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Jefferies: the high paying hiring bank you can’t escape from?

Jefferies bonuses tax

Jefferies and the gilded cage

Jefferies has been hiring in London. It has also been firing and – remarkably given the ‘difficult’ nature of its contracts – several people have even left of their own accord.

The UK Financial Conduct Authority (FCA) register reveals that Jefferies added a handful of senior markets professionals in London in February, some of them from rival firms. They include Lucy Codrington, an associate-level healthcare analyst who was a doctor at Ealing Hospital until March 2014, Alex Mertens, an experienced equities structured products trader who spent nine years at RBS, Endra Condron, an equity derivatives salesman who spent four years at Bank of America Merrill Lynch, and Will Faison, a government bond trader who was previously a senior rates trader at Nomura and Lehman Brothers.

As we reported last week, in a market where most banks are compelled to delay bonus payments for several years, Jefferies’ London office has the great advantage of paying large all-cash bonuses to its staff.

However, such bonuses don’t come without strings. When you sign an employment contract at Jefferies, the bank makes some very demanding stipulations. Firstly, it says that if you leave the bank for a competitor within a year of receiving the bonus, you have to pay the whole thing back. Secondly, it says you have to play the whole thing back plus income tax.

In practice, headhunters say this makes it almost impossible to escape. “It’s a major issue. No one’s getting their bonuses bought out in these markets and at Jefferies any hiring bank also has the tax to repay on top,” says one headhunter, speaking on condition of anonymity. “The flip-side of this is that if you work for Jefferies, you get all that cash.”

People have been leaving Jefferies in London nonetheless. Financial News reported last week that Gavin Philips, Jefferies’ head of sales trading for EMEA has “stepped down.” The UK FCA Register suggests several other people have departed too, including Gerald Moore, head of EMEA equity derivatives trading, Niklas Rasmussen, a cash equities trader, Dominic Squire, a senior equities trader whom it hired in June 2014,  Nima Mehdian, a VP in oil and gas corporate finance, and Catharina Zuber, a VP in leveraged finance.

It’s not clear whether they left of their own accord and had to repay their bonuses, or were compelled to disappear. Reuters reports that Jefferies will be laying people off from its leveraged finance business in the US as it mergers its junk-rated loans and bonds business with the junk debt unit of its joint venture with MassMutual Financial Group.

The FCA Register suggests that only eight out of 43 people who’ve left Jefferies in the past six months have found employment elsewhere in London. In 2016, only one ex-Jefferies employee left the bank and found a new job.

Photo: mrgao/istock/Thinkstock

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