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Secret “side letter” may expose Jefferies to regulatory breach

Stanislav Nikulin 06 October 2025 23:40
Secret “side letter” may expose Jefferies to regulatory breach

Investment bank Jefferies is facing backlash after revelations that it earned undisclosed fees from its financing of the now-bankrupt First Brands Group. Creditors allege these hidden payments may have breached loan covenants, raising concerns about fairness and transparency within the lending structure.

Source  Financial Times

Investigations uncovered that Jefferies’ affiliate worked with Point Bonita Capital to purchase First Brands’ invoices at discounted prices. This arrangement enabled the company to access early cash while Jefferies collected additional profits not outlined in the primary loan agreement, effectively creating a shadow financing mechanism.

Lenders argue that this setup violated agreed interest limits and exploited loopholes in the contract wording. Both Jefferies and First Brands have declined to comment, while the case continues to highlight growing scrutiny over opaque financial practices in corporate lending.