Jefferies Financial Group Inc.

Index

Note 1. Organization and Basis of Presentation

Organization

Jefferies Financial Group Inc. is a U.S.-headquartered global

investment banking and capital markets firm. The accompanying

Consolidated Financial Statements represent the accounts of

Jefferies Financial Group Inc. and subsidiaries (together, the

“Company,” “we” or “us”). We, collectively with our consolidated

subsidiaries and through our affiliates, deliver a broad range of

financial services across investment banking, capital markets

and asset management.

We operate intwo reportable business segments: (1) Investment

Banking and Capital Markets and (2) Asset Management. The

Investment Banking and Capital Markets reportable business

segment includes our capital markets activities and our

investment banking business, which provides underwriting and

financial advisory services to our clients. We operate in the

Americas; Europe and the Middle East; and Asia-Pacific.

Investment Banking and Capital Markets also includes our

corporate lending joint venture (“Jefferies Finance LLC” or

“Jefferies Finance”), our commercial real estate joint venture

(“Berkadia Commercial Holding LLC” or “Berkadia”) and

historically our automobile lending and servicing activities (sold

in April 2024). The Asset Management reportable business

segment provides alternative investment management services

to investors globally and generates investment income from

capital invested in and managed by us or our affiliated asset

managers, and includes certain remaining businesses and assets

of our legacy merchant banking portfolio.

During the fourth quarter of 2023, we acquired Stratos Group

International (“Stratos”) and OpNet S.p.A. (“OpNet”), investments

in our legacy merchant banking portfolio which became

consolidated subsidiaries. In April 2024, we finalized the sale of

Foursight Capital LLC (“Foursight”). In August 2024, OpNet sold

substantially all of its wholesale operating assets to Wind Tre

S.p.A., a subsidiary of CK Hutchison Group Telecom Holdings

Ltd. Refer to Note 4, Business Acquisitions and Discontinued

Operations for further information.

Basis of Presentation

The accompanying Consolidated Financial Statements have been

prepared in accordance with U.S. generally accepted accounting

principles (“U.S. GAAP”) for financial information.

We have made a number of estimates and assumptions relating

to the reporting of assets and liabilities, the disclosure of

contingent assets and liabilities and the reported amounts of

revenues and expenses during the reporting period to prepare

these consolidated financial statements in conformity with U.S.

GAAP. The most important of these estimates and assumptions

relate to fair value measurements, compensation and benefits,

goodwill and intangible assets and the accounting for income

taxes. Although these and other estimates and assumptions are

based on the best available information, actual results could be

materially different from these estimates.

Certain prior period amounts in our Consolidated Financial

Statements and respective notes have been reclassified to be

consistent with the current period presentation. Such

reclassifications had no impact on net earnings, total assets,

total liabilities, or stockholders’ equity.

Consolidation

Our policy is to consolidate all entities that we control by

ownership of a majority of the outstanding voting stock. In

addition, we consolidate entities that meet the definition of a

variable interest entity (“VIE”) for which we are the primary

beneficiary. The primary beneficiary is the party who has the

power to direct the activities of a VIE that most significantly

impact the entity’s economic performance and who has 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. For consolidated entities that are less than wholly-owned,

the third-party’s holding of equity interest is presented as

Noncontrolling interests in our Consolidated Statements of

Financial Condition and Consolidated Statements of Changes in

Equity. The portion of net earnings attributable to the

noncontrolling interests is presented as Net earnings (losses)

attributable to noncontrolling interests in our Consolidated

In situations in which we have significant influence, but not

control, of an entity that does not qualify as a VIE, we apply either

the equity method of accounting or fair value accounting

pursuant to the fair value option election under U.S. GAAP, with

our portion of net earnings or gains and losses recorded in Other

revenues or Principal transactions revenues, respectively. We

also have formed nonconsolidated investment vehicles with

third-party investors that are typically organized as partnerships

or limited liability companies and are carried at fair value. We act

as general partner or managing member for these investment

vehicles and have generally provided the third-party investors

with termination or “kick-out” rights.

Intercompany accounts and transactions are eliminated in

Note 2. Summary of Significant Accounting Policies

Revenue Recognition Policies

Commissions and Other Fees. All customer securities

transactions are reported in our Consolidated Statements of

Financial Condition on a settlement date basis with related

income reported on a trade-date basis. 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. These arrangements are

accounted for on an accrual basis and, as we are acting as an

agent in these arrangements, netted against commission

revenues. In addition, we earn asset-based fees associated with

the management and supervision of assets, account services and

administration related to customer accounts. We also earn

commissions on execution services provided to customers in

facilitating prime brokerage services.

Principal Transactions. Financial instruments owned and

Financial instruments sold, not yet purchased are carried at fair

value with gains and losses reflected in Principal transactions

revenues, except for derivatives accounted for as hedges (refer

to “Hedge Accounting” section herein and Note 6, Derivative

Financial Instruments). Fees received on loans carried at fair

value are also recorded in Principal transactions revenues.

Investment Banking. Advisory fees from mergers and acquisitions

engagements are recognized at a point in time when the related

transaction is completed. Advisory retainer fees from

restructuring engagements are recognized over time using a time

elapsed measure of progress. 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 advisory engagements,

are expensed as incurred. All investment banking advisory

expenses are recognized within their respective expense

category on the Consolidated Statements of Earnings and any

expenses reimbursed by clients are recognized as Investment

Underwriting and placement agent revenues are recognized at a

point in time on trade-date. Costs associated with underwriting

activities are deferred until the related revenue is recognized or

the engagement is otherwise concluded and are recorded on a

gross basis within Underwriting costs.

Asset Management Fees and Revenues. Asset management fees

and revenues consist of asset management fees, as well as

revenues from strategic affiliates pursuant to arrangements,

which entitle us to portions of the revenues and/or profits of the

affiliated managers and perpetual rights to certain defined

revenues for a given revenue share period. Revenue from

strategic affiliates pursuant to such arrangements is recognized

at the end of the defined revenue or profit share period when the

revenues have been realized and all contingencies have been

resolved.

Management and administrative fees are generally recognized

over the period that the related service is provided. Performance

fee revenue is generally recognized only at the end of the

performance period to the extent that the benchmark return has

been met.

Interest Revenue and Expense. We recognize contractual interest

on Financial instruments owned and Financial instruments sold,

not yet purchased, on an accrual basis as a component of

interest revenue and expense. Interest flows on derivative trading

transactions and dividends are included as part of the fair

valuation of these contracts and recognized in Principal

transactions revenues rather than as a component of interest

revenue or expense. We account for our short- and long-term

borrowings at amortized cost, except for those for which we have

elected the fair value option, with related interest recorded on an

accrual basis as Interest expense. Discounts/premiums arising

on our long-term debt are accreted/amortized to Interest expense

using the effective yield method over the remaining lives of the

underlying debt obligations. We recognize interest revenue

related to our securities borrowed and securities purchased

under agreements to resell activities and interest expense related

to our securities loaned and securities sold under agreements to

repurchase activities on an accrual basis. In addition, we

recognize interest income as earned on brokerage customer

margin balances and interest expense as incurred on credit

balances.

Other Revenues. Other revenues include revenue from the sale of

real estate and revenues from providing internet connection and

broadband services. Revenues from the sales of real estate are

recognized at a point in time when the related transaction is

complete. If performance obligations under the contract with a

customer related to a parcel of real estate are not yet complete

when title transfers to the buyer, revenue associated with the

incomplete performance obligations is deferred until the

performance obligation is completed. Revenues from internet

connection services are recognized based on volume based

pricing and revenue from activating broadband services are

recognized on a straight-line basis over a two year period. Fees

related to selling and licensing information and data to clients is

recognized ratably over the related contract service period.

Cash Equivalents

Cash equivalents include highly liquid investments, including

money market funds and certificates of deposit, not held for

resale with original maturities of three months or less.

Cash and Securities Segregated and on Deposit for Regulatory

Purposes or Deposited with Clearing and Depository

Organizations

In accordance with Rule 15c3-3 of the Securities Exchange Act of

1934, Jefferies LLC as a broker-dealer carrying client accounts, is

subject to requirements related to maintaining cash or qualified

securities in a segregated reserve account for the exclusive

benefit of its clients. Certain other entities are also obligated by

rules mandated by their primary regulators to segregate or set

aside cash or equivalent securities to satisfy regulations,

promulgated to protect customer assets. In addition, certain

exchange and/or clearing organizations require cash and/or

securities to be deposited by us to conduct day-to-day activities.

Amounts may also include cash and cash equivalents that are

restricted for other business purposes.

Financial Instruments and Fair Value

yet purchased are recorded at fair value, either as required by

accounting pronouncements or through the fair value option

election. These instruments primarily represent our trading

activities and include both cash and derivative products. Our

derivative products are acquired or originated for trading

purposes and are included within operating activities on our

Consolidated Statements of Cash Flows. Gains and losses are

recognized in Principal transactions revenues. The fair value of a

financial instrument is the amount that would be received to sell

an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date (the exit

price).

In determining fair value, we maximize the use of observable

inputs and minimize the use of unobservable inputs by requiring

that observable inputs be used when available. Observable inputs

are inputs that market participants would use in pricing the asset

or liability based on market data obtained from independent

sources. Unobservable inputs reflect our assumptions that

market participants would use in pricing the asset or liability

developed based on the best information available in the

circumstances. We apply a hierarchy to categorize our fair value

measurements broken down into three levels based on the

transparency of inputs as follows:

Certain financial instruments have bid and ask prices that can be

observed in the marketplace. For financial instruments whose

inputs are based on bid-ask prices, the financial instrument is

valued at the point within the bid-ask range that meets our best

estimate of fair value. We use prices and inputs that are current

at the measurement date. For financial instruments that do not

have readily determinable fair values using quoted market prices,

the determination of fair value is based on the best available

information, taking into account the types of financial

instruments, current financial information, restrictions (if any) on

dispositions, fair values of underlying financial instruments and

quotations for similar instruments.

The valuation of financial instruments may include the use of

valuation models and other techniques. Adjustments to

valuations derived from valuation models are permitted based on

management’s judgment, which takes into consideration the

features of the financial instrument such as its complexity, the

market in which the financial instrument is traded and underlying

risk uncertainties about market conditions. Adjustments from the

price derived from a valuation model reflect management’s

judgment that other participants in the market for the financial

instrument being measured at fair value would also consider in

valuing that same financial instrument. To the extent that

valuation is based on models or inputs that are less observable

or unobservable in the market, the determination of fair value

requires more judgment.

The availability of observable inputs can vary and is affected by a

wide variety of factors, including, for example, the type of

financial instrument and market conditions. As the observability

of prices and inputs may change for a financial instrument from

period to period, this condition may cause a transfer of an

instrument among the fair value hierarchy levels. The degree of

judgment exercised in determining fair value is greatest for

instruments categorized within Level 3.

Securities Borrowed and Securities Loaned

Securities borrowed and securities loaned are carried at the

amounts of cash collateral advanced and received in connection

with the transactions and accounted for as collateralized

financing transactions. In connection with both trading and

brokerage activities, we borrow securities to cover short sales

and to complete transactions in which customers have failed to

deliver securities by the required settlement date and lend

securities to other brokers and dealers for similar purposes.

When we borrow securities, we generally provide cash to the

lender as collateral, which is reflected in our Consolidated

Statements of Financial Condition as Securities borrowed. We

earn interest revenues on this cash collateral. Similarly, when we

lend securities to another party, that party provides cash to us as

collateral, which is reflected in our Consolidated Statements of

Financial Condition as Securities loaned. We pay interest expense

on the cash collateral received from the party borrowing the

securities. The initial collateral advanced or received

approximates or is greater than the fair value of the securities

borrowed or loaned. We monitor the fair value of the securities

borrowed and loaned on a daily basis and request additional

collateral or return excess collateral, as appropriate. In instances

where the Company receives securities as collateral in

connection with securities-for-securities transactions in the

which the Company is the lender of securities and is permitted to

sell or repledge the securities received as collateral, the Company

reports the fair value of the collateral received and the related

obligation to return the collateral in the Company’s Consolidated

Statements of Financial Condition.

Securities Purchased Under Agreements to Resell and Securities

Sold Under Agreements to Repurchase

Securities purchased under agreements to resell and Securities

sold under agreements to repurchase (collectively “repos”) are

accounted for as collateralized financing transactions and are

recorded at their contracted resale or repurchase amount plus

accrued interest. We earn and incur interest over the term of the

repo, which is reflected in Interest revenue and Interest expense

on an accrual basis. Repos are presented in our Consolidated

Statements of Financial Condition on a net-basis by counterparty,

where permitted by U.S. GAAP. We monitor the fair value of the

underlying securities daily versus the related receivable or

payable balances. Should the fair value of the underlying

securities decline or increase, additional collateral is requested or

excess collateral is returned, as appropriate.

Offsetting of Derivative Financial Instruments and Securities

Financing Agreements

To manage our exposure to credit risk associated with our

derivative activities and securities financing transactions, we may

enter into International Swaps and Derivative Association, Inc.

(“ISDA”) master netting agreements, master securities lending

agreements, master repurchase agreements or similar

agreements and collateral arrangements with counterparties. A

master agreement creates a single contract under which all

transactions between two counterparties are executed allowing

for trade aggregation and a single net payment obligation. Master

agreements provide protection in bankruptcy in certain

circumstances and, where legally enforceable, enable receivables

and payables with the same counterparty to be settled or

otherwise eliminated by applying amounts due against all or a

portion of an amount due from the counterparty or a third-party.

Under our ISDA master netting agreements, we typically also

execute credit support annexes, which provide for collateral,

either in the form of cash or securities, to be posted by or paid to

a counterparty based on the fair value of the derivative receivable

or payable based on the rates and parameters established in the

credit support annex.

In the event of the counterparty’s default, provisions of the

master agreement permit acceleration and termination of all

outstanding transactions covered by the agreement such that a

single amount is owed by, or to, the non-defaulting party. In

addition, any collateral posted can be applied to the net

obligations, with any excess returned; and the collateralized party

has a right to liquidate the collateral. Any residual claim after

netting is treated along with other unsecured claims in

bankruptcy court.

The conditions supporting the legal right of offset may vary from

one legal jurisdiction to another and the enforceability of master

netting agreements and bankruptcy laws in certain countries or in

certain industries is not free from doubt. The right of offset is

dependent both on contract law under the governing

arrangement and consistency with the bankruptcy laws of the

jurisdiction where the counterparty is located. Industry legal

opinions with respect to the enforceability of certain standard

provisions in respective jurisdictions are relied upon as a part of

managing credit risk. In cases where we have not determined an

agreement to be enforceable, the related amounts are not offset.

Master netting agreements are a critical component of our risk

management processes as part of reducing counterparty credit

risk and managing liquidity risk.

We are also a party to clearing agreements with various central

clearing parties. Under these arrangements, the central clearing

counterparty facilitates settlement between counterparties based

on the net payable owed or receivable due and, with respect to

daily settlement, cash is generally only required to be deposited

to the extent of the net amount. In the event of default, a net

termination amount is determined based on the market values of

all outstanding positions and the clearing organization or clearing

member provides for the liquidation and settlement of the net

termination amount among all counterparties to the open

contracts or transactions.

Securitization Activities

We engage in securitization activities related to corporate loans,

consumer loans, mortgage loans and mortgage-backed and other

asset-backed securities. Transfers of financial assets to secured

funding vehicles are accounted for as sales when we have

relinquished control over the transferred assets. The gain or loss

on sale of such financial assets depends, in part, on the previous

carrying amount of the assets involved in the transfer allocated

between the assets sold and the retained interests, if any, based

upon their respective fair values at the date of sale. We may

retain interests in the securitized financial assets as one or more

tranches of the securitization. These retained interests are

included in Financial instruments owned, at fair value. Any

changes in the fair value of such retained interests are

recognized in Principal transactions revenues.

When a transfer of assets does not meet the criteria of a sale, we

account for the transfer as a secured borrowing and continue to

recognize the assets of a secured borrowing in Financial

instruments owned and recognize the associated financing in

Other secured financings.

Investments in and Loans to Related Parties

Investments in and loans to related parties include investments

in operating entities in which we exercise significant influence

and investments in limited partnerships or certain limited liability

companies where our interest is more than minor. Investments in

and loans to related parties also includes loans made to these

investees as well as loans to private equity and other entities

considered to be integral to our asset management activities.

Investments in and loans to related parties are accounted for

using the equity method or at cost, as appropriate, and reviewed

for impairment when changes in circumstances may indicate a

decrease in value which is other than temporary. Revenues on

Investments in and loans to related parties are included in Other

revenues. Refer to Note 10, Investments, and Note 23, Related

Party Transactions for additional information regarding certain of

these investments.

Credit Losses

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 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

current market conditions and reasonable and supportable

forecasts of expected future economic conditions.

Goodwill and Intangible Assets

Goodwill. Goodwill represents the excess acquisition cost over

the fair value of net tangible and intangible assets

acquired. Goodwill is not amortized and is subject to annual

impairment testing on August 1 for our Investment Banking,

Fixed Income, Equities and Asset Management reporting units,

on November 30 for other identified reporting units or between

annual tests if an event or change in circumstance occurs that

would more likely than not reduce the fair value of a reporting

unit below its carrying value. The goodwill impairment test is

performed at the reporting unit level by comparing the estimated

fair value of a reporting unit with its respective carrying value,

including goodwill and allocated intangible assets. If the fair

value is less than the carrying value, then an impairment loss is

recognized for the amount by which the carrying value of the

reporting unit exceeds the reporting unit’s fair value.

When assessing goodwill for impairment, first, a qualitative

assessment can be made to determine whether it is more likely

than not that the estimated fair value of a reporting unit is less

than its carrying value. If the results of the qualitative

assessment are not conclusive, a quantitative goodwill test is

performed. If the estimated fair value exceeds the carrying value,

goodwill at the reporting unit level is not impaired. Alternatively, a

quantitative goodwill test can be performed without performing a

qualitative assessment.

The fair value of a reporting unit is based on widely accepted

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 the fair

value of reporting units include market valuation methods that

incorporate price-to-earnings and price-to-book multiples of

comparable exchange-traded companies and multiples of merger

and acquisitions of similar businesses and/or projected cash

flows. The estimates and assumptions used in determining fair

value could have a significant effect on whether or not an

impairment charge is recorded and the magnitude of such a

charge. Adverse market or economic events could result in

impairment charges in future periods.

Intangible Assets. Intangible assets deemed to have finite lives

are amortized on a straight-line basis over their estimated useful

lives, where the useful life is the period over which the asset is

expected to contribute directly, or indirectly, to our future cash

flows. Intangible assets are reviewed for impairment on an

interim basis when certain events or circumstances exist. For

intangible assets deemed to be impaired, an impairment loss is

recognized for the amount by which the intangible asset’s

carrying value exceeds its fair value. At least annually, the

remaining useful life is evaluated.

An intangible asset with an indefinite useful life is not amortized

but assessed for impairment annually, or more frequently, when

events or changes in circumstances occur indicating that it is

more likely than not that the indefinite-lived asset is impaired.

Impairment exists when the carrying amount exceeds its fair

value. In testing for impairment, we have the option to first

perform a qualitative assessment to determine whether it is more

likely than not that an impairment exists. If it is determined that it

is not more likely than not that an impairment exists, a

quantitative impairment test is not necessary. If we conclude

otherwise, we are required to perform a quantitative impairment

test.

Intangible assets are included in Other assets. Our annual

indefinite-lived intangible asset impairment testing date is August

1. To the extent an impairment loss is recognized, the loss

establishes the new cost basis of the asset that is amortized over

the remaining useful life of that asset, if any. Subsequent reversal

of impairment losses is not permitted.

Premises and Equipment

Premises and equipment consist of leasehold improvements,

furniture, fixtures, computer and communications equipment,

capitalized software (externally purchased and developed for

internal use) and owned aircraft. Furniture, fixtures, computer and

communications equipment, capitalized software are

depreciated using the straight-line method over the estimated

useful lives of the related assets (generally three toten years).

Leasehold improvements are amortized using the straight-line

method over the term of the related leases or the estimated

useful lives of the assets, whichever is shorter. The carrying

values of internally developed software ready for its intended use

are depreciated over the remaining useful life of each capitalized

software.

At November 30, 2025 and 2024, premises and equipment (not

including right-of-use assets) amounted to$1.63 billion and

$1.51 billion, respectively. Accumulated depreciation and

amortization was$907.2 million and$816.1 million at

November 30, 2025 and 2024, respectively.

Depreciation and amortization expense amounted to$192.3

million,$190.3 million and$112.2 million for the years ended

November 30, 2025,2024 and 2023, respectively.

Leases

For leases with an original term longer than one year, lease

liabilities are initially recognized on the lease commencement

date based on the present value of the future minimum lease

payments over the lease term, including non-lease components

such as fixed common area maintenance costs and other fixed

costs for generally all leases. A corresponding right-of-use

(“ROU”) asset is initially recognized equal to the lease liability

adjusted for any lease prepayments, initial direct costs and lease

incentives. The ROU assets are included within Premises and

equipment on our Consolidated Statements of Financial

Condition and are amortized over the lease term with the

resulting amortization expense included in Occupancy and

equipment rental in our Statements of Consolidated Earnings and

Other adjustments in our Consolidated Statements of Cash

Flows.

The discount rates used in determining the present value of

leases represent our collateralized borrowing rate considering

each lease’s term and currency of payment. The lease term

includes options to extend or terminate the lease when it is

reasonably certain that we will exercise that option. Certain

leases have renewal options that can be exercised at the

discretion of the Company. Lease expense is generally

recognized on a straight-line basis over the lease term and

included in Occupancy and equipment rental expense.

Real Estate and Costs of Sales

We have a consolidated entity that engages in real estate

activities.

Real estate is classified within Other assets and includes all

expenditures incurred in connection with the acquisition,

development and construction of properties. Interest, payroll

related to construction, property taxes and other professional

fees attributable to land and property construction are capitalized

and added to the cost of those properties when active

development begins and ends when the property development is

fully completed and ready for its intended use. During the years

ended November 30, 2025,2024 and 2023, capitalized interest of

$23.3 million,$14.2 million and$12.9 million, respectively, was

allocated among real estate projects that are currently under

development.

Cost of goods sold is recognized within Non-interest expenses.

Impairment of Long-Lived Assets

We evaluate our long-lived assets for impairment whenever

events or changes in circumstances indicate, in management’s

judgment, that the carrying value of such assets may not be

recoverable. When testing for impairment, we group our long-

lived assets with other assets and liabilities at the lowest level for

which identifiable cash flows are largely independent of the cash

flows of other assets and liabilities (or asset group). The

determination of whether an asset group is recoverable is based

on management’s estimate of undiscounted future cash flows

directly attributable to the asset group as compared to its

carrying value. If the carrying amount of the asset group is

greater than the undiscounted cash flows, an impairment loss

would be recognized for the amount by which the carrying

amount of the asset group exceeds its estimated fair value.

Assets Held for Sale

We classify assets and related liabilities as held for sale when: (i)

management has committed to a plan to sell the assets, (ii) the

net assets are available for immediate sale, (iii) there is an active

program to locate a buyer and (iv) the sale and transfer of the net

assets is probable within one year. Assets and liabilities held for

sale generally are presented separately on our Consolidated

Statements of Financial Condition with a valuation allowance, if

necessary, to recognize the net carrying amount at the lower of

cost or fair value, less costs to sell. Depreciation of property,

plant and equipment and amortization of finite-lived intangible

assets and right-of-use assets are not recorded while these

assets are classified as held for sale. For each period that assets

are classified as being held for sale, they are tested for

recoverability. Refer to Note 4. Business Acquisitions and

Discontinued Operations for additional information.

Share-based Compensation

Share-based awards are measured based on the fair value of the

award and recognized over the required service or vesting period.

Certain executive and employee share-based awards contain

market, performance and/or service conditions. Market

conditions are incorporated into the grant-date fair value 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. The fair value of options is estimated at the date

of grant using the Black-Scholes option pricing model. We

account for forfeitures as they occur, which results in dividends

and dividend equivalents originally charged against retained

earnings for forfeited shares to be reclassified to compensation

expense in the period in which the forfeiture occurs.

Deferred tax assets and liabilities are recognized for the future

tax consequences attributable to differences between the

financial statement carrying amounts of existing assets and

liabilities and their respective tax bases and for tax loss

carryforwards. Deferred tax assets and liabilities are measured

using enacted tax rates expected to apply to taxable income in

the years in which those temporary differences are expected to

be recovered or settled. The effect of a change in tax rates on

deferred tax assets and liabilities is recognized in income in the

period that includes the enactment date. The realization of

deferred tax assets is assessed and a valuation allowance is

recorded to the extent that it is more likely than not that any

portion of the deferred tax asset will not be realized on the basis

of its projected tax return results.

We record uncertain tax positions using a two-step process:

(i) we determine whether it is more likely than not that each tax

position will be sustained on the basis of the technical merits of

the position; and (ii) for those tax positions that meet the more-

likely-than-not recognition threshold, we recognize the largest

amount of tax benefit that is more than 50 percent likely to be

realized upon ultimate settlement with the related tax authority.

We use the portfolio approach relating to the release of stranded

tax effects recorded in accumulated other comprehensive

income (loss).

Earnings per Common Share

Basic earnings per share is calculated using the two-class

method and is computed by dividing net earnings available to

common shareholders by the weighted average number of

common shares outstanding and certain other shares committed

to be, but not yet issued. Net earnings available to common

shareholders represent net earnings to common shareholders

reduced by the allocation of earnings to participating

securities. Losses are not allocated to participating

securities. Common shares outstanding and certain other shares

committed to be, but not yet issued, include restricted stock and

restricted stock units (“RSUs”) for which no future service is

required.

Diluted earnings per share is calculated using the two-class

method using the treasury stock or if-converted method, with the

more dilutive amount being reported. Diluted earnings per share

is computed by taking the sum of net earnings available to

common shareholders, dividends on preferred shares and

dividends on dilutive mandatorily redeemable convertible

preferred shares, divided by the weighted average number of

common shares outstanding and certain other shares committed

to be, but not yet issued, plus all dilutive common stock

equivalents outstanding during the period.

Preferred shares and unvested share-based payment awards that

contain nonforfeitable rights to dividends or dividend equivalents

(whether paid or unpaid) are participating securities and,

therefore, are included in the earnings allocation in computing

earnings per share under the two-class method of earnings per

share. Restricted stock and RSUs granted as part of share-based

compensation contain nonforfeitable rights to dividends and

dividend equivalents, respectively, and therefore, prior to the

requisite service being rendered for the right to retain the award,

restricted stock and RSUs meet the definition of a participating

security. RSUs granted under the senior executive compensation

plan are not considered participating securities as the rights to

dividend equivalents are forfeitable.

Legal Reserves

In the normal course of business, we have been named, from

time to time, as a defendant in legal and regulatory proceedings.

We 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 recognize a liability for a contingency in Accrued expenses

and other liabilities when it is probable that a liability has been

incurred and the amount of loss can be reasonably estimated. If

the reasonable estimate of a probable loss is a range, we accrue

the most likely amount of such loss, and if such amount is not

determinable, then we accrue the minimum in the range as the

loss accrual. The determination of the outcome and loss

estimates requires significant judgment on the part of

management. We believe that any other matters for which we

have determined a loss to be probable and reasonably estimable

are not material to our consolidated financial statements.

In many instances, it is not possible to determine whether any

loss is probable or even possible or to estimate the amount of

any loss or the size of any range of loss. We believe that, in the

aggregate, the pending legal actions or regulatory proceedings

and any other exams, investigations or similar reviews (both

formal and informal) should not have a material adverse effect

on our consolidated results of operations, cash flows or financial

condition. In addition, we believe that any amount of potential

loss or range of potential loss in excess of what has been

provided in our consolidated financial statements that could be

reasonably estimated is not material.

Hedge Accounting

Hedge accounting is applied using interest rate swaps

designated as fair value hedges of changes in the benchmark

interest rate of fixed rate senior long-term debt. The interest rate

swaps are included as derivative contracts in Financial

instruments owned and Financial instruments sold, not yet

purchased. We use regression analysis to perform ongoing

prospective and retrospective assessments of the effectiveness

of these hedging relationships. A hedging relationship is deemed

effective if the change in fair value of the interest rate swap and

the change in the fair value of the long-term debt due to changes

in the benchmark interest rate offset within a range of 80% -

125%. The impact of valuation adjustments related to our own

credit spreads and counterparty credit spreads are included in

the assessment of effectiveness.

For qualifying fair value hedges of benchmark interest rates, the

change in the fair value of the derivative and the change in fair

value of the long-term debt provide offset of one another and,

together with any resulting ineffectiveness, are recorded in

Interest expense.

We seek to reduce the impact of fluctuations in foreign exchange

rates on our net investments in certain non-U.S. operations

through the use of foreign exchange contracts. The foreign

exchange contracts are included as derivative contracts in

yet purchased. For foreign exchange contracts designated as

hedges, the effectiveness of the hedge is assessed based on the

overall changes in the fair value of the forward contracts (i.e.,

based on changes in forward rates). For qualifying net

investment hedges, all gains or losses on the hedging

instruments are included in Currency translation adjustments and

other in our Consolidated Statements of Comprehensive Income.

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries having non-U.S.

dollar functional currencies are translated at exchange rates at

the end of a period. Revenues and expenses are translated at

average exchange rates during the period. The gains or losses

resulting from translating foreign currency financial statements

into U.S. dollars, net of hedging gains or losses and taxes, if any,

are included in Other comprehensive income. Gains or losses

resulting from foreign currency transactions are included in

Principal transactions revenues.

Note 3. Accounting Developments

Accounting Standards to be Adopted in Future Periods

Income Taxes. In December 2023, the FASB issued ASU No.

2023-09 (“ASU 2023-09”), Improvements to Income Tax

Disclosures. The guidance is intended to improve income tax

disclosure requirements by requiring (i) consistent categories

and greater disaggregation of information in the rate

reconciliation and (ii) the disaggregation of income taxes paid by

jurisdiction. The guidance makes several other changes to the

income tax disclosure requirements. The amendments in ASU

2023-09 are effective for fiscal years beginning after December

15, 2024, with early adoption permitted, and are required to be

applied prospectively with the option of retrospective application.

We are evaluating the impact of the standard on our income tax

disclosures.

Expenses. In November 2024, the FASB issued ASU No. 2024-03

(“ASU 2024-03”), Disaggregation of Income Statement Expenses.

The guidance primarily will require enhanced disclosures about

certain types of expenses. The amendments in ASU 2024-03 are

effective for fiscal years beginning after December 15, 2026, and

interim periods within fiscal years beginning after December 15,

2027 and may be applied either on a prospective or retrospective

basis. We are evaluating the impact of the standard on our

disclosures.

Credit Losses. In July 2025, the FASB issued ASU No. 2025-05

(“ASU 2025-05”), Financial Instruments–Credit Losses. The

guidance provides an optional practical expedient when applying

the guidance related to the estimation of expected credit losses

for current accounts receivable and current contract assets

resulting from transactions arising from contracts with

customers. The amendments in ASU 2025-05 are effective for

fiscal years beginning after December 15, 2025, and interim

reporting periods, with early adoption permitted. We are

evaluating the impact of the standard on our financial

Internal-Use Software. In September 2025, the FASB issued ASU

No. 2025-06 (“ASU 2025-06”), Intangibles–Goodwill and Other–

Internal-Use Software. The guidance modernizes and clarifies the

threshold for when an entity is required to start capitalizing

software costs and is based on when (i) management has

authorized and committed to funding the software project and (ii)

it is probable that the project will be completed and the software

will be used to perform the function intended. The amendments

in ASU 2025-06 are effective for fiscal years beginning after

December 15, 2027, and interim reporting periods, with early

adoption permitted. We are evaluating the impact of the standard

on our financial statements.

Derivatives and Hedging and Revenue from Contracts with

Customers. In September 2025, the FASB issued ASU No.

2025-07 (“ASU 2025-07”), Derivatives and Hedging (Topic 815)

and Revenue from Contracts with Customers (Topic 606). The

guidance refines the scope of Topic 815 to clarify which

contracts are subject to derivative accounting. The guidance also

provides clarification under Topic 606 for share-based payments

from a customer in a revenue contract. The amendments in ASU

2025-07 are effective for fiscal years beginning after December

15, 2026, and interim reporting periods, with early adoption

permitted. We are evaluating the impact of the standard on our

financial statements.

Adopted Accounting Standards

Segment Reporting. In November 2023, the Financial Accounting

Standards Board (“FASB”) issued ASU No. 2023-07 (“ASU

2023-07”), Improvements to Reportable Segment Disclosures.

The guidance primarily requires enhanced disclosures about

significant segment expenses. We adopted the guidance

beginning with our year ended November 30, 2025, which

impacted our disclosures only. Refer to Note 22, Segment

Reporting for additional information.

Note 4. Business Acquisitions and Discontinued Operations

OpNet

We historically owned 47.4% of the common shares and 50.0% of

the voting rights of OpNet, a fixed wireless broadband service

provider in Italy, and various classes of convertible preferred

stock issued by OpNet (the “preferred shares”). On November 30,

2023, we provided notice of our intent to convert certain classes

of our preferred shares into common shares and, as a result, we

obtained control of OpNet. Upon conversion on May 7, 2024, our

ownership increased to 57.5% of the common shares and our

voting rights increased to 72.5% of the aggregate voting rights of

OpNet.

Upon obtaining control of OpNet on November 30, 2023, the

assets and liabilities of OpNet have been included in our

consolidated financial statements under the acquisition method

of accounting. The initial consolidation of OpNet was accounted

for under the acquisition method of accounting and we

remeasured our previously existing interests at fair value and

recognized a gain of$115.8 million, representing the excess of

the fair value of our previously existing interests over the carrying

value of our investment of$201.6 million.

The fair value of the previously existing interests was measured

based on an estimate of what could be recognized in a sale

transaction for wholesale net operating assets operating assets

of OpNet. The remaining identifiable assets and assumed

liabilities of OpNet represented the assets and liabilities of

Tessellis S.p.A. (“Tessellis”), a telecommunications company

publicly listed on the Italian stock exchange. An enterprise value

for Tessellis was estimated based on its market capitalization at

November 30, 2023.

In February 2024, OpNet agreed to sell substantially all of its

wholesale operating assets to Wind Tre S.p.A., a subsidiary of CK

Hutchison Group Telecom Holdings Ltd. The sale closed in

August 2024 and we received net cash proceeds of

$322.8 million and recognized a pre-tax gain on sale of

$3.5 million. The sale of OpNet’s operating assets did not include

our interest in Tessellis. For the year ended November 30, 2024,

the activities of OpNet’s wholesale operations have been

classified as discontinued operations and OpNet’s results are

presented in Net losses from discontinued operations, net of

income tax benefit.

During 2024, Tessellis executed various acquisitions and, as a

result, recognized assets and liabilities of$27.9 million and

$20.2 million, respectively, on the acquisition dates. Total assets

primarily relate to goodwill, property and equipment, intangible

assets, and short-term trade receivables. Total liabilities primarily

relate to financial debt assumed and trade payables. The primary

acquisition executed during 2024 was the acquisition of a 97.2%

ownership interest in Go Internet S.p.A. (“Go Internet”) for a total

consideration of€4.2 million. During the second quarter of 2025,

purchase price allocation adjustments were finalized.

Stratos

We historically held a 49.9% voting interest in Stratos. In March

2023, certain noteholders of Global Brokerage Inc. (“GLBR”) filed

an involuntary bankruptcy petition against GLBR and its

subsidiary, Global Brokerage Holdings LLC (“Holdings”), which

holds a 50.1% voting equity interest in Stratos. On September 14,

2023, we completed a foreclosure on the collateral that GLBR had

pledged to secure its obligations under a credit facility, which

consisted of GLBR’s equity interest in Stratos. As a result of the

foreclosure, we own 100% of the outstanding interests of Stratos;

and Stratos has become a consolidated subsidiary.

In connection with the acquisition of the additional 50.1%

interests in Stratos, we extinguished our senior secured term loan

to Stratos of$39.2 million and recognized a gain of$5.6 million,

which is reflected in Principal transactions revenues. Upon the

acquisition, we remeasured our previously existing 49.9% interest

at fair value and recognized a loss of$4.7 million, in Other

revenues, representing the excess of the carrying value of the

49.9% interest of our$47.9 million equity method investment

over its fair value at the date of acquisition. The fair value of the

previously existing equity interest was measured using an

income approach based on estimates of future expected cash

flows applying a risk-adjusted discount rate of 24.5%. Critical

estimates to derive future expected cash flows includes the use

of projected revenues and expenses, applicable tax rates and

depreciation factors with the risk-adjusted discount rate based

upon an estimated weighted average cost of capital for the

acquired business.

No consideration, other than the nonmonetary exchange of our

senior secured term loan, was transferred in connection with the

foreclosure, which resulted in us obtaining 100% ownership of

the outstanding interests of Stratos. In applying acquisition

accounting, we estimated the overall enterprise fair value of

Stratos consistent with the methodology utilized to fair value our

previously existing 49.9% equity interest. The enterprise fair value

was allocated based on the fair values of the acquired assets and

assumed liabilities resulting in a gain of$0.9 million and goodwill

of$5.5 million.

The results of Stratos’ operations have been included in our

Consolidated Statements of Earnings from the date of

acquisition on September 14, 2023.

Foursight

During the second quarter of 2024, we closed the sale of

Foursight and recognized a gain on sale of$24.2 million, which is

included within Other revenues.

Note 5. Fair Value Disclosures

(1)Excludes investments at fair value based on net asset value (“NAV”) of$1.68 billion at November 30, 2025 by level within the fair value hierarchy.

(2)Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.

(1)Excludes investments at fair value based on NAV of$1.25 billion at November 30, 2024 by level within the fair value hierarchy.

(2)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:

Cash and securities segregated and on deposit for regulatory

purposes or deposited with clearing and depository organizations

Segregated 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.

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 and valuation adjustments are not applied..

•Non-Exchange-Traded Equity Securities: Non-exchange-traded

equity securities are measured, where available, 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 the company. 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. 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 may be used. Investment grade corporate

bonds measured using alternative valuation techniques are

categorized within Level 2 or Level 3 of the fair value hierarchy.

•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 pricing data from external pricing

services and broker quotations, 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

•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

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 (“RMBS”):

Agency RMBS include mortgage pass-through securities (fixed

and adjustable rate), collateralized mortgage obligations and

principal-only and interest-only (including inverse interest-only)

securities. Agency RMBS 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 RMBS: The fair value of non-agency RMBS 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.

Commercial Mortgage-Backed Securities

•Agency Commercial Mortgage-Backed Securities (“CMBS”):

Government National Mortgage Association (“Ginnie Mae”)

project loan bonds are measured using recent transactions,

pricing data from external pricing services or discount cash

flow methodologies with 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 (“Fannie Mae”)

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. Ginnie Mae project loan bonds and

Fannie Mae DUS mortgage-backed securities are categorized

within Level 2 of the fair value hierarchy.

•Non-Agency CMBS: Non-agency CMBS 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 CMBS

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 (“ABS”) 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 with similar collateral

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 observable. Price quotations are derived using market

prices for debt securities of the same creditor and estimates of

future cash flows. Future cash flows use assumptions

regarding creditor default and recovery rates, credit rating,

effective yield 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 Ginnie Mae

Project and Construction Loans: Valuations of participation

certificates in Ginnie Mae 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 2 of the fair value hierarchy where

fair value is based on recent observations in the same

receivable. 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.

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 that they are tradeable. Listed derivative contracts

that use 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

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.

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.

Securities Received as Collateral / 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. These financial instruments are typically

categorized within Level 1 of the fair value hierarchy.

Other Secured Financings

Other secured financings that are accounted for at fair value are

classified within Level 2 or Level 3 of the fair value hierarchy. Fair

value is based on estimates of future cash flows incorporating

assumptions regarding recovery rates.

Long-term Debt

Long-term debt includes structured notes where valuation is

linked to the performance of a specific index, a specific equity

security or various interest rate-related features, such as

embedded options (caps, floors, and collars), callable or puttable

provisions, step-up or step-down coupon structures, and floating-

rate components tied to benchmark indices (e.g., SOFR,

EURIBOR). The various valuation models incorporate our 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, otherwise

the notes are categorized within Level 3.

Investments at Fair Value

Investments at fair value includes investments in hedge funds,

private equity funds, credit funds, real estate funds and other

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.

Information about our investments in entities that have the

characteristics of an investment company:

N/R - Not redeemable

(1)Where fair value is calculated based on NAV, fair value has been derived from

each of the funds’ capital statements.

(2)Includes investments in hedge funds that invest, long and short, primarily in

both public and private equity securities in domestic and international

markets, commodities and multi-asset securities.

(3)Includes investments in equity funds that invest in the equity of various U.S.

and foreign private companies in a broad range of industries. 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 approximatelyone tonine years.

(4)Primarily includes investments in funds that invest in:

•Distressed and special situations long/short credit strategies across

sectors and asset types;

•Short-term trade receivables and payables that are expected to generally be

outstanding between 90 to 120 days; and

•Distressed and event-driven opportunities across structured credit,

opportunistic credit, and private credit.

(5)Primarily includes investments in corporate real estate strategies focused on

buying or building real estate businesses.

Level 3 Rollforwards

within Long-term debt are presented net of tax in our Consolidated Statements of Comprehensive Income.

(2)Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives.

November 30, 2025

Transfers of assets of$82.6 million from Level 2 to Level 3 of the

•Loans and other receivables of$28.4 million, CDOs and CLOs

of$20.1 million, corporate equity securities of$17.0 million

and other ABS of$15.4 million due to reduced pricing

Transfers of assets of$178.3 million from Level 3 to Level 2 are

•Loans and other receivables of$63.5 million, corporate equity

securities of$50.8 million, CDOs and CLOs of$45.8 million,

investments at fair value of$11.3 million and other ABS of$5.1

million due to greater pricing transparency.

Transfers of liabilities of$16.0 million from Level 2 to Level 3 of

•Structured notes within long-term debt of$7.2 million, net

derivatives of$5.6 million and loans of$2.3 million due to

reduced pricing and market transparency.

Transfers of liabilities of$39.8 million from Level 3 to Level 2 of

•Structured notes within long-term debt of$32.1 million and net

derivatives of$6.5 million due to greater pricing and market

Netlosses on Level 3 assets were$19.6 million and netlosses

on Level 3 liabilities were$5.7 million for theyear ended

November 30, 2025. Netlosses on Level 3 assets were primarily

due todecreased market values in CDOs and CLOs, corporate

equity securities, other ABS and loans and other receivables,

partially offset by increases in the market values of investments

at fair value and corporate debt securities. Netlosses on Level 3

liabilities were primarily due toincreased market valuations of

certain structured notes within long-term debt and corporate debt

securities, partially offset by decreases in the market valuations

of loans, certain derivatives and other secured financings.

within Long-term debt are presented net of tax in our Consolidated Statements of Comprehensive Income.

(2)Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives.

November 30, 2024

Transfers of assets of$90.5 million from Level 2 to Level 3 of the

•Other ABS of$47.6 million, corporate equity securities of$22.7

million, loans and other receivables of$14.9 million, CDOs and

CLOs of$2.7 million and corporate debt securities of$2.0

million due to reduced pricing transparency.

Transfers of assets of$66.9 million from Level 3 to Level 2 are

•Other ABS of$19.0 million, RMBS of$14.6 million, corporate

equity securities of$9.7 million, CDOs and CLOs of$8.2 million

and loans and other receivables of$8.1 million due to greater

pricing transparency.

Transfers of liabilities of$30.1 million from Level 2 to Level 3 of

•Structured notes within long-term debt of$26.8 million and net

derivatives of$3.1 million due to reduced pricing and market

Transfers of liabilities of$40.4 million from Level 3 to Level 2 of

•Structured notes within long-term debt of$27.8 million and net

derivatives of$13.6 million due to greater pricing and market

Netlosses on Level 3 assets were$52.0 million and netlosses

on Level 3 liabilities were$47.1 million for theyear ended

November 30, 2024. Netlosses on Level 3 assets were primarily

due todecreased market values in loans and other receivables,

other ABS, investments at fair value, CDOs and CLOs, corporate

equity securities and corporate debt securities. Netlosses on

Level 3 liabilities were primarily due toincreased market other

secured financings, partially offset by decreases in certain

derivatives.

within long-term debt are presented net of tax in our Consolidated Statements of Comprehensive Income.

(2)Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased —Derivatives.

November 30, 2023

Transfers of assets of$88.5 million from Level 2 to Level 3 of the

•Other ABS of$57.8 million, loans and other receivables of

$16.5 million, corporate debt securities of$8.9 million and

corporate equity securities of$5.3 million due to reduced price

Transfers of assets of$78.2 million from Level 3 to Level 2 are

•Loans and other receivables of$32.4 million, other ABS of

$24.3 million, CDOs and CLOs of$14.0 million and corporate

equity securities of$6.0 million due to greater pricing

transparency supporting classification into Level 2.

Transfers of liabilities of$60.8 million from Level 2 to Level 3 are

•Net derivatives of$35.6 million and structured notes within

long-term debt of$25.2 million due to reduced pricing and

market transparency.

Transfers of liabilities of$62.0 million from Level 3 to Level 2 are

•Net derivatives of$32.0 million and structured notes within

long-term debt of$29.8 million due to greater pricing

Netgains on Level 3 assets were$38.5 million and netlosses on

Level 3 liabilities were$62.9 million for theyear ended November

30, 2023. Netgains on Level 3 assets were primarily due to

increased market values in investments at fair value, CDOs and

CLOs and loans and other receivables, partially offset by

decreases in corporate equity securities and other ABS. Net

losses on Level 3 liabilities were primarily due toincreased

market valuations of certain structured notes within long-term

debt, partially offset by decreases in certain derivatives.

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 to 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.

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 November 30,

2025 and 2024, asset exclusions consisted of$28.2 million and

$23.9 million, respectively, primarily composed of CDOs and

CLOs, Investments at fair value, certain derivatives, other ABS

and CMBS. At November 30, 2025 and 2024, liability exclusions

consisted of$0.2 million and$2.7 million, respectively, primarily

composed of CMBS, certain derivatives, corporate equity

securities and corporate debt securities.

Uncertainty of Fair Value Measurement from Use of Significant

Unobservable Inputs

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 debt securities,

CDOs and CLOs, loans and other receivables, RMBS, other ABS,

private equity securities, certain derivatives, other secured

financings and structured notes using a market approach

valuation technique. A significant increase (decrease) in the

price of the private equity securities, nonexchange-traded

securities, corporate debt securities, CDOs and CLOs, RMBS,

other ABS, loans and other receivables, other secured

financings and structured notes would result in a significantly

higher (lower) fair value measurement. A significant increase

(decrease) in the revenue or revenue multiple related to private

equity securities would result in a significantly higher (lower)

fair value measurement. A significant increase (decrease) in

the discount rate/security yield related to private equity

securities would result in a significantly lower (higher) 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 options.

•Corporate debt securities, loans and other receivables, other

ABS and other secured financings using a scenario analysis

valuation technique. A significant increase (decrease) in the

possible recovery rates underlying the financial instrument

would result in a significantly higher (lower) fair value

measurement for the financial instrument.

•CDOs and CLOs, corporate debt securities, RMBS and other

ABS using a discounted cash flows 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.

•Corporate equity securities and derivative equity options 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

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 and loan commitments are included in

yet purchased. 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 Investments in and loans to related

parties 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. We have elected the fair value option for certain financial

instruments held by subsidiaries as the investments are risk

managed by us 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 – Brokers,

dealers and clearing organizations, Receivables – Customers,

Receivables – Fees, interest and other, Payables – Brokers,

dealers and clearing organizations and Payables – Customers,

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.

Gains (losses) due to changes in fair value related to instrument-

specific credit risk on loans, other receivables and debt

instruments and gains (losses) due to other changes in fair value

on Long-term debt measured at fair value under the fair value

option:

(1)Changes in fair value of structured notes related to instrument-specific credit

risk are presented net of tax in our Consolidated Statements of

Comprehensive Income.

(2)Other changes in fair value are included in Principal transactions revenues.

Difference between contractual principal and fair value (1):

(1)Amounts indicate contractual principal greater than or (less than) fair value.

(2)Interest income is recognized separately from other changes in fair value and

is included in Interest revenues.

Fair value of loans and other receivables on nonaccrual status:

Assets Measured at Fair Value on a Non-recurring Basis

Certain assets were measured at fair value on a non-recurring

basis and are not included in the tables above. There were no

non-recurring fair value adjustmentsfor the year ended

November 30, 2025. Assets measured at fair value on a non-

recurring basis for which we recognized a non-recurring fair value

adjustment for the periods presented:

(1)Premises and equipment losses represent impairments of leasehold

improvements, furniture, fixtures, computer and communications equipment

and capitalized software and were recognized in Technology and

communications and Occupancy and equipment rental in our Consolidated

(2)These impairment losses, which represent ownership interests in market

exchanges on which trading business is conducted, and registrations, were

recognized in Other expenses and the assets were in the Investment Banking

and Capital Markets reportable business segment. The fair value is based on

observed quoted sales prices for each individual membership.

(3)Our shares in Monashee, an equity method investment, were converted to a

newly created class of nonmarketable preferred shares. Our equity method

investment was remeasured in connection with its nonmonetary exchange

into the preferred shares, which are accounted for at cost pursuant to the

measurement alternative subsequent to the nonmonetary exchange. The gain

was recognized in Other revenues and the asset was in the Asset

Management reportable business segment.

(4)These impairment losses, which are related to an equity method investments,

were recognized in Other revenues and the asset was in the Asset

Management reportable business segment. Fair value was based on our best

estimate of what could be recognized in a sale transaction for the investment.

(5)These impairment losses, which are related to real estate held for

development, were recognized in Other revenues and are held in the Asset

Management reportable business segment. Fair value was based on

estimated future cash flows using discounts rates ranging from 10.0% to

14.0%.

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

We have equity securities without readily determinable fair

values, which we account for at cost, minus impairment, which

are presented within Other assets and were$21.9 million at both

November 30, 2025 and 2024. There wereno net gains or

(losses) recognized on these investments during the years ended

November 30, 2025 and 2024. Net losses of$122.2 million were

recognized on these investments during the year ended

November 30, 2023. Impairments and downward adjustments on

these investments during the year ended November 30, 2023

were$80.3 million. There wereno impairments and downward

adjustments on these investments during the years ended

November 30, 2025 and 2024. These investments would

generally be presented within Level 3 of the fair value hierarchy.

Note 6. Derivative Financial Instruments

Our derivative activities are recorded at fair value in our

Consolidated Statements of Financial Condition in Financial

instruments owned and Financial instruments sold, not yet

purchased, 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. We enter into derivative transactions to satisfy the

needs of our clients and to manage our own exposure to market

and credit risks. 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.

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.

Refer to Note 2, Summary of Significant Accounting Policies for

additional information regarding the offsetting of derivative

contracts.

The following tables also provide information regarding (1) the

extent to which, under enforceable master netting arrangements,

such balances are presented net in our Consolidated Statements

of Financial Condition as appropriate under U.S. 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.

The fair value of assets/liabilities in the following tables

represent our receivable/payable for derivative financial

instruments, gross of counterparty netting and cash collateral

received and pledged.

(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)The number of exchange-traded contracts may include open futures

contracts. The unsettled fair value of these futures contracts is included in

Receivables from/Payables to brokers, dealers and clearing organizations.

(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 our Consolidated Statements of

Financial Condition.

(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)The number of exchange-traded contracts may include open futures

contracts. The unsettled fair value of these futures contracts is included in

Receivables from/Payables to brokers, dealers and clearing organizations.

(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 our Consolidated Statements of

Financial Condition.

Gains (losses) recognized in Interest expense related to fair value

hedges:

(1)Includes net settlements of$(48.0) million,$(62.3) million and$(55.6) million

for the years ended November 30, 2025,2024 and 2023, respectively.

Gains (losses) on our net investment hedges recognized in

Currency translation and other adjustments, a component of

Other comprehensive income (loss), in our Consolidated

Statements of Comprehensive Income:

Unrealized and realized gains (losses) on derivative contracts

recognized primarily in Principal transactions revenues, which are

utilized in connection with our client activities and our economic

risk management activities:

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

Remaining contract maturities at November 30, 2025:

(1)At November 30, 2025, we held net exchange-traded derivative assets and

liabilities and other credit agreements with a fair value of$1.18 billion and

$555.8 million, respectively, which are not included in these tables.

(2)OTC derivative assets and liabilities in the tables above are gross of collateral

pledged. OTC derivative assets and liabilities are recorded net of collateral

pledged in our Consolidated Statements of Financial Condition. At

November 30, 2025, cash collateral received and pledged was$308.5 million

and$587.9 million, respectively.

(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.

Counterparty credit quality with respect to the fair value of our

OTC derivative assets at November 30, 2025:

(1)We utilize internal credit ratings determined by our Risk Management

department. Credit ratings determined by Risk Management use

methodologies that produce ratings generally consistent with those produced

by external rating agencies.

Credit Related Derivative Contracts

External credit ratings of the underlyings or referenced assets for

our written credit related derivative contracts:

Contingent Features

Certain derivative instruments contain provisions that require us

to either post additional collateral or immediately settle any

outstanding liability balances upon a specific event related to our

credit, primarily downgrades in our credit ratings. The following

table presents the aggregate fair value of all derivative

instruments with such credit-risk-related contingent features that

are in a net liability position, the collateral amounts we have

posted or received in the normal course of business and the

potential collateral we could have been required to return and/or

post additionally to our counterparties if the credit-risk-related

contingent features underlying these agreements were triggered:

(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.

Note 7. Collateralized Transactions

Our repurchase agreements and securities borrowing and lending

arrangements are generally recorded at cost in our 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 our dealer

operations. We monitor the fair value of the securities loaned and

borrowed on a daily basis as compared to 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 our 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 our Consolidated Statements of Financial Condition.

We receive securities as collateral under resale agreements,

securities borrowing transactions, customer margin loans, and in

connection with securities-for-securities transactions in which we

are the lender of securities. We also receive securities as initial

margin on certain derivative transactions. 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 November 30, 2025 and

2024, the approximate fair value of securities received as

collateral by us that may be sold or repledged was$49.68 billion

and$37.63 billion, respectively. At November 30, 2025 and 2024,

a substantial portion of the securities received by us had been

sold or repledged.

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 tables provide 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 our Consolidated Statements of Financial Condition and (1) the extent to which, under enforceable master netting arrangements,

such balances are presented net in our Consolidated Statements of Financial Condition as appropriate under U.S.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.

(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 our Consolidated Statements of Financial Condition because other netting provisions of U.S. 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)Includes$5.81 billion of securities borrowing arrangements, for which we have received securities collateral of$5.69 billion, and$670.0 million of repurchase

agreements, for which we have pledged securities collateral of$688.0 million, which are subject to master netting agreements, but we have not determined the

agreements to be legally enforceable.

(4)Includes$5.31 billion of securities borrowing arrangements, for which we have received securities collateral of$5.19 billion, and$645.0 million of repurchase

agreements, for which we have pledged securities collateral of$656.9 million, which are subject to master netting agreements, but we have not determined the

agreements to be legally enforceable.

Note 8. 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 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 VIEs; however, we generally do not

consolidate the SPEs as we are not considered the primary

beneficiary for these SPEs. Refer to Note 9, Variable Interest

Entities for further discussion on VIEs and our determination of

the primary beneficiary.

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 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 and are generally initially

categorized as Level 2 within the fair value hierarchy.

Securitizations that were accounted for as sales in which we had

continuing involvement:

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

November 30, 2025 and 2024.

Our retained interests in SPEs where we transferred assets and

have continuing involvement and received sale accounting

treatment:

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 in our Consolidated Statements of Financial

Condition.

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 9, Variable

Interest Entities.

If we have not relinquished control over the transferred assets,

the assets continue to be recognized in Financial instruments

owned and a corresponding liability is recognized in Other

secured financings. The carrying value of assets and liabilities at

November 30, 2025 resulting from transfers of financial assets

treated as secured financings was$456.1 million and$456.1

million, respectively. The related liabilities do not have recourse

to our general credit.

Note 9. 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,

commitments, guarantees and certain fees. Our involvement with

VIEs arises primarily from:

•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.

Consolidated VIEs:

(1)Assets and liabilities are presented prior to consolidation and thus a portion of

these assets and liabilities are eliminated in consolidation.

(2)Securities purchased under agreements to resell primarily represent amounts

due under collateralized transactions on related consolidated entities, all of

which are eliminated in consolidation.

(3)Includes$0.5 million and$1.5 million at November 30, 2025 and 2024,

(4)Includes$3.4 million and$3.4 million at November 30, 2025 and 2024,

(5)Includes$780.5 million and$719.0 million at November 30, 2025 and 2024,

(6)Includes$84.0 million and$22.0 million at November 30, 2025 and 2024,

Secured Funding Vehicles. We sell agency and non-agency

residential and commercial mortgage loans, and asset-backed

securities to asset-backed financing vehicles 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, 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. We also from time to time

securitize other financial instruments and own variable interests

in other securitization vehicles.

Other. We manage investment vehicles for external investors and

for the benefit of our employees and we may also hold a

controlling financial interest in investment vehicles managed by

third parties. The assets of these VIEs consist primarily of equity

securities and broker receivables. Our variable interests in these

vehicles consist of equity securities, management and

performance fees and revenue share arrangements. 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.

We are the primary beneficiary of a real estate syndication entity

that develops multi-family residential property and manages the

property. The assets of the VIE consist primarily of real estate

and its liabilities primarily consist of accrued expenses and long-

term debt secured by the real estate property. Our variable

interest in the VIE primarily consists of our limited liability

company interest, a sponsor promote and development and

asset management fees for managing the project.

We are the primary beneficiaryof special purpose vehicles that

hold risk retention notes issued as part of unsecured loan asset-

backed transactions. Our variable interest in the VIEs primarily

consists of our ownership of certificates issued by the VIEs.

Nonconsolidated VIEs

Maximum Disclosure to Loss

Maximum exposure to loss represents the total of the carrying

value of our on-balance sheet interests in the unconsolidated

VIEs and the notional amount of any unfunded off-balance sheet

arrangements with the unconsolidated VIEs. With respect to

CLOs and asset-backed vehicles, the off-balance sheet

arrangements typically represent the undrawn notional amount of

arrangements to finance the acquisition of assets during the

warehousing and pre-closing phase of the vehicles. The

maximum exposure to loss is based on the unlikely event that all

of the assets in the VIEs become worthless and incorporates not

only potential losses associated with the carrying amounts of

assets recognized on the Consolidated Statements of Financial

Condition but also potential losses associated with unfunded

commitments and other contractual arrangements. The

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 is not reduced by

the amount of collateral held as part of a transaction with a VIE

and does not consider any executed forward sale agreements

where we have committed to sell ownership interests in any of

the investment vehicles.

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

where we have been involved in providing underwriting and/or

advisory services include:

•Forward sale agreements whereby we commit to sell, at a fixed

price, corporate loans and ownership interests in a CLO;

•Warehouse funding arrangements in the form of:

◦Participation interests in corporate loans and commitments

to fund such participation interests;

◦Reverse repurchase agreements and commitments to fund

such reverse repurchase agreements;

◦Variable funding notes; and

◦Senior and subordinated notes issued in connection with

CLO warehousing activities.

•Trading positions in securities issued in CLO transactions.

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. We

also may transfer originated corporate loans to certain VIEs and

hold subordinated interests issued by the vehicle. The underlying

assets, which are collateralizing the vehicles, are primarily

composed of unsecured consumer loans, mortgage loans and

corporate loans. 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 have committed to

invest in private equity funds, (the “JCP Funds”, including JCP

Fund V (refer to Note 10, Investments for further information))

managed by Jefferies Capital Partners, LLC (the “JCP Manager”).

Additionally, we have committed to invest in the general partners

of the JCP Funds (the “JCP General Partners”) and the JCP

Manager. Our variable interests 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 November 30, 2025 and

2024, ourremaining equity commitment in the JCP Entities was

9.7 million and 9.8 million, respectively. At November 30, 2025

and 2024, we also had remaining commitments of$0.4 million

and 0.5 million, respectively, to a private equity fund managed by

us for the benefit of our employees. The carrying value of our

collective equity interests were$3.4 million and$3.7 million at

November 30, 2025 and 2024, respectively. Our exposure to loss

is limited to the total of our carrying value and unfunded equity

commitment. The assets of the vehicles primarily consist of

private equity and equity related investments.

Other Investment Vehicles. At November 30, 2025 and 2024, our

remaining equity commitment in various other investment

vehicles was$282.2 million and$258.0 million, respectively. The

carrying value of our equity investments was$1.72 billion and

$1.11 billion at November 30, 2025 and 2024, 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,

various oil and gas assets and energy tax credits.

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, automobile loans and student loans.

These securities are accounted for at fair value and included in

Financial instruments owned. 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 (Fannie Mae, Federal Home Loan Mortgage

Corporation (“Freddie Mac”) or 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

automobile 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 November 30, 2025 and 2024, we held$1.06 billion and$1.84

billion of agency mortgage-backed securities, respectively, and

$156.3 million and$201.1 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.

Note 10. Investments

Investments for which we exercise significant influence over the

investee are accounted for under the equity method of

accounting with our shares of the investees’ earnings recognized

in Other revenues. Equity method investments, including any

loans to the investees, are reported within Investments in and

loans to related parties.

The following presents summarized financial information about

our significant equity method investees. For certain investees, we

receive financial information on a lag and the summarized

information provided for these investees is based on the latest

financial information available as of November 30, 2025,2024

and 2023, respectively.

Jefferies Finance

Jefferies Finance, our 50/50 joint venture with Massachusetts

Mutual Life Insurance Company (“MassMutual”) structures,

underwrites and syndicates primarily senior secured loans to

corporate borrowers; and manages proprietary and third-party

investments in both broadly syndicated and direct lending loans.

In connection with its Leveraged Finance business, loans are

originated primarily through our investment banking efforts and

Jefferies Finance typically syndicates to third-party investors

substantially all of its arranged volume through us. The Asset

Management business is a multi-strategy private credit platform

that manages proprietary and third-party capital across various

types of investment vehicles. Broadly syndicated loan

investments are sourced through transactions arranged by

Jefferies Finance and third-party arrangers and managed through

its subsidiary, Apex Credit Partners LLC. Direct lending

investments are primarily sourced through us. Jefferies Finance

and its subsidiaries that are involved in investment management

are registered investment advisers with the SEC.

At November 30, 2025, we and MassMutual each had equity

commitments to Jefferies Finance of$750.0 million, for a

combined total commitment of$1.5 billion. The equity

commitment is reduced quarterly based on our share of any

undistributed earnings from Jefferies Finance and the

commitment is increased only to the extent the share of such

earnings are distributed. At November 30, 2025, our remaining

commitment to Jefferies Finance was$15.4 million. The

investment commitment is scheduled to expire on March 1, 2026

with automaticone year extensions absent a 60 day termination

notice by either party.

Jefferies Finance has executed a secured revolving credit facility

with us 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 facility is a committed amount

of$500.0 million at November 30, 2025. Advances are shared

equally between us and MassMutual. The facility is scheduled to

mature on March 1, 2026 with automaticone year extensions

absent a 60 day termination notice by either party. At

November 30, 2025, our$250.0 million commitment was

undrawn.

Activity related to the facility:

Selected financial information for Jefferies Finance:

Activity related to our other transactions with Jefferies Finance:

(1)We engage in the origination and syndication of loans underwritten by

Jefferies Finance. In connection with such services, we earn fees, which are

recognized in Investment banking revenues. In addition, we pay fees to

Jefferies Finance in respect of certain loans originated by Jefferies Finance,

which are recognized as Business development expenses.

(2)We act as a placement and/or structuring agent for CLOs managed by

Jefferies Finance, which are recognized as fees and included in Investment

(3)We act as a placement agent for investment funds managed by Jefferies

Finance, which are recognized as fees and included in Commissions and other

fees.

(4)Under a fee and revenue sharing agreement with Jefferies Finance, we receive

fees, which are included in Asset management fees and revenues.

(5)We act as underwriter in connection with term loans issued by Jefferies

Finance. The fees are included in Investment banking revenues.

(6)Under a service agreement, we charge Jefferies Finance for various

administrative services provided.

Additional balances with Jefferies Finance as reported in our

Consolidated Statements of Financial Condition.

(1)In connection with our capital markets activities, from time to time we make a

market in long-term debt securities and term loans of Jefferies Finance (i.e.,

we buy and sell debt securities and tern loans of Jefferies Finance).

(2)Receivable for services and certain fees from Jefferies Finance.

(3)Cash collateral, net, received from Jefferies Finance on OTC foreign currency

derivatives.

(4)Payable to Jefferies Finance in connection with loans originated by Jefferies

Finance to borrowers who are investment banking clients of ours. We have

also entered into an agreement toindemnify Jefferies Finance with respect to

any foreign currency exposure on these loans.

Berkadia

Berkadia is a commercial real estate finance and investment

sales joint venture that was formed by us and Berkshire

Hathaway Inc. We are entitled to receive 45.0% of the profits of

Berkadia. Berkadia originates commercial and multifamily real

estate loans that are sold to U.S. government agencies or other

investors with Berkadia retaining the servicing rights. Berkadia

also provides advisory services in connection with sales of

multifamily assets. 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 and

financial services companies.

Commercial paper issued by Berkadia is supported by a

$1.50 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 November 30, 2025, the aggregate

amount of commercial paper outstanding was$1.47 billion.

Selected financial information for Berkadia:

At November 30, 2025 and 2024, we had commitments to

purchase$13.6 million and$21.8 million, respectively, of agency

CMBS from Berkadia.

Activity related to our other transactions with Berkadia:

(1)We refer Berkadia to our clients to act as a transaction servicer and receive

fees, which are included in Commissions and other fees.

(2)We pay fees to Berkadia for loan originations and realty sales. Loan origination

fees are capitalized as debt issuance costs and amortized over the life of the

loan. Realty sales commissions are included in Cost of sales.

Real Estate Investments

Our real estate equity method investments primarily consist of

our equity interests in Brooklyn Renaissance Plaza and Hotel and

54 Madison.

Brooklyn Renaissance Plaza is composed of a hotel, office

building complex and parking garage located in Brooklyn, New

York. We have a 25.4% equity interest in the hotel and a 61.3%

equity interest in the office building and garage. Although we

have a majority interest in the office building and garage, we do

not have control, but only have the ability to exercise significant

influence on this investment. 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 a 48.1% equity interest in 54 Madison, a fund that most

recently owned an interest in one real estate project and is in the

process of being liquidated.

Selected financial information for the real estate investments:

JCP Fund V

We have limited partnership interestsof 11% and 50% in Jefferies

Capital Partners V L.P. and Jefferies SBI USA Fund L.P. (together,

“JCP Fund V”), respectively, which are private equity funds

managed by a team led by our President and which are in the

process of being fully liquidated. The amount of our investments

in JCP Fund V included in Financial instruments owned, at fair

value was$2.8 million and$2.9 million at November 30, 2025

and 2024, respectively. We account for these investments at fair

value based on the NAV of the funds provided by the fund

managers. The following summarizes the results from these

investments which are included in Principal transactions

revenues:

At both November 30, 2025 and 2024, our unfunded commitment

relating to JCP Fund V was$8.7 million. We do not expect any

further capital to be called by JCP Fund V.

Selected financial information for 100.0% of JCP Fund V, in which

we own effectively 35.1% of the combined equity interests:

(1)Financial information for JCP Fund V included in our financial position at

November 30, 2025 and 2024 and our results of operations for the years

ended November 30, 2025,2024 and 2023 is based on the periods presented.

Hildene

In July 2024, we invested$25.0 million in the Class A Common

Equity Units of Hildene Insurance Holdings, LLC (“Hildene

Insurance,” an investment fund with insurance exposures. On

March 1, 2025, we made an additional investment of

$75.0 million in Hildene Insurance, which resulted in an increase

of our effective ownership from 8.8% to 23.5%. The investment is

accounted for under the equity method with a carrying amount of

$113.8 million and$27.5 million at November 30, 2025 and 2024,

Selected financial information for 100.0% of Hildene Insurance:

(1)Financial information for Hildene Insurance included in our financial position

at November 30, 2025 and 2024 and results of operations for the year ended

November 30, 2025 is based on the periods presented.

On December 9, 2025, we entered into an agreement to acquire a

50% interest in Hildene Holding Company, LLC, parent of Hildene

Capital Management, LLC, a credit-focused asset manager and

the parent of Hildene Insurance. We will contribute our existing

revenue share, a portion of our interest in a Hildene-managed

fund, and$340.0 million in cash. Hildene’s principals will

contribute their ownership interests and approximately

$250.0 million of the fund and related equity interests. Closing is

expected in the third quarter of 2026, subject to customary

approvals.

Monashee

We had an equity method investment with a carrying amount of

$15.8 million at November 30, 2023, consisting of shares in

Monashee, an investment management company, registered

investment advisor and general partner of various investment

management funds, which provided us with 50.0% voting rights

interest and the rights to distributions of 47.5% of the annual net

profits of Monashee’s operations if certain thresholds were met.

During the three months ended February 29, 2024, our shares

were converted to preferred shares, which provide us with rights

to be paid dividends based on Monashee’s performance and

management fees, and we recognized a gain of$6.0 million upon

the nonmonetary exchange. In addition, we invested$5.2 million

in mandatorily redeemable preferred shares issued by Monashee.

The investment in the preferred shares is accounted for at cost,

less impairment, if any. The investment in the mandatorily

redeemable preferred shares is accounted for at fair value.

We also had an investment management agreement whereby

Monashee provides asset management services to us for certain

separately managed accounts.

Activity related to these separately managed accounts:

(1)Included in Principal transactions revenues.

(2)Included in Floor brokerage and clearing fees.

ApiJect

We own shares which represent a 33.6% economic interest in

ApiJect at November 30, 2025 and 2024, which are accounted for

at fair value by electing the fair value option available under U.S.

GAAP, and are included within corporate equity securities in

Financial instruments owned, at fair value. At November 30, 2025

and 2024, the total fair value of our total equity investment in

common shares of ApiJect was$97.9 million and$116.1 million,

respectively, which is classified within Level 3 of the fair value

hierarchy. Additionally, we own warrants to purchase up to

950,000 shares of common stock at any time or from time to

time on or before April 15, 2032.

During the year ended November 30, 2025, we recognized a

valuation loss of$18.2 million and$0.2 million on our ApiJect

common shares and warrants, respectively.

We recognized interest income of$0.2 million on the two

convertible promissory notes during the year ended 2024. During

the year ended 2024, we recognized a gain of$1.2 million,

relating to the conversion of the notes.

We also have a term loan agreement with a principal of ApiJect

for$23.3 million, which matures on January 31, 2026. The loan is

accounted for at amortized cost and reported within Other

assets. The loan had a fair value of$23.3 million and

$23.3 million at November 30, 2025 and 2024, respectively, which

would be classified as Level 3 in the fair value hierarchy.

In December 2025, we purchased two secured convertible

promissory notes totaling$9.8 million from ApiJect.

SPAC

Prior to May 2024, we owned 73.4% of the publicly traded units of

a special purpose acquisition company (“SPAC”), which

represented 25.7% of its voting shares. We considered the SPAC

a VIE and had significant influence over the SPAC but were not

considered to be the primary beneficiary as we did not have

control. Our investment was accounted for at fair value pursuant

to the fair value option and was included within corporate equity

securities in Financial instruments owned. In May 2024, the

company redeemed all of its outstanding units issued in its initial

public offering, and our investment in the SPAC was redeemed in

cash for approximately$24.3 million.

Stratos

We had a 49.9% voting interest in Stratos and had the ability to

significantly influence Stratos through our seats on the board of

directors. On September 14, 2023, we acquired the additional

50.1% voting interest in Stratos (refer to Note 4, Business

Acquisitions and Discontinued Operations for further

information). As a result, the financial statements of Stratos are

consolidated into our consolidated financial statements. During

2023, prior to the acquisition, we contributed additional capital of

$20.0 million.

Selected financial information for Stratos:

(1) Represents the period prior to the step-acquisition.

Aircadia

In December 2023, Aircadia Leasing II LLC (“Aircadia”), a wholly

owned subsidiary, purchased airplanes and simultaneously

entered into a lease with the seller to lease the airplanes for a

term of 42 months. The transaction was accounted for as a sale

leaseback and the airplanes were recognized within Premises

and equipment at$57.7 million.

Also in December 2023, we provided a loan to the seller for

$30.0 million, which was paid off on April 1, 2025. The loan was

accounted for at amortized cost and included within Investments

in and loans to related parties. We recognized interest income of

$1.0 million and$3.1 million during the year ended November 30,

2025 and 2024, respectively. We also hold preferred shares in the

seller, which are accounted for at fair value in Financial

instruments owned with a fair value of$43.2 million and$37.1

million at November 30, 2025 and 2024, respectively, and are

classified within Level 3 of the fair value hierarchy.

In September 2024, we provided a€15.0 million loan, maturing in

May 15, 2026, to an individual related to the seller, secured by a

privately owned aircraft and guaranteed by the individual. We

recognized interest income of$2.0 million during the year ended

November 30, 2025.

During 2024, we classified the airplanes related to the sale

leaseback transaction as held for sale. Effective with the

designation of the airplanes as held for sale, we suspended

recording depreciation on these assets. The airplanes were

included within Assets held for sale on our Consolidated

Statements of Financial Condition and had a carrying amount of

$51.9 million at November 30, 2024. During the second quarter of

2025, we agreed to sell the airplanes and we recognized a loss of

$12.8 million during the three months ended May 31, 2025. The

sale closed in the third quarter of 2025.

OpNet

On November 30, 2023, we provided notice of our intent to

convert certain classes of our preferred shares into common

shares. As a result, we obtained control of OpNet and

consolidated its assets and liabilities in our consolidated

financial statements as of November 30, 2023. Upon conversion

on May 7, 2024, our ownership increased to 57.5% of the

common shares and our voting rights increased to 72.6% of the

aggregate voting rights of OpNet. From the time we obtained

control of OpNet to its sale in August 2024, its wholesale

business was considered a VIE and classified as held for sale.

We also consolidate Tessellis, a subsidiary of OpNet, which is not

considered to be a VIE. Refer to Note 4, Business Acquisitions for

further information. Prior to the acquisition and consolidation of

OpNet, we accounted for our equity investment in OpNet under

the equity method.

We recognized equity method pickup losses of$254.1 million for

the year ended November 30, 2023 in Other revenues.

During the year ended November 30, 2023, we contributed

$167.2 million to OpNet through direct subscription, settlement

of subscription advances and the conversion of a shareholder

loan.

Selected financial information for OpNet:

Golden Queen Mining Company LLC

We had a 50.0% ownership interest in Golden Queen, which owns

and operates a gold and silver mine project located in California.

We sold our interest in Golden Queen in November 2023. During

the year ended 2023, we recognized impairment charges of

$57.2 million on our investment within Other revenues. We sold

our interest in Golden Queen in November 2023 and recognized a

gain of$1.7 million.

Selected financial information for Golden Queen:

Note 11. Credit Losses on Financial Assets Measured at

Amortized Cost

Secured Financing Receivables. 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 our secured financing receivables requires that

the counterparty continually adjust the collateralization amount,

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. 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.

Broker Receivables. 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 and receivables and

payables for fees and commissions. 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.

Investment Banking Fee Receivables. Our allowance for credit

losses on our investment banking fee receivables uses a

provisioning matrix based on the shared risk characteristics and

historical loss experience for such receivables. In some

instances, we may adjust the allowance calculated based on the

provision matrix to incorporate a specific allowance based on the

unique credit risk profile of a receivable. The provisioning matrix

is periodically updated to reflect changes in the underlying

portfolio’s credit characteristics and most recent historical loss

data.

Allowance for credit losses for investment banking receivables:

(1)Substantially all of the allowance for doubtful accounts relate to mergers and

acquisitions and restructuring fee receivables, which include recoverable

expense receivables.

Other Financial Assets. 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. During theyear ended

November 30, 2024, we recognized bad debt expense of

$26.2 million related to receivables associated with our asset

management arrangements with Weiss Multi-Strategy Advisers.

Note 12. Goodwill and Intangible Assets

Goodwill

(1)Relates to a measurement period adjustment recorded during the second

quarter of 2025 attributable to the Go Internet acquisition. Refer to Note 4,

Business Acquisitions and Discontinued Operations for further discussion.

(1)Includes a$27.0 million measurement period adjustment recorded during the

first quarter of 2024 related to the OpNet acquisition. Refer to Note 4,

Business Acquisitions and Discontinued Operations for further discussion.

Carrying values of goodwill by reporting unit:

Goodwill Impairment Testing

The goodwill impairment test is performed at the level of the

reporting unit. A reporting unit is an operating segment or one

level below an operating segment. The fair value of each

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, then an impairment loss is recognized for the

amount by which the carrying value of the reporting unit exceeds

the reporting unit’s fair value.

We test goodwill allocated to our Investment Banking, Equities,

Fixed Income and Asset Management reporting units annually on

August 1 and test goodwill allocated to other individual reporting

units annually on November 30. Our annual goodwill impairment

testing at August 1, 2025 did not indicate any goodwill

impairment in any of our Investment Banking, Equities and Fixed

Income reporting units, which are part of our Investment Banking

and Capital Markets reportable segment and did not indicate any

goodwill impairment in our Asset Management reporting unit. Our

annual goodwill impairment testing of our other individual

reporting units did not indicate any goodwill impairment.

For our reporting units that are part of our Investment Banking

and Capital Markets and Asset Management reportable

segments, we generally perform a quantitative assessment,

which involves a quantitative calculation to estimate the fair

value of a reporting unit. Estimating the fair value of a reporting

unit requires management judgment. Estimated fair values for

our reporting units were determined using methodologies that

include a market valuation method that incorporated price-to-

earnings and price-to-book multiples of comparable public

companies and/or projected cash flows. Under the market

valuation approach, the key assumptions are the selected

multiples and our internally developed projections of future

profitability, growth and return on equity for each reporting unit.

The weight assigned to the multiples requires judgment in

qualitatively and quantitatively evaluating the size, profitability

and the nature of the business activities of the reporting units as

compared to the comparable publicly-traded companies. In

addition, as the fair values determined under the market valuation

approach represent a noncontrolling interest, we applied a

control premium to arrive at the estimated fair value of each

reporting unit on a controlling basis. We engaged an independent

valuation specialist to assist us in our quantitative valuation

process at August 1.

Intangible Assets

Intangible assets are included in Other assets.

(1)Includes a$39.3 million measurement period adjustment recorded during the

first quarter of 2024 related to the OpNet acquisition. Refer to Note 4,

Business Acquisitions and Discontinued Operations for further information.

At August 1,2025, we performed our annual impairment testing

of intangible assets with an indefinite useful life consisting of

exchange and clearing organization membership interests and

registrations. 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, there were no impairment 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

more likely than not that the intangible assets are not impaired.

Amortization Expense

For finite life intangible assets, we recognized aggregate

amortization expense of$33.5 million,$30.3 million and$9.3

million for the years ended November 30, 2025,2024 and 2023,

respectively. These expenses are included in Depreciation and

amortization.

Estimated future amortization expense:

Note 13. Revenues from Contracts with Customers

Revenue from contracts with customers is 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 (i.e., 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:

•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 Accrued expenses and other liabilities. 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 is 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 our Consolidated Statements of Earnings

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 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 as we are

acting as a principal in the arrangement. Any expenses

reimbursed by our clients are recognized as Investment

•Commissions and Other Fees. We earn commission and other

fee revenue by executing, settling and clearing transactions for

clients primarily in equity, equity-related and futures products

and facilitating foreign currency spot transactions. 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. Commissions 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 our Consolidated Statements

of Earnings. 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 Accrued expenses

and other liabilities. Distribution fees are variable and

recognized when the uncertainties with respect to the amounts

are resolved.

•Asset Management Fees. We earn management and

performance fees 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.

•Real Estate Revenues. Revenues from the sales of real estate

are recognized at a point in time when the related transaction

is complete. The majority of our real estate sales of land, lots

and homes transfer the goods and services to the customer at

the close of escrow when the title transfers to the buyer and

the buyer has the benefit and control of the goods and service.

If the performance obligation under the contract with a

customer related to a parcel of real estate is not yet complete

when title transfers to the buyer, revenue associated with the

incomplete performance obligation is deferred until the

performance obligation is completed.

•Internet Connection and Broadband Revenues. Revenues

associated with internet connection and mobile voice services

provided to customers are recognized based on the volume of

service provided as of a given date and the related service

charge. Revenues from the activation of broadband services

are recognized on a straight-line basis over a period of 24

months. Amounts received in advance are deferred and

recognized into revenue over the 24 month service period.

Disaggregation of Revenue

(1)Revenues from contracts with customers associated with the equities and

fixed income businesses primarily represent commissions and other fee

revenue.

Refer to Note 22, Segment Reporting, for a further discussion on

the allocation of revenues to geographic regions.

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 November 30, 2025. 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.

For the years ended November 30, 2025,2024, and 2023, we

recognized$85.0 million,$41.0 million and$38.1 million,

respectively, of revenue 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$32.4

million,$32.1 million, and$31.5 million of revenues primarily

associated with distribution services for the years ended

November 30, 2025,2024, and 2023, respectively, a portion of

which relates to prior periods.

Contract Balances

The timing of our revenue recognition may differ from the timing

of payment by our customers. We record a receivable when

revenue is recognized prior to payment and we have an

unconditional right to payment. Alternatively, when payment

precedes the provision of the related services, we record deferred

revenue until the performance obligations are satisfied.

Our deferred revenue primarily relates to retainer and milestone

fees received in investment banking advisory engagements

where the performance obligation has not yet been satisfied.

Deferred revenue at November 30, 2025 and 2024 was$92.3

million and$79.1 million, respectively, which is recorded in

Accrued expenses and other liabilities. For the years ended

November 30, 2025,2024, and 2023, we recognized revenues of

$54.1 million,$34.6 million, and$22.7 million, respectively, that

were recorded as deferred revenue at the beginning of the

periods.

We had receivables related to revenues from contracts with

customers of$396.8 million and$275.9 million at November 30,

2025 and 2024, respectively.

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 November 30, 2025 and 2024, capitalized costs to fulfill a

contract were$5.2 million and$5.8 million, respectively, which

are recorded in Receivables – Fees, interest and other. For the

years ended November 30, 2025,2024, and 2023, we recognized

expenses of$2.1 million,$3.6 million, and$1.8 million,

respectively, related to costs to fulfill a contract that were

capitalized as of the beginning of the year. There were no

significant impairment charges recognized in relation to these

capitalized costs for the years ended November 30, 2025,2024,

and 2023.

Note 14. Compensation Plans

Equity Compensation Plan

Our amended and restated Equity Compensation Plan (the “ECP”)

was approved by shareholders on March 28, 2024. The ECP

replaced our 2003 Incentive Compensation Plan, as Amended

and Restated (the “Incentive Plan”) and the 1999 Directors’ Stock

Compensation Plan, as Amended and Restated July 25, 2013.

The ECP is an omnibus plan authorizing a variety of equity award

types, as well as cash incentive awards, to be used for

employees, non-employee directors and other service providers.

At November 30, 2025,11.3 million shares remain available for

new grants under the ECP.

Restricted stock awards are grants of our common shares that

generally require service as a condition of vesting. RSUs give a

participant the right to receive shares if service or performance

conditions are met and may specify an additional deferral period

allowing a participant to hold an interest tied to common stock

on a tax deferred basis. Prior to settlement, RSUs carry no voting

or dividend rights associated with stock ownership, but dividend

equivalents are accrued to the extent there are dividends

declared on the underlying common shares.

Restricted stock and RSUs may be granted to new employees as

“sign-on” awards and to existing employees as either “retention”

awards or pursuant to regulatory requirements outside the U.S.

governing remuneration for certain employees. Restricted stock

and RSUs are also granted to certain senior executive officers as

incentive awards. Employee awards are generally subject to

annual ratable vesting over a multi-year service period and may

also contain performance conditions. Restricted stock and RSUs

granted to certain senior executives may contain market,

performance and/or 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 conditions are

not met. Awards with performance conditions are amortized over

the service period if, and to the extent, it is determined to be

probable that the performance condition will be achieved. If

awards are forfeited due to failure to achieve performance

conditions or failure to satisfy service conditions, any previously

recognized expense for such awards is reversed.

Senior Executive Compensation

In December 2021, the Board of Directors granted our senior

executives each a special long-term, five-year retention grant,

termed the Leadership Continuity Grant, with a grant date fair

value of$25.0 million. Our senior executives will gain the benefits

of the retention award after an additional three-year holding

period following thefive-year service period.

The senior executives also hold previously awarded stock

options of 2,506,266 stock options, with an exercise price of

$23.75, which include rights to “excess dividend

equivalents,” (each share subject to the option is entitled totwo

times the amount of any regular quarterly cash dividend paid in

the 9.5 years after grant to the extent the per share dividend

exceeds the quarterly dividend rate in effect at the time of grant

with the dividend equivalent amount converted to non-forfeitable

share units at the dividend payment date.

In connection with our spin-off of Vitesse Energy, Inc. in January

2023, the options and related dividend equivalent rights were

adjusted, resulting in each senior executive holding 2,532,370

Jefferies options exercisable at$22.69 per share and 228,933

Vitesse options exercisable at$8.97 per share, with

corresponding adjustments such that Vitesse regular quarterly

cash dividends relating to shares underlying the Vitesse options

are taken into consideration in the calculation of the excess

dividend equivalents. The stock options became or become

exercisable inthree equal annual tranches beginning December

6, 2021, with a final expiration date of December 5, 2030. At

November 30, 2025, stock options of 5,064,740 were outstanding

and exercisable.

Additionally, in connection with our spin-off of Vitesse Energy,

Inc. shares, we adjusted certain outstanding equity awards to

include like awards for the acquisition of Vitesse common stock

(“Vitesse Awards”). Vesting terms, exercise dates and expiration

dates of the resulting Vitesse Awards and Vitesse options are the

same as those terms of the related Jefferies awards. For those

Vitesse Awards that remain subject to performance or service-

based vesting requirements, we continue to recognize expense

based on the original grant-date fair value and any incremental

fair value resulting from modifications of awards. In fiscal 2023,

$4.0 million of incremental compensation expense was

recognized for these modifications connection with the

adjustments relating to the Vitesse spin-off.

In addition, the Compensation Committee has granted RSUs and

performance stock units (“PSUs”) to each of our senior

executives as follows:

(1)ROTE is defined as return on tangible equity measured over three years.

(2)Performance below an ROTE of 7.5% results in forfeiture of all PSUs. An ROTE

of 15% or greater results in earning 150% of target PSUs and between 7.5% to

15% , the level of earning PSUs is linearly interpolated.

The following reflects activity in restricted stock, inclusive across

all plans:

The following reflects activity in total RSUs, excluding RSUs

related to senior executive compensation that contain

performance conditions:

(1)Fulfillment of vesting requirement during the years ended November 30, 2025,

2024 and 2023, includes RSUs of 716,000,0, and 2,438,000, respectively,

related to senior executive compensation.

The following reflects activity solely relatedto the portions of

RSUs related to senior executive compensation that contain

performance conditions:

During the years ended November 30, 2025,2024 and 2023,

grants are shown with the targeted number of shares.

In December 2025, the Compensation Committee of our Board of

Directors approved a total of 200,215 PSUs relating to the

December 2023 award based on actual performance from fiscal

2023 to 2025. As a result,46,355 PSUs were forfeited by senior

executives due to achieving actual performance below the

targeted number of shares.

Employee Stock Purchase Plan

An Employee Stock Purchase Plan (the “ESPP”) has been

implemented under both the prior Incentive Plan and the ECP. We

consider the ESPP to be noncompensatory effective January 1,

2007. The ESPP allows eligible employees to make payroll

contributions that are used to acquire shares of our stock,

generally at a discounted price.

Deferred Compensation Plan

A Deferred Compensation Plan (the “DCP”), which permits eligible

employees to defer compensation which may be deemed

invested in our common shares usually at a discount or directed

among other investment vehicles available under the DCP. We

often invest directly, as a principal, in investments corresponding

to the other investment vehicles, relating to our obligations to

perform under the DCP. The compensation deferred by our

eligible employees is expensed in the period earned. The change

in fair value of our investments in assets corresponding to the

specified other investment vehicles are recognized in Principal

transactions revenues and changes in the corresponding

deferred compensation liability are reflected as Compensation

and benefits expense.

Profit Sharing Plan

We have a profit sharing plan, covering substantially all

employees, which includes a salary reduction feature designed to

qualify under Section 401(k) of the Internal Revenue Code.

Other Compensation Plans

In connection with the HomeFed LLC (“HomeFed”) merger in

2019, HomeFed stock options were converted into options to

purchase our common shares. During the year ended November

30, 2023, all remaining HomeFed stock options were exercised at

a price of$22.20 per common share.

Restricted Cash Awards

We provide compensation to new and existing employees in the

form of cash awards or loans which are subject to ratable vesting

terms with service requirements. We amortize these awards to

compensation expense over the relevant service period, which is

generally considered to start at the beginning of the annual

compensation year.

Compensation Expense

(1)Total compensation cost associated with restricted stock and RSUs include

the amortization of sign-on, retention and senior executive awards, less

forfeitures and clawbacks. Additionally, we recognize compensation costs

related to the discount provided to employees in electing to defer

compensation under the DCP. These compensation costs were approximately

$1.2 million,$0.7 million and$0.5 million for the years ended November 30,

2025,2024 and 2023, respectively.

Remaining unamortized amounts related to certain

compensation plans at November 30, 2025:

In December 2025,$467.3 million of restricted cash awards,

which contain a future service requirement and are related to the

2025 performance year were approved and awarded. Absent

actual forfeitures or cancellations or accelerations, the annual

compensation cost for these awards will be recognized as

Note 15. Benefit Plans

U.S. Pension Plans

Pursuant to the agreement to sell one of our former subsidiaries,

WilTel Communications Group, LLC (“WilTel”), the responsibility

for WilTel’s defined benefit pension plan was retained by us. All

benefits under this plan were frozen as of October 30,

2005. Jefferies Group LLC Employees’ Pension Plan (the “U.S.

Pension Plan”) is a defined benefit pension plan covering certain

employees; benefits under that plan were frozen as of December

31, 2005. Wecontributed $1.8 million to the WilTel plan during

the year ended November 30, 2025 and weanticipate making a

$3.9 million contribution to the plan for the year ending

November 30,2026. We didnot contribute to the U.S. Pension

Plan during the year ended November 30, 2025 and weanticipate

making $1.4 million contribution to the plan for the year ending

November 30,2026.

Activity with respect to both plans:

As of November 30, 2025 and 2024,$23.8 million and

$28.6 million, respectively, of the net amount recognized in the

Consolidated Statements of Financial Condition was reflected as

a charge to Accumulated other comprehensive income (loss)

(substantially all of which were cumulative losses) and

$9.0 million and$13.4 million, respectively, was reflected as

accrued pension cost.

Components of net periodic pension cost and other amounts

recognized in other comprehensive income (loss) excluding

taxes:

Accumulated other comprehensive income (loss) at

November 30, 2025 and 2024 has not yet been recognized as

components of net periodic pension cost in the Consolidated

Assumptions:

Pension benefit payments expected to be paid (in thousands):

U.S. Plan Assets

The information below on the plan assets for the WilTel plan and

the U.S. Pension Plan is presented separately for the plans as the

investments are managed independently.

WilTel Plan Assets

The current investment objectives are designed to close the

funding gap while mitigating funded status volatility through a

combination of liability hedging and investment returns. As plan

funded status improves, the asset allocation will move along a

predetermined, de-risking glide path that reallocates capital from

growth assets to liability-hedging assets in order to reduce

funded status volatility and lock in funded status gains. Plan

assets are split intotwo separate portfolios, each with different

asset mixes and objectives. The portfolios are valued at their

NAV as a practical expedient for fair value.

•The Growth Portfolio consists of global equities and high yield

investments.

•The Liability-Driven Investing (“LDI”) Portfolio consists of long

duration credit bonds and a suite of long duration, Treasury-

based instruments designed to provide capital-efficient interest

rate exposure as well as target specific maturities. The

objective of the LDI Portfolio is to seek to achieve performance

similar to the WilTel plan’s liability by seeking to match the

interest rate sensitivity and credit sensitivity. The LDI Portfolio

is managed to mitigate volatility in funded status deriving from

changes in the discounted value of benefit obligations from

market movements in the interest rate and credit components

of the underlying discount curve.

U.S. Pension Plan Assets

We have an agreement with an external investment manager to

invest and manage the plan’s assets under a strategy using a

combination of two portfolios. The investment manager allocates

the plan’s assets between a growth portfolio and a liability-driven

portfolio according to certain target allocations and tolerance

bands that are agreed to by the Administrative Committee of the

U.S. Pension Plan. Such target allocations will take into

consideration the plan’s funded ratio. The manager will also

monitor the strategy and, as the plan’s funded ratio changes over

time, will rebalance the strategy, if necessary, to be within the

agreed tolerance bands and target allocations. The portfolios are

composed of certain common collective investment trusts that

are established and maintained by the investment manager. The

common collective trusts are valued at their NAV as a practical

expedient for fair value.

Plan Assumptions

To develop the assumption for the expected long-term rate of

return on plan assets, we considered the following underlying

assumptions:2.5% current expected inflation,0.5% to 1.5% real

rate of return for long duration risk free investments and an

additional 0.5% to 1.0% return premium for corporate credit risk.

For U.S. and international equity, we assume an equity risk

premium over risk-free assets equal to 4.3%. We then weighted

these assumptions based on invested assets and assumed that

investment expenses were offset by expected returns in excess

of benchmarks, which resulted in the selection of 6.0% and 5.0%

expected long-term rate of return assumption for WilTel and U.S.

Pension plan, respectively, for 2025.

Other

We have defined contribution pension plans, including 401(k)

plans, that cover certain employees. Amounts charged to

expense related to such plans were$14.2 million,$13.6 million

and$12.6 million for the years ended November 30, 2025,2024

and 2023, respectively.

Note 16. Leases

We enter into lease and sublease agreements, primarily for office

space, across our geographic locations. Information related to

operating leases in our Consolidated Statements of Financial

Condition:

Maturities of our operating lease liabilitiesand a reconciliation to

the Lease liabilities:

In addition to the table above, at November 30, 2025, we entered

into a lease agreement that was signed but had not yet

commenced. This operating lease will commence in 2026 with a

lease term ofthree years. Lease payments for this lease

agreement will be$3.3 million for the period from lease

commencement to the end of the lease term.

Lease costs:

(1)Includes short-term leases, which are not material.

(2)Includes property taxes, insurance costs, common area maintenance, utilities,

and other costs that are not fixed. The amount also includes rent increases

resulting from inflation indices and periodic market rent reviews.

Consolidated Statements of Cash Flows supplemental

information: