Jefferies Said to Cut Fixed-Income Staff Linked to Mortgages

  • Fixed-income unit is also said to hire 20 people this quarter
  • CEO Handler is looking to boost profitability of the division

Jefferies Group cut employees from its fixed-income unit this week, with a focus on staff handling products tied to mortgages, according to people with knowledge of the matter.

Less than 10 percent of the mortgage-related business was affected, one person said. James Raezer was among managing directors there who left, said the people, asking not to be identified discussing personnel changes. Cory Rothman, a trader, and Colin McGahren in sales also were among those exiting, the people said. Some of the people dismissed were paid bonuses last week.

Richard Khaleel, a spokesman for the New York-based investment bank owned by Leucadia National Corp., declined to comment on any of the departures. Raezer and McGahren said they had no comment. A person answering Rothman’s work phone said he was no longer at the firm.

Chief Executive Officer Richard Handler is looking to improve the profitability of the firm’s fixed-income operations, where revenue from trading tumbled 83 percent in the fiscal fourth quarter amid a global energy-market rout and weakening demand for riskier assets. This week’s reductions are part of an effort to align costs with related revenue, one person said. The broader fixed-income division also has hired about 20 people this quarter as it looks to improve performance, the person said.

Investment banks around the world have signaled that they’ll continue shrinking and overhauling their fixed-income operations amid an industrywide trading slump and as many firms contend with stiffer capital rules.

In the U.S., Morgan Stanley decided to eliminate roughly 25 percent of its fixed-income trading staff during the fourth quarter. Goldman Sachs Group Inc. will decide soon whether to cut deeper in fixed-income sales and trading than an annual 5 percent cull, a person with knowledge of its deliberations said last month.

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