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May 26, 2017  

Jefferies Payout Revealed in Court Filing

Former Jefferies executive William Jennings received a $10 million severance payment from the bank when it forced him out, court documents show.

The size of the payout was disclosed in a May 10 filing in U.S. District Court in New Haven, Conn., by attorneys representing former Jefferies trader Jesse Litvak as part of sentencing procedures tied to his federal securities-fraud conviction.

While the information had appeared in documents tied to Litvak’s trial before, it was redacted before release to the public.

Litvak was accused of overcharging clients for their mortgage-bond investments. As co-head of Jefferies’ fixed-income unit alongside Johan Eveland, Jennings was his supervisor.

The severance payment was tied to a $25 million settlement Jefferies reached in 2014 with the U.S. Attorney’s Office and the SEC over the bank’s trading conduct. That arrangement saw the government agencies agree to forgo prosecuting the institution, on the condition that Jennings was terminated or forced to resign.

Litvak’s attorneys wrote in their filing that Jennings’ removal reflected a belief by the government that “it would be impossible to reform Jefferies’ culture if Jennings continued as its co-head of fixed income.”

Jennings was never charged. In April 2016, Finra fined him $30,000 and banned him from the securities industry for three months. He currently plays professional poker.

As for Litvak, he was convicted on a single fraud count and cleared of nine others on Jan. 27 — and on April 29 was sentenced to two years in prison. His lawyers had been pushing for house arrest instead, while arguing that Jennings knew about and encouraged their client’s tactics. Litvak remains free on bail amid preparations for an appeal.