Related Party Transactions

12 Months Ended

Nov. 30, 2019

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


•	At November 30, 2019 and 2018, we had $34.8 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 November 30, 2019 and 2018, respectively.

See Note 8, Variable Interest Entities, and Note 17, Commitments, Contingencies and Guarantees, for further information regarding related party transactions with our officers, directors and employees.

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


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



	Year Ended November 30,
	2019		2018		2017
Charges to Jefferies for services provided	$	52.7	$	61.2	$	42.2
Charges from Jefferies for services received	9.5		9.1		14.2


•	We provide investment banking and 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):



	Year Ended November 30,
	2019		2018		2017
Investment banking	$	10.6	$	15.7	$	14.7
Commissions and other fees	1.2		1.8		0.3
Principal transactions	—		0.1		—


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



	Year Ended November 30,
	2019		2018
Receivable from Jefferies	$	0.9	$	1.2
Payable to Jefferies	4.3		2.9

•

During the years ended November 30, 2019 and 2018, we paid distributions of $311.1 million and $248.7 million, respectively, to Jefferies. For the three months ended November 30, 2019 and 2018, we accrued distributions payable in the amount of $12.6 million and $30.7 million, respectively, which are included in Accrued expenses and other liabilities, in our Consolidated Statements of Financial Condition.

•

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 November 30, 2019, a net current tax receivable from Jefferies of $24.4 million is included in Other assets, in our Consolidated Statements of Financial Condition 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. During the years ended November 30, 2019 and 2018, we made payments to Jefferies of $71.4 million and $193.0 million, respectively.


•	On November 27, 2019, we transferred our investment in CoreCommodity Capital, LLC, an asset manager, along with a related accrued receivable and deferred tax asset, to Jefferies, in return for a total cash payment of $31.0 million.


•	During the year ended November 30, 2019, we sold securities totaling $110.9 million, and transferred a related deferred tax liability of $3.1 million, to Jefferies and purchased securities totaling $917.2 million from Jefferies, at fair value. There were no gains or losses on these transactions.

•

On October 1, 2018, Jefferies transferred its 50% interest in Berkadia and capital investments in certain separately managed accounts and funds to us. On November 1, 2018, we purchased LIML, an investment advisory company, from Jefferies. These transfers were accomplished as a capital contribution from Jefferies of approximately $598.2 million and cash payments of $70.5 million to Jefferies during the fourth quarter of 2018. In addition, we paid cash of approximately $5.5 million, representing LIML’s net book value as at October 31, 2018, including goodwill of $0.4 million and intangible assets of $0.2 million. In connection with these transfers, related deferred tax liabilities of approximately $50.9 million were transferred to us, for which Jefferies has indemnified us. These transferred deferred tax liabilities were adjusted by an additional $19.1 million during the fourth quarter of 2019. See Note 9, Investments, for further details on our 50% interest in Berkadia.


•	We entered into a foreign exchange prime brokerage agreement with an affiliate of Jefferies. In connection with the foreign exchange contracts entered into under this agreement, we have $9.9 million at both November 30, 2019 and 2018, included in Payables—brokers, dealers and clearing organizations, in our Consolidated Statements of Financial Condition.

•

We enter into OTC foreign exchange contracts with a subsidiary of Jefferies. In connection with these contracts, we had $0.6 million recorded in Financial instruments sold, at fair value, in our Consolidated Statements of Financial Condition at November 30, 2019. For the year ended November 30, 2019, we recorded a $6.1 million loss on these contracts, which is included in Principal transactions revenues in our Consolidated Statements of Earnings.


•	Two of our directors have investments totaling $0.4 million and $2.7 million at November 30, 2019 and 2018, respectively, in a hedge fund managed by Jefferies.

•

We have investments in hedge funds managed by Jefferies of $223.5 million and $218.7 million at November 30, 2019 and 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 are as follows (in millions):



	Year Ended November 30,
	2019		2018		2017
Net gains on our investments	$	4.7	$	5.0	$	8.0

•

In connection with our capital markets 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 November 30, 2019 and 2018, approximately $0.1 million and $0.3 million, respectively, of debt issued by Jefferies is included in Financial instruments owned in our Consolidated Statements of Financial Condition.

HRG Group Inc. (“HRG”). We recognized investment banking revenues of $3.0 million for the year ended November 30, 2018 in connection with the merger of HRG into Spectrum Brands Holdings, Inc., which was partially owned by Jefferies.

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