Just in: Jefferies chief executive Rich Handler has told investors that the bank believes it was 'defrauded' after being grilled over its exposure to bankrupt automotive parts supplier First Brands Group https://on.ft.com/3W7up1Y
It was not defrauded; the risk management was mediocre and you charged more interest. Now register the provision for not collectable and bonus payment 0.00.
When a major player like Jefferies publicly uses the word 'defrauded,' it sends shockwaves through the entire financial ecosystem. This goes beyond a simple bad debt - it suggests a fundamental breakdown in due diligence. The real question is whether this was an isolated failure or a symptom of broader underwriting complacency during the recent credit boom
Sounds all too familiar, unfortunately ...
Jefferies' exposure to the bankrupt First Brands Group is bad enough, but the CEO's claim of being 'defrauded' escalates this dramatically. Do you expect a wave of litigation in the distressed debt space following this public accusation? #InvestmentBanking #Bankruptcy
It is like shifting of onus on the defaulter, whereas, the Lender is equally responsible for giving loans, to any person, if defrauded and Lender is alone responsible for loan being defaulted.
The term ‘Due Diligence’ implies work done to insure the value being acquired. Here, the use of defrauded by Jefferies is certain to be followed by legal action from all parties involved, including the SEC and bank regulators….
A shocker for the entire banking system and raises serious questions around the overall health of lending books and therefore a looming bad debt crisis globally. Judging from the quoted comments of the CEO & Chair I am not surprised. To plead being “defrauded” just highlights senior executive leadership “ sleeping at the wheel” whilst lending irresponsibly. Then there is the question about risk management effectiveness and regulatory oversight. ….. bad story and no wonder that the banking sector shedded significant value across financial markets across both Europe and the US on Friday. Credit exposure scare in the making…..🤔🤔
It’s what happens when you standardise the process of issuing investment for the sake of efficiency and scalability. When you play with other people’s money, then it’s imperative to leave not even a small stone unturned.
Are we sure it just wasn't because Jefferies risk assessment was half baked because they saw $$ signs lol