2014 was a brutal year for investment bank Jefferies.
In 2014, shares of the bank’s parent company — Leucadia National Corp — slumped nearly 19%.
On top of that, Jefferies was also featured in the news during the fourth quarter for one of its top banker’s messy divorces.
Sage Kelly, a top healthcare banker at the firm, resigned from Jefferies in December following accusations of drug abuse and extramarital sex made back in October in a sworn affidavit by his estranged wife, Christina Di Mauro Kelly. Kelly’s wife also accused some Jefferies managing directors and bank clients of using drugs. All of the Jefferies bankers and clients named in the affidavit categorically denied her allegations.
“2014 is in the history books and we want everyone to come back in January well-rested and ready to fully engage with 100 per cent commitment, passion and energy,” says the firm’s CEO Rich Handler in a new memo.
Handler and Jefferies Chairman Brian Friedman list a number of reasons for of “why we do it” referring to why they keep going year after year when there are other career options. Together, they list 7 reasons.
In the memo, Handler writes they take “great pride” in Jefferies. He also writes that when there’s an “embarrassing situation” at the firm it’s “painful.”
“What we can tell you is that we feel incredible personal pain whenever something bad or unwanted happens under our roof. We will tell you that we will always be honest about it. We will always strive to do the right thing once all facts are learned in a calm and methodical manner. We will do our best to always learn from these experiences. We will also do our very best to never repeat them.”
Here’s the full letter:
In case we were in any way at risk of becoming complacent, our fourth quarter reminded all of us that we operate in a volatile, competitive, ever-changing and complicated world where the challenges are numerous, the pace non-stop and the pressure constant. The logical question to ask is: why do all 3,915 of us do this year in and year out when there are so many other options and career choices? We won’t speak for anyone but ourselves, but we do feel that now is as good a time as any for some self-reflection and to share with each of you, our partners in living and building Jefferies, “why we do it.”
1. You. We cannot fully express how much motivation we get from our fellow Executive Committee members, the leaders of our various businesses, the sales, trading, research and investment banking professionals around the firm, and our infrastructure and support folks who keep the bandwidth flowing and make so much possible. We so appreciate how much each of you cares, how dedicated you are to doing the right thing and the sacrifices that each one of you constantly make. Knowing that each of you are giving your all compels us and yet makes it easy for us to do our part.
2. Our Clients. It is a truly competitive world and every trade or deal our clients do can be executed at a bank holding company with a well-recognised brand. The fact of the matter is that we have all proven to our clients that we can do it better, and they have rewarded us with loyalty that is very rare in today’s financial world. Granted, we have to earn our clients’ trust every day and can never take anything for granted, but our clients are rooting for us and want us to win. It is a great feeling and we feel an incredible responsibility to never let them down.
3. Our Shareholders. Prices will go up and prices will go down. We are driven to do our best to create long-term value for our shareholders. This is partially out of personal self-interest, since our own money is where our mouths are, but it is also because we personally know so many of our shareholders, and greatly value the trust and confidence they have put in us. We do not want to let them down, and it is a long race that requires stamina and persistence.
4. The Importance of Jefferies. Our firm does good and important things. We help companies raise money to build factories. We help companies grow by acquisition. We help troubled companies get healthy. We help raise capital so companies can hire people and, in turn, do productive work. We help mutual funds invest money for families. We help hedge funds invest money for retirees, endowments and pension funds. We provide liquidity on a global basis, which helps the capital markets function better. Granted, we are not policemen or firemen saving or protecting lives, teachers educating our kids, or soldiers defending freedom…those people are real heroes. That said, we do important work at Jefferies and all of you should be as proud of what we do as the two of us are.
5. Competition. We have no ill will towards any of our competitors as they too are people, and they and their families also need to succeed. That said, it gives us enormous pride to go head-to-head with trillion dollar bank holding companies daily and win fair and square based on our competence. We take pride that we did not ask taxpayers for even a penny of bailout money. We don’t shy away from being the underdog and it sure makes winning all the more enjoyable. When competitors underestimate our brand, capability or team, that is the best time to shine.
6. Pride. We take great pride in building our brand, competitive position and firm. You all know that for the two of us, this is very personal. That is why it is so painful when there is a stumble, a setback, or an embarrassing situation. We cannot promise that these will no longer happen at Jefferies — where there are people, there are complexities and none of us are perfect. We can’t tell you that our bad spots should be overlooked, but if you look at the totality of our unwanted experiences versus those of our competitors, we measure up great. What we can tell you is that we feel incredible personal pain whenever something bad or unwanted happens under our roof. We will tell you that we will always be honest about it. We will always strive to do the right thing once all facts are learned in a calm and methodical manner. We will do our best to always learn from these experiences. We will also do our very best to never repeat them. Finally, when we do have the occasional setback, nobody is more motivated than the two of us to proactively deal with it, and get back on the horse and start charging again. We are not shrinking violets, the stakes are high and we are motivated to lead the winning team.
7. Our Culture. The collection of all 3,915 of us is our culture. The two of us draw strength and motivation from our collective culture. Honesty, transparency, directness and no bureaucracy mean that each of you has the right to tell either or both of us what we are doing wrong and how to fix our problems. We love this. It also means that if we are asking each of you to lead by example, then we must follow the same playbook. That means if anyone needs help making an investment banking presentation, fixing a problem trade or recruiting a key hire, our answer is always yes. We are not bothered by this, but rather we are motivated by it. If we can help any one of you win, we are making a difference and ultimately helping all of us win.
We could go on and on with this list, but we will leave it at seven. The two of us are now on a much needed vacation (no, not together). 2014 is in the history books and we want everyone to come back in January well-rested and ready to fully engage with 100 per cent commitment, passion and energy. The two of us will be back and fully charged for action, and now you all know exactly why. Happy holidays. Please enjoy your friends and families, and hello calendar 2015!
Rich and Brian
Handler and Friedman send out a motivational letter to the bank’s 3,915 employees every month.