Jefferies Group LLC - 10-Q filing on 2016-07-08

Related Party Transactions

6 Months Ended

May 31, 2016

Jefferies Capital Partners Related Funds. We have equity investments in the JCP Manager and in private equity funds, which are managed by a team led by Brian P. Friedman, one of our directors and our Chairman of the Executive Committee (“Private Equity Related Funds”). At May 31, 2016 and November 30, 2015, our equity investments in Private Equity Related Funds were in aggregate $32.1 million and $39.6 million, respectively. We also charge the JCP Manager for certain services under a service agreement. The following table presents other revenues and investment income (loss) related to net gains and losses on our investment in Private Equity Related Funds and service charges (in thousands):



	Three Months Ended May 31,					Six Months Ended May 31,
	2016			2015		2016			2015
Other revenues and investment income (loss)	$	(5,064	)	$	947	$	(7,712	)	$	(24,212	)
Service charges	207			225		336			459

For further information regarding our commitments and funded amounts to the Private Equity Related Funds, see Note 17, Commitments, Contingencies and Guarantees.

Berkadia Commercial Mortgage, LLC. At May 31, 2016 and November 30, 2015, we have commitments to purchase $674.6 million and $752.4 million, respectively, in agency commercial mortgage-backed securities from Berkadia Commercial Mortgage, LLC, which is partially owned by Leucadia.

HRG Group Inc. ("HRG"). As part of our loan secondary trading activities we had unsettled purchases and sales of loans pertaining to portfolio companies within funds managed by HRG, which is partially owned by Leucadia, of $261.6 million at November 30, 2015. Additionally, we recognized investment banking and advisory revenues of $0.9 million and $1.3 million during the three and six months ended May 31, 2015, respectively.

National Beef Packaging Company, LLC (“National Beef”). We acted as an FCM for National Beef, which is principally owned by Leucadia. During the six months ended May 31, 2015, we recognized commissions of $0.2 million.

Officers, Directors and Employees. At May 31, 2016 and November 30, 2015, we had $39.8 million and $28.3 million, respectively, of loans outstanding to certain of our employees (none of whom are executive officers or directors) that are included in Other assets on the 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. At May 31, 2016 and November 30, 2015, we have provided a guarantee of a credit agreement for a private equity fund owned by our employees.

Leucadia. The following is a description of related party transactions with Leucadia:

•

Under a service agreement, we charge Leucadia for certain services, which amounted to $6.9 million and $14.5 million for the three and six months ended May 31, 2016, respectively, and $6.1 million and $11.2 million for the three and six months ended May 31, 2015, respectively. At May 31, 2016 and November 30, 2015, we had a receivable from Leucadia of $7.6 million and $10.2 million, respectively, which is included within Other assets on the Consolidated Statements of Financial Condition. At May 31, 2016 and November 30, 2015, we had a payable to Leucadia of $1.0 million and $0.6 million, respectively, related to certain services provided by Leucadia, which is included within Other liabilities on the Consolidated Statements of Financial Condition.


•	Pursuant to a tax sharing agreement entered into between us and Leucadia, payments are made between us and Leucadia to settle current tax assets and liabilities. At May 31, 2016 and November 30, 2015, a net current tax receivable from Leucadia of $191.9 million and $109.5 million, respectively, is included in Other assets on the Consolidated Statements of Financial Condition.


•	Of the total noncontrolling interests in asset management entities that are consolidated by us at November 30, 2015, $26.3 million are attributed to Leucadia.


•	In March 2016, we made a capital contribution of $114.0 million to a hedge fund managed by a subsidiary of Leucadia.


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



	Three Months Ended May 31,				Six Months Ended May 31,
	2016		2015		2016		2015
Investment banking and advisory	$	1,786	$	200	$	1,786	$	21,200
Asset management	29		119		145		303
Commissions and other fees	88		1		88		37

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