Jefferies Gets Apology From Banker’s Wife Over Scandal

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Jefferies Group CEO Richard Handler
Richard Handler, chief executive officer of Jefferies Group LLC. Photographer: Peter Foley/Bloomberg

Christina Kelly, whose rancorous divorce from Jefferies Group LLC investment banker Sage Kelly has inflamed New York’s tabloids, issued a statement praising him as a “great father” and apologizing to the firm as the pair reached a tentative custody agreement.

The banker has “high integrity” and “is a great father who deeply loves our children,” she said in a signed document provided to Bloomberg News by a person privy to the discussions.

“A substantial portion of what has been written in the press and other media over the past few weeks is inaccurate, untrue or hyperbolic, and I apologize to those who have been affected thereby -- including those at Jefferies and those associated with Jefferies,” she said.

The statement doesn’t specify terms of the settlement, which she said was amicable and “ensures loving homes for our children.” Any deal would require a judge’s approval and could still unravel, according to the person, who asked not to be identified because the talks are confidential.

Sage Kelly, 42, who runs Jefferies’s profitable health-care banking group, went on a leave of absence last month after his wife accused him of setting up hidden cameras to catch her using drugs, while not disclosing his own cocaine abuse, according to a copy of an Oct. 22 lawsuit she filed. She sought $7 million in damages, according to the complaint.

‘Deeply Offended’

After she said Jefferies employees used cocaine, Chief Executive Officer Richard Handler, 53, visited the health-care group and invited them to join him in taking a drug test. Handler later sent a memo saying that the tests were negative and accusing rivals at larger banks of spreading “lurid details” of allegations he called “pure fabrication.”

In her statement, Christina Kelly said there’s a danger that statements in divorce cases can create misimpressions and cause unintended harm to innocent people. She didn’t specify which reports or details were inaccurate.

“The presentation of the facts in divorce proceedings is a function of subjective viewpoints,” she said.

William Beslow, Christina Kelly’s lawyer, confirmed that a settlement had been reached and declined to comment on terms or on whether his client would retract earlier assertions made in court.

Sage Kelly, who has denied the allegations in the court filings, didn’t respond to an e-mail sent to his work account. Someone who answered his mobile phone said he wasn’t available and hung up.

The health-care banking group that Kelly runs is among Jefferies’s most successful. The New York-based firm generated almost $500 million in investment-banking fees from deals in the health-care industry in the three years ended last quarter, according to data from research firm Freeman & Co.

Handler has said the Jefferies bankers were “deeply offended” by the claims, and he noted last week that some clients had sought answers.

“We will be transparent and forthright with them, and we do not expect any long-term issues,” he said at the time.

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