Jefferies Sells Stake in L.A. Brokerage He Founded
Boyd L. Jefferies has abandoned his dream of eventually returning to the Los Angeles brokerage firm he founded, selling back his 800,000 shares of Jefferies Group Inc. stock to the firm for $11 million.
The sale, which took place over the weekend, was announced Monday by Jefferies Group, the holding company for the securities brokerage Jefferies & Co. The price was the closing market price for the stock on Friday, $13.75 a share.
Ronald L. Ripley, one of Jefferies’ lawyers, said the sale came about because Jefferies, 60, concluded that Jefferies Group’s current management didn’t want him back. “They did not feel like they had a place for Boyd when he becomes eligible to return,” Ripley said. Boyd Jefferies’ stake represented about 15% of the firm’s stock.
Jefferies was forced to resign as chairman and chief executive of the firm in 1987, when he pleaded guilty to two felony counts related to the illegal “parking” of stock for admitted inside trader Ivan F. Boesky and corporate raider Paul A. Bilzerian. Jefferies could be eligible to reapply for permission to work in the securities industry as early as July, 1992.
Jefferies had built Jefferies & Co. into a powerful trader of large blocks of stock between institutional investors. After his plea, he cooperated with the government and appeared as a government witness in two criminal cases.
A federal judge in New York sentenced Jefferies in 1989 to probation and ordered him to pay a fine. He was given no prison term. U.S. District Judge Morris E. Lasker said he had taken into account Jefferies’ cooperation and the fact that his crimes were far less serious than those committed by Boesky.
In an interview shortly after his sentencing, Jefferies said he definitely wanted to return to the firm when a ban imposed by regulators was lifted. The Securities and Exchange Commission had barred him for life from the securities industry but included a provision allowing him to apply to have the ban lifted on the fifth anniversary of his guilty plea.
Trading in Jefferies Group’s stock was delayed Monday while announcement of the sale was made. It dropped $1.25 Monday to close at $12.50, although on very light volume of 1,300 shares.
Jefferies was en route from California to Hawaii on Monday and couldn’t be reached for comment. But in an interview with the Associated Press shortly before he left, he said, “I think the management felt it didn’t want me back.” He added: “I really felt that six months from now it was probably going to be impossible for me to go back with the company. The company has changed a lot. My life has changed.”
Jefferies Group President and Chief Executive Frank E. Baxter said, “I’m very grateful for what he’s done for the company.” He declined to say if the sale was meant to conclusively rule out an eventual return by the founder. “I think you’d pretty much have to draw your own conclusions there,” Baxter said.
Jefferies has spent much of his time since leaving the firm in organizing and working in volunteer programs that benefit young people and tending his personal investments. Ripley said much of Jefferies’ net worth was tied up in the stock.
He said the sale gives Jefferies the flexibility to embark on other business ventures, although he declined to say whether Jefferies has specific plans. Ripley said Jefferies had been in intermittent negotiations with the firm in recent months about selling the stock. He said Jefferies originally had asked for a premium above the stock’s market price.
