Jefferies released a six-page letter to shareholders right after the market open in light of the stock taking a major battering recently due to continued worries about Europe and the company’s long-term stability.
In the letter, the investment bank dismisses several “malicious lies and false rumours” that have been spreading about the company. In addition, they even go so far to say that a hedge fund has been participating in the proliferation of such falsehoods.
The letter goes on to address and list the seven major lies and rumours, which are:
- Lies that Jefferies’ inventory PIIGS debt contains complex and risky hedges, such as credit-default swaps
- Falsehoods about “mass exodus” of prime brokerage clients to other big banks
- rumour of “undisclosed major loss” at the partnership between Jefferies and its majority investor Leucadia National Corp.
- Claimed reductions in Jefferies’ inventory funding
- Unfounded assertions that Jefferies’ needs to raise more long-term debt
- False suggestions that Jefferies did not satisfy its due diligence obligation when MF Global completed a capital raise through them in early 2011
- rumours about a weak fourth quarter
Investors seem to like the lengths to which Jefferies is going to dispel these rumours. Share prices for Jefferies moved up after the letter’s release around 10 a.m., at one point going into the green. It is now trading at around $10.06 per share, down less than 1%.