(Sept 29): Jefferies Financial Group Inc’s asset-management unit revenue slumped more than 50% in the fiscal third quarter, sending shares down as the bank grapples with fallout from tumultuous investments.

Net revenue in that business totalled US$85.6 million (RM349 million) in the three months through August, down from almost US$177 million in the same period a year earlier, according to a statement late Monday. That business has been dealing with soured bets on First Brands Group and Radiant World that the firm was exposed to through Leucadia Asset Management’s Point Bonita fund.

Shares of Jefferies dropped 1.1% in early New York trading, extending this year’s decline to more than 25%.

“We remain confident in the long-term outlook for the business as we continue to reposition the platform by reducing capital allocated to certain existing funds consistent with the strategy we outlined last fall when we announced our intent to acquire and fund a 50% interest in Hildene,” chief executive officer Richard Handler and president Brian Friedman said in the statement.

In 2025, Jefferies agreed to buy a 50% stake in Hildene Holding Co, a credit-focused asset manager that the bank had had a strategic relationship with for years.

The firm’s asset-management woes overshadowed a record quarter for Jefferies’ stock traders and investment bankers. Equity-trading revenue surged 29% from a year earlier to US$626 million, boosted by cash and electronic trading as well as the prime services business that works with hedge funds.

Revenue at the investment-banking business rose 17% to US$1.3 billion. That was driven by a 25% gain in the advisory unit and a 69% increase in the equity-underwriting business.

In recent months, Radiant World has come under scrutiny amid allegations of fraud. Jefferies’ exposure to Radiant World was less than US$300 million, Bloomberg previously reported.

Jefferies’ fixed-income trading business also had a tougher quarter, hit by a sluggish market that drove a 26% decrease in net revenue. Still, equity trading was “robust,” even if questions are arising about how sustainable it can be, according to Vital Knowledge’s Adam Crisafulli.

The quarter was OK, he said. “Not amazing, not horrible.”

Earnings per share totalled US$1.08 in the period, surpassing the US$1 average estimate of analysts in a Bloomberg survey.

Jefferies is the first of the major US banks to post third-quarter results, setting a benchmark for Wall Street firms that report in October. The results offer a look into how investment-banking businesses have held up despite market volatility.

“We are very optimistic about the balance of 2026 and our momentum heading into 2027, supported by the breadth and strength of our current backlog and new business activity,” Handler and Friedman said in the statement.

The bank’s quarter is also a positive sign for Wall Street’s other equity-trading desks, many of which had already started hinting at how good the quarter was shaping up. Bank of America Corp. CEO Brian Moynihan said equity trading climbed in the quarter through the middle of September, while Goldman Sachs Group Inc’s David Solomon said equity trading has remained “very strong.”

Fixed-income trading, however, has been softer in some parts of Wall Street. Bank of America has cautioned that revenue in the business was down and bouncing around.

Uploaded by Magessan Varatharaja