Related Party Transactions

Jefferies Capital Partners Related Funds. We have equity investments in the JCP Manager and in private equity funds, which are managed by a team led by Brian P. Friedman, one of our directors and our Chairman of the Executive Committee (“Private Equity Related Funds”). At August 31, 2018 and November 30, 2017, our equity investments in Private Equity Related Funds were in aggregate $34.1 million and $23.7 million, respectively. We also charge the JCP Manager for certain services under a service agreement. The following table presents revenues and service charges related to our investment in Private Equity Related Funds (in thousands):



	Nine Months Ended August 31,					Nine Months Ended August 31,
	2018		2017			2018		2017
Other revenues and investment income (loss)	$	172	$	(373	)	$	10,175	$	(9,793	)
Service charges	92		200			212		523

For further information regarding our commitments and funded amounts to the Private Equity Related Funds, see Note 16, Commitments, Contingencies and Guarantees.

Berkadia Commercial Mortgage, LLC (“Berkadia”). At August 31, 2018 and November 30, 2017, we had commitments to purchase $748.8 million and $864.1 million, respectively, in agency CMBS from Berkadia, which is partially owned by Jefferies.

HRG Group Inc. (“HRG”). We recognized investment banking revenues of $3.0 million for the three and nine months ended August 31, 2018 in connection with the merger of HRG into Spectrum Brands Holdings, Inc., which is partially owned by Jefferies.

Officers, Directors and Employees. The following sets forth information regarding related party transactions with our officers, directors and employees:


•	At August 31, 2018 and November 30, 2017, we had $41.2 million and $45.6 million, respectively, of loans outstanding to certain of our officers and employees (none of whom are executive officers or directors) that are included in Other assets in our Consolidated Statements of Financial Condition.


•	Receivables from and payables to customers include balances arising from officers’, directors’ and employees’ individual security transactions. These transactions are subject to the same regulations as all customer transactions and are provided on substantially the same terms.


•	One of our directors has investments in a hedge fund managed by us of approximately $4.8 million and $4.9 million at August 31, 2018 and November 30, 2017, respectively.

See Note 8, Variable Interest Entities, and Note 16, Commitments, Contingencies and Guarantees, for further information regarding related party transactions with our officers, directors and employees.

Jefferies. The following is a description of related party transactions with Jefferies and its affiliates:


•	We provide services to and receive services from Jefferies under service agreements. We also receive revenues from Jefferies under a revenue sharing agreement (in millions):



	Three Months Ended August 31,				Nine Months Ended August 31,
	2018		2017		2018		2017
Charges to Jefferies for services provided	$	15.8	$	13.0	$	46.1	$	34.8
Charges from Jefferies for services received	2.2		4.9		6.9		13.8


•	We provide capital markets and asset management services to Jefferies and its affiliates. The following table presents the revenues earned by type of services provided (in millions):



	Three Months Ended August 31,				Nine Months Ended August 31,
	2018		2017		2018		2017
Investment banking	$	5.6	$	—	$	5.6	$	—
Commissions and other fees	0.1		—		0.5		—
Principal transactions	—		—		0.1		—
Other revenues	0.3		—		0.7		—


•	Receivables from and payables to Jefferies, included in Other assets and Accrued expenses and other liabilities, respectively, in our Consolidated Statements of Financial Condition (in millions):



	August 31, 2018		November 30, 2017
Receivable from Jefferies	$	3.2	$	2.5
Payable to Jefferies	0.6		3.1

•

On January 11, 2018, our Board of Directors approved a distribution to our sole limited liability company member, Jefferies, in the amount of $200.0 million, which was paid on January 31, 2018. In addition, our Board of Directors approved a quarterly distribution policy authorizing us to pay a quarterly distribution to our limited liability company members following the end of each of our fiscal quarters. Beginning at the end of our fiscal quarter ending February 28, 2018 and on a quarterly basis thereafter, we will pay our limited liability company members a quarterly dividend equal to 50% of our positive net earnings attributable to us (as adjusted for preceding loss quarters, if any). During the three months ended August 31, 2018, we paid a dividend in the amount of $18.6 million to Jefferies, based on our results for the six months ended May 31, 2018. Our results at August 31, 2018 include a dividend payable in the amount of $30.1 million.

•

Pursuant to a tax sharing agreement entered into between us and Jefferies, payments are made between us and Jefferies to settle current tax receivables and payables. At August 31, 2018 and November 30, 2017, a net current tax payable to Jefferies of $44.0 million and $91.5 million, respectively, is included in Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition. On April 3, June 15 and September 25, 2018, we made payments of $115.0 million, $36.0 million and $42.0 million, respectively, to Jefferies, which reduced the cumulative net current tax payable balance.


•	We entered into a foreign exchange prime brokerage agreement with an affiliate of Jefferies in 2017. The following table presents the balances relating to these foreign exchange contracts, which are included in our Consolidated Statements of Financial Condition (in millions).



	August 31, 2018		November 30, 2017
Payables-brokers, dealers and clearing organizations	$	12.3	$	17.0


•	Two of our directors have investments totaling $2.8 million and $3.6 million at August 31, 2018 and November 30, 2017, respectively, in a hedge fund managed by Jefferies.


•	We have investments in hedge funds managed by Jefferies of $218.1 million and $136.1 million at August 31, 2018 and November 30, 2017, respectively, included in Financial instruments owned in our Consolidated Statements of Financial Condition. Net gains on our investments in these hedge funds, which are included in Principal transactions in our Consolidated Statements of Earnings (in millions):



	Three Months Ended August 31,				Nine Months Ended August 31,
	2018		2017		2018		2017
Net gains on our investments	$	0.5	$	1.9	$	5.0	$	5.1

•

As a result of a public offering by Landcadia Holdings Inc., an affiliate of Jefferies, we own 638,561 public units (each unit consisting of one share of Class A common stock and one public warrant) at August 31, 2018 and November 30, 2017, with a fair value of $7.1 million and $6.8 million, respectively, included in Financial instruments owned in our Consolidated Statements of Financial Condition.


•	A subsidiary of Jefferies had an investment in a hedge fund managed by us of $27.3 million at November 30, 2017. This investment was transferred to Jefferies LLC effective December 31, 2017, and we paid $26.7 million, the investment’s NAV, to Jefferies in January 2018.


•	We sold securities to Jefferies at fair value for cash during the following periods:



Date	Amount (in millions) (1)
February 2017	$	25.6
April 2017	21.9
August 2017	7.1

(1) There was no gain or loss on these transactions


•	In connection with our sales and trading activities, from time to time we make a market in long-term debt securities of Jefferies (i.e., we buy and sell debt securities issued by Jefferies). At August 31, 2018 and November 30, 2017, approximately $1.5 million and $0.2 million, respectively, is included in Financial instruments owned in our Consolidated Statements of Financial Condition.

For information on transactions with our equity method investees, see Note 9, Investments.