WSJ What’s News Jefferies Faces Questions After First Brands’ Collapse
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Oct 16, 2025 The podcast dives into the fallout from First Brands' bankruptcy, putting Jefferies under the microscope due to an accounting scandal. It explores Jefferies’ dual roles as banker and asset manager that raised concerns among investors. Strong endowment returns at elite universities also catch attention, contrasting with a cautious outlook amid political pressures. Additionally, the discussion touches on banks' strategies focusing on wealthier borrowers, questioning the broader implications for the economy.
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Dual Role Raised Conflict Questions
- Jefferies acted as both investment banker and asset manager for First Brands, creating potential conflicts and closer visibility into its financing.
- That dual role raises questions about whether Jefferies could or should have detected the off‑balance‑sheet debt earlier.
Complex Structuring Hid Debt
- First Brands used a complex web of affiliates and possibly double‑pledged invoices to hide debt.
- Investigators and accountants are still untangling messy books and large discrepancies in collateral versus liabilities.
Demand Stronger Due Diligence
- Do scrutinize advisors' business judgment when large off‑balance liabilities appear after a deal.
- Demand clearer due diligence and disclosure when banks wear multiple hats for a client.