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Related Party Transactions

9 Months Ended

Aug. 31, 2019

Officers, Directors and Employees. The following sets forth information regarding related party transactions with our officers, directors and employees:


•	At August 31, 2019 and November 30, 2018, we had $34.9 million and $39.3 million, respectively, of loans outstanding to certain of our officers and employees (none of whom are executive officers or directors) that are included in Other assets in our Consolidated Statements of Financial Condition.


•	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.


•	One of our directors has investments in a hedge fund managed by us of approximately $3.6 million and $4.6 million at August 31, 2019 and November 30, 2018, respectively.

See Note 8, Variable Interest Entities, and Note 16, Commitments, Contingencies and Guarantees, for further information regarding related party transactions with our officers, directors and employees.

Jefferies. The following is a description of related party transactions with Jefferies and its affiliates:


•	We provide services to and receive services from Jefferies under service agreements (in millions):



	Three Months Ended August 31,				Nine Months Ended August 31,
	2019		2018		2019		2018
Charges to Jefferies for services provided	$	9.8	$	15.8	$	36.1	$	46.1
Charges from Jefferies for services received	6.4		2.2		7.8		6.9


•	We provide capital markets and asset management services to Jefferies and its affiliates. The following table presents the revenues earned by type of services provided (in millions):



	Three Months Ended August 31,				Nine Months Ended August 31,
	2019		2018		2019		2018
Investment banking	$	2.4	$	5.6	$	10.3	$	5.6
Commissions and other fees	—		0.1		0.3		0.5
Principal transactions	—		—		—		0.1
Other revenues	1.1		0.3		2.0		0.7


•	Receivables from and payables to Jefferies, included in Other assets and Accrued expenses and other liabilities, respectively, in our Consolidated Statements of Financial Condition:



	August 31, 2019		November 30, 2018
Receivable from Jefferies	$	2.1	$	1.2
Payable to Jefferies	8.7		2.9

•

During the nine months ended August 31, 2019, we paid distributions of $108.7 million to Jefferies, based on our results for the nine months ended May 31, 2019. In addition, on January 29, 2019, our Board of Directors approved a distribution of $100.0 million to Jefferies, which was paid on January 30, 2019. At August 31, 2019, we have accrued a distribution payable of $32.5 million based on our results for the three months ended August 31, 2019.

•

Pursuant to a tax sharing agreement entered into between us and Jefferies, payments are made between us and Jefferies to settle current tax receivables and payables. At August 31, 2019, a net current tax receivable of $5.6 million is included in Other assets, and at November 30, 2018, a net current tax payable to Jefferies of $34.1 million is included in Accrued expenses and other liabilities, in our Consolidated Statements of Financial Condition. In December 2018, we made a payment of $35.0 million to Jefferies, which reduced the cumulative net current tax payable balance.


•	During the three and nine months ended August 31, 2019, we sold securities at fair value totaling $22.9 million and $40.8 million, respectively, to Jefferies. In addition, during the nine months ended August 31, 2019, we purchased securities totaling $885.6 million from Jefferies, at fair value. There were no gains or losses on these transactions.

•

We entered into a foreign exchange prime brokerage agreement with an affiliate of Jefferies in 2017. In connection with the foreign exchange contracts entered into under this agreement we have $22.7 million and $9.9 million at August 31, 2019 and November 30, 2018, respectively, included in Payables— brokers, dealers and clearing organizations and $0.2 million at August 31, 2019 in Financial instruments sold, not yet purchased, at fair value, in our Consolidated Statements of Financial Condition.


•	Two of our directors have investments totaling $2.5 million and $2.7 million at August 31, 2019 and November 30, 2018, respectively, in a hedge fund managed by Jefferies.

•

We have investments in hedge funds managed by Jefferies of $222.1 million and $218.7 million at August 31, 2019 and November 30, 2018, respectively, included in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition. Net gains on our investments in these hedge funds, which are included in Principal transactions revenues in our Consolidated Statements of Earnings (in millions):



	Three Months Ended August 31,				Nine Months Ended August 31,
	2019		2018		2019		2018
Net gains on our investments	$	1.0	$	0.5	$	3.3	$	5.0

•

In connection with our sales and trading activities, from time to time we make a market in long-term debt securities of Jefferies (i.e., we buy and sell debt securities issued by Jefferies). At August 31, 2019 and November 30, 2018, approximately $3.1 million and $0.3 million, respectively, of debt issued by Jefferies are included in Financial instruments owned, at fair value, in our Consolidated Statements of Financial Condition.

HRG Group Inc. (“HRG”). We recognized investment banking revenues of $3.0 million for the three and nine months ended August 31, 2018 in connection with the merger of HRG into Spectrum Brands Holdings, Inc., which is partially owned by Jefferies.

For information on transactions with our equity method investees, see Note 9, Investments.