Jefferies Reports Five Trading-Loss Days in Second Quarter

Jefferies Group LLC had five daily trading losses in the fiscal second quarter, fueled by its investment in Knight Capital Group Inc., after reporting none in the same period last year.

The biggest daily trading loss was $6 million to $8 million in the three months ended May 31, Jefferies said today in a regulatory filing. The firm would have had one daily loss without its August 2012 investment in Knight. In the prior three quarters combined, New York-based Jefferies said it had 18 daily losses with Knight, compared with three excluding the holding.

Jefferies, which was acquired in March by Leucadia National Corp., saw a “significant slowdown” in fixed-income trading during March and April amid uncertainty about the direction of the Federal Reserve’s bond-buying program, Chief Executive Officer Richard Handler said last month. Revenue from sales and trading fell 13 percent to $358.8 million in the second quarter from a year earlier, the company said at the time.

Average daily value-at-risk, a measure of potential trading losses, was $8.77 million in the period ended May 31, according to the filing, compared with $9.27 million in the preceding quarter. Excluding the Knight investment, VaR was $5.77 million in the second quarter of this year.

Jefferies helped arrange a $400 million bailout for Jersey City, New Jersey-based Knight after trading losses spurred by a software failure.

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