Jefferies Financial Group Inc.

Our CFO and Global Treasurer are responsible for developing and

implementing our liquidity, funding and capital management

strategies. These policies are determined by the nature and

needs of our day-to-day business operations, business

opportunities, regulatory obligations, and liquidity requirements.

Our 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,

rating agency ratios and cost and availability of both long term

and short-term funding. We have historically maintained a

balance sheet consisting of a large portion of our total assets in

cash and liquid marketable securities. The liquid nature of these

assets provides us with flexibility in financing and managing our

We also own a legacy portfolio of businesses and investments

that are reflected as consolidated subsidiaries, equity

investments or securities. Over the most recent years, we

completed several critical steps to substantially liquidate our

legacy Other investments portfolio of businesses, including the

sales of Foursight in April 2024 and the wholesale operations of

OpNet in August 2024.

In keeping with our strategy of returning excess liquidity to

shareholders, during theyear ended November 30, 2025, we

returned an aggregate of$432.6 million to shareholders primarily

in the form of$374.1 million in cash dividends andthe

repurchase of 735,426 common shares for a total of $58.5

million at a weighted average price of$79.57 per share in

connection with the net share settlement for tax purposes of

stock awards under our equity compensation plans.

We maintain modest leverage to support our investment grade

ratings. The growth of our balance sheet is supported by our

equity and we have quantitative metrics in place to monitor

leverage and double leverage. Our capital plan is robust, in order

to sustain our 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 our regulatory, or other internal or

external, requirements. Our access to funding and liquidity is

stable and efficient to ensure that there is sufficient liquidity to

meet our financial obligations in normal and stressed market

conditions.

In January 2026, we issued $1.5 billion aggregate principal

Our Balance Sheet

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 our 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 our assets and liabilities. We continually monitor

our overall securities inventory, including the inventory turnover

rate, which confirms the liquidity of our overall assets. A

significant portion of our financial instruments are valued on a

daily basis and we monitor and employ balance sheet limits for

our various businesses.

Total assets at November 30, 2025 and 2024 were$76.01 billion

and$64.36 billion, respectively, an increase of 18.1%. During the

year ended November 30, 2025, average total assets were higher

by 5.1% than total assets at November 30, 2025.

Our total Financial instruments owned inventory was$27.72

billion and$24.14 billion at November 30, 2025 and 2024,

respectively. During theyear ended November 30, 2025, our total

Financial instruments owned increased primarily due to

increased client facilitation trades in corporate equity securities

largely in connection with our growing prime brokerage business,

derivative contracts and loans at fair value, partially offset by a

decrease in U.S. government and agency securities. Financial

instruments sold, not yet purchased inventory was$13.32 billion

at November 30, 2025, an increase of 21.0% from$11.01 billion

at November 30, 2024, with theincrease primarily driven by

increases in corporate equity securities and derivative contracts,

partially offset by a decrease in U.S. government and agency

securities. Our overall net inventory position was$14.40 billion

and$13.13 billion at November 30, 2025 and 2024, respectively,

with the increase primarily due to increases in derivative

contracts, investments at fair value and corporate debt.

Level 3 assets:

(1)At November 30, 2025 and 2024,$195.8 million and$218.3 million,

respectively, are attributed to Other investments within our Asset Management

reportable segment.

Securities financing assets and liabilities include financing for

our 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.

Our average month end balance of total reverse repos and stock

borrows during year ended November 30, 2025 was 23.4% higher

than the balance at November 30, 2025. Our average month end

balance of total repos and stock loans during theyear ended

November 30, 2025 was 34.4% higher than the balance at

November 30, 2025.

Select information related to repurchase agreements:

Fluctuations in the balance of our repurchase agreements from

period to period and intraperiod are dependent on business

activity in those periods. Additionally, the fluctuations in the

balances of our 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.

Leverage Ratios:

(1)Leverage ratio equals total assets divided by total equity.

(2)Tangible gross leverage ratio (a non-GAAP financial measure) equals total

assets less goodwill and identifiable intangible assets, net divided by tangible

shareholders’ equity. The tangible gross leverage ratio is used by rating

agencies in assessing our leverage ratio.

Liquidity Management

The key objectives of the liquidity management framework are to

support the successful execution of our business strategies

while ensuring sufficient liquidity through the business cycle and

during periods of financial and idiosyncratic distress. Our liquidity

management policies are designed to mitigate the potential risk

that we may be unable to access adequate financing to service

our financial obligations without material franchise or business

impact.

The principal elements of our liquidity management framework

are our Cash Capital Policy, our assessment of Modeled Liquidity

Outflow (“MLO”) and our Contingency Funding Plan (“CFP”).

Liquidity Management Framework. Our Liquidity Management

Framework 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

and other secured funding including central counterparty

clearinghouses;

•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. We maintain a cash capital model that

measures long-term funding sources against requirements.

Sources of cash capital include our equity, mezzanine 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 and other assets 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 we do not need to liquidate inventory in the event

of a funding stress, we seek to maintain surplus cash capital. Our

total long-term capital of$23.14 billion at November 30, 2025

exceeded our cash capital requirements.

MLO. Our businesses are diverse, and our 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 our policy to ensure we have

sufficient funds to cover what we estimate may be needed in a

liquidity stress, we hold more cash and unencumbered securities

and have greater long-term debt balances than our businesses

would otherwise require. As part of this estimation process, we

calculate an MLO that could be experienced in a liquidity stress.

MLO is based on a scenario that includes both a market-wide

stress and firm-specific stress, characterized by some or all of

the following elements:

•Global recession, default by a medium-sized sovereign, low

consumer and corporate confidence, and general financial

instability.

•Severely challenged market environment with material declines

in equity markets and widening of credit spreads.

•Damaging follow-on impacts to financial institutions leading to

the failure of a large bank.

•A firm-specific crisis potentially triggered by material losses,

reputational damage, litigation, executive departure, and/or a

ratings downgrade.

The following are the critical modeling parameters of the MLO:

•Liquidity needs over a 30-day scenario.

•A two-notch downgrade of our long-term senior unsecured

credit ratings.

•No support from government funding facilities.

•A combination of contractual outflows, such as upcoming

maturities of unsecured debt, and contingent outflows (e.g.,

actions though not contractually required, we may deem

necessary in a crisis). We assume that most contingent

outflows will occur within the initial days and weeks of a

stress.

•No diversification benefit across liquidity risks. We assume

that liquidity risks are additive.

The calculation of our MLO under the above stresses and

modeling parameters considers the following potential

contractual and contingent cash and collateral outflows:

•All upcoming maturities of unsecured long-term debt,

promissory notes and other unsecured funding products

assuming we will be unable to issue new unsecured debt or

rollover any maturing debt.

•Repurchases of our outstanding long-term debt in the ordinary

course of business as a market maker.

•A portion of upcoming contractual maturities of secured

funding activity due to either the inability to refinance or the

ability to refinance only at wider haircuts (i.e., on terms which

require us to post additional collateral). Our assumptions

reflect, among other factors, the quality of the underlying

collateral and counterparty concentration.

•Collateral postings to counterparties due to adverse changes in

the value of our over-the-counter (“OTC”) derivatives and other

outflows due to trade terminations, collateral substitutions,

collateral disputes, collateral calls or termination payments

required by a two-notch downgrade in our credit ratings.

•Variation margin postings required due to adverse changes in

the value of our outstanding exchange-traded derivatives and

any increase in initial margin and guarantee fund requirements

by derivative clearing houses.

•Liquidity outflows associated with our prime services business,

including withdrawals of customer credit balances, and a

reduction in customer short positions.

•Liquidity outflows to clearing banks to ensure timely

settlements of cash and securities transactions.

•Draws on our unfunded commitments considering, among

other things, the type of commitment and counterparty.

•Other upcoming large cash outflows, such as employee

compensation, tax and dividend payments, with no expectation

of future dividends from any subsidiaries.

Based on the sources and uses of liquidity calculated under the

MLO 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 our inventory balances

and cash holdings. At November 30, 2025, we had sufficient

excess liquidity to meet all contingent cash outflows detailed in

the MLO for at least 30 days without balance sheet reduction. We

regularly refine our model to reflect changes in market or

economic conditions and our business mix.

CFP. Our CFP ensures the ability to access adequate liquid

financial resources to meet liquidity shortfalls that may arise in

emergency situations. The CFP triggers the following actions:

•Sets out the governance for managing liquidity during a

liquidity crisis;

•Identifies key liquidity and capital early warning indicators that

will help guide the response to the liquidity crisis;

•Identifies the actions and escalation procedures should we

experience a liquidity crisis including coordination amongst

senior management and the Board of Directors;

•Sets out the sources of funding available during a liquidity

crisis;

•Sets out the communication plan during a liquidity crisis for

key external stakeholders including regulators, relationship

banks, rating agencies and funding counterparties; and

•Sets out an action plan to source additional funding.

Sources of Liquidity

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:

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

(2)At November 30, 2025 and 2024,$10.12 billion and$8.21 billion, respectively,

was invested in U.S. government money funds that invest primarily 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 balances at November 30, 2025 and

2024 are primarily invested in AAA-rated prime money funds. The average

balance of U.S. government money funds for the quarter ended November 30,

2025 was$6.60 billion.

(3)Consists of unencumbered 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, United Kingdom, Canada, Australia,

Japan, Switzerland or the U.S.; and securities issued by a designated

multilateral development bank and reverse repurchase agreements with

underlying collateral composed 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 our 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 November 30, 2025, we had the ability to readily

obtain repurchase financing for 71.8% of our inventory at haircuts

of 10% or less, which reflects the liquidity of our 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 our Financial instruments owned primarily consisting

of loans and investments are predominantly funded by long term

capital. Under our cash capital policy, we model capital allocation

levels that are more stringent than the haircuts used in the

market for secured funding; and we maintain surplus capital at

these more stringent levels. We continually assess the liquidity of

our inventory based on the level at which we 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.

Financial instruments by asset class that we consider to be of a

liquid nature and the amount of such assets that have not been

pledged as collateral:

(1)Unencumbered liquid balances represent assets that can be sold or used as

collateral for a loan but have not been.

(2)Consists solely of agency mortgage-backed securities issued by the Federal

Home Loan Mortgage Corporation (“Freddie Mac”), the Federal National

Mortgage Association (“Fannie Mae”) and the Government National Mortgage

Association (“Ginnie Mae”).

In addition to being able to be readily financed at reasonable

haircut levels, we estimate 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

Our 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

We rely principally on readily available secured funding to finance

our inventory of financial instruments owned and financial

instruments sold. Our ability to support increases in total assets

is largely a function of our ability to obtain short- and

intermediate-term secured funding, primarily through securities

financing transactions. We finance a portion of our long inventory

and cover some of our short inventory by pledging and borrowing

securities in the form of repurchase or reverse repurchase

agreements (collectively “repos”), respectively. A portion of our

cash and noncash repurchase financing activities is used as

collateral that is 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 our total repo activity that is

eligible for central clearing reflects the high quality and liquid

composition of the inventory we carry in our trading books. For

those asset classes not eligible for central clearing house

financing, we seek to execute our bi-lateral financings on an

extended term basis and the tenor of our repurchase and reverse

repurchase agreements generally exceeds the expected holding

period of the assets we are financing. The weighted average

maturity of cash and noncash repurchase agreements for non-

clearing corporation eligible funded inventory is approximately

eight months at November 30, 2025.

Our ability to finance our inventory via central clearinghouses and

bi-lateral arrangements is augmented by our ability to draw bank

loans on an uncommitted basis under our various banking

arrangements. At November 30, 2025, short-term borrowings,

which must be repaid within one year or less include bank loans,

overdrafts and borrowings under revolving credit facilities.

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 short-

term borrowings outstanding were$1.26 billion and$1.25 billion

for theyear ended November 30, 2025 and 2024, respectively.

At November 30, 2025 and 2024, our borrowings under bank

loans in Short-term borrowings were$533.8 million and

$414.5 million, respectively. Our borrowings include credit

facilities that contain certain covenants that, among other things,

require us to maintain a specified level of tangible net worth,

require a minimum regulatory net capital requirement for our U.S.

broker-dealer, Jefferies LLC, and impose certain restrictions on

the future indebtedness of certain of our subsidiaries that are

borrowers. Interest is based on rates at spreads over the federal

funds rate or other adjusted rates, as defined in the various credit

agreements, or at a rate as agreed between the bank and us in

reference to the bank’s cost of funding. At November 30, 2025,

we were in compliance with all covenants under these credit

In addition to the above financing arrangements, we issue notes

backed by eligible collateral under master repurchase

agreements, which provide an additional financing source for our

inventory (our “repurchase agreement financing program”). The

notes issued under the program are presented within Other

secured financings. At November 30, 2025, the outstanding notes

totaled$2.27 billion, bear interest primarily at a spread over the

Secured Overnight Funding Rate (“SOFR”) and mature from

December 2025 to October 2028.

For additional details on our repurchase agreement financing

program, refer to Note 9, Variable Interest Entities in our

on Form 10-K.

Total Long-Term Capital

At November 30, 2025 and 2024, we had total long-term capital

of$23.14 billion and$21.66 billion, respectively, resulting in a

long-term debt to equity capital ratio of 1.17:1 and 1.12:1,

(1)Amounts at November 30, 2025 and 2024 exclude our secured long-term debt.

The amount at November 30, 2024 excludes$8.5 million of our 5.500%

Callable Note as the note matured on February 22, 2025,$5.4 million of our

6.000% Callable Note as the note matured on June 16, 2025,$6.2 million of

our 4.500% Callable Note as the note matured on July 22, 2025, and

$500.0 million of our 5.100% Callable Note as the note matured on September

15, 2025. The amount at November 30, 2025 excludes$869.5 million of our

Callable Notes as the note matures on April 16, 2026, and$45.2 million of our

Floating Senior Notes as the note matures on June 19, 2026. The amounts at

November 30, 2025 and 2024 also exclude$102.7 million and$157.6 million,

respectively, of structured notes as the notes mature within one year.

Long-Term Debt

During theyear ended November 30, 2025, long-term debt

increased by$2.37 billion to$15.90 billion at November 30, 2025,

as presented in our Consolidated Statements of Financial

Condition. This increase isprimarily due toproceeds of

$1.07 billion from the issuances of unsecured senior notes,

$698.7 million from net issuances of structured notes,

$1.65 billion from increased subsidiaries’ borrowings, and

$296.1 million from currency losses on foreign currency

borrowings. These increases were partially offset by repayments

of$1.42 billion on our unsecured senior notes.

At November 30, 2025, our unsecured long-term debt has a

weighted average maturity of approximately 7.4 years.

At November 30, 2025 and 2024, our borrowings under several

credit facilities classified within Long-term debt in our

Consolidated Statements of Financial Condition amounted to

$803.2 million and$775.3 million, respectively. Interest on these

credit facilities is based on an adjusted SOFR plus a spread or

other adjusted rates, as defined in the various credit agreements.

The credit facility agreements contain certain covenants that,

among other things, require us to maintain specified levels of

tangible net worth and liquidity amounts, certain credit and rating

levels and impose certain restrictions on future indebtedness of

and require specified levels of regulated capital and cash

reserves for certain of our subsidiaries. At November 30, 2025,

we were in compliance with all covenants under theses credit

For further information, refer to Note 17, Borrowings, in our

on Form 10-K.

Long-term debt ratings:

Access to external financing to finance our day-to-day operations,

as well as the cost of that financing, is dependent upon various

factors, including our debt ratings. Our 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, our capital

structure, our overall risk management, business diversification

and our market share and competitive position in the markets in

which we operate. Deterioration in any of these factors could

impact our credit ratings. While certain aspects of a credit rating

downgrade are quantifiable pursuant to contractual provisions,

the impact on our 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 January 2026, we issued $1.5 billion aggregate principal

Equity Capital

Common Stock

At November 30, 2025 and 2024, we had 565,000,000 authorized

shares of voting common stock with a par value of$1.00 per

share and had 206,296,167 and 205,504,272 common shares

outstanding, respectively. At November 30, 2025, we had

16,202,612 share-based awards that do not require the holder to

pay any exercise price and 5,064,740 stock options that require

the holder to pay a weighted average exercise price of$22.69 per

share.

program. We did not purchase any shares under our share

repurchase program during theyear ended November 30, 2025.

Treasury stock repurchases during theyear ended November 30,

2025 represent repurchases of common stock for net-share tax

withholding under our equity compensation plan.

Dividends

On January 8, 2025, the Board of Directors increased our

quarterly dividend from$0.35 to$0.40 per common share. On

January 7, 2026, the Board of Directors declared a dividend of

$0.40 per common share to be paid on February 27, 2026 to

common shareholders of record at February 17, 2026.

The payment of dividends is subject to the discretion of our

Board of Directors and depends upon general business

conditions and other factors that our Board of Directors may

Non-Voting Common Stock

On June 28, 2023, shareholders approved an Amended and

Restated Certificate of Incorporation, which authorized the

issuance of 35,000,000 shares of non-voting common stock with

a par value of$1.00 per share (the “Non-Voting Common

Shares”). The Non-Voting Common Shares are entitled to share

equally, on a per share basis, with the voting common stock, in

dividends and distributions. Upon the effectiveness of the

Amended and Restated Certificate of Corporation on June 30,

2023, the number of authorized shares of common stock

remains at 600,000,000 shares, composed of 565,000,000 shares

of voting common stock and 35,000,000 shares of Non-Voting

Common Shares.

Preferred Stock

On April 27, 2023, we established Series B Non-Voting

Convertible Preferred Shares with a par value of$1.00 per share

(“Series B Preferred Stock”) and designated 70,000 shares as

Series B Preferred Stock. The Series B Preferred Stock has a

liquidation preference of$17,500 per share and rank senior to our

voting common stock upon dissolution, liquidation or winding up

of Jefferies Financial Group Inc. Each share of Series B Preferred

Stock is automatically convertible into 500 shares of non-voting

common stock, subject to certain anti-dilution adjustments, three

years after issuance. The Series B Preferred Stock participates in

cash dividends and distributions alongside our voting common

stock on an as-converted basis.

Additionally, on April 27, 2023, we entered into an Exchange

Agreement with Sumitomo Mitsui Banking Corporation (“SMBC”),

which entitles SMBC to exchange shares of our voting common

stock for shares of the Series B Preferred Stock at a rate of 500

shares of voting common stock for one share of Series B

Preferred Stock. The Exchange Agreement is limited to 55,125

shares of Preferred Stock and SMBC is required to pay$1.50 per

share of voting common stock so exchanged. As of November

30, 2025, SMBC had exchanged approximately 27.6 million

shares of voting common stock for 55,125 shares of Series B

Preferred Stock. At November 30, 2025, SMBC owns

approximately 15.7% of our common stock on an as-converted

basis and 14.3% on a fully-diluted, as-converted basis. The CEO

of Sumitomo Mitsui Financial Group, Inc. serves on our Board of

Directors. Additionally, Refer to Note 23, Related Party

Transactions for further information regarding transactions with

SMBC.

On September 19, 2025, our Board of Directors established Series

B-1 Non-Voting Convertible Preferred Shares with a par value of

$1.00 per share (“Series B-1 Preferred Stock”) and designated

17,500 shares as Series B-1 Preferred Stock. The Series B-1

Preferred Stock has a liquidation preference of $500 per share

and ranks senior to our voting common stock and equal to the

Series B Preferred Stock upon dissolution, liquidation or winding

up of Jefferies Financial Group Inc. Each share of Series B-1

Preferred Stock is automatically convertible into 500 shares of

non-voting common stock as soon as such non-voting common

stock exists, subject to certain anti-dilution adjustments. The

Series B-1 Preferred Stock also participates in cash dividends

and distributions alongside our voting common stock on an as-

converted basis.

Additionally, on September 19, 2025, we entered into an amended

and restated Exchange Agreement (the “Amended and Restated

Exchange Agreement”) with SMBC, which entitles SMBC to

exchange shares of our voting common stock for shares of the

Series B-1 Preferred Stock at a rate of 500 shares of voting

common stock for one share of Series B-1 Preferred Stock. The

Amended and Restated Exchange Agreement is limited to 17,500

shares of Series B-1 Preferred Stock. Under the Amended and

Restated Exchange Agreement, SMBC is permitted to increase its

economic ownership in the Company to up to 20% on an as-

converted and fully diluted basis, while continuing to own less

than 5% of a voting interest in the Company.

During the year ended November 30, 2025 and 2024, we paid

cash dividends of$44.1 million and$31.9 million, respectively,

with respect to the Series B Preferred stock.

The payment of dividends is subject to the discretion of our

Board of Directors and depends upon general business

conditions and other factors that our Board of Directors may

Net Capital

Jefferies LLC is a broker-dealer registered with the SEC and a

member firm of the Financial Industry Regulatory Authority

(“FINRA”) and 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 Regulation 1.17 of the Commodity

Futures Trading Commission (“CFTC”) under the Commodity

Exchange Act, 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 SEA Rule 15c3-1 or CFTC

Regulation 1.17. FINRA is the designated examining authority for

Jefferies LLC and the National Futures Association (“NFA”) is the

designated self-regulatory organization (“DSRO”) for Jefferies

LLC as an FCM.

Jefferies Financial Services, Inc. (“JFSI”) is registered with the

SEC as a Security-Based Swap Dealer (“SBS Dealer”) and an OTC

Derivatives Dealer (“OTCDD”) subject to the SEC’s SBS dealer

regulatory rules and the SEC’s net capital requirements. JFSI is

also registered as a swap dealer with the CFTC and is subject to

the CFTC’s regulatory capital requirements pursuant to the

minimum financial requirements for swap dealers. Additionally,

as a registered member firm, JFSI is subject to the net capital

requirements of the NFA. The SEC is the designated examining

authority for JFSI in its capacity as an SBS Dealer and OTCDD,

while the NFA is the DSRO for JFSI, as a CFTC registered swap

dealer.

Certain non-U.S. subsidiaries are subject to capital adequacy

requirements as prescribed by the regulatory authorities in their

respective jurisdictions. This includes Jefferies International

Limited (“JIL”), which is subject to the regulatory supervision and

requirements of the Financial Conduct Authority in the U.K. and

Jefferies GmbH, which is subject to the regulatory supervision of

the German Federal Financial Supervisory Authority.

At November 30, 2025, net capital and excess net capital were as

(1)Represents an equivalent capital requirement in the respective jurisdiction.

At November 30, 2025, Jefferies LLC, JFSI, JIL and Jefferies

GmbH are in compliance with their applicable requirements.

The regulatory capital requirements referred to above may

restrict our ability to withdraw capital from our regulated

At November 30, 2025 and 2024,$5.93 billion and$4.96 billion,

respectively, of net assets of our consolidated subsidiaries are

restricted as to the payment of cash dividends, or the ability to

make loans or advances to the parent company. At November 30,

2025 and 2024,$5.30 billion and$4.54 billion, respectively, of

these assets are restricted as they reflect regulatory capital

requirements or require regulatory approval prior to the payment

of cash dividends and advances to the parent company.

Customer Protection and Segregation Requirement

accounts, Jefferies LLC is subject to the customer protection

provisions under SEC Rule 15c3-3 and is required to compute

reserve formula requirement for customer accounts and deposit

cash or qualified securities into a special reserve bank account

for the exclusive benefit of customers. At November 30, 2025,

Jefferies LLC had$846.7 million in cash and qualified U.S.

Government securities on deposit in special reserve bank

accounts for the exclusive benefit of customers.

As a registered broker dealer that clears and carries proprietary

accounts of brokers or dealers (commonly referred to as “PAB”),

Jefferies LLC is also required to compute a reserve requirement

for PABs pursuant to SEC Rule 15c3-3. At November 30, 2025,

Jefferies LLC had$475.1 million in cash and qualified U.S.

Government securities in special reserve bank accounts for the

exclusive benefit of PABs.

The qualified securities meeting the 15c3-3 customer and PAB

requirements are included in Cash and securities segregated and

Securities purchased under agreements to resell.

JFSI is exempt from the CFTC and SEC segregation rules.

Other Developments

In February 2022, Russia invaded Ukraine. Following Russia’s

invasion, the U.S., the U.K., and the European Union governments,

among others, developed coordinated financial and economic

sanctions targeting Russia that, in various ways, constrain

transactions with numerous Russian entities, including major

Russian banks and individuals; transactions in Russian sovereign

debt; and investment, trade and financing to, from, or in Ukraine.

We do not have any operations in Russia or any clients with

significant Russian operations and we have minimal market risk

related to securities of companies either domiciled or operating

in Russia. We continue to closely monitor the status of global

sanctions and restrictions, trading conditions related to Russian

securities and the credit risk and nature of our counterparties.

Global markets continue to experience disruption and volatility

following the geopolitical instability from the ongoing conflicts

along Israel’s border with the Gaza Strip and elsewhere in the

Middle East, including the ongoing tensions between Israel and

Iran. Our investments and assets in our growing business in the

Persian Gulf, Saudi Arabia and Israel, as well as the related global

macroeconomic climate, could be negatively affected by

consequences from this geopolitical and military conflict in the

region. We continue to monitor these and other geopolitical

conflicts, including recent developments between the United

States, Venezuela and other Latin American countries, and

assess their potential impact on our business.

Throughout 2025, the United States introduced actions to

increase import tariffsat various rates, including on certain

products imported from almost all countries. Other countries

have responded with retaliatory actions or plans for retaliatory

actions. Some of these tariff announcements have since been

followed by announcements of limited exemptions and

temporary pauses, and wholly new arrangements with key trading

partners of the United States. These actions have led to

increased economic uncertainty, and could negatively impact

global supply chains and trade flow. The potential impact of

tariffs on corporate earnings remains uncertain. We continue to

closely monitor the impact of these matters on our business.

Beginning on September 24, 2025, First Brands Group, LLC and

certain of its affiliates (“First Brands”) filed voluntary petitions for

Chapter 11 bankruptcy protection. First Brands is an aftermarket

auto parts manufacturer that sells its products to major auto-

parts retailers (the “Obligors”). As of that date, Point Bonita

Capital, a division of Leucadia Asset Management (“LAM”),

managed on behalf of third-party institutional and other investors

an approximately $3 billion portfolio of trade-finance assets,

which was supported by total invested equity of $1.9 billion, of

which $113 million, or 5.9%, is owned by LAM. Since 2019, the

portfolio has included purported accounts receivable purchased

from First Brands and arising from the sale of First Brands’

products to Obligors. The purchase of receivables in this fashion

is called factoring, and as of the Chapter 11 filing the Point Bonita

portfolio had approximately $715 million in purported receivables

due from retailers, including Walmart, AutoZone, NAPA, O’Reilly

Auto Parts, and Advanced Auto Parts, with First Brands, as the

servicer, responsible for collecting and remitting the Obligors’

payments to Point Bonita. For almost six years until September

15, 2025, Point Bonita always had been paid on time and in full.

On September 15, 2025, First Brands stopped directing timely

transfers of funds to Point Bonita.

The First Brands bankruptcy proceedings have uncovered what is

alleged to be a massive fraud that has resulted in the bankrupt

estate bringing claims against its former CEO, its former

Executive Vice President, one of its significant financing

counterparties, and various related entities to recover billions of

dollars in allegedly fraudulent transfers. As it relates to factoring,

the alleged fraudulent activities included First Brands selling

certain receivables more than once, selling receivables that had

been inflated in amount, and selling fabricated receivables. The

Company is exerting every effort to maximize the recovery of

assets from First Brands and from the various Obligors. That

process will take months to years to complete and, given the

fraud, the recovery is uncertain.

Separately, Apex Credit Partners LLC (“Apex”), a wholly owned

subsidiary of Jefferies Finance, 50%-owned by us, manages on

behalf of third-party institutional and other investors certain CLOs

that invest in broadly syndicated loans with approximately $4.5

billion in assets under management. 12 CLOs managed by Apex

own approximately $49 million in the aggregate of First Brands’

term loans (including PIK interest) and $9 million of First Brands’

debtor-in-possession term loans, which is approximately 1% of

the CLO assets managed by Apex. Additionally, approximately, $1

million of First Brands’ term loans (including PIK interest) and

$0.2 million of debt-in-possession term loans were transferred

from an Apex-managed CLO warehouse to Apex in anticipation of

a CLO closing expected to occur at the end of January. Apex

beneficially own a portion of the equity tranche and other senior

tranches in an amount to comply with applicable securitization

risk-retention rules and in certain instances such additional

amounts which are not material.

Off-Balance Sheet Arrangements

We have 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, purchases and sales of corporate loans in the secondary

market 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

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 our Consolidated

Statements of Financial Condition. Rather, the fair values of

derivative contracts are reported in our Consolidated Statements

of Financial Condition as Financial instruments owned or

Financial instruments sold, not yet purchased 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. For additional information

about our accounting policies and our derivative activities, refer

to Note 2, Summary of Significant Accounting Policies, in our

consolidated financial statements included in Part II, Item 8 of

our Annual Report on Form 10-K for the year ended November 30,

2024 and Note 5, Fair Value Disclosures and Note 6, Derivative

Financial Instruments in our consolidated financial statements

included in this Annual Report on Form 10-K.

Contractual Obligations

Subsequent to November 30, 2025 and on or before January 31,

2026, we expect to make cash payments of$1.94 billion related

to year-end compensation awards for fiscal 2025. Refer to Note

14, Compensation Plans in our consolidated financial statements

included in this Annual Report on Form 10-K for further

information.