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•	Earnings Releases and Other Public Announcements

•	Annual and interim reports on Form 10-K

•	Quarterly reports on Form 10-Q

•	Current reports on Form 8-K

•	Code of Ethics

•	Reportable waivers, if any, from our Code of Ethics by our executive officers

•	Board of Directors Corporate Governance Guidelines

•	Charter of the Corporate Governance and Nominating Committee of the Board of Directors

•	Charter of the Compensation Committee of the Board of Directors

•	Charter of the Audit Committee of the Board of Directors

•	Charters of other Committees of our Board of Directors

•	Any amendments to the above-mentioned documents and reports

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Investment Banking and Capital Markets includes our investment banking, capital markets and other related services. Investment banking provides underwriting and financial advisory services to our clients across most industry sectors in the Americas, Europe and Asia. Our capital markets businesses operate across the spectrum of equities and fixed income products. Related services include, among other things, prime brokerage and equity finance, research and strategy, corporate lending and real estate finance.

•	Asset Management provides investment management services to investors in the U.S. and overseas and invests capital in hedge funds, separately managed accounts and third-party asset managers.

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•	accountability and transparency requirements, which require companies to demonstrate and record compliance with the GDPR and to provide more detailed information to data subjects regarding the processing of their personal data obligations to consider data protection when any new products or services are developed and to limit the amount of personal data processed

•	compliance with the data protection rights of data subjects including a right of access to or correction of personal data and a right of erasure of personal data

•	the reporting of personal data breaches to the relevant data supervisory authority without undue delay (no later than 72 hours after discovering the data breach, where feasible) unless the personal data breach is unlikely to result in a risk to the data subject’s rights and freedoms.

•	A market downturn could lead to a decline in the volume of transactions executed for customers and, therefore, to a decline in the revenues we receive from commissions and spreads

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•

Unfavorable conditions or changes in general political, economic or market conditions could reduce the number and size of transactions in which we provide underwriting, financial advisory and other services. Our investment banking revenues, in the form of financial advisory and sales and trading or placement fees, are directly related to the number and size of the transactions in which we participate and could therefore be adversely affected by unfavorable financial, economic or political conditions. In particular, the increasing trend toward sovereign protectionism and deglobalization resulting from the current populist political movement has resulted or could result in decreases in free trade, erosion of traditional international coalitions, the imposition of sanctions and tariffs, governmental closures and no-confidence votes, domestic and international strife, and general market upheaval in response to such results, all of which could negatively impact our business

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Adverse changes in the market could also lead to a reduction in revenues from asset management fees and losses on our own capital invested in managed funds. Even in the absence of a market downturn, below-market investment performance by our funds and portfolio managers could reduce asset management revenues and assets under management and result in reputational damage that might make it more difficult to attract new investors

•	Adverse changes in the market could lead to regulatory restrictions that may limit or halt certain of our business activities

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Limitations on the availability of credit can affect our ability to borrow on a secured or unsecured basis, which may adversely affect our liquidity and results of operations. Global market and economic conditions have been particularly disrupted and volatile in the last several years and may be in the future. Our cost and availability of funding could be affected by illiquid credit markets and wider credit spreads

•	New or increased taxes on compensation payments such as bonuses or on balance sheet items may adversely affect our profits

•	Should one of our customers or competitors fail, our business prospects and revenue could be negatively impacted due to negative market sentiment causing customers to cease doing business with us and our lenders to cease loaning us money, which could adversely affect our business, funding and liquidity

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•	the description of our business contained in this report under the caption “Business”;

•	the risk factors contained in this report under the caption “Risk Factors”;

•	the discussion of our analysis of financial condition and results of operations contained in this report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein;

•	the discussion of our risk management policies, procedures and methodologies contained in this report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management” herein;

•	the notes to the consolidated financial statements contained in this report; and

•	cautionary statements we make in our public documents, reports and announcements.

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•	Net revenues for 2019 were $3,112.5 million, compared with $3,183.4 million for 2018, a decrease of $70.8 million, or 2.2%.

•

Our results for 2019 include record net revenues in equities and strong performances in fixed income and asset management, which produced a strong combined 25.1% annual increase in net revenues for these businesses as compared to 2018. This growth in net revenues for 2019 was offset by a 20.5% decline in investment banking net revenues, after two consecutive record years. Our results in investment banking were impacted by the very difficult month of December 2018 and then the U.S. government shutdown in late December and January as well as the challenges of tariffs and trade wars, Brexit uncertainty and many other cross-currents that dampened corporate deal making.

•

Net revenues for 2019 reflect a record year in equities and a solid performance in fixed income, as these businesses benefited from continued market share growth and more active markets throughout most of the year, and results also benefited from increased investment returns in asset management compared to 2018. This growth in results for 2019 was offset by below-trend investment banking revenues.

•	Our record equities net revenues in 2019 were a 16.3% improvement over 2018, supported by increases across most of our core equities businesses.

•	Our fixed income net revenues increased 21.7% compared to 2018, primarily due to more active markets throughout most of 2019.

•

Our investment banking revenues for 2019 declined by 20.5%. Substantially all of the decrease was due to lower underwriting revenue, which decreased 29.4% to $769.3 million from 2018. The largest portion of the underwritings shortfall was related to our leveraged finance business, which was primarily due to the overall slowdown in leveraged finance issuance across the U.S. and Europe, particularly in the single-B rated market, which is our primary market. Our advisory revenues declined 6.4% to $767.4 million from2018, against a backdrop of an 11% decline in industry-wide merger and acquisition fees across the U.S. and Europe during this period, according to Dealogic.

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Investment banking revenues for 2019 also include net revenues of $22.3 million from our share of the net results of the Jefferies Finance LLC (“Jefferies Finance”) joint venture, compared with net revenues of $98.6 million for 2018. The decrease in these results was due to the volatility experienced in the leveraged loan markets in 2019, which drove a decline in overall loan origination activity. The results for Jefferies Finance for 2019 also include $12.5 million in costs from refinancing its debt.

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•	Net revenues for 2019 also included asset management revenues of $76.5 million, compared with a net loss of $1.1 million for 2018, primarily due to higher investment returns.

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Net revenues from our other business category for 2019 were $58.5 million, compared with $45.3 million for 2018. Results for 2019 include net revenues of $88.2 million due to our share of income from Berkadia Commercial Mortgage Holding LLC (“Berkadia”), compared with net revenues of $20.0 million for 2018, reflecting two months of revenues, as Jefferies transferred its 50% interest in Berkadia to us on October 1, 2018. The results for 2018 also included foreign currency gains.

•	Non-interest expenses for 2019 increased $14.2 million, or 0.5%, to $2,787.9 million, compared with $2,773.7 million for 2018.

•	Compensation and benefits expense for 2019 was $1,684.1 million, a decrease of $52.2 million, or 3.0%, from 2018. Compensation and benefits expense as a percentage of Net revenues was 54.1% for 2019, compared with 54.5% in 2018.

•	Non-compensation expenses for 2019 increased $66.4 million, or 6.4%, to $1,103.8 million, compared with $1,037.4 million for 2018.

•	At November 30, 2019, we had 3,815 employees globally, an increase of 219 employees from our headcount of 3,596 at November 30, 2018. Our headcount increased primarily as a result of continued hiring in investment banking, as well as additions in our asset management and equities businesses.

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(1)	Includes net interest revenues (expenses) of $74.0 million, $8.5 million and $(58.6) million for 2019, 2018 and 2017, respectively.

(2)	Allocated net interest is not separately disaggregated in presenting our Investment Banking and Capital Markets reportable segment within our Net Revenues by Source. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.

(3)	The amount for 2019 includes revenues of $3.1 million from our share of fees received by third party asset management companies with which we have revenue and profit share arrangements.

(4)

Beginning with the first quarter of 2019, Net revenues attributed to the Investment return in our Asset Management reportable segment have been disaggregated to separately present Investment return and Allocated net interest (see footnotes 5 and 6 below). This disaggregation is intended to increase transparency and to make clearer actual Investment return. We offer third-party investors the opportunity to co-invest in our asset management funds and separately managed accounts alongside us. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to our credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods, none of which are pertinent to the Investment returns generated by the performance of the portfolio.

(5)	Includes net interest expenses of $8.9 million, $8.4 million and $4.8 million for 2019, 2018 and 2017, respectively.

(6)	Allocated net interest represents the allocation of our long-term debt interest expense to our Asset Management reportable segment, net of interest income on our Cash and cash equivalents and other sources of liquidity. For discussion of our sources of liquidity, refer to the “Liquidity, Financial Condition and Capital Resources” section herein.

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•	services provided to our clients from which we earn commissions or spread revenue by executing, settling and clearing transactions for clients;

•	advisory services offered to clients;

•	financing, securities lending and other prime brokerage services offered to clients; and

•	wealth management services, which includes providing clients access to all of our institutional execution capabilities.

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In 2019, certain of our equities businesses achieved high rankings by Greenwich Associates. This includes ranking #1 in U.S. electronic trading, U.S. small and mid-cap trading, U.S. high touch sales trading and U.S., Europe, and Asia (excluding Japan) convertibles sales and trading. In addition, we ranked #1 in U.S. healthcare desk strategy from Institutional Investor. We also ranked in the top five from Greenwich Associates in U.S. research sales and we ranked in the top ten from third-party market surveys in global cash equities, U.S. cash equities, U.S. options and U.K. cash equities.

•	Total equities net revenues were $774.0 million for 2019, an increase of $108.4 million, compared with $665.6 million for 2018.

•	Equities posted record results for 2019 for our overall global business across the U.S., Europe and Asia Pacific regions. Our results include records for our Europe and Asia cash equities, global electronic trading, global prime brokerage and global securities finance businesses.

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Equities net revenues for 2019 increased compared with 2018 on strong performance across many of our businesses, which continue to be well-positioned with continued market share growth. The increase in our core global equities business was primarily driven by higher revenues across cash equities, electronic trading, convertibles, securities finance and prime brokerage. Results in our global cash equities businesses were primarily driven by record results in Europe and Asia. Our global electronic trading business was driven by continued growth in market share and increased trading volumes, particularly in Europe and Asia. Our global convertibles business benefited from significant growth due to the expansion of the business in London with a market-leading team and improved trading conditions. Stronger results in our prime services business, which reflects prime brokerage and securities finance, were driven by increased customer trading activity and the addition of a trading desk that provides outsourced services to clients.

•	The increase in our core global equities capital markets net revenues was partially offset by a decrease in our equity derivatives business, driven by a lower volatility trading environment and a decline in client activity.

•	The increase in our global equities business also included lower losses on certain block positions in 2019 as compared with 2018.

•	executing transactions for clients and making markets in securitized products, investment grade, high-yield, emerging markets, municipal and sovereign securities and bank loans, as well as foreign exchange execution on behalf of clients; and

•	interest rate derivatives and credit derivatives.

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Fixed income net revenues totaled $681.4 million for 2019, an increase of $121.7 million compared with net revenues of $559.7 million for 2018, primarily due to more active markets throughout most of the current year and improved market conditions in the U.S., as well as the expansion of certain trading teams in 2019. The increase was partially offset by lower volatility in European rates and credit markets and certain risk assets. The following highlights the main components of the results:

◦	Revenues improved in our U.S. investment grade corporates business due to increased trading activity and increased investor demand as credit spreads tightened during 2019 compared to muted client activity and demand in 2018, while revenues in our U.S. rates business improved, as opportunities in the U.S. treasuries trading market were more present in 2019.

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◦	Revenues in our leveraged credit business were strong due to improved results from secondary trading of par loans and bonds, as well as benefiting from various trading hires. Similarly, our Asia credit business was also well positioned to benefit from new hires, extended client reach and activity throughout most of the current year.

◦	Our global emerging markets business delivered higher net revenues in 2019 as compared with the prior year, primarily due to strong investor demand and increased volatility in certain countries.

◦	The current year also included higher revenues from our structured notes business due to higher trading and issuance volumes that benefited from a more established trading desk, as compared with the prior year.

◦	International rates revenues for 2019 declined as economic challenges and an ultra-low rate environment persisted in European countries, including continued concerns over Brexit, which resulted in limited trading opportunities. This compares with 2018 markets with higher levels of trading activity due to comparatively higher volatility.

◦	Revenues in our international securitized markets groups underperformed, as a more favorable trading environment in certain securitization businesses, primarily in Europe, was present in 2018. U.S. securitized markets businesses performance was flat year-over-year with mixed results in individual business lines.

•	advisory services with respect to mergers and acquisitions and restructurings and recapitalizations;

•	underwriting services, which include underwriting and placement services related to corporate debt, municipal bonds, mortgage-backed and asset-backed securities and equity and equity-linked securities and loan syndication;

•	our share of net earnings from our corporate lending joint venture Jefferies Finance; and

•	securities and loans received or acquired in connection with our investment banking activities.

(1)	The number of advisory deals completed includes 16, 15 and 10 restructuring and recapitalization transactions during 2019, 2018 and 2017, respectively.

(2)	We acted as sole or joint bookrunner on 139, 179 and 164 offerings during 2019, 2018 and 2017, respectively.

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•

Total investment banking revenues were $1,522.1 million for 2019, 20.5% lower than 2018. Substantially all of this decrease was due to lower underwriting revenue, with the largest portion of the underwriting shortfall related to our leveraged finance business. Most of our revenue shortfall in leveraged finance was due to the overall slowdown in leveraged finance issuance across the U.S. and Europe, particularly in the single-B rated market, which is our primary market.

•	Our advisory revenues were $767.4 million, down $52.6 million, or 6.4% lower than 2018. This performance was against a backdrop of an 11% decline in industry-wide merger and acquisition fees across the U.S. and Europe during this period, according to Dealogic.

•	Our underwriting revenues for 2019 were $769.3 million, down $320.9 million, or 29.4% from 2018. From equity and debt underwriting activities, we generated $362.0 million and $407.3 million in revenues, respectively, for 2019, compared with $454.6 million and $635.6 million in revenues, respectively, in 2018.

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Other investment banking revenues were a loss of $14.6 million for 2019, compared with revenues of $3.6 million for 2018. The results for 2019 include net revenues of $22.3 million from our share of the profits of the Jefferies Finance joint venture, compared to net revenues of $98.6 million for 2018. The decline in 2019 reflects volatility experienced in the leveraged loan markets throughout most of the year, which resulted in lower transaction volume as compared to 2018. The results for Jefferies Finance for 2019 also include $12.5 million in costs from refinancing its debt. Results in both years also include the amortization of costs and allocated interest expense related to our investment in the Jefferies Finance business.

•	Berkadia and other strategic investments (other than Jefferies Finance);

•	principal investments in private equity and hedge funds managed by third parties or related parties and that are not part of our Leucadia Asset Management platform; and

•	investments held as part of employee benefit plans, including deferred compensation plans (for which we incur an equal and offsetting amount of compensation expenses).

•	Net revenues from our other business category totaled $58.5 million for 2019, an increase of $13.2 million compared with $45.3 million in 2018.

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Results in 2019 include net revenues of $88.2 million due to our share of income from Berkadia, compared with net revenues of $20.0 million for 2018, reflecting two months of revenues, as Jefferies transferred its 50% interest in Berkadia to us on October 1, 2018. The results in both periods also include interest expenses in receipt of allocated long-term debt and mark-to-market decreases related to other strategic investments. Results in 2018 also included foreign currency gains.

•	management and performance fees from funds and accounts managed by us;

•	arrangements with strategic partners, which entitle us to portions of our partners’ revenues and/or profits; and

•	investment income from capital invested in and managed by our asset management business and other asset managers.

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(1)	The amount for 2019 includes our share of fees received by third party asset management companies with which we have revenue and profit share arrangements.

•	Asset management net revenues for 2019 were $76.5 million, compared with a net loss of $1.1 million for 2018. The increase was primarily due to higher investment returns, as a result of improved performance in certain of our investments in separately managed accounts and funds and an increase in our investments in certain of these investments.

(1)

Assets under management include third-party net assets actively managed by us, including hedge funds and certain managed accounts. The amount at November 30, 2019 also includes $150 million of assets under management in a strategy, which represents a net asset value equivalent of an asset management strategy where we earn performance fees. We may consolidate certain funds and for such consolidated funds, assets under management includes the pro-rata portion of third-party net assets in consolidated funds based on the percentage ownership of third-party investors in the consolidated fund.

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(1)	Due to the level or nature of an investment in a fund, we may consolidate that fund; and accordingly, the assets and liabilities of the fund are included in the representative line items in our consolidated financial statements. At November 30, 2019 and 2018, $22.6 million and $19.9 million, respectively, represents net investments in funds that have been consolidated in our financial statements.

(2)	Where we have investments in a separately managed account, the assets and liabilities of such account are presented on our balance sheet within each respective line item.

(3)	On November 27, 2019, we transferred to Jefferies our investments in asset managers. Refer to Note 20, Related Party Transactions, included in this Annual Report on Form 10-K, for further details on this transfer.

(4)

Of the $1,184.9 million total invested in the funds at November 30, 2019, $1,049.9 million was sourced from the proceeds of long-term and permanent capital, which attracted an internally calculated interest charge of $40.5 million. At November 30, 2019, we have borrowed $135.0 million under a credit facility agreement (“Credit Facility”) with JPMorgan Chase Bank, N.A., which is secured by our investment in a fund managed by Jefferies Financial Group Inc., with a carrying value of $218.1 million. Interest expense associated with the Credit Facility is included in Investment return (see “Net Revenues by Source” herein).

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•	Compensation and benefits expense consists of salaries, benefits, commissions, annual cash compensation awards and the amortization of certain share-based and cash compensation awards to employees.

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Cash and historical share-based awards and a portion of cash awards granted to employees as part of year end compensation generally contain provisions such that employees who terminate their employment or are terminated without cause may continue to vest in their awards, so long as those awards are not forfeited as a result of other forfeiture provisions (primarily non-compete clauses) of those awards. Accordingly, the compensation expense for a portion of awards granted at year end as part of annual compensation is recorded in the year of the award.

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Included in Compensation and benefits expense are share-based amortization and cash-based expense for senior executive awards, non-annual share-based and cash-based awards to other employees and certain year end awards that contain future service requirements for vesting, all of which are being amortized over their respective future service periods. In addition, the senior executive awards contain market and performance conditions.

•	Refer to Note 15, Compensation Plans, included in this Annual Report on Form 10-K, for further details on compensation and benefits.

•	Compensation and benefits expense was $1,684.1 million for 2019 compared with $1,736.3 million for 2018.

•	Compensation and benefits expense as a percentage of Net revenues was 54.1% for 2019 and 54.5% for 2018.

•	Compensation expense related to the amortization of share- and cash-based awards amounted to $341.4 million for 2019 compared with $302.0 million for 2018.

•	Employee headcount was 3,815 globally at November 30, 2019, an increase of 219 employees from our headcount of 3,596 at November 30, 2018. Our headcount increased, primarily as a result of continued hiring in investment banking, as well as additions in our asset management and equities businesses.

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Non-compensation expenses were $1,103.8 million for 2019, an increase of $66.4 million, or 6.4%, compared with $1,037.4 million for 2018. The increase in non-compensation expenses was primarily due to higher Floor brokerage and clearings fees due to an increase in trading volumes across the equities and fixed income businesses, as well as the growth in certain asset management funds and resultant trading activity. The higher expenses also included an increase in Technology and communication expenses related to costs associated with the development of various trading systems and our efforts to provide our professionals with leading digital tools to manage workflow and help us better serve our clients, as well as increased market data usage costs. Occupancy and equipment expenses increased primarily due to duplicative occupancy expenses related to relocating our office space in London. Professional services expenses increased due to an increase in consulting and legal fees. The increases were partially offset by lower Business development expenses and Underwriting costs due to a decline in investment banking engagements and activity related to our Jefferies Finance joint venture during the current year.

•	Non-compensation expenses as a percentage of Net revenues was 35.5% and 32.6% for 2019 and 2018, respectively.

•	For 2019, the provision for income taxes was $80.3 million, an effective tax rate of 24.7%, compared with a provision for income taxes of $250.7 million, an effective tax rate of 61.2%, for 2018.

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The decrease in the effective tax rate during 2019, as compared with 2018 is primarily due to the $165.1 million provisional tax charge related to the enactment of the Tax Act recorded in 2018. Of this amount, $112.7 million relates to the write down of our deferred tax asset, reflecting the impact of a lower federal tax rate of 21% on our deferred tax items. The remaining part of the provisional charge relates to a toll charge on the deemed repatriation of unremitted foreign earnings.

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(1)	Leverage ratio equals total assets divided by total equity.

(2)	Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible Jefferies Group LLC member’s equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio.

•	Repayment of all unsecured debt maturing within one year and no incremental unsecured debt issuance;

•	Maturity rolloff of outstanding letters of credit with no further issuance and replacement with cash collateral;

•	Higher margin requirements than currently exist on assets on securities financing activity, including repurchase agreements;

•	Liquidity outflows related to possible credit downgrade;

•	Lower availability of secured funding;

•	Client cash withdrawals;

•	The anticipated funding of outstanding investment and loan commitments; and

•	Certain accrued expenses and other liabilities and fixed costs.

•	Illiquid assets such as equipment, goodwill, net intangible assets, exchange memberships, deferred tax assets and certain investments;

•	A portion of securities inventory that is not expected to be financed on a secured basis in a credit stressed environment (i.e., margin requirements); and

•	Drawdowns of unfunded commitments.

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•	Global recession, default by a medium-sized sovereign, low consumer and corporate confidence, and general financial instability.

•	Severely challenged market environment with material declines in equity markets and widening of credit spreads.

•	Damaging follow-on impacts to financial institutions leading to the failure of a large bank.

•	A firm-specific crisis potentially triggered by material losses, reputational damage, litigation, executive departure, and/or a ratings downgrade.

•	Liquidity needs over a 30-day scenario.

•	A two-notch downgrade of our long-term senior unsecured credit ratings.

•	No support from government funding facilities.

•	A combination of contractual outflows, such as upcoming maturities of unsecured debt, and contingent outflows (e.g., actions though not contractually required, we may deem necessary in a crisis). We assume that most contingent outflows will occur within the initial days and weeks of a crisis.

•	No diversification benefit across liquidity risks. We assume that liquidity risks are additive.

•	All upcoming maturities of unsecured long-term debt, commercial paper, promissory notes and other unsecured funding products assuming we will be unable to issue new unsecured debt or rollover any maturing debt.

•	Repurchases of our outstanding long-term debt in the ordinary course of business as a market maker.

•	A portion of upcoming contractual maturities of secured funding trades due to either the inability to refinance or the ability to refinance only at wider haircuts (i.e., on terms which require us to post additional collateral). Our assumptions reflect, among other factors, the quality of the underlying collateral and counterparty concentration.

•	Collateral postings to counterparties due to adverse changes in the value of our over-the-counter (“OTC”) derivatives and other outflows due to trade terminations, collateral substitutions, collateral disputes, collateral calls or termination payments required by a two-notch downgrade in our credit ratings.

•	Variation margin postings required due to adverse changes in the value of our outstanding exchange-traded derivatives and any increase in initial margin and guarantee fund requirements by derivative clearing houses.

•	Liquidity outflows associated with our prime services business, including withdrawals of customer credit balances, and a reduction in customer short positions.

•	Liquidity outflows to clearing banks to ensure timely settlements of cash and securities transactions.

•	Draws on our unfunded commitments considering, among other things, the type of commitment and counterparty.

•	Other upcoming large cash outflows, such as tax payments.

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(1)	Average balances are calculated based on weekly balances.

(2)

At November 30, 2019 and 2018, $4,496.7 million and $2,250.0 million, respectively, was invested in U.S. government money funds that invest at least 99.5% of its total assets in cash, securities issued by the U.S. government and U.S. government-sponsored entities, and repurchase agreements that are fully collateralized by cash or government securities. The remaining $87.4 million and $562.4 million at November 30, 2019 and 2018, respectively, are invested in AAA rated prime money funds. The average balance of U.S. government money funds for the quarter ended November 30, 2019 was $1,886.0 million.

(3)

Consists of high quality sovereign government securities and reverse repurchase agreements collateralized by U.S. government securities and other high quality sovereign government securities; deposits with a central bank within the European Economic Area, Canada, Australia, Japan, Switzerland or the U.S.; and securities issued by a designated multilateral development bank and reverse repurchase agreements with underlying collateral comprised of these securities.

(4)	Other includes unencumbered inventory representing an estimate of the amount of additional secured financing that could be reasonably expected to be obtained from our Financial instruments owned that are currently not pledged after considering reasonable financing haircuts.

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(1)	Consists solely of agency mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae. These securities include pass-through securities, securities backed by adjustable rate mortgages, collateralized mortgage obligations, commercial mortgage-backed securities and interest- and principal-only securities.

(2)	Unencumbered liquid balances represent assets that can be sold or used as collateral for a loan, but have not been.

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Credit Facility. On December 27, 2018, one of our subsidiaries entered into a Credit Facility with JPMorgan Chase Bank, N.A. for a committed amount of $135.0 million. Interest is based on an annual alternative base rate or an adjusted London Interbank Offered Rate (“LIBOR”), as defined in the Credit Facility. The Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain a specified level of tangible net worth. The covenants also require the borrower to maintain specified leverage amounts and impose certain restrictions on the borrower’s future indebtedness. At November 30, 2019, we were in compliance with all debt covenants under the Credit Facility.

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Intraday Credit Facility. The Bank of New York Mellon has agreed to make revolving intraday credit advances (“Intraday Credit Facility”) for an aggregate committed amount of $150.0 million. The Intraday Credit facility is structured so that advances are generally repaid before the end of each business day. However, if an advance is not repaid by the end of any business day, the advance is converted to an overnight loan. Intraday loans accrue interest at a rate of 0.12%. Interest is charged based on the number of minutes in a day the advance is outstanding. Overnight loans are charged interest at the base rate plus 3% on a daily basis. The base rate is the higher of the federal funds rate plus 0.50% or the prime rate in effect at that time. The Intraday Credit Facility contains financial covenants, which include a minimum regulatory net capital requirement for our U.S. broker-dealer, Jefferies LLC. At November 30, 2019, we were in compliance with all debt covenants under the Intraday Credit Facility.

(1)

Long-term debt at November 30, 2019 excludes $550.6 million of our 2.375% Euro Medium Term Notes, as these notes mature on May 20, 2020, $189.1 million of our outstanding borrowings under our senior secured revolving credit facility (“Revolving Credit Facility”) and $50.0 million of our secured bank loan. Long-term debt at November 30, 2018 excludes $5.7 million of our structured notes, as these notes matured on February 26, 2019, $699.7 million of our 8.500% senior notes, as these notes mature on July 15, 2019 and $183.5 million of our outstanding borrowings under our Revolving Credit Facility.

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(1)	On November 25, 2019, Standard and Poor’s (“S&P”) upgraded our long-term debt rating from BBB- to BBB and revised our rating outlook from positive to stable.

(1)	On November 25, 2019, S&P upgraded the long-term debt rating on Jefferies LLC and Jefferies International Limited from BBB to BBB+ and revised our rating outlook from positive to stable.

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(1)	For additional information on long-term debt, see Note 12, Long-Term Debt, in our consolidated financial statements included in this Annual Report on Form 10-K.

(2)	Amounts based on applicable interest rates at November 30, 2019.

(3)	For additional information on operating leases related to certain premises and equipment agreement, see Note 17, Commitments, Contingencies and Guarantees, in our consolidated financial statements included in this Annual Report on Form 10-K.

(4)	Purchase obligations for goods and services primarily include payments for outsourcing and computer and telecommunications maintenance agreements. Purchase obligations at November 30, 2019 reflect the minimum contractual obligations under legally enforceable contracts.

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•	RMC - the principal committee that governs our risk-taking activities. The RMC meets weekly to discuss our risk profile and discuss business or market trends and their potential impact on the business. The Committee approves our limits as a whole, and across risk categories and business lines, reviews limit breaches, and approves risk policies and stress testing methodologies.

•	Executive Committee - provides insight, perspective and guidance for the day-to-day operations and strategic direction of their respective businesses and us as a whole.

•	Operating Committee - brings together the managers of all control areas and the business line chief operating officers, whereby each department presents issues regarding current and proposed business. This committee provides the key forum for coordination and communication between the control managers entirely focused on our activities as a whole.

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Asset / Liability Committee - seeks to ensure effective management and control of the balance sheet in terms of risk profile, adequacy of capital and liquidity resources, and funding profile and strategy. The committee is responsible for developing, implementing and enforcing our liquidity, funding and capital policies. This includes recommendations for capital and balance sheet size, as well as the allocation of capital to our businesses.

•	Independent Price Verification Committee - establishes our valuation policies and procedures and is responsible for independently validating the fair value of our financial instruments. The committee, which is comprised of stakeholders represented by the CFO, Internal Audit, Risk Management and Controllers, meets monthly to assess and approve the results of our inventory price testing.

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New Business Committee - reviews new business, products and activities and extensions of existing businesses, products and activities that may introduce materially different or greater risks than those of a business’ existing activities. The new business approval process is a key control over new business activity. The objectives are to notify all relevant functions of the intention to introduce a new product, business or activity, to share information between functions and to ensure there is a thorough understanding of the proposal.

•	Vendor Risk Committee - oversees our vendor assurance program, reviews the list of critical vendors annually, ensures that our vendor risk management policy is being applied consistently and operated effectively and that the overall level of vendor risk is in line with our approved risk levels.

•	Model Governance Committee - approves the model risk policy and sets common standards for managing model risk, and reviews and approves all model validation reports. The committee also reviews model validation findings and monitors the completion of any remedial action.

•	Market Risk Management Policy;

•	Operational Risk Management Policy;

•	Credit Risk Management Policy;

•	Independent Price Verification Policy;

•	Model Risk Management Policy;

•	Vendor Risk Management Policy; and

•	New Business Approval Policy.

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(1)	For the VaR numbers reported above, a one-day time horizon, with a one year look-back period, and a 95% confidence level were used.

(2)	The diversification effect is not applicable for the maximum and minimum VaR values as the firmwide VaR and the VaR values for the four risk categories might have occurred on different days during the year.

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(1)	Includes investments in hedge funds, fund of funds and private equity funds. For additional details on these investments refer to “Investments at Fair Value” within Note 4, Fair Value Disclosures, in our consolidated financial statements included in this Annual Report on Form 10-K.

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Loans and lending arising in connection with our investment banking and capital markets activities, which reflects our exposure at risk on a default event with no recovery of loans. Current exposure represents loans that have been drawn by the borrower and lending commitments that are outstanding. In addition, credit exposures on forward settling traded loans are included within our loans and lending exposures for consistency with the balance sheet categorization of these items. Loans and lending also arise in connection with our portion of a Secured Revolving Credit Facility that is with us and Massachusetts Mutual Life Insurance Company, to be funded equally, to support loan underwritings by Jefferies Finance. For further information on this facility, refer to Note 9, Investments, in our consolidated financial statements included in this Annual Report on Form 10-K. In addition, we have loans outstanding to certain of our officers and employees (none of whom are executive officers or directors). For further information on these employee loans, refer to Note 20, Related Party Transactions, in our consolidated financial statements included in this Annual Report on Form 10-K.

•	Securities and margin financing transactions, which reflect our credit exposure arising from reverse repurchase agreements, repurchase agreements and securities lending agreements to the extent the fair value of the underlying collateral differs from the contractual agreement amount and from margin provided to customers.

•	OTC derivatives, which are reported net by counterparty when a legal right of setoff exists under an enforceable master netting agreement. OTC derivative exposure is based on a contract at fair value, net of cash collateral received or posted under credit support agreements. In addition, credit exposures on forward settling trades are included within our derivative credit exposures.

•	Cash and cash equivalents, which includes both interest-bearing and non-interest-bearing deposits at banks.

•	Client on-boarding and approving counterparty credit limits;

•	Negotiating, approving and monitoring credit terms in legal and master documentation;

•	Determining the analytical standards and risk parameters for ongoing management and monitoring credit risk books;

•	Actively managing daily exposure, exceptions and breaches; and

•	Monitoring daily margin call activity and counterparty performance.

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•	We tested the operating effectiveness of the Company’s valuation controls, including the:

◦	Independent price verification controls.

◦	Pricing model controls which are designed to review a model’s theoretical soundness and its appropriateness.

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•	With the assistance of our fair value specialist, we evaluated the reasonableness of management’s valuation methodology and estimates and:

◦	We developed valuation estimates, using externally sourced inputs and models, and compared to management’s recorded value and investigated differences.

◦	We compared management’s assumptions utilized within management’s models to external sources.

•	We evaluated management’s ability to estimate fair value by comparing management’s valuation estimates to subsequent transactions, when available.

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(1)

The amounts include income tax benefits (expenses) of approximately $(3.2) million and $8.9 million during the year ended November 30, 2019 and 2018, respectively, related to the impact of certain discrete items related to tax planning for our non-U.S. subsidiaries in connection with the Tax Cuts and Jobs Act (the “Tax Act”). The amount during the year ended November 30, 2018 also includes a gain of $20.5 million related to foreign currency gains, which was reclassified to Other revenues within the Consolidated Statements of Earnings.

(2)

The amounts include income tax benefits (expenses) of approximately $4.5 million, $(15.5) million, and $13.2 million for the years ended November 30, 2019, 2018 and 2017, respectively. The amount for the year ended November 30, 2019 includes a gain of $0.4 million, net of taxes of $0.2 million, related to changes in instrument specific risk, which was reclassified to Principal transactions revenues within the Consolidated Statements of Earnings. The amount during the year ended November 30, 2018 includes a gain of $0.9 million, net of taxes of $0.3 million, related to changes in instrument specific risk, which was reclassified to Principal transactions revenues within the Consolidated Statements of Earnings and also includes $(6.5) million related to the Tax Act, which was reclassified to Member’s paid-in capital.

(3)

The amounts include income tax benefits (expenses) of approximately $0.2 million, $(0.8) million, and $0.6 million for the years ended November 30, 2019, 2018 and 2017, respectively. The cash flow hedge loss of $0.5 million during the year ended November 30, 2019 was reclassified to Other revenues within the Consolidated Statement of Earnings due to the sale of all of our common shares of Epic Gas Ltd. (“Epic Gas”). Refer to Note 9, Investments, for further information. The amount during the year ended November 30, 2018 also includes $(0.2) million related to the Tax Act, which was reclassified to Member’s paid-in capital.

(4)

The amounts include income tax benefits (expenses) of $0.5 million, $(0.7) million and $0.1 million for the years ended November 30, 2019, 2018 and 2017, respectively. The amount during the year ended November 30, 2019 includes pension losses of $(0.1) million, which was reclassified to Compensation and benefits expenses within the Consolidated Statements of Earnings. The amount during the year ended November 30, 2018 includes $5.3 million related to the transfer of the German Pension Plan and $(0.3) million, net of taxes of $0.1 million, related to pension losses, which were reclassified to Compensation and benefits expenses within the Consolidated Statements of Earnings and $(0.8) million related to the Tax Act, which was reclassified to Member’s paid-in capital.

(5)	The amounts for the years ended November 30, 2019 and 2018 include income tax expense of approximately $0.2 million and $0.1 million, respectively.

(6)	None of the components of other comprehensive income are attributable to noncontrolling interests.

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Organization

Jefferies Group LLC is the largest independent U.S.-headquartered global full service, integrated investment banking and securities firm. The accompanying Consolidated Financial Statements represent the accounts of Jefferies Group LLC and all our subsidiaries (together “we” or “us”). The subsidiaries of Jefferies Group LLC include Jefferies LLC, Jefferies International Limited, Jefferies Hong Kong Limited, Jefferies Financial Services, Inc., Jefferies Funding LLC, Jefferies Leveraged Credit Products, LLC and all other entities in which we have a controlling financial interest or are the primary beneficiary.

Jefferies Group LLC is a direct wholly owned subsidiary of publicly traded Jefferies Financial Group Inc. (“Jefferies”). Jefferies does not guarantee any of our outstanding debt securities. Jefferies Group LLC is a Securities and Exchange Commission (“SEC”) reporting company, filing annual, quarterly and periodic financial reports. Richard Handler, our Chief Executive Officer and Chairman, is the Chief Executive Officer of Jefferies, as well as a Director of Jefferies. Brian P. Friedman, our Chairman of the Executive Committee, is Jefferies’ President and a Director of Jefferies.

On October 1, 2018, Jefferies transferred its 50% interest in Berkadia Commercial Mortgage Holding LLC (“Berkadia”) and investments in certain separately managed accounts and funds to us. On November 1, 2018, we purchased Leucadia Investment Management Limited, an investment advisory company, from Leucadia Asset Management Holding LLC, a subsidiary of Jefferies. Refer to Note 20, Related Party Transactions, for further information.

We operate in two reportable business segments: (1) Investment Banking and Capital Markets and (2) Asset Management. For further information on our reportable business segments, refer to Note 19, Segment Reporting.

Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for financial information.

We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period to prepare these consolidated financial statements in conformity with U.S. GAAP. The most important of these estimates and assumptions relate to fair value measurements, compensation and benefits, goodwill and intangible assets, the ability to realize certain deferred tax assets and the recognition and measurement of uncertain tax positions. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates.

During the third quarter of 2019, we reclassified the presentation of certain other fees, primarily related to prime brokerage services offered to clients. These fees were previously presented as Other revenues in our Consolidated Statements of Earnings and are now presented within Commissions and other fees. Previously reported results are presented on a comparable basis. This change had the impact of increasing Commissions and other fees and reducing Other revenues by $28.3 million and $23.8 million for the years ended November 30, 2018 and 2017, respectively. There is no impact on Total revenues as a result of this change in presentation.

Consolidation

Our policy is to consolidate all entities that we control by ownership of a majority of the outstanding voting stock. In addition, we consolidate entities that meet the definition of a variable interest entity (“VIE”) for which we are the primary beneficiary. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. For consolidated entities that are less than wholly owned, the third party’s holding of equity interest is presented as Noncontrolling interests in our Consolidated Statements of Financial Condition and Consolidated Statements of Changes in Equity. The portion of net earnings attributable to the noncontrolling interests is presented as Net earnings (loss) attributable to noncontrolling interests in our Consolidated Statements of Earnings.

In situations in which we have significant influence, but not control, of an entity that does not qualify as a VIE, we apply either the equity method of accounting or fair value accounting pursuant to the fair value option election under U.S. GAAP, with our portion of net earnings or gains and losses recorded in Other revenues or Principal transactions revenues, respectively. We also have formed nonconsolidated investment vehicles with third-party investors that are typically organized as partnerships or limited liability companies and are carried at fair value. We act as general partner or managing member for these investment vehicles and have generally provided the third-party investors with termination or “kick-out” rights.

Intercompany accounts and transactions are eliminated in consolidation.

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Revenue Recognition Policies

We adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (the “new revenue standard” or Accounting Standards Codification 606, (“ASC 606”)) on December 1, 2017. Revenue recognition policies under the new standard are applied prospectively in our financial statements from December 1, 2017 forward. Reported financial information for the historical comparable periods was not revised and continues to be reported under the accounting standards in effect during the historical periods. For investment banking revenues and asset management fees, we separately state the accounting policies applicable in the presented fiscal years. There were no material changes in our other revenue recognition policies as a result of the new standard.

Commissions and Other Fees. All customer securities transactions are reported in our Consolidated Statements of Financial Condition on a settlement date basis with related income reported on a trade-date basis. We permit institutional customers to allocate a portion of their gross commissions to pay for research products and other services provided by third parties. The amounts allocated for those purposes are commonly referred to as soft dollar arrangements. These arrangements are accounted for on an accrual basis and, as we are acting as an agent in these arrangements, netted against commission revenues in our Consolidated Statements of Earnings. In addition, we earn asset-based fees associated with the management and supervision of assets, account services and administration related to customer accounts.

Principal Transactions. Financial instruments owned and Financial instruments sold, not yet purchased (all of which are recorded on a trade-date basis) are carried at fair value with gains and losses reflected in Principal transactions revenues in our Consolidated Statements of Earnings, except for derivatives accounted for as hedges (see “Hedge Accounting” section herein and Note 5, Derivative Financial Instruments). Fees received on loans carried at fair value are also recorded in Principal transactions revenues.

Investment Banking - Years Ended November 30, 2019 and 2018. Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed. Advisory fees from restructuring engagements are recognized over time using a time elapsed measure of progress. Expenses associated with investment banking advisory engagements are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other investment banking advisory related expenses, including expenses incurred related to restructuring advisory engagements, are expensed as incurred. All investment banking advisory expenses are recognized within their respective expense category on the Consolidated Statements of Earnings and any expenses reimbursed by clients are recognized as Investment banking revenues.

Underwriting and placement agent revenues are recognized at a point in time on trade-date. Costs associated with underwriting activities are deferred until the related revenue is recognized or the engagement is otherwise concluded and are recorded on a gross basis within Underwriting costs in the Consolidated Statements of Earnings.

Investment Banking - Year Ended November 30, 2017. Fees from mergers and acquisitions, restructuring and other investment banking advisory assignments or engagements and underwriting revenues are recorded when the services related to the underlying transactions are completed under the terms of the assignment or engagement. Expenses associated with such assignments are deferred until reimbursed by the client, the related revenue is recognized or the engagement is otherwise concluded. Expenses are recorded net of client reimbursements and netted against revenues. Unreimbursed expenses with no related revenues are included in Business development and Professional services expenses in our Consolidated Statements of Earnings.

Asset Management Fees and Revenues. Asset management fees and revenues consist of asset management fees, as well as revenues from arrangements with strategic partners, which entitle us to portions of our partners’ management company revenues and/or partners’ profits and perpetual rights to certain defined revenues for a given revenue share period. Revenue from arrangements with strategic partners is recognized at the end of the defined revenue or profit share period when the revenues have been realized and all contingencies have been resolved.

Asset Management Fees - Years Ended November 30, 2019 and 2018. Management and administrative fees are generally recognized over the period that the related service is provided. Performance fee revenue is generally recognized only at the end of the performance period to the extent that the benchmark return has been met.

Asset Management Fees - Year Ended November 30, 2017. Management and administrative fees are generally recognized over the period that the related service is provided. Performance fees are accrued (or reversed) on a monthly basis based on measuring performance to date versus any relevant benchmark return hurdles stated in the investment management agreement. Performance fees are not subject to adjustment once the measurement period ends (generally annual periods) and the performance fees have been realized.

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Interest Revenue and Expense. We recognize contractual interest on Financial instruments owned and Financial instruments sold, not yet purchased, on an accrual basis as a component of interest revenue and expense. Interest flows on derivative trading transactions and dividends are included as part of the fair valuation of these contracts and recognized in Principal transactions revenues in our Consolidated Statements of Earnings rather than as a component of interest revenue or expense. We account for our short- and long-term borrowings on an accrual basis, except for those for which we have elected the fair value option, with related interest recorded as Interest expense. Discounts/premiums arising on our long-term debt are accreted/amortized to Interest expense using the effective yield method over the remaining lives of the underlying debt obligations. In addition, we recognize interest revenue related to our securities borrowed and securities purchased under agreements to resell activities and interest expense related to our securities loaned and securities sold under agreements to repurchase activities on an accrual basis.

Cash Equivalents

Cash equivalents include highly liquid investments, including money market funds and certificates of deposit, not held for resale with original maturities of three months or less.

Cash and Securities Segregated and on Deposit for Regulatory Purposes or Deposited With Clearing and Depository Organizations

In accordance with Rule 15c3-3 of the Securities Exchange Act of 1934, Jefferies LLC as a broker-dealer carrying client accounts, is subject to requirements related to maintaining cash or qualified securities in a segregated reserve account for the exclusive benefit of its clients. Certain other entities are also obligated by rules mandated by their primary regulators to segregate or set aside cash or equivalent securities to satisfy regulations, promulgated to protect customer assets. In addition, certain exchange and/or clearing organizations require cash and/or securities to be deposited by us to conduct day-to-day activities.

Financial Instruments and Fair Value

Financial instruments owned and Financial instruments sold, not yet purchased are recorded at fair value, either as required by accounting pronouncements or through the fair value option election. These instruments primarily represent our trading activities and include both cash and derivative products. Gains and losses are recognized in Principal transactions revenues in our Consolidated Statements of Earnings. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price).

Fair Value Hierarchy

In determining fair value, we maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs reflect our assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. We apply a hierarchy to categorize our fair value measurements broken down into three levels based on the transparency of inputs as follows:

Level 1:	Quoted prices are available in active markets for identical assets or liabilities at the reported date. Valuation adjustments and block discounts are not applied to Level 1 instruments.
Level 2:	Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable at the reported date. The nature of these financial instruments include cash instruments for which quoted prices are available but traded less frequently, derivative instruments for which fair values have been derived using model inputs that are directly observable in the market, or can be derived principally from, or corroborated by, observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed.
Level 3:	Instruments that have little to no pricing observability at the reported date. These financial instruments are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Certain financial instruments have bid and ask prices that can be observed in the marketplace. For financial instruments whose inputs are based on bid-ask prices, the financial instrument is valued at the point within the bid-ask range that meets our best estimate of fair value. We use prices and inputs that are current at the measurement date. For financial instruments that do not have readily determinable fair values using quoted market prices, the determination of fair value is based on the best available information, taking into account the types of financial instruments, current financial information, restrictions (if any) on dispositions, fair values of underlying financial instruments and quotations for similar instruments.

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The valuation of financial instruments may include the use of valuation models and other techniques. Adjustments to valuations derived from valuation models are permitted based on management’s judgment, which takes into consideration the features of the financial instrument such as its complexity, the market in which the financial instrument is traded and underlying risk uncertainties about market conditions. Adjustments from the price derived from a valuation model reflect management’s judgment that other participants in the market for the financial instrument being measured at fair value would also consider in valuing that same financial instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.

The availability of observable inputs can vary and is affected by a wide variety of factors, including, for example, the type of financial instrument and market conditions. As the observability of prices and inputs may change for a financial instrument from period to period, this condition may cause a transfer of an instrument among the fair value hierarchy levels. The degree of judgment exercised in determining fair value is greatest for instruments categorized within Level 3.

Loans to and Investments in Related Parties

Loans to and investments in related parties include investments in private equity and other operating entities made in connection with our investment banking and capital markets activities in which we exercise significant influence over operating and capital decisions and loans issued in connection with such activities. Loans to and investments in related parties are accounted for using the equity method or at cost, as appropriate. Revenues on Loans to and investments in related parties are included in Other revenues in our Consolidated Statements of Earnings. See Note 9, Investments, and Note 20, Related Party Transactions, for additional information regarding certain of these investments.

Securities Borrowed and Securities Loaned

Securities borrowed and securities loaned are carried at the amounts of cash collateral advanced and received in connection with the transactions and accounted for as collateralized financing transactions. In connection with both trading and brokerage activities, we borrow securities to cover short sales and to complete transactions in which customers have failed to deliver securities by the required settlement date, and lend securities to other brokers and dealers for similar purposes. When we borrow securities, we generally provide cash to the lender as collateral, which is reflected in our Consolidated Statements of Financial Condition as Securities borrowed. We earn interest revenues on this cash collateral. Similarly, when we lend securities to another party, that party provides cash to us as collateral, which is reflected in our Consolidated Statements of Financial Condition as Securities loaned. We pay interest expense on the cash collateral received from the party borrowing the securities. The initial collateral advanced or received approximates or is greater than the fair value of the securities borrowed or loaned. We monitor the fair value of the securities borrowed and loaned on a daily basis and request additional collateral or return excess collateral, as appropriate.

Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase

Securities purchased under agreements to resell and Securities sold under agreements to repurchase (collectively “repos”) are accounted for as collateralized financing transactions and are recorded at their contracted resale or repurchase amount plus accrued interest. We earn and incur interest over the term of the repo, which is reflected in Interest revenue and Interest expense in our Consolidated Statements of Earnings on an accrual basis. Repos are presented in our Consolidated Statements of Financial Condition on a net-basis by counterparty, where permitted by U.S. GAAP. We monitor the fair value of the underlying securities daily versus the related receivable or payable balances. Should the fair value of the underlying securities decline or increase, additional collateral is requested or excess collateral is returned, as appropriate.

Offsetting of Derivative Financial Instruments and Securities Financing Agreements

To manage our exposure to credit risk associated with our derivative activities and securities financing transactions, we may enter into International Swaps and Derivative Association, Inc. (“ISDA”) master netting agreements, master securities lending agreements, master repurchase agreements or similar agreements and collateral arrangements with counterparties. A master agreement creates a single contract under which all transactions between two counterparties are executed allowing for trade aggregation and a single net payment obligation. Master agreements provide protection in bankruptcy in certain circumstances and, where legally enforceable, enable receivables and payables with the same counterparty to be settled or otherwise eliminated by applying amounts due against all or a portion of an amount due from the counterparty or a third party. Under our ISDA master netting agreements, we typically also execute credit support annexes, which provide for collateral, either in the form of cash or securities, to be posted by or paid to a counterparty based on the fair value of the derivative receivable or payable based on the rates and parameters established in the credit support annex.

In the event of the counterparty’s default, provisions of the master agreement permit acceleration and termination of all outstanding transactions covered by the agreement such that a single amount is owed by, or to, the non-defaulting party. In addition, any collateral posted can be applied to the net obligations, with any excess returned; and the collateralized party has a right to liquidate the collateral. Any residual claim after netting is treated along with other unsecured claims in bankruptcy court.

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The conditions supporting the legal right of offset may vary from one legal jurisdiction to another and the enforceability of master netting agreements and bankruptcy laws in certain countries or in certain industries is not free from doubt. The right of offset is dependent both on contract law under the governing arrangement and consistency with the bankruptcy laws of the jurisdiction where the counterparty is located. Industry legal opinions with respect to the enforceability of certain standard provisions in respective jurisdictions are relied upon as a part of managing credit risk. In cases where we have not determined an agreement to be enforceable, the related amounts are not offset. Master netting agreements are a critical component of our risk management processes as part of reducing counterparty credit risk and managing liquidity risk.

We are also a party to clearing agreements with various central clearing parties. Under these arrangements, the central clearing counterparty facilitates settlement between counterparties based on the net payable owed or receivable due and, with respect to daily settlement, cash is generally only required to be deposited to the extent of the net amount. In the event of default, a net termination amount is determined based on the market values of all outstanding positions and the clearing organization or clearing member provides for the liquidation and settlement of the net termination amount among all counterparties to the open contracts or transactions.

Refer to Note 5, Derivative Financial Instruments and Note 6, Collateralized Transactions, for further information.

Hedge Accounting

Hedge accounting is applied using interest rate swaps designated as fair value hedges of changes in the benchmark interest rate of fixed rate senior long-term debt. The interest rate swaps are included as derivative contracts in Financial instruments owned and Financial instruments sold, not yet purchased in our Consolidated Statements of Financial Position. We use regression analysis to perform ongoing prospective and retrospective assessments of the effectiveness of these hedging relationships. A hedging relationship is deemed effective if the change in fair value of the interest rate swap and the change in the fair value of the long-term debt due to changes in the benchmark interest rate offset within a range of 80% - 125%. The impact of valuation adjustments related to our own credit spreads and counterparty credit spreads are included in the assessment of effectiveness.

For qualifying fair value hedges of benchmark interest rates, the change in the fair value of the derivative and the change in fair value of the long-term debt provide offset of one another and, together with any resulting ineffectiveness, are recorded in Interest expense.

Refer to Note 5, Derivative Financial Instruments, for further information.

Premises and Equipment

Premises and equipment are depreciated using the straight-line method over the estimated useful lives of the related assets (generally three to ten years). Leasehold improvements are amortized using the straight-line method over the term of the related leases or the estimated useful lives of the assets, whichever is shorter. Premises and equipment includes internally developed software. The carrying values of internally developed software ready for its intended use are depreciated over the remaining useful life.

At November 30, 2019 and 2018, furniture, fixtures and equipment, including amounts under capital leases, amounted to $500.3 million and $431.9 million, respectively, and leasehold improvements amounted to $262.1 million and $219.7 million, respectively. Accumulated depreciation and amortization was $411.9 million and $347.5 million at November 30, 2019 and 2018, respectively.

Depreciation and amortization expense amounted to $67.0 million, $56.2 million and $51.7 million for the years ended November 30, 2019, 2018 and 2017, respectively.

Goodwill and Intangible Assets

Goodwill. Goodwill represents the excess acquisition cost over the fair value of net tangible and intangible assets acquired. Goodwill is not amortized and is subject to annual impairment testing on August 1^st or between annual tests if an event or change in circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying value. In testing for goodwill impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. If we conclude otherwise, we are required to perform the two-step impairment test. The goodwill impairment test is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not impaired. If the estimated fair value is less than the carrying value, further analysis is necessary to determine the amount of impairment, if any, by comparing the implied fair value of the reporting unit’s goodwill to the carrying value of the reporting unit’s goodwill.

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The fair value of reporting units are based on widely accepted valuation techniques that we believe market participants would use, although the valuation process requires significant judgment and often involves the use of significant estimates and assumptions. The methodologies we utilize in estimating the fair value of reporting units include market valuation methods that incorporate price-to-earnings and price-to-book multiples of comparable exchange-traded companies and multiples of merger and acquisitions of similar businesses. The estimates and assumptions used in determining fair value could have a significant effect on whether or not an impairment charge is recorded and the magnitude of such a charge. Adverse market or economic events could result in impairment charges in future periods.

Intangible Assets. Intangible assets deemed to have finite lives are amortized on a straight-line basis over their estimated useful lives, where the useful life is the period over which the asset is expected to contribute directly, or indirectly, to our future cash flows. Intangible assets are reviewed for impairment on an interim basis when certain events or circumstances exist. For amortizable intangible assets, impairment exists when the carrying amount of the intangible asset exceeds its fair value. At least annually, the remaining useful life is evaluated.

An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, we have the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If we conclude otherwise, we are required to perform a quantitative impairment test.

Intangible assets are included in Other assets in our Consolidated Statements of Financial Condition. Our annual indefinite-lived intangible asset impairment testing date is August 1^st. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset that is amortized over the remaining useful life of that asset, if any. Subsequent reversal of impairment losses is not permitted.

Refer to Note 10, Goodwill and Intangible Assets, for further information.

Income Taxes

Our results of operations are included in the consolidated federal and applicable state income tax returns filed by Jefferies. In states that neither accept nor require combined or unitary tax returns, certain subsidiaries file separate state income tax returns. We also are subject to income tax in various foreign jurisdictions in which we operate. We account for our provision for income taxes using a “separate return” method. Amounts provided for income taxes are based on income reported for financial statement purposes and do not necessarily represent amounts currently payable. Pursuant to a tax sharing agreement entered into between us and Jefferies, payments are made between us and Jefferies to settle current tax assets and liabilities.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We provide deferred taxes on our temporary differences and on any carryforwards that we could claim on our hypothetical tax return. The realization of deferred tax assets is assessed and a valuation allowance is recorded to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized on the basis of its projected separate return results.

We record uncertain tax positions using a two-step process: (i) we determine whether it is more likely than not that each tax position will be sustained on the basis of the technical merits of the position; and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Legal Reserves

In the normal course of business, we have been named, from time to time, as a defendant in legal and regulatory proceedings. We are also involved, from time to time, in other exams, investigations and similar reviews (both formal and informal) by governmental and self-regulatory agencies regarding our businesses, certain of which may result in judgments, settlements, fines, penalties or other injunctions.

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We recognize a liability for a contingency in Accrued expenses and other liabilities when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If the reasonable estimate of a probable loss is a range, we accrue the most likely amount of such loss, and if such amount is not determinable, then we accrue the minimum in the range as the loss accrual. The determination of the outcome and loss estimates requires significant judgment on the part of management. We believe that any other matters for which we have determined a loss to be probable and reasonably estimable are not material to our consolidated financial statements.

In many instances, it is not possible to determine whether any loss is probable or even possible or to estimate the amount of any loss or the size of any range of loss. We believe that, in the aggregate, the pending legal actions or regulatory proceedings and any other exams, investigations or similar reviews (both formal and informal) should not have a material adverse effect on our consolidated results of operations, cash flows or financial condition. In addition, we believe that any amount of potential loss or range of potential loss in excess of what has been provided in our consolidated financial statements that could be reasonably estimated is not material.

Share-based Compensation

Share-based awards are measured based on the grant-date fair value of the award and recognized over the period from the service inception date through the date the employee is no longer required to provide service to earn the award. We account for forfeitures as they occur.

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries having non-U.S. dollar functional currencies are translated at exchange rates at the end of a period. Revenues and expenses are translated at average exchange rates during the period. The gains or losses resulting from translating foreign currency financial statements into U.S. dollars, net of hedging gains or losses and taxes, if any, are included in Other comprehensive income. Gains or losses resulting from foreign currency transactions are included in Principal transactions revenues in our Consolidated Statements of Earnings.

Securitization Activities

We engage in securitization activities related to corporate loans, consumer loans, commercial mortgage loans and mortgage-backed and other asset-backed securities. Transfers of financial assets to secured funding vehicles are accounted for as sales when we have relinquished control over the transferred assets. The gain or loss on sale of such financial assets depends, in part, on the previous carrying amount of the assets involved in the transfer allocated between the assets sold and the retained interests, if any, based upon their respective fair values at the date of sale. We may retain interests in the securitized financial assets as one or more tranches of the securitization. These retained interests are included in Financial instruments owned within our Consolidated Statements of Financial Condition at fair value. Any changes in the fair value of such retained interests are recognized in Principal transactions revenues in our Consolidated Statements of Earnings.

When a transfer of assets does not meet the criteria of a sale, we account for the transfer as a secured borrowing and continue to recognize the assets of a secured borrowing in Financial instruments owned and recognize the associated financing in Other secured financings in our Consolidated Statements of Financial Condition.

Accounting Standards to be Adopted in Future Periods

Income Taxes. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The objective of the guidance is to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and to provide more consistent application to improve the comparability of financial statements. The guidance is effective in the first quarter of fiscal 2022. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Consolidation. In October 2018, the FASB issued ASU No. 2018-17, Consolidation: Targeted Improvements to Related Party Guidance for Variable Interest Entities. The guidance requires indirect interests held through related parties under common control arrangements be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. The guidance is effective in the first quarter of fiscal 2021. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

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Internal-Use Software. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The guidance amends the definition of a hosting arrangement and requires that the customer in a hosting arrangement that is a service contract capitalize certain implementation costs as if the arrangement was an internal-use software project. The guidance is effective in the first quarter of fiscal 2021. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Defined Benefit Plans. In August 2018, the FASB issued ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General: Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. The objective of the guidance is to improve the effectiveness of disclosure requirements on defined benefit pension plans and other postretirement plans. The guidance is effective in the first quarter of fiscal 2021. We do not believe the new guidance will have a material impact on our consolidated financial statements.

Derivatives and Hedging. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The objective of the guidance is to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The guidance is effective in the first quarter of fiscal 2020. We do not believe the new guidance will have a material impact on our consolidated financial statements.

Goodwill. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies goodwill impairment testing. The guidance is effective in the first quarter of fiscal 2021. We do not believe the new guidance will have a material impact on our consolidated financial statements.

Financial Instruments—Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. The guidance provides for estimating credit losses on certain types of financial instruments by introducing an approach based on expected losses. The guidance is effective in the first quarter of fiscal 2021. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases. The guidance affects the accounting for leases and provides for a lessee model that brings substantially all leases that are longer than one year onto the balance sheet, which will result in the recognition of a right-of-use (“ROU”) asset and a corresponding lease liability. The ROU asset and lease liability will be measured initially using the present value of the remaining rental payments. In July 2018, the FASB issued ASU No. 2018-11, Leases: Targeted Improvements. The guidance allows an entity to apply a modified retrospective approach. We adopted both lease ASUs in the first quarter of fiscal 2020 under a modified retrospective approach. At transition on December 1, 2019, the adoption of this standard resulted in the recognition of ROU assets of $519.9 million and operating lease liabilities of $586.3 million reflected in Premises and equipment and Operating lease liabilities, respectively. Reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods. The guidance requires enhanced disclosures, which we will include in the footnotes to our consolidated financial statements beginning with the three months ended February 29, 2020.

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The following is a summary of our financial assets and liabilities that are accounted for at fair value on a recurring basis, excluding Investments at fair value based on net asset value (“NAV”) of $570.3 million and $322.9 million at November 30, 2019 and 2018, respectively, by level within the fair value hierarchy (in thousands):

	November 30, 2019
	Level 1				Level 2				Level 3				Counterparty and Cash Collateral Netting (1)				Total
Assets:
Financial instruments owned:
Corporate equity securities	$	2,325,116			$	218,403			$	58,301			$	—			$	2,601,820
Corporate debt securities	—				2,472,213				7,490				—				2,479,703
Collateralized debt obligations and collateralized loan obligations	—				124,225				20,081				—				144,306
U.S. government and federal agency securities	2,101,624				158,618				—				—				2,260,242
Municipal securities	—				742,326				—				—				742,326
Sovereign obligations	1,330,026				1,405,827				—				—				2,735,853
Residential mortgage-backed securities	—				1,069,066				17,740				—				1,086,806
Commercial mortgage-backed securities	—				424,060				6,110				—				430,170
Other asset-backed securities	—				303,847				42,563				—				346,410
Loans and other receivables	—				2,395,211				64,240				—				2,459,451
Derivatives	2,809				1,812,659				14,889				(1,432,806		)		397,551
Investments at fair value	—				32,688				75,738				—				108,426
Total financial instruments owned, excluding Investments at fair value based on NAV	$	5,759,575			$	11,159,143			$	307,152			$	(1,432,806	)		$	15,793,064
Securities purchased under agreements to resell	$	—			$	—			$	25,000			$	—			$	25,000
Securities received as collateral	$	9,500			$	—			$	—			$	—			$	9,500
Liabilities:
Financial instruments sold, not yet purchased:
Corporate equity securities	$	2,755,601			$	7,438			$	4,487			$	—			$	2,767,526
Corporate debt securities	—				1,471,142				340				—				1,471,482
U.S. government and federal agency securities	1,851,981				—				—				—				1,851,981
Sovereign obligations	1,363,475				941,065				—				—				2,304,540
Commercial mortgage-backed securities	—				—				35				—				35
Loans	—				1,600,228				9,463				—				1,609,691
Derivatives	871				2,066,064				92,057				(1,631,787		)		527,205
Total financial instruments sold, not yet purchased	$	5,971,928			$	6,085,937			$	106,382			$	(1,631,787	)		$	10,532,460
Short-term borrowings	$	—			$	20,981			$	—			$	—			$	20,981
Obligation to return securities received as collateral	$	9,500			$	—			$	—			$	—			$	9,500
Long-term debt	$	—			$	735,216			$	480,069			$	—			$	1,215,285

(1)	Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.

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	November 30, 2018
	Level 1				Level 2				Level 3				Counterparty and Cash Collateral Netting (1)				Total
Assets:
Financial instruments owned:
Corporate equity securities	$	1,907,945			$	118,681			$	51,040			$	—			$	2,077,666
Corporate debt securities	—				2,683,180				9,484				—				2,692,664
Collateralized debt obligations and collateralized loan obligations	—				72,949				25,815				—				98,764
U.S. government and federal agency securities	1,789,614				56,592				—				—				1,846,206
Municipal securities	—				894,253				—				—				894,253
Sovereign obligations	1,769,556				1,043,409				—				—				2,812,965
Residential mortgage-backed securities	—				2,163,629				19,603				—				2,183,232
Commercial mortgage-backed securities	—				819,406				10,886				—				830,292
Other asset-backed securities	—				239,381				53,175				—				292,556
Loans and other receivables	—				2,056,593				46,985				—				2,103,578
Derivatives	12,186				2,524,988				5,922				(2,412,486		)		130,610
Investments at fair value	—				—				113,831				—				113,831
Total financial instruments owned, excluding Investments at fair value based on NAV	$	5,479,301			$	12,673,061			$	336,741			$	(2,412,486	)		$	16,076,617
Liabilities:
Financial instruments sold, not yet purchased:
Corporate equity securities	$	1,685,071			$	1,444			$	—			$	—			$	1,686,515
Corporate debt securities	—				1,505,618				522				—				1,506,140
U.S. government and federal agency securities	1,384,295				—				—				—				1,384,295
Sovereign obligations	1,735,242				661,095				—				—				2,396,337
Loans	—				1,371,630				6,376				—				1,378,006
Derivatives	26,471				3,585,249				27,536				(2,511,605		)		1,127,651
Total financial instruments sold, not yet purchased	$	4,831,079			$	7,125,036			$	34,434			$	(2,511,605	)		$	9,478,944
Long-term debt	$	—			$	485,425			$	200,745			$	—			$	686,170

(1)	Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.

The following is a description of the valuation basis, including valuation techniques and inputs, used in measuring our financial assets and liabilities that are accounted for at fair value on a recurring basis:

Corporate Equity Securities

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Exchange-Traded Equity Securities: Exchange-traded equity securities are measured based on quoted closing exchange prices, which are generally obtained from external pricing services, and are categorized within Level 1 of the fair value hierarchy, otherwise they are categorized within Level 2 of the fair value hierarchy. To the extent these securities are actively traded, valuation adjustments are not applied.

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Non-Exchange-Traded Equity Securities: Non-exchange-traded equity securities are measured primarily using broker quotations, pricing data from external pricing services and prices observed from recently executed market transactions and are categorized within Level 2 of the fair value hierarchy. Where such information is not available, non-exchange-traded equity securities are categorized within Level 3 of the fair value hierarchy and measured using valuation techniques involving quoted prices of or market data for comparable companies, similar company ratios and multiples (e.g., price/Earnings before interest, taxes, depreciation and amortization (“EBITDA”), price/book value), discounted cash flow analyses and transaction prices observed from subsequent financing or capital issuance by the company. When using pricing data of comparable companies, judgment must be applied to adjust the pricing data to account for differences between the measured security and the comparable security (e.g., issuer market capitalization, yield, dividend rate, geographical concentration).

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Equity Warrants: Non-exchange-traded equity warrants are measured primarily using pricing data from external pricing services, prices observed from recently executed market transactions and broker quotations and are categorized within Level 2 of the fair value hierarchy. Where such information is not available, non-exchange-traded equity warrants are generally categorized within Level 3 of the fair value hierarchy and are measured using the Black-Scholes model with key inputs impacting the valuation including the underlying security price, implied volatility, dividend yield, interest rate curve, strike price and maturity date.

Corporate Debt Securities

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Investment Grade Corporate Bonds: Investment grade corporate bonds are measured primarily using pricing data from external pricing services and broker quotations, where available, prices observed from recently executed market transactions and bond spreads or credit default swap spreads of the issuer adjusted for basis differences between the swap curve and the bond curve. Investment grade corporate bonds measured using these valuation methods are categorized within Level 2 of the fair value hierarchy. If broker quotes, pricing data or spread data is not available, alternative valuation techniques are used including cash flow models incorporating interest rate curves, single name or index credit default swap curves for comparable issuers and recovery rate assumptions. Investment grade corporate bonds measured using alternative valuation techniques are categorized within Level 2 or Level 3 of the fair value hierarchy and are a limited portion of our investment grade corporate bonds.

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High Yield Corporate and Convertible Bonds: A significant portion of our high yield corporate and convertible bonds are categorized within Level 2 of the fair value hierarchy and are measured primarily using broker quotations and pricing data from external pricing services, where available, and prices observed from recently executed market transactions of institutional size. Where pricing data is less observable, valuations are categorized within Level 3 of the fair value hierarchy and are based on pending transactions involving the issuer or comparable issuers, prices implied from an issuer’s subsequent financing or recapitalization, models incorporating financial ratios and projected cash flows of the issuer and market prices for comparable issuers.

Collateralized Debt Obligations and Collateralized Loan Obligations

Collateralized debt obligations (“CDOs”) and collateralized loan obligations (“CLOs”) are measured based on prices observed from recently executed market transactions of the same or similar security or based on valuations received from third-party brokers or data providers and are categorized within Level 2 or Level 3 of the fair value hierarchy depending on the observability and significance of the pricing inputs. Valuation that is based on recently executed market transactions of similar securities incorporates additional review and analysis of pricing inputs and comparability criteria, including, but not limited to, collateral type, tranche type, rating, origination year, prepayment rates, default rates and loss severity.

U.S. Government and Federal Agency Securities

•	U.S. Treasury Securities: U.S. Treasury securities are measured based on quoted market prices obtained from external pricing services and categorized within Level 1 of the fair value hierarchy.

•	U.S. Agency Debt Securities: Callable and non-callable U.S. agency debt securities are measured primarily based on quoted market prices obtained from external pricing services and are generally categorized within Level 1 or Level 2 of the fair value hierarchy.

Municipal Securities

Municipal securities are measured based on quoted prices obtained from external pricing services and are generally categorized within Level 2 of the fair value hierarchy.

Sovereign Obligations

Sovereign government obligations are measured based on quoted market prices obtained from external pricing services, where available, or recently executed independent transactions of comparable size. Sovereign government obligations, with consideration given to the country of issuance, are generally categorized within Level 1 or Level 2 of the fair value hierarchy.

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Residential Mortgage-Backed Securities

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Agency Residential Mortgage-Backed Securities (“RMBS”): Agency RMBS include mortgage pass-through securities (fixed and adjustable rate), collateralized mortgage obligations and principal-only and interest-only (including inverse interest-only) securities. Agency RMBS are generally measured using recent transactions, pricing data from external pricing services or expected future cash flow techniques that incorporate prepayment models and other prepayment assumptions to amortize the underlying mortgage loan collateral and are categorized within Level 2 or Level 3 of the fair value hierarchy. We use prices observed from recently executed transactions to develop market-clearing spread and yield curve assumptions. Valuation inputs with regard to the underlying collateral incorporate factors such as weighted average coupon, loan-to-value, credit scores, geographic location, maximum and average loan size, originator, servicer and weighted average loan age.

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Non-Agency RMBS: The fair value of non-agency RMBS is determined primarily using discounted cash flow methodologies and securities are categorized within Level 2 or Level 3 of the fair value hierarchy based on the observability and significance of the pricing inputs used. Performance attributes of the underlying mortgage loans are evaluated to estimate pricing inputs, such as prepayment rates, default rates and the severity of credit losses. Attributes of the underlying mortgage loans that affect the pricing inputs include, but are not limited to, weighted average coupon; average and maximum loan size; loan-to-value; credit scores; documentation type; geographic location; weighted average loan age; originator; servicer; historical prepayment, default and loss severity experience of the mortgage loan pool; and delinquency rate. Yield curves used in the discounted cash flow models are based on observed market prices for comparable securities and published interest rate data to estimate market yields. In addition, broker quotes, where available, are also referenced to compare prices primarily on interest-only securities.

Commercial Mortgage-Backed Securities

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Agency Commercial Mortgage-Backed Securities (“CMBS”): Government National Mortgage Association (“GNMA”) project loan bonds are measured based on inputs corroborated from and benchmarked to observed prices of recent securitization transactions of similar securities with adjustments incorporating an evaluation of various factors, including prepayment speeds, default rates and cash flow structures, as well as the likelihood of pricing levels in the current market environment. Federal National Mortgage Association (“FNMA”) Delegated Underwriting and Servicing (“DUS”) mortgage-backed securities are generally measured by using prices observed from recently executed market transactions to estimate market-clearing spread levels for purposes of estimating fair value. GNMA project loan bonds and FNMA DUS mortgage-backed securities are categorized within Level 2 of the fair value hierarchy.

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Non-Agency CMBS: Non-agency CMBS are measured using pricing data obtained from external pricing services, prices observed from recently executed market transactions or based on expected cash flow models that incorporate underlying loan collateral characteristics and performance. Non-Agency CMBS are categorized within Level 2 or Level 3 of the fair value hierarchy depending on the observability of the underlying inputs.

Other Asset-Backed Securities

Other asset-backed securities (“ABS”) include, but are not limited to, securities backed by auto loans, credit card receivables, student loans and other consumer loans and are categorized within Level 2 or Level 3 of the fair value hierarchy. Valuations are primarily determined using pricing data obtained from external pricing services, broker quotes and prices observed from recently executed market transactions. In addition, recent transaction data from comparable deals is deployed to develop market clearing yields and cumulative loss assumptions. The cumulative loss assumptions are based on the analysis of the underlying collateral and comparisons to earlier deals from the same issuer to gauge the relative performance of the deal.

Loans and Other Receivables

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Corporate Loans: Corporate loans categorized within Level 2 of the fair value hierarchy are measured based on market consensus pricing service quotations. Where available, market price quotations from external pricing services are reviewed to ensure they are supported by transaction data. Corporate loans categorized within Level 3 of the fair value hierarchy are measured based on price quotations that are considered to be less transparent, market prices for debt securities of the same creditor and estimates of future cash flows incorporating assumptions regarding creditor default and recovery rates and consideration of the issuer’s capital structure.

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Participation Certificates in Agency Residential Loans: Valuations of participation certificates in agency residential loans are based on observed market prices of recently executed purchases and sales of similar loans and data provider pricing. The loan participation certificates are categorized within Level 2 of the fair value hierarchy given the observability and volume of recently executed transactions and availability of data provider pricing.

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Project Loans and Participation Certificates in GNMA Project and Construction Loans: Valuations of participation certificates in GNMA project and construction loans are based on inputs corroborated from and benchmarked to observed prices of recent securitizations with similar underlying loan collateral to derive an implied spread. Securitization prices are adjusted to estimate the fair value of the loans to account for the arbitrage that is realized at the time of securitization. The measurements are categorized within Level 2 of the fair value hierarchy given the observability and volume of recently executed transactions.

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Consumer Loans and Funding Facilities: Consumer and small business whole loans and related funding facilities are valued based on observed market transactions and incorporating valuation inputs including, but not limited to, delinquency and default rates, prepayment rates, borrower characteristics, loan risk grades and loan age. These assets are categorized within Level 2 or Level 3 of the fair value hierarchy.

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Escrow and Claim Receivables: Escrow and claim receivables are categorized within Level 3 of the fair value hierarchy where fair value is estimated based on reference to market prices and implied yields of debt securities of the same or similar issuers. Escrow and claim receivables are categorized within Level 2 of the fair value hierarchy where fair value is based on recent observations in the same receivable.

Derivatives

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Listed Derivative Contracts: Listed derivative contracts that are actively traded are measured based on quoted exchange prices, broker quotes or vanilla option valuation models, such as Black-Scholes, using observable valuation inputs from the principal market or consensus pricing services. Exchange quotes and/or valuation inputs are generally obtained from external vendors and pricing services. Broker quotes are validated directly through observable and tradeable quotes. Listed derivative contracts that use unadjusted exchange close prices are generally categorized within Level 1 of the fair value hierarchy. All other listed derivative contracts are generally categorized within Level 2 of the fair value hierarchy.

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Over-the-Counter (“OTC”) Derivative Contracts: OTC derivative contracts are generally valued using models, whose inputs reflect assumptions that we believe market participants would use in valuing the derivative in a current transaction. Where available, valuation inputs are calibrated from observable market data. For many OTC derivative contracts, the valuation models do not involve material subjectivity as the methodologies do not entail significant judgment and the inputs to valuation models do not involve a high degree of subjectivity as the valuation model inputs are readily observable or can be derived from actively quoted markets. OTC derivative contracts are primarily categorized within Level 2 of the fair value hierarchy given the observability and significance of the inputs to the valuation models. Where significant inputs to the valuation are unobservable, derivative instruments are categorized within Level 3 of the fair value hierarchy.

OTC options include OTC equity, foreign exchange, interest rate and commodity options measured using various valuation models, such as Black-Scholes, with key inputs including the underlying security price, foreign exchange spot rate, commodity price, implied volatility, dividend yield, interest rate curve, strike price and maturity date. Discounted cash flow models are utilized to measure certain OTC derivative contracts including the valuations of our interest rate swaps, which incorporate observable inputs related to interest rate curves, valuations of our foreign exchange forwards and swaps, which incorporate observable inputs related to foreign currency spot rates and forward curves and valuations of our commodity swaps and forwards, which incorporate observable inputs related to commodity spot prices and forward curves. Discounted cash flow models are also utilized to measure certain variable funding note swaps, which are backed by CLOs and incorporates constant prepayment rate, constant default rate and loss severity assumptions. Credit default swaps include both index and single-name credit default swaps. Where available, external data is used in measuring index credit default swaps and single-name credit default swaps. For commodity and equity total return swaps, market prices are generally observable for the underlying asset and used as the basis for measuring the fair value of the derivative contracts. Total return swaps executed on other underlyings are measured based on valuations received from external pricing services.

Investments at Fair Value

Investments at fair value includes investments in hedge funds, fund of funds and private equity funds, which are measured at the NAV of the funds, provided by the fund managers and are excluded from the fair value hierarchy. Investments at fair value also include direct equity investments in private companies, which are measured at fair value using valuation techniques involving quoted prices of or market data for comparable companies, similar company ratios and multiples (e.g., price/EBITDA, price/book value), discounted cash flow analyses and transaction prices observed for subsequent financing or capital issuance by the company. Direct equity investments in private companies are categorized within Level 2 or Level 3 of the fair value hierarchy.

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The following tables present information about our investments in entities that have the characteristics of an investment company (in thousands):

	November 30, 2019
	Fair Value (1)				Unfunded Commitments
Equity Long/Short Hedge Funds (2)	$	291,593			$	—
Equity Funds (3)	27,952				12,108
Commodity Fund (4)	16,025				—
Multi-asset Funds (5)	234,583				—
Other Funds (6)	157				—
Total	$	570,310			$	12,108

	November 30, 2018
	Fair Value (1)				Unfunded Commitments
Equity Long/Short Hedge Funds (2)	$	15,338			$	—
Equity Funds (3)	40,070				20,996
Commodity Fund (4)	10,129				—
Multi-asset Funds (5)	256,972				—
Other Funds (6)	400				—
Total	$	322,909			$	20,996

(1)	Where fair value is calculated based on NAV, fair value has been derived from each of the funds’ capital statements.

(2)

This category includes investments in hedge funds that invest, long and short, primarily in equity securities in domestic and international markets in both the public and private sectors. At November 30, 2019 and 2018, approximately 94% and 0%, respectively, of the fair value of investments in this category cannot be redeemed because these investments include restrictions that do not allow for redemption in the first 36 months after acquisition. At November 30, 2019 and 2018, approximately 6% and 97%, respectively, of the fair value of investments in this category are redeemable quarterly with 60 days prior written notice.

(3)

At November 30, 2019 and 2018, the investments in this category include investments in equity funds that invest in the equity of various U.S. and foreign private companies in the energy, technology, internet service and telecommunication service industries. These investments cannot be redeemed; instead, distributions are received through the liquidation of the underlying assets of the funds which are primarily expected to be liquidated in approximately one to nine years.

(4)	This category includes investments in a hedge fund that invests, long and short, primarily in commodities. Investments in this category are redeemable quarterly with 60 days prior written notice.

(5)	This category includes investments in hedge funds that invest, long and short, primarily in multi-asset securities in domestic and international markets in both the public and private sectors. At November 30, 2019 and 2018, investments representing approximately 5% and 15%, respectively, of the fair value of investments in this category are redeemable with 30 days prior written notice.

(6)

This category includes investments in a fund that invests in loans secured by a first trust deed on property, domestic and international public high yield debt, private high yield investments, senior bank loans, public leveraged equities, distressed debt and private equity investments and there are no redemption provisions. This category also includes investments in a fund of funds that invests in various private equity funds that are managed by us and have no redemption provisions. Investments in the fund of funds are gradually being liquidated, however, the timing of when the proceeds will be received is uncertain.

Securities Purchased Under Agreements to Resell

Securities purchased under agreements to resell may include embedded call features. The valuation of these instruments is based on review of expected future cash flows, interest rates, funding spreads and the fair value of the underlying collateral. Securities purchased under agreements to resell are categorized within Level 3 of the fair value hierarchy due to limited observability of the embedded derivative and unobservable credit spreads.

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Securities Received as Collateral / Obligations to Return Securities Received as Collateral

In connection with securities-for-securities transactions in which we are the lender of securities and are permitted to sell or repledge the securities received as collateral, we report the fair value of the collateral received and the related obligation to return the collateral. Valuation is based on the price of the underlying security and is categorized within Level 1 of the fair value hierarchy.

Short-term Borrowings / Long-term Debt

Short-term borrowings that are accounted for at fair value include equity-linked notes, which are generally categorized within Level 2 of the fair value hierarchy, as the fair value is based on the price of the underlying equity security. Long-term debt includes variable rate, fixed-to-floating rate, constant maturity swap, digital and Bermudan structured notes. These are valued using various valuation models that incorporate our own credit spread, market price quotations from external pricing sources referencing the appropriate interest rate curves, volatilities and other inputs as well as prices for transactions in a given note during the period. Long-term debt notes are generally categorized within Level 2 of the fair value hierarchy, where market trades have been observed during the quarter, otherwise categorized within Level 3.

Level 3 Rollforwards

The following is a summary of changes in fair value of our financial assets and liabilities that have been categorized within Level 3 of the fair value hierarchy for the year ended November 30, 2019 (in thousands):

	Balance at November 30, 2018				Total gains/ losses (realized and unrealized) (1)				Purchases				Sales				Settlements				Issuances				Net transfers into/ (out of) Level 3				Balance at November 30, 2019				For instruments still held at November 30, 2019, changes in unrealized gains/(losses) included in:
																																	Earnings (1)				Other comprehensive income (1)
Assets:
Financial instruments owned:
Corporate equity securities	$	51,040			$	(10,380	)		$	69,065			$	(28,159	)		$	(18,208	)		$	—			$	(5,057	)		$	58,301			$	(12,821	)		$	—
Corporate debt securities	9,484				(4,860		)		8,900				(13,854		)		(379		)		—				8,199				7,490				(6,176		)		—
CDOs and CLOs	25,815				(2,342		)		49,658				(38,147		)		(9,083		)		—				(5,820		)		20,081				(974		)		—
RMBS	19,603				(1,669		)		1,954				(2,472		)		(152		)		—				476				17,740				(530		)		—
CMBS	10,886				(2,888		)		206				(2,346		)		(5,317		)		—				5,569				6,110				(2,366		)		—
Other ABS	53,175				433				104,097				(73,335		)		(51,374		)		—				9,567				42,563				(98		)		—
Loans and other receivables	46,985				(5,505		)		57,403				(48,350		)		(5,068		)		—				18,775				64,240				(3,319		)		—
Investments at fair value	113,831				113				240				(38,446		)		—				—				—				75,738				2,964				—
Securities purchased under agreements to resell	—				—				—				—				—				25,000				—				25,000				—				—
Liabilities:
Financial instruments sold, not yet purchased:
Corporate equity securities	$	—			$	(2,649	)		$	(4,322	)		$	11,458			$	—			$	—			$	—			$	4,487			$	1,928			$	—
Corporate debt securities	522				(381		)		(457		)		—				(524		)		—				1,180				340				383				—
CMBS	—				35				—				—				—				—				—				35				35				—
Loans	6,376				(1,382		)		(2,573		)		6,494				—				—				548				9,463				1,382				—
Net derivatives (2)	21,614				(21,452		)		(4,323		)		36,144				2,227				—				42,958				77,168				12,098				—
Long-term debt	200,745				(18,662		)		—				—				(11,250		)		348,275				(39,039		)		480,069				29,656				(10,993		)

(1)	Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in our Consolidated Statements of Earnings. Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statement of Comprehensive Income, net of tax.

(2)	Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased —Derivatives.

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Analysis of Level 3 Assets and Liabilities for the Year Ended November 30, 2019

During the year ended November 30, 2019, transfers of assets of $58.4 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•	Loans and other receivables of $27.4 million, other ABS of $12.1 million, corporate debt securities of $8.9 million, CMBS of $5.6 million and CDOs and CLOs of $3.0 million due to reduced pricing transparency.

During the year ended November 30, 2019, transfers of assets of $26.7 million from Level 3 to Level 2 are primarily attributed to:

•	CDOs and CLOs of $8.8 million, loans and other receivables of $8.6 million, corporate equity securities of $6.0 million and other ABS of $2.6 million due to greater pricing transparency supporting classification into Level 2.

During the year ended November 30, 2019, there were transfers of net derivatives of $57.2 million from Level 2 to Level 3 due to reduced observability of inputs and market data. Transfers of net derivatives from Level 3 to Level 2 were $14.3 million for the year ended November 30, 2019 due to greater observability of inputs and market data.

During the year ended November 30, 2019, there were transfers of structured notes of $22.6 million from Level 2 to Level 3 due to reduced market transparency. Transfers of structured notes from Level 3 to Level 2 were $61.7 million for the year ended November 30, 2019 due to greater market transparency.

Net losses on Level 3 assets were $27.1 million and net gains on Level 3 liabilities were $44.5 million for the year ended November 30, 2019. Net losses on Level 3 assets were primarily due to decreased market values in corporate equity securities, loans and other receivables, corporate debt securities, CMBS and CDOs and CLOs. Net gains on Level 3 liabilities were primarily due to decreased market values across certain derivatives and valuations of certain structured notes.

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The following is a summary of changes in fair value of our financial assets and liabilities that have been categorized within Level 3 of the fair value hierarchy for the year ended November 30, 2018 (in thousands):

	Balance at November  30, 2017				Total gains/ losses (realized and unrealized) (1)				Purchases				Sales				Settlements				Issuances				Net transfers into/ (out of) Level 3				Balance at November 30, 2018				For instruments still held at November 30, 2018, changes in unrealized gains/(losses) included in:
																																	Earnings (1)				Other comprehensive income (1)
Assets:
Financial instruments owned:
Corporate equity securities	$	22,009			$	24,023			$	31,669			$	(22,759	)		$	(3,977	)		$	—			$	75			$	51,040			$	22,774			$	—
Corporate debt securities	26,036				(439		)		10,352				(23,364		)		(1,679		)		—				(1,422		)		9,484				(2,606		)		—
CDOs and CLOs	30,004				(14,368		)		356,650				(353,330		)		(10,247		)		—				17,106				25,815				(7,605		)		—
RMBS	26,077				(6,970		)		3,118				(12,816		)		(513		)		—				10,707				19,603				521				—
CMBS	12,419				(2,186		)		1,436				(471		)		(16,624		)		—				16,312				10,886				(4,000		)		—
Other ABS	61,129				(9,934		)		706,846				(677,220		)		(27,641		)		—				(5		)		53,175				(5,283		)
Loans and other receivables	47,304				(5,137		)		149,228				(130,832		)		(15,311		)		—				1,733				46,985				(8,457		)		—
Investments at fair value	93,454				2,353				34,648				(17,570		)		—				—				946				113,831				1,759				—
Liabilities:
Financial instruments sold, not yet purchased:
Corporate equity securities	$	48			$	—			$	—			$	—			$	—			$	—			$	(48	)		$	—			$	—			$	—
Corporate debt securities	522				—				—				—				—				—				—				522				—				—
CMBS	105				(105		)		—				—				—				—				—				—				—				—
Loans	3,486				84				(4,626		)		7,432				—				—				—				6,376				(28		)		—
Net derivatives (2)	6,746				(3,237		)		(17		)		14,920				(1,335		)		—				4,537				21,614				(646		)		—
Long-term debt	—				(30,347		)		—				—				—				84,860				146,232				200,745				10,951				19,396

(1)	Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in our Consolidated Statements of Earnings. Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statement of Comprehensive Income, net of tax.

(2)	Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased —Derivatives.

Analysis of Level 3 Assets and Liabilities for the Year Ended November 30, 2018

During the year ended November 30, 2018, transfers of assets of $57.8 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•	CDOs and CLOs of $17.3 million, CMBS of $16.3 million and RMBS of $15.3 million due to reduced price transparency.

During the year ended November 30, 2018, transfers of assets of $12.3 million from Level 3 to Level 2 are primarily attributed to:

•	RMBS of $4.6 million, corporate debt securities of $3.6 million and corporate equity securities of $2.9 million due to greater pricing transparency supporting classification into Level 2.

During the year ended November 30, 2018, there were transfers of structured notes of $146.2 million from Level 2 to Level 3 due to reduced market transparency.

Net losses on Level 3 assets were $12.7 million and net gains on Level 3 liabilities were $33.6 million for the year ended November 30, 2018. Net losses on Level 3 assets were primarily due to decreased market values in CDOs and CLOs, other ABS, RMBS and certain loans and other receivables, partially offset by increased market values in corporate equity securities. Net gains on Level 3 liabilities were primarily due to decreased valuations of certain structured notes.

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The following is a summary of changes in fair value of our financial assets and liabilities that have been categorized within Level 3 of the fair value hierarchy for the year ended November 30, 2017 (in thousands):

	Balance at November 30, 2016				Total gains/ losses (realized and unrealized) (1)				Purchases				Sales				Settlements				Issuances				Net transfers into/ (out of) Level 3				Balance at November 30, 2017				Change in unrealized gain/ (losses) relating to instruments still held at November 30, 2017 (1)
Assets:
Financial instruments owned:
Corporate equity securities	$	21,739			$	3,262			$	896			$	(1,623	)		$	52			$	—			$	(2,317	)		$	22,009			$	2,515
Corporate debt securities	25,005				(3,723		)		36,850				(34,077		)		(1,968		)		—				3,949				26,036				(3,768		)
CDOs and CLOs	54,354				(19,858		)		112,239				(110,907		)		(367		)		—				(5,457		)		30,004				(2,262		)
Municipal securities	27,257				(1,547		)		—				(25,710		)		—				—				—				—				—
RMBS	38,772				(10,817		)		6,805				(26,193		)		(115		)		—				17,625				26,077				(7,201		)
CMBS	20,580				(5,346		)		3,275				(5,263		)		(1,018		)		—				191				12,419				(6,976		)
Other ABS	40,911				(17,705		)		77,508				(8,613		)		(25,799		)		—				(5,173		)		61,129				(12,562		)
Loans and other receivables	81,872				24,794				63,768				(53,095		)		(34,622		)		—				(35,413		)		47,304				17,451
Investments, at fair value	96,369				6,361				1,981				(10,157		)		(1,100		)		—				—				93,454				8,385
Liabilities:
Financial instruments sold, not yet purchased:
Corporate equity securities	$	313			$	60			$	(373	)		$	48			$	—			$	—			$	—			$	48			$	—
Corporate debt securities	523				(1		)		—				—				—				—				—				522				1
CMBS	—				105				—				—				—				—				—				105				(105		)
Loans	378				196				(385		)		2,485				—				—				812				3,486				(2,639		)
Net derivatives (2)	3,441				(1,638		)		—				—				5,558				456				(1,071		)		6,746				(17,740		)
Other secured financings	418				(418		)		—				—				—				—				—				—				—

(1)	Realized and unrealized gains/losses are reported in Principal transactions revenues in our Consolidated Statements of Earnings.

(2)	Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased —Derivatives.

Analysis of Level 3 Assets and Liabilities for the Year Ended November 30, 2017

During the year ended November 30, 2017, transfers of assets of $33.8 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

•	RMBS of $19.6 million and corporate debt securities of $8.3 million due to a lack of observable market transactions.

During the year ended November 30, 2017, transfers of assets of $60.4 million from Level 3 to Level 2 are primarily attributed to:

•	Loans and other receivables of $40.9 million due to a greater price transparency supporting classification into Level 2.

Net losses on Level 3 assets were $24.6 million and net gains on Level 3 liabilities were $1.7 million for the year ended November 30, 2017. Net losses on Level 3 assets were primarily due to decreased valuations of CDOs and CLOs, other ABS and RMBS, partially offset by increased valuations of certain loans and other receivables. Net gains on Level 3 liabilities were primarily due to increased valuations of certain net derivatives.

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Quantitative Information about Significant Unobservable Inputs used in Level 3 Fair Value Measurements at November 30, 2019 and 2018

The tables below present information on the valuation techniques, significant unobservable inputs and their ranges for our financial assets and liabilities, subject to threshold levels related to the market value of the positions held, measured at fair value on a recurring basis with a significant Level 3 balance. The range of unobservable inputs could differ significantly across different firms given the range of products across different firms in the financial services sector. The inputs are not representative of the inputs that could have been used in the valuation of any one financial instrument (i.e., the input used for valuing one financial instrument within a particular class of financial instruments may not be appropriate for valuing other financial instruments within that given class). Additionally, the ranges of inputs presented below should not be construed to represent uncertainty regarding the fair values of our financial instruments; rather, the range of inputs is reflective of the differences in the underlying characteristics of the financial instruments in each category.

For certain categories, we have provided a weighted average of the inputs allocated based on the fair values of the financial instruments comprising the category. We do not believe that the range or weighted average of the inputs is indicative of the reasonableness of uncertainty of our Level 3 fair values. The range and weighted average are driven by the individual financial instruments within each category and their relative distribution in the population. The disclosed inputs when compared with the inputs as disclosed in other periods should not be expected to necessarily be indicative of changes in our estimates of unobservable inputs for a particular financial instrument as the population of financial instruments comprising the category will vary from period to period based on purchases and sales of financial instruments during the period as well as transfers into and out of Level 3 each period.

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November 30, 2019
Financial Instruments Owned		Fair Value (in thousands)				Valuation Technique		Significant Unobservable Input(s)		Input / Range					Weighted Average
Corporate equity securities		$	29,017
Non-exchange-traded securities						Market approach		Price		$1		-	$140		$	55
								Underlying stock price		$3		-	$5		$	4
Corporate debt securities		$	7,490			Scenario analysis		Estimated recovery percentage		23	%	-	85%		46		%
								Volatility		44%					—
								Credit spread		750					—
								Underlying stock price		£0.4					—
CDOs and CLOs		$	20,081			Discounted cash flows		Constant prepayment rate		20%					—
								Constant default rate		1	%	-	2%		2		%
								Loss severity		25	%	-	37%		29		%
								Discount rate/yield		12	%	-	21%		15		%
RMBS		$	17,740			Discounted cash flows		Cumulative loss rate		2%					—
								Duration (years)		6.3					—
								Discount rate/yield		3%					—
CMBS		$	6,110			Discounted cash flows		Cumulative loss rate		7.3%					—
								Duration (years)		0.2					—
								Discount rate/yield		85%					—
						Scenario analysis		Estimated recovery percentage		44%					—
Other ABS		$	42,563			Discounted cash flows		Cumulative loss rate		7	%	-	31%		16		%
								Duration (years)		0.5		-	3.0		1.5
								Discount rate/yield		7	%	-	15%		11		%
Loans and other receivables		$	62,734			Market approach		Price		$36		-	$100		$	90
						Scenario analysis		Estimated recovery percentage		87	%	-	104%		99		%
Derivatives		$	13,826
Interest rate swaps						Market approach		Basis points upfront		0		-	16		6
Unfunded commitments								Price		$88					—
Equity options						Volatility benchmarking		Volatility		45%					—
Investments at fair value		$	75,736
Private equity securities						Market approach		Price		$8		-	$250		$	125
Securities purchased under agreements to resell		$	25,000			Market approach		Spread to 6 month LIBOR		500					—
								Duration (years)		1.5					—
Financial Instruments Sold, Not Yet Purchased:
Corporate equity securities		$	4,487			Market approach		Transaction level		$1					—
Loans		$	9,463			Market approach		Price		$50		-	$100		$	88
						Scenario analysis		Estimated recovery percentage		1%					—
Derivatives		$	92,057
Equity options						Volatility benchmarking		Volatility		21	%	-	61%		43		%
Interest rate swaps						Market approach		Basis points upfront		0		-	22		13
Cross currency swaps								Basis points upfront		2					—
Unfunded commitments								Price		$88					—
Long-term debt
Structured notes		$	480,069			Market approach		Price		$84		-	$108		$	96
								Price		€74		-	€103		€	91

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November 30, 2018
Financial Instruments Owned:		Fair Value (in thousands)				Valuation Technique		Significant Unobservable Input(s)		Input / Range					Weighted Average
Corporate equity securities		$	43,664
Non-exchange-traded securities						Market approach		Price		$1		-	$75		$	12
								Transaction level		$47					—
Corporate debt securities		$	9,484			Market approach		Estimated recovery percentage		46%					—
								Transaction level		$80					—
CDOs and CLOs		$	25,815			Discounted cash flows		Constant prepayment rate		10	%	-	20%		18		%
								Constant default rate		1	%	-	2%		2		%
								Loss severity		25	%	-	30%		26		%
								Discount rate/yield		11	%	-	16%		14		%
						Scenario analysis		Estimated recovery percentage		2%					—
RMBS		$	19,603			Discounted cash flows		Cumulative loss rate		4%					—
								Duration (years)		13					—
								Loss severity		0%					—
								Discount rate/yield		3%					—
						Market approach		Price		$100					—
CMBS		$	9,444			Discounted cash flows		Cumulative loss rate		8	%	-	85%		45		%
								Duration (years)		1		-	3		1
								Loss severity		64%					—
								Discount rate/yield		2	%	-	15%		6		%
						Scenario analysis		Estimated recovery percentage		26%					—
								Price		$49					—
Other ABS		$	53,175			Discounted cash flows		Cumulative loss rate		12	%	-	30%		22		%
								Duration (years)		1		-	2		1
								Discount rate/yield		6	%	-	12%		8		%
						Market approach		Price		$100					—
Loans and other receivables		$	46,078			Market approach		Price		$50		-	$100		$	96
						Scenario analysis		Estimated recovery percentage		13	%	-	117%		105		%
Derivatives		$	4,602
Total return swaps						Market approach		Price		$97					—
Investments at fair value		$	113,831
Private equity securities						Market approach		Price		$3		-	$250		$	108
								Transaction level		$169					—
						Scenario analysis		Discount rate/yield		20%					—
								Revenue growth		0%					—
Financial Instruments Sold, Not Yet Purchased:
Loans		$	6,376			Market approach		Price		$50		-	$101		$	74
Derivatives		$	27,536
Equity options						Option model/default rate		Default probability		0%					—
						Volatility benchmarking		Volatility		39	%	-	62%		50		%
Interest rate swaps						Market approach		Price		$20					—
Total return swaps								Price		$97					—
Long-term debt
Structured notes		$	200,745			Market approach		Price		$78		-	$94		$	86
								Price		€68		-	€110		€	96

The fair values of certain Level 3 assets and liabilities that were determined based on third-party pricing information, unadjusted past transaction prices, reported NAV or a percentage of the reported enterprise fair value are excluded from the above tables. At November 30, 2019 and 2018, asset exclusions consisted of $31.9 million and $11.1 million, respectively, primarily comprised of corporate equity securities, loans and other receivables and certain derivatives. At November 30, 2019 and 2018, liability exclusions consisted of $0.4 million and $0.5 million, respectively, primarily comprised of corporate debt and CMBS.

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Uncertainty of Fair Value Measurement from Use of Significant Unobservable Inputs

For recurring fair value measurements categorized within Level 3 of the fair value hierarchy, the uncertainty of the fair value measurement due to the use of significant unobservable inputs and interrelationships between those unobservable inputs (if any) are described below:

•

Corporate equity securities, corporate debt securities, loans and other receivables, certain derivatives, RMBS, other ABS, private equity securities, securities purchased under agreements to resell and structured notes using a market approach valuation technique. A significant increase (decrease) in the transaction level of corporate equity securities, corporate debt securities and private equity securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the price of the private equity securities, non-exchange-traded securities, total return swaps, interest rate swaps, unfunded commitments, RMBS, other ABS, loans and other receivables or structured notes would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the underlying stock price of corporate equity securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the estimated recovery rates of the cash flow outcomes underlying the corporate debt securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the yield or duration, in isolation, of securities purchased under agreements to resell would result in a significantly lower (higher) fair value measurement. Depending on whether we are a receiver or (payer) of basis points upfront, a significant increase in basis points would result in a significant increase (decrease) in the fair value measurement of cross currency and interest rate swaps.

•

Loans and other receivables, CDOs and CLOs, CMBS, corporate debt and private equity securities using scenario analysis. A significant increase (decrease) in the possible recovery rates of the cash flow outcomes underlying the financial instrument would result in a significantly higher (lower) fair value measurement for the financial instrument. A significant increase (decrease) in the price of the underlying assets of the financial instrument would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the volatility of the underlying stock price would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the credit spread of the financial instrument would result in a significantly lower (higher) fair value measurement. A significant increase (decrease) in the discount rate/yield underlying the investment would result in a significantly lower (higher) fair value measurement. A significant increase (decrease) in the revenue growth underlying the investment would result in a significantly higher (lower) fair value measurement.

•

CDOs and CLOs, RMBS, CMBS and other ABS using a discounted cash flow valuation technique. A significant increase (decrease) in isolation in the constant default rate, loss severity or cumulative loss rate would result in a significantly lower (higher) fair value measurement. The impact of changes in the constant prepayment rate and duration would have differing impacts depending on the capital structure and type of security. A significant increase (decrease) in the discount rate/security yield would result in a significantly lower (higher) fair value measurement.

•	Derivative equity options using an option/default rate model. A significant increase (decrease) in default probability would result in a significantly lower (higher) fair value measurement.

•	Derivative equity options using volatility benchmarking. A significant increase (decrease) in volatility would result in a significantly higher (lower) fair value measurement.

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Fair Value Option Election

We have elected the fair value option for all loans and loan commitments made by our investment banking and capital markets businesses. These loans and loan commitments include loans entered into by our investment banking division in connection with client bridge financing and loan syndications, loans purchased by our leveraged credit trading desk as part of its bank loan trading activities and mortgage and consumer loan commitments, purchases and fundings in connection with mortgage-backed and other asset-backed securitization activities. Loans and loan commitments originated or purchased by our leveraged credit and mortgage-backed businesses are managed on a fair value basis. Loans are included in Financial instruments owned and loan commitments are included in Financial instruments owned and Financial instruments sold, not yet purchased in our Consolidated Statements of Financial Condition. The fair value option election is not applied to loans made to affiliate entities as such loans are entered into as part of ongoing, strategic business ventures. Loans to affiliate entities are included in Loans to and investments in related parties in our Consolidated Statements of Financial Condition and are accounted for on an amortized cost basis. We have also elected the fair value option for certain of our structured notes and securities purchased under agreements to resell, which are managed by our investment banking and capital markets businesses and are included in Long-term debt, Short-term borrowings and Securities purchased under agreements to resell in our Consolidated Statements of Financial Condition, respectively. We have elected the fair value option for certain financial instruments held by subsidiaries as the investments are risk managed by us on a fair value basis. The fair value option may be elected for certain secured financings that arise in connection with our securitization activities and other structured financings. Other secured financings, Receivables – Brokers, dealers and clearing organizations, Receivables – Customers, Receivables – Fees, interest and other, Payables – Brokers, dealers and clearing organizations and Payables – Customers, are accounted for at cost plus accrued interest rather than at fair value; however, the recorded amounts approximate fair value due to their liquid or short-term nature.

The following is a summary of gains (losses) due to changes in instrument specific credit risk on loans, other receivables and debt instruments and gains (losses) due to other changes in fair value on Long-term debt and Short-term borrowings measured at fair value under the fair value option (in thousands):

	Year Ended November 30,
	2019				2018				2017
Financial instruments owned:
Loans and other receivables	$	(2,072	)		$	(3,856	)		$	22,088
Financial instruments sold, not yet purchased:
Loans	$	656			$	(46	)		$	—
Loan commitments	(1,089		)		(739		)		230
Long-term debt:
Changes in instrument specific credit risk (1)	$	(20,332	)		$	38,064			$	(34,609	)
Other changes in fair value (2)	(25,144		)		48,748				47,291
Short-term borrowings:
Changes in instrument specific credit risk (1)	$	114			$	—			$	—
Other changes in fair value (2)	(863		)		—				(681		)

(1)	Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statements of Comprehensive Income, net of tax.

(2)	Other changes in fair value are included in Principal transactions revenues in our Consolidated Statements of Earnings.

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The following is a summary of the amount by which contractual principal exceeds fair value for loans and other receivables, long term debt and short-term borrowings measured at fair value under the fair value option (in thousands):

	November 30,
	2019				2018
Financial instruments owned:
Loans and other receivables (1)	$	1,546,516			$	961,554
Loans and other receivables on nonaccrual status and/or 90 days or     greater past due (1) (2)	197,215				158,392
Long-term debt and short-term borrowings	74,408				114,669

(1)	Interest income is recognized separately from other changes in fair value and is included in Interest revenues in our Consolidated Statements of Earnings.

(2)	Amounts include loans and other receivables 90 days or greater past due by which contractual principal exceeds fair value of $22.2 million and $20.5 million at November 30, 2019 and 2018, respectively.

The aggregate fair value of loans and other receivables on nonaccrual status and/or 90 days or greater past due was $127.0 million and $105.3 million at November 30, 2019 and 2018, respectively, which includes loans and other receivables 90 days or greater past due of $24.8 million and $19.4 million at November 30, 2019 and 2018, respectively.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

Certain intangible assets were measured at fair value on a non-recurring basis and are not included in the tables above. The following table presents those assets measured at fair value on a non-recurring basis for which we recognized a non-recurring fair value adjustment during the years ended November 30, 2019, 2018 and 2017 (in thousands):

	Carrying Value at November 30, 2019				Level 2				Level 3				Impairment Losses for the Year Ended November 30, 2019
Exchange ownership interests and registrations (1)	$	2,443			$	2,443			$	—			$	291

	Carrying Value at November 30, 2018				Level 2				Level 3				Impairment Losses for the Year Ended November 30, 2018
Exchange ownership interests and registrations (1)	$	2,663			$	2,663			$	—			$	9

	Carrying Value at November 30, 2017				Level 2				Level 3				Impairment Losses for the Year Ended November 30, 2017
Exchange ownership interests and registrations (1)	$	2,672			$	2,672			$	—			$	613

(1)

Impairment losses for exchange memberships, which represent ownership interests in market exchanges on which trading business is conducted, and registrations, were recognized in Other expenses. The fair value of these exchange memberships is based on observed quoted sales prices for each individual membership. (See Note 10, Goodwill and Intangible Assets.) The intangible assets are recognized for the years ended November 30, 2019, 2018 and 2017, primarily in the Fixed income reporting unit.

There were no assets measured at fair value on a non-recurring basis, which utilized Level 1 inputs during the years ended November 30, 2019, 2018 and 2017. There were no liabilities measured at fair value on a non-recurring basis during the years ended November 30, 2019, 2018 and 2017.

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Financial Instruments Not Measured at Fair Value

Certain of our financial instruments are not carried at fair value but are recorded at amounts that approximate fair value due to their liquid or short-term nature and generally negligible credit risk. These financial assets include Cash and cash equivalents and Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations and would generally be presented within Level 1 of the fair value hierarchy. Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations includes U.S. Treasury securities with a fair value of $35.0 million and $34.8 million at November 30, 2019 and 2018, respectively.

Derivative Financial Instruments

Our derivative activities are recorded at fair value in our Consolidated Statements of Financial Condition in Financial instruments owned and Financial instruments sold, not yet purchased, net of cash paid or received under credit support agreements and on a net counterparty basis when a legally enforceable right to offset exists under a master netting agreement. We enter into derivative transactions to satisfy the needs of our clients and to manage our own exposure to market and credit risks resulting from our trading activities. In addition, we apply hedge accounting to an interest rate swap that has been designated as a fair value hedge of the changes in fair value due to the benchmark interest rate for certain fixed rate senior long-term debt.

See Note 4, Fair Value Disclosures, and Note 17, Commitments, Contingencies and Guarantees, for additional disclosures about derivative financial instruments.

Derivatives are subject to various risks similar to other financial instruments, including market, credit and operational risk. The risks of derivatives should not be viewed in isolation, but rather should be considered on an aggregate basis along with our other trading-related activities. We manage the risks associated with derivatives on an aggregate basis along with the risks associated with proprietary trading as part of our firm wide risk management policies.

In connection with our derivative activities, we may enter into ISDA master netting agreements or similar agreements with counterparties. See Note 2, Summary of Significant Accounting Policies, for additional information regarding the offsetting of derivative contracts.

The following tables present the fair value and related number of derivative contracts at November 30, 2019 and 2018 categorized by type of derivative contract and the platform on which these derivatives are transacted. The fair value of assets/liabilities represents our receivable/payable for derivative financial instruments, gross of counterparty netting and cash collateral received and pledged. The following tables also provide information regarding 1) the extent to which, under enforceable master netting arrangements, such balances are presented net in our Consolidated Statements of Financial Condition as appropriate under U.S. GAAP and 2) the extent to which other rights of setoff associated with these arrangements exist and could have an effect on our financial position (in thousands, except contract amounts).

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	November 30, 2019 (1)
	Assets							Liabilities
	Fair Value				Number of Contracts (2)			Fair Value				Number of Contracts (2)
Derivatives designated as accounting hedges:
Interest rate contracts:
Cleared OTC	$	28,663			1			$	—
Total derivatives designated as accounting hedges	28,663							—
Derivatives not designated as accounting hedges:
Interest rate contracts:
Exchange-traded	1,191				65,226			103				38,464
Cleared OTC	213,224				3,329			284,433				3,443
Bilateral OTC	421,700				1,325			258,857				738
Foreign exchange contracts:
Exchange-traded	—				256			—				199
Bilateral OTC	190,570				9,255			187,836				9,187
Equity contracts:
Exchange-traded	717,494				1,714,538			962,535				1,481,388
Bilateral OTC	248,720				4,731			445,241				4,271
Commodity contracts:
Exchange-traded	—				5,524			—				4,646
Credit contracts:
Cleared OTC	2,514				13			5,768				12
Bilateral OTC	6,281				25			14,219				28
Total derivatives not designated as accounting hedges	1,801,694							2,158,992
Total gross derivative assets/ liabilities:
Exchange-traded	718,685							962,638
Cleared OTC	244,401							290,201
Bilateral OTC	867,271							906,153
Amounts offset in our Consolidated Statements of Financial Condition (3):
Exchange-traded	(688,871		)					(688,871		)
Cleared OTC	(222,869		)					(266,900		)
Bilateral OTC	(521,066		)					(676,016		)
Net amounts per Consolidated Statements of Financial Condition (4)	$	397,551						$	527,205

(1)	Exchange-traded derivatives include derivatives executed on an organized exchange. Cleared OTC derivatives include derivatives executed bilaterally and subsequently novated to and cleared through central clearing counterparties. Bilateral OTC derivatives include derivatives executed and settled bilaterally without the use of an organized exchange or central clearing counterparty.

(2)	Number of exchange-traded contracts may include open futures contracts. The unsettled fair value of these futures contracts is included in Receivables from/Payables to brokers, dealers and clearing organizations in our Consolidated Statements of Financial Condition.

(3)	Amounts netted include both netting by counterparty and for cash collateral paid or received.

(4)	We have not received or pledged additional collateral under master netting agreements and/or other credit support agreements that is eligible to be offset beyond what has been offset in our Consolidated Statements of Financial Condition.

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	November 30, 2018 (1)
	Assets							Liabilities
	Fair Value				Number of Contracts (2)			Fair Value				Number of Contracts (2)
Derivatives designated as accounting hedges:
Interest rate contracts:
Cleared OTC	$	—			—			$	29,647			1
Total derivatives designated as accounting hedges	—							29,647
Derivatives not designated as accounting hedges:
Interest rate contracts:
Exchange-traded	924				32,159			513				66,095
Cleared OTC	422,670				2,095			411,833				2,394
Bilateral OTC	372,899				1,398			491,697				816
Foreign exchange contracts:
Exchange-traded	42				538			2				690
Cleared OTC	—				—			36				3
Bilateral OTC	311,228				9,548			314,951				9,909
Equity contracts:
Exchange-traded	1,202,927				2,104,684			2,061,137				1,779,836
Bilateral OTC	207,221				5,126			315,996				2,764
Commodity contracts:
Exchange-traded	213				3,927			270				4,012
Credit contracts:
Cleared OTC	11,204				7			1,556				14
Bilateral OTC	13,768				123			11,618				79
Total derivatives not designated as accounting hedges	2,543,096							3,609,609
Total gross derivative assets/liabilities:
Exchange-traded	1,204,106							2,061,922
Cleared OTC	433,874							443,072
Bilateral OTC	905,116							1,134,262
Amounts offset in our Consolidated Statements of Financial Condition (3):
Exchange-traded	(1,190,951		)					(1,190,951		)
Cleared OTC	(407,351		)					(418,779		)
Bilateral OTC	(814,184		)					(901,875		)
Net amounts per Consolidated Statements of Financial Condition (4)	$	130,610						$	1,127,651

(1)	Exchange-traded derivatives include derivatives executed on an organized exchange. Cleared OTC derivatives include derivatives executed bilaterally and subsequently novated to and cleared through central clearing counterparties. Bilateral OTC derivatives include derivatives executed and settled bilaterally without the use of an organized exchange or central clearing counterparty.

(2)	Number of exchange-traded contracts may include open futures contracts. The unsettled fair value of these futures contracts is included in Receivables from/Payables to brokers, dealers and clearing organizations in our Consolidated Statements of Financial Condition.

(3)	Amounts netted include both netting by counterparty and for cash collateral paid or received.

(4)	We have not received or pledged additional collateral under master netting agreements and/or other credit support agreements that is eligible to be offset beyond what has been offset in our Consolidated Statements of Financial Condition.

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The following table provides information related to gains (losses) recognized in Interest expense in our Consolidated Statements of Earnings on a fair value hedge (in thousands):

	Year Ended November 30,
Gains (Losses)	2019				2018				2017
Interest rate swaps	$	56,385			$	(25,539	)		$	(2,091	)
Long-term debt	(58,931		)		27,363				8,124
Total	$	(2,546	)		$	1,824			$	6,033

The following table presents unrealized and realized gains (losses) on derivative contracts recognized in Principal transactions revenues in our Consolidated Statements of Earnings, which are utilized in connection with our client activities and our economic risk management activities (in thousands):

	Year Ended November 30,
Gains (Losses)	2019				2018				2017
Interest rate contracts	$	(188,605	)		$	67,291			$	2,959
Foreign exchange contracts	(4,016		)		(304		)		4,735
Equity contracts	(108,961		)		(232,873		)		(303,953		)
Commodity contracts	(681		)		1,112				(4,911		)
Credit contracts	9,147				2,715				8,508
Total	$	(293,116	)		$	(162,059	)		$	(292,662	)

The net gains (losses) on derivative contracts in the table above are one of a number of activities comprising our business activities and are before consideration of economic hedging transactions, which generally offset the net gains (losses) included above. We substantially mitigate our exposure to market risk on our cash instruments through derivative contracts, which generally provide offsetting revenues, and we manage the risk associated with these contracts in the context of our overall risk management framework.

OTC Derivatives. The following tables set forth by remaining contract maturity the fair value of OTC derivative assets and liabilities at November 30, 2019 (in thousands):

	OTC Derivative Assets (1) (2) (3)
	0 – 12 Months				1 – 5 Years				Greater Than  5 Years				Cross-Maturity Netting (4)				Total
Equity forwards, swaps and options	$	44,065			$	2,302			$	7,442			$	(6,612	)		$	47,197
Credit default swaps	49				1,059				15				(62		)		1,061
Total return swaps	58,845				34,546				—				(554		)		92,837
Foreign currency forwards, swaps and options	46,003				11,123				62				(4,855		)		52,333
Fixed income forwards	986				—				—				—				986
Interest rate swaps, options and forwards	33,147				163,818				142,277				(15,032		)		324,210
Total	$	183,095			$	212,848			$	149,796			$	(27,115	)		518,624
Cross product counterparty netting																	(32,208		)
Total OTC derivative assets included in Financial instruments owned																	$	486,416

(1)	At November 30, 2019, we held net exchange-traded derivative assets and other credit agreements with a fair value of $37.2 million, which are not included in this table.

(2)	OTC derivative assets in the table above are gross of collateral received. OTC derivative assets are recorded net of collateral received in our Consolidated Statements of Financial Condition. At November 30, 2019, cash collateral received was $126.1 million.

(3)	Derivative fair values include counterparty netting within product category.

(4)	Amounts represent the netting of receivable balances with payable balances for the same counterparty within product category across maturity categories.

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	OTC Derivative Liabilities (1) (2) (3)
	0 – 12 Months				1 – 5 Years				Greater Than 5 Years				Cross-Maturity Netting (4)				Total
Equity forwards, swaps and options	$	25,342			$	173,359			$	77,052			$	(6,612	)		$	269,141
Credit default swaps	1,245				3,688				8,160				(62		)		13,031
Total return swaps	28,096				41,160				—				(554		)		68,702
Foreign currency forwards, swaps and options	48,388				9,786				45				(4,855		)		53,364
Fixed income forwards	581				—				—				—				581
Interest rate swaps, options and forwards	20,881				93,730				104,318				(15,032		)		203,897
Total	$	124,533			$	321,723			$	189,575			$	(27,115	)		608,716
Cross product counterparty netting																	(32,208		)
Total OTC derivative liabilities included in Financial instruments sold, not yet purchased																	$	576,508

(1)	At November 30, 2019, we held net exchange-traded derivative liabilities and other credit agreements with a fair value of $275.7 million, which are not included in this table.

(2)	OTC derivative liabilities in the table above are gross of collateral pledged. OTC derivative liabilities are recorded net of collateral pledged in our Consolidated Statements of Financial Condition. At November 30, 2019, cash collateral pledged was $325.0 million.

(3)	Derivative fair values include counterparty netting within product category.

(4)	Amounts represent the netting of receivable balances with payable balances for the same counterparty within product category across maturity categories.

The following table presents the counterparty credit quality with respect to the fair value of our OTC derivative assets at November 30, 2019 (in thousands):

Counterparty credit quality (1):
A- or higher	$	107,146
BBB- to BBB+	30,888
BB+ or lower	193,338
Unrated	155,044
Total	$	486,416

(1)	We utilize internal credit ratings determined by our Risk Management department. Credit ratings determined by Risk Management use methodologies that produce ratings generally consistent with those produced by external rating agencies.

Credit Related Derivative Contracts

The external credit ratings of the underlyings or referenced assets for our written credit related derivative contracts (in millions):

	November 30, 2019
	External Credit Rating
	Investment Grade				Non-investment Grade				Unrated				Total Notional
Credit protection sold:
Index credit default swaps	$	3.0			$	32.0			$	—			$	35.0
Single name credit default swaps	3.4				29.0				1.5				33.9

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	November 30, 2018
	External Credit Rating
	Investment Grade				Non-investment Grade				Unrated				Total Notional
Credit protection sold:
Index credit default swaps	$	25.7			$	167.4			$	—			$	193.1
Single name credit default swaps	57.7				84.5				3.0				145.2

Contingent Features

Certain of our derivative instruments contain provisions that require our debt to maintain an investment grade credit rating from each of the major credit rating agencies. If our debt were to fall below investment grade, it would be in violation of these provisions and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on our derivative instruments in liability positions. The following table presents the aggregate fair value of all derivative instruments with such credit-risk-related contingent features that are in a liability position, the collateral amounts we have posted or received in the normal course of business and the potential collateral we would have been required to return and/or post additionally to our counterparties if the credit-risk-related contingent features underlying these agreements were triggered (in millions):

	November 30,
	2019				2018
Derivative instrument liabilities with credit-risk-related contingent features	$	42.9			$	93.5
Collateral posted	(3.1		)		(61.5		)
Collateral received	114.1				91.5
Return of and additional collateral required in the event of a credit rating downgrade below investment grade (1)	154.0				123.3

(1)	These potential outflows include initial margin received from counterparties at the execution of the derivative contract. The initial margin will be returned if counterparties elect to terminate the contract after a downgrade.

Our repurchase agreements and securities borrowing and lending arrangements are generally recorded at cost in our Consolidated Statements of Financial Condition, which is a reasonable approximation of their fair values due to their short-term nature. We enter into secured borrowing and lending arrangements to obtain collateral necessary to effect settlement, finance inventory positions, meet customer needs or re-lend as part of our dealer operations. We monitor the fair value of the securities loaned and borrowed on a daily basis as compared with the related payable or receivable, and request additional collateral or return excess collateral, as appropriate. We pledge financial instruments as collateral under repurchase agreements, securities lending agreements and other secured arrangements, including clearing arrangements. Our agreements with counterparties generally contain contractual provisions allowing the counterparty the right to sell or repledge the collateral. Pledged securities owned that can be sold or repledged by the counterparty are included in Financial instruments owned, at fair value and noted parenthetically as Securities pledged in our Consolidated Statements of Financial Condition.

In instances where we receive securities as collateral in connection with securities-for-securities transactions in which we are the lender of securities and are permitted to sell or repledge the securities received as collateral, we report the fair value of the collateral received and the related obligation to return the collateral in the Consolidated Statements of Financial Condition.

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The following tables set forth the carrying value of securities lending arrangements, repurchase agreements and obligation to return securities received as collateral by class of collateral pledged (in thousands):

	November 30, 2019
	Securities Lending Arrangements				Repurchase Agreements				Obligation To Return Securities Received As Collateral				Total
Collateral Pledged:
Corporate equity securities	$	1,314,395			$	129,558			$	—			$	1,443,953
Corporate debt securities	191,311				1,730,526				—				1,921,837
Mortgage-backed and asset-backed securities	—				1,745,145				—				1,745,145
U.S. government and federal agency securities	19,434				10,863,997				9,500				10,892,931
Municipal securities	—				498,202				—				498,202
Sovereign obligations	—				3,016,563				—				3,016,563
Loans and other receivables	—				772,926				—				772,926
Total	$	1,525,140			$	18,756,917			$	9,500			$	20,291,557

	November 30, 2018
	Securities Lending Arrangements				Repurchase Agreements				Total
Collateral Pledged:
Corporate equity securities	$	1,505,218			$	487,124			$	1,992,342
Corporate debt securities	333,221				1,853,309				2,186,530
Mortgage-backed and asset-backed securities	249				2,820,543				2,820,792
U.S. government and federal agency securities	—				8,181,947				8,181,947
Municipal securities	—				604,274				604,274
Sovereign obligations	—				2,945,521				2,945,521
Loans and other receivables	—				300,768				300,768
Total	$	1,838,688			$	17,193,486			$	19,032,174

The following tables set forth the carrying value of securities lending arrangements, repurchase agreements and obligation to return securities received as collateral by remaining contractual maturity (in thousands):

	November 30, 2019
	Overnight and Continuous				Up to 30 Days				31-90 Days				Greater than 90 Days				Total
Securities lending arrangements	$	694,821			$	—			$	672,969			$	157,350			$	1,525,140
Repurchase agreements	6,614,026				1,556,260				8,988,528				1,598,103				18,756,917
Obligation to return securities received as collateral	—				—				9,500				—				9,500
Total	$	7,308,847			$	1,556,260			$	9,670,997			$	1,755,453			$	20,291,557

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	November 30, 2018
	Overnight and Continuous				Up to 30 Days				31-90 Days				Greater than 90 Days				Total
Securities lending arrangements	$	807,347			$	—			$	560,417			$	470,924			$	1,838,688
Repurchase agreements	7,849,052				1,915,325				6,042,951				1,386,158				17,193,486
Total	$	8,656,399			$	1,915,325			$	6,603,368			$	1,857,082			$	19,032,174

We receive securities as collateral under resale agreements, securities borrowing transactions and customer margin loans. We also receive securities as collateral in connection with securities-for-securities transactions in which we are the lender of securities. In many instances, we are permitted by contract to rehypothecate the securities received as collateral. These securities may be used to secure repurchase agreements, enter into securities lending transactions, satisfy margin requirements on derivative transactions or cover short positions. At November 30, 2019 and 2018, the approximate fair value of securities received as collateral by us that may be sold or repledged was $28.7 billion and $23.1 billion, respectively. At November 30, 2019 and 2018, a substantial portion of the securities received by us had been sold or repledged.

Offsetting of Securities Financing Agreements

To manage our exposure to credit risk associated with securities financing transactions, we may enter into master netting agreements and collateral arrangements with counterparties. Generally, transactions are executed under standard industry agreements, including, but not limited to, master securities lending agreements (securities lending transactions) and master repurchase agreements (repurchase transactions). See Note 2, Summary of Significant Accounting Policies, for additional information regarding the offsetting of securities financing agreements.

The following tables provide information regarding repurchase agreements, securities borrowing and lending arrangements and securities received as collateral and obligation to return securities received as collateral that are recognized in our Consolidated Statements of Financial Condition and 1) the extent to which, under enforceable master netting arrangements, such balances are presented net in our Consolidated Statements of Financial Condition as appropriate under U.S. GAAP and 2) the extent to which other rights of setoff associated with these arrangements exist and could have an effect on our financial position (in thousands).

	November 30, 2019
	Gross Amounts				Netting in Consolidated Statement of Financial Condition				Net Amounts in Consolidated Statement of Financial Condition				Additional Amounts Available for Setoff (1)				Available Collateral (2)				Net Amount (3)
Assets
Securities borrowing arrangements	$	7,624,642			$	—			$	7,624,642			$	(361,394	)		$	(1,479,433	)		$	5,783,815
Reverse repurchase agreements	15,551,845				(11,252,247		)		4,299,598				(291,316		)		(3,929,977		)		78,305
Securities received as collateral	9,500				—				9,500				—				—				9,500
Liabilities
Securities lending arrangements	$	1,525,140			$	—			$	1,525,140			$	(361,394	)		$	(970,799	)		$	192,947
Repurchase agreements	18,756,917				(11,252,247		)		7,504,670				(291,316		)		(6,663,807		)		549,547
Obligation to return securities received as collateral	9,500				—				9,500				—				—				9,500

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	November 30, 2018
	Gross Amounts				Netting in Consolidated Statement of Financial Condition				Net Amounts in Consolidated Statement of Financial Condition				Additional Amounts Available for Setoff (1)				Available Collateral (2)				Net Amount (4)
Assets
Securities borrowing arrangements	$	6,538,212			$	—			$	6,538,212			$	(468,778	)		$	(1,193,986	)		$	4,875,448
Reverse repurchase agreements	11,336,175				(8,550,417		)		2,785,758				(609,225		)		(2,126,730		)		49,803
Liabilities
Securities lending arrangements	$	1,838,688			$	—			$	1,838,688			$	(468,778	)		$	(1,343,704	)		$	26,206
Repurchase agreements	17,193,486				(8,550,417		)		8,643,069				(609,225		)		(7,070,967		)		962,877

(1)

Under master netting agreements with our counterparties, we have the legal right of offset with a counterparty, which incorporates all of the counterparty’s outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by a counterparty in the event of a counterparty’s default, but which are not netted in the balance sheet because other netting provisions of U.S. GAAP are not met.

(2)	Includes securities received or paid under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty’s rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements.

(3)	Amounts include $5,683.4 million of securities borrowing arrangements, for which we have received securities collateral of $5,523.6 million, and $439.7 million of repurchase agreements, for which we have pledged securities collateral of $447.5 million, which are subject to master netting agreements but we have not determined the agreements to be legally enforceable.

(4)	Amounts include $4,825.7 million of securities borrowing arrangements, for which we have received securities collateral of $4,711.7 million, and $931.7 million of repurchase agreements, for which we have pledged securities collateral of $963.6 million, which are subject to master netting agreements but we have not determined the agreements to be legally enforceable.

Cash and Securities Segregated and on Deposit for Regulatory Purposes or Deposited with Clearing and Depository Organizations

Cash and securities deposited with clearing and depository organizations and segregated in accordance with regulatory regulations totaled $796.8 million and $708.0 million at November 30, 2019 and 2018, respectively. Segregated cash and securities consist of deposits in accordance with Rule 15c3-3 of the Securities Exchange Act of 1934, which subjects Jefferies LLC as a broker-dealer carrying customer accounts to requirements related to maintaining cash or qualified securities in segregated special reserve bank accounts for the exclusive benefit of its customers.

We engage in securitization activities related to corporate loans, mortgage loans, consumer loans and mortgage-backed and other asset-backed securities. In our securitization transactions, we transfer these assets to special purpose entities (“SPEs”) and act as the placement or structuring agent for the beneficial interests sold to investors by the SPE. A significant portion of our securitization transactions are the securitization of assets issued or guaranteed by U.S. government agencies. These SPEs generally meet the criteria of VIEs; however, we generally do not consolidate the SPEs as we are not considered the primary beneficiary for these SPEs. See Note 8, Variable Interest Entities, for further discussion on VIEs and our determination of the primary beneficiary.

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We account for our securitization transactions as sales, provided we have relinquished control over the transferred assets. Transferred assets are carried at fair value with unrealized gains and losses reflected in Principal transactions revenues in our Consolidated Statements of Earnings prior to the identification and isolation for securitization. Subsequently, revenues recognized upon securitization are reflected as net underwriting revenues. We generally receive cash proceeds in connection with the transfer of assets to an SPE. We may, however, have continuing involvement with the transferred assets, which is limited to retaining one or more tranches of the securitization (primarily senior and subordinated debt securities in the form of mortgage-backed and other-asset backed securities or CLOs). These securities are included in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition and are generally initially categorized as Level 2 within the fair value hierarchy. For further information on fair value measurements and the fair value hierarchy, refer to Note 4, Fair Value Disclosures, and Note 2, Summary of Significant Accounting Policies, herein.

The following table presents activity related to our securitizations that were accounted for as sales in which we had continuing involvement (in millions):

	Year Ended November 30,
	2019				2018				2017
Transferred assets	$	4,780.9			$	7,159.3			$	4,552.9
Proceeds on new securitizations	4,852.8				7,165.3				4,594.5
Cash flows received on retained interests	48.3				48.5				28.7

We have no explicit or implicit arrangements to provide additional financial support to these SPEs, have no liabilities related to these SPEs and do not have any outstanding derivative contracts executed in connection with these securitization activities at November 30, 2019 and 2018.

The following tables summarize our retained interests in SPEs where we transferred assets and have continuing involvement and received sale accounting treatment (in millions):

	November 30,
	2019								2018
Securitization Type	Total Assets				Retained Interests				Total Assets				Retained Interests
U.S. government agency RMBS	$	10,671.7			$	103.3			$	13,633.5			$	365.3
U.S. government agency CMBS	1,374.8				45.8				2,027.6				185.6
CLOs	3,006.7				58.4				3,512.0				20.9
Consumer and other loans	1,149.3				71.8				604.1				48.9

Total assets represent the unpaid principal amount of assets in the SPEs in which we have continuing involvement and are presented solely to provide information regarding the size of the transactions and the size of the underlying assets supporting our retained interests, and are not considered representative of the risk of potential loss. Assets retained in connection with a securitization transaction represent the fair value of the securities of one or more tranches issued by an SPE, including senior and subordinated tranches. Our risk of loss is limited to this fair value amount which is included in total Financial instruments owned in our Consolidated Statements of Financial Condition.

Although not obligated, in connection with secondary market-making activities we may make a market in the securities issued by these SPEs. In these market-making transactions, we buy these securities from and sell these securities to investors. Securities purchased through these market-making activities are not considered to be continuing involvement in these SPEs. To the extent we purchased securities through these market-making activities and we are not deemed to be the primary beneficiary of the VIE, these securities are included in agency and non-agency mortgage-backed and asset-backed securitizations in the nonconsolidated VIEs section presented in Note 8, Variable Interest Entities.

VIEs are entities in which equity investors lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary. The primary beneficiary is the party who has both (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity.

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Our variable interests in VIEs include debt and equity interests, commitments, guarantees and certain fees. Our involvement with VIEs arises primarily from:

•	Purchases of securities in connection with our trading and secondary market making activities;

•	Retained interests held as a result of securitization activities, including the resecuritization of mortgage-backed and other asset-backed securities and the securitization of mortgage, corporate and consumer loans;

•	Acting as placement agent and/or underwriter in connection with client-sponsored securitizations;

•	Financing of agency and non-agency mortgage-backed and other asset-backed securities;

•	Warehouse funding arrangements for client-sponsored consumer and mortgage loan vehicles and CLOs through participation agreements, forward sale agreements and revolving loan and note commitments; and

•	Loans to, investments in and fees from various investment vehicles.

We determine whether we are the primary beneficiary of a VIE upon our initial involvement with the VIE and we reassess whether we are the primary beneficiary of a VIE on an ongoing basis. Our determination of whether we are the primary beneficiary of a VIE is based upon the facts and circumstances for each VIE and requires judgment. Our considerations in determining the VIE’s most significant activities and whether we have power to direct those activities include, but are not limited to, the VIE’s purpose and design and the risks passed through to investors, the voting interests of the VIE, management, service and/or other agreements of the VIE, involvement in the VIE’s initial design and the existence of explicit or implicit financial guarantees. In situations where we have determined that the power over the VIE’s significant activities is shared, we assess whether we are the party with the power over the most significant activities. If we are the party with the power over the most significant activities, we meet the “power” criteria of the primary beneficiary. If we do not have the power over the most significant activities or we determine that decisions require consent of each sharing party, we do not meet the “power” criteria of the primary beneficiary.

We assess our variable interests in a VIE both individually and in aggregate to determine whether we have an obligation to absorb losses of or a right to receive benefits from the VIE that could potentially be significant to the VIE. The determination of whether our variable interest is significant to the VIE requires judgment. In determining the significance of our variable interest, we consider the terms, characteristics and size of the variable interests, the design and characteristics of the VIE, our involvement in the VIE and our market-making activities related to the variable interests.

Consolidated VIEs

The following table presents information about our consolidated VIEs at November 30, 2019 and 2018 (in millions). The assets and liabilities in the tables below are presented prior to consolidation and thus a portion of these assets and liabilities are eliminated in consolidation.

	November 30,
	2019								2018
	Secured Funding Vehicles				Other				Secured Funding Vehicles				Other
Cash	$	—			$	1.2			$	—			$	1.1
Financial instruments owned	—				0.3				—				0.4
Securities purchased under agreements to resell (1)	2,467.3				—				883.1				—
Total assets	$	2,467.3			$	1.5			$	883.1			$	1.5
Other secured financings (2)	$	2,465.8			$	—			$	882.5			$	—
Other liabilities (3)	1.5				0.2				0.6				0.2
Total liabilities	$	2,467.3			$	0.2			$	883.1			$	0.2

(1)	Securities purchased under agreements to resell represent amounts due under collateralized transactions on related consolidated entities, which are eliminated in consolidation.

(2)	Approximately $1.0 million of the secured financing represent amounts held by us in inventory and are eliminated in consolidation at November 30, 2018.

(3)	Approximately $0.2 million of the other liabilities amounts represent intercompany payables and are eliminated in consolidation at both November 30, 2019 and 2018.

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Secured Funding Vehicles. We are the primary beneficiary of asset-backed financing vehicles to which we sell agency and non-agency residential and commercial mortgage loans, and asset-backed securities pursuant to the terms of a master repurchase agreement. Our variable interests in these vehicles consist of our collateral margin maintenance obligations under the master repurchase agreement, which we manage, and retained interests in securities issued. The assets of these VIEs consist of reverse repurchase agreements, which are available for the benefit of the vehicle’s debt holders.

Other. We are the primary beneficiary of certain investment vehicles set up for the benefit of our employees. We manage and invest alongside our employees in these vehicles. The assets of these VIEs consist of private equity securities, and are available for the benefit of the entities’ equity holders. Our variable interests in these vehicles consist of equity securities. The creditors of these VIEs do not have recourse to our general credit and each such VIE’s assets are not available to satisfy any other debt.

Nonconsolidated VIEs

The following tables present information about our variable interests in nonconsolidated VIEs (in millions):

	November 30, 2019
	Carrying Amount								Maximum Exposure to Loss				VIE Assets
	Assets				Liabilities
CLOs	$	152.6			$	0.6			$	505.3			$	7,845.0
Consumer loan and other asset-backed vehicles	358.3				—				490.6				2,354.8
Related party private equity vehicles	23.0				—				34.3				71.4
Other investment vehicles	404.1				—				411.9				6,102.7
Total	$	938.0			$	0.6			$	1,442.1			$	16,373.9

	November 30, 2018
	Carrying Amount								Maximum Exposure to Loss				VIE Assets
	Assets				Liabilities
CLOs	$	42.1			$	—			$	568.3			$	3,088.9
Consumer loan and other asset-backed vehicles	462.1				—				807.1				3,273.1
Related party private equity vehicles	35.5				—				53.5				108.3
Other investment vehicles	95.0				—				99.1				3,558.1
Total	$	634.7			$	—			$	1,528.0			$	10,028.4

Our maximum exposure to loss often differs from the carrying value of the variable interests. The maximum exposure to loss is dependent on the nature of our variable interests in the VIEs and is limited to the notional amounts of certain loan and equity commitments and guarantees. Our maximum exposure to loss does not include the offsetting benefit of any financial instruments that may be utilized to hedge the risks associated with our variable interests and is not reduced by the amount of collateral held as part of a transaction with a VIE.

Collateralized Loan Obligations. Assets collateralizing the CLOs include bank loans, participation interests and sub-investment grade and senior secured U.S. loans. We underwrite securities issued in CLO transactions on behalf of sponsors and provide advisory services to the sponsors. We may also sell corporate loans to the CLOs. Our variable interests in connection with CLOs where we have been involved in providing underwriting and/or advisory services consist of the following:

•	Forward sale agreements whereby we commit to sell, at a fixed price, corporate loans and ownership interests in an entity holding such corporate loans to CLOs;

•	Warehouse funding arrangements in the form of participation interests in corporate loans held by CLOs and commitments to fund such participation interests;

•	Trading positions in securities issued in a CLO transaction; and

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•	Investments in variable funding notes issued by CLOs.

Asset-Backed Vehicles. We provide financing and lending related services to certain client-sponsored VIEs in the form of revolving funding note agreements, revolving credit facilities, forward purchase agreements. and reverse repurchase agreements. The underlying assets, which are collateralizing the vehicles, are primarily composed of unsecured consumer loans, mortgage loans, and trade claims. In addition, we may provide structuring and advisory services and act as an underwriter or placement agent for securities issued by the vehicles. We do not control the activities of these entities.

Related Party Private Equity Vehicles. We committed to invest in private equity funds, (the “JCP Funds”, including JCP Fund V (see Note 9, Investments)) managed by Jefferies Capital Partners, LLC (the “JCP Manager”). Additionally, we committed to invest in the general partners of the JCP Funds (the “JCP General Partners”) and the JCP Manager. Our variable interests in the JCP Funds, JCP General Partners and JCP Manager (collectively, the “JCP Entities”) consist of equity interests that, in total, provide us with limited and general partner investment returns of the JCP Funds, a portion of the carried interest earned by the JCP General Partners and a portion of the management fees earned by the JCP Manager. At November 30, 2019 and 2018, our total equity commitment in the JCP Entities were $133.0 million and $139.3 million, respectively, of which $121.7 million and $121.3 million had been funded, respectively. The carrying value of our equity investments in the JCP Entities was $23.0 million and $35.5 million at November 30, 2019 and 2018, respectively. Our exposure to loss is limited to the total of our carrying value and unfunded equity commitment. The assets of the JCP Entities primarily consist of private equity and equity related investments.

Other Investment Vehicles. At November 30, 2019 and 2018, we had equity commitments to invest $398.6 million and $112.2 million, respectively, in various other investment vehicles, of which $390.8 million and $108.1 million was funded, respectively. The carrying value of our equity investments was $404.1 million and $95.0 million at November 30, 2019 and 2018, respectively. Our exposure to loss is limited to the total of our carrying value and unfunded equity commitment. These investment vehicles have assets primarily consisting of private and public equity investments, debt instruments, trade and insurance claims and various oil and gas assets.

Mortgage-Backed and Other Asset-Backed Secured Funding Vehicles. In connection with our secondary trading and market making activities, we buy and sell agency and non-agency mortgage-backed securities and other asset-backed securities, which are issued by third-party securitization SPEs and are generally considered variable interests in VIEs. Securities issued by securitization SPEs are backed by residential mortgage loans, U.S. agency collateralized mortgage obligations, commercial mortgage loans, CDOs and CLOs and other consumer loans, such as installment receivables, auto loans and student loans. These securities are accounted for at fair value and included in Financial instruments owned in our Consolidated Statements of Financial Condition. We have no other involvement with the related SPEs and therefore do not consolidate these entities.

We also engage in underwriting, placement and structuring activities for third-party-sponsored securitization trusts generally through agency (FNMA (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”) or GNMA (“Ginnie Mae”)) or non-agency-sponsored SPEs and may purchase loans or mortgage-backed securities from third parties that are subsequently transferred into the securitization trusts. The securitizations are backed by residential and commercial mortgage, home equity and auto loans. We do not consolidate agency-sponsored securitizations as we do not have the power to direct the activities of the SPEs that most significantly impact their economic performance. Further, we are not the servicer of non-agency-sponsored securitizations and therefore do not have power to direct the most significant activities of the SPEs and accordingly, do not consolidate these entities. We may retain unsold senior and/or subordinated interests at the time of securitization in the form of securities issued by the SPEs.

At November 30, 2019 and 2018, we held $1,453.5 million and $2,913.0 million of agency mortgage-backed securities, respectively, and $134.8 million and $170.5 million of non-agency mortgage-backed and other asset-backed securities, respectively, as a result of our secondary trading and market-making activities, and underwriting, placement and structuring activities. Our maximum exposure to loss on these securities is limited to the carrying value of our investments in these securities. These mortgage-backed and other asset-backed secured funding vehicles discussed are not included in the above table containing information about our variable interests in nonconsolidated VIEs.

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At November 30, 2019, we had investments in Jefferies Finance LLC (“Jefferies Finance”) and Berkadia. In addition, we had an investment in Epic Gas, which was sold on March 19, 2019. Our investments in Jefferies Finance, Berkadia and Epic Gas have been accounted for under the equity method and have been included in Loans to and investments in related parties in our Consolidated Statements of Financial Condition with our share of the investees’ earnings recognized in Other revenues in our Consolidated Statements of Earnings. We have limited partnership interests of 10% and 46% in Jefferies Capital Partners V L.P. and the Jefferies SBI USA Fund L.P. (together, “JCP Fund V”), respectively, which are private equity funds managed by a team led by one of our directors and our Chairman of the Executive Committee. In addition, we had investments in KCG Holdings, Inc. (“KCG”) and Jefferies LoanCore LLC (“Jefferies LoanCore”), which were sold on July 20, 2017 and October 31, 2017, respectively. Our investment in KCG was accounted for at fair value by electing the fair value option available under U.S. GAAP and changes in fair value were recognized in Principal transactions revenues in our Consolidated Statements of Earnings. Our investment in Jefferies LoanCore was accounted for under the equity method with our share of the investees’ earnings recognized in Other revenues in our Consolidated Statements of Earnings.

Jefferies Finance

Jefferies Finance, a joint venture entity pursuant to an agreement with Massachusetts Mutual Life Insurance Company (“MassMutual”), is a commercial finance company that structures, underwrites and syndicates primarily senior secured loans to corporate borrowers. Loans are originated primarily through the investment banking efforts of Jefferies LLC. Jefferies Finance may also originate other debt products such as second lien term, bridge and mezzanine loans, as well as related equity co-investments. Jefferies Finance also purchases syndicated loans in the secondary market and acts as an investment advisor for various loan funds.

At November 30, 2019, we and MassMutual each had equity commitments to Jefferies Finance of $750.0 million for a combined total commitment of $1.5 billion. At November 30, 2019, we had funded $643.7 million of our $750.0 million commitment, leaving $106.3 million unfunded. The investment commitment is scheduled to expire on March 1, 2020 with automatic one year extensions absent a 60 days termination notice by either party.

Jefferies Finance has executed a Secured Revolving Credit Facility with us and MassMutual, to be funded equally, to support loan underwritings by Jefferies Finance, which bears interest based on the interest rates of the related Jefferies Finance underwritten loans and is secured by the underlying loans funded by the proceeds of the facility. The total Secured Revolving Credit Facility is a committed amount of $500.0 million at November 30, 2019. Advances are shared equally between us and MassMutual. The facility is scheduled to mature on March 1, 2020 with automatic one year extensions absent a 60 days termination notice by either party. At November 30, 2019, we had funded $0.0 million of our $250.0 million commitment. The following summarizes the activity included in our Consolidated Statements of Earnings related to the facility (in millions):

	Year Ended November 30,
	2019				2018				2017
Interest income	$	—			$	1.2			$	2.9
Unfunded commitment fees	1.3				1.2				1.0

Separate financial statements for Jefferies Finance are included in this Annual Report on Form 10-K. The following is a summary of selected financial information for Jefferies Finance (in millions):

	November 30,
	2019				2018
Total assets	$	7,112.4			$	7,776.5
Total liabilities	5,828.3				6,386.9
Total equity	1,284.1				1,389.6
Our total equity balance	642.0				694.8

	Year Ended November 30,
	2019				2018				2017
Net earnings	$	44.5			$	197.2			$	181.7

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The following summarizes activity related to our other transactions with Jefferies Finance (in millions):

	Year Ended November 30,
	2019				2018				2017
Origination and syndication fee revenues (1)	$	176.3			$	377.7			$	327.9
Origination fee expenses (1)	27.6				56.6				2.4
CLO placement fee revenues (2)	6.0				3.7				6.1
Derivative losses (3)	—				(1.6		)		(1.1		)
Underwriting fees (4)	3.9				0.3				—
Service fees (5)	60.8				61.7				50.7

(1)

We engage in debt underwriting transactions with Jefferies Finance related to the originations and syndications of loans by Jefferies Finance. In connection with such services, we earned fees, which are recognized in Investment banking revenues in our Consolidated Statements of Earnings. In addition, we paid fees to Jefferies Finance in respect of certain loans originated by Jefferies Finance, which are recognized as Business development expenses in our Consolidated Statements of Earnings.

(2)	We act as a placement agent for CLOs managed by Jefferies Finance, for which we recognized fees, which are included in Investment banking revenues in our Consolidated Statements of Earnings. At November 30, 2019 and 2018, we held securities issued by CLOs managed by Jefferies Finance, which are included in Financial instruments owned, at fair value.

(3)	We have entered into participation agreements and derivative contracts with Jefferies Finance based upon certain securities issued by CLOs and we have recognized gains (losses) relating to the derivative contracts.

(4)	We acted as underwriter in connection with term loans issued by Jefferies Finance.

(5)	Under a service agreement, we charge Jefferies Finance for services provided.

Receivables from Jefferies Finance, included in Other assets in our Consolidated Statements of Financial Condition, were $17.2 million and $35.2 million at November 30, 2019 and 2018, respectively. At November 30, 2019, payables to Jefferies Finance, related to cash deposited with us and included in Accrued expenses and other liabilities and Payables to customers in our Consolidated Statements of Financial Condition, were $13.7 million and $17.6 million, respectively. At November 30, 2018, we had $14.1 million of payables to Jefferies Finance, related to cash deposited with us and included in Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition.

We enter into OTC foreign exchange contracts with Jefferies Finance. In connection with these contracts we had $4.7 million recorded in Payables—brokers, dealers and clearing organizations and $0.2 million recorded in Financial instruments sold, at fair value in our Consolidated Statements of Financial Condition at November 30, 2019. We recorded $0.2 million in Payables—brokers, dealers and clearing organizations and $0.4 million in Financial instruments sold, not yet purchased, at fair value in our Consolidated Statements of Financial Condition at November 30, 2018.

On March 28, 2019, we entered into a promissory note with Jefferies Finance with a principal amount of $1.0 billion, the proceeds of which were used in connection with our investment banking loan syndication activities. We repaid Jefferies Finance the entire outstanding principal amount of this note on May 15, 2019. Interest paid on the note of $3.8 million is included in Interest expense within our Consolidated Statements of Earnings.

Berkadia

Berkadia is a commercial mortgage banking and servicing joint venture that was formed in 2009 by Jefferies and Berkshire Hathaway Inc. On October 1, 2018, Jefferies transferred its 50% voting equity interest in Berkadia and related arrangements to us. As a result, we are entitled to receive 45% of the profits of Berkadia. Berkadia originates commercial/multifamily real estate loans that are sold to U.S. government agencies, and originates and brokers commercial/multifamily mortgage loans which are not part of government agency programs. Berkadia is an investment sales advisor focused on the multifamily industry. Berkadia is a servicer of commercial real estate loans in the U.S., performing primary, master and special servicing functions for U.S. government agency programs, commercial mortgage-backed securities transactions, banks, insurance companies and other financial institutions.

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The following is a summary of selected financial information for Berkadia (in millions):

	November 30,
	2019				2018
Total assets	$	2,809.8			$	3,875.8
Total liabilities	2,213.2				3,331.5
Total equity	596.6				544.3
Our total equity balance	268.9				245.2

	Year Ended  November 30, 2019				Two Months Ended November 30, 2018
Net earnings	$	195.9			$	44.4

At November 30, 2019 and 2018, we had commitments to purchase $360.4 million and $723.8 million, respectively, in agency CMBS from Berkadia. During the year ended November 30, 2019, we received $65.0 million in distributions from Berkadia on our equity interest.

JCP Fund V

The amount of our investments in JCP Fund V included in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition was $20.6 million and $31.9 million at November 30, 2019 and 2018, respectively. We account for these investments at fair value based on the NAV of the funds provided by the fund managers (see Note 2, Summary of Significant Accounting Policies, herein). The following summarizes the results from these investments which are included in Principal transactions revenues in our Consolidated Statements of Earnings (in millions):

	Year Ended November 30,
	2019				2018				2017
Net gains (losses) from our investments in JCP Fund V	$	(5.7	)		$	12.1			$	(10.7	)

At both November 30, 2019 and 2018, we were committed to invest equity of up to $85.0 million in JCP Fund V. At November 30, 2019 and 2018, our unfunded commitment relating to JCP Fund V was $9.4 million and $9.7 million, respectively.

The following is a summary of selected financial information for 100.0% of JCP Fund V, in which we owned effectively 32.6% of the combined equity interests (in thousands):

	September 30,
	2019 (1)				2018 (1)
Total assets	$	63,248			$	90,731
Total liabilities	76				76
Total partners’ capital	63,172				90,655

	Nine Months Ended September 30, 2019 (1)				Three Months Ended December 31, 2018 (1)				Nine Months Ended September 30, 2018 (1)				Three Months Ended December 31, 2017 (1)				Nine Months Ended September 30, 2017 (1)				Three Months Ended December 31, 2016 (1)
Net increase (decrease) in net assets resulting from operations	$	(19,070	)		$	(8,412	)		$	15,252			$	19,712			$	(24,630	)		$	(2,294	)

(1)	Financial information for JCP Fund V within our results of operations at November 30, 2019 and 2018 and for the years ended November 30, 2019, 2018 and 2017 is included based on the presented periods.

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Epic Gas

On July 14, 2015, Jefferies LLC purchased common shares of Epic Gas. At November 30, 2018, we owned approximately 21.1% of the outstanding common stock of Epic Gas and one of our directors served on the Board of Directors of Epic Gas and owned common shares of Epic Gas. During the year ended November 30, 2019, we sold all of our common shares of Epic Gas, at fair value, for a total of $24.6 million. There was a gain of $2.8 million on this transaction, which is included in Other revenue in our Consolidated Statements of Earnings. At November 30, 2018, our investment in Epic Gas of $21.7 million was included in Loans to and investments in related parties in our Consolidated Statements of Financial Condition.

The following is a summary of selected financial information for Epic Gas (in millions):

	September 30, 2018 (1)
Total assets	$	555.7
Total liabilities	312.6
Total equity	243.1

	Three Months Ended December 31, 2018 (1)				Nine Months Ended September 30, 2018 (1)				Three Months Ended December 31, 2017 (1)				Nine Months Ended September 30, 2017 (1)				Three Months Ended December 31, 2016 (1)
Net gains (losses)	$	0.9			$	(3.7	)		$	(16.4	)		$	(14.5	)		$	(15.9	)

(1)	Financial information for Epic Gas in our financial position and results of operations at November 30, 2018 and for the years ended November 30, 2019, 2018 and 2017 is included based on the presented periods.

Jefferies LoanCore

Jefferies LoanCore, a commercial real estate finance company and a joint venture with the Government of Singapore Investment Corporation, the Canada Pension Plan Investment Board and LoanCore, LLC, originates and purchases commercial real estate loans throughout the U.S. and Europe. On October 31, 2017, we sold all of our membership interests (which constituted a 48.5% voting interest) in Jefferies LoanCore for approximately $173.1 million, the estimated book value at October 31, 2017. In addition, we may be entitled to additional cash consideration over the next three years in the event Jefferies LoanCore’s yearly return on equity exceeds certain thresholds. For the eleven months ended October 31, 2017, Jefferies LoanCore reported net earnings of $37.5 million. In connection with Jefferies LoanCore, we entered into master repurchase agreements and earned interest income and fees of $0.6 million during the years ended November 30, 2017, related to these agreements.

KCG

Our investment in KCG was sold on July 20, 2017. The change in the fair value of our investment in KCG was net gains of $93.4 million for the year ended November 30, 2017, and was included in Principal transactions revenues in our Consolidated Statements of Earnings. We had elected to record our investment in KCG at fair value under the fair value option, as the investment was acquired as part of our investment banking and capital markets activities. The valuation of our investment was based on the closing exchange price of KCG and included within Level 1 of the fair value hierarchy.

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Goodwill

Goodwill attributed to our reportable business segments are as follows (in thousands):

	November 30,
	2019				2018
Investment Banking and Capital Markets (1)	$	1,640,201			$	1,638,778
Asset Management (1)	3,398				3,392
Total goodwill	$	1,643,599			$	1,642,170

(1)

Accumulated goodwill impairments related to the Investment Banking and Capital Markets business segment were $51.9 million at both December 1, 2019 and 2018, and goodwill prior to these impairments was $1,692.1 million and $1,690.7 million at December 1, 2019 and 2018, respectively. Accumulated goodwill impairments related to the Asset Management business segment were $2.1 million at both December 1, 2019 and 2018, and goodwill prior to these impairments was $5.5 million at both December 1, 2019 and 2018.

The following table is a summary of the changes to goodwill (in thousands):

	Year Ended November 30,
	2019				2018
Balance, at beginning of period	$	1,642,170			$	1,647,089
Translation adjustments	1,325				(5,319		)
Goodwill acquired during the period (1)	104				400
Balance, at end of period	$	1,643,599			$	1,642,170

(1)	Goodwill acquired in the year ended November 30, 2019 was in connection with our purchase of an entity in Australia and relates to our Investment Banking and Capital Markets business segment. Goodwill acquired in the year ended November 30, 2018 was in connection with our purchase of LIML and relates to our Asset Management business segment.

Goodwill Impairment Testing

A reporting unit is an operating segment or one level below an operating segment. The quantitative goodwill impairment test is performed at the level of the reporting unit and consists of two steps. In the first step, the fair value of each reporting unit is compared with its carrying value, including goodwill and allocated intangible assets. If the fair value is in excess of the carrying value, the goodwill for the reporting unit is considered not to be impaired. If the fair value is less than the carrying value, then a second step is performed in order to measure the amount of the impairment loss, if any, which is based on comparing the implied fair value of the reporting unit’s goodwill to the carrying value of the reporting unit’s goodwill.

Allocated tangible equity plus allocated goodwill and intangible assets are used for the carrying amount of each reporting unit. The amount of tangible equity allocated to a reporting unit is based on our cash capital model deployed in managing our businesses, which seeks to approximate the capital a business would require if it were operating independently. Intangible assets are allocated to a reporting unit based on either specifically identifying a particular intangible asset as pertaining to a reporting unit or, if shared among reporting units, based on an assessment of the reporting unit’s benefit from the intangible asset in order to generate results.

Estimating the fair value of a reporting unit requires management judgment. Estimated fair values for our reporting units were determined using a market valuation method that incorporates price-to-earnings and price-to-book multiples of comparable public companies. In addition, as the fair values determined under the market approach represent a noncontrolling interest, we applied a control premium to arrive at the estimated fair value of each reporting unit on a controlling basis. We engaged an independent valuation specialist to assist us in our valuation process at August 1, 2019.

Our annual goodwill impairment testing at August 1, 2019 did not indicate any goodwill impairment in any of our reporting units. Substantially all of our goodwill is allocated to our Investment Banking, Equities and Fixed Income reporting units, which are part of our Investment Banking and Capital Markets reportable business segment, for which the results of our assessment indicated that these reporting units had a fair value in excess of their carrying amounts based on current projections. At August 31, 2019, goodwill allocated to these reporting units is $1,640.2 million of total goodwill of $1,643.6 million.

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Intangible Assets

Intangible assets are included in Other assets in our Consolidated Statements of Financial Condition. The following tables present the gross carrying amount, changes in carrying amount, net carrying amount and weighted average amortization period of identifiable intangible assets at November 30, 2019 and 2018 (dollars in thousands):

	November 30, 2019																Weighted average remaining lives (years)
	Gross cost				Impairment losses				Accumulated amortization				Net carrying amount
Customer relationships	$	125,736			$	—			$	(67,257	)		$	58,479			9.9
Trade name	128,590				—				(24,800		)		103,790				28.3
Exchange and clearing organization membership interests and registrations	8,564				(291		)		—				8,273				N/A
Total	$	262,890			$	(291	)		$	(92,057	)		$	170,542

	November 30, 2018																								Weighted average remaining lives (years)
	Gross cost				Disposals (1)				Impairment losses				Accumulated amortization				Intangible Assets Acquired (2)				Net carrying amount
Customer relationships	$	125,574			$	—			$	—			$	(58,892	)		$	—			$	66,682			10.6
Trade name	128,348				—				—				(21,086		)		—				107,262				29.3
Exchange and clearing organization membership interests and registrations	8,450				(93		)		(9		)		—				176				8,524				N/A
Total	$	262,372			$	(93	)		$	(9	)		$	(79,978	)		$	176			$	182,468

(1)	Activity is primarily related to the disposal of certain exchange membership interests in the Investment Banking and Capital Markets business segment due to the closing of a branch location in Dubai.

(2)	Intangible assets were acquired in connection with our purchase of LIML and relates to our Asset Management business segment.

We performed our annual impairment testing of intangible assets with an indefinite useful life, which consists of exchange and clearing organization membership interests and registrations, at August 1, 2019. We elected to perform a quantitative assessment of membership interests and registrations that have available quoted sales prices as well as certain other membership interests and registrations that have declined in utilization. A qualitative assessment was performed on the remainder of our indefinite-life intangible assets. In applying our quantitative assessment at August 1, 2019, 2018 and 2017, we recognized impairment losses on certain exchange membership interests and registrations. With regard to our qualitative assessment of the remaining indefinite-life intangible assets, based on our assessment of market conditions, the utilization of the assets and the replacement costs associated with the assets, we have concluded that it is not more likely than not that the intangible assets are impaired. In addition, we recognized an impairment loss during the year ended November 30, 2017 on certain membership interests that were not renewed.

Amortization Expense

For finite life intangible assets, aggregate amortization expense amounted to $11.9 million, $12.1 million and $11.9 million for the years ended November 30, 2019, 2018 and 2017, respectively. These expenses are included in Other expenses in our Consolidated Statements of Earnings.

The estimated future amortization expense for the five succeeding fiscal years is as follows (in thousands):

Year ending November 30, 2020	$	12,198
Year ending November 30, 2021	12,198
Year ending November 30, 2022	9,256
Year ending November 30, 2023	8,268
Year ending November 30, 2024	7,770

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Short-term borrowings at November 30, 2019 and 2018 include the following and mature in one year or less (in thousands):

	November 30,
	2019				2018
Bank loans (1)	$	527,509			$	330,942
Floating rate puttable notes (1)	—				56,550
Equity-linked notes	20,981				—
Total short-term borrowings	$	548,490			$	387,492

(1)	These Short-term borrowings are recorded at cost in our Consolidated Statements of Financial Condition, which is a reasonable approximation of their fair values due to their liquid and short-term nature.

At November 30, 2019, the weighted average interest rate on short-term borrowings outstanding is 3.24% per annum. Average daily short-term borrowings outstanding were $555.4 million and $472.6 million for the years ended November 30, 2019 and 2018, respectively.

During 2019, we issued equity-linked notes with principal amounts of $5.2 million and $15.1 million, which will mature on March 13, 2020 and October 7, 2020, respectively. See Note 4, Fair Value Disclosures, for further information on these notes. On July 29, 2019, our floating rate puttable notes with a principal amount of €50.0 million matured.

On March 28, 2019, we entered into a promissory note with Jefferies Finance, which was repaid on May 15, 2019. For further information on this promissory note, refer to Note 9, Investments.

On April 8, 2018 and May 3, 2018, our floating rate puttable notes with principal amounts of €30.0 million and €11.0 million matured, respectively. In addition, our equity-linked notes with a principal amount of $23.3 million matured on December 7, 2017. See Note 4, Fair Value Disclosures, for further information on these notes.

On December 27, 2018, one of our subsidiaries entered into a credit facility agreement (“Credit Facility”) with JPMorgan Chase Bank, N.A. for a committed amount of $135.0 million, which is included in bank loans. Interest is based on an annual alternative base rate or an adjusted London Interbank Offered Rate (“LIBOR”), as defined in the Credit Facility. The Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain a specified level of tangible net worth. The covenants also require the borrower to maintain specified leverage amounts and impose certain restrictions on the borrower’s future indebtedness. At November 30, 2019, we were in compliance with all debt covenants under the Credit Facility.

The Bank of New York Mellon has agreed to make revolving intraday credit advances (“Intraday Credit Facility”) for an aggregate committed amount of $150.0 million. The Intraday Credit facility is structured so that advances are generally repaid before the end of each business day. However, if an advance is not repaid by the end of any business day, the advance is converted to an overnight loan. Intraday loans accrue interest at a rate of 0.12%. Interest is charged based on the number of minutes in a day the advance is outstanding. Overnight loans are charged interest at the base rate plus 3% on a daily basis. The base rate is the higher of the federal funds rate plus 0.50% or the prime rate in effect at that time. The Intraday Credit Facility contains financial covenants, which include a minimum regulatory net capital requirement for Jefferies LLC. At November 30, 2019, we were in compliance with debt covenants under the Intraday Credit Facility.

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The following summarizes our long-term debt carrying values (including unamortized discounts and premiums, valuation adjustments and debt issuance costs, where applicable) (in thousands):

			Effective Interest Rate		November 30,
	Maturity				2019				2018
Unsecured long-term debt
8.500% Senior Notes	July 15, 2019		—%		$	—			$	699,659
2.375% Euro Medium Term Notes	May 20, 2020		2.42%		550,622				564,702
6.875% Senior Notes	April 15, 2021		4.40%		774,738				791,814
2.250% Euro Medium Term Notes	July 13, 2022		4.08%		4,204				4,243
5.125% Senior Notes	January 20, 2023		4.55%		610,023				612,928
1.000% Euro Medium Term Notes	July 19, 2024		1.00%		548,880				—
4.850% Senior Notes (1)	January 15, 2027		4.93%		768,931				709,484
6.450% Senior Debentures	June 8, 2027		5.46%		371,426				373,669
4.150% Senior Notes	January 23, 2030		4.26%		988,662				987,788
6.250% Senior Debentures	January 15, 2036		6.03%		511,260				511,662
6.500% Senior Notes	January 20, 2043		6.09%		420,239				420,625
Structured notes (2) (3)	Various		Various		1,215,285				686,170
Total unsecured long-term debt					6,764,270				6,362,744
Secured long-term debt
Revolving Credit Facility					189,088				183,539
Secured Bank Loan	September 27, 2021				50,000				—
Total long-term debt (4)					$	7,003,358			$	6,546,283

(1)

These senior notes with a principal amount of $750.0 million were issued on January 17, 2017. The carrying value includes a loss of $58.9 million and a gain of $27.4 million during 2019 and 2018, respectively, associated with an interest rate swap based on its designation as a fair value hedge. See Note 2, Summary of Significant Accounting Policies, and Note 5, Derivative Financial Instruments, for further information.

(2)

These structured notes contain various interest rate payment terms and are accounted for at fair value, with changes in fair value resulting from a change in the instrument-specific credit risk presented in other comprehensive income and changes in fair value resulting from non-credit components recognized in Principal transactions revenues. A weighted average coupon rate is not meaningful, as all of the structured notes are carried at fair value.

(3)	Of the $1,215.3 million of structured notes at November 30, 2019, $28.0 million matures in 2022, $3.1 million matures in 2024, and the remaining $1,184.2 million matures in 2025 or thereafter.

(4)	The Total Long-term debt has a fair value of $7,280.4 million and $6,423.6 million at November 30, 2019 and 2018, respectively, which would be classified as Level 2 and Level 3 in the fair value hierarchy.

During 2019, long-term debt increased $457.1 million. This increase is primarily due to structured notes issuances with a total principal amount of approximately $498.9 million, net of retirements. In addition, on July 19, 2019, under our $2.5 billion Euro Medium Term Note Program, we issued 1.000% senior unsecured notes with a principal amount of $553.6 million, due 2024. Proceeds amounted to $551.4 million. The increase in long-term debt was partially offset by repayments of $680.8 million of our 8.500% senior notes.

During 2018, we issued 4.150% senior notes with a total principal amount of $1.0 billion, due 2030, and structured notes with a total principal amount of approximately $173.2 million, net of retirements.

In addition, on January 5, 2018, our remaining convertible debentures ($324.8 million at November 30, 2017) were redeemed at a redemption price equal to 100% of the principal amount of the convertible debentures redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. In addition, in April 2018, our remaining 5.125% senior notes with a principal amount of $668.3 million were redeemed.

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We have a senior secured revolving credit facility (“Revolving Credit Facility”) with a group of commercial banks for an aggregate principal amount of $190.0 million. The Revolving Credit Facility contains certain covenants that, among other things, requires Jefferies Group LLC to maintain specified level of tangible net worth and liquidity amounts, and imposes certain restrictions on future indebtedness of and requires specified levels of regulated capital for certain of our subsidiaries. Interest is based on an annual alternative base rate or an adjusted LIBOR, as defined in the Revolving Credit Facility agreement. The obligations of certain of our subsidiaries under the Revolving Credit Facility are secured by substantially all its assets. At November 30, 2019, we were in compliance with the debt covenants under the Revolving Credit Facility.

On September 27, 2019, one of our subsidiaries entered into a Loan and Security Agreement with a bank for a term loan with a principal amount of $50.0 million (“Secured Bank Loan”). This Secured Bank Loan matures on September 27, 2021 and is collateralized by certain trading securities. Interest on the Secured Bank Loan is 1.25% plus LIBOR. The agreement contains certain covenants that, among other things, restrict lien or encumbrance upon any of the pledged collateral. At November 30, 2019, we were in compliance with all covenants under the Loan and Security Agreement.

The following table presents our total revenues separated for our revenues from contracts with customers and our other sources of revenues (in thousands):

	Year Ended November 30,
	2019				2018
Revenues from contracts with customers:
Commissions and other fees (1)	$	676,309			$	663,470
Investment banking	1,528,729				1,910,203
Asset management fees	17,219				21,214
Total revenue from contracts with customers	2,222,257				2,594,887
Other sources of revenue:
Principal transactions	769,258				524,296
Revenues from arrangements with strategic partners	3,066				—
Interest	1,496,529				1,207,095
Other	93,422				103,354
Total revenues	$	4,584,532			$	4,429,632

(1)

During the third quarter of 2019, we reclassified the presentation of certain other fees, primarily related to prime brokerage services offered to clients. These fees were previously presented as Other revenues in our Consolidated Statements of Earnings and are now presented within Commissions and other fees. There is no impact on Total revenues as a result of this change in presentation. Previously reported results are presented on a comparable basis.

Revenue from contracts with customers is recognized when, or as, we satisfy our performance obligations by transferring the promised goods or services to the customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring our progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised goods or services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties.

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The following provides detailed information on the recognition of our revenues from contracts with customers:

Commissions and Other Fees. We earn commission and other fee revenue by executing, settling and clearing transactions for clients primarily in equity, equity-related and futures products. Trade execution and clearing services, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission revenues associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, are recognized at a point in time on trade-date. Commissions revenues are generally paid on settlement date and we record a receivable between trade-date and payment on settlement date. We permit institutional customers to allocate a portion of their gross commissions to pay for research products and other services provided by third parties. The amounts allocated for those purposes are commonly referred to as soft dollar arrangements. We act as an agent in the soft dollar arrangements as the customer controls the use of the soft dollars and directs our payments to third-party service providers on its behalf. Accordingly, amounts allocated to soft dollar arrangements are netted against commission revenues in our Consolidated Statements of Earnings.

We earn account advisory and distribution fees in connection with wealth management services. Account advisory fees are recognized over time using the time-elapsed method as we determined that the customer simultaneously receives and consumes the benefits of investment advisory services as they are provided. Account advisory fees may be paid in advance of a specified service period or in arrears at the end of the specified service period (e.g., quarterly). Account advisory fees paid in advance are initially deferred within Accrued expenses and other liabilities in the Consolidated Statements of Financial Condition. Distribution fees are variable and recognized when the uncertainties with respect to the amounts are resolved.

Investment Banking. We provide our clients with a full range of financial advisory and underwriting services. Revenues from financial advisory services primarily consist of fees generated in connection with merger, acquisition and restructuring transactions. Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed, as the performance obligation is to successfully broker a specific transaction. Fees received prior to the completion of the transaction are deferred within Accrued expenses and other liabilities in the Consolidated Statements of Financial Condition. Advisory fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. A significant portion of the fees we receive for our advisory services are considered variable as they are contingent upon a future event (e.g., completion of a transaction or third-party emergence from bankruptcy) and are excluded from the transaction price until the uncertainty associated with the variable consideration is subsequently resolved, which is expected to occur upon achievement of the specified milestone. Payment for advisory services are generally due promptly upon completion of a specified milestone or, for retainer fees, periodically over the course of the engagement. We recognize a receivable between the date of completion of the milestone and payment by the customer. Expenses associated with investment banking advisory engagements are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other investment banking advisory related expenses, including expenses incurred related to restructuring assignments, are expensed as incurred. All investment banking advisory expenses are recognized within their respective expense category in the Consolidated Statements of Earnings and any expenses reimbursed by our clients are recognized as Investment banking revenues.

Underwriting services include underwriting and placement agent services in both the equity and debt capital markets, including private equity placements, initial public offerings, follow-on offerings and equity-linked convertible securities transactions and structuring, underwriting and distributing public and private debt, including investment grade debt, high yield bonds, leveraged loans, municipal bonds and mortgage-backed and asset-backed securities. Underwriting and placement agent revenues are recognized at a point in time on trade-date, as the client obtains the control and benefit of the underwriting offering at that point. Costs associated with underwriting transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded, and are recorded on a gross basis within Underwriting costs in the Consolidated Statements of Earnings as we are acting as a principal in the arrangement. Any expenses reimbursed by our clients are recognized as Investment banking revenues.

Asset Management Fees. We earn management and performance fees in connection with investment advisory services provided to various funds and accounts, which are satisfied over time and measured using a time elapsed measure of progress as the customer receives the benefits of the services evenly throughout the term of the contract. Management and performance fees are considered variable as they are subject to fluctuation (e.g., changes in assets under management, market performance) and/ or are contingent on a future event during the measurement period (e.g., meeting a specified benchmark) and are recognized only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. Management fees are generally based on month-end assets under management or an agreed upon notional amount and are included in the transaction price at the end of each month when the assets under management or notional amount is known. Performance fees are received when the return on assets under management for a specified performance period exceed certain benchmark returns, “high-water marks” or other performance targets. The performance period related to our performance fees is annual or semi-annual. Accordingly, performance fee revenue will generally be recognized only at the end of the performance period to the extent that the benchmark return has been met.

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Disaggregation of Revenue

The following presents our revenues from contracts with customers disaggregated by major business activity and primary geographic regions (in thousands):

	Year Ended November 30,
	2019												2018
	Reportable Segment												Reportable Segment
	Investment Banking and Capital Markets				Asset Management				Total				Investment Banking and Capital Markets				Asset Management				Total
Major business activity:
Equities (1)	$	662,804			$	—			$	662,804			$	649,631			$	—			$	649,631
Fixed income (1)	13,505				—				13,505				13,839				—				13,839
Investment banking - Advisory	767,421				—				767,421				820,042				—				820,042
Investment banking - Underwriting	761,308				—				761,308				1,090,161				—				1,090,161
Asset management	—				17,219				17,219				—				21,214				21,214
Total	$	2,205,038			$	17,219			$	2,222,257			$	2,573,673			$	21,214			$	2,594,887
Primary geographic region:
Americas	$	1,751,568			$	10,472			$	1,762,040			$	2,186,955			$	20,871			$	2,207,826
Europe	374,411				6,747				381,158				304,027				343				304,370
Asia	79,059				—				79,059				82,691				—				82,691
Total	$	2,205,038			$	17,219			$	2,222,257			$	2,573,673			$	21,214			$	2,594,887

(1)	Revenues from contracts with customers associated with the equities and fixed income businesses primarily represent commissions and other fee revenue.

Refer to Note 19, Segment Reporting, for a further discussion on the allocation of revenues to geographic regions.

Information on Remaining Performance Obligations and Revenue Recognized from Past Performance

We do not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at November 30, 2019. Investment banking advisory fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price at November 30, 2019.

During the years ended November 30, 2019 and 2018, we recognized $27.6 million and $26.6 million, respectively, of revenue related to performance obligations satisfied (or partially satisfied) in previous periods, mainly due to resolving uncertainties in variable consideration that was constrained in prior periods. In addition, we recognized $21.7 million and $18.1 million of revenues primarily associated with distribution services during the years ended November 30, 2019 and 2018, respectively, a portion of which relates to prior periods.

Contract Balances

The timing of our revenue recognition may differ from the timing of payment by our customers. We record a receivable when revenue is recognized prior to payment and we have an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, we record deferred revenue until the performance obligations are satisfied.

We had receivables related to revenues from contracts with customers of $209.3 million and $199.0 million at November 30, 2019 and 2018, respectively. We had no significant impairments related to these receivables during the years ended November 30, 2019 and 2018.

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Our deferred revenue primarily relates to retainer and milestone fees received in investment banking advisory engagements where the performance obligation has not yet been satisfied. Deferred revenue at November 30, 2019 and 2018 was $9.0 million and $10.6 million, respectively, which are recorded in Accrued expenses and other liabilities in the Consolidated Statements of Financial Condition. During the years ended November 30, 2019 and 2018, we recognized revenue of $9.5 million and $5.4 million, respectively, that were recorded as deferred revenue at the beginning of the year.

Contract Costs

We capitalize costs to fulfill contracts associated with investment banking advisory engagements where the revenue is recognized at a point in time and the costs are determined to be recoverable. Capitalized costs to fulfill a contract are recognized at the point in time that the related revenue is recognized.

At November 30, 2019 and 2018, capitalized costs to fulfill a contract were $4.8 million and $4.7 million, respectively, which are recorded in Receivables – Fees, interest and other in the Consolidated Statement of Financial Condition. For the years ended November 30, 2019 and 2018, we recognized expenses of $4.0 million and $2.3 million, respectively, related to costs to fulfill a contract that were capitalized as of the beginning of the year. There were no significant impairment charges recognized in relation to these capitalized costs during the years ended November 30, 2019 and 2018.

U.S. Pension Plan

We maintain a defined benefit pension plan, Jefferies Group LLC Employees’ Pension Plan (the “U.S. Pension Plan”), which is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended, and covers certain of our employees. Under the U.S. Pension Plan, benefits to participants are based on years of service and the employee’s career average pay. Effective December 31, 2005, benefits under the U.S. Pension Plan were frozen with no further benefit accruing to participants for future service after December 31, 2005.

Employer Contributions - Our funding policy is to contribute to the U.S. Pension Plan at least the minimum amount required for funding purposes under applicable employee benefit and tax laws. We contributed $2.0 million to the U.S. Pension Plan during the year ended November 30, 2019. We do not anticipate making a contribution to the plan for the year ending November 30, 2020.

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The following tables summarize the changes in the projected benefit obligation, the fair value of the assets and the funded status of the plan (in thousands):

	Year Ended November 30,
	2019				2018
Change in projected benefit obligation:
Projected benefit obligation, beginning of period	$	54,724			$	60,559
Service cost	500				400
Interest cost	2,303				2,129
Actuarial (gains)/losses	9,606				(3,777		)
Administrative expenses paid	(467		)		(502		)
Benefits paid	(3,444		)		(952		)
Settlements	—				(3,133		)
Projected benefit obligation, end of period	$	63,222			$	54,724
Change in plan assets:
Fair value of assets, beginning of period	$	48,176			$	52,949
Benefits paid	(3,444		)		(952		)
Administrative expenses paid	(467		)		(502		)
Actual return on plan assets	10,715				(1,186		)
Contributions	2,000				1,000
Settlements	—				(3,133		)
Fair value of assets, end of period	$	56,980			$	48,176
Funded status at end of period	$	(6,242	)		$	(6,548	)

The amounts recognized in our Consolidated Statements of Financial Condition are as follows (in thousands):

	November 30,
	2019				2018
Consolidated statements of financial condition:
Accrued expenses and other liabilities	$	6,242			$	6,548
Accumulated other comprehensive income, before taxes:
Net losses	$	(8,159	)		$	(6,382	)

The following tables summarize the components of net periodic pension cost and other amounts recognized in Other comprehensive income, before taxes (in thousands):

	Year Ended November 30,
	2019				2018				2017
Components of net periodic pension cost:
Service cost	$	500			$	400			$	450
Interest cost on projected benefit obligation	2,303				2,129				2,232
Expected return on plan assets	(3,008		)		(3,247		)		(3,021		)
Net amortization	122				—				19
Settlement losses	—				365				—
Net periodic pension cost	$	(83	)		$	(353	)		$	(320	)

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	Year Ended November 30,
	2019				2018				2017
Amounts recognized in Other comprehensive income:
Net losses arising during the period	$	1,899			$	655			$	210
Amortization of net loss	(122		)		—				(19		)
Settlements during the period	—				(365		)		—
Total losses recognized in Other comprehensive income	$	1,777			$	290			$	191
Net losses/(gains) recognized in net periodic benefit cost and Other comprehensive income	$	1,694			$	(63	)		$	(129	)

The assumptions used to determine the actuarial present value of the projected obligation and net periodic pension benefit cost are as follows:

	Year Ended November 30,
	2019			2018			2017
Discount rate used to determine benefit obligation	2.90	%		4.30	%		3.60	%
Weighted average assumptions used to determine net pension cost:
Discount rate	4.30	%		3.60	%		3.90	%
Expected long-term rate of return on plan assets	6.25	%		6.25	%		6.25	%

Expected Benefit Payments - Expected benefit payments for each of the next five fiscal years and in the aggregate for the five fiscal years thereafter are as follows (in thousands):

2020	$	2,244
2021	1,899
2022	2,886
2023	4,557
2024	4,442
2025 through 2029	23,286

Plan Assets - On May 16, 2017, we entered into an agreement with an external investment manager to invest and manage the plan’s assets under a strategy using a combination of two portfolios. The investment manager allocates the plan’s assets between a growth portfolio and a liability-driven portfolio according to certain target allocations and tolerance bands that are agreed to by the Administrative Committee of the U.S. Pension Plan. Such target allocations will take into consideration the plan’s funded ratio. The manager will also monitor the strategy and, as the plan’s funded ratio changes over time, will rebalance the strategy, if necessary, to be within the agreed tolerance bands and target allocations. The portfolios are comprised of certain common collective investment trusts that are established and maintained by the investment manager. The common collective trusts are valued at their NAV as a practical expedient for fair value.

German Pension Plan

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Jefferies sponsors our following share-based compensation plans: Incentive Compensation Plan, Employee Stock Purchase Plan (“ESPP”) and the Deferred Compensation Plan. The outstanding and future share-based awards relating to these plans relate to Jefferies common shares. The fair value of share-based awards is estimated on the date of grant based on the market price of the underlying common stock less the impact of market conditions and selling restrictions subsequent to vesting, if any, and is amortized as compensation expense over the related requisite service periods. We are allocated costs associated with awards granted to our employees under such plans.

In addition, we sponsor non-share-based compensation plans. Non-share-based compensation plans sponsored by us include a profit sharing plan and other forms of restricted cash awards.

The components of total compensation cost associated with certain of our compensation plans are as follows (in millions):

	Year Ended November 30,
	2019				2018				2017
Components of compensation cost:
Restricted cash awards	$	314.7			$	274.4			$	251.6
Restricted stock and RSUs (1)	26.7				27.6				26.6
Profit sharing plan	7.2				6.5				6.0
Total compensation cost	$	348.6			$	308.5			$	284.2

(1)

Total compensation cost associated with restricted stock and restricted stock units (“RSUs”) includes the amortization of sign-on, retention and senior executive awards, less forfeitures and clawbacks. Additionally, we recognize compensation cost related to the discount provided to employees in electing to defer compensation under the Deferred Compensation Plan. This compensation cost was approximately $377,000, $346,000 and $227,000 for the years ended November 30, 2019, 2018 and 2017, respectively.

Remaining unamortized amounts related to certain compensation plans at November 30, 2019 are as follows (dollars in millions):

	Remaining Unamortized Amounts				Weighted Average Vesting Period (in Years)
Non-vested share-based awards	$	47.0			3
Restricted cash awards	444.3				3
Total	$	491.3

In December 2019, $359.5 million of restricted cash awards related to the 2019 performance year that contain a future service requirement were approved and awarded. Absent actual forfeitures or cancellations or accelerations, the annual compensation cost for these awards will be recognized as follows (in millions):

	Year Ended November 30,
	2019				2020				2021				Thereafter				Total
Restricted cash awards	$	78.0			$	58.5			$	69.7			$	153.3			$	359.5

The following are descriptions of the compensation plans:

Incentive Compensation Plan. The Incentive Compensation Plan (“Incentive Plan”) allows for awards in the form of incentive stock options (within the meaning of Section 422 of the Internal Revenue Code), nonqualified stock options, stock appreciation rights, restricted stock, unrestricted stock, performance awards, RSUs, dividend equivalents or other share-based awards. RSUs give a participant the right to receive fully vested common shares at the end of a specified deferral period, allowing a participant to hold an interest tied to common stock on a tax deferred basis. Prior to settlement, RSUs carry no voting or dividend rights associated with the stock ownership, but dividend equivalents are accrued to the extent there are dividends declared on the underlying common shares as cash amounts or as deemed reinvestments in additional RSUs. Awards issued and outstanding related to the Incentive Plan relate to shares of Jefferies.

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Restricted stock and RSUs may be granted to new employees as sign-on awards, to existing employees as “retention” awards and to certain executive officers as awards for multiple years. Sign-on and retention awards are generally subject to annual ratable vesting over a four-year service period and are amortized as compensation expense on a straight-line basis over the related four years. Restricted stock and RSUs are granted to certain senior executives with market, performance and service conditions. Market conditions are incorporated into the grant-date fair value of senior executive awards using a Monte Carlo valuation model. Compensation expense for awards with market conditions is recognized over the service period and is not reversed if the market condition is not met. Awards with performance conditions are amortized over the service period if we determine that it is probable that the performance condition will be achieved.

Employee Stock Purchase Plan. There is also an ESPP which we consider noncompensatory effective January 1, 2007. The ESPP permits all regular full-time employees and employees who work part time over 20 hours per week to purchase, at a discount, Jefferies common shares. Annual employee contributions are limited to $21,250, are voluntary and made through payroll deduction. The stock purchase price is equal to 95% of the closing price of common stock on the last day of the applicable session (monthly).

Deferred Compensation Plan. There is also a Deferred Compensation Plan (“Deferred Compensation Plan”), which was established in 2001. Eligible employees are able to defer compensation on a pre-tax basis, with deferred amounts deemed invested at a discount in Jefferies common shares, or by allocating among any combination of other investment funds available under the Deferred Compensation Plan. We often invest directly, as a principal, in investments corresponding to the other investment funds, relating to our obligations to perform under the Deferred Compensation Plan. The compensation deferred by our employees is expensed in the period earned. The change in fair value of our investments in assets corresponding to the specified other investment funds are recognized in Principal transactions revenues and changes in the corresponding deferred compensation liability are reflected as Compensation and benefits expense in our Consolidated Statements of Earnings.

Profit Sharing Plan. We have a profit sharing plan, covering substantially all employees, which includes a salary reduction feature designed to qualify under Section 401(k) of the Internal Revenue Code.

Restricted Cash Awards. We provide compensation to new and existing employees in the form of loans and/or other cash awards which are subject to ratable vesting terms with service requirements. We amortize these awards to compensation expense over the relevant service period, which is generally considered to start at the beginning of the annual compensation year.

Total income taxes were allocated as follows (in thousands):

	Year Ended November 30,
	2019				2018				2017
Income tax expense	$	80,284			$	250,650			$	147,340

The provision for income tax expense consists of the following components (in thousands):

	Year Ended November 30,
	2019				2018				2017
Current:
U.S. Federal	$	50,970			$	106,761			$	147,065
U.S. state and local	(3,641		)		7,485				30,611
Foreign	10,923				10,139				12,910
Total current	58,252				124,385				190,586
Deferred:
U.S. Federal	19,973				131,233				(53,157		)
U.S. state and local	5,768				975				1,760
Foreign	(3,709		)		(5,943		)		8,151
Total deferred	22,032				126,265				(43,246		)
Total income tax expense	$	80,284			$	250,650			$	147,340

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The following table presents the U.S. and non-U.S. components of income before income tax expense (in thousands):

	Year Ended November 30,
	2019				2018				2017
U.S.	$	313,349			$	370,600			$	403,445
Non-U.S. (1)	11,320				39,067				101,479
Income before income tax expense	$	324,669			$	409,667			$	504,924

(1)	For purposes of this table, non-U.S. income is defined as income generated from operations located outside the U.S.

Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rates of 21.0% for the year ended November 30, 2019, 22.2% for the year ended November 30, 2018 and 35% for the year ended November 30, 2017 to earnings before income taxes as a result of the following (dollars in thousands):

	Year Ended November 30,
	2019							2018								2017
	Amount				Percent			Amount				Percent				Amount				Percent
Computed expected income taxes	$	68,181			21.0	%		$	90,945			22.2	%	(1	)	$	176,724			35.0	%
Increase (decrease) in income taxes resulting from:
State and local income taxes, net of Federal income tax benefit	11,638				3.6			20,419				5.0				23,898				4.7
International operations (including foreign rate differential)	4,518				1.4			2,258				0.6				(11,577		)		(2.3	)
Tax exempt income	(634		)		(0.2	)		(2,202		)		(0.5	)			(3,850		)		(0.8	)
Foreign tax credits, net	(1,664		)		(0.5	)		(8,006		)		(2.0	)			(32,974		)		(6.5	)
Meals and entertainment	3,641				1.1			4,528				1.1				4,129				0.8
Non-deductible executive compensation	3,720				1.1			3,011				0.7				442				0.1
Federal benefits related to prior year tax filings	(653		)		(0.2	)		—				—				(3,786		)		(0.8	)
Change in unrecognized tax benefits related to prior years	(7,690		)		(2.4	)		(18,497		)		(4.5	)			(2,953		)		(0.6	)
Deferred tax asset remeasurement related to the Tax Act	—				—			112,733				27.5				—				—
Transition tax on foreign earnings related to the Tax Act	139				0.1			52,417				12.8				—				—
Other, net	(912		)		(0.3	)		(6,956		)		(1.7	)			(2,713		)		(0.4	)
Total income tax expense	$	80,284			24.7	%		$	250,650			61.2	%			$	147,340			29.2	%

(1)	On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act, which reduced the U.S. federal corporate tax rate from 35% to 21%, as well as other changes. The statutory U.S. federal corporate tax rate for companies with a fiscal year end of November 30, 2018 is a blended rate of 22.2%, which was reduced to 21% in fiscal 2019 and thereafter.

The following table presents a reconciliation of gross unrecognized tax benefits (in thousands):

	Year Ended November 30,
	2019				2018				2017
Balance at beginning of period	$	125,626			$	129,544			$	109,527
Increases based on tax positions related to the current period	8,142				19,840				18,619
Increases based on tax positions related to prior periods	1,399				5,002				7,310
Decreases based on tax positions related to prior periods	(9,560		)		(28,760		)		(5,912		)
Balance at end of period	$	125,607			$	125,626			$	129,544

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The total amount of unrecognized tax benefit that, if recognized, would favorably affect the effective tax rate was $99.5 million and $99.4 million (net of benefits of taxes) at November 30, 2019 and 2018, respectively.

We recognize interest accrued related to unrecognized tax benefits in Interest expense. Penalties, if any, are recognized in Other expenses in our Consolidated Statements of Earnings. Net interest expense related to unrecognized tax benefits was $6.3 million, $1.0 million and $9.0 million for the years ended November 30, 2019, 2018 and 2017, respectively. At November 30, 2019 and 2018, we had interest accrued of approximately $55.6 million and $49.3 million, respectively, included in Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition. No material penalties were accrued for the years ended November 30, 2019 and 2018.

The cumulative tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below (in thousands):

	November 30,
	2019				2018
Deferred tax assets:
Compensation and benefits	$	223,357			$	240,785
Net operating loss	5,634				17,867
Long-term debt	33,097				39,623
Accrued expenses and other	71,993				65,265
Sub-total	334,081				363,540
Valuation allowance	(3,228		)		(10,650		)
Total deferred tax assets	330,853				352,890
Deferred tax liabilities:
Amortization of intangibles	70,373				69,095
Other	62,433				40,556
Total deferred tax liabilities	132,806				109,651
Net deferred tax asset, included in Other assets	$	198,047			$	243,239

The valuation allowance represents the portion of our deferred tax assets for which it is more likely than not that the benefit of such items will not be realized. We believe that the realization of the net deferred tax asset of $198.0 million at November 30, 2019 is more likely than not based on expectations of future taxable income in the jurisdictions in which we operate.

At November 30, 2019, we had gross net operating loss carryforwards of $5.6 million, primarily related to various European jurisdictions. A deferred tax asset of $5.2 million related to net operating losses in Europe has been partially offset by a valuation allowance of $1.8 million, while $0.3 million of deferred tax asset related to net operating losses in Asia has been fully offset by a valuation allowance. The remaining valuation allowance is attributable to deferred tax assets related to compensation and benefits in the U.K.

We have a tax sharing agreement between us and Jefferies. Refer to Note 20, Related Party Transactions, herein, for further information.

We are currently under examination by numerous taxing jurisdictions. We do not expect that resolution of these examinations will have a material effect on our consolidated financial position, but could have a material impact on the consolidated results of operations for the period in which resolution occurs. It is reasonably possible that, within the next twelve months, statutes of limitation will expire which would have the effect of reducing the balance of unrecognized tax benefits by $9.5 million.

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The table below summarizes the earliest tax years that remain subject to examination in the major tax jurisdictions in which we operate:

Jurisdiction	Tax Year
United States	2016
California	2009
New Jersey	2010
New York State	2001
New York City	2003
United Kingdom	2018
Hong Kong	2014
India	2010
Italy	2012

During the quarter ended February 28, 2019, we increased the provisional tax charge that had been recorded during the year ended November 30, 2018 by $0.2 million resulting in a total tax charge of $165.3 million, as a result of the Tax Act. Of this amount, $112.7 million related to the write down of our deferred tax asset, reflecting the impact of a lower federal tax rate of 21% on our deferred tax items. The remaining part of the charge related to the transition tax on the deemed repatriation of unremitted foreign earnings. The measurement period as permitted by Staff Accounting Bulletin No. 118, which was issued by SEC staff on December 22, 2017, was closed during the quarter ended February 28, 2019 and we have completed our accounting as it relates to the Tax Act.

The new tax on global intangible low-taxed income (“GILTI”), became applicable in fiscal 2019. As a result, we made an accounting policy election in the first quarter of 2019 to treat GILTI as a period cost if and when incurred.

Commitments

The following table summarizes our commitments at November 30, 2019 (in millions):

	Expected Maturity Date (fiscal years)
	2020				2021				2022 and 2023				2024 and 2025				2026 and Later				Maximum Payout
Equity commitments (1)	$	115.8			$	1.4			$	—			$	—			$	8.4			$	125.6
Loan commitments (1)	250.0				45.0				10.0				9.3				—				314.3
Underwriting commitments	13.5				—				—				—				—				13.5
Forward starting reverse repos (2)	5,475.3				—				—				—				—				5,475.3
Forward starting repos (2)	2,168.8				—				—				—				—				2,168.8
Other unfunded commitments (1)	72.3				132.2				—				4.9				—				209.4
Total commitments	$	8,095.7			$	178.6			$	10.0			$	14.2			$	8.4			$	8,306.9

(1)	Equity, loan and other unfunded commitments are presented by contractual maturity date. The amounts, however, are available on demand.

(2)	All of the securities purchased under agreements to resell and $2,157.7 million within forward starting securities sold under agreements to repurchase at November 30, 2019 settled within three business days.

Equity Commitments. Includes a commitment to invest in our joint venture, Jefferies Finance, and commitments to invest in private equity funds and in Jefferies Capital Partners, LLC, the manager of the private equity funds, which consists of a team led by one of our directors and Chairman of the Executive Committee. At November 30, 2019, our outstanding commitments relating to Jefferies Capital Partners, LLC and its private equity funds were $11.5 million.

See Note 9, Investments, for additional information regarding our investments in Jefferies Finance.

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Additionally, at November 30, 2019, we had other outstanding equity commitments to invest up to $7.8 million in various other investments.

Loan Commitments. From time to time we make commitments to extend credit to investment banking and other clients in loan syndication, acquisition finance and securities transactions and to SPE sponsors in connection with the funding of CLO and other asset-backed transactions. These commitments and any related drawdowns of these facilities typically have fixed maturity dates and are contingent on certain representations, warranties and contractual conditions applicable to the borrower. At November 30, 2019, we had $64.3 million of outstanding loan commitments to clients.

Loan commitments outstanding at November 30, 2019 also include our portion of the outstanding secured revolving credit facility provided to Jefferies Finance, to support loan underwritings by Jefferies Finance. See Note 9, Investments, for additional information.

Underwriting Commitments. In connection with investment banking activities, we may from time to time provide underwriting commitments to our clients in connection with capital raising transactions.

Forward Starting Reverse Repos and Repos. We enter into commitments to take possession of securities with agreements to resell on a forward starting basis and to sell securities with agreements to repurchase on a forward starting basis that are primarily secured by U.S. government and agency securities.

Other Unfunded Commitments. Other unfunded commitments include obligations in the form of revolving notes, warehouse financings and debt securities to provide financing to asset-backed and CLO vehicles. Upon advancing funds, drawn amounts are collateralized by the assets of an entity.

Leases. As lessee, we lease certain premises and equipment under non-cancelable agreements expiring at various dates through 2039 which are operating leases. At November 30, 2019, future minimum aggregate annual lease payments under such leases (net of subleases) for fiscal years ended November 30, 2020 through 2024 and the aggregate amount thereafter, are as follows (in thousands):

Fiscal Year	Operating Leases
2020	$	57,952
2021	60,395
2022	62,916
2023	57,574
2024	56,878
Thereafter	389,245
Total	$	684,960

The total minimum payments to be received in the future under non-cancelable subleases at November 30, 2019 was $16.2 million.

Rental expense, net of subleases, amounted to $61.2 million, $52.3 million and $56.1 million for the years ended November 30, 2019, 2018 and 2017, respectively.

Guarantees

Derivative Contracts. As a dealer, we make markets and trade in a variety of derivative instruments. Certain derivative contracts that we have entered into meet the accounting definition of a guarantee under U.S. GAAP, including credit default swaps, written foreign currency options and written equity put options. On certain of these contracts, such as written interest rate caps and foreign currency options, the maximum payout cannot be quantified since the increase in interest or foreign exchange rates are not contractually limited by the terms of the contract. As such, we have disclosed notional values as a measure of our maximum potential payout under these contracts.

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The following table summarizes the notional amounts associated with our derivative contracts meeting the definition of a guarantee under U.S. GAAP at November 30, 2019 (in millions):

	Expected Maturity Date (Fiscal Years)
	2020				2021				2022 and 2023				2024 and 2025				2026 and Later				Notional/ Maximum Payout
Guarantee Type:
Derivative contracts—non-credit related	$	9,854.0			$	3,150.8			$	4,453.6			$	1,044.8			$	48.2			$	18,551.4
Written derivative contracts—credit related	1.5				—				2.7				29.7				—				33.9
Total derivative contracts	$	9,855.5			$	3,150.8			$	4,456.3			$	1,074.5			$	48.2			$	18,585.3

The derivative contracts deemed to meet the definition of a guarantee under U.S. GAAP are before consideration of hedging transactions and only reflect a partial or “one-sided” component of any risk exposure. Written equity options and written credit default swaps are often executed in a strategy that is in tandem with long cash instruments (e.g., equity and debt securities). We substantially mitigate our exposure to market risk on these contracts through hedges, such as other derivative contracts and/or cash instruments, and we manage the risk associated with these contracts in the context of our overall risk management framework. We believe notional amounts overstate our expected payout and that fair value of these contracts is a more relevant measure of our obligations. At November 30, 2019, the fair value of derivative contracts meeting the definition of a guarantee is approximately $170.9 million.

Standby Letters of Credit. At November 30, 2019, we provided guarantees to certain counterparties in the form of standby letters of credit in the amount of $36.9 million, all of which expire within one year. Standby letters of credit commit us to make payment to the beneficiary if the guaranteed party fails to fulfill its obligation under a contractual arrangement with that beneficiary. Since commitments associated with these collateral instruments may expire unused, the amount shown does not necessarily reflect the actual future cash funding requirement.

Other Guarantees. We are members of various exchanges and clearing houses. In the normal course of business we provide guarantees to securities clearing houses and exchanges. These guarantees generally are required under the standard membership agreements, such that members are required to guarantee the performance of other members. Additionally, if a member becomes unable to satisfy its obligations to the clearing house, other members would be required to meet these shortfalls. To mitigate these performance risks, the exchanges and clearing houses often require members to post collateral. Our obligations under such guarantees could exceed the collateral amounts posted. Our maximum potential liability under these arrangements cannot be quantified; however, the potential for us to be required to make payments under such guarantees is deemed remote. Accordingly, no liability has been recognized for these arrangements.

As a broker-dealer registered with the SEC and member firms of the Financial Industry Regulatory Authority (“FINRA”), Jefferies LLC is subject to the SEC Uniform Net Capital Rule (“Rule 15c3-1”), which requires the maintenance of minimum net capital, and has elected to calculate minimum capital requirements using the alternative method permitted by Rule 15c3-1 in calculating net capital. Jefferies LLC, as a dually-registered U.S. broker-dealer and futures commission merchant (“FCM”), is also subject to Rule 1.17 of the Commodity Futures Trading Commission (“CFTC”), which sets forth minimum financial requirements. The minimum net capital requirement in determining excess net capital for a dually-registered U.S. broker-dealer and FCM is equal to the greater of the requirement under Rule 15c3-1 or CFTC Rule 1.17.

At November 30, 2019, Jefferies LLC’s net capital and excess net capital were as follows (in thousands):

	Net Capital				Excess Net Capital
Jefferies LLC	$	1,644,980			$	1,527,951

FINRA is the designated examining authority for our U.S. broker-dealer and the National Futures Association is the designated self-regulatory organization for Jefferies LLC as an FCM.

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Certain other U.S. and non-U.S. subsidiaries are subject to capital adequacy requirements as prescribed by the regulatory authorities in their respective jurisdictions, including Jefferies International Limited, which is authorized and regulated by the Financial Conduct Authority in the U.K.

The regulatory capital requirements referred to above may restrict our ability to withdraw capital from our regulated subsidiaries.

At November 30, 2019 and 2018, $4,934.2 million and $4,717.3 million, respectively, of net assets of our consolidated subsidiaries are restricted, as they reflect regulatory capital requirements or require regulatory approval prior to the payment of cash dividends and advances to the parent company.

We operate in two reportable business segments: (1) Investment Banking and Capital Markets and (2) Asset Management. The Investment Banking and Capital Markets reportable business segment includes our securities, commodities, futures and foreign exchange capital markets activities and investment banking business, which is composed of financial advisory and underwriting activities. The Investment Banking and Capital Markets reportable business segment provides the sales, trading, origination and advisory effort for various fixed income, equity and advisory products and services. The Asset Management reportable business segment provides investment management services to investors in the U.S. and overseas and invests capital in hedge funds, separately managed accounts and third-party asset managers.

Our reportable business segment information is prepared using the following methodologies:

•	Net revenues and non-interest expenses directly associated with each reportable business segment are included in determining earnings (loss) before income taxes.

•	Net revenues and non-interest expenses not directly associated with specific reportable business segments are allocated based on the most relevant measures applicable, including each reportable business segment’s net revenues, headcount and other factors.

•	Reportable business segment assets include an allocation of indirect corporate assets that have been fully allocated to our reportable business segments, generally based on each reportable business segment’s capital utilization.

Our net revenues, non-interest expenses and earnings (loss) before income taxes by reportable business segment are summarized below (in millions):

	Year Ended November 30,
	2019				2018				2017
Investment Banking and Capital Markets:
Net revenues	$	3,036.0			$	3,184.4			$	3,169.9
Non-interest expenses	2,688.9				2,719.5				2,634.2
Earnings before income taxes	$	347.1			$	464.9			$	535.7
Asset Management:
Net revenues	$	76.5			$	(1.0	)		$	28.2
Non-interest expenses	98.9				54.2				59.0
Loss before income taxes	$	(22.4	)		$	(55.2	)		$	(30.8	)
Total:
Net revenues	$	3,112.5			$	3,183.4			$	3,198.1
Non-interest expenses	2,787.8				2,773.7				2,693.2
Earnings before income taxes	$	324.7			$	409.7			$	504.9

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The following table summarizes our total assets by reportable business segment (in millions):

	November 30,
	2019				2018
Investment Banking and Capital Markets	$	40,565.8			$	38,700.7
Asset Management	2,950.3				2,468.1
Total assets	$	43,516.1			$	41,168.8

Net Revenues by Geographic Region

Net revenues for the Investment Banking and Capital Markets reportable business segment are recorded in the geographic region in which the position was risk-managed or, in the case of investment banking, in which the senior coverage banker is located. For the Asset Management reportable business segment, net revenues are allocated according to the location of the investment advisor. Net revenues by geographic region were as follows (in millions):

	Year Ended November 30,
	2019				2018				2017
Americas (1)	$	2,407.6			$	2,652.9			$	2,602.7
Europe (2)	592.8				434.9				489.6
Asia	112.1				95.6				105.8
Net revenues	$	3,112.5			$	3,183.4			$	3,198.1

(1)	Substantially all relates to U.S. results.

(2)	Substantially all relates to U.K. results.

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

•	At November 30, 2019 and 2018, we had $34.8 million and $39.3 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 $3.6 million and $4.6 million at November 30, 2019 and 2018, respectively.

See Note 8, Variable Interest Entities, and Note 17, Commitments, Contingencies and Guarantees, for further information regarding related party transactions with our officers, directors and employees.

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

•	We provide services to and receive services from Jefferies under service agreements (in millions):

	Year Ended November 30,
	2019				2018				2017
Charges to Jefferies for services provided	$	52.7			$	61.2			$	42.2
Charges from Jefferies for services received	9.5				9.1				14.2

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•	We provide investment banking and 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):

	Year Ended November 30,
	2019				2018				2017
Investment banking	$	10.6			$	15.7			$	14.7
Commissions and other fees	1.2				1.8				0.3
Principal transactions	—				0.1				—

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

	Year Ended November 30,
	2019				2018
Receivable from Jefferies	$	0.9			$	1.2
Payable to Jefferies	4.3				2.9

•

During the years ended November 30, 2019 and 2018, we paid distributions of $311.1 million and $248.7 million, respectively, to Jefferies. For the three months ended November 30, 2019 and 2018, we accrued distributions payable in the amount of $12.6 million and $30.7 million, respectively, which are included in Accrued expenses and other liabilities, in our Consolidated Statements of Financial Condition.

•

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 November 30, 2019, a net current tax receivable from Jefferies of $24.4 million is included in Other assets, in our Consolidated Statements of Financial Condition and at November 30, 2018, a net current tax payable to Jefferies of $34.1 million is included in Accrued expenses and other liabilities, in our Consolidated Statements of Financial Condition. During the years ended November 30, 2019 and 2018, we made payments to Jefferies of $71.4 million and $193.0 million, respectively.

•	On November 27, 2019, we transferred our investment in CoreCommodity Capital, LLC, an asset manager, along with a related accrued receivable and deferred tax asset, to Jefferies, in return for a total cash payment of $31.0 million.

•	During the year ended November 30, 2019, we sold securities totaling $110.9 million, and transferred a related deferred tax liability of $3.1 million, to Jefferies and purchased securities totaling $917.2 million from Jefferies, at fair value. There were no gains or losses on these transactions.

•

On October 1, 2018, Jefferies transferred its 50% interest in Berkadia and capital investments in certain separately managed accounts and funds to us. On November 1, 2018, we purchased LIML, an investment advisory company, from Jefferies. These transfers were accomplished as a capital contribution from Jefferies of approximately $598.2 million and cash payments of $70.5 million to Jefferies during the fourth quarter of 2018. In addition, we paid cash of approximately $5.5 million, representing LIML’s net book value as at October 31, 2018, including goodwill of $0.4 million and intangible assets of $0.2 million. In connection with these transfers, related deferred tax liabilities of approximately $50.9 million were transferred to us, for which Jefferies has indemnified us. These transferred deferred tax liabilities were adjusted by an additional $19.1 million during the fourth quarter of 2019. See Note 9, Investments, for further details on our 50% interest in Berkadia.

•	We entered into a foreign exchange prime brokerage agreement with an affiliate of Jefferies. In connection with the foreign exchange contracts entered into under this agreement, we have $9.9 million at both November 30, 2019 and 2018, included in Payables—brokers, dealers and clearing organizations, in our Consolidated Statements of Financial Condition.

•

We enter into OTC foreign exchange contracts with a subsidiary of Jefferies. In connection with these contracts, we had $0.6 million recorded in Financial instruments sold, at fair value, in our Consolidated Statements of Financial Condition at November 30, 2019. For the year ended November 30, 2019, we recorded a $6.1 million loss on these contracts, which is included in Principal transactions revenues in our Consolidated Statements of Earnings.

•	Two of our directors have investments totaling $0.4 million and $2.7 million at November 30, 2019 and 2018, respectively, in a hedge fund managed by Jefferies.

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•

We have investments in hedge funds managed by Jefferies of $223.5 million and $218.7 million at November 30, 2019 and 2018, respectively, included in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition. Net gains on our investments in these hedge funds, which are included in Principal transactions revenues in our Consolidated Statements of Earnings are as follows (in millions):

	Year Ended November 30,
	2019				2018				2017
Net gains on our investments	$	4.7			$	5.0			$	8.0

•

In connection with our capital markets 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 November 30, 2019 and 2018, approximately $0.1 million and $0.3 million, respectively, of debt issued by Jefferies is included in Financial instruments owned in our Consolidated Statements of Financial Condition.

HRG Group Inc. (“HRG”). We recognized investment banking revenues of $3.0 million for the year ended November 30, 2018 in connection with the merger of HRG into Spectrum Brands Holdings, Inc., which was partially owned by Jefferies.

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

The following is a summary of unaudited quarterly statements of earnings for the years ended November 30, 2019 and 2018 (in thousands):

	Three Months Ended
	November 30, 2019				August 31, 2019				May 31, 2019				February 28, 2019
Total revenues	$	1,073,536			$	1,141,631			$	1,314,493			$	1,054,872
Net revenues	747,802				777,159				901,851				685,718
Earnings before income taxes	23,871				83,075				155,138				62,585
Net earnings attributable to Jefferies Group LLC	25,160				64,968				109,920				45,981

	Three Months Ended
	November 30, 2018				August 31, 2018				May 31, 2018				February 28, 2018
Total revenues	$	1,097,943			$	1,088,285			$	1,156,809			$	1,086,595
Net revenues	761,958				777,615				822,557				821,246
Earnings before income taxes	77,963				87,101				121,865				122,738
Net earnings (loss) attributable to Jefferies Group LLC	61,393				60,182				98,004				(60,818		)

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(c)	Financial Statement Schedules

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JEFFERIES GROUP LLC

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF FINANCIAL CONDITION

(In thousands)

	November 30,
	2019				2018
ASSETS
Cash and cash equivalents	$	128,535			$	921,603
Cash and securities segregated and on deposited for regulatory purposes or deposited with clearing and depository organizations	38,817				57,817
Financial instruments owned, at fair value	72,736				99,491
Loans to and investments in related parties	643,720				696,774
Investment in subsidiaries	5,639,208				5,850,168
Advances to subsidiaries	3,979,139				2,488,026
Subordinated notes receivable	2,442,625				2,434,411
Other assets	333,798				483,770
Total assets	$	13,278,578			$	13,032,060
LIABILITIES AND EQUITY
Short-term borrowings	$	20,989			$	56,555
Financial instruments sold, not yet purchased, at fair value	2,307				797
Accrued expenses and other liabilities	365,540				431,471
Long-term debt	6,764,270				6,362,744
Total liabilities	7,153,106				6,851,567
EQUITY
Member’s paid-in capital	6,329,677				6,376,662
Accumulated other comprehensive income (loss):
Currency translation adjustments	(179,378		)		(185,804		)
Changes in instrument specific credit risk	(18,889		)		(5,728		)
Cash flow hedges	—				470
Additional minimum pension liability	(6,079		)		(4,761		)
Available-for-sale securities	141				(346		)
Total accumulated other comprehensive loss	(204,205		)		(196,169		)
Total member’s equity	6,125,472				6,180,493
Total liabilities and equity	$	13,278,578			$	13,032,060

See accompanying notes to condensed financial statements.

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JEFFERIES GROUP LLC

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands)

	Year Ended November 30,
	2019				2018				2017
Revenues:
Principal transactions	$	13,746			$	20,875			$	576
Asset management fees	—				—				1,266
Investment banking	103				—				—
Interest	271,369				262,042				241,357
Other	19,346				101,284				78,812
Total revenues	304,564				384,201				322,011
Interest expense	297,927				316,050				276,727
Net revenues	6,637				68,151				45,284
Non-interest expenses:
Total non-interest expenses	6,482				5,016				13,598
Earnings before income taxes	155				63,135				31,686
Income tax expense (benefit)	(3,316		)		104,649				(21,292		)
Net earnings (loss) before undistributed earnings of subsidiaries	3,471				(41,514		)		52,978
Undistributed earnings of subsidiaries	242,558				200,275				304,520
Net earnings	246,029				158,761				357,498
Other comprehensive income (loss), net of tax:
Currency translation and other adjustments	6,426				(85,554		)		53,396
Change in instrument specific credit risk	(13,161		)		22,160				(21,394		)
Cash flow hedges	(470		)		1,406				(936		)
Minimum pension liability adjustments, net of tax	(1,318		)		4,285				312
Unrealized gain on available-for-sale securities	487				311				—
Total other comprehensive income (loss), net of tax	(8,036		)		(57,392		)		31,378
Comprehensive income	$	237,993			$	101,369			$	388,876

See accompanying notes to condensed financial statements.

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JEFFERIES GROUP LLC

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended November 30,
	2019				2018				2017
Cash flows from operating activities:
Net earnings	$	246,029			$	158,761			$	357,498
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Amortization	(38,812		)		(53,296		)		(61,634		)
Undistributed earnings of subsidiaries	(242,558		)		(200,275		)		(304,520		)
(Income) loss on loans to and investments in related parties	(21,946		)		(98,223		)		(90,724		)
Distributions received on investments in related parties	75,000				40,000				—
Other adjustments	60,106				(116,307		)		39,513
Net change in assets and liabilities:
Financial instruments owned	26,755				(25,604		)		90,399
Other assets	154,940				119,293				(29,031		)
Financial instruments sold, not yet purchased	1,510				(17,264		)		10,776
Accrued expenses and other liabilities	(51,821		)		(200,970		)		324,446
Net cash provided by (used in) operating activities	209,203				(393,885		)		336,723
Cash flows from investing activities:
Investments in, advances to and subordinated notes receivable from subsidiaries	(1,035,619		)		(473,436		)		(415,100		)
Loans to and investments in related parties	—				—				(73,915		)
Cash received from contingent consideration	—				—				1,342
Net cash used in investing activities	(1,035,619		)		(473,436		)		(487,673		)
Cash flows from financing activities:
Proceeds from short-term borrowings	20,236				70,482				55,652
Payments on short-term borrowings	(55,773		)		(140,664		)		(32,326		)
Proceeds from issuance of long-term debt, net of issuance costs	1,184,891				1,183,954				1,116,798
Repayment of long-term debt	(823,875		)		(1,035,700		)		(186,444		)
Distribution to Jefferies Financial Group Inc.	(311,131		)		(248,684		)		—
Net cash provided by (used in) financing activities	14,348				(170,612		)		953,680
Net increase (decrease) in cash and cash equivalents	(812,068		)		(1,037,933		)		802,730
Cash, cash equivalents and restricted cash at beginning of period	979,420				2,017,353				1,214,623
Cash, cash equivalents and restricted cash at end of period	$	167,352			$	979,420			$	2,017,353
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for:
Interest	$	291,298			$	385,410			$	332,135
Income taxes, net	73,151				186,236				2,494

Noncash financing activities:

On October 1, 2018, Jefferies Financial Group Inc. (“Jefferies”) transferred to the Parent Company its 50% interest in Berkadia Commercial Mortgage Holding LLC (“Berkadia”) and its capital investments in certain separately managed accounts and funds. The transfer of its interest in Berkadia and a portion of the transfer of its capital investments in certain separately managed accounts and funds were recorded as a capital contribution and increased member’s equity by $598.2 million. Refer to Note 1, Organization and Basis of Presentation, in the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended November 30, 2019 for further details.

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The following presents the Parent Company’s cash, cash equivalents and restricted cash by category within the Condensed Statements of Financial Condition (in thousands):

	November 30,
	2019				2018
Cash and cash equivalents	$	128,535			$	921,603
Cash and securities segregated and on deposit for regulatory purposes with clearing and depository organizations	38,817				57,817
Total cash, cash equivalents and restricted cash	$	167,352			$	979,420

See accompanying notes to condensed financial statements.

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Note 1. Introduction and Basis of Presentation

The accompanying condensed financial statements (the “Parent Company Financial Statements”), including the notes thereto, should be read in conjunction with the consolidated financial statements of Jefferies Group LLC (the “Company”) and the notes thereto found in the Company’s Annual Report on Form 10-K for the year ended November 30, 2019. For purposes of these condensed non-consolidated financial statements, the Company’s wholly owned and majority owned subsidiaries are accounted for using the equity method of accounting (“equity method subsidiaries”).

The Parent Company is an indirect wholly owned subsidiary of Jefferies. Jefferies does not guarantee any of our outstanding debt securities.

The Parent Company Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for financial information. The significant accounting policies of the Parent Company Financial Statements are those used by the Company on a consolidated basis, to the extent applicable. For further information regarding the significant accounting policies refer to Note 2, Summary of Significant Accounting Policies, in the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended November 30, 2019.

The Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with U.S. GAAP. The most important of these estimates and assumptions relate to fair value measurements, compensation and benefits, goodwill and intangible assets, the ability to realize deferred tax assets and the recognition and measurement of uncertain tax positions. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates.

Note 2. Transactions with Subsidiaries

The Parent Company has transactions with its consolidated subsidiaries, Jefferies and certain other affiliated entities determined on an agreed upon basis and has guaranteed certain unsecured lines of credit and contractual obligations of certain equity method subsidiaries.

Note 3. Guarantees

In the normal course of its business, the Parent Company issues guarantees in respect of obligations of certain of its wholly owned subsidiaries under trading and other financial arrangements, including guarantees to various trading counterparties and banks. The Parent Company records all derivative contracts and Financial instruments owned and Financial instruments sold, not yet purchased at fair value in its Consolidated Statements of Financial Condition.

Certain of the Parent Company’s equity method subsidiaries are members of various exchanges and clearing houses. In the normal course of business, the Parent Company provides guarantees to securities clearinghouses and exchanges. These guarantees generally are required under the standard membership agreements, such that members are required to guarantee the performance of other members. Additionally, if a member becomes unable to satisfy its obligations to the clearinghouse, other members would be required to meet these shortfalls. To mitigate these performance risks, the exchanges and clearinghouses often require members to post collateral. The Parent Company’s obligations under such guarantees could exceed the collateral amounts posted. The maximum potential liability under these arrangements cannot be quantified; however, the potential for the Parent Company to be required to make payments under such guarantees is deemed remote. Accordingly, no liability has been recognized for these arrangements.

The Parent Company guarantees certain financing arrangements of subsidiaries. The maximum amount payable under these guarantees is $375.0 million at November 30, 2019. For further information, refer to Note 11, Short-Term Borrowings, and Note 12, Long-Term Debt, in the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended November 30, 2019.

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(1)	Unamortized deferred loan fees received in connection with revolving credit facilities are classified within Other liabilities on the Consolidated Balance Sheets.

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■	the types of loans;

■	the expected loss with regard to the loan type;

■	the internal credit rating assigned to the loans; and

■	type of industry for a given loan.

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■	Industry segment

■	Position within the industry

■	Earnings/Operating Cash Flows

■	Asset/Liability values

■	Financial flexibility/debt capacity

■	Management and controls

■	Grade 1—Issuers assigned this grade are characterized as substantially risk free and having an extremely strong capacity to meet all financial obligations.

■	Grade 2—Issuers assigned this grade are characterized as representing minimal risk.

■	Grade 3—Issuers assigned this grade are characterized as representing modest risk.

■	Grade 4—Issuers assigned this grade are characterized as representing better than average risk.

■	Grade 5—Issuers assigned this grade are characterized as representing average risk.

■	Grade 6—Issuers assigned this grade are characterized as representing acceptable risk.

■	Grade 7—Issuers assigned this grade are currently vulnerable to adverse business, financial and economic conditions and are characterized by increasing credit risk. They possess potential weakness that may, if not checked or corrected,

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■	Grade 8—Issuers assigned this grade are characterized by inadequate repayment capacity and/or recovery of the obligor or of the collateral pledged resulting in potential loss if deficiencies are not corrected.

■	Grade 9—Issuers assigned this grade are in (a) payment default at any level in its debt structure or (b) bankruptcy. In addition, asset weaknesses may make collection or liquidation in full, on the basis of existing facts, highly questionable and improbable.

■	Grade 10—Issuers assigned this grade are charged-off.

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■	Payment default of principal and/or interest

■	Bankruptcy declaration

■	Going concern opinion issued by the borrower’s auditors

■	Insufficient cash flow to service debt with low likelihood of turnaround in the short term

■	Securities (public) are de-listed

■	Refinancing sources are unlikely

■	Financial covenants breach is unlikely to be amended

■	Modification of interest rate below market rate

■	The borrower does not otherwise have access to funding for debt with similar risk characteristics in the market at the restructured rate and terms

■	Capitalization of interest

■	Delaying principal and/or interest for a period of year or more

■	Forgiveness of some or all of the principal balance

(1)	Post modification outstanding amounts include loan and equity converted on restructure.

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(1)	For the year ended November 30, 2019 and 2018 the Company did not record any OTTI.

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(1)	This facility is secured on a super priority basis by the collateral securing the Senior Secured Debt (refer to Note 11). The collateral is comprised of JFIN’s unrestricted cash, loans receivable and loans held for sale, net not encumbered by other facilities.

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(2)	On February 20, 2019, the Third Party Fronting Line was increased to $825.0 million from $800.0 million.

(3)	Outstanding balance does not include $12.0 million of deferred structuring fees which is recorded as a direct reduction of the credit facility on the consolidated balance sheet.

(4)	Included in Interest Expense in the Consolidated Statements of Earnings.

(5)	The Member’s $500 million Fronting Line was renewed until March 1, 2020. Each Member, at their discretion may make available additional advances in excess of its committed amount.

(1)	On February 21, 2018, the Third Party Fronting Line was increased to $800.0 million from $500.0 million. Third Party Fronting line included a temporary increase of $233.0 million from 2/27/2018 to 3/27/2018.

(2)	Outstanding balance does not include $5.9 million of deferred structuring fees which is recorded as a direct reduction of the credit facility on the consolidated balance sheet.

(3)	Included in Interest Expense in the Consolidated Statements of Earnings.

(4)	The Member’s $500 million Fronting Line was renewed until March 1, 2019. Each Member, at their discretion may make available additional advances in excess of its committed amount.

(1)	Outstanding balance does not include $5.7 million of deferred structuring fees which is recorded as a direct reduction of the credit facility on consolidated balance sheet.

(2)	Each Member, at their discretion may make available additional advances in excess of its committed amount.

(3)	Included in Interest Expense in the Consolidated Statements of Earnings.

(4)	On February 27, 2016, the Third Party Fronting Line was increased to $500.0 million from $481.7 million.

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(5)	After March 1, 2016, the Members’ Fronting Line contains annual automatic one-year extensions, absent a 60-day termination notice by either party.

(6)	On February 10, 2017, the maturity of the facility was extended until February 10, 2022.

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(1)	The Term Loan and the 2026 Secured Notes mature on June 3, 2026, or May 16, 2024 if the amount outstanding on the 2024 Notes equals or exceeds $150 million on such date.

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(1)	Jefferies LLC is a wholly owned subsidiary of JGL.

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