2021, cash collateral pledged was ~~$628.9~~$483.1 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 ~~May~~August 31, 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	$	~~127,260~~130,680
BBB- to BBB+	~~33,398~~13,552
BB+ or lower	~~192,047~~165,863
Unrated	~~188,472~~212,488
Total	$	~~541,177~~522,583

(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.

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									External Credit Rating
		Investment Grade		Non-investment grade		Unrated		Total Notional			Investment Grade		Non-investment grade		Unrated		Total Notional
May 31, 2021
August 31, 2021										August 31, 2021
Credit protection sold:	Credit protection sold:									Credit protection sold:
Index credit default swaps	Index credit default swaps	$	163.2	$	70.0	$	0	$	233.2	Index credit default swaps	$	265.0	$	287.1	$	—	$	552.1
Single name credit default swaps	Single name credit default swaps	81.8		6.2		0.2		88.2		Single name credit default swaps	12.6		6.2		0.2		19.0

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


		May 31, 2021		November 30, 2020			August 31, 2021		November 30, 2020
Derivative instrument liabilities with credit-risk-related contingent features	Derivative instrument liabilities with credit-risk-related contingent features	$	508.2	$	284.6	Derivative instrument liabilities with credit-risk-related contingent features	$	440.4	$	284.6
Collateral posted	Collateral posted	(209.9)		(129.8)		Collateral posted	(216.2)		(129.8)
Collateral received	Collateral received	155.7		141.4		Collateral received	121.7		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)	454.0		296.2		Return of and additional collateral required in the event of a credit rating downgrade below investment grade (1)	346.0		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 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, 2021

Corporate equity securities	$	1,428,901	$	207,370	$	9,853	$	1,646,124
Corporate debt securities	262,099		2,019,062		—		2,281,161
Mortgage-backed and asset-backed securities	—		1,035,695		—		1,035,695
U.S. government and federal agency securities	17,261		8,399,520		—		8,416,781
Municipal securities	—		170,540		—		170,540
Sovereign obligations	56,227		2,211,634		—		2,267,861
Loans and other receivables	—		1,607,536		—		1,607,536
Total	$	1,764,488	$	15,651,357	$	9,853	$	17,425,698

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

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
May 31, 2021
August 31, 2021												August 31, 2021
Securities lending arrangements	Securities lending arrangements	$	861,554	$	0	$	598,203	$	817,666	$	2,277,423	Securities lending arrangements	$	693,448	$	—	$	446,696	$	624,344	$	1,764,488
Repurchase agreements	Repurchase agreements	8,251,453		2,894,885		2,811,683		3,324,918		17,282,939		Repurchase agreements	6,731,201		2,113,096		2,346,442		4,460,618		15,651,357

Obligation to return securities received as collateral, at fair value												Obligation to return securities received as collateral, at fair value	9,853		—		—		—		9,853
Total	Total	$	9,113,007	$	2,894,885	$	3,409,886	$	4,142,584	$	19,560,362	Total	$	7,434,502	$	2,113,096	$	2,793,138	$	5,084,962	$	17,425,698

November 30, 2020	November 30, 2020											November 30, 2020
Securities lending arrangements	Securities lending arrangements	$	636,256	$	59,735	$	459,455	$	655,302	$	1,810,748	Securities lending arrangements	$	636,256	$	59,735	$	459,455	$	655,302	$	1,810,748
Repurchase agreements	Repurchase agreements	5,510,476		1,747,526		5,019,885		2,881,386		15,159,273		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	7,517		0		0		0		7,517		Obligation to return securities received as collateral, at fair value	7,517		—		—		—		7,517
Total	Total	$	6,154,249	$	1,807,261	$	5,479,340	$	3,536,688	$	16,977,538	Total	$	6,154,249	$	1,807,261	$	5,479,340	$	3,536,688	$	16,977,538

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 ~~May~~August 31, 2021 and November 30, 2020, the approximate fair value of securities received as collateral by us that may be sold or repledged was ~~$33.0~~$31.60 billion and ~~$25.9~~$25.85 billion, respectively. At ~~May~~August 31, 2021 and November 30, 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 May 31, 2021
Assets at August 31, 2021														Assets at August 31, 2021
Securities borrowing arrangements	Securities borrowing arrangements	$	6,720,683	$	0	$	6,720,683	$	(493,650)	$	(2,083,503)	$	4,143,530	Securities borrowing arrangements	$	6,212,491	$	—	$	6,212,491	$	(263,043)	$	(1,925,452)	$	4,023,996
Reverse repurchase agreements	Reverse repurchase agreements	17,120,842		(10,203,617)		6,917,225		(618,350)		(6,259,927)		38,948		Reverse repurchase agreements	16,091,094		(8,079,544)		8,011,550		(310,547)		(7,669,325)		31,678
Securities received as collateral, at fair value														Securities received as collateral, at fair value	9,853		—		9,853		—		(9,853)		—

Liabilities at May 31, 2021
Liabilities at August 31, 2021														Liabilities at August 31, 2021
Securities lending arrangements	Securities lending arrangements	$	2,277,423	$	0	$	2,277,423	$	(493,650)	$	(1,718,328)	$	65,445	Securities lending arrangements	$	1,764,488	$	—	$	1,764,488	$	(263,043)	$	(1,489,230)	$	12,215
Repurchase agreements	Repurchase agreements	17,282,939		(10,203,617)		7,079,322		(618,350)		(5,933,921)		527,051		Repurchase agreements	15,651,357		(8,079,544)		7,571,813		(310,547)		(6,835,756)		425,510

Obligation to return securities received as collateral, at fair value														Obligation to return securities received as collateral, at fair value	9,853		—		9,853		—		(9,853)		—

Assets at November 30, 2020	Assets at November 30, 2020													Assets at November 30, 2020
Securities borrowing arrangements	Securities borrowing arrangements	$	6,934,762	$	0	$	6,934,762	$	(395,342)	$	(1,706,046)	$	4,833,374	Securities borrowing arrangements	$	6,934,762	$	—	$	6,934,762	$	(395,342)	$	(1,706,046)	$	4,833,374
Reverse repurchase agreements	Reverse repurchase agreements	11,939,773		(6,843,004)		5,096,769		(412,327)		(4,578,560)		105,882		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	7,517		0		7,517		0		0		7,517		Securities received as collateral, at fair value	7,517		—		7,517		—		—		7,517

Liabilities at November 30, 2020	Liabilities at November 30, 2020													Liabilities at November 30, 2020
Securities lending arrangements	Securities lending arrangements	$	1,810,748	$	0	$	1,810,748	$	(395,342)	$	(1,397,550)	$	17,856	Securities lending arrangements	$	1,810,748	$	—	$	1,810,748	$	(395,342)	$	(1,397,550)	$	17,856
Repurchase agreements	Repurchase agreements	15,159,273		(6,843,004)		8,316,269		(412,327)		(7,122,422)		781,520		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	7,517		0		7,517		0		0		7,517		Obligation to return securities received as collateral, at fair value	7,517		—		7,517		—		—		7,517

(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 ~~May~~August 31, 2021, amounts include ~~$4,032.0 million~~$3.93 billion of securities borrowing arrangements, for which we have received securities collateral of ~~$3,904.7 million,~~$3.79 billion, and ~~$520.0~~$420.0 million of repurchase agreements, for which we have pledged securities collateral of ~~$533.6~~$432.1 million, which are subject to master netting agreements, but we have not determined the agreements to be legally enforceable. At November 30, 2020, amounts include ~~$4,757.8 million~~$4.76 billion of securities borrowing arrangements, for which we have received securities collateral of ~~$4,617.0 million,~~$4.62 billion, and $720.0 million of repurchase agreements, for which we have pledged securities collateral of $733.9 million, which are subject to master netting agreements, but we have not determined the agreements to be legally enforceable.

3738

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 totaled ~~$901.4~~$514.5 million and $604.3 million at ~~May~~August 31, 2021 and November 30, 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 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 Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Transferred assets	Transferred assets	$	3,146.5	$	1,475.8	$	6,730.0	$	3,810.4	Transferred assets	$	2,608.1	$	983.9	$	9,338.1	$	4,794.3
Proceeds on new securitizations	Proceeds on new securitizations	3,146.5		1,475.7		6,729.6		3,810.4		Proceeds on new securitizations	2,609.8		983.9		9,339.4		4,794.3
Cash flows received on retained interests	Cash flows received on retained interests	5.1		7.2		11.1		11.7		Cash flows received on retained interests	4.5		6.3		14.3		18.6

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 ~~May~~August 31, 2021 and November 30, 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):


		May 31, 2021				November 30, 2020					August 31, 2021				November 30, 2020
Securitization Type	Securitization Type	Total Assets		Retained Interests		Total Assets		Retained Interests		Securitization Type	Total Assets		Retained Interests		Total Assets		Retained Interests
U.S. government agency residential mortgage-backed securities	U.S. government agency residential mortgage-backed securities	$	447.8	$	6.2	$	562.5	$	7.8	U.S. government agency residential mortgage-backed securities	$	382.5	$	5.6	$	562.5	$	7.8
U.S. government agency commercial mortgage-backed securities	U.S. government agency commercial mortgage-backed securities	2,224.0		114.5		2,461.2		205.2		U.S. government agency commercial mortgage-backed securities	2,755.1		100.3		2,461.2		205.2
CLOs	CLOs	3,702.0		91.9		3,345.5		39.5		CLOs	3,826.5		58.7		3,345.5		39.5
Consumer and other loans	Consumer and other loans	1,693.3		95.1		1,290.6		56.6		Consumer and other loans	2,250.3		125.7		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.

3839

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;

•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.

3940

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.


		May 31, 2021				November 30, 2020					August 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)	$	—	$	1.2	$	—	$	1.2
Financial instruments owned, at fair value ~~(2)~~	Financial instruments owned, at fair value ~~(2)~~	0		0.2		0		5.2		Financial instruments owned, at fair value ~~(2)~~	—		37.6		—		5.2
Securities purchased under agreements to resell ~~(3)~~(2)	Securities purchased under agreements to resell ~~(3)~~(2)	3,535.2		0		2,908.9		0		Securities purchased under agreements to resell ~~(3)~~(2)	3,549.9		—		2,908.9		—

Receivables	Receivables	549.2		22.5		510.6		12.9		Receivables	708.1		13.1		510.6		12.9

Other assets ~~(4)~~(3)	Other assets ~~(4)~~(3)	75.9		0.2		46.4		0.1		Other assets ~~(4)~~(3)	113.9		—		46.4		0.1
Total assets	Total assets	$	4,160.3	$	24.1	$	3,465.9	$	19.4	Total assets	$	4,371.9	$	51.9	$	3,465.9	$	19.4

Financial instruments sold, not yet purchased, at fair value	Financial instruments sold, not yet purchased, at fair value	$	0	$	0	$	0	$	2.5	Financial instruments sold, not yet purchased, at fair value	$	—	$	0.1	$	—	$	2.5
Other secured financings ~~(5)~~(4)	Other secured financings ~~(5)~~(4)	4,129.1		0		3,425.0		0		Other secured financings ~~(5)~~(4)	4,338.8		—		3,425.0		—

Other liabilities ~~(6)~~(5)	Other liabilities ~~(6)~~(5)	2.0		0.8		1.8		0.4		Other liabilities ~~(6)~~(5)	2.6		51.3		1.8		0.4
Total liabilities	Total liabilities	$	4,131.1	$	0.8	$	3,426.8	$	2.9	Total liabilities	$	4,341.4	$	51.4	$	3,426.8	$	2.9

(1)Approximately $1.2 million and $0.7 million of the cash amounts at ~~May~~August 31, 2021 and November 30, 2020, respectively, represent cash on deposit with related consolidated entities and are 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.

~~(4)~~(3)Approximately ~~$30.2~~$36.0 million and $9.7 million of the other assets at ~~May~~August 31, 2021 and November 30, 2020, respectively, represent intercompany receivables with related consolidated entities, which are eliminated in consolidation.

~~(5)~~(4)Approximately $138.2 million of the other secured financings at November 30, 2020 are with related consolidated entities, which are eliminated in consolidation.

~~(6)~~(5)Approximately ~~$0.3~~$50.9 million and $0.3 million of the other liabilities at ~~May~~August 31, 2021 and November 30, 2020, respectively, represent intercompany payables with related consolidated entities, which are eliminated in consolidation.

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 ~~May~~August 31, 2021 and November 30, 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 ~~six~~three and nine months ended ~~May~~August 31, 2021, automobile loan receivables aggregating ~~$250.4~~$264.1 million and $514.5 million, respectively, were securitized by Foursight Capital in connection with a secured borrowing ~~offering.~~offerings. The majority of the proceeds from issuance of the secured ~~borrowing~~borrowings were used to pay down Foursight Capital's 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.

4041

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
May 31, 2021
August 31, 2021											August 31, 2021
CLOs	CLOs	$	145.3	$	2.4	$	1,089.7		$	6,684.9	CLOs	$	309.3	$	2.3	$	2,372.2	$	8,669.1
Asset-backed vehicles	Asset-backed vehicles	265.6		0		421.2			2,584.6		Asset-backed vehicles	214.6		—		241.7		3,097.8
Related party private equity vehicles	Related party private equity vehicles	23.7		0		34.6			67.2		Related party private equity vehicles	28.1		—		38.7		80.4

Other investment vehicles	Other investment vehicles	949.9		0		1,088.7			14,736.7		Other investment vehicles	1,079.4		—		1,196.7		16,618.9
Total	Total	$	1,384.5	$	2.4	$	2,634.2		$	24,073.4	Total	$	1,631.4	$	2.3	$	3,849.3	$	28,466.2

November 30, 2020	November 30, 2020										November 30, 2020
CLOs	CLOs	$	60.7	$	0.2	$	642.7		$	6,849.1	CLOs	$	60.7	$	0.2	$	642.7	$	6,849.1
Asset-backed vehicles	Asset-backed vehicles	251.6		0		377.2			2,462.7		Asset-backed vehicles	251.6		—		377.2		2,462.7
Related party private equity vehicles	Related party private equity vehicles	19.0		0		30.0			53.0		Related party private equity vehicles	19.0		—		30.0		53.0

Other investment vehicles	Other investment vehicles	899.9		0		1,042.9			15,735.5		Other investment vehicles	899.9		—		1,042.9		15,735.5
Total	Total	$	1,231.2	$	0.2	$	2,092.8		$	25,100.3	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 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, sub-investment grade and senior secured U.S. 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 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 CLO 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 both ~~May~~August 31, 2021 and November 30, 2020, our total equity commitment in the JCP Entities was $133.0 million, of which ~~$122.1~~$122.3 million and $122.0 million, respectively, had been funded. The carrying value of our equity investments in the JCP Entities was ~~$23.7~~$28.1 million and $19.0 million at ~~May~~August 31, ~~2021~~

4142

2021 and November 30, 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 ~~$949.9 million~~$1.08 billion and $899.9 million at ~~May~~August 31, 2021 and November 30, 2020, respectively. Our unfunded equity commitment related to these investments totaled ~~$138.7~~$117.2 million and $143.0 million at ~~May~~August 31, 2021 and November 30, 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 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 ~~May~~August 31, 2021 and November 30, 2020, we held ~~$1,418.2~~$695.9 million and ~~$1,571.6 million~~$1.57 billion of agency mortgage-backed securities, respectively, and ~~$239.2~~$189.0 million and $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~~$394.7 million in its latest financial statements. Our maximum exposure to loss as a result of our involvement with FXCM is limited to the carrying value of the term loan ($~~59.2~~58.5 million) and the investment in associated company ($~~64.1~~51.0 million), which totaled ~~$123.3~~$109.5 million at ~~May~~August 31, 2021. FXCM is not included in the above table containing information about our variable interests in nonconsolidated VIEs.

4243

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 ~~six~~nine months ended ~~May~~August 31, 2021 and 2020 is as follows (in thousands):


		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			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													2021
Jefferies Finance	Jefferies Finance	$	693,201	$	0	$	60,835	$	(21,817)	$	0	$	732,219	Jefferies Finance	$	693,201	$	—	$	59,068	$	(8,837)	$	—	$	743,432
Berkadia	Berkadia	301,152		0		60,672		(505)		(57)		361,262		Berkadia	301,152		0		86,639		(556)		(140)		387,095

FXCM (2)	FXCM (2)	73,920		(10,120)		0		0		328		64,128		FXCM (2)	73,920		(23,046)		—		—		109		50,983

Linkem (3)	Linkem (3)	198,991		(19,943)		0		(8,783)		0		170,265		Linkem (3)	198,991		(34,174)		—		(9,057)		(726)		155,034

Real estate associated companies	Real estate associated companies	168,678		(3,117)		0		(11,854)		0		153,707		Real estate associated companies	168,678		(2,948)		—		(20,151)		—		145,579
Other (3)	Other (3)	250,621		(914)		31,537		(34,709)		(1)		246,534		Other (3)	250,621		(1,102)		41,525		(28,200)		(2)		262,842
Total	Total	$	1,686,563	$	(34,094)	$	153,044	$	(77,668)	$	270	$	1,728,115	Total	$	1,686,563	$	(61,270)	$	187,232	$	(66,801)	$	(759)	$	1,744,965

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

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

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

Real estate associated companies (4)	Real estate associated companies (4)	255,309		(53,442)		0		(31,784)		0		170,083		Real estate associated companies (4)	255,309		(50,910)		—		(34,505)		—		169,894
Other	Other	189,762		(7,577)		(111)		(186)		9,237		191,125		Other	189,762		(6,815)		3,026		(3,643)		9,235		191,565
Total	Total	$	1,652,957	$	(74,576)	$	(26,136)	$	(5,743)	$	13,291	$	1,559,793	Total	$	1,652,957	$	(69,523)	$	(22,282)	$	(29,553)	$	7,757	$	1,539,356

(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 ~~May~~August 31, 2021 and November 30, 2020 include loans and debt securities aggregating $104.1 million and $104.1 million, respectively, related to Linkem and Other.

(4)Income (loss) related to Real estate associated companies for the ~~three and six~~nine months ended ~~May~~August 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.

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


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

FXCM	FXCM	$	(4,658)	$	7,890	$	(10,120)	$	6,252	FXCM	$	(12,926)	$	3,704	$	(23,046)	$	9,956

Linkem	Linkem	(10,836)		(6,624)		(19,943)		(19,809)		Linkem	(14,231)		(1,945)		(34,174)		(21,754)

Real estate associated companies	Real estate associated companies	(9,168)		(428)		(3,117)		(53,442)		Real estate associated companies	169		2,532		(2,948)		(50,910)
Other	Other	1,136		(7,559)		(914)		(7,577)		Other	(188)		762		(1,102)		(6,815)
Total	Total	$	(23,526)	$	(6,721)	$	(34,094)	$	(74,576)	Total	$	(27,176)	$	5,053	$	(61,270)	$	(69,523)

4344

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


		For the Three Months Ended				For the Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Jefferies Finance	Jefferies Finance	$	33,250	$	(53,069)	$	60,835	$	(47,950)	Jefferies Finance	$	(1,767)	$	(17,731)	$	59,068	$	(65,681)
Berkadia	Berkadia	30,654		31		60,672		21,925		Berkadia	25,967		18,448		86,639		40,373
Other	Other	1,234		(1,857)		31,537		(111)		Other	9,988		3,137		41,525		3,026
Total	Total	$	65,138	$	(54,895)	$	153,044	$	(26,136)	Total	$	34,188	$	3,854	$	187,232	$	(22,282)

Jefferies Finance

In August 2021, Jefferies Finance LLC’s corporate structure was reorganized and its debt was refinanced. As a result, we now hold an equity interest in JFIN Parent LLC ("Jefferies Finance") and Jefferies Finance LLC is a direct subsidiary of JFIN Parent LLC. 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 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~~$1.50 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 Credit Partners, is a private credit platform that manages more than $10.0 billion of proprietary and third party capital invested across commingled funds, separately managed accounts and CLOs.

At ~~May~~August 31, 2021, Jefferies Group and MassMutual each had equity commitments to Jefferies Finance of $750.0 million. At ~~May~~August 31, 2021, ~~$676.8~~$681.2 million of Jefferies Group's commitment was funded. The investment commitment is scheduled to expire on March 1, 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 ~~May~~August 31, 2021. Advances are shared equally between Jefferies Group and MassMutual. The facility is scheduled to mature on March 1, 2022 with automatic one year extensions absent a 60-day termination notice by either party. At ~~May~~August 31, 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 ~~$1.3~~$0.3 million and ~~$1.5~~$0.4 million during the three months ended ~~May~~August 31, 2021 and 2020, respectively, and ~~$1.9~~$2.2 million and ~~$2.6~~$3.0 million during the ~~six~~nine months ended ~~May~~August 31, 2021 and 2020, respectively.

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


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

Origination and syndication fee revenues (1)	Origination and syndication fee revenues (1)	$	145.4	$	43.8	$	215.7	$	81.5	Origination and syndication fee revenues (1)	$	87.8	$	42.4	$	303.5	$	123.9
Origination fee expenses (1)	Origination fee expenses (1)	20.5		3.0		32.8		8.6		Origination fee expenses (1)	15.6		3.8		48.4		12.4
CLO placement fee revenues (2)	CLO placement fee revenues (2)	1.3		0		3.7		0.4		CLO placement fee revenues (2)	0.6		1.3		4.3		1.7
Underwriting fees (3)	Underwriting fees (3)	0		0		0.5		0.3		Underwriting fees (3)	2.0		—		2.5		0.3
Service fees (4)	Service fees (4)	14.0		10.7		45.5		35.9		Service fees (4)	18.0		13.5		63.5		49.4

(1) Jefferies Group engages in the origination and 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 ~~May~~August 31, 2021

and November 30, 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 ~~May~~August 31, 2021 and November 30, 2020, we had receivables from Jefferies Finance, included in Other assets in the Consolidated Statements of Financial Condition of ~~$31.6~~$14.5 million and $24.2 million, respectively. At ~~May~~August 31, 2021 and November 30, 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 ~~$1.8~~$1.1 million and $13.7 million, respectively.

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 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 ~~May~~August 31, 2021, the aggregate amount of commercial paper outstanding was $1.47 billion.

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 ~~May~~August 31, 2021. We have approximately 48% of the total voting securities of Linkem. Additionally, we have made shareholder loans to Linkem with principal outstanding of ~~$104.3~~$101.1 million at ~~May~~August 31, 2021. We account for our equity interest in Linkem on a two month lag.

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).

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.

Note 9. Intangible Assets, Net and Goodwill

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


		May 31, 2021		November 30, 2020			August 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	$	7,928	$	7,884	Exchange and clearing organization membership interests and registrations	$	7,811	$	7,884

Amortizable intangibles:	Amortizable intangibles:					Amortizable intangibles:
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		99,247		100,255
Customer and other relationships, net of accumulated amortization of $126,254 and $119,694						Customer and other relationships, net of accumulated amortization of $126,254 and $119,694	45,065		51,285
Trademarks and tradenames, net of accumulated amortization of $31,472 and $28,585						Trademarks and tradenames, net of accumulated amortization of $31,472 and $28,585	97,888		100,255

Other, net of accumulated amortization of $10,183 and $8,953		6,499		7,729
Other, net of accumulated amortization of $10,768 and $8,953						Other, net of accumulated amortization of $10,768 and $8,953	5,914		7,729
Total intangible assets, net	Total intangible assets, net	160,974		167,153		Total intangible assets, net	156,678		167,153

Goodwill:	Goodwill:					Goodwill:
Investment Banking and Capital Markets (1)	Investment Banking and Capital Markets (1)	1,568,336		1,563,144		Investment Banking and Capital Markets (1)	1,565,315		1,563,144
Asset Management	Asset Management	143,000		143,000		Asset Management	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	1,751,506		1,746,314		Total goodwill	1,748,485		1,746,314

Total intangible assets, net and goodwill	Total intangible assets, net and goodwill	$	1,912,480	$	1,913,467	Total intangible assets, net and goodwill	$	1,905,163	$	1,913,467

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

Amortization expense on intangible assets was $3.6 million and ~~$3.9~~$3.7 million for the three months ended ~~May~~August 31, 2021 and 2020, respectively, and ~~$7.2~~$10.7 million and ~~$7.7~~$11.5 million for the ~~six~~nine months ended ~~May~~August 31, 2021 and 2020, 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	$	7,179	Remainder of current year	$	3,585
2022	2022	11,134		2022	11,134
2023	2023	9,900		2023	9,900
2024	2024	9,143		2024	9,143
2025	2025	8,632		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, 2021. The quantitative goodwill impairment test is performed at our reporting unit level. 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, an impairment loss is recognized as the difference between the fair value and carrying value of the reporting unit.

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, 2021. 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, 2021. We utilized quantitative assessments 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 and qualitative assessments were performed on the remainder of our indefinite-life intangible assets. In applying our quantitative assessments, we recognized immaterialimpairment losses on certain exchange membership interests and registrations. With regard to our qualitative assessments of the remaining indefinite-life intangible assets, based on our assessments of market conditions, the utilization of the assets and the replacement costs associated with the assets, we have 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):


		May 31, 2021		November 30, 2020			August 31, 2021		November 30, 2020
Bank loans (1)	Bank loans (1)	$	469,034	$	752,848	Bank loans (1)	$	300,497	$	752,848

Floating rate puttable notes (1)	Floating rate puttable notes (1)	6,800		6,800		Floating rate puttable notes (1)	6,800		6,800
Equity-linked notes (2)	Equity-linked notes (2)	0		5,067		Equity-linked notes (2)	—		5,067
Total short-term borrowings	Total short-term borrowings	$	475,834	$	764,715	Total short-term borrowings	$	307,297	$	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 ~~May~~August 31, 2021 and November 30, 2020, the weighted average interest rate on short-term borrowings outstanding was ~~1.49%~~1.02% and 1.87% per annum, respectively.

Our bank loans include facilities that contain certain covenants that, among other things, require Jefferies Group to maintain a specified level of tangible net worth and impose certain restrictions on the future indebtedness of certain of Jefferies Group's subsidiaries that are borrowers. At ~~May~~August 31, 2021, Jefferies Group was in compliance with all covenants under these facilities. Our facilities, which are with a bank and are included within bank loans, were ~~$413.0~~$300.0 million and $746.0 million at ~~May~~August 31, 2021 and November 30, 2020, respectively. Interest is based on a rate per annum at spreads over the Federal Funds Rate, as defined in the credit agreements.

In addition, a bank has agreed to make revolving intraday credit advances to Jefferies Group ("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 ~~May~~August 31, 2021, Jefferies Group was in compliance with all debt covenants under the Jefferies Group Intraday Credit Facility.

4748

Note 11. Long-Term Debt

~~The principal amount (net~~Principal amounts included in the table below are shown net of unamortized discounts, premiums and debt issuance ~~costs), stated interest rate and maturity date of outstanding debt are as follows~~costs (dollars in thousands):.


		May 31, 2021		November 30, 2020			August 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	$	746,551	$	745,883	5.50% Senior Notes due October 18, 2023, $750,000 principal	$	746,891	$	745,883
6.625% Senior Notes due October 23, 2043, $250,000 principal	6.625% Senior Notes due October 23, 2043, $250,000 principal	246,858		246,828		6.625% Senior Notes due October 23, 2043, $250,000 principal	246,873		246,828
Total long-term debt – Parent Company	Total long-term debt – Parent Company	993,409		992,711		Total long-term debt – Parent Company	993,764		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:
2.25% 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		2.25% Euro Medium Term Notes, due July 13, 2022, $0 and $4,779 principal	—		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		5.125% Senior Notes, due January 20, 2023, $750,000 principal	756,536		759,901
1.00% Euro Medium Term Notes, due July 19, 2024, $611,400 and $597,350 principal		609,952		595,700
1.00% Euro Medium Term Notes, due July 19, 2024, $590,600 and $597,350 principal						1.00% Euro Medium Term Notes, due July 19, 2024, $590,600 and $597,350 principal	589,294		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)	788,749		809,039		4.85% Senior Notes, due January 15, 2027, $750,000 principal (1)	789,663		809,039
6.45% Senior Debentures, due June 8, 2027, $350,000 principal	6.45% Senior Debentures, due June 8, 2027, $350,000 principal	367,824		369,057		6.45% Senior Debentures, due June 8, 2027, $350,000 principal	367,194		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	990,044		989,574		4.15% Senior Notes, due January 23, 2030, $1,000,000 principal	990,283		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		2.75% Senior Notes, due October 15, 2032, $500,000 principal (1)	466,860		485,134
6.25% Senior Debentures, due January 15, 2036, $500,000 principal	6.25% Senior Debentures, due January 15, 2036, $500,000 principal	510,611		510,834		6.25% Senior Debentures, due January 15, 2036, $500,000 principal	510,497		510,834
6.50% Senior Notes, due January 20, 2043, $400,000 principal	6.50% Senior Notes, due January 20, 2043, $400,000 principal	419,611		419,826		6.50% Senior Notes, due January 20, 2043, $400,000 principal	419,500		419,826
Structured Notes (2)	Structured Notes (2)	1,819,975		1,712,245		Structured Notes (2)	1,790,645		1,712,245
Jefferies Group Revolving Credit Facility	Jefferies Group Revolving Credit Facility	248,764		189,732		Jefferies Group Revolving Credit Facility	248,873		189,732
Jefferies Group Secured Credit Facility	Jefferies Group Secured Credit Facility	375,000		0		Jefferies Group Secured Credit Facility	375,000		—
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	197,463		191,294		HomeFed EB-5 Program debt	202,618		191,294
HomeFed construction loans	HomeFed construction loans	49,407		45,471		HomeFed construction loans	45,442		45,471
Foursight Capital Credit Facilities	Foursight Capital Credit Facilities	109,168		129,000		Foursight Capital Credit Facilities	—		129,000
Vitesse Energy Finance Revolving Credit Facility	Vitesse Energy Finance Revolving Credit Facility	81,502		97,883		Vitesse Energy Finance Revolving Credit Facility	74,559		97,883

Total long-term debt – subsidiaries	Total long-term debt – subsidiaries	7,829,836		7,359,328		Total long-term debt – subsidiaries	7,676,964		7,359,328

Long-term debt	Long-term debt	$	8,823,245	$	8,352,039	Long-term debt	$	8,670,728	$	8,352,039

(1) The carrying ~~value~~values of these senior notes include a net gain of ~~$52.0~~$38.6 million and a net loss of ~~$47.2~~$45.5 million during the ~~six~~nine months ended ~~May~~August 31, 2021 and 2020, respectively, associated with interest rate swaps based on designation as fair value 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.

Parent Company Debt:

Subsequent to quarter-end on October 8, 2021, we announced a tender offer for any and all of our $750.0 million outstanding 5.50% Senior Notes due October 18, 2023.

Subsidiary Debt:

During the ~~six~~nine months ended ~~May~~August 31, 2021, structured notes with a total principal amount of approximately ~~$59.5~~$50.6 million, net of retirements, were issued by Jefferies Group. Subsequent to quarter-end, on October 8, 2021, Jefferies Group issued 2.625% senior notes with a principal amount of $1.0 billion, due 2031. In addition, Jefferies Group gave notice to the trustee

and debt holders of its 5.125% senior notes, due January 20, 2023, of its plan to redeem the outstanding aggregate principal amount (carrying value of $756.5 million at August 31, 2021) of these notes.

liquidity amounts, and impose certain restrictions on future indebtedness of and require specified levels of regulated capital for certain of its subsidiaries. Throughout the period and at ~~May~~August 31, 2021, no instances of noncompliance with the Jefferies Group Revolving Credit Facility covenants occurred and Jefferies Group expects to remain in compliance given its 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~~August 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~~a certain subsidiary of Jefferies Group to maintain specified leverage amounts and impose certain restrictions on ~~the borrower's~~its future indebtedness. At ~~May~~August 31, 2021, Jefferies Group was in compliance with all debt covenants under the Jefferies Group Secured Credit Facility.

During August 2021, Jefferies Group entered into a senior unsecured revolving credit facility ("Jefferies Group Unsecured Revolving Credit Facility") agreement with a bank for an aggregate committed amount of $350.0 million. Interest is based on a rate per annum at spreads over an Adjusted LIBOR Rate or a Base Rate, as defined in the credit agreement. The Jefferies Group Unsecured Revolving Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain a specified level of tangible net worth, net cash capital and a minimum regulatory net capital requirement for Jefferies LLC. At August 31, 2021, Jefferies Group was in compliance with all covenants under the Jefferies Group Unsecured Revolving Credit Facility. At August 31, 2021, Jefferies Group did not have any borrowings outstanding under the Jefferies Group Unsecured Revolving Credit Facility.

One of Jefferies Group's subsidiaries ~~has~~had 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~~matured on September 27, 2021 and iswas collateralized by certain trading securities. Interest on the Jefferies Group Secured Bank Loan iswas 1.25% plus LIBOR. The agreement ~~contains~~contained certain covenants that, among other things, ~~restrict~~restricted lien or encumbrance upon any of the pledged collateral. At ~~May~~August 31, 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 ~~May~~August 31, 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 ~~May~~August 31, 2021, HomeFed has construction loans with an aggregate committed amount of ~~$162.7~~$151.9 million. The proceeds are being used for construction at certain of its real estate projects. The outstanding principal amount of the loans bear interest based on spreads of 2.15% to 3.15%, over 30-day LIBOR, subject to adjustment on the first of each calendar month. At ~~May~~August 31, 2021, the weighted average interest rate on these loans was ~~3.21%~~3.24%. The loans mature between ~~June 2021~~March 2022 and May 2024 and are collateralized by the property underlying the related project with a guarantee by HomeFed. At ~~May~~August 31, 2021 and November 30, 2020, ~~$50.8~~$46.8 million and $46.2 million, respectively, was outstanding under the construction loan agreements.

At ~~May~~August 31, 2021, Foursight Capital's credit facilities consisted of 2 warehouse credit commitments aggregating $175.0 million. ~~One of the~~The $75.0 million credit ~~facilities~~facility matures in May 2023 and bears interest based on the one-month LIBOR plus a credit spread fixed through its ~~maturity and the other~~maturity. The $100.0 million credit facility ~~matures in~~is currently available through October ~~2022~~2021 and bears interest based on a commercial paper rate plus a fixed credit ~~spread fixed through its maturity.~~spread. Foursight Capital anticipates renegotiating the terms of the $100.0 million credit facility in the upcoming quarter. 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 automobile loan receivables owed to Foursight Capital of approximately $135.9 million at May 31, 2021.~~ At ~~May~~August 31, 2021 and November 30, 2020, ~~$109.3~~$0.0 million and $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 ~~May~~August 31, 2021. Amounts outstanding under the facility at ~~May~~August 31, 2021 and November 30, 2020 were ~~$82.0~~$75.0 million and $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 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. Mezzanine Equity

Redeemable Noncontrolling Interests

At ~~May~~August 31, 2021 and November 30, 2020, redeemable noncontrolling interests include other redeemable noncontrolling interests of ~~$34.5~~$38.2 million and $24.7 million, respectively, primarily related to our oil and gas exploration and development businesses.

Mandatorily Redeemable Convertible Preferred Shares

We have one series of callable mandatorily redeemable cumulative convertible preferred shares ("Preferred Shares"). Our 125,000 Preferred Shares are callable beginning January 2023 at a price of $1,000 per share, plus accrued interest and are mandatorily redeemable in 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 and in the third quarter of 2021, we increased our quarterly dividend from $0.20 to $0.25 per common share. ~~This~~These increased the preferred stock dividend from ~~$2.8~~$4.2 million for the ~~six~~nine months ended ~~May~~August 31, 2020 to ~~$3.3~~$5.1 million for the ~~six~~nine months ended ~~May~~August 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 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.

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~~nine months ended ~~May~~August 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. Share-based compensation expense relating to grants made under our share-based compensation plans was ~~$10.1~~$7.0 million ~~(including $2.2 million related to the senior executive stock option~~ and ~~SAR awards, as discussed above) and $10.7~~$8.9 million for the three months ended ~~May~~August 31, 2021 and 2020, respectively, and ~~$64.3~~$71.2 million (including $48.6 million related to the senior executive stock option and SAR awards, as discussed above) and ~~$20.7~~$29.6 million for the ~~six~~nine months ended ~~May~~August 31, 2021 and 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 ~~$2.1~~$1.8 million and ~~$2.7~~$2.3 million for the three months ended ~~May~~August 31, 2021 and 2020, respectively, and ~~$7.2~~$9.0 million and ~~$5.3~~$7.5 million for the ~~six~~nine months ended ~~May~~August 31, 2021 and 2020, respectively. At ~~May~~August 31, 2021, total unrecognized compensation cost related to nonvested share-based compensation plans was ~~$37.8~~$30.9 million; this cost is expected to be recognized over a weighted average period of 2.1 years.

At ~~May~~August 31, 2021, there were ~~1,630,000~~1,583,000 shares of restricted stock outstanding with future service required, ~~2,878,000~~2,896,000 RSUs outstanding with future service required (including target RSUs issuable under the senior executive compensation plan), ~~16,964,000~~17,080,000 RSUs outstanding with no future service required, ~~5,156,000~~5,132,000 stock options outstanding and ~~1,110,000~~1,119,000 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 ~~30,549,000~~30,668,000 at ~~May~~August 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 ~~May~~August 31, 2021, the remaining unamortized amount of the restricted cash awards was ~~$401.5~~$390.0 million 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 3 years.

Note 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):


		May 31, 2021		November 30, 2020			August 31, 2021		November 30, 2020
Net unrealized gains on available for sale securities	Net unrealized gains on available for sale securities	$	426	$	513	Net unrealized gains on available for sale securities	$	377	$	513
Net unrealized foreign exchange losses	Net unrealized foreign exchange losses	(142,242)		(156,718)		Net unrealized foreign exchange losses	(151,445)		(156,718)
Net unrealized losses on instrument specific credit risk	Net unrealized losses on instrument specific credit risk	(162,172)		(71,151)		Net unrealized losses on instrument specific credit risk	(147,673)		(71,151)

Net minimum pension liability	Net minimum pension liability	(60,010)		(61,561)		Net minimum pension liability	(59,232)		(61,561)
Total accumulated other comprehensive income (loss)	Total accumulated other comprehensive income (loss)	$	(363,998)	$	(288,917)	Total accumulated other comprehensive income (loss)	$	(357,973)	$	(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	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	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						For the Nine Months Ended
		May 31, 2021		May 31, 2020				August 31, 2021		August 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
Net unrealized gains (losses) on instrument specific credit risk, net of income tax provision (benefit) of $599 and $306							Net unrealized gains (losses) on instrument specific credit risk, net of income tax provision (benefit) of $599 and $306	$	1,861	$	898	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
Amortization of defined benefit pension plan actuarial losses, net of income tax benefit of $(795) and $(658)							Amortization of defined benefit pension plan actuarial losses, net of income tax benefit of $(795) and $(658)	(2,329)		(1,931)		Selling, general and other expenses, which includes pension expense
Total reclassifications for the period, net of tax	Total reclassifications for the period, net of tax	$	1,308	$	267		Total reclassifications for the period, net of tax	$	(468)	$	(1,033)

Note 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 Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 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	$	222,624	$	242,972	$	459,393	$	422,402	Commissions and other fees	$	214,363	$	204,032	$	673,756	$	626,434
Investment banking	Investment banking	1,000,700		387,491		2,004,312		979,493		Investment banking	1,180,620		615,837		3,184,932		1,595,330
Manufacturing revenues	Manufacturing revenues	184,092		85,379		321,939		162,986		Manufacturing revenues	118,918		119,751		440,857		282,737
Other	Other	84,937		34,077		139,352		97,854		Other	120,168		35,121		259,520		132,975
Total revenues from contracts with customers	Total revenues from contracts with customers	1,492,353		749,919		2,924,996		1,662,735		Total revenues from contracts with customers	1,634,069		974,741		4,559,065		2,637,476

Other sources of revenue:	Other sources of revenue:									Other sources of revenue:
Principal transactions	Principal transactions	361,023		393,338		1,280,924		798,202		Principal transactions	232,110		623,283		1,513,034		1,421,485
Interest income	Interest income	230,448		236,732		470,945		563,098		Interest income	220,278		219,843		691,223		782,941
Other	Other	82,505		(2,458)		193,052		45,760		Other	54,137		7,632		247,189		53,392
Total revenues from other sources	Total revenues from other sources	673,976		627,612		1,944,921		1,407,060		Total revenues from other sources	506,525		850,758		2,451,446		2,257,818

Total revenues	Total revenues	$	2,166,329	$	1,377,531	$	4,869,917	$	3,069,795	Total revenues	$	2,140,594	$	1,825,499	$	7,010,511	$	4,895,294

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.

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. 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 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.

5354

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

Three months ended May 31, 2021
Three months ended August 31, 2021														Three months ended August 31, 2021
Major Business Activity:	Major Business Activity:													Major Business Activity:
Investment Banking - Advisory	Investment Banking - Advisory	$	390,508	$	0	$	0	$	0	$	0	$	390,508	Investment Banking - Advisory	$	583,887	$	—	$	—	$	—	$	—	$	583,887
Investment Banking - Underwriting	Investment Banking - Underwriting	610,192		0		0		0		0		610,192		Investment Banking - Underwriting	596,789		—		—		—		(56)		596,733
Equities (1)	Equities (1)	219,855		0		0		0		(19)		219,836		Equities (1)	210,109		—		—		—		(30)		210,079
Fixed Income (1)	Fixed Income (1)	2,788		0		0		0		0		2,788		Fixed Income (1)	4,284		—		—		—		—		4,284
Asset Management	Asset Management	0		2,315		0		0		0		2,315		Asset Management	—		2,853		—		—		—		2,853
Manufacturing revenues	Manufacturing revenues	0		0		184,092		0		0		184,092		Manufacturing revenues	—		—		118,918		—		—		118,918
Oil and gas revenues	Oil and gas revenues	0		0		45,032		0		0		45,032		Oil and gas revenues	—		—		49,814		—		—		49,814
Other revenues	Other revenues	0		0		37,590		0		0		37,590		Other revenues	—		—		67,501		—		—		67,501
Total revenues from contracts with customers	Total revenues from contracts with customers	$	1,223,343	$	2,315	$	266,714	$	0	$	(19)	$	1,492,353	Total revenues from contracts with customers	$	1,395,069	$	2,853	$	236,233	$	—	$	(86)	$	1,634,069

Primary Geographic Region:	Primary Geographic Region:													Primary Geographic Region:
Americas	Americas	$	962,556	$	2,011	$	265,972	$	0	$	(19)	$	1,230,520	Americas	$	1,114,885	$	2,853	$	235,450	$	—	$	(86)	$	1,353,102
Europe	Europe	196,891		304		537		0		0		197,732		Europe	215,146		—		445		—		—		215,591
Asia Pacific	Asia Pacific	63,896		0		205		0		0		64,101		Asia Pacific	65,038		—		338		—		—		65,376
Total revenues from contracts with customers	Total revenues from contracts with customers	$	1,223,343	$	2,315	$	266,714	$	0	$	(19)	$	1,492,353	Total revenues from contracts with customers	$	1,395,069	$	2,853	$	236,233	$	—	$	(86)	$	1,634,069

Three months ended May 31, 2020
Three months ended August 31, 2020														Three months ended August 31, 2020
Major Business Activity:	Major Business Activity:													Major Business Activity:
Investment Banking - Advisory	Investment Banking - Advisory	$	182,081	$	0	$	0	$	0	$	0	$	182,081	Investment Banking - Advisory	$	171,438	$	—	$	—	$	—	$	—	$	171,438
Investment Banking - Underwriting	Investment Banking - Underwriting	205,410		0		0		0		0		205,410		Investment Banking - Underwriting	444,399		—		—		—		—		444,399
Equities (1)	Equities (1)	236,683		0		0		0		(295)		236,388		Equities (1)	201,157		—		—		—		(281)		200,876
Fixed Income (1)	Fixed Income (1)	6,584		0		0		0		0		6,584		Fixed Income (1)	3,156		—		—		—		—		3,156
Asset Management	Asset Management	0		3,496		0		0		0		3,496		Asset Management	—		3,127		—		—		—		3,127
Manufacturing revenues	Manufacturing revenues	0		0		85,379		0		0		85,379		Manufacturing revenues	—		—		119,751		—		—		119,751
Oil and gas revenues	Oil and gas revenues	0		0		15,544		0		0		15,544		Oil and gas revenues	—		—		20,946		—		—		20,946
Other revenues	Other revenues	0		0		15,037		0		0		15,037		Other revenues	—		—		11,048		—		—		11,048
Total revenues from contracts with customers	Total revenues from contracts with customers	$	630,758	$	3,496	$	115,960	$	0	$	(295)	$	749,919	Total revenues from contracts with customers	$	820,150	$	3,127	$	151,745	$	—	$	(281)	$	974,741

Primary Geographic Region:	Primary Geographic Region:													Primary Geographic Region:
Americas	Americas	$	524,627	$	1,825	$	115,620	$	0	$	(295)	$	641,777	Americas	$	684,441	$	1,758	$	151,085	$	—	$	(281)	$	837,003
Europe	Europe	68,082		1,671		299		0		0		70,052		Europe	90,132		1,369		644		—		—		92,145
Asia Pacific	Asia Pacific	38,049		0		41		0		0		38,090		Asia Pacific	45,577		—		16		—		—		45,593
Total revenues from contracts with customers	Total revenues from contracts with customers	$	630,758	$	3,496	$	115,960	$	0	$	(295)	$	749,919	Total revenues from contracts with customers	$	820,150	$	3,127	$	151,745	$	—	$	(281)	$	974,741

5455


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

Six months ended May 31, 2021
Nine months ended August 31, 2021														Nine months ended August 31, 2021
Major Business Activity:	Major Business Activity:													Major Business Activity:
Investment Banking - Advisory	Investment Banking - Advisory	$	701,947	$	0	$	0	$	0	$	0	$	701,947	Investment Banking - Advisory	$	1,285,834	$	—	$	—	$	—	$	—	$	1,285,834
Investment Banking - Underwriting	Investment Banking - Underwriting	1,302,415		0		0		0		(50)		1,302,365		Investment Banking - Underwriting	1,899,204		—		—		—		(106)		1,899,098
Equities (1)	Equities (1)	453,394		0		0		0		(188)		453,206		Equities (1)	663,503		—		—		—		(218)		663,285
Fixed Income (1)	Fixed Income (1)	6,187		0		0		0		0		6,187		Fixed Income (1)	10,471		—		—		—		—		10,471
Asset Management	Asset Management	0		9,741		0		0		0		9,741		Asset Management	—		12,594		—		—		—		12,594
Manufacturing revenues	Manufacturing revenues	0		0		321,939		0		0		321,939		Manufacturing revenues	—		—		440,857		—		—		440,857
Oil and gas revenues	Oil and gas revenues	0		0		77,041		0		0		77,041		Oil and gas revenues	—		—		126,855		—		—		126,855
Other revenues	Other revenues	0		0		52,570		0		0		52,570		Other revenues	—		—		120,071		—		—		120,071
Total revenues from contracts with customers	Total revenues from contracts with customers	$	2,463,943	$	9,741	$	451,550	$	0	$	(238)	$	2,924,996	Total revenues from contracts with customers	$	3,859,012	$	12,594	$	687,783	$	—	$	(324)	$	4,559,065

Primary Geographic Region:	Primary Geographic Region:													Primary Geographic Region:
Americas	Americas	$	1,989,472	$	9,108	$	450,310	$	0	$	(238)	$	2,448,652	Americas	$	3,104,357	$	11,961	$	685,760	$	—	$	(324)	$	3,801,754
Europe	Europe	360,628		633		906		0		0		362,167		Europe	575,774		633		1,351		—		—		577,758
Asia Pacific	Asia Pacific	113,843		0		334		0		0		114,177		Asia Pacific	178,881		—		672		—		—		179,553
Total revenues from contracts with customers	Total revenues from contracts with customers	$	2,463,943	$	9,741	$	451,550	$	0	$	(238)	$	2,924,996	Total revenues from contracts with customers	$	3,859,012	$	12,594	$	687,783	$	—	$	(324)	$	4,559,065

Six months ended May 31, 2020
Nine months ended August 31, 2020														Nine months ended August 31, 2020
Major Business Activity:	Major Business Activity:													Major Business Activity:
Investment Banking - Advisory	Investment Banking - Advisory	$	525,239	$	0	$	0	$	0	$	0	$	525,239	Investment Banking - Advisory	$	696,677	$	—	$	—	$	—	$	—	$	696,677
Investment Banking - Underwriting	Investment Banking - Underwriting	454,254		0		0		0		0		454,254		Investment Banking - Underwriting	898,653		—		—		—		—		898,653
Equities (1)	Equities (1)	412,932		0		0		0		(400)		412,532		Equities (1)	614,089		—		—		—		(681)		613,408
Fixed Income (1)	Fixed Income (1)	9,870		0		0		0		0		9,870		Fixed Income (1)	13,026		—		—		—		—		13,026
Asset Management	Asset Management	0		9,587		0		0		0		9,587		Asset Management	—		12,714		—		—		—		12,714
Manufacturing revenues	Manufacturing revenues	0		0		162,986		0		0		162,986		Manufacturing revenues	—		—		282,737		—		—		282,737
Oil and gas revenues	Oil and gas revenues	0		0		57,758		0		0		57,758		Oil and gas revenues	—		—		78,704		—		—		78,704
Other revenues	Other revenues	0		0		30,509		0		0		30,509		Other revenues	—		—		41,557		—		—		41,557
Total revenues from contracts with customers	Total revenues from contracts with customers	$	1,402,295	$	9,587	$	251,253	$	0	$	(400)	$	1,662,735	Total revenues from contracts with customers	$	2,222,445	$	12,714	$	402,998	$	—	$	(681)	$	2,637,476

Primary Geographic Region:	Primary Geographic Region:													Primary Geographic Region:
Americas	Americas	$	1,173,696	$	4,492	$	250,399	$	0	$	(400)	$	1,428,187	Americas	$	1,858,137	$	6,250	$	401,484	$	—	$	(681)	$	2,265,190
Europe	Europe	147,520		5,095		659		0		0		153,274		Europe	237,652		6,464		1,303		—		—		245,419
Asia Pacific	Asia Pacific	81,079		0		195		0		0		81,274		Asia Pacific	126,656		—		211		—		—		126,867
Total revenues from contracts with customers	Total revenues from contracts with customers	$	1,402,295	$	9,587	$	251,253	$	0	$	(400)	$	1,662,735	Total revenues from contracts with customers	$	2,222,445	$	12,714	$	402,998	$	—	$	(681)	$	2,637,476

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

5556

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 ~~May~~August 31, 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 ~~May~~August 31, 2021.

We recognized ~~$20.9~~$76.2 million and ~~$7.4~~$15.6 million during the three months ended ~~May~~August 31, 2021 and 2020, respectively, and ~~$41.4~~$49.4 million and ~~$10.5~~$10.8 million during the ~~six~~nine months ended ~~May~~August 31, 2021 and 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 ~~$5.6~~$7.9 million and ~~$4.5~~$4.3 million during the three months ended ~~May~~August 31, 2021 and 2020, respectively, and ~~$8.5~~$16.4 million and ~~$10.1~~$14.4 million during the ~~six~~nine months ended ~~May~~August 31, 2021 and 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.~~payment, and we record a contract asset when we have transferred goods, services or assets to a customer, but payment is contingent upon additional performance obligations. 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 ~~$344.7~~$365.8 million and $332.5 million at ~~May~~August 31, 2021 and November 30, 2020, ~~respectively.~~respectively, and we had contract assets related to revenues from contracts with customers of $24.6 million at August 31, 2021. We had no significant impairments related to these receivables or contract assets during the three and ~~six~~nine months ended ~~May~~August 31, 2021 and 2020.

Our deferred revenue primarily includes deferred revenue related to our real estate operations and retainer and milestone fees received in investment banking advisory engagements where the performance obligations have not yet been satisfied. Deferred revenues were ~~$35.1~~$45.1 million and $14.8 million at ~~May~~August 31, 2021 and November 30, 2020, respectively, which are recorded as Payables, expense accruals and other liabilities in the Consolidated Statements of Financial Condition. During the three months ended ~~May~~August 31, 2021, we recognized ~~$4.1~~$8.0 million of deferred revenue from the balance at ~~February 28,~~May 31, 2021. During the three months ended ~~May~~August 31, 2020, we recognized ~~$7.2~~$19.1 million of deferred revenue from the balance at ~~February 29,~~May 31, 2020. During the ~~six~~nine months ended ~~May~~August 31, 2021, we recognized ~~$9.4~~$10.0 million of deferred revenue from the balance at November 30, 2020. During the ~~six~~nine months ended ~~May~~August 31, 2020, we recognized ~~$7.9~~$9.3 million of deferred revenue from the balance at November 30, 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 ~~May~~August 31, 2021 and November 30, 2020, capitalized costs to fulfill a contract were ~~$1.2~~$1.9 million and $1.8 million, respectively, which are recorded in Receivables in the Consolidated Statements of Financial Condition. We recognized expenses of ~~$0.8~~$0.9 million and ~~$1.8~~$0.8 million, during the three months ended ~~May~~August 31, 2021 and 2020, respectively, and ~~$1.8~~$1.6 million and ~~$3.7~~$3.6 million during the ~~six~~nine months ended ~~May~~August 31, 2021 and 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 ~~six~~nine months ended ~~May~~August 31, 2021 and 2020.

Note 16. Income Taxes

The aggregate amount of gross unrecognized tax benefits related to uncertain tax positions was ~~$454.0~~$473.9 million (including ~~$97.2~~$102.2 million for interest) at ~~May~~August 31, 2021, of which ~~$272.2~~$289.0 million related to Jefferies Group, and was $401.4 million (including $87.1 million for interest) at November 30, 2020, of which $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 three and six months ended May 31, 2021 and 2020.~~

The net deferred tax asset was ~~$452.5~~$479.0 million and $393.7 million at ~~May~~August 31, 2021 and November 30, 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 2016. We are currently under examination by various 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 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 ~~six~~nine months ended ~~May~~August 31, 2021 was ~~$339.1~~$484.8 million, representing an effective tax rate of ~~26.6%~~26.5%. Our provision for income taxes for the ~~six~~nine months ended ~~May~~August 31, 2020 was ~~$77.7~~$185.1 million, representing an effective tax rate of ~~33.3%~~28.7%.

Note 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 Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 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	$	352,596	$	44,919	$	935,031	$	157,929	Net income attributable to Jefferies Financial Group Inc. common shareholders	$	407,459	$	304,409	$	1,342,490	$	462,338
Allocation of earnings to participating securities (1)	Allocation of earnings to participating securities (1)	(2,178)		(288)		(5,470)		(988)		Allocation of earnings to participating securities (1)	(2,490)		(1,945)		(7,974)		(2,921)
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	350,418		44,631		929,561		156,941		Net income attributable to Jefferies Financial Group Inc. common shareholders for basic earnings per share	404,969		302,464		1,334,516		459,417
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)	43		(9)		107		(11)		Adjustment to allocation of earnings to participating securities related to diluted shares (1)	52		17		161		5
Mandatorily redeemable convertible preferred share dividends	Mandatorily redeemable convertible preferred share dividends	1,626		0		3,252		0		Mandatorily redeemable convertible preferred share dividends	1,849		1,404		5,101		4,230
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	$	352,087	$	44,622	$	932,920	$	156,930	Net income attributable to Jefferies Financial Group Inc. common shareholders for diluted earnings per share	$	406,870	$	303,885	$	1,339,778	$	463,652

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	246,937		269,362		248,144		278,022		Weighted average common shares outstanding	246,624		263,062		247,638		273,035
Weighted average shares of restricted stock outstanding with future service required	Weighted average shares of restricted stock outstanding with future service required	(1,618)		(1,832)		(1,540)		(1,862)		Weighted average shares of restricted stock outstanding with future service required	(1,602)		(1,787)		(1,561)		(1,837)
Weighted average RSUs outstanding with no future service required	Weighted average RSUs outstanding with no future service required	17,961		19,234		18,225		18,429		Weighted average RSUs outstanding with no future service required	18,065		19,420		18,171		18,761
Denominator for basic earnings per share – weighted average shares	Denominator for basic earnings per share – weighted average shares	263,280		286,764		264,829		294,589		Denominator for basic earnings per share – weighted average shares	263,087		280,695		264,248		289,959
Stock options	Stock options	1,152		0		646		0		Stock options	1,485		—		905		—
Senior executive compensation plan awards	Senior executive compensation plan awards	2,219		0		2,032		712		Senior executive compensation plan awards	2,392		—		2,152		475
Mandatorily redeemable convertible preferred shares	Mandatorily redeemable convertible preferred shares	4,441		0		4,441		0		Mandatorily redeemable convertible preferred shares	4,441		4,441		4,441		4,441
Denominator for diluted earnings per share	Denominator for diluted earnings per share	271,092		286,764		271,948		295,301		Denominator for diluted earnings per share	271,405		285,136		271,746		294,875

(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 ~~1,638,600~~1,621,000 and ~~1,846,400~~1,807,800 for the three months ended ~~May~~August 31, 2021 and 2020, respectively, and ~~1,561,100~~1,581,200 and ~~1,874,100~~ 1,851,900

for the ~~six~~nine months ended ~~May~~August 31, 2021 and 2020, respectively. Dividends declared on participating securities were not material during the three and ~~six~~nine months ended ~~May~~August 31, 2021 and 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.

Our Board of Directors from time to time has authorized the repurchase of our common shares. In January 2020, the Board of Directors approved an increase of $250.0 million to the share repurchase authorization and 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 and in September 2020, the Board of Directors increased the share repurchase authorization by $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~~nine months ended ~~May~~August 31, 2021, we purchased a total of ~~5,000,000~~6,500,000 of our common shares for an aggregate purchase price of ~~$127.5~~$179.3 million, or an average price of ~~$25.51~~$27.59 per share. At ~~May~~August 31, 2021, we had approximately ~~$250.0~~$198.2 million available for future purchases. In September 2021, the Board of Directors increased the share repurchase authorization to $250.0 million, including the $198.2 million.

Note 18. Commitments, Contingencies and Guarantees

Commitments

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


		Expected Maturity Date													Expected Maturity Date (Fiscal Years)
		2021		2022		2023 and 2024		2025 and 2026		2027 and Later		Maximum Payout			2021		2022		2023 and 2024		2025 and 2026		2027 and Later		Maximum Payout
Equity commitments (1)	Equity commitments (1)	$	113.4	$	126.3	$	25.4	$	10.7	$	33.7	$	309.5	Equity commitments (1)	$	121.0	$	230.3	$	26.2	$	11.1	$	21.1	$	409.7
Loan commitments (1)	Loan commitments (1)	4.1		260.0		34.0		61.3		0		359.4		Loan commitments (1)	—		250.0		25.8		60.0		—		335.8

Underwriting commitments	Underwriting commitments	231.8		0		0		0		0		231.8		Underwriting commitments	155.8		—		—		—		—		155.8
Forward starting reverse repos (2)	Forward starting reverse repos (2)	6,715.3		0		0		0		0		6,715.3		Forward starting reverse repos (2)	10,223.8		99.5		—		—		—		10,323.3
Forward starting repos (2)	Forward starting repos (2)	5,212.3		0		0		0		0		5,212.3		Forward starting repos (2)	6,296.3		—		—		—		—		6,296.3
Other unfunded commitments (1)	Other unfunded commitments (1)	155.6		63.2		336.4		0		0		555.2		Other unfunded commitments (1)	27.2		25.0		133.9		—		—		186.1
Total	Total	$	12,432.5	$	449.5	$	395.8	$	72.0	$	33.7	$	13,383.5	Total	$	16,824.1	$	604.8	$	185.9	$	71.1	$	21.1	$	17,707.0

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

(2)At ~~May~~August 31, 2021, ~~$6,714.8 million~~$10.32 billion within forward starting securities purchased under agreements to resell and ~~all~~$6.21 billion 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 ~~May~~August 31, 2021, Jefferies Group's outstanding commitments relating to Jefferies Capital Partners, LLC and its private equity funds were ~~$10.8~~$10.7 million.

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

Additionally, at ~~May~~August 31, 2021, we had other outstanding equity commitments to invest up to ~~$225.5~~$100.0 million to strategic affiliates and $230.2 million to 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 to 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 ~~May~~August 31, 2021, we had ~~$104.0~~$85.0 million of outstanding loan commitments to ~~clients and $1.0 million to strategic affiliates.~~clients.

Loan commitments outstanding at ~~May~~August 31, 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 ~~May~~August 31, 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.

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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 ~~May~~August 31, 2021 (in millions):


		Expected Maturity Date													Expected Maturity Date (Fiscal Years)
Guarantee Type	Guarantee Type	2021		2022		2023 and 2024		2025 and 2026		2027 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	$	10,052.6	$	5,851.3	$	9,272.7	$	398.3	$	12.2	$	25,587.1	Derivative contracts – non-credit related	$	8,635.2	$	12,807.8	$	9,503.1	$	386.6	$	50.0	$	31,382.7
Written derivative contracts – credit related	Written derivative contracts – credit related	0		0		6.4		81.8		0		88.2		Written derivative contracts – credit related	—		—		19.0		—		—		19.0
Total derivative contracts	Total derivative contracts	$	10,052.6	$	5,851.3	$	9,279.1	$	480.1	$	12.2	$	25,675.3	Total derivative contracts	$	8,635.2	$	12,807.8	$	9,522.1	$	386.6	$	50.0	$	31,401.7

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. At ~~May~~August 31, 2021, the fair value of derivative contracts meeting the definition of a guarantee is approximately ~~$173.7~~$174.2 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 ~~May~~August 31, 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 ~~May~~August 31, 2021, the aggregate amount of infrastructure improvement bonds outstanding was ~~$73.5~~$74.5 million.

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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 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 ~~May~~August 31, 2021, we provided guarantees to certain counterparties in the form of standby letters of credit totaling $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 19. Net Capital Requirements

Jefferies LLC operates as a broker-dealer registered with the U.S. Securities and Exchange Commission ("SEC") and a member firm 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 ~~May~~August 31, 2021 were ~~$1,518.2 million~~$2.06 billion and ~~$1,394.5 million,~~$1.94 billion, 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.

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.

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Note 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):


		May 31, 2021				November 30, 2020					August 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)	$	784,496	$	811,366	$	727,492	$	744,424	Notes and loans receivable (1)	$	825,406	$	873,347	$	727,492	$	744,424

Financial Liabilities:	Financial Liabilities:									Financial Liabilities:
Short-term borrowings (2)	Short-term borrowings (2)	$	475,834	$	475,834	$	759,648	$	759,648	Short-term borrowings (2)	$	307,297	$	307,297	$	759,648	$	759,648
Long-term debt (3)	Long-term debt (3)	7,003,270		7,814,194		6,639,794		7,495,642		Long-term debt (3)	6,880,083		7,744,654		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 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 ~~May~~August 31, 2021 and November 30, 2020 are Jefferies Group's equity investments in Private Equity Related Funds of ~~$23.7~~$28.1 million and $19.0 million, respectively. Net gains (losses) from Jefferies Group's investment in JCP Fund V aggregating ~~$5.0~~$4.2 million and ~~$(7.0)~~$2.0 million for the three months ended ~~May~~August 31, 2021 and 2020, respectively, and ~~$4.5~~$8.7 million and ~~$(5.5)~~$(3.5) million for the ~~six~~nine months ended ~~May~~August 31, 2021 and 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 18.

Special Purpose Acquisition Companies. Jefferies Group earned investment banking revenues during the three and ~~six~~nine months ended ~~May~~August 31, 2021 of ~~$10.5~~$21.4 million and ~~$24.0~~$45.5 million, respectively, for services provided to special purpose acquisition companies we have co-sponsored.

Berkadia Commercial Mortgage, LLC. At ~~May~~August 31, 2021 and November 30, 2020, Jefferies Group has commitments to purchase ~~$544.1~~$490.2 million and $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~~$0.9 million and $2.7 million at ~~May~~August 31, 2021 and November 30, 2020, respectively, included in Payables, expense accruals and other liabilities in the Consolidated Statements of Financial Condition.

Officers, Directors and Employees. We had ~~$36.4~~$35.7 million and $38.9 million of loans outstanding to certain officers and employees (none of whom are an executive officer or director of the Company) at ~~May~~August 31, 2021 and November 30, 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.

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Note 22. Segment Information

We are engaged in investment banking and capital markets, asset management and direct investing. 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 Pacific. Capital markets businesses operate across the spectrum of equities and fixed income products.

Merchant Banking consists of our various merchant banking businesses and investments, primarily including Linkem, Vitesse Energy Finance and JETX Energy, real estate, Idaho Timber and FXCM.

Corporate assets primarily consist of cash and cash equivalents. Corporate revenues primarily include interest income.

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Certain information concerning our segments is presented in the following table (in thousands):


		For the Three Months Ended				For the Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Net revenues:	Net revenues:									Net revenues:
Reportable Segments:	Reportable Segments:									Reportable Segments:
Investment Banking and Capital Markets	Investment Banking and Capital Markets	$	1,572,964	$	1,028,832	$	3,532,473	$	2,177,661	Investment Banking and Capital Markets	$	1,650,796	$	1,274,115	$	5,183,269	$	3,451,776
Asset Management	Asset Management	54,554		7,391		281,288		27,720		Asset Management	12,604		118,558		293,892		146,278
Merchant Banking	Merchant Banking	318,828		107,162		616,331		311,721		Merchant Banking	271,608		220,887		887,939		532,608
Corporate	Corporate	724		1,525		1,314		11,317		Corporate	955		591		2,269		11,908
Total net revenues related to reportable segments	Total net revenues related to reportable segments	1,947,070		1,144,910		4,431,406		2,528,419		Total net revenues related to reportable segments	1,935,963		1,614,151		6,367,369		4,142,570

Consolidation adjustments	Consolidation adjustments	3,437		2,679		6,043		5,498		Consolidation adjustments	3,021		2,019		9,064		7,517
Total consolidated revenues	Total consolidated revenues	$	1,950,507	$	1,147,589	$	4,437,449	$	2,533,917	Total consolidated revenues	$	1,938,984	$	1,616,170	$	6,376,433	$	4,150,087

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	$	426,558	$	214,534	$	969,841	$	464,491	Investment Banking and Capital Markets	$	589,992	$	281,323	$	1,559,833	$	745,814
Asset Management	Asset Management	11,055		(41,553)		192,520		(62,482)		Asset Management	(18,615)		87,604		173,905		25,122
Merchant Banking	Merchant Banking	58,998		(74,716)		166,615		(128,339)		Merchant Banking	3,356		70,747		169,971		(57,592)
Corporate	Corporate	(12,099)		(12,854)		(32,576)		(20,608)		Corporate	(10,450)		(15,618)		(43,026)		(36,226)
Income before income taxes related to reportable segments	Income before income taxes related to reportable segments	484,512		85,411		1,296,400		253,062		Income before income taxes related to reportable segments	564,283		424,056		1,860,683		677,118
Parent Company interest	Parent Company interest	(13,829)		(12,878)		(27,731)		(25,659)		Parent Company interest	(13,774)		(14,114)		(41,505)		(39,773)
Consolidation adjustments	Consolidation adjustments	3,456		2,974		6,255		5,898		Consolidation adjustments	3,107		2,300		9,362		8,198
Total consolidated income before income taxes	Total consolidated income before income taxes	$	474,139	$	75,507	$	1,274,924	$	233,301	Total consolidated income before income taxes	$	553,616	$	412,242	$	1,828,540	$	645,543

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	$	20,778	$	19,981	$	41,462	$	39,097	Investment Banking and Capital Markets	$	21,035	$	22,225	$	62,497	$	61,322
Asset Management	Asset Management	489		2,133		968		2,758		Asset Management	494		2,018		1,462		4,776
Merchant Banking	Merchant Banking	17,295		17,378		34,035		36,219		Merchant Banking	16,584		14,408		50,619		50,627
Corporate	Corporate	878		874		1,742		1,762		Corporate	564		869		2,306		2,631

Total consolidated depreciation and amortization expenses	Total consolidated depreciation and amortization expenses	$	39,440	$	40,366	$	78,207	$	79,836	Total consolidated depreciation and amortization expenses	$	38,677	$	39,520	$	116,884	$	119,356

						May 31, 2021		November 30, 2020							August 31, 2021		November 30, 2020
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					$	49,723,982	$	44,835,126	Investment Banking and Capital Markets					$	49,598,771	$	44,835,126
Asset Management	Asset Management					2,770,954		3,231,059		Asset Management					2,771,582		3,231,059
Merchant Banking	Merchant Banking					3,330,832		3,173,064		Merchant Banking					3,382,049		3,173,064
Corporate	Corporate					2,433,940		2,178,699		Corporate					2,572,196		2,178,699
Identifiable assets related to reportable segments	Identifiable assets related to reportable segments					58,259,708		53,417,948		Identifiable assets related to reportable segments					58,324,598		53,417,948

Consolidation adjustments	Consolidation adjustments					(280,739)		(299,596)		Consolidation adjustments					(287,199)		(299,596)
Total consolidated assets	Total consolidated assets					$	57,978,969	$	53,118,352	Total consolidated assets					$	58,037,399	$	53,118,352

Interest expense classified as a component of Net revenues relates to Jefferies Group. For the three months ended ~~May~~August 31, 2021 and 2020, interest expense classified as a component of Expenses was primarily comprised of parent company interest ($13.8 million and ~~$12.9~~$14.1 million, respectively) and Merchant Banking ($~~6.1~~5.7 million and ~~$8.3~~$7.4 million, respectively). For the ~~six~~nine months ended ~~May~~August 31, 2021 and 2020, interest expense classified as a component of Expenses was primarily comprised of parent company interest ($~~27.7~~41.5 million and ~~$25.7~~$39.8 million, respectively) and Merchant Banking ($~~12.6~~18.3 million and ~~$17.1~~$24.5 million, respectively).

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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, 2020 (the "2020 10-K").

Results of Operations

We are engaged in investment banking and capital markets, asset management and direct investing. Jefferies Group, our largest subsidiary, is now the largest independent full-service global investment banking firm headquartered in the U.S. The following tables present a summary of our financial results.

A summary of results of operations for the ~~second~~third quarter of 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	$	1,572,964		$	54,554		$	318,828		$	724	$	—	$	3,437	$	1,950,507	Net revenues	$	1,650,796		$	12,604		$	271,608		$	955	$	—	$	3,021	$	1,938,984

Expenses:	Expenses:																		Expenses:
Compensation and benefits	Compensation and benefits	774,549			21,671			27,987			7,035		—		—		831,242		Compensation and benefits	758,546			15,468			21,763			6,466		—		—		802,243
Cost of sales	Cost of sales	66,211		(1)	10,599		(1)	143,847			—		—		—		220,657		Cost of sales	64,441		(1)	4,541		(1)	151,510			—		—		—		220,492
Interest expense	Interest expense	—			—			6,114		(2)	—		13,829		—		19,943		Interest expense	—			—			5,744		(2)	—		13,774		—		19,518
Depreciation and amortization	Depreciation and amortization	20,778			489			17,295			878		—		—		39,440		Depreciation and amortization	21,035			494			16,584			564		—		—		38,677
Selling, general and other expenses	Selling, general and other expenses	284,868			10,740			41,061			4,910		—		(19)		341,560		Selling, general and other expenses	216,782			10,716			45,475			4,375		—		(86)		277,262
Total expenses	Total expenses	1,146,406			43,499			236,304			12,823		13,829		(19)		1,452,842		Total expenses	1,060,804			31,219			241,076			11,405		13,774		(86)		1,358,192
Income (loss) before income taxes and loss related to associated companies	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		Income (loss) before income taxes and loss related to associated companies	589,992			(18,615)			30,532			(10,450)		(13,774)		3,107		580,792
Loss related to associated companies	Loss related to associated companies	—			—			(23,526)			—		—		—		(23,526)		Loss related to associated companies	—			—			(27,176)			—		—		—		(27,176)
Income (loss) before income taxes	Income (loss) before income taxes	$	426,558		$	11,055		$	58,998		$	(12,099)	$	(13,829)	$	3,456	474,139		Income (loss) before income taxes	$	589,992		$	(18,615)		$	3,356		$	(10,450)	$	(13,774)	$	3,107	553,616
Income tax provision	Income tax provision																120,820		Income tax provision																145,700

Net income	Net income																$	353,319	Net income																$	407,916

(1) Includes Floor brokerage and clearing fees.

(2) Interest expense within Merchant Banking of ~~$6.1~~$5.7 million for the ~~second~~third quarter of 2021, primarily includes ~~$5.3~~$5.0 million for Foursight Capital and $0.8 million for Vitesse Energy, LLC ("Vitesse Energy Finance").

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A summary of results of operations for the first ~~half~~nine months of 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	$	3,532,473		$	281,288		$	616,331		$	1,314	$	—	$	6,043	$	4,437,449	Net revenues	$	5,183,269		$	293,892		$	887,939		$	2,269	$	—	$	9,064	$	6,376,433

Expenses:	Expenses:																		Expenses:
Compensation and benefits	Compensation and benefits	1,880,761			44,456			55,999			22,569		—		—		2,003,785		Compensation and benefits	2,639,307			59,924			77,762			29,035		—		—		2,806,028
Cost of sales	Cost of sales	132,785		(1)	20,441		(1)	239,406			—		—		—		392,632		Cost of sales	197,226		(1)	24,982		(1)	390,916			—		—		—		613,124
Interest expense	Interest expense	—			—			12,579		(2)	—		27,731		—		40,310		Interest expense	—			—			18,323		(2)	—		41,505		—		59,828
Depreciation and amortization	Depreciation and amortization	41,462			968			34,035			1,742		—		—		78,207		Depreciation and amortization	62,497			1,462			50,619			2,306		—		—		116,884
Selling, general and other expenses	Selling, general and other expenses	507,624			22,903			73,603			9,579		—		(212)		613,497		Selling, general and other expenses	724,406			33,619			119,078			13,954		—		(298)		890,759
Total expenses	Total expenses	2,562,632			88,768			415,622			33,890		27,731		(212)		3,128,431		Total expenses	3,623,436			119,987			656,698			45,295		41,505		(298)		4,486,623
Income (loss) before income taxes and loss related to associated companies	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		Income (loss) before income taxes and loss related to associated companies	1,559,833			173,905			231,241			(43,026)		(41,505)		9,362		1,889,810
Loss related to associated companies	Loss related to associated companies	—			—			(34,094)			—		—		—		(34,094)		Loss related to associated companies	—			—			(61,270)			—		—		—		(61,270)
Income (loss) before income taxes	Income (loss) before income taxes	$	969,841		$	192,520		$	166,615		$	(32,576)	$	(27,731)	$	6,255	1,274,924		Income (loss) before income taxes	$	1,559,833		$	173,905		$	169,971		$	(43,026)	$	(41,505)	$	9,362	1,828,540
Income tax provision	Income tax provision																339,056		Income tax provision																484,756

Net income	Net income																$	935,868	Net income																$	1,343,784

(1) Includes Floor brokerage and clearing fees.

(2) Interest expense within Merchant Banking of ~~$12.6~~$18.3 million for the first ~~half~~nine months of 2021, primarily includes ~~$10.8~~$15.8 million for Foursight Capital and ~~$1.8~~$2.5 million for Vitesse Energy Finance.

A summary of results for the ~~second~~third quarter of 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	$	1,028,832		$	7,391		$	107,162		$	1,525	$	—	$	2,679	$	1,147,589	Net revenues	$	1,274,115		$	118,558		$	220,887		$	591	$	—	$	2,019	$	1,616,170

Expenses:	Expenses:																		Expenses:
Compensation and benefits	Compensation and benefits	551,821			26,502			13,973			6,171		—		—		598,467		Compensation and benefits	719,822			10,652			20,573			9,790		—		—		760,837
Cost of sales	Cost of sales	67,601		(1)	7,878		(1)	80,771			—		—		—		156,250		Cost of sales	60,640		(1)	6,103		(1)	82,657			—		—		—		149,400
Interest expense	Interest expense	—			—			8,282		(2)	—		12,878		—		21,160		Interest expense	—			—			7,398		(2)	—		14,114		—		21,512
Depreciation and amortization	Depreciation and amortization	19,981			2,133			17,378			874		—		—		40,366		Depreciation and amortization	22,225			2,018			14,408			869		—		—		39,520
Selling, general and other expenses	Selling, general and other expenses	174,895			12,431			54,753			7,334		—		(295)		249,118		Selling, general and other expenses	190,105			12,181			30,157			5,550		—		(281)		237,712
Total expenses	Total expenses	814,298			48,944			175,157			14,379		12,878		(295)		1,065,361		Total expenses	992,792			30,954			155,193			16,209		14,114		(281)		1,208,981
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 and income related to associated companies																			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																			Income related to associated companies	—			—			5,053			—		—		—		5,053
Income (loss) before income taxes	Income (loss) before income taxes	$	214,534		$	(41,553)		$	(74,716)		$	(12,854)	$	(12,878)	$	2,974	75,507		Income (loss) before income taxes	$	281,323		$	87,604		$	70,747		$	(15,618)	$	(14,114)	$	2,300	412,242
Income tax provision	Income tax provision																31,962		Income tax provision																107,403

Net income	Net income																$	43,545	Net income																$	304,839

(1) Includes Floor brokerage and clearing fees.

(2) Interest expense within Merchant Banking of ~~$8.3~~$7.4 million for the ~~second~~third quarter of 2020, primarily includes ~~$7.0~~$6.4 million for Foursight Capital and ~~$1.2~~$1.0 million for Vitesse Energy Finance.

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A summary of results for the first ~~half~~nine months of 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	$	2,177,661		$	27,720		$	311,721		$	11,317	$	—	$	5,498	$	2,533,917	Net revenues	$	3,451,776		$	146,278		$	532,608		$	11,908	$	—	$	7,517	$	4,150,087

Expenses:	Expenses:																		Expenses:
Compensation and benefits	Compensation and benefits	1,172,745			48,723			31,163			16,029		—		—		1,268,660		Compensation and benefits	1,892,567			59,375			51,736			25,819		—		—		2,029,497
Cost of sales	Cost of sales	120,475		(1)	14,185		(1)	153,214			—		—		—		287,874		Cost of sales	181,115		(1)	20,288		(1)	235,871			—		—		—		437,274
Interest expense	Interest expense	—			—			17,055		(2)	—		25,659		—		42,714		Interest expense	—			—			24,453		(2)	—		39,773		—		64,226
Depreciation and amortization	Depreciation and amortization	39,097			2,758			36,219			1,762		—		—		79,836		Depreciation and amortization	61,322			4,776			50,627			2,631		—		—		119,356
Selling, general and other expenses	Selling, general and other expenses	380,853			24,536			127,833			14,134		—		(400)		546,956		Selling, general and other expenses	570,958			36,717			157,990			19,684		—		(681)		784,668
Total expenses	Total expenses	1,713,170			90,202			365,484			31,925		25,659		(400)		2,226,040		Total expenses	2,705,962			121,156			520,677			48,134		39,773		(681)		3,435,021
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		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
Loss related to associated companies	Loss related to associated companies	—			—			(74,576)			—		—		—		(74,576)		Loss related to associated companies	—			—			(69,523)			—		—		—		(69,523)
Income (loss) before income taxes	Income (loss) before income taxes	$	464,491		$	(62,482)		$	(128,339)		$	(20,608)	$	(25,659)	$	5,898	233,301		Income (loss) before income taxes	$	745,814		$	25,122		$	(57,592)		$	(36,226)	$	(39,773)	$	8,198	645,543
Income tax provision	Income tax provision																77,735		Income tax provision																185,138

Net income	Net income																$	155,566	Net income																$	460,405

(1) Includes Floor brokerage and clearing fees.

(2) Interest expense within Merchant Banking of ~~$17.1~~$24.5 million for the first ~~half~~nine months of 2020, primarily includes ~~$14.4~~$20.8 million for Foursight Capital and ~~$2.6~~$3.6 million for Vitesse Energy Finance.

The composition of our financial results has varied over time and we expect will continue to 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 ~~second~~third quarter of 2021 were impacted by:

•~~Record~~All-time record quarterly investment banking net revenues of ~~$1,033.7 million,~~$1.18 billion, including all-time record quarterly advisory net revenues of ~~$390.5~~$583.9 million, ~~record~~equity underwriting net revenues of $367.5 million and debt underwriting net revenues of ~~$285.7~~$229.3 million, ~~and equity underwriting net revenues of $324.5 million;~~each a record for a third quarter;

•Quarterly combined capital markets net revenues of ~~$500.1~~$442.3 million, including equities net revenues of ~~$242.9~~$236.5 million and fixed income net revenues of ~~$257.2~~$205.8 million;

•Asset Management revenues (before allocated net interest) of ~~$66.0~~$23.8 million, down significantly from the robust prior year quarter; and

•Pre-tax income of $3.4 million related to our Merchant Banking businesses reflecting normalization of the results from Idaho Timber, as well as charges to adjust its inventory carrying value to substantially lower lumber prices.

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

•Record nine month investment banking net revenues of $3.25 billion, including record advisory net revenues of $1.29 billion, record equity underwriting net revenues of $1.19 billion and record debt underwriting net revenues of $712.5 million;

•Nine month combined capital markets net revenues of $1.84 billion, including record equities net revenues of $1.01 billion and fixed income net revenues of $826.4 million;

•Record nine month Asset Management revenues (before allocated net interest) of $326.9 million; and

•Pre-tax income of ~~$59.0~~$170.0 million related to our Merchant Banking businesses reflecting ~~record quarterly~~exceptionally strong results from Idaho Timber for the first six months of the nine month period 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~~third quarter of 2020 were impacted by:

•Investment banking net revenues of ~~$316.3~~$588.8 million, including equity underwriting net revenues of ~~$124.4~~$305.4 million, advisory net revenues of ~~$182.1~~$171.4 million and debt underwriting net revenues of ~~$81.0~~$139.0 million;

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

•Asset Management revenues (before allocated net interest) of ~~$20.4~~$131.6 million; and

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

◦~~Positive impact of hedging gains at Vitesse Energy Finance,~~reflecting solid results at Idaho 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~~

◦~~$19.3~~$54.5 million of mark-to-market unrealized ~~decreases~~increases in the values of some of our investments in public ~~companies.~~companies and a decrease in the fair value of Vitesse Energy Finance's hedges, as oil prices appreciated during the quarter.

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

•Investment banking net revenues of ~~$893.7~~$1.48 billion, including advisory net revenues of $696.7 million, ~~including~~ equity underwriting net revenues of ~~$256.1 million, advisory net revenues of $525.2~~$561.5 million and debt underwriting net revenues of ~~$198.2~~$337.2 million;

•Combined capital markets net revenues of ~~$1,224.1 million,~~$1.88 billion, including equities net revenues of ~~$482.8~~$801.6 million and fixed income net revenues of ~~$741.3 million;~~$1.08 billion;

•Asset Management revenues (before allocated net interest) of ~~$51.4~~$183.0 million; and

•Pre-tax loss of ~~$128.3~~$57.6 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 the value of our investment in WeWork;

◦~~$45.2 million of mark-to-market unrealized decreases in the values of some of 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 charges of $13.2 million to write down Vitesse Energy Finance's oil and gas assets in the DJ Basin and $33.0 million to write down the value of our investment in JETX Energy, LLC ("JETX Energy") to reflect the decline in oil prices.

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

Net revenues	Net revenues	$	1,572,964	$	1,028,832	$	3,532,473	$	2,177,661	Net revenues	$	1,650,796	$	1,274,115	$	5,183,269	$	3,451,776

Expenses:	Expenses:									Expenses:
Compensation and benefits	Compensation and benefits	774,549		551,821		1,880,761		1,172,745		Compensation and benefits	758,546		719,822		2,639,307		1,892,567
Floor brokerage and clearing fees	Floor brokerage and clearing fees	66,211		67,601		132,785		120,475		Floor brokerage and clearing fees	64,441		60,640		197,226		181,115
Depreciation and amortization	Depreciation and amortization	20,778		19,981		41,462		39,097		Depreciation and amortization	21,035		22,225		62,497		61,322
Selling, general and other expenses	Selling, general and other expenses	284,868		174,895		507,624		380,853		Selling, general and other expenses	216,782		190,105		724,406		570,958
Total expenses	Total expenses	1,146,406		814,298		2,562,632		1,713,170		Total expenses	1,060,804		992,792		3,623,436		2,705,962
Income before income taxes	Income before income taxes	$	426,558	$	214,534	$	969,841	$	464,491	Income before income taxes	$	589,992	$	281,323	$	1,559,833	$	745,814

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

Advisory	Advisory	$	390,508	$	182,081	$	701,947	$	525,239	Advisory	$	583,887	$	171,438	$	1,285,834	$	696,677

Equity underwriting	Equity underwriting	324,462		124,383		819,268		256,075		Equity underwriting	367,460		305,380		1,186,728		561,455
Debt underwriting	Debt underwriting	285,730		81,027		483,147		198,179		Debt underwriting	229,329		139,019		712,476		337,198
Total underwriting	Total underwriting	610,192		205,410		1,302,415		454,254		Total underwriting	596,789		444,399		1,899,204		898,653

Other investment banking	Other investment banking	32,971		(71,234)		62,796		(85,763)		Other investment banking	(360)		(27,013)		62,436		(112,776)
Total investment banking	Total investment banking	1,033,671		316,257		2,067,158		893,730		Total investment banking	1,180,316		588,824		3,247,474		1,482,554

Equities	Equities	242,949		237,131		773,965		482,772		Equities	236,532		318,824		1,010,497		801,596
Fixed income	Fixed income	257,197		493,144		620,556		741,326		Fixed income	205,795		336,347		826,351		1,077,673
Total capital markets	Total capital markets	500,146		730,275		1,394,521		1,224,098		Total capital markets	442,327		655,171		1,836,848		1,879,269

Other	Other	39,147		(17,700)		70,794		59,833		Other	28,153		30,120		98,947		89,953
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	Total Investment Banking and Capital Markets (1)	$	1,650,796	$	1,274,115	$	5,183,269	$	3,451,776

(1)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									Deals Completed				Aggregate Value
		For the Three Months Ended		For the Six Months Ended		For the Three Months Ended				For the Six Months Ended					For the Three Months Ended		For the Nine Months Ended		For the Three Months Ended				For the Nine 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			August 31, 2021	August 31, 2020	August 31, 2021	August 31, 2020	August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020

Advisory transactions	Advisory transactions	64	35	129	101	$	71.1	$	23.3	$	153.3	$	81.0	Advisory transactions	88	48	217	149	$	118.3	$	29.3	$	271.6	$	110.3
Public and private equity and convertible offerings	Public and private equity and convertible offerings	104	50	220	106	$	37.9	$	25.4	$	81.7	$	37.2	Public and private equity and convertible offerings	96	99	316	205	$	26.2	$	34.5	$	107.9	$	71.7
Public and private debt financings	Public and private debt financings	201	84	364	236	$	105.9	$	43.6	$	182.6	$	113.2	Public and private debt financings	240	213	604	449	$	93.4	$	72.2	$	276.0	$	185.4

Investment banking revenues for the ~~second~~third quarter of 2021 were a record of ~~$1.03~~$1.18 billion, compared with ~~$316.3~~$588.8 million for the ~~second~~third quarter of 2020, reflecting all-time record revenues in investment banking advisory, as merger and ~~debt~~acquisition activity remains strong and underwriting ~~and solid performance in equity underwriting, as the global economy continues to improve and market conditions stabilize.~~revenues were also strong. Our

ongoing investment in our investment banking franchise and our strategy to lead with our investment banking platform has ~~delivered increased~~continued to deliver market share ~~as is reflected in global rankings.~~gains.

Our advisory revenues were a record ~~$390.5~~$583.9 million, up ~~$208.4~~$412.4 million, or ~~114.5%~~240.6% compared to the prior year comparable quarter, reflecting record performance in our mergers and acquisitions business as ~~a result of the increased number of transactions~~Jefferies Group gained market share and ~~higher average transaction deal values, as~~activity in the mergers and acquisitions markets ~~held~~remained strong ~~due to the record~~in an environment of low interest ~~rate environment.~~rates and higher stock prices.

Our underwriting revenues for the ~~second~~third quarter of 2021 were ~~a record $610.2~~$596.8 million, an increase of ~~197.1%~~34.3%, from ~~$205.4~~$444.4 million in the ~~same period last~~prior year comparable quarter, with ~~record~~strong quarterly net revenues of ~~$285.7~~$367.5 million in equity underwriting and $229.3 million in debt underwriting reflective of both the number and ~~strong quarterly net revenues in equity~~aggregate value of underwriting ~~of $324.5 million,~~transactions completed as ~~companies continued~~Jefferies Group's investment banking business extended its reach to ~~take advantage of~~a broader client base. Further, the ~~record~~ low interest rate environment ~~to access the debt capital markets~~ and ~~clients took advantage of the~~ strong equity ~~environment~~markets have led to increased deal activity as clients looked to raise ~~equity~~ capital in ~~almost all~~most sectors. In addition, our equity underwriting results in the current year quarter were driven by growth in initial public offerings, including our underwriting activities on 14 Special Purpose Acquisition Companies ("SPACs") offerings and other SPAC-related transactions.

Other investment banking ~~revenues~~results were ~~$33.0~~a net loss of $0.4 million for the ~~second~~third quarter of 2021, compared with a net loss of ~~$71.2~~$27.0 million for the ~~second~~third quarter of 2020. Other investment banking revenues during the ~~second~~third quarter of 2021 include ~~record~~ net revenues of ~~$41.7~~$4.4 million from Jefferies Group's share of the net earnings of the Jefferies Finance joint venture, compared with a net loss of ~~$49.7~~$11.8 million in the ~~second~~third quarter of 2020. ~~Strong results~~Results in the ~~second~~third 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~~underlying revenues, partially offset by a $56.0 million one-time charge incurred by Jefferies Finance related to the ~~write down~~refinancing of ~~commitments and loans held-for-sale, as well as~~outstanding debt. Results in the prior year comparable quarter include losses related to reserves recorded on the loan portfolio during the prior year comparable quarter, primarily due to the impact of COVID-19 on the markets and ~~the~~ economy. ~~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~~August 31, 2021, ~~our~~Jefferies Group's 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~~nine months of 2021 were a record of ~~$2.07~~$3.25 billion, compared with ~~$893.7 million~~$1.48 billion for the first ~~half~~nine months of 2020, reflecting record ~~six~~nine months advisory revenues ~~in equity~~ and ~~debt~~record underwriting ~~and in mergers and acquisitions.~~revenues.

Our advisory revenues were a ~~six~~nine months record of ~~$701.9 million~~$1.29 billion for the first ~~half~~nine months of 2021, up ~~$176.7~~$589.1 million, or ~~33.6%~~84.6% higher than the prior year comparable period, primarily due to a significant increase in the number and values of ~~deals and higher average transaction deal values,~~transactions, 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.~~strong equity markets.

Our underwriting revenues for the first ~~half~~nine months of 2021 were a ~~six~~nine months record of ~~$1.30~~$1.90 billion, an increase of ~~186.7%~~111.3%, from ~~$454.3~~$898.7 million in the prior year comparable period, with record ~~six~~nine months net revenues in equity underwriting of ~~$819.3 million~~$1.19 billion and record ~~six~~nine months net revenues of ~~$483.1~~$712.5 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 half of 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~~$62.4 million for the first ~~half~~nine months of 2021, compared with a net loss of ~~$85.8~~$112.8 million for the first ~~half~~nine months of 2020. Other investment banking revenues during the first ~~half~~nine months of 2021 include net revenues of ~~$72.3~~$76.7 million from our share of the net earnings of the Jefferies Finance joint venture, compared with a net loss of ~~$39.3~~$51.1 million in the first ~~half~~nine months of 2020. Strong results in the first ~~half~~nine months 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.~~reserves, partially offset by a $56.0 million one-time charge incurred by Jefferies Finance related to the refinancing of outstanding debt. The results during the first ~~half~~nine months 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~~commitments and loans held-for-sale, as well as reserves recorded on the loan portfolio during the first nine months of 2020, primarily 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~~nine months 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~~our 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 and other prime brokerage services offered to clients, including capital ~~intelligence~~introductions and outsourced trading; and

•wealth management services.

Total equities net revenues ~~of $242.9~~were $236.5 million for the ~~second~~third quarter of 2021, ~~a record for a~~Jefferies Group's second highest third quarter and ~~an increase~~a decrease of ~~2.5%~~25.8%, compared with ~~$237.1~~$318.8 million for the ~~second~~third quarter of ~~2020,~~2020. Our equities franchise achieved solid results as our ~~equities franchise~~business continues to ~~gain market share and perform well in~~expand within the context of a ~~market~~more normalized trading environment ~~with a broad decline in market volumes and lower levels of client activity across several segments of~~compared to the ~~market.~~record prior year comparable quarter.

~~Our~~Results in our global cash equities business ~~declined in the U.S., as a result of~~reflected lower client activity and ~~changes~~market volumes and reduced trading gains on certain strategic positions and activity related to Special Purpose Acquisition Companies ("SPACs") in ~~market dynamics, while~~the U.S. as compared to the prior year quarter, partially offset by continued growth of our international franchise, ~~in Europe and~~primarily across Asia ~~Pacific continued to grow, driven by ongoing momentum, market share gains and increased client activity.~~Pacific. Our global electronic trading ~~businesses in Europe~~business and ~~Asia Pacific had continued growth and momentum, while~~ our ~~U.S. electronic trading~~global convertibles business had lower revenues ~~as our results in the prior year comparable quarter reflected record revenues~~primarily driven by ~~significantly higher global market volatility.~~ lower trading volumes and volatility, as well as reduced primary issuance activity.

Results in our prime services franchise ~~consisting of prime brokerage, outsourced trading and securities finance,~~ were higher driven by increased client balances and ~~improved~~the continued growth of our outsourced trading business, as well as higher financing revenues in our securities finance ~~franchise, as well as continued growth in outsourced trading for hedge fund clients,~~business, partially offset by ~~decreased client activity in other areas as well as muted~~reduced money market revenue as a result of low short-term interest rates. Our equity derivatives business had higher quarterly results driven by an increase in client activity and improved trading results due to a strengthening of our human capital. Our global convertibles franchise had increased revenues both in the U.S. and internationally, driven by improved trading results and market conditions.

The increase in our global equities net revenues is also reflective of losses on certain block positions in the second quarter of 2020 that were not repeated in the current year quarter and our second quarter of 2021 results also include mark-to-market losses from SPAC-related activity.

Total equities net revenues were ~~$774.0 million~~$1.01 billion for the first ~~half~~nine months of 2021, an increase of ~~60.3%~~26.1%, compared with ~~$482.8~~$801.6 million for the first ~~half~~nine months of 2020, driven by ~~all-time six months~~ record results, primarily in ~~predominately~~the first quarter of 2021 in almost all our ~~equities businesses~~products and across each of our core ~~regions in the first half of 2021.~~regions. Our equities franchise continues to gain market share and ~~benefited significantly from~~achieve double-digit growth across the ~~favorable trading environment~~majority of our products. Strong results and ~~SPAC-related activity in the U.S., particularly~~momentum are being driven by our long-term globalization and product diversification strategies. Overall, our record results this year, primarily in the first quarter of the current ~~year.~~

Inyear period, are a result of increased client activity, improved trading and the ~~current year, we received~~ recognition ~~from leading third-party market surveys. Our international convertibles franchise was ranked 1st in both European~~by our clients of our advisory, differentiated distribution and Asian, excluding Japan, convertibles by Greenwich Associates. Bloomberg ranked our 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.execution capabilities globally.

Our cash equities business had record results globally and across each region in the U.S., Europe and across Asia Pacific. Overall, our cash equities results were driven by significant client activity ~~meaningful~~and trading revenue, ~~and~~including SPAC-related ~~activity. Record results~~activity, particularly in ~~our~~the first quarter of 2021. Our electronic trading business ~~were~~had record results globally, driven by ~~higher commissions~~continued expansion and ~~growth~~momentum in our ~~European~~international franchise. Our derivatives business achieved record results and ~~Asia Pacific businesses. Overall, our international electronic~~more than doubled their revenue as compared with the prior year comparable period, driven by strong client activity and trading ~~franchise continued to benefit from our globalization and expansion strategy.~~revenues. 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~~as well as higher financing revenues in our securities finance business, and 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.

business.

Our execution franchise continues to be top-ranked by Greenwich Associates in electronic trading and convertibles. Each of our research franchises in the U.S., Europe, and across Asia Pacific are now ranked within the top 8 by Institutional Investor. Our global distribution platform has received several rankings around the world where we are ranked within the top 5 by Institutional Investor in sales and sector strategy, with several market-leading positions according to Institutional Investor and Asiamoney.

7071

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 ~~$257.2~~$205.8 million for the ~~second~~third quarter of 2021, a decrease of ~~47.8%~~38.8% from net revenues of ~~$493.1~~$336.3 million for the ~~second~~third quarter of 2020, ~~driven by reduced~~as trading volumes and client activity were lower across most products and regions aswith a more normalized trading environment compared to 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.prior year comparable quarter.

~~Net~~Results across our global trading businesses reflect lower revenues infor the ~~second~~third 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 on lower levels of client activity and liquidity in the market compared with the ~~second~~third quarter of 2020. In contrast, our distressed trading business had increased revenues as compared to the third quarter of 2020 ~~which experienced record trading volumes as the effect of COVID-19~~ and the ~~associated government support impacted~~securitization markets remain strong which drove solid results in our securitized markets group.

Emerging markets results declined from 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 secondthird quarter of ~~2021,~~2020 as ~~these businesses benefited significantly from the~~ government support of the credit markets had driven increased client trading activity and opportunities in the ~~second~~third quarter of 2020. Additionally, results in the municipal securities business declined compared with the third quarter of 2020 due to higher levels of activity in the municipal markets as spreads tightened.

Fixed income net revenues totaled ~~$620.6~~$826.4 million for the first ~~half~~nine months of 2021, a decrease of ~~16.3%~~23.3% from net revenues of ~~$741.3 million~~$1.08 billion for the first ~~half~~nine months of 2020, driven by reduced global trading volumes across ~~most~~several products ~~and regions~~ in the second ~~quarter~~and third quarters of the current year period. While the first ~~half~~nine months of 2021 revenues decreased from that of the first ~~half~~nine months of 2020, our fixed income franchise produced solid overall trading results ~~produced the second best six month fixed income revenue period on record with the first half~~across most of ~~2020 representing an all-time record six month results.~~our businesses. The first ~~half~~nine months 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.~~volatility.

Net revenues in the first ~~half~~nine months of 2021 were higher in our ~~U.S. and international~~ securitized markets groups on increased client demand for ~~most of~~ these ~~product classes,~~products, as compared with the first ~~half~~nine months of 2020. ~~Our revenues also benefited from ongoing investments across our European credit franchise.~~ In addition, ~~the~~ first ~~half~~nine months of 2021 results benefited from trading gains in our municipal securities business compared to the first ~~half~~nine months of 2020 when markets experienced a significant sell-off due to the impact of COVID-19. Our revenues also benefited from ongoing investments across our European credit franchise.

Our results also 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~~nine months of 2021, as the first ~~half~~nine months of 2020 benefited from significant ~~government interventions.~~client activity and wider bid-offer spreads. Lower results across our Asian credit, investment grade corporates and emerging markets businesses, as well as our high yield and loan trading businesses, ~~resulted from a decline in revenues across most regions and products due to~~were driven by reduced client activity and lower levels of volatility in the first ~~half~~nine months of 2021 ~~as these businesses benefited significantly from the government support of the credit markets in~~across regions and products compared to the first ~~half~~nine months of 2020.

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 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 expense).

Our other net revenues totaled ~~$39.1~~$28.2 million for the ~~second~~third quarter of 2021, ~~an increase~~a decrease of ~~$56.8~~$1.9 million compared with a net ~~loss~~revenues of ~~$17.7~~$30.1 million for the ~~second~~third quarter of 2020.

Results in the ~~second~~third quarter of 2021 include net revenues of ~~$30.7~~$25.9 million due to our share of the net income of Berkadia compared with net revenues of $18.5 million from Berkadia in the third quarter of 2020, primarily due to higher mortgage ~~origination,~~origination.

Our other net revenues totaled $98.9 million for the first nine months of 2021, an increase of $8.9 million compared with ~~negligible~~net revenues ~~from Berkadia in~~of $90.0 million for the ~~second quarter~~first nine months of 2020.

Results in the ~~second quarter~~first nine months of 2021 include net revenues of $86.6 million due to our share of the net income of Berkadia compared with $40.4 million in the first nine months of 2020. The lower results in the first nine months 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.

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 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~~nine months of 2020 included gains of $61.5 million from macro hedges that were bought and sold in the first ~~half~~nine months 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 during the year of the award. Compensation and benefits expense includes amortization expense associated with these awards to the extent vesting is contingent on future service. In addition, the senior executive awards contain market and performance 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					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020

Compensation expense without future service requirements	Compensation expense without future service requirements	$	721,569	$	472,430	$	1,786,479	$	1,010,266	Compensation expense without future service requirements	$	708,520	$	646,403	$	2,494,999	$	1,656,669
Amortization of share-based and cash-based awards	Amortization of share-based and cash-based awards	52,980		79,391		94,282		162,479		Amortization of share-based and cash-based awards	50,026		73,419		144,308		235,898
Total Compensation and benefits expense	Total Compensation and benefits expense	$	774,549	$	551,821	$	1,880,761	$	1,172,745	Total Compensation and benefits expense	$	758,546	$	719,822	$	2,639,307	$	1,892,567

Compensation and benefits expense increased in line with the significant increase in our net revenues in the ~~second~~third quarter and first ~~half~~nine months of 2021. A significant portion of compensation expense is highly variable with net revenues. Amortization of share-based and cash-based awards decreased in the ~~second~~third quarter and first ~~half~~nine months of 2021 as compared to the same periods in 2020 as a result of the accelerated amortization recognized in the year ended November 30, ~~2020.~~2020 of certain cash-based awards that had been granted during previous years, which were amended to remove any service requirements for vesting in the awards.

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 ~~$371.9~~$302.3 million for the ~~second~~third quarter of 2021, an increase of ~~$109.4~~$29.3 million, compared with ~~$262.5~~$273.0 million in the ~~second~~third quarter of 2020. Non-compensation expenses as a percentage of ~~Net~~Investment Banking and Capital Markets net revenues were ~~23.6%~~18.3% and ~~25.5%~~21.4% for the ~~second~~third quarter of 2021 and 2020, 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 record~~business development and professional services expenses consistent with the increase in our investment banking ~~net revenues resulting from an increase in the volume of investment banking transactions~~businesses, as well as higher consulting and ~~higher technology~~legal fees. Technology and communication expenses were higher, primarily related to costs associated with the development of various trading systems and increased market data costs associated with business growth. ~~The increase also included higher business development~~Non-compensation 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 businesses. The increase is also due to higher other expenses, primarily due to an increase in our bad debt expense mostly related to our prime brokerage business. Results in the ~~second~~third quarter of ~~2020~~2021 also included our charitable donations of ~~$8.6~~$5.4 million to 45 accredited charities that will use these funds to support critical needs for those in ~~memory of Peg Broadbent, Jefferies Group's longstanding, esteemed CFO who tragically died from complications of COVID-19 in March 2020.~~Afghanistan and Haiti, and to support our military veterans.

Non-compensation expenses were ~~$681.9~~$984.1 million for the first ~~half~~nine months of 2021, an increase of ~~$141.5~~$170.7 million, compared with ~~$540.4~~$813.4 million in the first ~~half~~nine months of 2020. Non-compensation expenses as a percentage of ~~Net~~Investment Banking and Capital Markets net revenues were ~~19.3%~~19.0% and ~~24.8%~~23.6% for the first ~~half~~nine months of 2021 and 2020, respectively, demonstrating the operating leverage inherent in our business.

The increase in non-compensation expenses was ~~primarily~~largely due to higher floor brokerage and clearing fees ~~due~~related to increased trading volumes and an increased volume of investment banking transactions driving higher underwriting costs. These increases correspond with our record equities 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.~~revenues. 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.~~businesses and higher business development expenses primarily due to higher costs associated with the increase in our investment banking businesses, but lower as a percentage of net revenues versus the first nine months of 2020.

Results in the first ~~half~~nine months of 2021 also included higher ~~other~~non-compensation expenses, primarily due to an increase in ~~our~~ bad debt expense mostly related to a specific default in our prime brokerage business. Non-compensation expenses in the first ~~half~~nine months of 2021 also included our charitable donations of ~~$7.7~~$13.2 million to approximately ~~130~~175 accredited charities ~~around~~that will use these funds to support critical needs for those in Afghanistan and Haiti, support our ~~planet that~~military veterans, 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~~nine months 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.

Asset Management

Our asset management business is a diversified alternative asset management platform offering institutional clients an innovative range of investment strategies through us and our affiliated asset managers. We provide certain of our affiliated asset managers access to fully integrated global operational infrastructure and support. This may include strategy and product development, daily operations and finance-related activities, compliance, legal and human resources support, as well as all aspects of 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 Six Months Ended					For the Three Months Ended				For the Nine Months Ended
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020

Net revenues	Net revenues	$	54,554	$	7,391	$	281,288	$	27,720	Net revenues	$	12,604	$	118,558	$	293,892	$	146,278

Expenses:	Expenses:									Expenses:
Compensation and benefits	Compensation and benefits	21,671		26,502		44,456		48,723		Compensation and benefits	15,468		10,652		59,924		59,375
Floor brokerage and clearing fees	Floor brokerage and clearing fees	10,599		7,878		20,441		14,185		Floor brokerage and clearing fees	4,541		6,103		24,982		20,288
Depreciation and amortization	Depreciation and amortization	489		2,133		968		2,758		Depreciation and amortization	494		2,018		1,462		4,776
Selling, general and other expenses	Selling, general and other expenses	10,740		12,431		22,903		24,536		Selling, general and other expenses	10,716		12,181		33,619		36,717
Total expenses	Total expenses	43,499		48,944		88,768		90,202		Total expenses	31,219		30,954		119,987		121,156
Income (loss) before income taxes	Income (loss) before income taxes	$	11,055	$	(41,553)	$	192,520	$	(62,482)	Income (loss) before income taxes	$	(18,615)	$	87,604	$	173,905	$	25,122

~~Revenues~~

Revenues

Asset management net revenues include the following:

• Total asset management fees: management and performance fees from funds and accounts managed by us;

• Revenue from arrangements with strategic affiliates: revenues from affiliated asset managers in which we hold interests that entitle us to portions of their revenues and/or profits, as well as earnings on our ownership interests in our affiliated asset managers; and

• Investment return: this includes investment income from capital invested in and managed by us and our affiliated asset managers.

The 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~~In some instances, 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.~~reversed, typically in December. As a result, a significant portion of our performance fees and similar revenues ~~are generally realized and recognized in the first quarter of our fiscal year creating a timing lag between~~generated from investment returns ~~generated~~ in a calendar year ~~with the associated performance fees~~are recognized in our following fiscal ~~year .~~year.

The following summarizes the results of our Asset Management businesses revenues by asset class (in thousands):


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

Asset management fees:	Asset management fees:									Asset management fees:
Equities	Equities	$	624	$	1,073	$	5,623	$	4,011	Equities	$	582	$	1,215	$	6,317	$	5,226
Multi-asset	Multi-asset	1,691		2,423		4,118		5,576		Multi-asset	2,271		1,912		6,277		7,488
Total asset management fees	Total asset management fees	2,315		3,496		9,741		9,587		Total asset management fees	2,853		3,127		12,594		12,714

Revenues from arrangements with strategic affiliates (1)	Revenues from arrangements with strategic affiliates (1)	20,175		1,340		79,058		2,631		Revenues from arrangements with strategic affiliates (1)	16,016		4,258		95,074		6,889
Total asset management fees and revenues	Total asset management fees and revenues	22,490		4,836		88,799		12,218		Total asset management fees and revenues	18,869		7,385		107,668		19,603

Investment return (2)	Investment return (2)	43,503		15,540		214,327		39,179		Investment return (2)	4,890		124,172		219,217		163,351
Allocated net interest (2)	Allocated net interest (2)	(11,439)		(12,985)		(21,838)		(23,677)		Allocated net interest (2)	(11,155)		(12,999)		(32,993)		(36,676)
Total Asset Management	Total Asset Management	$	54,554	$	7,391	$	281,288	$	27,720	Total Asset Management	$	12,604	$	118,558	$	293,892	$	146,278

(1)The amounts include our share of fees received by affiliated asset management companies with which we have revenue and profit share arrangements, as well as earnings on our ownership interest in affiliated asset managers.

(2)Allocated net interest represents ~~the~~an allocation to Asset Management 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.

Asset management net revenues for the ~~second~~third quarter of 2021 were ~~$54.6~~$12.6 million, significantly ~~higher~~lower than ~~$7.4~~$118.6 million recorded in the ~~second~~third 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 impacted byprimarily due to lower investment returns ~~from~~as a result of a difficult environment for multi-strategy funds, the liquidation of certain ~~of our investments in separately managed accounts~~funds and ~~funds due to the impact of COVID-19 on the markets and economy. Results~~lower performance by strategies that had very strong returns in the ~~second~~third quarter of ~~2021 include $22.5 million in~~2020. This is partially offset by higher asset management ~~performance and similar~~ fees and revenues earned directly or through our strategic affiliates, as ~~compared with $4.8 million in~~a result of the ~~prior year comparable quarter.~~continued growth of our asset management business.

Asset management net revenues for the first ~~half~~nine months of 2021 were a ~~six month~~nine months record of ~~$281.3~~$293.9 million, significantly higher than ~~$27.7~~$146.3 million recorded in the first ~~half~~nine months 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 impacted by lower investment returns from certain of our investments in separately managed accounts and 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 strategic affiliates, as compared with $12.2 million in the first half of 2020. Performance fees and similar revenues are recognized upon crystallization, which is generally ~~realized and recognized~~ once a year in the first quarter of our fiscal year and are attributable to performance realized in respect of the calendar year ending during our first fiscal quarter.

Expenses

The decrease in expenses in the ~~second quarter and~~ first ~~half~~nine months of 2021 as compared with the same ~~periods~~period in 2020 primarily reflects the wind down of one of our businesses in the second quarter of 2020, partially offset by an increase in Floor brokerage and clearing fees in 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):


		May 31, 2021		November 30, 2020			August 31, 2021		November 30, 2020
Assets under management (1):	Assets under management (1):					Assets under management (1):
Equities	Equities	$	326	$	481	Equities	$	347	$	481
Multi-asset	Multi-asset	442		293		Multi-asset	503		293
Total	Total	$	768	$	774	Total	$	850	$	774

(1) Assets under management include third-party net assets actively managed by us, including hedge funds and certain managed accounts. 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 affiliates or investments.

Change in assets under management were as follows (in millions):


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

Balance, beginning of period	Balance, beginning of period	$	773	$	1,140	$	774	$	1,216	Balance, beginning of period	$	768	$	1,039	$	774	$	1,216
Net cash flow in (out)	Net cash flow in (out)	4		(49)		(30)		(70)		Net cash flow in (out)	77		(420)		47		(490)
Net market appreciation (depreciation)	Net market appreciation (depreciation)	(9)		(52)		24		(107)		Net market appreciation (depreciation)	5		3		29		(104)
Balance, end of period	Balance, end of period	$	768	$	1,039	$	768	$	1,039	Balance, end of period	$	850	$	622	$	850	$	622

The change in assets under management in our wholly-owned managers during the ~~second~~third quarter of 2021 is primarily due to redemptions from certain 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 second quarter of 2020 is primarily due to redemptions from certain funds and 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 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 third quarter of 2020 is primarily due to liquidation and redemptions from certain funds. The change in assets under management in our wholly-owned managers during the first ~~half~~nine months of 2021 is primarily due to new subscriptions and investments from third-parties and net market appreciation, partially offset by redemptions from and liquidations of certain funds. The change in assets under management in our wholly-owned managers during the first nine months of 2020 is primarily due to the liquidation and redemptions from certain funds and market depreciation during the ~~period due to the impact of COVID-19 on the markets and economy, partially offset by new subscriptions and investments from third-parties.~~period.

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~~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~~$4.9 million and ~~$15.5~~$124.2 million for the ~~second~~third quarter of 2021 and 2020, respectively, and ~~$214.3~~$219.2 million and ~~$39.2~~$163.4 million for the first ~~half~~nine months of 2021 and 2020, respectively. The following table reflects amounts invested by asset manager (in thousands):


		May 31, 2021		November 30, 2020			August 31, 2021		November 30, 2020

Jefferies Financial Group Inc., as manager:	Jefferies Financial Group Inc., as manager:					Jefferies Financial Group Inc., as manager:
Fund investments (1)	Fund investments (1)	$	145,803	$	258,893	Fund investments (1)	$	192,297	$	258,893
Separately managed accounts (2)	Separately managed accounts (2)	300,392		352,084		Separately managed accounts (2)	256,641		352,084
Total	Total	446,195		610,977		Total	448,938		610,977

Third-party, as manager:	Third-party, as manager:					Third-party, as manager:
Fund investments	Fund investments	712,604		650,585		Fund investments	825,636		650,585
Separately managed accounts (2)	Separately managed accounts (2)	374,329		323,943		Separately managed accounts (2)	342,412		323,943
Investments in asset managers	Investments in asset managers	170,622		162,268		Investments in asset managers	190,577		162,268
Total	Total	1,257,555		1,136,796		Total	1,358,625		1,136,796
Total asset management investments	Total asset management investments	$	1,703,750	$	1,747,773	Total asset management investments	$	1,807,563	$	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~~August 31, 2021 and November 30, 2020, ~~$20.1~~$49.4 million and $0.1 million, respectively, represents net investments in funds that have been consolidated in 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.

Collectively, we and our affiliated asset managers have aggregate net asset values or net asset value equivalent assets under management of approximately ~~$29.9~~$21.9 billion and ~~$26.8~~$16.0 billion at ~~May~~August 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 or the net capital invested in a separately managed ~~account,~~account. (In the third quarter of 2021, we made changes to our aggregate assets under management to exclude the aggregate par value of collateralized loan obligations ~~or notional account value.~~that are managed by Jefferies Finance, in order to better align the manner in which we evaluate our asset management businesses, and have presented the amount at November 30, 2020 on a comparable basis.) These include the following:

•$~~16.0~~18.4 billion and $12.6 billion as of ~~May~~August 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~~2.6 billion and $2.6 billion as of ~~May~~August 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~~$1.6 billion and $1.5 billion as of ~~May~~August 31, 2021 and November 30, 2020, respectively, in addition to amounts financed of $1.0 billion and $1.1 billion as of ~~May~~August 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~~0.9 billion and $0.8 billion as of ~~May~~August 31, 2021 and November 30, 2020, respectively - This includes third-party investments actively managed by wholly-owned divisions.

Merchant Banking

A summary of results for Merchant Banking is as follows (in thousands):


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

Net revenues	Net revenues	$	318,828	$	107,162	$	616,331	$	311,721	Net revenues	$	271,608	$	220,887	$	887,939	$	532,608

Expenses:	Expenses:									Expenses:
Compensation and benefits	Compensation and benefits	27,987		13,973		55,999		31,163		Compensation and benefits	21,763		20,573		77,762		51,736
Cost of sales	Cost of sales	143,847		80,771		239,406		153,214		Cost of sales	151,510		82,657		390,916		235,871
Interest expense	Interest expense	6,114		8,282		12,579		17,055		Interest expense	5,744		7,398		18,323		24,453
Depreciation and amortization	Depreciation and amortization	17,295		17,378		34,035		36,219		Depreciation and amortization	16,584		14,408		50,619		50,627
Selling, general and other expenses	Selling, general and other expenses	41,061		54,753		73,603		127,833		Selling, general and other expenses	45,475		30,157		119,078		157,990
Total expenses	Total expenses	236,304		175,157		415,622		365,484		Total expenses	241,076		155,193		656,698		520,677

Income (loss) before income taxes and loss related to associated companies		82,524		(67,995)		200,709		(53,763)
Loss related to associated companies		(23,526)		(6,721)		(34,094)		(74,576)
Income (loss) before income taxes and income (loss) related to associated companies										Income (loss) before income taxes and income (loss) related to associated companies	30,532		65,694		231,241		11,931
Income (loss) related to associated companies										Income (loss) related to associated companies	(27,176)		5,053		(61,270)		(69,523)
Income (loss) before income taxes	Income (loss) before income taxes	$	58,998	$	(74,716)	$	166,615	$	(128,339)	Income (loss) before income taxes	$	3,356	$	70,747	$	169,971	$	(57,592)

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)			Revenues		Expenses		Income (Loss) from Associated Companies		Total Pre-Tax Income (Loss)

For the three months ended May 31, 2021
For the three months ended August 31, 2021										For the three months ended August 31, 2021
Oil and gas	Oil and gas	$	37,070	$	34,126	$	—	$	2,944	Oil and gas	$	44,918	$	35,479	$	—	$	9,439
Idaho Timber	Idaho Timber	184,111		130,263		—		53,848		Idaho Timber	118,917		121,282		—		(2,365)
Real estate	Real estate	33,971		33,404		(9,168)		(8,601)		Real estate	66,617		47,947		169		18,839
Other	Other	63,676		38,511		(14,358)		10,807		Other	41,156		36,368		(27,345)		(22,557)
Total	Total	$	318,828	$	236,304	$	(23,526)	$	58,998	Total	$	271,608	$	241,076	$	(27,176)	$	3,356

For the three months ended May 31, 2020
For the three months ended August 31, 2020										For the three months ended August 31, 2020
Oil and gas	Oil and gas	$	51,694	$	44,133	$	—	$	7,561	Oil and gas	$	3,658	$	28,518	$	—	$	(24,860)
Idaho Timber	Idaho Timber	85,383		78,128		—		7,255		Idaho Timber	119,752		89,116		—		30,636
Real estate	Real estate	10,965		19,510		(428)		(8,973)		Real estate	8,169		10,243		2,532		458
Other	Other	(40,880)		33,386		(6,293)		(80,559)		Other	89,308		27,316		2,521		64,513
Total	Total	$	107,162	$	175,157	$	(6,721)	$	(74,716)	Total	$	220,887	$	155,193	$	5,053	$	70,747

Revenues Expenses Income (Loss) from Associated Companies Total Pre-Tax Income (Loss)
For the six months ended May 31, 2021
Oil and gas $ 50,388 $ 68,373 $ — $ (17,985)
Idaho Timber 322,003 229,856 — 92,147
Real estate 45,643 47,695 (3,117) (5,169)
Other 198,297 69,698 (30,977) 97,622
Total $ 616,331 $ 415,622 $ (34,094) $ 166,615
For the six months ended May 31, 2020
Oil and gas $ 114,550 $ 115,727 $ — $ (1,177)
Idaho Timber 163,022 151,058 — 11,964
Real estate 23,195 30,614 (53,442) (60,861)
Other 10,954 68,085 (21,134) (78,265)
Total $ 311,721 $ 365,484 $ (74,576) $ (128,339)


	Revenues		Expenses		Income (Loss) from Associated Companies		Total Pre-Tax Income (Loss)

For the nine months ended August 31, 2021
Oil and gas	$	95,306	$	103,852	$	—	$	(8,546)
Idaho Timber	440,920		351,138		—		89,782
Real estate	112,260		95,642		(2,948)		13,670
Other	239,453		106,066		(58,322)		75,065
Total	$	887,939	$	656,698	$	(61,270)	$	169,971

For the nine months ended August 31, 2020
Oil and gas	$	118,208	$	144,245	$	—	$	(26,037)
Idaho Timber	282,774		240,174		—		42,600
Real estate	31,364		40,857		(50,910)		(60,403)
Other	100,262		95,401		(18,613)		(13,752)
Total	$	532,608	$	520,677	$	(69,523)	$	(57,592)

Oil and Gas

Oil and gas results for the ~~second~~third quarter of 2021 were ~~lower~~higher than the ~~second~~third quarter of 2020 primarily due to ~~increased~~decreased unrealized losses related to oil hedge derivatives and increased production revenues, partially offset by ~~slightly~~ increased ~~production revenues and impairment charges recorded during the second quarter of 2020.~~operating expenses. Oil and gas net revenues totaled ~~$37.1~~$44.9 million and ~~$51.7~~$3.7 million during the ~~second~~third quarter 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 ~~$42.7~~$45.3 million and ~~$40.0~~$34.5 million during the ~~second~~third quarter of 2021 and 2020, respectively. The increase in production revenues related to increases in oil prices and ~~slightly~~ higher volumes, partially offset by greater realized losses on oil hedges. Production revenues included realized gains (losses) on oil hedges of ~~$(2.8)~~$(5.1) million and ~~$23.9~~$13.0 million during the ~~second~~third quarter of 2021 and 2020, respectively.

•Net unrealized gains (losses) related to oil hedge derivatives were ~~$(5.6)~~$(0.4) million and ~~$15.0~~$(29.7) million in the ~~second~~third quarter of 2021 and 2020, respectively. As discussed further in Note 3 to the consolidated financial statements, Vitesse Energy Finance uses swaps and call and put options to reduce exposure to future oil price fluctuations. For the ~~second~~third quarter of 2021, approximately ~~46%~~45% of oil production was hedged at a weighted average price of approximately ~~$53/~~$52/barrel.

•Mark-to-market gains (losses) related to a financial instrument owned held at fair value were not material for the ~~second~~third quarter of 2021 and ~~$(3.2)~~$(1.1) million during the ~~second~~third quarter of 2020.

Oil and gas results for the first ~~half~~nine months of 2021 were ~~lower~~higher than the first ~~half~~nine months of 2020 primarily due to slightly increased production revenues during the first nine months of 2021 and impairment charges recorded during the first nine months of 2020 partially offset by 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.derivatives. Oil and gas net revenues totaled ~~$50.4~~$95.3 million and ~~$114.6~~$118.2 million during the first ~~half~~nine months 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~~$123.2 million and ~~$85.3~~$119.8 million during the first ~~half~~nine months of 2021 and 2020, respectively. The ~~decrease~~increase in production revenues related to ~~lower production across most of the basin~~higher oil and gas prices and slightly higher volumes due to ~~weather and reduced development activity during the second half of 2020~~fewer inactive wells, partially offset by greater realized losses on oil hedges due to ~~a lower price environment at that time.~~the higher oil prices. Production revenues included realized gains (losses) on oil hedges of ~~$(0.1)~~$(5.2) million and ~~$26.6~~$39.7 million during the first ~~half~~nine months of 2021 and 2020, respectively.

•Net unrealized gains (losses) related to oil hedge derivatives were ~~$(27.5)~~$(27.9) million and ~~$34.9~~$5.2 million in the first ~~half~~nine months of 2021 and 2020, respectively. For the first ~~half~~nine months of 2021, approximately ~~58%~~54% of oil production was hedged at a weighted average price of approximately ~~$56/~~$55/barrel. For the remainder of 2021, approximately ~~40%~~36% of expected oil production is hedged at a weighted average price of approximately $52/barrel.

•Mark-to-market gains (losses) related to a financial instrument owned held at fair value were ~~immaterial~~not material during the first ~~half~~nine months of 2021 and ~~$(5.7)~~$(6.8) million during the first ~~half~~nine months of 2020.

Total expenses for ~~Oil~~oil and gas were ~~$34.1~~$35.5 million during the ~~second~~third quarter of 2021 as compared to ~~$44.1~~$28.5 million during the ~~second~~third quarter of 2020. The ~~decrease~~increase in expenses was primarily due to ~~a non-cash charge of $13.2 million in the second quarter of 2020 to write down the value of a subset of Vitesse Energy Finance's~~higher production volumes and higher oil and gas ~~assets located in the DJ Basin, reflecting the impact of oil price declines during the quarter.~~ prices.Total expenses for ~~Oil~~oil and gas were ~~$68.4~~$103.9 million during the first ~~half~~nine months of 2021 as compared to ~~$115.7~~$144.2 million during the first ~~half~~nine months of 2020. The decrease in expenses was primarily due to non-cash charges in the first ~~half~~nine months of 2020 of $33.0 million to write down JETX Energy's oil and gas assets to reflect the impact of oil price declines during the period and $13.2 million to write down Vitesse Energy Finance's oil and gas assets in the DJ Basin.

Idaho Timber

~~High~~During the third quarter of 2021, lumber prices have declined substantially from recently established all-time highs, resulting in a substantial decline in revenues during the third quarter of 2021. Net revenues decreased in the third quarter of 2021 as compared to the same period in 2020, primarily due to a decrease in weekly shipments by 22% partially offset by an increase in the average selling price of 28%. During the first nine months of 2021, high demand for wood for home improvement and construction led to favorable pricing and record results for Idaho Timber. Net revenues increased in the ~~second quarter and~~ first ~~half~~nine months of 2021 as compared to the same ~~periods~~period in 2020, primarily due to ~~increases~~an increase in the average selling price of 141% and 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.78%.

The increase in total expenses for Idaho Timber in the ~~second~~third quarter and first ~~half~~nine months of 2021 as compared to the same periods in 2020 primarily reflects increased cost of sales, as well as charges to adjust its inventory carrying value to substantially lower lumber prices and, for the first nine months of 2020, increased compensation expense.

Real Estate

The increase in real estate revenues and expenses in the ~~second~~third quarter and first ~~half~~nine months of 2021 as compared to the same periods in 2020 primarily reflects increased revenues from sales of properties and the related cost of sales. ~~Income (loss)~~During the third quarter of 2021, we sold a self-storage facility and recognized revenues of $26.4 million and cost of sales of $12.4 million related to Real estate associated companies for the second quarter and first half of 2020, includes a non-cash charge of $6.9 million to fully write off HomeFed's interest in the Brooklyn Renaissance Plaza hotel related to the significant impact of COVID-19 during the second quarter of 2020.this sale. Income (loss) related to real estate associated companies for the first ~~half~~nine months of 2020, ~~also~~ includes a non-cash charge of $55.6 million to fully write off the value of HomeFed's RedSky JZ Fulton Investors joint venture investment due to the softening of the Brooklyn real estate ~~market.~~market and a non-cash charge of $6.9 million to fully write off HomeFed's interest in the Brooklyn Renaissance Plaza hotel related to the significant impact of COVID-19.

Other

Other revenues reflect realized and unrealized gains (losses) on financial instruments owned, which are held at fair value, of ~~$27.8~~$3.5 million and ~~$(71.3)~~$60.4 million for the ~~second~~third quarter of 2021 and 2020, respectively, and ~~$131.3~~$134.9 million and ~~$(30.3)~~$30.1 million for the first ~~half~~nine months of 2021 and 2020, respectively. The gains (losses) on financial instruments owned include mark-to-market changes in the value of our investments in public companies of ~~$7.8~~$7.7 million and ~~$(16.1)~~$55.6 million for the ~~second~~third quarter of 2021 and 2020, respectively, and ~~$91.6~~$104.9 million and ~~$(39.6)~~$15.9 million for the first ~~half~~nine months of 2021 and 2020, respectively. The first ~~half~~nine months of 2020, also includes a gain of $61.5 million from effective short-term hedges against mark-to-market and fair value decreases in our portfolio investments.

Corporate

A summary of results of operations for Corporate is as follows (in thousands):


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

Net revenues	Net revenues	$	724	$	1,525	$	1,314	$	11,317	Net revenues	$	955	$	591	$	2,269	$	11,908

Expenses:	Expenses:									Expenses:
Compensation and benefits	Compensation and benefits	7,035		6,171		22,569		16,029		Compensation and benefits	6,466		9,790		29,035		25,819
Depreciation and amortization	Depreciation and amortization	878		874		1,742		1,762		Depreciation and amortization	564		869		2,306		2,631
Selling, general and other expenses	Selling, general and other expenses	4,910		7,334		9,579		14,134		Selling, general and other expenses	4,375		5,550		13,954		19,684
Total expenses	Total expenses	12,823		14,379		33,890		31,925		Total expenses	11,405		16,209		45,295		48,134
Loss before income taxes	Loss before income taxes	$	(12,099)	$	(12,854)	$	(32,576)	$	(20,608)	Loss before income taxes	$	(10,450)	$	(15,618)	$	(43,026)	$	(36,226)

Corporate expenses include share-based compensation expense of ~~$3.0~~$2.1 million and ~~$3.9~~$3.2 million for the ~~second~~third quarter of 2021 and 2020, respectively, and ~~$12.0~~$14.2 million and ~~$7.3~~$10.5 million for the first ~~half~~nine months of 2021 and 2020, respectively. Share-based compensation expense is higher in the first ~~half~~nine months 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 $13.8 million and ~~$12.9~~$14.1 million for the ~~second~~third quarter of 2021 and 2020, respectively, and ~~$27.7~~$41.5 million and ~~$25.7~~$39.8 million for the first ~~half~~nine months of 2021 and 2020, respectively. ~~We capitalize~~Total amounts of interest expense may fluctuate due to capitalization of interest.

Subsequent to quarter-end on ~~qualifying HomeFed real estate assets. Parent company interest capitalized was $1.0~~October 8, 2021, we announced a tender offer for any and all of our $750.0 million ~~and $1.9 million during~~outstanding 5.50% Senior Notes due October 18, 2023. Interest expense in future periods will be reduced based on the ~~second quarter~~amount of ~~2021 and 2020, respectively, and $1.9 million and $3.9 million during the first half of 2021 and 2020, respectively.~~debt that is tendered.

Income Taxes

Our provisions for income taxes were ~~$120.8~~$145.7 million and ~~$339.1~~$484.8 million, respectively, for the ~~second~~third quarter and first ~~half~~nine months of 2021, representing an effective tax rate of ~~25.5%~~26.3% and ~~26.6%~~26.5%, respectively. Our provisions for income taxes were ~~$32.0~~$107.4 million and ~~$77.7~~$185.1 million, respectively, for the ~~second~~third quarter and first ~~half~~nine months of 2020, representing an effective tax rate of ~~42.3%~~26.1% and ~~33.3%~~28.7%, respectively. The decrease in the effective tax ~~rates~~rate for the ~~second quarter and~~ first ~~half~~nine months of 2021, as compared to the ~~second quarter and~~ first ~~half~~nine months of 2020, is primarily due to our substantially higher earnings before income taxes minimizing the impact of nondeductible ~~expenses.~~expenses and interest.

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):


		May 31, 2021													August 31, 2021
		Investment Banking and Capital Markets		Asset Management		Merchant Banking		Corporate		Consolidation Adjustments		Total			Investment Banking and Capital Markets		Asset Management		Merchant Banking		Corporate		Consolidation Adjustments		Total
Assets	Assets													Assets
Cash and cash equivalents	Cash and cash equivalents	$	6,211,170	$	10,187	$	212,903	$	2,008,946	$	—	$	8,443,206	Cash and cash equivalents	$	7,177,581	$	9,052	$	191,254	$	2,103,027	$	—	$	9,480,914
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	901,381		—		—		—		—		901,381		Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations	514,519		—		—		—		—		514,519
Financial instruments owned, at fair value	Financial instruments owned, at fair value	17,369,745		2,155,636		412,449		—		—		19,937,830		Financial instruments owned, at fair value	17,166,326		2,119,872		448,905		—		—		19,735,103
Loans to and investments in associated companies	Loans to and investments in associated companies	1,094,769		148,829		484,517		—		—		1,728,115		Loans to and investments in associated companies	1,131,749		161,518		451,698		—		—		1,744,965
Securities borrowed	Securities borrowed	6,720,683		—		—		—		—		6,720,683		Securities borrowed	6,212,491		—		—		—		—		6,212,491
Securities purchased under agreements to resell	Securities purchased under agreements to resell	6,877,107		40,118		—		—		—		6,917,225		Securities purchased under agreements to resell	8,011,550		—		—		—		—		8,011,550

Securities received as collateral, at fair value														Securities received as collateral, at fair value	9,853		—		—		—		—		9,853
Receivables	Receivables	7,065,093		245,710		821,089		51		—		8,131,943		Receivables	5,903,548		319,229		837,310		7,554		—		7,067,641
Property, equipment and leasehold improvements, net	Property, equipment and leasehold improvements, net	858,193		6,636		28,598		9,583		—		903,010		Property, equipment and leasehold improvements, net	863,302		5,863		35,849		9,523		—		914,537
Intangible assets, net and goodwill	Intangible assets, net and goodwill	1,721,568		143,320		47,592		—		—		1,912,480		Intangible assets, net and goodwill	1,714,872		143,312		46,979		—		—		1,905,163
Other assets	Other assets	904,273		20,518		1,323,684		415,360		(280,739)		2,383,096		Other assets	892,980		12,736		1,370,054		452,092		(287,199)		2,440,663
Total assets	Total assets	49,723,982		2,770,954		3,330,832		2,433,940		(280,739)		57,978,969		Total assets	49,598,771		2,771,582		3,382,049		2,572,196		(287,199)		58,037,399

Liabilities	Liabilities													Liabilities
Long-term debt (1) (2)	Long-term debt (1) (2)	6,426,329		965,967		437,540		993,409		—		8,823,245		Long-term debt (1) (2)	6,231,782		1,122,563		322,619		993,764		—		8,670,728
Other liabilities	Other liabilities	37,227,645		878,542		846,996		228,405		(280,739)		38,900,849		Other liabilities	37,018,374		791,645		1,043,834		236,055		(287,199)		38,802,709
Total liabilities	Total liabilities	43,653,974		1,844,509		1,284,536		1,221,814		(280,739)		47,724,094		Total liabilities	43,250,156		1,914,208		1,366,453		1,229,819		(287,199)		47,473,437

Redeemable noncontrolling interests	Redeemable noncontrolling interests	—		—		34,511		—		—		34,511		Redeemable noncontrolling interests	—		—		38,249		—		—		38,249
Mandatorily redeemable convertible preferred shares	Mandatorily redeemable convertible preferred shares	—		—		—		125,000		—		125,000		Mandatorily redeemable convertible preferred shares	724		3,214		14,892		—		—		18,830
Noncontrolling interests	Noncontrolling interests	725		5,427		16,578		—		—		22,730		Noncontrolling interests	—		—		—		125,000		—		125,000
Total Jefferies Financial Group Inc. shareholders' equity	Total Jefferies Financial Group Inc. shareholders' equity	$	6,069,283	$	921,018	$	1,995,207	$	1,087,126	$	—	$	10,072,634	Total Jefferies Financial Group Inc. shareholders' equity	$	6,347,891	$	854,160	$	1,962,455	$	1,217,377	$	—	$	10,381,883

(1) Jefferies Group long-term debt of ~~$7.4~~$7.35 billion at ~~May~~August 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~~$322.6 million at ~~May~~August 31, 2021, primarily includes ~~$246.9~~$248.1 million for real estate businesses ~~$81.5~~and $74.6 million for Vitesse Energy ~~Finance and $109.2 million for Foursight Capital.~~Finance. At ~~May~~August 31, 2021, Vitesse Energy Finance had ~~$82.0~~$75.0 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.~~facility. See Note 11 in our consolidated financial statements for additional information.

8182


	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~~$6.90 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 $463.6 million at November 30, 2020, primarily includes $236.8 million for real estate businesses, $97.9 million for Vitesse Energy Finance and $129.0 million for Foursight Capital. At November 30, 2020, Vitesse Energy Finance had $98.5 million drawn out of the maximum $120.0 million borrowing base on its credit facility and Foursight Capital had $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.

8283

The table below presents our capital by significant business and investment (in thousands):


		May 31, 2021		November 30, 2020			August 31, 2021		November 30, 2020

Jefferies Group	Jefferies Group	$	6,740,807	$	6,407,954	Jefferies Group	$	6,956,195	$	6,407,954

Assets held on behalf of Asset Management (excluding Jefferies Group)	Assets held on behalf of Asset Management (excluding Jefferies Group)	249,494		234,049		Assets held on behalf of Asset Management (excluding Jefferies Group)	245,856		234,049

Merchant Banking:	Merchant Banking:					Merchant Banking:
Oil and gas	Oil and gas	493,820		526,642		Oil and gas	505,162		526,642
Real estate	Real estate	529,967		531,553		Real estate	492,334		531,553
Linkem	Linkem	170,265		198,991		Linkem	155,034		198,991
FXCM	FXCM	123,283		133,375		FXCM	109,448		133,375
Idaho Timber	Idaho Timber	110,829		85,595		Idaho Timber	94,067		85,595
Investments in public companies	Investments in public companies	258,546		192,363		Investments in public companies	307,207		192,363
Other	Other	308,497		271,890		Other	299,203		271,890
Total Merchant Banking	Total Merchant Banking	1,995,207		1,940,409		Total Merchant Banking	1,962,455		1,940,409

Corporate liquidity and other assets, net of Corporate liabilities including long-term debt	Corporate liquidity and other assets, net of Corporate liabilities including long-term debt	1,087,126		821,481		Corporate liquidity and other assets, net of Corporate liabilities including long-term debt	1,217,377		821,481
Total Capital	Total Capital	$	10,072,634	$	9,403,893	Total Capital	$	10,381,883	$	9,403,893

Below is a brief description of the captions in the table above:

•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 products. Our Investment Banking and Capital Markets businesses are conducted by Jefferies Group, our largest subsidiary, and is now the largest independent full-service global investment banking firm headquartered in the U.S.

•Our Asset Management segment 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:

◦Our oil and gas business primarily consists of Vitesse Energy Finance. Vitesse Energy Finance is our 97% owned consolidated subsidiary that acquires, invests and monetizes non-operated working interests and royalties predominantly in the Bakken Shale of the Williston Basin in North Dakota.

◦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, garage and 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 ~~May~~August 31, 2021. Linkem provides residential broadband services in Italy using LTE technologies deployed over the 3.5 GHz spectrum band. Linkem deployed its first 5G towers in late 2020 and plans to rapidly increase its network coverage and service offerings over the coming years as it upgrades to 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, 2022 ($71.6 million principal outstanding at ~~May~~August 31, 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.

8384

•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 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 is completed. Some of these transactions have generated significant excess liquidity; some of these transactions have also 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 ~~$2,206.2 million~~$2.35 billion at ~~May~~August 31, 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 ~~May~~August 31, 2021, ~~$1,831.2 million~~$1.93 billion 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 ~~half~~nine months of 2021, our parent company received cash distributions of ~~$527.8~~$802.7 million from our subsidiary businesses, including ~~$400.6~~$560.0 million from Jefferies Group. We also received ~~$83.2~~$97.8 million from divestitures.

Our recurring cash requirements, including the payment of interest on our parent company debt, dividends and corporate cash overhead expenses, aggregate approximately ~~$356.2~~$354.9 million on an annual basis. Dividends paid during the first ~~half~~nine months of 2021 of ~~$99.5~~$161.3 million include quarterly dividends of $0.20 per ~~share. In June~~share for each of the first two quarters of 2021 ~~our Board~~and $0.25 for the third quarter of ~~Directors increased our quarterly cash dividend by 25% to $0.25 per share.~~2021. 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 benefited from federal net operating loss carryovers ("NOLs") which substantially offset our federal cash tax requirements. As a result of full utilization of our federal NOLs and other tax attributes, we are incurring and paying federal taxes in 2021.

Our primary long-term parent company cash requirement is our $1.0 billion principal outstanding as of ~~May~~August 31, 2021 under our long-term debt, of which $750.0 million is due in 2023 and $250.0 million in 2043. Subsequent to quarter-end on October 8, 2021, we announced a tender offer for any and all of our $750.0 million outstanding 5.50% Senior Notes due October 18, 2023. Parent company liquidity will be reduced by the amount of debt that is tendered. 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

During the first nine months of 2021, we purchased a total of 6,500,000 of our common shares for $179.3 million, or an average price per share of $27.59. At ~~November 30, 2020,~~August 31, 2021, we had approximately ~~$57.2~~$198.2 million available for future ~~share~~ repurchases. In ~~January~~September 2021, the Board of Directors increased the share repurchase authorization ~~by $192.8 million~~ to $250.0 million, ~~and in March 2021,~~including the ~~Board of Directors increased the share repurchase authorization by $127.5 million to $250.0~~$198.2 million. During the first half of 2021, we purchased a total of 5,000,000 of our common shares for $127.5 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 ~~May~~August 31, 2021, we had outstanding ~~247,031,705~~245,557,193 common shares, ~~20,952,000~~21,095,000 share-based awards that do not require the holder to pay any exercise price and ~~5,156,000~~5,132,000 stock options that require the holder to pay an average exercise price of ~~$23.67~~$23.69 per share. The ~~20,952,000~~21,095,000 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~~August 31, 2021, the maximum potential increase to common shares outstanding resulting from these outstanding awards and the preferred shares is ~~30,549,000~~30,668,000 (potentially an aggregate of ~~277,580,705~~276,225,193 outstanding common shares if all awards and preferred shares become outstanding common shares).

8485

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	Positive
Standard and Poor's	BBB	Stable
Fitch Ratings	BBB	Stable

(1) On March 15, 2021, Moody's Investors Service affirmed our rating of Baa3 and revised our rating outlook from stable to 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, principal repayments 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):	~~May~~August 31, 2021
Minimum reserve under liquidity target	$	~~712,400~~709,700
Actual liquidity	$	~~2,206,242~~2,347,500

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			Nine Months Ended August 31, 2021		Nine Months Ended August 31, 2020

Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	$	9,664,972	$	8,480,435	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 provided by operating activities						Net cash provided by operating activities	86,545		1,307,858
Net cash used for investing activities	Net cash used for investing activities	(128,812)		(163,418)		Net cash used for investing activities	(256,666)		(188,404)
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	775,987		(969,420)		Net cash provided by (used for) financing activities	575,848		(221,719)
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	4,755		(13,547)		Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	1,704		19,723
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	9,335,316	$	7,495,010	Cash, cash equivalents and restricted cash at end of period	$	10,072,403	$	9,397,893

During the first nine months of 2021, net cash provided by operating activities primarily reflects funds provided by Jefferies Group of $291.9 million, funds provided by our Merchant Banking operations of $234.3 million and Corporate tax payments $451.1 million.

During the first ~~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~~nine months of 2020, net cash provided by operating activities primarily relates to funds provided by Jefferies Group of ~~$92.0 million.~~$1.19 billion. Net losses related to property and equipment, and other assets ~~includes~~include non-cash charges of ~~$52.9~~$53.3 million to write down the value of certain of our investments during the first ~~half~~nine months of 2020.

During the first ~~half~~nine months of 2021, net cash used for investing activities principally reflects ~~$1,988.2 million~~$2.29 billion of loans to and investments in associated companies and ~~$2,025.7 million~~$2.31 billion of capital distributions and loan repayments from associated companies.

During the first ~~half~~nine months of 2020, net cash used for investing activities principally reflects ~~$1,382.8 million~~$1.39 billion of loans to and investments in associated companies and ~~$120.7 million for acquisitions of property, equipment and leasehold improvements, and other assets, partially offset by $1,344.6 million~~$1.37 billion of capital distributions and loan repayments from associated companies.

During the first ~~half~~nine months of 2021, net cash provided by financing activities primarily relates to funds provided by Jefferies Group of ~~$954.8~~$789.3 million, including funds provided by the issuance of debt of ~~$1,102.6 million~~$1.23 billion and proceeds from other secured financings of ~~$765.1~~$779.5 million, partially offset by funds used for the repayment of debt of ~~$951.4 million.~~$1.20 billion. Additionally, funds provided by financing activities includes the issuance of debt of ~~$173.7~~$237.5 million and proceeds from other secured financings of ~~$77.1~~$271.8 million in our Merchant Banking segment. This was partially offset by funds used to repurchase common shares for treasury of ~~$130.1~~$181.9 million, funds used for the repayment of debt of ~~$202.0~~$381.1 million in our Merchant Banking segment and funds used to pay dividends of ~~$99.5~~$161.3 million.

During the first ~~half~~nine months of 2020, net cash used for financing activities primarily relates to funds used to repurchase common shares for treasury of ~~$495.3~~$623.5 million and funds used to pay dividends of ~~$83.4 million and~~$122.9 million. This was partially offset by funds ~~used~~provided by Jefferies Group of ~~$450.2 million. This includes~~$442.0 million, including funds provided by the issuance of debt of $2.09 billion and proceeds from other secured financings of $323.9 million, partially offset by funds used for the repayment of debt of $1,762.4 million and payment of other secured financings of $369.7 million, partially offset by funds provided by the issuance of debt of $1,667.8 million. This was partially offset by proceeds from other secured financings of $44.5 million in our Merchant Banking segment.$1.95 billion.

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'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 ~~May~~August 31, 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):


		Six Months Ended May 31, 2021		Year Ended November 30, 2020			Nine Months Ended August 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	$	6,917	$	5,097	Period end	$	8,012	$	5,097
Month end average	Month end average	9,190		8,040		Month end average	9,455		8,040
Maximum month end	Maximum month end	12,321		12,061		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	$	7,079	$	8,316	Period end	$	7,572	$	8,316
Month end average	Month end average	12,142		13,501		Month end average	11,757		13,501
Maximum month end	Maximum month end	19,207		18,979		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 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 stress, we seek to maintain surplus cash capital. Jefferies Group's total long-term capital of ~~$13.4~~$13.57 billion at ~~May~~August 31, 2021 exceeded its cash capital requirements.

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 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 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 Modeled Liquidity Outflow that could be experienced in a liquidity 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 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 ~~May~~August 31, 2021, Jefferies Group had sufficient excess liquidity to meet all contingent cash outflows detailed in the Modeled Liquidity Outflow. WeJefferies Group regularly ~~refine our~~refines its 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):


		May 31, 2021		Average Second Quarter 2021 (1)		November 30, 2020			August 31, 2021		Average Third Quarter 2021 (1)		November 30, 2020
Cash and cash equivalents:	Cash and cash equivalents:							Cash and cash equivalents:
Cash in banks	Cash in banks	$	2,108,019	$	3,136,547	$	1,979,058	Cash in banks	$	1,695,518	$	3,245,491	$	1,979,058

Money market investments (2)	Money market investments (2)	4,112,874		2,971,160		5,132,871		Money market investments (2)	5,490,874		3,240,367		5,132,871
Total cash and cash equivalents	Total cash and cash equivalents	6,220,893		6,107,707		7,111,929		Total cash and cash equivalents	7,186,392		6,485,858		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)	1,650,901		1,204,579		1,180,410		Debt securities owned and securities purchased under agreements to resell (3)	1,646,881		1,427,446		1,180,410
Other (4)	Other (4)	387,422		411,235		312,511		Other (4)	367,747		424,326		312,511
Total other sources	Total other sources	2,038,323		1,615,814		1,492,921		Total other sources	2,014,628		1,851,772		1,492,921
Total cash and cash equivalents and other liquidity sources	Total cash and cash equivalents and other liquidity sources	$	8,259,216	$	7,723,521	$	8,604,850	Total cash and cash equivalents and other liquidity sources	$	9,201,020	$	8,337,630	$	8,604,850

(1)Average balances are calculated based on weekly balances.

(2)At ~~May~~August 31, 2021 and November 30, 2020, ~~$4,098.0 million~~$5.48 billion and ~~$5,118.0 million,~~$5.12 billion, 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 $14.9 million at both ~~May~~August 31, 2021 and November 30, 2020 ~~respectively,~~ are invested in AAA

rated prime money funds. The average balance of U.S. government money funds for the quarter ended ~~May~~August 31, 2021 was ~~$2,955.0 million.~~$3.23 billion.

(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 ~~May~~August 31, 2021, repurchase financing can be readily obtained for ~~approximately 70.8%~~70.6% 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):


		May 31, 2021				November 30, 2020					August 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	$	2,839,654	$	444,428	$	2,191,536	$	238,129	Corporate equity securities	$	2,762,673	$	368,787	$	2,191,536	$	238,129
Corporate debt securities	Corporate debt securities	2,579,263		40,672		2,298,591		50,217		Corporate debt securities	2,301,518		30,670		2,298,591		50,217
U.S. government, agency and municipal securities	U.S. government, agency and municipal securities	4,000,885		400,906		3,336,361		110,586		U.S. government, agency and municipal securities	5,033,369		118,070		3,336,361		110,586
Other sovereign obligations	Other sovereign obligations	2,236,240		1,263,841		2,518,928		1,101,272		Other sovereign obligations	2,106,288		1,523,792		2,518,928		1,101,272
Agency mortgage-backed securities (1)	Agency mortgage-backed securities (1)	1,952,468		—		1,652,743		—		Agency mortgage-backed securities (1)	1,078,076		—		1,652,743		—
Loans and other receivables	Loans and other receivables	142,948		—		564,112		—		Loans and other receivables	267,519		—		564,112		—

Total	Total	$	13,751,458	$	2,149,847	$	12,562,271	$	1,500,204	Total	$	13,549,443	$	2,041,319	$	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 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 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. At ~~May~~August 31, 2021, approximately ~~64%~~60% 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~~nine months of 2021, an average of approximately ~~72%~~70.7% 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 nine months at ~~May~~August 31, 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 ~~May~~August 31, 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, totaled ~~$475.8~~$307.3 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 ~~$825.2~~$429.0 million and ~~$854.5~~$711.6 million for the ~~second~~third quarter and first ~~half~~nine months of 2021, respectively.

Jefferies Group's short-term borrowings include facilities that contain certain covenants that, among other things, require it to maintain a specified level of tangible net worth and impose certain restrictions on the future indebtedness of certain of its subsidiaries that are borrowers. At ~~May~~August 31, 2021, Jefferies Group was in compliance with all covenants under these facilities. Jefferies Group's facilities, which are with ~~various banks~~a bank and are included within short-term borrowings, were $300.0 million at ~~May~~August 31, ~~2021 were $413.0 million.~~2021. Interest is based on a rate per annum at spreads over the Federal Funds Rate as defined in the credit agreements.

Jefferies Group's short-term borrowings at ~~May~~August 31, 2021 also include floating rate puttable notes of $6.8 million and other bank loans of ~~$56.0~~$0.5 million.

In addition, a 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 ~~May~~August 31, 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 ~~May~~August 31, 2021, the outstanding notes were ~~$3.5~~$3.55 billion, bear interest at a spread over London Interbank Offered Rate ("LIBOR") and mature from ~~June~~September 2021 to ~~April~~August 2023.

Long-Term Debt

Jefferies Group's long-term debt reflected in the Consolidated Statement of Financial Condition at ~~May~~August 31, 2021 is ~~$7.4~~$7.35 billion. Jefferies Group's unsecured long-term debt, which excludes its revolving credit facility, secured credit facility and the secured bank loan, has a weighted average maturity of approximately ~~10.4~~10.2 years.

During the ~~six~~nine months ended ~~May~~August 31, 2021, Jefferies Group's long-term debt increased ~~$496.6~~$458.7 million, primarily due to an increase of $375.0 million from its borrowings under Jefferies Group's Secured Credit Facility, approximately ~~$59.5~~$50.6 million of structured notes issuances, net of retirements, a $59.0 million net increase due to Jefferies Group's Revolving Credit Facility and changes in instrument specific credit risk on its structured notes, partially offset by ~~losses~~decreases associated with interest rate swaps based on their designation as fair value hedges. At ~~May~~August 31, 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 ~~May~~August 31, 2021 was ~~$1,820.0 million.~~$1.79 billion.

Subsequent to quarter-end, on October 8, 2021, Jefferies Group issued 2.625% senior notes with a principal amount of $1.0 billion, due 2031. In addition, Jefferies Group gave notice to the trustee and debt holders of its 5.125% senior notes, due January 20, 2023, of its plan to redeem the outstanding aggregate principal amount (carrying value of $756.5 million at August 31, 2021) of these notes.

During April 2021, Jefferies Group entered into a Revolving Credit Facility ("Jefferies Group Revolving Credit Facility") with a group of commercial banks following the maturity of its previous revolving credit facility. At ~~May~~August 31, 2021, borrowings under the Jefferies Group Revolving Credit Facility amounted to ~~$248.8~~$248.9 million. Interest is based on an adjusted LIBOR Rate, as defined in the credit agreement. The Jefferies Group Revolving Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain specified levels of tangible net worth and liquidity amounts, and impose certain restrictions on future indebtedness of and require specified levels of regulated capital for certain of its subsidiaries. Throughout the period and at ~~May~~August 31, 2021, no instances of noncompliance with the Jefferies Group Revolving Credit Facility covenants occurred and Jefferies Group expects to remain in compliance given its current liquidity and anticipated funding requirements given its business plan and profitability expectations.

During August 2021, Jefferies Group entered into a senior unsecured revolving credit facility ("Jefferies Group Unsecured Revolving Credit Facility") agreement with a bank for an aggregate committed amount of $350.0 million. Interest is based on a rate per annum at spreads over an Adjusted LIBOR Rate or a Base Rate, as defined in the credit agreement. The Jefferies Group Unsecured Revolving Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain a specified level of tangible net worth, net cash capital and a minimum regulatory net capital requirement for Jefferies LLC. At August 31, 2021, Jefferies Group was in compliance with all covenants under the Jefferies Group Unsecured Revolving Credit Facility. At August 31, 2021, Jefferies Group did not have any borrowing outstanding under the Jefferies Group Unsecured Revolving Credit Facility.

Jefferies Group's long-term debt ratings are as follows:


	Rating	Outlook
Moody's Investors Service (1)	Baa3	Positive
Standard and Poor's	BBB	Stable
Fitch Ratings	BBB	Stable

(1) On March 15, 2021, Moody's Investors Service affirmed Jefferies Group's rating of Baa3 and revised its rating outlook from stable to 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. 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, Jefferies Group may be required to provide additional collateral to counterparties, exchanges and clearing organizations in the event of a credit rating downgrade. At ~~May~~August 31, 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 ~~$120.1~~$105.7 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 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 ~~May~~August 31, 2021 were ~~$1,518.2 million~~$2.06 billion and ~~$1,394.5 million,~~$1.94 billion, 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 subject to the 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~~On October 6, 2021, Jefferies Financial Services, Inc. ("JFSI"), a registered swap dealer, became subject to the CFTC's regulatory capital requirements and financial reporting requirements for CFTC registered swap dealers not subject to regulation by a banking regulator. These provisions will result in certain of Jefferies Group's entities becoming subject toholds regulatory capital ~~requirements for~~in excess of the ~~first time, namely Jefferies Financial Services, Inc., which registered~~minimum regulatory requirement. Additionally, JFSI will be required to register as a securities based swap dealer with the ~~CFTC during January 2013 and Jefferies Financial Products LLC,~~SEC by November 1, 2021. Further, in September 2021, JFSI filed an application with the SEC to become an OTC derivatives dealer, which ~~registered during August 2014. Compliance~~upon approval, would subject JFSI to the SEC's net capital requirements. JFSI is expected to be in compliance with these ~~rules is required~~requirements upon final approval of its application by ~~October 6, 2021.~~the SEC.

The regulatory capital requirements referred to above may restrict Jefferies Group's ability to withdraw capital from its 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.

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"). AtAs of 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.

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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, 2020 and filed with the SEC on January 29, 2021 (the "2020 10-K");

•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.

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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 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 ~~$376.8~~$413.1 million at ~~May~~August 31, 2021. Assuming a decline of 10% in market prices, the value of these investments could decrease by approximately ~~$37.7~~$41.3 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 a 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

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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, 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.

There was a ~~modest~~ decrease in Jefferies Group's average daily VaR to $12.69 million for the third quarter of 2021 from $15.77 million for the second ~~quarter of 2021 from $16.02 million for the first~~ quarter of 2021. The decrease was primarily driven by lower equity price and interest rate and credit ~~spread~~spreads VaR ~~as the~~following position reductions. Furthermore, a number of volatile ~~period in~~days from 2020 ~~driven by the impact~~dropped out of ~~COVID-19 continued to drop from the one year look-back period. This~~Jefferies Group's times series which further reduced overall VaR. The decrease was partially offset by ~~higher equity price VaR driven by longer beta positioning in our Asset Management~~a lower diversification benefit across asset classes and business ~~during the second quarter of 2021.~~divisions.

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 (in millions):


Daily VaR (1) Value-at-Risk in Trading Portfolios	Daily VaR (1) Value-at-Risk in Trading Portfolios																	Daily VaR (1) Value-at-Risk in Trading Portfolios
Risk Categories	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						Risk Categories	VaR at August 31, 2021		Daily VaR for the Three Months Ended August 31, 2021						VaR at May 31, 2021		Daily VaR for the Three Months Ended May 31, 2021
				Average		High		Low				Average		High		Low					Average		High		Low				Average		High		Low

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	Interest Rates and Credit Spreads	$	3.74	$	4.11	$	5.63	$	3.28	$	4.06	$	5.08	$	10.77	$	3.21
Equity Prices	Equity Prices	15.53		14.83		18.98		10.57		11.36		10.90		15.71		6.17		Equity Prices	8.91		11.59		18.51		7.04		15.53		14.83		18.98		10.57
Currency Rates	Currency Rates	0.06		0.14		0.31		0.06		0.31		0.19		0.31		0.11		Currency Rates	0.04		0.09		0.22		0.04		0.06		0.14		0.31		0.06
Commodity Prices	Commodity Prices	0.43		0.55		0.77		0.37		0.72		0.42		0.75		0.16		Commodity Prices	0.20		0.35		0.56		0.17		0.43		0.55		0.77		0.37
Diversification Effect (2)	Diversification Effect (2)	(3.60)		(4.83)		N/A		N/A		(6.61)		(4.07)		N/A		N/A		Diversification Effect (2)	(2.35)		(3.45)		N/A		N/A		(3.60)		(4.83)		N/A		N/A

Firmwide	Firmwide	$	16.48	$	15.77	$	20.30	$	12.37	$	16.13	$	16.02	$	22.91	$	6.94	Firmwide	$	10.54	$	12.69	$	19.45	$	8.36	$	16.48	$	15.77	$	20.30	$	12.37

(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.

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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 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 ~~second~~third quarter of 2021, results of the evaluation at the aggregate level demonstrated ~~three~~two days when the net trading loss exceeded the 95% one day ~~VaR due to Jefferies Group's asset management and equity businesses.~~VaR.

The chart below reflects our daily VaR over the last four quarters. The increases from ~~August~~October 2020 through mid-January 2021 were driven by the 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~~reductions, while equity exposure increased at various points from March 2021 through early June 2021. VaR trended lower in the current ~~year~~ quarter ~~which was offset~~due to position reductions and as ~~the highly~~a number of volatile ~~period in~~days from 2020 ~~driven by the impact of COVID-19~~ dropped out of the ~~one year look-back period.~~time series.

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Daily Net Trading Revenue

There were 20 days with trading losses out of a total of 6465 trading days in the ~~second~~third quarter of 2021. The loss days during the ~~second~~third quarter of 2021 were primarily driven by ~~SPAC-related activity,~~ certain ~~block positions and certain~~equity funds in Jefferies Group's Asset Management ~~business.~~business, combined with idiosyncratic positions in Jefferies Group's equity trading that prior to quarter-end were substantially liquidated. The histogram below presents the distribution of ~~our~~Jefferies Group's actual daily net trading revenue for substantially all of ~~Jefferies Group's~~its trading activities for the ~~second~~third quarter of 2021 (in millions).

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 ~~May~~August 31, 2021 (in thousands):


	10% Sensitivity
Investment in funds (1)	$	~~90,021~~101,441
Private investments	~~14,249~~15,850
Corporate debt securities in default	~~11,955~~8,668
Trade claims	~~5,180~~4,243

(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 Jefferies Group's own credit spreads on financial liabilities for which the fair value option was elected was an increase in value of approximately ~~$1.7~~$1.6 million at ~~May~~August 31, 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 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.

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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 counterparty to derivative contracts, as a direct lender and through extending loan commitments ~~as a holder of securities~~and providing securities-based lending 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 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 21 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.

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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 ~~May~~August 31, 2021 and November 30, 2020 (in millions).


Counterparty Credit Exposure by Credit Rating	Counterparty Credit Exposure by Credit Rating																							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						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
		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			August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020
AAA Range	AAA Range	$	—	$	—	$	—	$	1.1	$	—	$	0.1	$	—	$	1.2	$	4,112.9	$	5,132.9	$	4,112.9		$	5,134.1	AAA Range	$	—	$	—	$	—	$	1.1	$	—	$	0.1	$	—	$	1.2	$	5,490.9	$	5,132.9	$	5,490.9	$	5,134.1
AA Range	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		AA Range	60.2		45.2		109.0		111.7		23.5		9.8		192.7		166.7		9.4		7.8		202.1		174.5
A Range	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		A Range	0.5		0.2		570.5		542.2		227.8		147.2		798.8		689.6		1,678.2		1,967.9		2,477.0		2,657.5
BBB Range	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		BBB Range	250.2		250.5		140.2		110.2		12.0		18.1		402.4		378.8		1.8		2.2		404.2		381.0
BB or Lower	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		BB or Lower	40.0		50.0		1.6		8.3		106.2		201.6		147.8		259.9		0.1		0.1		147.9		260.0
Unrated	Unrated	141.0		142.0		—		—		—		0.2		141.0		142.2		—		1.0		141.0			143.2		Unrated	116.6		142.0		—		—		—		0.2		116.6		142.2		6.0		1.0		122.6		143.2
Total	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	Total	$	467.5	$	487.9	$	821.3	$	773.5	$	369.5	$	377.0	$	1,658.3	$	1,638.4	$	7,186.4	$	7,111.9	$	8,844.7	$	8,750.3


Counterparty Credit Exposure by Region	Counterparty Credit Exposure by Region																							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						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
		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			August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020
Asia/Latin America/Other	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	Asia/Latin America/Other	$	15.0	$	15.0	$	91.9	$	72.6	$	6.9	$	6.9	$	113.8	$	94.5	$	271.7	$	248.4	$	385.5	$	342.9
Europe	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		Europe	0.2		0.1		285.2		313.0		24.1		42.5		309.5		355.6		98.0		96.4		407.5		452.0
North America	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		North America	452.3		472.8		444.2		387.9		338.5		327.6		1,235.0		1,188.3		6,816.7		6,767.1		8,051.7		7,955.4
Total	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	Total	$	467.5	$	487.9	$	821.3	$	773.5	$	369.5	$	377.0	$	1,658.3	$	1,638.4	$	7,186.4	$	7,111.9	$	8,844.7	$	8,750.3


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
		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			August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020		August 31, 2021		November 30, 2020
Asset Managers	Asset Managers	$	—	$	0.2	$	—	$	—	$	—	$	—	$	—	$	0.2	$	4,112.9	$	5,132.9	$	4,112.9		$	5,133.1	Asset Managers	$	0.2	$	0.2	$	—	$	—	$	1.5	$	—	$	1.7	$	0.2	$	5,490.9	$	5,132.9	$	5,492.6	$	5,133.1
Banks, Broker-dealers	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		Banks, Broker-dealers	250.7		250.7		637.9		558.6		262.8		178.8		1,151.4		988.1		1,695.5		1,979.0		2,846.9		2,967.1

Corporates	Corporates	150.0		132.7		—		—		128.7		183.9		278.7		316.6		—		—		278.7			316.6		Corporates	123.8		132.7		—		—		100.8		183.9		224.6		316.6		—		—		224.6		316.6
As Agent Banks	As Agent Banks	—		—		184.1		190.0		—		—		184.1		190.0		—		—		184.1			190.0		As Agent Banks	—		—		160.4		190.0		—		—		160.4		190.0		—		—		160.4		190.0
Other	Other	101.0		104.3		21.7		24.9		5.8		14.3		128.5		143.5		—		—		128.5			143.5		Other	92.8		104.3		23.0		24.9		4.4		14.3		120.2		143.5		—		—		120.2		143.5
Total	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	Total	$	467.5	$	487.9	$	821.3	$	773.5	$	369.5	$	377.0	$	1,658.3	$	1,638.4	$	7,186.4	$	7,111.9	$	8,844.7	$	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.

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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):

May 31, 2021
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
United Kingdom $ 484.1 $ (246.1) $ (86.0) $ 0.2 $ 68.4 $ 2.1 $ 194.5 $ 222.7 $ 417.2
Germany 493.3 (321.1) 122.0 — 61.0 13.5 42.5 368.7 411.2
Canada 148.7 (94.5) 1.1 — 48.0 142.5 6.8 245.8 252.6
Hong Kong 37.8 (16.3) — — 1.1 — 173.0 22.6 195.6
China 522.0 (339.9) (27.2) — — — — 154.9 154.9
Ireland 140.6 (6.3) (0.3) — — — — 134.0 134.0
Switzerland 135.1 (58.6) 2.3 — 33.0 7.6 1.8 119.4 121.2
Austria 171.3 (56.4) — — — — — 114.9 114.9
Netherlands 393.9 (337.5) — — 4.1 0.3 0.1 60.8 60.9
Italy 1,009.6 (813.0) (137.5) — — 0.1 0.7 59.2 59.9
Total $ 3,536.4 $ (2,289.7) $ (125.6) $ 0.2 $ 215.6 $ 166.1 $ 419.4 $ 1,503.0 $ 1,922.4


		November 30, 2020																			August 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

Italy		$	1,929.5	$	(921.6)	$	(618.9)	$	—	$	—	$	0.1	$	—	$	389.1	$	389.1
United Kingdom	United Kingdom	464.0		(235.8)		(46.7)		0.1		67.4		5.2		64.8		254.2		319.0		United Kingdom	$	681.3	$	(342.9)	$	(57.5)	$	0.2	$	54.5	$	12.0	$	71.3	$	347.6	$	418.9
France		357.3		(290.9)		48.3		—		140.8		24.3		—		279.8		279.8
Canada																				Canada	123.8		(187.7)		101.8		—		69.3		191.3		7.1		298.5		305.6
Hong Kong																				Hong Kong	37.7		(17.2)		—		—		0.5		—		167.5		21.0		188.5
Germany	Germany	470.7		(352.7)		40.2		—		63.1		11.3		26.7		232.6		259.3		Germany	380.6		(415.9)		119.7		—		53.4		2.3		23.8		140.1		163.9
Austria																				Austria	187.4		(69.9)		—		—		—		—		—		117.5		117.5
China																				China	437.6		(330.9)		0.8		—		—		—		—		107.5		107.5
Switzerland																				Switzerland	77.1		(46.8)		6.3		—		35.7		1.5		2.1		73.8		75.9
Australia	Australia	32.7		(17.8)		173.9		—		24.9		—		12.8		213.7		226.5		Australia	113.9		(92.5)		(19.1)		—		40.2		—		25.0		42.5		67.5
Hong Kong		35.2		(11.8)		0.7		—		0.1		—		157.4		24.2		181.6
Canada		417.3		(326.8)		1.3		—		20.4		64.3		2.1		176.5		178.6
Austria		151.2		(73.6)		—		—		—		—		—		77.6		77.6
India		50.9		(6.7)		—		—		—		—		24.3		44.2		68.5
Switzerland		104.0		(72.2)		2.9		—		31.6		1.3		0.4		67.6		68.0
Ireland																				Ireland	78.7		(17.6)		2.9		—		—		—		—		64.0		64.0
Singapore																				Singapore	45.1		(26.0)		—		—		15.1		—		17.6		34.2		51.8
Total	Total	$	4,012.8	$	(2,309.9)	$	(398.3)	$	0.1	$	348.3	$	106.5	$	288.5	$	1,759.5	$	2,048.0	Total	$	2,163.2	$	(1,547.4)	$	154.9	$	0.2	$	268.7	$	207.1	$	314.4	$	1,246.7	$	1,561.1

~~At May 31, 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.~~


	November 30, 2020
	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

Italy	$	1,929.5	$	(921.6)	$	(618.9)	$	—	$	—	$	0.1	$	—	$	389.1	$	389.1
United Kingdom	464.0		(235.8)		(46.7)		0.1		67.4		5.2		64.8		254.2		319.0
France	357.3		(290.9)		48.3		—		140.8		24.3		—		279.8		279.8
Germany	470.7		(352.7)		40.2		—		63.1		11.3		26.7		232.6		259.3
Australia	32.7		(17.8)		173.9		—		24.9		—		12.8		213.7		226.5
Hong Kong	35.2		(11.8)		0.7		—		0.1		—		157.4		24.2		181.6
Canada	417.3		(326.8)		1.3		—		20.4		64.3		2.1		176.5		178.6
Austria	151.2		(73.6)		—		—		—		—		—		77.6		77.6
India	50.9		(6.7)		—		—		—		—		24.3		44.2		68.5
Switzerland	104.0		(72.2)		2.9		—		31.6		1.3		0.4		67.6		68.0
Total	$	4,012.8	$	(2,309.9)	$	(398.3)	$	0.1	$	348.3	$	106.5	$	288.5	$	1,759.5	$	2,048.0

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.

101

This may include a disruption involving electrical, communications, transportation or other services used by us or 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' 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.

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 established protocols for office access, travel, meetings and entertainment to ensure the safety of our people and clients, and continue to work actively with our employees to navigate the changing environment. Our Business Continuity Plan is operating effectively across a largely 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~~102

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, 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 ~~May~~August 31, 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 ~~May~~August 31, 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 ~~May~~August 31, 2021, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

~~102~~103

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 18, Commitments, Contingencies and Guarantees, in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report, which is incorporated herein by reference.

Item 1A. Risk Factors.

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 assumptions, risks, uncertainties and other factors that could adversely affect our business or that could otherwise result in changes that differ materially from our expectations.

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 ~~second~~third quarter of 2021 (dollars in thousands, except per share amounts):

(a) Total
Number of
Shares
Purchased

(b) Average
Price Paid
per Share

(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~~

—


	(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)
June 1, 2021 to June 30, 2021	—	$	—	—	$	250,000
July 1, 2021 to July 31, 2021	100,000	$	31.91	100,000	$	246,809
August 1, 2021 to August 31, 2021	1,400,000	$	34.70	1,400,000	$	198,230
Total	1,500,000			1,500,000

(1) At August 31, 2021, $198.2 million remains available for future purchases. In ~~March~~September 2021, the Board of Directors increased the share repurchase authorization ~~by $127.5 million~~ to $250.0 ~~million. At May 31, 2021, $250.0~~ million, ~~remains available for future purchases.~~including the $198.2 million.

~~103~~104


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 ~~May~~August 31, 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).

~~104~~105

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: ~~July 9,~~October 8, 2021	By:	/s/ John M. Dalton
		Name: John M. Dalton
		Title: Vice President and Controller
		(Duly Authorized Officer and Chief Accounting Officer)

~~105~~106