UPDATE: Jefferies Statement on Sovereign Debt of Portugal, Italy, Ireland, Greece, and Spain; Exposure Equals 1% of Shareholders Equity

In response to information published today, Jefferies clarified information relating to its sovereign-debt positions and its interest-income expense. To be clear, as of August 31, 2011, Jefferies had no meaningful net exposure to European sovereign debt. Recent reports and calculations appear to have been focusing only on long inventory of $2.684 billion but not taking into account the fact that there were offsetting short positions in such sovereign debt of $2.545 billion as well as offsetting positions in futures instruments. It should be noted that, as of today's opening of business, Jefferies' net exposure to the sovereign debt of the nations of Portugal, Italy, Ireland, Greece, and Spain consisted of the following (rounded to the nearest million): Portugal $5 million Ireland $28 million Italy $104 million Greece $3 million Spain <$178 million> That combined net short exposure of approximately $38 million equals approximately 1% of Jefferies' shareholders' equity, which as previously reported is not meaningful to Jefferies' shareholder equity. As Jefferies has previously stated, to the extent Jefferies from time to time takes positions in such debt, they are short term in nature, are recorded in the trading book of Jefferies' regulated UK broker-dealer, are marked to market daily, and fluctuate depending upon customer demand, auction activity, and opportunities in the market place. With respect to interest-income expense, Jefferies carries interest-earnings investments that turn over rapidly with its funding. As a result, Jefferies has had significant interest income in the past and should continue to have it in the future.