The United States Justice Department has joined the Securities and Exchange Commission and NASD in investigating gifts Jefferies brokers allegedly gave to mutual fund companies, the firm indicated in its annual report filing. Regulators are also looking into potential violations related to travel and entertainment expenses.
While Jefferies does not name the mutual fund complex in question, the SEC and NASD have been looking into gifts, such as Super Bowl tickets and exotic trips, which 20 brokerage houses, including Jefferies, may have given to traders at Fidelity Investments. Regulators are also looking into "trading with and for the mutual fund complex," Jefferies said. NASD regulations permit brokers to give gifts totaling no more than $100 to investment advisor employees.
While the firm said it does not expect the investigation to have material bearing on its finances, it indicated, "an adverse determination could be material for a particular period." The firm also said it is fully cooperating with the investigations.
Jefferies stock has traded in a narrow range since the filing was made March 31, closing at $38.21 on April 4.