Jefferies Group LLC U.S.$2,500,000,000 Euro Medium Term Note Programme ______

SUPPLEMENT

This Second Supplement dated 30 October 2020 (this “Supplement”) to the Base Prospectus dated 13 July 2020 (the “Base Prospectus”) (as supplemented by the First Supplement dated 6 October 2020) is prepared in connection with the U.S.$2,500,000,000 Euro Medium Term Note Programme (the “Programme”) established by Jefferies Group LLC (the “Issuer”).

This Supplement has been approved by the Central Bank of Ireland (the “Central Bank”), as competent authority under Regulation (EU) 2017/1129 (the “Prospectus Regulation”). The Central Bank only approves this Supplement as meeting the standards of completeness, comprehensibility and consistency imposed by the Prospectus Regulation. Such approval should not be considered as an endorsement of the Issuer nor as an endorsement of the quality of the Notes that are the subject of the Base Prospectus and this Supplement. Investors should make their own assessment as to the suitability of investing in the Notes.

This document constitutes a Supplement for the purposes of the Prospectus Regulation. This Supplement is supplemental to, and should be read in conjunction with, the Base Prospectus.

Terms defined in the Base Prospectus have the same meaning when used in this Supplement.

The Issuer accepts responsibility for the information contained in this Supplement. To the best of the knowledge of the Issuer, the information contained in this Supplement is in accordance with the facts and does not omit anything likely to affect the import of such information.

Documents Incorporated by Reference in the Base Prospectus

A copy of the Issuer’s quarterly report on Form 10-Q as filed with the United States Securities and Exchange Commission on 9 October 2020, has been filed with the Central Bank and is annexed as Annex I hereto.

A copy of the Issuer’s Form 8-K relating to the issue of $500,000,000 aggregate principal amount of 2.75% Senior Notes due 2032, as filed with the United States Securities and Exchange Commission on 30 September 2020, has been filed with the Central Bank and is annexed as Annex II hereto.

Any statement contained in the Base Prospectus or a document incorporated by reference in the Base Prospectus shall be considered to be modified or superseded to the extent that a statement contained or incorporated by reference in this Supplement or in any other subsequently filed document that is incorporated by reference in the Base Prospectus modifies or supersedes such statement.

Certain statements included or incorporated by reference herein may constitute “forward looking statements”. Forward-looking statements include statements about the Issuer’s future and statements that are not historical facts. These forward-looking statements are usually preceded by the words “believe,” “intend,” “may,” “will,” or similar expressions. Forward-looking statements may contain expectations regarding revenues, earnings, operations and other financial projections, and may include statements of future performance, plans and objectives. Forward-looking statements also include

statements pertaining to the Issuer’s strategies for future development of its business and products. Forward-looking statements represent only the Issuer’s belief regarding future events, many of which by their nature are inherently uncertain. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors that could cause actual results to differ, perhaps materially, from those in the Issuer’s forward looking statements is contained in the Base Prospectus and other documents the Issuer files.

Any forward-looking statement speaks only as of the date on which that statement is made. The Issuer will not update any forward looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as required by applicable law.

General

Where there is any inconsistency among the Base Prospectus and this Supplement, the language used in this Supplement shall prevail.

Save as disclosed in this Supplement, there has been no other significant new factor, material mistake or inaccuracy relating to information included in the Base Prospectus since the publication of this Supplement.

Save as disclosed in this Supplement, there has been no significant change in the financial or trading position of the Issuer and its subsidiaries, taken as a whole, since 31 May 2020. Save as disclosed in the Base Prospectus and this Supplement, there has been no material adverse change in the prospects of the Issuer and its subsidiaries taken as a whole since 30 November 2019.

Annex I

Form 10-Q

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2020 OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to Commission file number 1-14947

JEFFERIES GROUP LLC (Exact name of registrant as specified in its charter)

Delaware 95-4719745 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)

520 Madison Avenue, New York, New York 10022 (Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 284-2550

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered 4.850% Senior Notes Due 2027 JEF/27A New York Stock Exchange 5.125% Senior Notes Due 2023 JEF/23 New York Stock Exchange

The Registrant is a wholly-owned subsidiary of Jefferies Financial Group Inc. and meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with a reduced disclosure format as permitted by Instruction H(2). Table of Contents

JEFFERIES GROUP LLC INDEX TO QUARTERLY REPORT ON FORM 10-Q August 31, 2020

PART I. FINANCIAL INFORMATION

Page

Item 1. Financial Statements 2

Consolidated Statements of Financial Condition (Unaudited) 2

Consolidated Statements of Earnings (Unaudited) 3

Consolidated Statements of Comprehensive Income (Unaudited) 4

Consolidated Statements of Changes in Equity (Unaudited) 5

Consolidated Statements of Cash Flows (Unaudited) 6

Notes to Consolidated Financial Statements (Unaudited) 8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 63

Item 3. Quantitative and Qualitative Disclosures About Market Risk 99

Item 4. Controls and Procedures 99

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 100

Item 1A. Risk Factors 100

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 101

Item 6. Exhibits 101

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PART I. FINANCIAL INFORMATION Item 1. Financial Statements. JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (In thousands)

August 31, 2020 November 30, 2019 ASSETS Cash and cash equivalents (includes $629 and $1,154 at August 31, 2020 and November 30, 2019, respectively, related to consolidated VIEs) $ 6,749,706 $ 5,567,903 Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations 986,117 796,797 Financial instruments owned, at fair value (includes securities pledged of $12,793,080 and $12,058,522 at August 31, 2020 and November 30, 2019, respectively; and $3,573 and $339 at August 31, 2020 and November 30, 2019, respectively, related to consolidated VIEs) 17,555,720 16,363,374 Loans to and investments in related parties 892,987 944,509 Securities borrowed 7,268,413 7,624,642 Securities purchased under agreements to resell (includes $0 and $25,000 at fair value at August 31, 2020 and November 30, 2019, respectively) 5,327,391 4,299,598 Securities received as collateral, at fair value 4,413 9,500 Receivables: Brokers, dealers and clearing organizations ($13,502 and $0 at August 31, 2020 and November 30, 2019, respectively, related to consolidated VIEs) 2,748,993 3,007,949 Customers 956,821 1,490,876 Fees, interest and other 350,261 323,067 Premises and equipment 863,522 350,433 Goodwill 1,644,044 1,643,599 Other assets ($150 and $0 at August 31, 2020 and November 30, 2019, respectively, related to consolidated VIEs) 1,312,060 1,093,868 Total assets $ 46,660,448 $ 43,516,115 LIABILITIES AND EQUITY Short-term borrowings (includes $21,829 and $20,981 at fair value at August 31, 2020 and November 30, 2019, respectively) $ 805,381 $ 548,490 Financial instruments sold, not yet purchased, at fair value ($2,094 and $0 at August 31, 2020 and November 30, 2019, respectively, related to consolidated VIEs) 10,994,445 10,532,460 Collateralized financings: Securities loaned 1,929,737 1,525,140 Securities sold under agreements to repurchase 7,258,972 7,504,670 Other secured financings (includes $3,402 at fair value at August 31, 2020; and $2,788,316 and $2,465,800 at August 31, 2020 and November 30, 2019, respectively, related to consolidated VIEs) 2,791,718 2,467,819 Obligation to return securities received as collateral, at fair value 4,413 9,500 Payables: Brokers, dealers and clearing organizations 2,546,494 2,555,178 Customers 3,936,811 3,808,609 Lease liabilities 573,563 — Accrued expenses and other liabilities (includes $1,493 and $1,546 at August 31, 2020 and November 30, 2019, respectively, related to consolidated VIEs) 2,326,026 1,431,144 Long-term debt (includes $1,522,105 and $1,215,285 at fair value at August 31, 2020 and November 30, 2019, respectively) 6,988,434 7,003,358 Total liabilities 40,155,994 37,386,368 EQUITY Member’s paid-in capital 6,615,771 6,329,677 Accumulated other comprehensive income (loss): Currency translation adjustments (142,080) (179,378) Changes in instrument specific credit risk 19,586 (18,889) Additional minimum pension liability (5,939) (6,079) Available-for-sale securities 552 141 Total accumulated other comprehensive loss (127,881) (204,205) Total Jefferies Group LLC member’s equity 6,487,890 6,125,472 Noncontrolling interests 16,564 4,275 Total equity 6,504,454 6,129,747 Total liabilities and equity $ 46,660,448 $ 43,516,115

See accompanying notes to consolidated financial statements.

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JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (In thousands)

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019 Revenues: Commissions and other fees $ 204,313 $ 171,003 $ 627,115 $ 493,843 Principal transactions 560,665 148,873 1,399,850 632,002 Investment banking 615,837 412,533 1,595,330 1,128,216 Asset management fees and revenues 6,772 4,220 23,068 16,350 Interest 195,960 383,596 702,569 1,163,022 Other 11,526 21,406 (6,020) 77,563 Total revenues 1,595,073 1,141,631 4,341,912 3,510,996 Interest expense 211,629 364,472 753,405 1,146,268 Net revenues 1,383,444 777,159 3,588,507 2,364,728 Non-interest expenses: Compensation and benefits 725,555 411,936 1,932,332 1,261,506 Non-compensation expenses: Floor brokerage and clearing fees 66,744 54,247 204,943 168,698 Technology and communications 102,635 86,649 287,413 247,464 Occupancy and equipment rental 27,053 29,300 78,951 87,587 Business development 7,637 36,526 45,953 103,430 Professional services 41,173 42,379 127,832 117,372 Underwriting costs 29,071 14,647 59,085 36,045 Other 20,175 18,400 80,351 41,828 Total non-compensation expenses 294,488 282,148 884,528 802,424 Total non-interest expenses 1,020,043 694,084 2,816,860 2,063,930 Earnings before income taxes 363,401 83,075 771,647 300,798 Income tax expense 95,870 18,250 203,855 79,789 Net earnings 267,531 64,825 567,792 221,009 Net earnings (loss) attributable to noncontrolling interests (531) (143) (4,397) 140 Net earnings attributable to Jefferies Group LLC $ 268,062 $ 64,968 $ 572,189 $ 220,869

See accompanying notes to consolidated financial statements.

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JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (In thousands)

Three Months Ended August Nine Months Ended August 31, 31, 2020 2019 2020 2019 Net earnings $ 267,531 $ 64,825 $ 567,792 $ 221,009 Other comprehensive income (loss), net of tax: Currency translation adjustments and other (1) 74,960 (28,023) 37,438 (34,208) Changes in instrument specific credit risk (2) (133,259) 5,889 38,475 26,533 Cash flow hedges (3) — — — (470) Unrealized gain (loss) on available-for-sale securities (4) (22) 198 411 577 Total other comprehensive income (loss), net of tax (5) (58,321) (21,936) 76,324 (7,568) Comprehensive income 209,210 42,889 644,116 213,441 Net earnings (loss) attributable to noncontrolling interests (531) (143) (4,397) 140 Comprehensive income attributable to Jefferies Group LLC $ 209,741 $ 43,032 $ 648,513 $ 213,301

(1) The amounts include income tax expenses of approximately $(25.6) million and $(13.7) million during the three and nine months ended August 31, 2020, respectively, and income tax benefits of $8.9 million and $10.6 million during the three and nine months ended August 31, 2019, respectively. (2) The amounts include income tax benefits (expenses) of approximately $45.5 million and $(13.1) million during the three and nine months ended August 31, 2020, respectively, and income tax expenses of approximately $2.0 million and $9.0 million for the three and nine months ended August 31, 2019, respectively. The amounts during the three and nine months ended August 31, 2020 also include net gains (losses) of $0.6 million and $(0.9) million, respectively, net of income tax (expenses) benefits of $(0.2) million and $0.3 million, respectively, related to changes in instrument specific risk, which were reclassified to Principal transactions revenues in our Consolidated Statements of Earnings. The amount during the nine months ended August 31, 2019 also includes a net gain of $0.5 million, net of taxes of $0.2 million, related to changes in instrument specific risk, which was reclassified to Principal transactions revenues in our Consolidated Statements of Earnings. (3) The amount during the nine months ended August 31, 2019 includes income tax benefits of $0.2 million. Cash flow hedge losses of $0.5 million were reclassified to Other revenues within the Consolidated Statement of Earnings. (4) The amounts include income tax expenses of $0.2 million during the nine months ended August 31, 2020, and income tax expense of $0.2 million during the nine months ended August 31, 2019. (5) None of the components of other comprehensive income (loss) are attributable to noncontrolling interests.

See accompanying notes to consolidated financial statements.

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JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) (In thousands)

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019 Member’s paid-in capital: Balance, beginning of period $ 6,481,740 $ 6,354,613 $ 6,329,677 $ 6,376,662 Net earnings attributable to Jefferies Group LLC 268,062 64,968 572,189 220,869 Distributions to Jefferies Financial Group Inc. (134,031) (32,484) (286,095) (210,434) Balance, end of period $ 6,615,771 $ 6,387,097 $ 6,615,771 $ 6,387,097 Accumulated other comprehensive income (loss), net of tax: Balance, beginning of period $ (69,560) $ (181,801) $ (204,205) $ (196,169) Currency translation adjustments and other 74,960 (28,023) 37,438 (34,208) Changes in instrument specific credit risk (133,259) 5,889 38,475 26,533 Cash flow hedges — — — (470) Unrealized gain (loss) on available-for-sale securities (22) 198 411 577 Balance, end of period $ (127,881) $ (203,737) $ (127,881) $ (203,737) Total Jefferies Group LLC member’s equity $ 6,487,890 $ 6,183,360 $ 6,487,890 $ 6,183,360 Noncontrolling interests: Balance, beginning of period $ 17,598 $ 6,313 $ 4,275 $ 1,911 Net earnings (loss) attributable to noncontrolling interests (531) (143) (4,397) 140 Contributions 1,000 — 18,405 6,600 Distributions (1,503) — (1,719) (2,481) Balance, end of period $ 16,564 $ 6,170 $ 16,564 $ 6,170

Total equity $ 6,504,454 $ 6,189,530 $ 6,504,454 $ 6,189,530

See accompanying notes to consolidated financial statements.

5 Table of Contents

JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)

Nine Months Ended

August 31, 2020 2019 Cash flows from operating activities: Net earnings $ 567,792 $ 221,009 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 49,450 24,626 Goodwill impairment 3,000 — (Income) loss on loans to and investments in related parties 25,524 (71,615) Distributions received on investments in related parties 35,949 126,504 Other adjustments 218,431 81,362 Net change in assets and liabilities: Securities deposited with clearing and depository organizations (20,955) (153) Receivables: Brokers, dealers and clearing organizations 265,354 268,337 Customers 534,057 330,869 Fees, interest and other (25,628) (27,007) Securities borrowed 382,907 (1,410,295) Financial instruments owned (1,115,993) (102,577) Securities purchased under agreements to resell (979,989) (1,772,192) Other assets (235,829) (74,840) Payables: Brokers, dealers and clearing organizations (16,565) (169,021) Customers 128,167 422,840 Securities loaned 387,692 387,016 Financial instruments sold, not yet purchased 366,626 921,282 Securities sold under agreements to repurchase (260,144) (346,031) Accrued expenses and other liabilities 835,964 (323,548) Net cash provided by (used in) operating activities 1,145,810 (1,513,434) Cash flows from investing activities: Contributions to loans to and investments in related parties (1,338,499) (26,849) Capital distributions from investments and repayments of loans from related parties 1,328,392 24,629 Net payments on premises and equipment (82,651) (71,392) Net cash used in investing activities (92,758) (73,612) Continued on next page.

6 Table of Contents

JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED (UNAUDITED) (In thousands)

Nine Months Ended

August 31, 2020 2019 Cash flows from financing activities: Proceeds from short-term borrowings 1,563,800 1,418,000 Payments on short-term borrowings (1,269,851) (1,221,000) Proceeds from issuance of long-term debt, net of issuance costs 521,170 908,332 Repayment of long-term debt (675,909) (756,614) Distributions to Jefferies Financial Group Inc. (164,644) (208,647) Net proceeds from other secured financings 323,899 939,953 Net change in bank overdrafts (37,758) (9,028) Proceeds from contributions of noncontrolling interests 18,405 6,600 Payments on distributions to noncontrolling interests (1,719) (2,481) Net cash provided by financing activities 277,393 1,075,115 Effect of exchange rate changes on cash, cash equivalents and restricted cash 19,723 (18,243) Net increase (decrease) in cash, cash equivalents and restricted cash 1,350,168 (530,174) Cash, cash equivalents and restricted cash at beginning of period 6,329,712 5,819,027 Cash, cash equivalents and restricted cash at end of period $ 7,679,880 $ 5,288,853

Supplemental disclosures of cash flow information: Cash paid during the period for Interest $ 834,180 $ 1,205,380 Income taxes, net 56,906 72,925

The following presents our cash, cash equivalents and restricted cash by category in our Consolidated Statements of Financial Condition (in thousands):

August 31, 2020 November 30, 2019 Cash and cash equivalents $ 6,749,706 $ 5,567,903 Cash and securities segregated and on deposit for regulatory purposes with clearing and depository organizations 930,174 761,809 Total cash, cash equivalents and restricted cash $ 7,679,880 $ 6,329,712

See accompanying notes to consolidated financial statements.

Table of Contents JEFFERIES GROUP LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Index

Note Page Note 1. Organization and Basis of Presentation 9 Note 2. Summary of Significant Accounting Policies 10 Note 3. Accounting Developments 10 Note 4. Fair Value Disclosures 12 Note 5. Derivative Financial Instruments 29 Note 6. Collateralized Transactions 35 Note 7. Securitization Activities 38 Note 8. Variable Interest Entities 40 Note 9. Investments 43 Note 10. Goodwill and Intangible Assets 46 Note 11. Short-Term Borrowings 48 Note 12. Long-Term Debt 49 Note 13. Leases 50 Note 14. Revenues from Contracts with Customers 52 Note 15. Compensation Plans 55 Note 16. Income Taxes 56 Note 17. Commitments, Contingencies and Guarantees 57 Note 18. Net Capital Requirements 59 Note 19. Segment Reporting 59 Note 20. Related Party Transactions 61

Table of Contents JEFFERIES GROUP LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited)

Note 1. Organization and Basis of Presentation

Organization

Jefferies Group LLC is the largest independent U.S.-headquartered global full service, integrated investment banking and securities firm. The accompanying Consolidated Financial Statements represent the accounts of Jefferies Group LLC and all our subsidiaries (together “we” or “us”). The subsidiaries of Jefferies Group LLC include Jefferies LLC, Jefferies International Limited, Jefferies Hong Kong Limited, Jefferies Financial Services, Inc., Jefferies Funding LLC, Jefferies Leveraged Credit Products, LLC and all other entities in which we have a controlling financial interest or are the primary beneficiary.

Jefferies Group LLC is a direct wholly owned subsidiary of publicly traded Jefferies Financial Group Inc. (“Jefferies”). Jefferies does not guarantee any of our outstanding debt securities. Jefferies Group LLC is a Securities and Exchange Commission (“SEC”) reporting company, filing annual, quarterly and periodic financial reports. Richard Handler, our Chief Executive Officer and Chairman, is the Chief Executive Officer of Jefferies, as well as a Director of Jefferies. Brian P. Friedman, our Chairman of the Executive Committee, is Jefferies’ President and a Director of Jefferies.

We operate in two reportable business segments: (1) Investment Banking and Capital Markets and (2) Asset Management. For further information on our reportable business segments, refer to Note 19, Segment Reporting.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10 -K for the year ended November 30, 2019. Certain footnote disclosures included in our Annual Report on Form 10-K for the year ended November 30, 2019 have been condensed or omitted from the consolidated financial statements as they are not required for interim reporting under U.S. GAAP. The Consolidated Financial Statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the interim period. The results presented in our Consolidated Financial Statements for interim periods are not necessarily indicative of the results for the entire year.

We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period to prepare these consolidated financial statements in conformity with U.S. GAAP. The most important of these estimates and assumptions relate to fair value measurements, compensation and benefits, goodwill and intangible assets, the ability to realize certain deferred tax assets and the recognition and measurement of uncertain tax positions. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates.

Consolidation

Our policy is to consolidate all entities that we control by ownership of a majority of the outstanding voting stock. In addition, we consolidate entities that meet the definition of a variable interest entity (“VIE”) for which we are the primary beneficiary. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. For consolidated entities that are less than wholly owned, the third party’s holding of equity interest is presented as Noncontrolling interests in our Consolidated Statements of Financial Condition and Consolidated Statements of Changes in Equity. The portion of net earnings attributable to the noncontrolling interests is presented as Net earnings (loss) attributable to noncontrolling interests in our Consolidated Statements of Earnings.

In situations in which we have significant influence, but not control, of an entity that does not qualify as a VIE, we apply either the equity method of accounting or fair value accounting pursuant to the fair value option election under U.S. GAAP, with our portion of net earnings or gains and losses recorded in Other revenues or Principal transactions revenues, respectively. We also have formed nonconsolidated investment vehicles with third-party investors that are typically organized as partnerships or limited liability companies and are carried at fair value. We act as general partner or managing member for these investment vehicles and have generally provided the third-party investors with termination or “kick-out” rights.

Intercompany accounts and transactions are eliminated in consolidation.

Table of Contents JEFFERIES GROUP LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited)

Note 2. Summary of Significant Accounting Policies

For a detailed discussion about the Company’s significant accounting policies, see Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2019.

During the nine months ended August 31, 2020, other than the following, there were no significant changes made to the Company’s significant accounting policies. The accounting policy changes are attributable to the adoption of the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-02, Leases (the “new lease standard”) on December 1, 2019. These lease policy updates are applied using a modified retrospective approach. Reported financial information for the historical comparable period was not revised and continues to be reported under the accounting standards in effect during the historical periods.

For leases with an original term longer than one year, lease liabilities are initially recognized on the lease commencement date based on the present value of the future minimum lease payments over the lease term, including non-lease components such as fixed common area maintenance costs and other fixed costs for generally all leases. A corresponding right-of-use (“ROU”) asset is initially recognized equal to the lease liability adjusted for any lease prepayments, initial direct costs and lease incentives. The ROU assets are included in Premises and equipment and the lease liabilities are included in Lease liabilities in our Consolidated Statement of Financial Condition.

The discount rates used in determining the present value of leases represent our collateralized borrowing rate considering each lease’s term and currency of payment. The lease term includes options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Certain leases have renewal options that can be exercised at the discretion of the Company. Lease expense is generally recognized on a straight-line basis over the lease term and included in Occupancy and equipment rental expense in our Consolidated Statement of Earnings. Refer to Note 3, Accounting Developments, and Note 13, Leases, for further information.

Note 3. Accounting Developments

Accounting Standards to be Adopted in Future Periods

Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides optional exceptions for applying U.S. GAAP to contracts, hedge accounting relationships or other transactions affected by reference rate reform. The optional exceptions can be elected through December 31, 2022. We are currently evaluating the impact of applying the optional exceptions on our consolidated financial statements.

Income Taxes. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The objective of the guidance is to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and to provide more consistent application to improve the comparability of financial statements. The guidance is effective in the first quarter of fiscal 2022. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Consolidation. In October 2018, the FASB issued ASU No. 2018-17, Consolidation: Targeted Improvements to Related Party Guidance for Variable Interest Entities. The guidance requires indirect interests held through related parties under common control arrangements be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. The guidance is effective in the first quarter of fiscal 2021. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Internal-Use Software. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The guidance amends the definition of a hosting arrangement and requires that the customer in a hosting arrangement that is a service contract capitalize certain implementation costs as if the arrangement was an internal-use software project. The guidance is effective in the first quarter of fiscal 2021. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Table of Contents JEFFERIES GROUP LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited)

Defined Benefit Plans. In August 2018, the FASB issued ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General: Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. The objective of the guidance is to improve the effectiveness of disclosure requirements on defined benefit pension plans and other postretirement plans. The guidance is effective in the first quarter of fiscal 2021. We do not believe the new guidance will have a material impact on our consolidated financial statements.

Goodwill. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies goodwill impairment testing. The guidance is effective in the first quarter of fiscal 2021. We do not believe the new guidance will have a material impact on our consolidated financial statements.

Financial Instruments—Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. The guidance provides for estimating credit losses on certain types of financial instruments by introducing an approach based on expected losses. The guidance is effective in the first quarter of fiscal 2021. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Adopted Accounting Standards Leases. We adopted the new lease standard on December 1, 2019 using a modified retrospective transition approach. Accordingly, reported financial information for historical comparable periods is not revised and continues to be reported under the accounting standards in effect during those historical periods. We elected not to reassess whether existing contracts are or contain leases, or the lease classification and initial direct costs of existing leases upon transition. At transition on December 1, 2019, the adoption of this standard resulted in the recognition of operating ROU assets of $519.9 million and operating lease liabilities of $586.3 million reflected in Premises and equipment and Lease liabilities in our Consolidated Statement of Financial Condition, respectively. Finance lease ROU assets and finance lease liabilities were not material and are reflected in Premises and equipment and Lease liabilities in our Consolidated Statement of Financial Condition, respectively. Derivatives and Hedging. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The objective of the guidance is to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. We adopted the guidance in the first quarter of fiscal 2020 and the adoption did not have a material impact on our consolidated financial statements.

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Note 4. Fair Value Disclosures

The following is a summary of our financial assets and liabilities that are accounted for at fair value on a recurring basis, excluding Investments at fair value based on net asset value (“NAV”) of $920.3 million and $570.3 million at August 31, 2020 and November 30, 2019, respectively, by level within the fair value hierarchy (in thousands):

August 31, 2020 Counterparty and Cash Collateral Level 1 Level 2 Level 3 Netting (1) Total Assets: Financial instruments owned: Corporate equity securities $ 2,446,810 $ 63,256 $ 77,830 $ — $ 2,587,896 Corporate debt securities — 2,720,581 23,269 — 2,743,850 Collateralized debt obligations and collateralized loan obligations — 68,287 27,936 — 96,223 U.S. government and federal agency securities 3,164,472 92,036 — — 3,256,508 Municipal securities — 358,292 — — 358,292 Sovereign obligations 1,686,522 877,334 — — 2,563,856 Residential mortgage-backed securities — 975,166 28,317 — 1,003,483 Commercial mortgage-backed securities — 1,091,406 4,663 — 1,096,069 Other asset-backed securities — 48,734 63,337 — 112,071 Loans and other receivables — 2,112,437 105,434 — 2,217,871 Derivatives 2,897 2,060,960 52,195 (1,611,815) 504,237 Investments at fair value — 45,156 49,881 — 95,037 Total financial instruments owned, excluding Investments at fair value based on NAV $ 7,300,701 $ 10,513,645 $ 432,862 $ (1,611,815) $ 16,635,393 Securities received as collateral $ 4,413 $ — $ — $ — $ 4,413

Liabilities: Financial instruments sold, not yet purchased: Corporate equity securities $ 2,295,391 $ 12,533 $ 4,367 $ — $ 2,312,291 Corporate debt securities — 1,448,558 148 — 1,448,706 U.S. government and federal agency securities 2,722,907 — — — 2,722,907 Sovereign obligations 1,452,399 1,096,176 — — 2,548,575 Commercial mortgage-backed securities — — 35 — 35 Loans — 1,432,113 46,594 — 1,478,707 Derivatives 1,031 2,207,254 74,620 (1,799,681) 483,224 Total financial instruments sold, not yet purchased $ 6,471,728 $ 6,196,634 $ 125,764 $ (1,799,681) $ 10,994,445 Short-term borrowings $ — $ 21,829 $ — $ — $ 21,829 Other secured financings $ — $ — $ 3,402 $ — $ 3,402 Obligation to return securities received as collateral $ 4,413 $ — $ — $ — $ 4,413 Long-term debt $ — $ 891,845 $ 630,260 $ — $ 1,522,105 (1) Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.

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November 30, 2019 Counterparty and Cash Collateral Level 1 Level 2 Level 3 Netting (1) Total Assets: Financial instruments owned: Corporate equity securities $ 2,325,116 $ 218,403 $ 58,301 $ — $ 2,601,820 Corporate debt securities — 2,472,213 7,490 — 2,479,703 Collateralized debt obligations and collateralized loan obligations — 124,225 20,081 — 144,306 U.S. government and federal agency securities 2,101,624 158,618 — — 2,260,242 Municipal securities — 742,326 — — 742,326 Sovereign obligations 1,330,026 1,405,827 — — 2,735,853 Residential mortgage-backed securities — 1,069,066 17,740 — 1,086,806 Commercial mortgage-backed securities — 424,060 6,110 — 430,170 Other asset-backed securities — 303,847 42,563 — 346,410 Loans and other receivables — 2,395,211 64,240 — 2,459,451 Derivatives 2,809 1,812,659 14,889 (1,432,806) 397,551 Investments at fair value — 32,688 75,738 — 108,426 Total financial instruments owned, excluding Investments at fair value based on NAV $ 5,759,575 $ 11,159,143 $ 307,152 $ (1,432,806) $ 15,793,064 Securities purchased under agreements to resell $ — $ — $ 25,000 $ — $ 25,000 Securities received as collateral $ 9,500 $ — $ — $ — $ 9,500

Liabilities: Financial instruments sold, not yet purchased: Corporate equity securities $ 2,755,601 $ 7,438 $ 4,487 $ — $ 2,767,526 Corporate debt securities — 1,471,142 340 — 1,471,482 U.S. government and federal agency securities 1,851,981 — — — 1,851,981 Sovereign obligations 1,363,475 941,065 — — 2,304,540 Commercial mortgage-backed securities — — 35 — 35 Loans — 1,600,228 9,463 — 1,609,691 Derivatives 871 2,066,064 92,057 (1,631,787) 527,205 Total financial instruments sold, not yet purchased $ 5,971,928 $ 6,085,937 $ 106,382 $ (1,631,787) $ 10,532,460 Short-term borrowings $ — $ 20,981 $ — $ — $ 20,981 Obligation to return securities received as collateral $ 9,500 $ — $ — $ — $ 9,500 Long-term debt $ — $ 735,216 $ 480,069 $ — $ 1,215,285

(1) Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.

The following is a description of the valuation basis, including valuation techniques and inputs, used in measuring our financial assets and liabilities that are accounted for at fair value on a recurring basis:

Corporate Equity Securities

• Exchange-Traded Equity Securities: Exchange-traded equity securities are measured based on quoted closing exchange prices, which are generally obtained from external pricing services, and are categorized within Level 1 of the fair value hierarchy, otherwise they are categorized within Level 2 of the fair value hierarchy. To the extent these securities are actively traded, valuation adjustments are not applied.

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• Non-Exchange-Traded Equity Securities: Non-exchange-traded equity securities are measured primarily using broker quotations, pricing data from external pricing services and prices observed from recently executed market transactions and are categorized within Level 2 of the fair value hierarchy. Where such information is not available, non-exchange-traded equity securities are categorized within Level 3 of the fair value hierarchy and measured using valuation techniques involving quoted prices of or market data for comparable companies, similar company ratios and multiples (e.g., price/Earnings before interest, taxes, depreciation and amortization (“EBITDA”), price/book value), discounted cash flow analyses and transaction prices observed from subsequent financing or capital issuance by the company. When using pricing data of comparable companies, judgment must be applied to adjust the pricing data to account for differences between the measured security and the comparable security (e.g., issuer market capitalization, yield, dividend rate, geographical concentration).

• Equity Warrants: Non-exchange-traded equity warrants are measured primarily using prices observed from recently executed market transactions and broker quotations and are categorized within Level 2 of the fair value hierarchy. Where such information is not available, non-exchange-traded equity warrants are generally categorized within Level 3 of the fair value hierarchy and can be measured using the Black-Scholes model with key inputs impacting the valuation including the underlying security price, implied volatility, dividend yield, interest rate curve, strike price and maturity date.

Corporate Debt Securities

• Investment Grade Corporate Bonds: Investment grade corporate bonds are measured primarily using pricing data from external pricing services and broker quotations, where available, prices observed from recently executed market transactions and bond spreads or credit default swap spreads of the issuer adjusted for basis differences between the swap curve and the bond curve. Investment grade corporate bonds measured using these valuation methods are categorized within Level 2 of the fair value hierarchy. If broker quotes, pricing data or spread data is not available, alternative valuation techniques are used including cash flow models incorporating interest rate curves, single name or index credit default swap curves for comparable issuers and recovery rate assumptions. Investment grade corporate bonds measured using alternative valuation techniques are categorized within Level 2 or Level 3 of the fair value hierarchy and are a limited portion of our investment grade corporate bonds.

• High Yield Corporate and Convertible Bonds: A significant portion of our high yield corporate and convertible bonds are categorized within Level 2 of the fair value hierarchy and are measured primarily using broker quotations and pricing data from external pricing services, where available, and prices observed from recently executed market transactions of institutional size. Where pricing data is less observable, valuations are categorized within Level 3 of the fair value hierarchy and are based on pending transactions involving the issuer or comparable issuers, prices implied from an issuer’s subsequent financing or recapitalization, models incorporating financial ratios and projected cash flows of the issuer and market prices for comparable issuers.

Collateralized Debt Obligations and Collateralized Loan Obligations

Collateralized debt obligations (“CDOs”) and collateralized loan obligations (“CLOs”) are measured based on prices observed from recently executed market transactions of the same or similar security or based on valuations received from third-party brokers or data providers and are categorized within Level 2 or Level 3 of the fair value hierarchy depending on the observability and significance of the pricing inputs. Valuation that is based on recently executed market transactions of similar securities incorporates additional review and analysis of pricing inputs and comparability criteria, including, but not limited to, collateral type, tranche type, rating, origination year, prepayment rates, default rates and loss severity.

U.S. Government and Federal Agency Securities

• U.S. Treasury Securities: U.S. Treasury securities are measured based on quoted market prices obtained from external pricing services and categorized within Level 1 of the fair value hierarchy.

• U.S. Agency Debt Securities: Callable and non-callable U.S. agency debt securities are measured primarily based on quoted market prices obtained from external pricing services and are generally categorized within Level 1 or Level 2 of the fair value hierarchy.

Municipal Securities

Municipal securities are measured based on quoted prices obtained from external pricing services and are generally categorized within Level 2 of the fair value hierarchy.

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Sovereign Obligations

Sovereign government obligations are measured based on quoted market prices obtained from external pricing services, where available, or recently executed independent transactions of comparable size. Sovereign government obligations, with consideration given to the country of issuance, are generally categorized within Level 1 or Level 2 of the fair value hierarchy.

Residential Mortgage-Backed Securities

• Agency Residential Mortgage-Backed Securities (“RMBS”): Agency RMBS include mortgage pass-through securities (fixed and adjustable rate), collateralized mortgage obligations and principal-only and interest-only (including inverse interest-only) securities. Agency RMBS are generally measured using recent transactions, pricing data from external pricing services or expected future cash flow techniques that incorporate prepayment models and other prepayment assumptions to amortize the underlying mortgage loan collateral and are categorized within Level 2 or Level 3 of the fair value hierarchy. We use prices observed from recently executed transactions to develop market-clearing spread and yield curve assumptions. Valuation inputs with regard to the underlying collateral incorporate factors such as weighted average coupon, loan-to-value, credit scores, geographic location, maximum and average loan size, originator, servicer and weighted average loan age.

• Non-Agency RMBS: The fair value of non-agency RMBS is determined primarily using discounted cash flow methodologies and securities are categorized within Level 2 or Level 3 of the fair value hierarchy based on the observability and significance of the pricing inputs used. Performance attributes of the underlying mortgage loans are evaluated to estimate pricing inputs, such as prepayment rates, default rates and the severity of credit losses. Attributes of the underlying mortgage loans that affect the pricing inputs include, but are not limited to, weighted average coupon; average and maximum loan size; loan-to-value; credit scores; documentation type; geographic location; weighted average loan age; originator; servicer; historical prepayment, default and loss severity experience of the mortgage loan pool; and delinquency rate. Yield curves used in the discounted cash flow models are based on observed market prices for comparable securities and published interest rate data to estimate market yields. In addition, broker quotes, where available, are also referenced to compare prices primarily on interest-only securities.

Commercial Mortgage-Backed Securities

• Agency Commercial Mortgage-Backed Securities (“CMBS”): Government National Mortgage Association (“GNMA”) project loan bonds are measured based on inputs corroborated from and benchmarked to observed prices of recent securitization transactions of similar securities with adjustments incorporating an evaluation of various factors, including prepayment speeds, default rates and cash flow structures. Federal National Mortgage Association (“FNMA”) Delegated Underwriting and Servicing (“DUS”) mortgage-backed securities are generally measured by using prices observed from recently executed market transactions to estimate market-clearing spread levels for purposes of estimating fair value. GNMA project loan bonds and FNMA DUS mortgage-backed securities are categorized within Level 2 of the fair value hierarchy.

• Non-Agency CMBS: Non-agency CMBS are measured using pricing data obtained from external pricing services, prices observed from recently executed market transactions or based on expected cash flow models that incorporate underlying loan collateral characteristics and performance. Non-Agency CMBS are categorized within Level 2 or Level 3 of the fair value hierarchy depending on the observability of the underlying inputs.

Other Asset-Backed Securities

Other asset-backed securities (“ABS”) include, but are not limited to, securities backed by auto loans, credit card receivables, student loans and other consumer loans and are categorized within Level 2 or Level 3 of the fair value hierarchy. Valuations are primarily determined using pricing data obtained from external pricing services, broker quotes and prices observed from recently executed market transactions. In addition, recent transaction data from comparable deals is deployed to develop market clearing yields and cumulative loss assumptions. The cumulative loss assumptions are based on the analysis of the underlying collateral and comparisons to earlier deals from the same issuer to gauge the relative performance of the deal.

Loans and Other Receivables

• Corporate Loans: Corporate loans categorized within Level 2 of the fair value hierarchy are measured based on market consensus pricing service quotations. Where available, market price quotations from external pricing services are reviewed to ensure they are supported by transaction data. Corporate loans categorized within Level 3 of the fair value hierarchy are measured based on price quotations that are considered to be less transparent, market prices for debt securities of the same creditor and estimates of future cash flows incorporating assumptions regarding creditor default and recovery rates and consideration of the issuer’s capital structure.

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• Participation Certificates in Agency Residential Loans: Valuations of participation certificates in agency residential loans are based on observed market prices of recently executed purchases and sales of similar loans and data provider pricing. The loan participation certificates are categorized within Level 2 of the fair value hierarchy given the observability and volume of recently executed transactions and availability of data provider pricing.

• Project Loans and Participation Certificates in GNMA Project and Construction Loans: Valuations of participation certificates in GNMA project and construction loans are based on inputs corroborated from and benchmarked to observed prices of recent securitizations with similar underlying loan collateral to derive an implied spread. Securitization prices are adjusted to estimate the fair value of the loans to account for the arbitrage that is realized at the time of securitization. The measurements are categorized within Level 2 of the fair value hierarchy given the observability and volume of recently executed transactions.

• Consumer Loans and Funding Facilities: Consumer and small business whole loans and related funding facilities are valued based on observed market transactions and incorporating valuation inputs including, but not limited to, delinquency and default rates, prepayment rates, borrower characteristics, loan risk grades and loan age. These assets are categorized within Level 2 or Level 3 of the fair value hierarchy.

• Escrow and Claim Receivables: Escrow and claim receivables are categorized within Level 3 of the fair value hierarchy where fair value is estimated based on reference to market prices and implied yields of debt securities of the same or similar issuers. Escrow and claim receivables are categorized within Level 2 of the fair value hierarchy where fair value is based on recent observations in the same receivable.

Derivatives

• Listed Derivative Contracts: Listed derivative contracts that are actively traded are measured based on quoted exchange prices, broker quotes or vanilla option valuation models, such as Black-Scholes, using observable valuation inputs from the principal market or consensus pricing services. Exchange quotes and/or valuation inputs are generally obtained from external vendors and pricing services. Broker quotes are validated directly through observable and tradeable quotes. Listed derivative contracts that use unadjusted exchange close prices are generally categorized within Level 1 of the fair value hierarchy. All other listed derivative contracts are generally categorized within Level 2 of the fair value hierarchy.

• Over-the-Counter (“OTC”) Derivative Contracts: OTC derivative contracts are generally valued using models, whose inputs reflect assumptions that we believe market participants would use in valuing the derivative in a current transaction. Where available, valuation inputs are calibrated from observable market data. For many OTC derivative contracts, the valuation models do not involve material subjectivity as the methodologies do not entail significant judgment and the inputs to valuation models do not involve a high degree of subjectivity as the valuation model inputs are readily observable or can be derived from actively quoted markets. OTC derivative contracts are primarily categorized within Level 2 of the fair value hierarchy given the observability and significance of the inputs to the valuation models. Where significant inputs to the valuation are unobservable, derivative instruments are categorized within Level 3 of the fair value hierarchy.

OTC options include OTC equity, foreign exchange, interest rate and commodity options measured using various valuation models, such as Black-Scholes, with key inputs including the underlying security price, foreign exchange spot rate, commodity price, implied volatility, dividend yield, interest rate curve, strike price and maturity date. Discounted cash flow models are utilized to measure certain OTC derivative contracts including the valuations of our interest rate swaps, which incorporate observable inputs related to interest rate curves, valuations of our foreign exchange forwards and swaps, which incorporate observable inputs related to foreign currency spot rates and forward curves and valuations of our commodity swaps and forwards, which incorporate observable inputs related to commodity spot prices and forward curves. Discounted cash flow models are also utilized to measure certain variable funding note swaps, which are backed by CLOs and incorporates constant prepayment rate, constant default rate and loss severity assumptions. Credit default swaps include both index and single-name credit default swaps. Where available, external data is used in measuring index credit default swaps and single-name credit default swaps. For commodity and equity total return swaps, market prices are generally observable for the underlying asset and used as the basis for measuring the fair value of the derivative contracts. Total return swaps executed on other underlyings are measured based on valuations received from external pricing services.

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Investments at Fair Value

Investments at fair value includes investments in hedge funds, fund of funds and private equity funds, which are measured at the NAV of the funds, provided by the fund managers and are excluded from the fair value hierarchy. Investments at fair value also include direct equity investments in private companies, which are measured at fair value using valuation techniques involving quoted prices of or market data for comparable companies, similar company ratios and multiples (e.g., price/EBITDA, price/book value), discounted cash flow analyses and transaction prices observed for subsequent financing or capital issuance by the company. Direct equity investments in private companies are categorized within Level 2 or Level 3 of the fair value hierarchy. The following tables present information about our investments in entities that have the characteristics of an investment company (in thousands):

August 31, 2020 Unfunded Fair Value (1) Commitments Equity Long/Short Hedge Funds (2) $ 322,020 $ — Equity Funds (3) 23,586 11,442 Commodity Funds (4) 16,204 — Multi-asset Funds (5) 558,452 — Other Funds (6) 65 — Total $ 920,327 $ 11,442

November 30, 2019 Unfunded Fair Value (1) Commitments Equity Long/Short Hedge Funds (2) $ 291,593 $ — Equity Funds (3) 27,952 12,108 Commodity Funds (4) 16,025 — Multi-asset Funds (5) 234,583 — Other Funds (6) 157 — Total $ 570,310 $ 12,108

(1) Where fair value is calculated based on NAV, fair value has been derived from each of the funds’ capital statements. (2) This category includes investments in hedge funds that invest, long and short, primarily in both public and private equity securities in domestic and international markets. At both August 31, 2020 and November 30, 2019, approximately 6% of the fair value of investments in this category are redeemable quarterly with 60 days prior written notice. (3) At August 31, 2020 and November 30, 2019, the investments in this category include investments in equity funds that invest in the equity of various U.S. and foreign private companies in the energy, technology, internet service and telecommunication service industries. These investments cannot be redeemed; instead, distributions are received through the liquidation of the underlying assets of the funds which are primarily expected to be liquidated in approximately one to eight years. (4) This category includes investments in a hedge fund that invests, long and short, primarily in commodities. Investments in this category are redeemable quarterly with 60 days prior written notice. (5) This category includes investments in hedge funds that invest, long and short, primarily in multi-asset securities in domestic and international markets in both the public and private sectors. At August 31, 2020 and November 30, 2019, investments representing approximately 58% and 5%, respectively, of the fair value of investments in this category are redeemable monthly with 30 or 60 days prior written notice. (6) This category includes investments in a fund that invests in loans secured by a first trust deed on property, domestic and international public high yield debt, private high yield investments, senior bank loans, public leveraged equities, distressed debt and private equity investments and there are no redemption provisions. This category also includes investments in a fund of funds that invests in various private equity funds that are managed by us and have no redemption provisions. Investments in the fund of funds are gradually being liquidated, however, the timing of when the proceeds will be received is uncertain.

Table of Contents JEFFERIES GROUP LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) Securities Purchased Under Agreements to Resell Securities purchased under agreements to resell may include embedded call features. The valuation of these instruments is based on review of expected future cash flows, interest rates, funding spreads and the fair value of the underlying collateral. Securities purchased under agreements to resell are categorized within Level 3 of the fair value hierarchy due to limited observability of the embedded derivative and unobservable credit spreads. Other Secured Financings Other secured financings that are accounted for at fair value are classified within Level 3 of the fair value hierarchy. Fair value is based on estimates of future cash flows incorporating assumptions regarding recovery rates. Securities Received as Collateral / Obligations to Return Securities Received as Collateral In connection with securities-for-securities transactions in which we are the lender of securities and are permitted to sell or repledge the securities received as collateral, we report the fair value of the collateral received and the related obligation to return the collateral. Valuation is based on the price of the underlying security and is categorized within Level 1 of the fair value hierarchy. Short-term Borrowings / Long-term Debt

Short-term borrowings that are accounted for at fair value include equity-linked notes, which are generally categorized within Level 2 of the fair value hierarchy, as the fair value is based on the price of the underlying equity security. Long-term debt includes variable rate, fixed-to-floating rate, constant maturity swap, digital and Bermudan structured notes. These are valued using various valuation models that incorporate our own credit spread, market price quotations from external pricing sources referencing the appropriate interest rate curves, volatilities and other inputs as well as prices for transactions in a given note during the period. Long-term debt notes are generally categorized within Level 2 of the fair value hierarchy where market trades have been observed during the quarter, otherwise categorized within Level 3.

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Level 3 Rollforwards The following is a summary of changes in fair value of our financial assets and liabilities that have been categorized within Level 3 of the fair value hierarchy for the three months ended August 31, 2020 (in thousands):

Three Months Ended August 31, 2020 For instruments still held at Total Net August 31, 2020 changes in gains/losses transfers unrealized gains/(losses) included in: Balance at (realized and into/ Balance at May 31, unrealized) (out of) August 31, Other comprehensive 2020 (1) Purchases Sales Settlements Issuances Level 3 2020 Earnings (1) income (1) Assets: Financial instruments owned: Corporate equity securities $ 76,100 $ (588) $ 699 $ — $ — $ — $ 1,619 $ 77,830 $ (588) $ — Corporate debt securities 25,178 (889) 4 (394) — — (630) 23,269 (881) — CDOs and CLOs 23,139 3,796 39 (7,539) (2,075) — 10,576 27,936 385 — RMBS 22,339 1,240 — — (774) — 5,512 28,317 1,262 — CMBS 4,461 202 — — — — — 4,663 198 — Other ABS 86,062 (1,585) 3,313 — (7,442) — (17,011) 63,337 (5,101) — Loans and other receivables 68,429 8,302 18,492 (13,897) (355) — 24,463 105,434 8,633 — Investments at fair value 63,959 (3,257) 2,182 — (13,003) — — 49,881 (4,406) — Liabilities: Financial instruments sold, not yet purchased: Corporate equity securities $ 4,190 $ (12) $ — $ — $ — $ — $ 189 $ 4,367 $ 12 $ — Corporate debt securities 163 (15) — — — — — 148 15 — CMBS 140 — (140) 35 — — — 35 — — Loans 10,674 6,636 (23,001) 3,558 — — 48,727 46,594 (6,591) — Net derivatives (2) 45,131 (12,175) (1,404) 13,089 (648) — (21,568) 22,425 12,007 — Other secured financings — (617) — — — 4,019 — 3,402 617 — Long-term debt 497,040 130,463 — — — 5,749 (2,992) 630,260 (42,163) (88,300) (1) Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in our Consolidated Statements of Earnings. Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statement of Comprehensive Income, net of tax. (2) Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives.

Analysis of Level 3 Assets and Liabilities for the three months ended August 31, 2020

During the three months ended August 31, 2020, transfers of assets of $64.5 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to: • Loans and other receivables of $31.8 million, CDOs and CLOs of $19.5 million, Other ABS of $5.8 million and RMBS of $5.5 million due to reduced pricing transparency. During the three months ended August 31, 2020, transfers of assets of $39.9 million from Level 3 to Level 2 are primarily attributed to: • Other ABS of $22.9 million, CDOs and CLOs of $8.9 million and Loans and other receivables of $7.4 million due to greater pricing transparency supporting classification into Level 2. During the three months ended August 31, 2020, transfers of liabilities of $54.4 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to: • Loans of $50.1 million and Net derivatives of $4.1 million due to reduced pricing and market transparency.

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During the three months ended August 31, 2020, transfers of liabilities of $30.0 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to: • Net derivatives of $25.6 million and structured notes of $3.0 million due to greater pricing and market transparency. Net gains on Level 3 assets were $7.2 million and net losses on Level 3 liabilities were $124.3 million for the three months ended August 31, 2020. Net gains on Level 3 assets were primarily due to increased market values across Loans and other receivables and CDOs and CLOs, partially offset by decreased market values across Investments at fair value and Other ABS. Net losses on Level 3 liabilities were primarily due to increased valuations of certain structured notes, partially offset by decreased market values across derivatives.

The following is a summary of changes in fair value of our financial assets and liabilities that have been categorized within Level 3 of the fair value hierarchy for the nine months ended August 31, 2020 (in thousands):

Nine Months Ended August 31, 2020 For instruments still held at August 31, 2020, changes in unrealized gains/ Total Net (losses) included in: gains/losses transfers Balance at (realized and into/ Balance at November unrealized) (out of) August 31, Other comprehensive 30, 2019 (1) Purchases Sales Settlements Issuances Level 3 2020 Earnings (1) income (1) Assets: Financial instruments owned: Corporate equity securities $ 58,301 $ (3,793) $ 3,299 $ (13,555) $ — $ — $ 33,578 $ 77,830 $ (654) $ — Corporate debt securities 7,490 (162) 285 (489) (602) — 16,747 23,269 (591) — CDOs and CLOs 20,081 (8,651) 10,883 (20,935) (5,675) — 32,233 27,936 (20,218) — RMBS 17,740 (1,347) 7,625 — (496) — 4,795 28,317 (1,811) — CMBS 6,110 232 — — (1,785) — 106 4,663 807 — Other ABS 42,563 (3,495) 29,096 (664) (22,125) — 17,962 63,337 (13,012) — Loans and other receivables 64,240 (7,093) 259,982 (208,958) (6,979) — 4,242 105,434 (6,216) — Investments at fair value 75,738 (33,753) 21,067 (168) (13,003) — — 49,881 (35,601) — Securities purchased under agreements to resell 25,000 — — — (25,000) — — — — — Liabilities: Financial instruments sold, not yet purchased: Corporate equity securities $ 4,487 $ 258 $ (567) $ — $ — $ — $ 189 $ 4,367 $ 98 $ — Corporate debt securities 340 (261) (325) 394 — — — 148 20 — CMBS 35 — (35) 35 — — — 35 — — Loans 9,463 2,986 (5,760) 38,531 — — 1,374 46,594 (3,366) — Net derivatives (2) 77,168 (63,367) (6,732) 26,656 (1,567) — (9,733) 22,425 60,257 — Other secured financings — (617) — — — 4,019 — 3,402 617 — Long-term debt 480,069 10,851 — — (2,000) 202,046 (60,706) 630,260 (28,153) 17,302 (1) Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in our Consolidated Statements of Earnings. Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statements of Comprehensive Income, net of tax. (2) Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives. Analysis of Level 3 Assets and Liabilities for the Nine Months Ended August 31, 2020

During the nine months ended August 31, 2020, transfers of assets of $132.0 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

• Corporate equity securities of $36.6 million, CDOs and CLOs of $34.1 million, Other ABS of $23.5 million, Corporate debt securities of $18.6 million and Loans and other receivables of $13.4 million due to reduced pricing transparency.

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During the nine months ended August 31, 2020, transfers of assets of $22.3 million from Level 3 to Level 2 are primarily attributed to:

• Loans and other receivables of $9.2 million, Other ABS of $5.6 million and Corporate equity securities of $3.1 million due to greater pricing transparency supporting classification into Level 2.

During the nine months ended August 31, 2020, transfers of liabilities of $37.3 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to:

• Net derivatives of $35.2 million due to reduced pricing transparency.

During the nine months ended August 31, 2020, transfers of liabilities of $106.2 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to:

• Structured notes of $60.7 million and net derivatives of $45.0 million due to greater market and pricing transparency.

Net losses on Level 3 assets were $58.1 million and net gains on Level 3 liabilities were $50.1 million for the nine months ended August 31, 2020. Net losses on Level 3 assets were primarily due to decreased market values across Investments at fair value, CDOs and CLOs, Loans and other receivables and Corporate equity securities. Net gains on Level 3 liabilities were primarily due to decreased market values across derivatives, partially offset by increased valuations of certain structured notes.

The following is a summary of changes in fair value of our financial assets and liabilities that have been categorized within Level 3 of the fair value hierarchy for the three months ended August 31, 2019 (in thousands):

Three Months Ended August 31, 2019 For instruments still held at Total Net August 31, 2019, changes in unrealized gains/ gains/losses transfers (losses) included in: Balance at (realized and into/ Balance at unrealized) (out of) August 31, Other comprehensive May 31, 2019 (1) Purchases Sales Settlements Issuances Level 3 2019 Earnings (1) income (1) Assets: Financial instruments owned: Corporate equity securities $ 59,307 $ 12,542 $ 16,508 $(17,502) $ — $ — $(20,255) $ 50,600 $ 12,062 $ — Corporate debt securities 7,429 (3,072) 1,175 (1,942) (85) — 5,783 9,288 (3,047) — CDOs and CLOs 16,195 (1,514) — — — — 6,454 21,135 (1,503) — RMBS 17,266 (1,917) — (65) (22) — 2,667 17,929 (1,435) — CMBS 12,530 (2,003) — (1,703) (3,362) — — 5,462 (3,143) — Other ABS 43,185 (1,689) 13,497 (6,975) (5,500) — (7,920) 34,598 (1,068) — Loans and other receivables 98,484 (2,847) 26,921 (33,409) (1,287) — (12,299) 75,563 (2,392) — Investments at fair value 103,833 (6,407) 240 (296) — — 35,135 132,505 (6,407) — Securities purchased under agreements to resell 25,000 — — — — — — 25,000 — — Liabilities: Financial instruments sold, not yet purchased: Corporate equity securities $ 221 $ 401 $ (221) $ — $ (190) $ — $ — $ 211 $ (35) $ — Corporate debt securities 669 (650) (34) — (369) — 1,586 1,202 649 — CMBS — — — 35 — — — 35 — — Loans 9,428 (520) (10,281) 5,384 — — 12,619 16,630 531 — Net derivatives (2) 47,449 (19,519) — 6,766 (14) — 16,081 50,763 18,507 — Long-term debt 236,562 7,455 — — — 114,641 (10,595) 348,063 (8,162) 706

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(1) Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in our Consolidated Statements of Earnings. Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statement of Comprehensive Income, net of tax. (2) Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives.

Analysis of Level 3 Assets and Liabilities for the three months ended August 31, 2019

During the three months ended August 31, 2019, transfers of assets of $79.0 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to: • Investments at fair value of $35.1 million and Loans and other receivables of $23.7 million due to reduced pricing transparency. During the three months ended August 31, 2019, transfers of assets of $69.4 million from Level 3 to Level 2 are primarily attributed to: • Loans and other receivables of $36.0 million and Corporate equity securities of $22.1 million due to greater pricing transparency supporting classification into Level 2. During the three months ended August 31, 2019, transfers of liabilities of $43.5 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to: • Net derivatives of $17.6 million, Loans of $13.3 million and structured notes of $11.0 million due to reduced market and pricing transparency. During the three months ended August 31, 2019, transfers of liabilities of $23.8 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to: • Structured notes of $21.6 million due to greater market transparency. Net losses on Level 3 assets were $6.9 million and net gains on Level 3 liabilities were $12.8 million for the three months ended August 31, 2019. Net losses on Level 3 assets were primarily due to decreased market values across Investments at fair value, Corporate debt securities, loans and other receivables and CMBS, partially offset by increased market values across Corporate equity securities. Net gains on Level 3 liabilities were primarily due to decreased market values across certain derivatives.

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Nine Months Ended August 31, 2019 For instruments still held at Net August 31, 2019, changes in unrealized gains/ Total transfers (losses) included in: Balance at gains/losses into/ Balance at November 30, (realized and (out of) August 31, Other comprehensive 2018 unrealized) (1) Purchases Sales Settlements Issuances Level 3 2019 Earnings (1) income (1) Assets: Financial instruments owned: Corporate equity securities $ 51,040 $ 16,381 $ 23,172 $(25,431) $ (669) $ — $(13,893) $ 50,600 $ 14,953 $ — Corporate debt securities 9,484 (4,904) 6,080 (10,544) (553) — 9,725 9,288 (5,325) — CDOs and CLOs 25,815 (5,892) 48,112 (43,230) (275) — (3,395) 21,135 (5,614) — RMBS 19,603 (2,573) 2,166 (2,022) (171) — 926 17,929 (2,166) — CMBS 10,886 (2,196) 11 (2,023) (6,638) — 5,422 5,462 (4,326) — Other ABS 53,175 (929) 14,698 (2,494) (30,623) — 771 34,598 (961) —

Loans and other receivables 46,985 3,933 178,069 (166,496) (8,379) — 21,451 75,563 682 — Investments at fair value 113,831 (3,971) 31,583 (296) — — (8,642) 132,505 (3,971) — Securities purchased under agreements to resell — — — — — 25,000 — 25,000 — — Liabilities: Financial instruments sold, not yet purchased: Corporate equity securities $ — $ 401 $ — $ — $ (190) $ — $ — $ 211 $ (35) $ — Corporate debt securities 522 (867) — — (524) — 2,071 1,202 867 — CMBS — — — 35 — — — 35 — — Loans 6,376 (1,342) (8,553) 9,929 — — 10,220 16,630 1,583 — Net derivatives (2) 21,614 (48,746) (2,829) 16,313 1,609 — 62,802 50,763 40,052 — Long-term debt 200,745 (5,286) — — (11,250) 204,710 (40,856) 348,063 (4,517) 9,804 (1) Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in our Consolidated Statements of Earnings. Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statements of Comprehensive Income, net of tax. (2) Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives. Analysis of Level 3 Assets and Liabilities for the Nine Months Ended August 31, 2019 During the nine months ended August 31, 2019, transfers of assets of $60.2 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to: • Loans and other receivables of $30.6 million, other ABS of $10.8 million and Corporate debt securities of $10.5 million due to reduced pricing transparency. During the nine months ended August 31, 2019, transfers of assets of $47.8 million from Level 3 to Level 2 are primarily attributed to: • Corporate equity securities of $14.8 million, other ABS of $10.0 million, Loans and other receivables of $9.2 million and Investments at fair value of $8.6 million due to greater pricing transparency supporting classification into Level 2.

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During the nine months ended August 31, 2019, transfers of liabilities of $98.3 million from Level 2 to Level 3 of the fair value hierarchy are primarily attributed to: • Net derivatives of $64.5 million and structured notes of $20.8 million due to reduced market and pricing transparency. During the nine months ended August 31, 2019, transfers of liabilities of $64.1 million from Level 3 to Level 2 of the fair value hierarchy are primarily attributed to: • Structured notes of $61.7 million due to greater market transparency. Net losses on Level 3 assets were $0.2 million and net gains on Level 3 liabilities were $55.8 million for the nine months ended August 31, 2019. Net losses on Level 3 assets were primarily due to decreased market values across Corporate debt securities, CDOs and CLOs and Investments at fair value, partially offset by increased market values across Corporate equity securities. Net gains on Level 3 liabilities were primarily due to decreased market values across derivatives and valuations of certain structured notes. Quantitative Information about Significant Unobservable Inputs used in Level 3 Fair Value Measurements at August 31, 2020 and November 30, 2019

The tables below present information on the valuation techniques, significant unobservable inputs and their ranges for our financial assets and liabilities, subject to threshold levels related to the market value of the positions held, measured at fair value on a recurring basis with a significant Level 3 balance. The range of unobservable inputs could differ significantly across different firms given the range of products across different firms in the financial services sector. The inputs are not representative of the inputs that could have been used in the valuation of any one financial instrument (i.e., the input used for valuing one financial instrument within a particular class of financial instruments may not be appropriate for valuing other financial instruments within that given class). Additionally, the ranges of inputs presented below should not be construed to represent uncertainty regarding the fair values of our financial instruments; rather, the range of inputs is reflective of the differences in the underlying characteristics of the financial instruments in each category.

For certain categories, we have provided a weighted average of the inputs allocated based on the fair values of the financial instruments comprising the category. We do not believe that the range or weighted average of the inputs is indicative of the reasonableness of uncertainty of our Level 3 fair values. The range and weighted average are driven by the individual financial instruments within each category and their relative distribution in the population. The disclosed inputs when compared with the inputs as disclosed in other periods should not be expected to necessarily be indicative of changes in our estimates of unobservable inputs for a particular financial instrument as the population of financial instruments comprising the category will vary from period to period based on purchases and sales of financial instruments during the period as well as transfers into and out of Level 3 each period.

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August 31, 2020 Fair Value Weighted Financial Instruments Owned: (in thousands) Valuation Technique Significant Unobservable Input(s) Input / Range Average

Corporate equity securities $ 77,442 Non-exchange traded securities Market approach Price $1 - $213 $84 EBITDA multiple $3 - $4 $3

Corporate debt securities $ 23,269 Market approach Price $69 — Scenario analysis Estimated recovery percentage 22% —

CDOs and CLOs $ 27,936 Discounted cash flows Constant prepayment rate 2% - 20% 19% Constant default rate 1% - 2% 2% Loss severity 25% - 50% 28% Discount rate/yield 6% - 26% 17%

RMBS $ 28,317 Discounted cash flows Cumulative loss rate 2% - 32% 5%

Duration (years) 1.0 - 13.0 9.7 Discount rate/yield 4% - 14% 5%

CMBS $ 4,663 Scenario analysis Estimated recovery percentage 44% —

Other ABS $ 63,337 Discounted cash flows Cumulative loss rate 7% - 72% 18%

Duration (years) 0.3 - 4.2 1.8 Discount rate/yield 4% - 15% 10% Market approach Price $100 —

Loans and other receivables $ 104,212 Market approach Price $6 - $100 $76 Scenario analysis Estimated recovery percentage 2% - 100% 62%

Derivatives $ 50,637 Loans total return swaps Market approach Price $97 - $99 $98

Interest rate swaps Market approach Basis points upfront 3 - 20 9

Investments at fair value $ 49,881

Private equity securities Market approach Price $6 - $169 $50 Scenario analysis Estimated recovery percentage 33% — Financial Instruments Sold, Not Yet Purchased:

Corporate equity securities $ 4,367 Market approach Transaction level $1 —

Corporate debt securities $ 148 Scenario analysis Estimated recovery percentage 22% —

Loans $ 46,594 Market approach Price $31 - $97 $70 Scenario analysis Estimated recovery percentage 2% —

Derivatives $ 69,615 Equity options Volatility benchmarking Volatility 32% - 46% 39%

Interest rate swaps Market approach Basis points upfront 3 - 20 9 Unfunded commitments Price $97 - $99 $98

Other secured financings $ 3,402 Scenario analysis Estimated recovery percentage 60% - 100% 79% Long-term debt

Structured notes $ 630,260 Market approach Price $77 - $105 $99 Price €69 - €107 €91

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November 30, 2019 Fair Value Weighted

Financial Instruments Owned (in thousands) Valuation Technique Significant Unobservable Input(s) Input / Range Average

Corporate equity securities $29,017 Non-exchange-traded securities Market approach Price $1 - $140 $55 Underlying stock price $3 - $5 $4 Corporate debt securities $7,490 Scenario analysis Estimated recovery percentage 23% - 85% 46% Volatility 44% — Credit spread 750 — Underlying stock price £0.4 — CDOs and CLOs $20,081 Discounted cash flows Constant prepayment rate 20% — Constant default rate 1% - 2% 2% Loss severity 25% - 37% 29% Discount rate/yield 12% - 21% 15% RMBS $17,740 Discounted cash flows Cumulative loss rate 2% — Duration (years) 6.3 — Discount rate/yield 3% — CMBS $6,110 Discounted cash flows Cumulative loss rate 7.3% — Duration (years) 0.2 — Discount rate/yield 85% — Scenario analysis Estimated recovery percentage 44% — Other ABS $42,563 Discounted cash flows Cumulative loss rate 7% - 31% 16%

Duration (years) 0.5 - 3.0 1.5 Discount rate/yield 7% - 15% 11%

Loans and other receivables $62,734 Market approach Price $36 - $100 $90 Scenario analysis Estimated recovery percentage 87% - 104% 99% Derivatives $13,826 Interest rate swaps Market approach Basis points upfront 0 - 16 6 Unfunded commitments Price $88 — Equity options Volatility benchmarking Volatility 45% — Investments at fair value $75,736 Private equity securities Market approach Price $8 - $250 $125 Securities purchased under agreements to resell $25,000 Market approach Spread to 6 month LIBOR 500 — Duration (years) 1.5 —

Financial Instruments Sold, Not Yet Purchased: Corporate equity securities $4,487 Market approach Transaction level $1 — Loans $9,463 Market approach Price $50 - $100 $88 Scenario analysis Estimated recovery percentage 1% — Derivatives $92,057 Equity options Volatility benchmarking Volatility 21% - 61% 43% Interest rate swaps Market approach Basis points upfront 0 - 22 13 Cross currency swaps Basis points upfront 2 — Unfunded commitments Price $88 — Long-term debt Structured notes $480,069 Market approach Price $84 - $108 $96 Price €74 - €103 €91

The fair values of certain Level 3 assets and liabilities that were determined based on third-party pricing information, unadjusted past transaction prices or a percentage of the reported enterprise fair value are excluded from the above tables. At August 31, 2020 and November 30, 2019, asset exclusions consisted of $3.2 million and $31.9 million, respectively, primarily comprised of certain derivatives, loans and other receivables and corporate equity securities. At August 31, 2020 and November 30, 2019, liability exclusions consisted of $5.0 million and $0.4 million, respectively, primarily comprised of certain derivatives and CMBS.

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Uncertainty of Fair Value Measurement from Use of Significant Unobservable Inputs

For recurring fair value measurements categorized within Level 3 of the fair value hierarchy, the uncertainty of the fair value measurement due to the use of significant unobservable inputs and interrelationships between those unobservable inputs (if any) are described below:

• Corporate equity securities, corporate debt securities, loans and other receivables, certain derivatives, other ABS, private equity securities, securities purchased under agreements to resell and structured notes using a market approach valuation technique. A significant increase (decrease) in the transaction level of corporate equity securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the price of the private equity securities, non-exchange-traded securities, unfunded commitments, corporate debt securities, other ABS, loans and other receivables, total return swaps or structured notes would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the EBITDA multiple related to corporate equity securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the underlying stock price of corporate equity securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the yield or duration, in isolation, of securities purchased under agreements to resell would result in a significantly lower (higher) fair value measurement. Depending on whether we are a receiver or (payer) of basis points upfront, a significant increase in basis points would result in a significant increase (decrease) in the fair value measurement of cross currency and interest rate swaps.

• Loans and other receivables, CMBS, corporate debt securities, private equity securities and other secured financings using scenario analysis. A significant increase (decrease) in the possible recovery rates of the cash flow outcomes underlying the financial instrument would result in a significantly higher (lower) fair value measurement for the financial instrument. A significant increase (decrease) in the price of the underlying assets of the financial instrument would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the volatility of the underlying stock price would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the credit spread of the financial instrument would result in a significantly lower (higher) fair value measurement.

• CDOs and CLOs, RMBS, CMBS and other ABS using a discounted cash flow valuation technique. A significant increase (decrease) in isolation in the constant default rate, loss severity or cumulative loss rate would result in a significantly lower (higher) fair value measurement. The impact of changes in the constant prepayment rate and duration would have differing impacts depending on the capital structure and type of security. A significant increase (decrease) in the discount rate/security yield would result in a significantly lower (higher) fair value measurement.

• Derivative equity options using volatility benchmarking. A significant increase (decrease) in volatility would result in a significantly higher (lower) fair value measurement.

Fair Value Option Election

We have elected the fair value option for all loans and loan commitments made by our investment banking and capital markets businesses. These loans and loan commitments include loans entered into by our investment banking division in connection with client bridge financing and loan syndications, loans purchased by our leveraged credit trading desk as part of its bank loan trading activities and mortgage and consumer loan commitments, purchases and fundings in connection with mortgage-backed and other asset-backed securitization activities. Loans and loan commitments originated or purchased by our leveraged credit and mortgage-backed businesses are managed on a fair value basis. Loans are included in Financial instruments owned and loan commitments are included in Financial instruments owned and Financial instruments sold, not yet purchased in our Consolidated Statements of Financial Condition. The fair value option election is not applied to loans made to affiliate entities as such loans are entered into as part of ongoing, strategic business ventures. Loans to affiliate entities are included in Loans to and investments in related parties in our Consolidated Statements of Financial Condition and are accounted for on an amortized cost basis. We have also elected the fair value option for certain of our structured notes, which are managed by our investment banking and capital markets businesses and are included in Long-term debt and Short-term borrowings in our Consolidated Statements of Financial Condition. We have elected the fair value option for certain financial instruments held by subsidiaries as the investments are risk managed by us on a fair value basis. The fair value option has been elected for certain other secured financings that arise in connection with our securitization activities and other structured financings. Other secured financings, Receivables – Brokers, dealers and clearing organizations, Receivables – Customers, Receivables – Fees, interest and other, Payables – Brokers, dealers and clearing organizations and Payables – Customers, are accounted for at cost plus accrued interest rather than at fair value; however, the recorded amounts approximate fair value due to their liquid or short-term nature.

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The following is a summary of gains (losses) due to changes in instrument specific credit risk on loans, other receivables and debt instruments and gains (losses) due to other changes in fair value on Short-term borrowing, Other secured financings and Long-term debt measured at fair value under the fair value option (in thousands):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019 Financial instruments owned: Loans and other receivables $ 1,704 $ 2,040 $ (11,256) $ (5,458) Financial instruments sold, not yet purchased: Loans $ 367 $ — $ (610) $ — Loan commitments 1,875 (443) 464 (1,200) Short-term borrowings: Changes in instrument specific credit risk (1) $ (23) $ — $ (92) $ — Other changes in fair value (2) (1,115) — (959) — Other secured financings Other changes in fair value (2) $ 617 $ — $ 617 $ — Long-term debt: Changes in instrument specific credit risk (1) $ (177,801) $ 6,922 $ 49,369 $ 34,414 Other changes in fair value (2) (9,943) (46,003) (78,567) (93,311)

(1) Changes in instrument specific credit risk related to structured notes are included in our Consolidated Statements of Comprehensive Income, net of tax. (2) Other changes in fair value are included in Principal transactions revenues in our Consolidated Statements of Earnings.

The following is a summary of the amount by which contractual principal exceeds fair value for loans and other receivables, short-term borrowings, other secured financings and long-term debt measured at fair value under the fair value option (in thousands):

August 31, 2020 November 30, 2019 Financial instruments owned: Loans and other receivables (1) $ 1,839,249 $ 1,546,516 Loans and other receivables on nonaccrual status and/or 90 days or greater past due (1) (2) 334,504 197,215 Long-term debt and short-term borrowings 74,197 74,408 Other secured financings 923 — (1) Interest income is recognized separately from other changes in fair value and is included in Interest revenues in our Consolidated Statements of Earnings. (2) Amounts include loans and other receivables 90 days or greater past due by which contractual principal exceeds fair value of $29.0 million and $22.2 million at August 31, 2020 and November 30, 2019, respectively.

The aggregate fair value of loans and other receivables on nonaccrual status and/or 90 days or greater past due was $162.6 million and $127.0 million at August 31, 2020 and November 30, 2019, respectively, which includes loans and other receivables 90 days or greater past due of $13.3 million and $24.8 million at August 31, 2020 and November 30, 2019, respectively.

Financial Instruments Not Measured at Fair Value

Certain of our financial instruments are not carried at fair value but are recorded at amounts that approximate fair value due to their liquid or short- term nature and generally negligible credit risk. These financial assets include Cash and cash equivalents and Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations and would generally be presented within Level 1 of the fair value hierarchy. Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations includes U.S. Treasury securities with a fair value of $55.9 million and $35.0 million at August 31, 2020 and November 30, 2019, respectively.

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Note 5. Derivative Financial Instruments

Derivative Financial Instruments Our derivative activities are recorded at fair value in our Consolidated Statements of Financial Condition in Financial instruments owned and Financial instruments sold, not yet purchased, net of cash paid or received under credit support agreements and on a net counterparty basis when a legally enforceable right to offset exists under a master netting agreement. We enter into derivative transactions to satisfy the needs of our clients and to manage our own exposure to market and credit risks resulting from our trading activities. In addition, we apply hedge accounting to: (1) an interest rate swap that has been designated as a fair value hedge of the changes in fair value due to the benchmark interest rate for certain fixed rate senior long-term debt, and (2) forward foreign exchange contracts designated as hedges to offset the change in the value of certain net investments in foreign operations.

See Note 4, Fair Value Disclosures, and Note 17, Commitments, Contingencies and Guarantees, for additional disclosures about derivative financial instruments.

Derivatives are subject to various risks similar to other financial instruments, including market, credit and operational risk. The risks of derivatives should not be viewed in isolation, but rather should be considered on an aggregate basis along with our other trading-related activities. We manage the risks associated with derivatives on an aggregate basis along with the risks associated with proprietary trading as part of our firm wide risk management policies.

In connection with our derivative activities, we may enter into International Swaps and Derivatives Association, Inc. master netting agreements or similar agreements with counterparties. See Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2019 for additional information regarding the offsetting of derivative contracts.

The following tables present the fair value and related number of derivative contracts at August 31, 2020 and November 30, 2019 categorized by type of derivative contract and the platform on which these derivatives are transacted. The fair value of assets/liabilities represents our receivable/payable for derivative financial instruments, gross of counterparty netting and cash collateral received and pledged. The following tables also provide information regarding 1) the extent to which, under enforceable master netting arrangements, such balances are presented net in our Consolidated Statements of Financial Condition as appropriate under U.S. GAAP and 2) the extent to which other rights of setoff associated with these arrangements exist and could have an effect on our financial position (in thousands, except contract amounts).

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August 31, 2020 (1) Assets Liabilities Number of Number of Fair Value Contracts (2) Fair Value Contracts (2) Derivatives designated as accounting hedges: Interest rate contracts: Cleared OTC $ 70,159 1 $ — — Foreign exchange contracts: Bilateral OTC — — 393 2 Total derivatives designated as accounting hedges 70,159 393

Derivatives not designated as accounting hedges: Interest rate contracts: Exchange-traded 781 48,453 73 69,918 Cleared OTC 75,125 3,894 168,467 4,199 Bilateral OTC 689,581 1,480 316,196 621 Foreign exchange contracts: Exchange-traded — — — 245 Bilateral OTC 416,298 13,561 391,431 13,449 Equity contracts: Exchange-traded 507,083 906,465 517,384 775,309 Bilateral OTC 351,744 1,939 879,876 1,945 Commodity contracts: Exchange-traded — 2,073 — 1,503 Bilateral OTC — 1 — — Credit contracts: Cleared OTC 3,165 15 5,567 13 Bilateral OTC 2,116 11 3,518 10 Total derivatives not designated as accounting hedges 2,045,893 2,282,512 Total gross derivative assets/ liabilities: Exchange-traded 507,864 517,457 Cleared OTC 148,449 174,034 Bilateral OTC 1,459,739 1,591,414 Amounts offset in our Consolidated Statements of Financial Condition (3): Exchange-traded (504,400) (504,400) Cleared OTC (144,200) (145,706) Bilateral OTC (963,215) (1,149,575) Net amounts per Consolidated Statements of Financial Condition (4) $ 504,237 $ 483,224

(1) Exchange-traded derivatives include derivatives executed on an organized exchange. Cleared OTC derivatives include derivatives executed bilaterally and subsequently novated to and cleared through central clearing counterparties. Bilateral OTC derivatives include derivatives executed and settled bilaterally without the use of an organized exchange or central clearing counterparty. (2) Number of exchange-traded contracts may include open futures contracts. The unsettled fair value of these futures contracts is included in Receivables from/Payables to brokers, dealers and clearing organizations in our Consolidated Statements of Financial Condition. (3) Amounts netted include both netting by counterparty and for cash collateral paid or received. (4) We have not received or pledged additional collateral under master netting agreements and/or other credit support agreements that is eligible to be offset beyond what has been offset in our Consolidated Statements of Financial Condition.

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November 30, 2019 (1) Assets Liabilities Number of Number of Fair Value Contracts (2) Fair Value Contracts (2) Derivatives designated as accounting hedges: Interest rate contracts: Cleared OTC $ 28,663 1 $ — — Total derivatives designated as accounting hedges 28,663 —

Derivatives not designated as accounting hedges: Interest rate contracts: Exchange-traded 1,191 65,226 103 38,464 Cleared OTC 213,224 3,329 284,433 3,443 Bilateral OTC 421,700 1,325 258,857 738 Foreign exchange contracts: Exchange-traded — 256 — 199 Bilateral OTC 190,570 9,255 187,836 9,187 Equity contracts: Exchange-traded 717,494 1,714,538 962,535 1,481,388 Bilateral OTC 248,720 4,731 445,241 4,271 Commodity contracts: Exchange-traded — 5,524 — 4,646 Credit contracts: Cleared OTC 2,514 13 5,768 12 Bilateral OTC 6,281 25 14,219 28 Total derivatives not designated as accounting hedges 1,801,694 2,158,992 Total gross derivative assets/liabilities: Exchange-traded 718,685 962,638 Cleared OTC 244,401 290,201 Bilateral OTC 867,271 906,153 Amounts offset in our Consolidated Statements of Financial Condition (3): Exchange-traded (688,871) (688,871) Cleared OTC (222,869) (266,900) Bilateral OTC (521,066) (676,016) Net amounts per Consolidated Statements of Financial Condition (4) $ 397,551 $ 527,205

Table of Contents JEFFERIES GROUP LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) The following table provides information related to gains (losses) recognized in Interest expense in our Consolidated Statements of Earnings on a fair value hedge (in thousands):

Three Months Ended Nine Months Ended

August 31, August 31, Gains (Losses) 2020 2019 2020 2019

Interest rate swaps $ 834 $ 28,052 $ 47,303 $ 69,843

Long-term debt 1,634 (28,519) (45,539) (72,288)

Total $ 2,468 $ (467) $ 1,764 $ (2,445)

The following table provides information related to gains (losses) on our net investment hedges recognized in Currency translation adjustments and other, a component of Other comprehensive income (loss), in our Consolidated Statements of Comprehensive Income (in thousands):

Three Months Ended Nine Months Ended

August 31, August 31, Gains (Losses) 2020 2019 2020 2019

Foreign exchange contracts $ (393) $ — $ (393) $ —

Total $ (393) $ — $ (393) $ —

The following table presents unrealized and realized gains (losses) on derivative contracts recognized in Principal transactions revenues in our Consolidated Statements of Earnings, which are utilized in connection with our client activities and our economic risk management activities (in thousands):

Three Months Ended Nine Months Ended

August 31, August 31, Gains (Losses) 2020 2019 2020 2019 Interest rate contracts $ (35,462) $ (89,864) $ (40,630) $ (193,715) Foreign exchange contracts 4,973 (3,022) 4,126 (1,604) Equity contracts (32,782) 2,236 113,253 (118,354) Commodity contracts (2,064) 3,400 (2,845) 4,775 Credit contracts (179) 2,687 14,205 11,600 Total $ (65,514) $ (84,563) $ 88,109 $ (297,298)

The net gains (losses) on derivative contracts in the table above are one of a number of activities comprising our business activities and are before consideration of economic hedging transactions, which generally offset the net gains (losses) included above. We substantially mitigate our exposure to market risk on our cash instruments through derivative contracts, which generally provide offsetting revenues, and we manage the risk associated with these contracts in the context of our overall risk management framework.

Table of Contents JEFFERIES GROUP LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited) OTC Derivatives. The following tables set forth by remaining contract maturity the fair value of OTC derivative assets and liabilities at August 31, 2020 (in thousands):

OTC Derivative Assets (1) (2) (3) Greater Than 5 Cross-Maturity 0 – 12 Months 1 – 5 Years Years Netting (4) Total Equity options and forwards $ 21,437 $ 44,672 $ 15,160 $ (25,445) $ 55,824 Total return swaps 74,923 19,764 2,872 (14,666) 82,893 Foreign currency forwards, swaps and options 63,570 28,993 — (4,477) 88,086 Interest rate swaps, options and forwards 94,956 204,309 222,482 (45,025) 476,722 Total $ 254,886 $ 297,738 $ 240,514 $ (89,613) 703,525 Cross product counterparty netting (22,759) Total OTC derivative assets included in Financial instruments owned $ 680,766

(1) At August 31, 2020, we held net exchange-traded derivative assets and other credit agreements with a fair value of $25.1 million, which are not included in this table. (2) OTC derivative assets in the table above are gross of collateral received. OTC derivative assets are recorded net of collateral received in our Consolidated Statements of Financial Condition. At August 31, 2020, cash collateral received was $201.6 million. (3) Derivative fair values include counterparty netting within product category. (4) Amounts represent the netting of receivable balances with payable balances for the same counterparty within product category across maturity categories.

OTC Derivative Liabilities (1) (2) (3) Greater Than 5 Cross-Maturity 0 – 12 Months 1 – 5 Years Years Netting (4) Total Equity options and forwards $ 15,474 $ 370,915 $ 156,839 $ (25,445) $ 517,783 Credit default swaps 12 1,108 — — 1,120 Total return swaps 58,888 103,567 — (14,666) 147,789 Foreign currency forwards, swaps and options 55,430 11,792 34 (4,477) 62,779 Fixed income forwards 1,404 — — — 1,404 Interest rate swaps, options and forwards 42,132 80,469 72,462 (45,025) 150,038 Total $ 173,340 $ 567,851 $ 229,335 $ (89,613) 880,913 Cross product counterparty netting (22,759) Total OTC derivative liabilities included in Financial instruments sold, not yet purchased $ 858,154

(1) At August 31, 2020, we held net exchange-traded derivative liabilities and other credit agreements with a fair value of $14.5 million, which are not included in this table. (2) OTC derivative liabilities in the table above are gross of collateral pledged. OTC derivative liabilities are recorded net of collateral pledged in our Consolidated Statements of Financial Condition. At August 31, 2020, cash collateral pledged was $389.5 million. (3) Derivative fair values include counterparty netting within product category. (4) Amounts represent the netting of receivable balances with payable balances for the same counterparty within product category across maturity categories.

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The following table presents the counterparty credit quality with respect to the fair value of our OTC derivative assets at August 31, 2020 (in thousands):

Counterparty credit quality (1): A- or higher $ 113,989 BBB- to BBB+ 15,949 BB+ or lower 353,564 Unrated 197,264 Total $ 680,766

(1) We utilize internal credit ratings determined by our Risk Management department. Credit ratings determined by Risk Management use methodologies that produce ratings generally consistent with those produced by external rating agencies. Credit Related Derivative Contracts

The external credit ratings of the underlyings or referenced assets for our written credit related derivative contracts (in millions):

August 31, 2020 External Credit Rating Investment Grade Non-investment Grade Unrated Total Notional Credit protection sold: Index credit default swaps $ 2.0 $ 45.9 $ — $ 47.9 Single name credit default swaps — 6.2 0.2 6.4

November 30, 2019 External Credit Rating Investment Grade Non-investment Grade Unrated Total Notional Credit protection sold: Index credit default swaps $ 3.0 $ 32.0 $ — $ 35.0 Single name credit default swaps 3.4 29.0 1.5 33.9

Contingent Features

Certain of our derivative instruments contain provisions that require our debt to maintain an investment grade credit rating from each of the major credit rating agencies. If our debt were to fall below investment grade, it would be in violation of these provisions and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on our derivative instruments in liability positions. The following table presents the aggregate fair value of all derivative instruments with such credit-risk-related contingent features that are in a liability position, the collateral amounts we have posted or received in the normal course of business and the potential collateral we would have been required to return and/or post additionally to our counterparties if the credit-risk-related contingent features underlying these agreements were triggered (in millions):

August 31, 2020 November 30, 2019

Derivative instrument liabilities with credit-risk-related contingent features $ 191.4 $ 42.9 Collateral posted (120.6) (3.1)

Collateral received 64.5 114.1 Return of and additional collateral required in the event of a credit rating downgrade below investment grade (1) 135.3 154.0

(1) These potential outflows include initial margin received from counterparties at the execution of the derivative contract. The initial margin will be returned if counterparties elect to terminate the contract after a downgrade.

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Note 6. Collateralized Transactions

Our repurchase agreements and securities borrowing and lending arrangements are generally recorded at cost in our Consolidated Statements of Financial Condition, which is a reasonable approximation of their fair values due to their short-term nature. We enter into secured borrowing and lending arrangements to obtain collateral necessary to effect settlement, finance inventory positions, meet customer needs or re-lend as part of our dealer operations. We monitor the fair value of the securities loaned and borrowed on a daily basis as compared with the related payable or receivable, and request additional collateral or return excess collateral, as appropriate. We pledge financial instruments as collateral under repurchase agreements, securities lending agreements and other secured arrangements, including clearing arrangements. Our agreements with counterparties generally contain contractual provisions allowing the counterparty the right to sell or repledge the collateral. Pledged securities owned that can be sold or repledged by the counterparty are included in Financial instruments owned, at fair value, and noted parenthetically as Securities pledged in our Consolidated Statements of Financial Condition.

In instances where we receive securities as collateral in connection with securities-for-securities transactions in which we are the lender of securities and are permitted to sell or repledge the securities received as collateral, we report the fair value of the collateral received and the related obligation to return the collateral in our Consolidated Statements of Financial Condition.

The following tables set forth the carrying value of securities lending arrangements, repurchase agreements and obligation to return securities received as collateral, at fair value, by class of collateral pledged (in thousands):

August 31, 2020 Obligation To Return Securities Received As Securities Lending Repurchase Collateral, at fair Arrangements Agreements value Total Collateral Pledged:

Corporate equity securities $ 1,317,023 $ 176,221 $ 4,413 $ 1,497,657

Corporate debt securities 605,527 1,661,854 — 2,267,381

Mortgage-backed and asset-backed securities — 1,680,052 — 1,680,052

U.S. government and federal agency securities 7,187 12,187,529 — 12,194,716

Municipal securities — 180,837 — 180,837

Sovereign obligations — 2,636,878 — 2,636,878

Loans and other receivables — 1,313,667 — 1,313,667

Total $ 1,929,737 $ 19,837,038 $ 4,413 $ 21,771,188 35

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November 30, 2019 Obligation To Return Securities Received As Securities Lending Repurchase Collateral, at fair Arrangements Agreements value Total Collateral Pledged:

Corporate equity securities $ 1,314,395 $ 129,558 $ — $ 1,443,953

Corporate debt securities 191,311 1,730,526 — 1,921,837

Mortgage-backed and asset-backed securities — 1,745,145 — 1,745,145

U.S. government and federal agency securities 19,434 10,863,997 9,500 10,892,931

Municipal securities — 498,202 — 498,202

Sovereign obligations — 3,016,563 — 3,016,563

Loans and other receivables — 772,926 — 772,926

Total $ 1,525,140 $ 18,756,917 $ 9,500 $ 20,291,557

August 31, 2020 Overnight and Greater than 90 Continuous Up to 30 Days 31-90 Days Days Total

Securities lending arrangements $ 630,163 $ — $ 553,062 $ 746,512 $ 1,929,737

Repurchase agreements 10,606,433 1,695,229 4,243,474 3,291,902 19,837,038 Obligation to return securities received as collateral, at fair value 4,413 — — — 4,413

Total $ 11,241,009 $ 1,695,229 $ 4,796,536 $ 4,038,414 $ 21,771,188

November 30, 2019 Overnight and Greater than 90 Continuous Up to 30 Days 31-90 Days Days Total

Securities lending arrangements $ 694,821 $ — $ 672,969 $ 157,350 $ 1,525,140

Repurchase agreements 6,614,026 1,556,260 8,988,528 1,598,103 18,756,917 Obligation to return securities received as collateral, at fair value — — 9,500 — 9,500

Total $ 7,308,847 $ 1,556,260 $ 9,670,997 $ 1,755,453 $ 20,291,557 We receive securities as collateral under resale agreements, securities borrowing transactions and customer margin loans. We also receive securities as collateral in connection with securities-for-securities transactions in which we are the lender of securities. In many instances, we are permitted by contract to rehypothecate the securities received as collateral. These securities may be used to secure repurchase agreements, enter into securities lending transactions, satisfy margin requirements on derivative transactions or cover short positions. At August 31, 2020 and November 30, 2019, the approximate fair value of securities received as collateral by us that may be sold or repledged was $29.9 billion and $28.7 billion, respectively. At August 31, 2020 and November 30, 2019, a substantial portion of the securities received by us had been sold or repledged.

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Offsetting of Securities Financing Agreements

To manage our exposure to credit risk associated with securities financing transactions, we may enter into master netting agreements and collateral arrangements with counterparties. Generally, transactions are executed under standard industry agreements, including, but not limited to, master securities lending agreements (securities lending transactions) and master repurchase agreements (repurchase transactions). See Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2019 for additional information regarding the offsetting of securities financing agreements.

The following tables provide information regarding repurchase agreements, securities borrowing and lending arrangements and securities received as collateral, at fair value, and obligation to return securities received as collateral, at fair value, that are recognized in our Consolidated Statements of Financial Condition and 1) the extent to which, under enforceable master netting arrangements, such balances are presented net in our Consolidated Statements of Financial Condition as appropriate under U.S. GAAP and 2) the extent to which other rights of setoff associated with these arrangements exist and could have an effect on our financial position (in thousands).

August 31, 2020 Netting in Net Amounts in Additional Consolidated Consolidated Amounts Statement of Statement of Available for Available Gross Amounts Financial Condition Financial Condition Setoff (1) Collateral (2) Net Amount (3) Assets: Securities borrowing arrangements $ 7,268,413 $ — $ 7,268,413 $ (429,615) $ (1,691,674) $ 5,147,124 Reverse repurchase agreements 17,905,457 (12,578,066) 5,327,391 (144,353) (5,141,297) 41,741 Securities received as collateral, at fair value 4,413 — 4,413 — — 4,413 Liabilities: Securities lending arrangements $ 1,929,737 $ — $ 1,929,737 $ (429,615) $ (1,467,230) $ 32,892 Repurchase agreements 19,837,038 (12,578,066) 7,258,972 (144,353) (6,622,623) 491,996 Obligation to return securities received as collateral, at fair value 4,413 — 4,413 — — 4,413

November 30, 2019 Netting in Net Amounts in Additional Consolidated Consolidated Amounts Statement of Statement of Available for Available Gross Amounts Financial Condition Financial Condition Setoff (1) Collateral (2) Net Amount (4) Assets: Securities borrowing arrangements $ 7,624,642 $ — $ 7,624,642 $ (361,394) $ (1,479,433) $ 5,783,815 Reverse repurchase agreements 15,551,845 (11,252,247) 4,299,598 (291,316) (3,929,977) 78,305 Securities received as collateral, at fair value 9,500 — 9,500 — — 9,500 Liabilities: Securities lending arrangements $ 1,525,140 $ — $ 1,525,140 $ (361,394) $ (970,799) $ 192,947 Repurchase agreements 18,756,917 (11,252,247) 7,504,670 (291,316) (6,663,807) 549,547 Obligation to return securities received as collateral, at fair value 9,500 — 9,500 — — 9,500

(1) Under master netting agreements with our counterparties, we have the legal right of offset with a counterparty, which incorporates all of the counterparty’s outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by a counterparty in the event of a counterparty’s default, but which are not netted in the balance sheet because other netting provisions of U.S. GAAP are not met.

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(2) Includes securities received or paid under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty’s rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements. (3) Amounts include $5,089.0 million of securities borrowing arrangements, for which we have received securities collateral of $4,921.2 million, and $439.7 million of repurchase agreements, for which we have pledged securities collateral of $451.6 million, which are subject to master netting agreements, but we have not determined the agreements to be legally enforceable. (4) Amounts include $5,683.4 million of securities borrowing arrangements, for which we have received securities collateral of $5,523.6 million, and $439.7 million of repurchase agreements, for which we have pledged securities collateral of $447.5 million, which are subject to master netting agreements, but we have not determined the agreements to be legally enforceable. Cash and Securities Segregated and on Deposit for Regulatory Purposes or Deposited with Clearing and Depository Organizations

Cash and securities deposited with clearing and depository organizations and segregated in accordance with regulatory regulations totaled $986.1 million and $796.8 million at August 31, 2020 and November 30, 2019, respectively. Segregated cash and securities consist of deposits in accordance with Rule 15c3-3 of the Securities Exchange Act of 1934, which subjects Jefferies LLC as a broker-dealer carrying customer accounts to requirements related to maintaining cash or qualified securities in segregated special reserve bank accounts for the exclusive benefit of its customers.

Note 7. Securitization Activities

We engage in securitization activities related to corporate loans, mortgage loans, consumer loans and mortgage-backed and other asset-backed securities. In our securitization transactions, we transfer these assets to special purpose entities (“SPEs”) and act as the placement or structuring agent for the beneficial interests sold to investors by the SPE. A significant portion of our securitization transactions are the securitization of assets issued or guaranteed by U.S. government agencies. These SPEs generally meet the criteria of VIEs; however, we generally do not consolidate the SPEs as we are not considered the primary beneficiary for these SPEs. See Note 8, Variable Interest Entities, for further discussion on VIEs and our determination of the primary beneficiary.

We account for our securitization transactions as sales, provided we have relinquished control over the transferred assets. Transferred assets are carried at fair value with unrealized gains and losses reflected in Principal transactions revenues in our Consolidated Statements of Earnings prior to the identification and isolation for securitization. Subsequently, revenues recognized upon securitization are reflected as net underwriting revenues. We generally receive cash proceeds in connection with the transfer of assets to an SPE. We may, however, have continuing involvement with the transferred assets, which is limited to retaining one or more tranches of the securitization (primarily senior and subordinated debt securities in the form of mortgage-backed and other-asset backed securities or CLOs). These securities are included in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition and are generally initially categorized as Level 2 within the fair value hierarchy. For further information on fair value measurements and the fair value hierarchy, refer to Note 4, Fair Value Disclosures, herein, and Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2019.

The following table presents activity related to our securitizations that were accounted for as sales in which we had continuing involvement (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019

Transferred assets $ 983.9 $ 789.3 $ 4,794.3 $ 2,894.4

Proceeds on new securitizations 983.9 789.3 4,794.3 2,966.3

Cash flows received on retained interests 6.3 16.8 18.6 47.2

We have no explicit or implicit arrangements to provide additional financial support to these SPEs, have no liabilities related to these SPEs and do not have any outstanding derivative contracts executed in connection with these securitization activities at August 31, 2020 and November 30, 2019.

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The following tables summarize our retained interests in SPEs where we transferred assets and have continuing involvement and received sale accounting treatment (in millions):

August 31, 2020 November 30, 2019 Securitization Type Total Assets Retained Interests Total Assets Retained Interests U.S. government agency RMBS $ 928.7 $ 12.4 $ 10,671.7 $ 103.3 U.S. government agency CMBS 439.2 138.3 1,374.8 45.8 CLOs 3,419.9 41.8 3,006.7 58.4 Consumer and other loans 884.0 45.6 1,149.3 71.8

Total assets represent the unpaid principal amount of assets in the SPEs in which we have continuing involvement and are presented solely to provide information regarding the size of the transactions and the size of the underlying assets supporting our retained interests, and are not considered representative of the risk of potential loss. Assets retained in connection with a securitization transaction represent the fair value of the securities of one or more tranches issued by an SPE, including senior and subordinated tranches. Our risk of loss is limited to this fair value amount which is included in total Financial instruments owned in our Consolidated Statements of Financial Condition.

Although not obligated, in connection with secondary market-making activities we may make a market in the securities issued by these SPEs. In these market-making transactions, we buy these securities from and sell these securities to investors. Securities purchased through these market- making activities are not considered to be continuing involvement in these SPEs. To the extent we purchased securities through these market- making activities and we are not deemed to be the primary beneficiary of the VIE, these securities are included in agency and non-agency mortgage- backed and asset-backed securitizations in the nonconsolidated VIEs section presented in Note 8, Variable Interest Entities.

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Note 8. Variable Interest Entities

VIEs are entities in which equity investors lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary. The primary beneficiary is the party who has both (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity.

Our variable interests in VIEs include debt and equity interests, commitments, guarantees and certain fees. Our involvement with VIEs arises primarily from:

• Purchases of securities in connection with our trading and secondary market-making activities;

• Retained interests held as a result of securitization activities, including the resecuritization of mortgage-backed and other asset-backed securities and the securitization of mortgage, corporate and consumer loans;

• Acting as placement agent and/or underwriter in connection with client-sponsored securitizations;

• Financing of agency and non-agency mortgage-backed and other asset-backed securities;

• Warehouse funding arrangements for client-sponsored consumer and mortgage loan vehicles and CLOs through participation agreements, forward sale agreements and revolving loan and note commitments; and

• Loans to, investments in and fees from various investment vehicles.

We determine whether we are the primary beneficiary of a VIE upon our initial involvement with the VIE and we reassess whether we are the primary beneficiary of a VIE on an ongoing basis. Our determination of whether we are the primary beneficiary of a VIE is based upon the facts and circumstances for each VIE and requires judgment. Our considerations in determining the VIE’s most significant activities and whether we have power to direct those activities include, but are not limited to, the VIE’s purpose and design and the risks passed through to investors, the voting interests of the VIE, management, service and/or other agreements of the VIE, involvement in the VIE’s initial design and the existence of explicit or implicit financial guarantees. In situations where we have determined that the power over the VIE’s significant activities is shared, we assess whether we are the party with the power over the most significant activities. If we are the party with the power over the most significant activities, we meet the “power” criteria of the primary beneficiary. If we do not have the power over the most significant activities or we determine that decisions require consent of each sharing party, we do not meet the “power” criteria of the primary beneficiary.

We assess our variable interests in a VIE both individually and in aggregate to determine whether we have an obligation to absorb losses of or a right to receive benefits from the VIE that could potentially be significant to the VIE. The determination of whether our variable interest is significant to the VIE requires judgment. In determining the significance of our variable interest, we consider the terms, characteristics and size of the variable interests, the design and characteristics of the VIE, our involvement in the VIE and our market-making activities related to the variable interests.

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Consolidated VIEs

The following table presents information about our consolidated VIEs at August 31, 2020 and November 30, 2019 (in millions). The assets and liabilities in the tables below are presented prior to consolidation and thus a portion of these assets and liabilities are eliminated in consolidation.

August 31, 2020 November 30, 2019 Secured Funding Secured Funding Vehicles Other Vehicles Other Cash (1) $ — $ 1.2 $ — $ 1.2 Financial instruments owned — 3.6 — 0.3 Securities purchased under agreements to resell (2) 2,919.8 — 2,467.3 — Receivable from brokers — 13.5 — — Other assets — 0.1 — — Total assets $ 2,919.8 $ 18.4 $ 2,467.3 $ 1.5 Financial instruments sold, not yet purchased $ — $ 2.1 $ — $ — Other secured financings (3) 2,918.4 — 2,465.8 — Other liabilities (4) 1.4 0.4 1.5 0.2 Total liabilities $ 2,919.8 $ 2.5 $ 2,467.3 $ 0.2

(1) Approximately $0.6 million of the cash amount at August 31, 2020 represents cash on deposit with related consolidated entities and is eliminated in consolidation. (2) Securities purchased under agreements to resell primarily represent amounts due under collateralized transactions on related consolidated entities, which are eliminated in consolidation. (3) Approximately $130.1 million of the other secured financings amount at August 31, 2020 is with related consolidated entities, which is eliminated in consolidation. (4) Approximately $0.3 million and $0.2 million of the other liabilities amounts at August 31, 2020 and November 30, 2019, respectively, represent intercompany payables with related consolidated entities, which are eliminated in consolidation. Secured Funding Vehicles. We are the primary beneficiary of asset-backed financing vehicles to which we sell agency and non-agency residential and commercial mortgage loans, and asset-backed securities pursuant to the terms of a master repurchase agreement. Our variable interests in these vehicles consist of our collateral margin maintenance obligations under the master repurchase agreement, which we manage, and retained interests in securities issued. The assets of these VIEs consist of reverse repurchase agreements, which are available for the benefit of the vehicle’s debt holders.

Other. We are the primary beneficiary of certain investment vehicles set up for the benefit of our employees. We manage and invest alongside our employees in these vehicles. The assets of these VIEs consist of private equity securities and are available for the benefit of the entities’ equity holders. Our variable interests in these vehicles consist of equity securities. The creditors of these VIEs do not have recourse to our general credit and each such VIE’s assets are not available to satisfy any other debt.

Nonconsolidated VIEs

The following tables present information about our variable interests in nonconsolidated VIEs (in millions):

August 31, 2020 Carrying Amount Maximum Exposure to Assets Liabilities Loss VIE Assets CLOs $ 66.3 $ 1.4 $ 470.4 $ 6,509.5 Consumer loan and other asset-backed vehicles 308.4 — 435.0 2,300.4 Related party private equity vehicles 18.6 — 29.6 50.7 Other investment vehicles 747.1 — 753.8 13,257.0 Total $ 1,140.4 $ 1.4 $ 1,688.8 $ 22,117.6

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November 30, 2019 Carrying Amount Maximum Exposure to Assets Liabilities Loss VIE Assets CLOs $ 152.6 $ 0.6 $ 505.3 $ 7,845.0 Consumer loan and other asset-backed vehicles 358.3 — 490.6 2,354.8 Related party private equity vehicles 23.0 — 34.3 71.4 Other investment vehicles 404.1 — 411.9 6,102.7 Total $ 938.0 $ 0.6 $ 1,442.1 $ 16,373.9

Our maximum exposure to loss often differs from the carrying value of the variable interests. The maximum exposure to loss is dependent on the nature of our variable interests in the VIEs and is limited to the notional amounts of certain loan and equity commitments and guarantees. Our maximum exposure to loss does not include the offsetting benefit of any financial instruments that may be utilized to hedge the risks associated with our variable interests and is not reduced by the amount of collateral held as part of a transaction with a VIE.

Collateralized Loan Obligations. Assets collateralizing the CLOs include bank loans, participation interests and sub-investment grade and senior secured U.S. loans. We underwrite securities issued in CLO transactions on behalf of sponsors and provide advisory services to the sponsors. We may also sell corporate loans to the CLOs. Our variable interests in connection with CLOs where we have been involved in providing underwriting and/or advisory services consist of the following:

• Forward sale agreements whereby we commit to sell, at a fixed price, corporate loans and ownership interests in an entity holding such corporate loans to CLOs;

• Warehouse funding arrangements in the form of participation interests in corporate loans held by CLOs and commitments to fund such participation interests;

• Trading positions in securities issued in a CLO transaction; and

• Investments in variable funding notes issued by CLOs.

Asset-Backed Vehicles. We provide financing and lending related services to certain client-sponsored VIEs in the form of revolving funding note agreements, revolving credit facilities, forward purchase agreements and reverse repurchase agreements. The underlying assets, which are collateralizing the vehicles, are primarily composed of unsecured consumer loans, mortgage loans, and trade claims. In addition, we may provide structuring and advisory services and act as an underwriter or placement agent for securities issued by the vehicles. We do not control the activities of these entities.

Related Party Private Equity Vehicles. We committed to invest in private equity funds, (the “JCP Funds”, including JCP Fund V (see Note 9, Investments)) managed by Jefferies Capital Partners, LLC (the “JCP Manager”). Additionally, we committed to invest in the general partners of the JCP Funds (the “JCP General Partners”) and the JCP Manager. Our variable interests in the JCP Funds, JCP General Partners and JCP Manager (collectively, the “JCP Entities”) consist of equity interests that, in total, provide us with limited and general partner investment returns of the JCP Funds, a portion of the carried interest earned by the JCP General Partners and a portion of the management fees earned by the JCP Manager. At both August 31, 2020 and November 30, 2019, our total equity commitment in the JCP Entities was $133.0 million, of which $122.0 million and $121.7 million had been funded, respectively. The carrying value of our equity investments in the JCP Entities was $18.6 million and $23.0 million at August 31, 2020 and November 30, 2019, respectively. Our exposure to loss is limited to the total of our carrying value and unfunded equity commitment. The assets of the JCP Entities primarily consist of private equity and equity related investments.

Other Investment Vehicles. At August 31, 2020 and November 30, 2019, we had equity commitments to invest $772.9 million and $398.6 million, respectively, in various other investment vehicles, of which $766.3 million and $390.8 million was funded, respectively. The carrying value of our equity investments was $747.1 million and $404.1 million at August 31, 2020 and November 30, 2019, respectively. Our exposure to loss is limited to the total of our carrying value and unfunded equity commitment. These investment vehicles have assets primarily consisting of private and public equity investments, debt instruments, trade and insurance claims and various oil and gas assets. 42

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Mortgage-Backed and Other Asset-Backed Secured Funding Vehicles. In connection with our secondary trading and market-making activities, we buy and sell agency and non-agency mortgage-backed securities and other asset-backed securities, which are issued by third-party securitization SPEs and are generally considered variable interests in VIEs. Securities issued by securitization SPEs are backed by residential mortgage loans, U.S. agency collateralized mortgage obligations, commercial mortgage loans, CDOs and CLOs and other consumer loans, such as installment receivables, auto loans and student loans. These securities are accounted for at fair value and included in Financial instruments owned in our Consolidated Statements of Financial Condition. We have no other involvement with the related SPEs and therefore do not consolidate these entities.

We also engage in underwriting, placement and structuring activities for third-party-sponsored securitization trusts generally through agency (FNMA (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”) or GNMA (“Ginnie Mae”)) or non-agency-sponsored SPEs and may purchase loans or mortgage-backed securities from third parties that are subsequently transferred into the securitization trusts. The securitizations are backed by residential and commercial mortgage, home equity and auto loans. We do not consolidate agency-sponsored securitizations as we do not have the power to direct the activities of the SPEs that most significantly impact their economic performance. Further, we are not the servicer of non-agency-sponsored securitizations and therefore do not have power to direct the most significant activities of the SPEs and accordingly, do not consolidate these entities. We may retain unsold senior and/or subordinated interests at the time of securitization in the form of securities issued by the SPEs.

At August 31, 2020 and November 30, 2019, we held $1,808.6 million and $1,453.5 million of agency mortgage-backed securities, respectively, and $130.8 million and $134.8 million of non-agency mortgage-backed and other asset-backed securities, respectively, as a result of our secondary trading and market-making activities, and underwriting, placement and structuring activities. Our maximum exposure to loss on these securities is limited to the carrying value of our investments in these securities. These mortgage-backed and other asset-backed secured funding vehicles discussed are not included in the above table containing information about our variable interests in nonconsolidated VIEs.

Note 9. Investments

At August 31, 2020, we had investments in Jefferies Finance LLC (“Jefferies Finance”) and Berkadia. In addition, we had an investment in Epic Gas, which was sold on March 19, 2019. Our investments in Jefferies Finance, Berkadia and Epic Gas have been accounted for under the equity method and have been included in Loans to and investments in related parties in our Consolidated Statements of Financial Condition with our share of the investees’ earnings recognized in Other revenues in our Consolidated Statements of Earnings. We have limited partnership interests of 11% and 50% in Jefferies Capital Partners V L.P. and the Jefferies SBI USA Fund L.P. (together, “JCP Fund V”), respectively, which are private equity funds managed by a team led by one of our directors and our Chairman of the Executive Committee.

Jefferies Finance Jefferies Finance, a joint venture entity pursuant to an agreement with Massachusetts Mutual Life Insurance Company (“MassMutual”), is a commercial finance company that structures, underwrites and arranges primarily senior secured loans to corporate borrowers. Loans are originated primarily through the investment banking efforts of Jefferies LLC. Jefferies Finance may also underwrite and arrange other debt products such as second lien term, bridge and mezzanine loans, as well as related equity co-investments. In addition, Jefferies Finance is a registered investment advisor under the Investment Advisers Act of 1940 and, through two of its wholly-owned subsidiaries, Apex Credit Partners LLC and JFIN Asset Management LLC, acts as an investment advisor for various loan funds and CLOs managing direct lending and broadly syndicated loan products. At August 31, 2020, we and MassMutual each had equity commitments to Jefferies Finance of $750.0 million, for a combined total commitment of $1.5 billion. At August 31, 2020, we had funded $652.4 million of our $750.0 million commitment, leaving $97.6 million unfunded. The investment commitment is scheduled to expire on March 1, 2021 with automatic one year extensions absent a 60 days termination notice by either party.

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Jefferies Finance has executed a Secured Revolving Credit Facility with us and MassMutual, to be funded equally, to support loan underwritings by Jefferies Finance, which bears interest based on the interest rates of the related Jefferies Finance underwritten loans and is secured by the underlying loans funded by the proceeds of the facility. The total Secured Revolving Credit Facility is a committed amount of $500.0 million at August 31, 2020. Advances are shared equally between us and MassMutual. The facility is scheduled to mature on March 1, 2021 with automatic one year extensions absent a 60 days termination notice by either party. At August 31, 2020, we had funded $0.0 million of our $250.0 million commitment. The following summarizes the activity included in our Consolidated Statements of Earnings related to the facility (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019 Interest income $ — $ — $ 2.2 $ — Unfunded commitment fees 0.4 0.3 0.8 0.9

The following is a summary of selected financial information for Jefferies Finance (in millions):

August 31, 2020 November 30, 2019 Our total equity balance $ 591.0 $ 642.0

Three Months Ended Nine Months Ended

August 31, August 31,

2020 2019 2020 2019 Net earnings (loss) $ (23.6) $ (16.3) $ (102.1) $ 31.5

The following summarizes activity related to our other transactions with Jefferies Finance (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019 Origination and syndication fee revenues (1) $ 42.4 $ 44.6 $ 123.9 $ 135.8 Origination fee expenses (1) 3.8 8.2 12.4 21.8 CLO placement fee revenues (2) 1.3 1.0 1.7 2.3 Underwriting fees (3) — 2.9 0.3 3.9 Service fees (4) 13.5 12.3 49.4 50.6

(1) We engage in debt underwriting transactions with Jefferies Finance related to the originations and syndications of loans by Jefferies Finance. In connection with such services, we earned fees, which are recognized in Investment banking revenues in our Consolidated Statements of Earnings. In addition, we paid fees to Jefferies Finance in respect of certain loans originated by Jefferies Finance, which are recognized as Business development expenses in our Consolidated Statements of Earnings. (2) We act as a placement agent for CLOs managed by Jefferies Finance, for which we recognized fees, which are included in Investment banking revenues in our Consolidated Statements of Earnings. At August 31, 2020 and November 30, 2019, we held securities issued by CLOs managed by Jefferies Finance, which are included in Financial instruments owned, at fair value. (3) We acted as underwriter in connection with term loans issued by Jefferies Finance. (4) Under a service agreement, we charge Jefferies Finance for services provided. In connection with non-U.S. dollar loans originated by Jefferies Finance to borrowers who are investment banking clients of ours, we have entered into an agreement to indemnify Jefferies Finance with respect to any foreign currency exposure.

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Receivables from Jefferies Finance, included in Other assets in our Consolidated Statements of Financial Condition, were $13.2 million and $17.2 million at August 31, 2020 and November 30, 2019, respectively. Payables to Jefferies Finance related to cash deposited with us and included in Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition, were $13.7 million at both August 31, 2020 and November 30, 2019. At November 30, 2019, a payable to Jefferies Finance of $17.6 million related to its lending transactions is included in Payables to customers in our Consolidated Statements of Financial Condition.

On March 28, 2019, we entered into a promissory note with Jefferies Finance with a principal amount of $1.0 billion, the proceeds of which were used in connection with our investment banking loan syndication activities. We repaid Jefferies Finance the entire outstanding principal amount of this note on May 15, 2019. Interest paid on the note of $3.8 million is included in Interest expense within our Consolidated Statements of Earnings for the nine months ended August 31, 2019.

Berkadia

Berkadia is a commercial mortgage banking and servicing joint venture that was formed in 2009 by Jefferies and Berkshire Hathaway Inc. On October 1, 2018, Jefferies transferred its 50% voting equity interest in Berkadia and related arrangements to us. As a result, we are entitled to receive 45% of the profits of Berkadia. Berkadia originates commercial/multifamily real estate loans that are sold to U.S. government agencies, and originates and brokers commercial/multifamily mortgage loans which are not part of government agency programs. Berkadia is an investment sales advisor focused on the multifamily industry. Berkadia is a servicer of commercial real estate loans in the U.S., performing primary, master and special servicing functions for U.S. government agency programs, commercial mortgage-backed securities transactions, banks, insurance companies and other financial institutions.

The following is a summary of selected financial information for Berkadia (in millions):

August 31, 2020 November 30, 2019

Our total equity balance $ 273.2 $ 268.9

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019

Net earnings $ 41.0 $ 53.8 $ 89.7 $ 160.3

At August 31, 2020 and November 30, 2019, we had commitments to purchase $325.6 million and $360.4 million, respectively, in agency CMBS from Berkadia.

We received distributions from Berkadia on our equity interest as follows (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019

Distributions $ — $ 29.6 $ 36.6 $ 47.7 JCP Fund V

The amount of our investments in JCP Fund V included in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition was $17.0 million and $20.6 million at August 31, 2020 and November 30, 2019, respectively. We account for these investments at fair value based on the NAV of the funds provided by the fund managers (see Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2019). The following summarizes the results from these investments which are included in Principal transactions revenues in our Consolidated Statements of Earnings (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019 Net gains (losses) from our investments in JCP Fund V $ 2.0 $ (2.5) $ (3.5) $ (1.9)

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At both August 31, 2020 and November 30, 2019, we were committed to invest equity of up to $85.0 million in JCP Fund V. At August 31, 2020 and November 30, 2019, our unfunded commitment relating to JCP Fund V was $9.1 million and $9.4 million, respectively.

The following is a summary of the Net change in net assets resulting from operations for 100.0% of JCP Fund V, in which we owned effectively 35.2% of the combined equity interests (in thousands):

Three Months Ended December 31, December 31, June 30, 2020 March 31, 2020 2019 June 30, 2019 March 31, 2019 2018 Net increase (decrease) in net assets resulting from operations (1) $ 6,233 $ (19,893) $ (1,397) $ (7,174) $ (1,169) $ (8,412)

(1) Financial information for JCP Fund V within our results of operations for the three and nine months ended August 31, 2020 and August 31, 2019 is included based on the presented periods.

Epic Gas

On July 14, 2015, Jefferies LLC purchased common shares of Epic Gas. At February 28, 2019, we owned approximately 21.1% of the outstanding common stock of Epic Gas and one of our directors served on the Board of Directors of Epic Gas and owned common shares of Epic Gas. During the three months ended May 31, 2019, we sold all of our common shares of Epic Gas, at fair value, for a total of $24.6 million. There was a gain of $2.8 million on this transaction, which is included in Other revenue in our Consolidated Statements of Earnings for the nine months ended August 31, 2019. At February 28, 2019, our investment in Epic Gas of $22.1 million was included in Loans to and investments in related parties in our Consolidated Statements of Financial Condition. For the three months ended December 31, 2018, Epic Gas reported net earnings of $0.9 million, which was included in our results of operations for the nine months ended August 31, 2019.

Note 10. Goodwill and Intangible Assets

Goodwill Goodwill attributed to our reportable business segments are as follows (in thousands):

August 31, 2020 November 30, 2019 Investment Banking and Capital Markets $ 1,643,633 $ 1,640,201 Asset Management 411 3,398 Total goodwill $ 1,644,044 $ 1,643,599

The following table is a summary of the changes to goodwill for the nine months ended August 31, 2020 (in thousands):

Balance at November 30, 2019 $ 1,643,599 Translation adjustments 3,445 Impairment losses (1) (3,000) Balance at August 31, 2020 $ 1,644,044

(1) Impairment losses are related to our wind down of an asset management platform.

Goodwill Impairment Testing

A reporting unit is an operating segment or one level below an operating segment. The quantitative goodwill impairment test is performed at the level of the reporting unit and consists of two steps. In the first step, the fair value of each reporting unit is compared with its carrying value, including goodwill and allocated intangible assets. If the fair value is in excess of the carrying value, the goodwill for the reporting unit is considered not to be impaired. If the fair value is less than the carrying value, then a second step is performed in order to measure the amount of the impairment loss, if any, which is based on comparing the implied fair value of the reporting unit’s goodwill to the carrying value of the reporting unit’s goodwill.

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Allocated tangible equity plus allocated goodwill and intangible assets are used for the carrying amount of each reporting unit. The amount of tangible equity allocated to a reporting unit is based on our cash capital model deployed in managing our businesses, which seeks to approximate the capital a business would require if it were operating independently. Intangible assets are allocated to a reporting unit based on either specifically identifying a particular intangible asset as pertaining to a reporting unit or, if shared among reporting units, based on an assessment of the reporting unit’s benefit from the intangible asset in order to generate results.

Estimating the fair value of a reporting unit requires management judgment. Estimated fair values for our reporting units were determined using a market valuation method that incorporates price-to-earnings and price-to-book multiples of comparable public companies. In addition, as the fair values determined under the market approach represent a noncontrolling interest, we applied a control premium to arrive at the estimated fair value of each reporting unit on a controlling basis. We engaged an independent valuation specialist to assist us in our valuation process at August 1, 2020.

Our annual goodwill impairment testing at August 1, 2020 did not indicate any goodwill impairment in any of our reporting units. Substantially all of our goodwill is allocated to our Investment Banking, Equities and Fixed Income reporting units, which are part of our Investment Banking and Capital Markets reportable business segment, for which the results of our assessment indicated that these reporting units had a fair value in excess of their carrying amounts based on current projections. At August 31, 2020, goodwill allocated to these reporting units is $1,643.6 million of total goodwill of $1,644.0 million.

Intangible Assets Intangible assets are included in Other assets in our Consolidated Statements of Financial Condition. The following tables present the gross carrying amount, changes in carrying amount, net carrying amount and weighted average amortization period of identifiable intangible assets at August 31, 2020 and November 30, 2019 (dollars in thousands):

August 31, 2020 Weighted average Accumulated Net carrying remaining lives Gross cost Impairment losses amortization amount (years) Customer relationships (1) $ 126,132 $ (26) $ (73,720) $ 52,386 9.5 Trade name (1) 129,154 (274) (27,673) 101,207 27.5 Exchange and clearing organization membership interests and registrations 8,342 (468) — 7,874 N/A

Total $ 263,628 $ (768) $ (101,393) $ 161,467

(1) Impairment losses are related to our wind down of an asset management platform.

November 30, 2019 Weighted average Accumulated Net carrying remaining lives Gross cost amortization amount (years)

Customer relationships $ 125,736 $ (67,257) $ 58,479 9.9

Trade name 128,590 (24,800) 103,790 28.3

Exchange and clearing organization membership interests and registrations 8,273 — 8,273 N/A

Total $ 262,599 $ (92,057) $ 170,542

We performed our annual impairment testing of intangible assets with an indefinite useful life, which consists of exchange and clearing organization membership interests and registrations, at August 1, 2020. We also deemed it appropriate to consider the impact of the global novel coronavirus pandemic as a triggering event and performed an interim impairment test for our indefinite-lived intangible assets at May 31, 2020. At May 31, 2020 and August 1, 2020, we elected to perform a quantitative assessment of membership interests and registrations that have available quoted sales prices as well as certain other membership interests and registrations that have declined in utilization. Qualitative assessments were performed on the remainder of our indefinite-life intangible assets. In applying our quantitative assessment at both May 31, 2020 and August 1, 2020, we recognized impairment losses on certain exchange membership interests and registrations. With regard to our qualitative assessments of the remaining indefinite life intangible assets, based on our assessments of market conditions, the utilization of the assets and the replacement costs associated with the assets, we have concluded that it is not more likely than not that the intangible assets are impaired.

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Amortization Expense

For finite life intangible assets, aggregate amortization expense amounted to $3.0 million and $9.3 million for the three and nine months ended August 31, 2020, respectively, and $3.0 million and $9.0 million for the three and nine months ended August 31, 2019, respectively. These expenses are included in Other expenses in our Consolidated Statements of Earnings.

The estimated future amortization expense for the five succeeding fiscal years is as follows (in thousands):

Remainder of fiscal 2020 $ 3,045 Year ending November 30, 2021 12,181 Year ending November 30, 2022 9,239 Year ending November 30, 2023 8,258 Year ending November 30, 2024 8,258

Note 11. Short-Term Borrowings

Short-term borrowings at August 31, 2020 and November 30, 2019 include the following and mature in one year or less (in thousands):

August 31, 2020 November 30, 2019

Bank loans (1) $ 776,752 $ 527,509

Floating rate puttable notes (1) 6,800 —

Equity-linked notes (2) 21,829 20,981

Total short-term borrowings $ 805,381 $ 548,490

(1) These Short-term borrowings are recorded at cost in our Consolidated Statements of Financial Condition, which is a reasonable approximation of their fair values due to their liquid and short-term nature. (2) See Note 4, Fair Value Disclosures, for further information on these notes. At August 31, 2020, the weighted average interest rate on short-term borrowings outstanding is 1.83% per annum. During the nine months ended August 31, 2020, we issued floating rate puttable notes with a principal amount of $6.8 million and equity-linked notes with a principal amount of $5.0 million and our equity-linked notes with a principal amount of $5.2 million matured on March 13, 2020. Subsequent to quarter-end, on October 7, 2020, our equity-linked notes with a principal amount of $15.1 million matured.

One of our subsidiaries has a credit facility agreement (“Credit Facility”) with JPMorgan Chase Bank, N.A. under which we have borrowed for a committed amount of $246.0 million at August 31, 2020, which is included in bank loans. Interest is based on an annual alternative base rate or an adjusted London Interbank Offered Rate (“LIBOR”), as defined in the Credit Facility. The Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain a specified level of tangible net worth. The covenants also require the borrower to maintain specified leverage amounts and impose certain restrictions on the borrower’s future indebtedness. During the nine months ended August 31, 2020, we were in compliance with all debt covenants under the Credit Facility.

One of our subsidiaries has a credit facility agreement with the Royal Bank of Canada (“RBC Credit Facility”) for a committed amount of $200.0 million, which is included in bank loans. Interest is based on a rate per annum equal to LIBOR plus an applicable margin of 2.05%. The RBC Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain a specified level of tangible net worth. The covenants also impose certain restrictions on the borrower’s future indebtedness. At August 31, 2020, we were in compliance with all debt covenants under the RBC Credit Facility.

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The Bank of New York Mellon has agreed to make revolving intraday credit advances (“Intraday Credit Facility”) for an aggregate committed amount of $150.0 million. The Intraday Credit facility is structured so that advances are generally repaid before the end of each business day. However, if an advance is not repaid by the end of any business day, the advance is converted to an overnight loan. Intraday loans accrue interest at a rate of 0.12%. Interest is charged based on the number of minutes in a day the advance is outstanding. Overnight loans are charged interest at the base rate plus 3% on a daily basis. The base rate is the higher of the federal funds rate plus 0.50% or the prime rate in effect at that time. The Intraday Credit Facility contains financial covenants, which include a minimum regulatory net capital requirement for Jefferies LLC. At August 31, 2020, we were in compliance with debt covenants under the Intraday Credit Facility.

Note 12. Long-Term Debt

The following summarizes our long-term debt carrying values (including unamortized discounts and premiums, valuation adjustments and debt issuance costs, where applicable) (in thousands):

August 31, November 30, Effective Maturity Interest Rate 2020 2019 Unsecured long-term debt: 2.375% Euro Medium Term Notes —% May 20, 2020 $ — $ 550,622 6.875% Senior Notes 4.40% April 15, 2021 761,430 774,738 2.250% Euro Medium Term Notes 4.08% July 13, 2022 4,613 4,204 5.125% Senior Notes 4.47% January 20, 2023 760,999 610,023 1.000% Euro Medium Term Notes 1.00% July 19, 2024 594,965 548,880 4.850% Senior Notes (1) 4.93% January 15, 2027 814,873 768,931 6.450% Senior Debentures 5.46% June 8, 2027 369,662 371,426 4.150% Senior Notes 4.26% January 23, 2030 989,342 988,662 6.250% Senior Debentures 6.03% January 15, 2036 510,943 511,260 6.500% Senior Notes 6.09% January 20, 2043 419,931 420,239 Structured notes (2) Various Various 1,522,105 1,215,285 Total unsecured long-term debt 6,748,863 6,764,270 Secured long-term debt: Revolving Credit Facility 189,571 189,088 Secured Bank Loan September 27, 2021 50,000 50,000 Total long-term debt (3) $ 6,988,434 $ 7,003,358

(1) The carrying value of these senior notes includes losses of $45.5 million and $72.3 million in the nine months ended August 31, 2020 and 2019, respectively, associated with an interest rate swap based on its designation as a fair value hedge. See Note 5, Derivative Financial Instruments, for further information. (2) These structured notes contain various interest rate payment terms and are accounted for at fair value, with changes in fair value resulting from a change in the instrument-specific credit risk presented in other comprehensive income and changes in fair value resulting from non- credit components recognized in Principal transactions revenues. A weighted average coupon rate is not meaningful, as all of the structured notes are carried at fair value. (3) The Total Long-term debt has a fair value of $7,465.6 million and $7,280.4 million at August 31, 2020 and November 30, 2019, respectively, which would be classified as Level 2 and Level 3 in the fair value hierarchy. The net decrease in long-term debt during the nine months ended August 31, 2020 is primarily due to the maturity and repayment of our 2.375% Euro Medium Term Notes, partially offset by approximately $244.4 million structured notes issuances, net of retirements, and a $150.0 million principal amount issuance of additional 5.125% Senior Notes due 2023. Subsequent to quarter-end, on October 7, 2020, we issued 2.75% Senior Notes with a principal amount of $500.0 million, due 2032.

We have a senior secured revolving credit facility (“Revolving Credit Facility”) with a group of commercial banks for an aggregate principal amount of $190.0 million. The Revolving Credit Facility contains certain covenants that, among other things, requires Jefferies Group LLC to maintain specified level of tangible net worth and liquidity amounts, and imposes certain restrictions on future indebtedness of and requires specified levels of regulated capital for certain of our subsidiaries. Interest is based on an annual 49

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alternative base rate or an adjusted LIBOR, as defined in the Revolving Credit Facility. The obligations of certain of our subsidiaries under the Revolving Credit Facility are secured by substantially all its assets. At August 31, 2020, we were in compliance with the debt covenants under the Revolving Credit Facility.

On September 27, 2019, one of our subsidiaries entered into a Loan and Security Agreement for a term loan with a principal amount of $50.0 million (“Secured Bank Loan”). This Secured Bank Loan matures on September 27, 2021 and is collateralized by certain trading securities. Interest on the Secured Bank Loan is 1.25% plus LIBOR. The agreement contains certain covenants that, among other things, restrict lien or encumbrance upon any of the pledged collateral. At August 31, 2020, we were in compliance with all covenants under the Loan and Security Agreement.

Note 13. Leases

We enter into lease and sublease agreements, primarily for office space, across our geographic locations. Finance lease ROU assets and finance lease liabilities are not material. Information related to operating leases in our Consolidated Statement of Financial Condition at August 31, 2020 was as follows (in thousands, except lease term and discount rate):

Premises and equipment - ROU assets $ 499,856

Weighted average:

Remaining lease term (in years) 11.1 Discount rate 2.9%

The following table presents the maturities of our operating lease liabilities and a reconciliation to the Lease liabilities included in our Consolidated Statement of Financial Condition at August 31, 2020 (in thousands):

Fiscal Year Lease Liabilities

Remainder of 2020 $ 20,495

2021 69,850

2022 68,063

2023 60,928

2024 59,624

2025 and thereafter 398,951

Total undiscounted cash flows 677,911 Less: Difference between undiscounted and discounted cash flows (104,595)

Operating leases amount in our Consolidated Statement of Financial Condition 573,316

Finance leases amount in our Consolidated Statement of Financial Condition 247

Total amount in our Consolidated Statement of Financial Condition $ 573,563 50

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The following table presents our lease costs (in thousands):

Three Months Ended Nine Months Ended

August 31, 2020 August 31, 2020

Operating lease costs (1) $ 17,866 $ 53,255

Variable lease costs (2) 3,413 9,379 Less: Sublease income (1,475) (4,475)

Total lease cost, net $ 19,804 $ 58,159

(1) Includes short-term leases, which are not material. (2) Includes property taxes, insurance costs, common area maintenance, utilities, and other costs that are not fixed. The amount also includes rent increases resulting from inflation indices and periodic market rent reviews.

Consolidated Statement of Cash Flows supplemental information was as follows (in thousands):

Nine Months Ended

August 31, 2020

Cash outflows - lease liabilities $ 54,001

Non-cash - ROU assets recorded for new and modified leases 20,756

Minimum Future Lease Commitments (under Previous GAAP). As lessee, we lease certain premises and equipment under non-cancelable agreements expiring at various dates through 2039 which are operating leases. At November 30, 2019, future minimum aggregate annual lease payments under such leases (net of subleases) for fiscal years ended November 30, 2020 through 2024 and the aggregate amount thereafter, were as follows (in thousands):

Fiscal Year Operating Leases

2020 $ 57,952

2021 60,395

2022 62,916

2023 57,574

2024 56,878

Thereafter 389,245

Total $ 684,960

The total minimum payments to be received in the future under non-cancelable subleases at November 30, 2019 was $16.2 million. Rental expense, net of subleases, amounted to $61.2 million, $52.3 million, and $56.1 million for the years ended November 30, 2019, 2018 and 2017, respectively. 51

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Note 14. Revenues from Contracts with Customers The following table presents our total revenues separated for our revenues from contracts with customers and our other sources of revenues (in thousands):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019 Revenues from contracts with customers:

Commissions and other fees $ 204,313 $ 171,003 $ 627,115 $ 493,843

Investment banking 615,837 412,533 1,595,330 1,128,216

Asset management fees 1,613 3,340 8,254 14,559

Total revenue from contracts with customers 821,763 586,876 2,230,699 1,636,618 Other sources of revenue:

Principal transactions 560,665 148,873 1,399,850 632,002

Revenues from arrangements with strategic partners 5,159 880 14,814 1,791

Interest 195,960 383,596 702,569 1,163,022

Other 11,526 21,406 (6,020) 77,563

Total revenues $ 1,595,073 $ 1,141,631 $ 4,341,912 $ 3,510,996

Revenue from contracts with customers is recognized when, or as, we satisfy our performance obligations by transferring the promised goods or services to the customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring our progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised goods or services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties.

The following provides detailed information on the recognition of our revenues from contracts with customers:

Commissions and Other Fees. We earn commission and other fee revenue by executing, settling and clearing transactions for clients primarily in equity, equity-related and futures products. Trade execution and clearing services, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission revenues associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, are recognized at a point in time on trade-date. Commissions revenues are generally paid on settlement date and we record a receivable between trade-date and payment on settlement date. We permit institutional customers to allocate a portion of their gross commissions to pay for research products and other services provided by third parties. The amounts allocated for those purposes are commonly referred to as soft dollar arrangements. We act as an agent in the soft dollar arrangements as the customer controls the use of the soft dollars and directs our payments to third-party service providers on its behalf. Accordingly, amounts allocated to soft dollar arrangements are netted against commission revenues in our Consolidated Statements of Earnings.

We earn account advisory and distribution fees in connection with wealth management services. Account advisory fees are recognized over time using the time-elapsed method as we determined that the customer simultaneously receives and consumes the benefits of investment advisory services as they are provided. Account advisory fees may be paid in advance of a specified service period or in arrears at the end of the specified service period (e.g., quarterly). Account advisory fees paid in advance are initially deferred within Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition. Distribution fees are variable and recognized when the uncertainties with respect to the amounts are resolved.

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Investment Banking. We provide our clients with a full range of financial advisory and underwriting services. Revenues from financial advisory services primarily consist of fees generated in connection with merger, acquisition and restructuring transactions. Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed, as the performance obligation is to successfully broker a specific transaction. Fees received prior to the completion of the transaction are deferred within Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition. Advisory fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. A significant portion of the fees we receive for our advisory services are considered variable as they are contingent upon a future event (e.g., completion of a transaction or third-party emergence from bankruptcy) and are excluded from the transaction price until the uncertainty associated with the variable consideration is subsequently resolved, which is expected to occur upon achievement of the specified milestone. Payment for advisory services are generally due promptly upon completion of a specified milestone or, for retainer fees, periodically over the course of the engagement. We recognize a receivable between the date of completion of the milestone and payment by the customer. Expenses associated with investment banking advisory engagements are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other investment banking advisory related expenses, including expenses incurred related to restructuring assignments, are expensed as incurred. All investment banking advisory expenses are recognized within their respective expense category in our Consolidated Statements of Earnings and any expenses reimbursed by our clients are recognized as Investment banking revenues.

Underwriting services include underwriting and placement agent services in both the equity and debt capital markets, including private equity placements, initial public offerings, follow-on offerings and equity-linked convertible securities transactions and structuring, underwriting and distributing public and private debt, including investment grade debt, high yield bonds, leveraged loans, municipal bonds and mortgage-backed and asset-backed securities. Underwriting and placement agent revenues are recognized at a point in time on trade-date, as the client obtains the control and benefit of the underwriting offering at that point. Costs associated with underwriting transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded, and are recorded on a gross basis within Underwriting costs in our Consolidated Statements of Earnings as we are acting as a principal in the arrangement. Any expenses reimbursed by our clients are recognized as Investment banking revenues.

Asset Management Fees. We earn management and performance fees in connection with investment advisory services provided to various funds and accounts, which are satisfied over time and measured using a time elapsed measure of progress as the customer receives the benefits of the services evenly throughout the term of the contract. Management and performance fees are considered variable as they are subject to fluctuation (e.g., changes in assets under management, market performance) and/ or are contingent on a future event during the measurement period (e.g., meeting a specified benchmark) and are recognized only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. Management fees are generally based on month-end assets under management or an agreed upon notional amount and are included in the transaction price at the end of each month when the assets under management or notional amount is known. Performance fees are received when the return on assets under management for a specified performance period exceed certain benchmark returns, “high-water marks” or other performance targets. The performance period related to our performance fees is annual or semi- annual. Accordingly, performance fee revenue will generally be recognized only at the end of the performance period to the extent that the benchmark return has been met.

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Disaggregation of Revenue

The following presents our revenues from contracts with customers disaggregated by major business activity and primary geographic regions (in thousands):

Three Months Ended August 31, Nine Months Ended August 31,

2020 2019 2020 2019

Reportable Segment Reportable Segment Reportable Segment Reportable Segment Investment Investment Investment Investment Banking Banking Banking Banking and Capital Asset and Capital Asset and Capital Asset and Capital Asset Markets Management Total Markets Management Total Markets Management Total Markets Management Total Major business activity:

Equities (1) $ 201,157 $ — $ 201,157 $ 167,528 $ — $ 167,528 $ 614,089 $ — $ 614,089 $ 483,771 $ — $ 483,771

Fixed income (1) 3,156 — 3,156 3,475 — 3,475 13,026 — 13,026 10,072 — 10,072 Investment banking - Advisory 171,438 — 171,438 213,350 — 213,350 696,677 — 696,677 572,386 — 572,386 Investment banking - Underwriting 444,399 — 444,399 199,183 — 199,183 898,653 — 898,653 555,830 — 555,830

Asset management — 1,613 1,613 — 3,340 3,340 — 8,254 8,254 — 14,559 14,559

Total $ 820,150 $ 1,613 $ 821,763 $ 583,536 $ 3,340 $ 586,876 $ 2,222,445 $ 8,254 $ 2,230,699 $ 1,622,059 $ 14,559 $ 1,636,618

Primary geographic region:

Americas $ 684,441 $ 244 $ 684,685 $ 476,983 $ 1,937 $ 478,920 $ 1,858,137 $ 1,790 $ 1,859,927 $ 1,288,046 $ 8,818 $ 1,296,864

Europe 90,132 1,369 91,501 88,890 1,403 90,293 237,652 6,464 244,116 280,605 5,741 286,346

Asia 45,577 — 45,577 17,663 — 17,663 126,656 — 126,656 53,408 — 53,408

Total $ 820,150 $ 1,613 $ 821,763 $ 583,536 $ 3,340 $ 586,876 $ 2,222,445 $ 8,254 $ 2,230,699 $ 1,622,059 $ 14,559 $ 1,636,618

(1) Revenues from contracts with customers associated with the equities and fixed income businesses primarily represent commissions and other fee revenue. Refer to Note 19, Segment Reporting, for a further discussion on the allocation of revenues to geographic regions.

Information on Remaining Performance Obligations and Revenue Recognized from Past Performance

We do not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at August 31, 2020. Investment banking advisory fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price at August 31, 2020.

During the three and nine months ended August 31, 2020, we recognized $15.6 million and $10.8 million, respectively, compared with $9.6 million and $27.2 million, during the three and nine months ended August 31, 2019, respectively, of revenue related to performance obligations satisfied (or partially satisfied) in previous periods, mainly due to resolving uncertainties in variable consideration that was constrained in prior periods. In addition, we recognized $4.3 million, and $14.4 million, during the three and nine months ended August 31, 2020, respectively, compared with $6.0 million and $15.8 million during the three and nine months ended August 31, 2019, respectively, of revenues primarily associated with distribution services, a portion of which relates to prior periods.

Contract Balances

The timing of our revenue recognition may differ from the timing of payment by our customers. We record a receivable when revenue is recognized prior to payment and we have an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, we record deferred revenue until the performance obligations are satisfied. We had receivables related to revenues from contracts with customers of $252.9 million and $209.3 million at August 31, 2020 and November 30, 2019, respectively. We had no significant impairments related to these receivables during the three and nine months ended August 31, 2020 and 2019.

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Our deferred revenue primarily relates to retainer and milestone fees received in investment banking advisory engagements where the performance obligation has not yet been satisfied. Deferred revenues at August 31, 2020 and November 30, 2019 were $12.0 million and $9.0 million, respectively, which are recorded in Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition. During the three and nine months ended August 31, 2020, we recognized revenues of $15.4 million and $6.3 million, respectively, compared with $9.4 million and $6.3 million, respectively, during the three and nine months ended August 31, 2019, respectively, that were recorded as deferred revenue at the beginning of the periods.

Contract Costs

We capitalize costs to fulfill contracts associated with investment banking advisory engagements where the revenue is recognized at a point in time and the costs are determined to be recoverable. Capitalized costs to fulfill a contract are recognized at the point in time that the related revenue is recognized.

At August 31, 2020 and November 30, 2019, capitalized costs to fulfill a contract were $2.8 million and $4.8 million, respectively, which are recorded in Receivables – Fees, interest and other in our Consolidated Statements of Financial Condition. For the three and nine months ended August 31, 2020, we recognized expenses of $0.8 million and $3.6 million, respectively, compared with $1.6 million and $3.8 million for the three and nine months ended August 31, 2019, respectively, related to costs to fulfill a contract that were capitalized as of the beginning of the period. There were no significant impairment charges recognized in relation to these capitalized costs during the three and nine months ended August 31, 2020 and 2019.

Note 15. Compensation Plans

Jefferies sponsors our following share-based compensation plans: the Incentive Compensation Plan, the Employee Stock Purchase Plan and the Deferred Compensation Plan. The outstanding and future share-based awards relating to these plans relate to Jefferies common shares. The fair value of share-based awards is estimated on the date of grant based on the market price of the underlying common stock less the impact of market conditions and selling restrictions subsequent to vesting, if any, and is amortized as compensation expense over the related requisite service periods. We are allocated costs associated with awards granted to our employees under such plans.

In addition, we sponsor non-share-based compensation plans. Non-share-based compensation plans sponsored by us include a profit sharing plan and other forms of restricted cash awards.

The components of total compensation cost associated with certain of our compensation plans are as follows (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019 Components of compensation cost:

Restricted cash awards $ 67.5 $ 72.3 $ 223.5 $ 205.1

Restricted stock and RSUs (1) 5.5 6.6 18.0 19.6

Profit sharing plan 1.5 1.2 6.9 6.4

Total compensation cost $ 74.5 $ 80.1 $ 248.4 $ 231.1 (1) Total compensation cost associated with restricted stock and restricted stock units (“RSUs”) includes the amortization of sign-on, retention and senior executive awards, less forfeitures and clawbacks.

Remaining unamortized amounts related to certain compensation plans at August 31, 2020 are as follows (dollars in millions):

Remaining Unamortized Weighted Average Amounts Vesting Period (in Years)

Non-vested share-based awards $ 35.4 2

Restricted cash awards (1) 606.2 3

Total $ 641.6

(1) The remaining unamortized amount is included within Other assets in our Consolidated Statement of Financial Condition.

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For detailed descriptions on the Company’s compensation plans, see Note 15, Compensation Plans, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2019.

Note 16. Income Taxes

At August 31, 2020 and November 30, 2019, we had approximately $169.4 million and $125.6 million, respectively, of total gross unrecognized tax benefits. The total amount of unrecognized benefits that, if recognized, would favorably affect the effective tax rate was $133.9 million and $99.5 million (net of Federal benefit) at August 31, 2020 and November 30, 2019, respectively.

We recognize interest accrued related to unrecognized tax benefits in Interest expense. Penalties, if any, are recognized in Other expenses in our Consolidated Statements of Earnings. At August 31, 2020 and November 30, 2019, we had interest accrued of approximately $63.8 million and $55.6 million, respectively, included in Accrued expenses and other liabilities. No penalties were accrued for the nine months ended August 31, 2020 and the year ended November 30, 2019.

We are currently under examination in a number of major tax jurisdictions. Though we do not expect that resolution of these examinations will have a material effect on our consolidated financial position, they may have a material impact on our consolidated results of operations for the period in which resolution occurs.

The table below summarizes the earliest tax years that remain subject to examination in the major tax jurisdictions in which we operate:

Jurisdiction Tax Year United States 2016 New Jersey 2010 New York State 2001 New York City 2006 United Kingdom 2018 Hong Kong 2014 India 2010 Italy 2012 For the nine months ended August 31, 2020, the provision for income taxes was $203.9 million, equating to an effective tax rate of 26.4%. For the nine months ended August 31, 2019, the provision for income taxes was $79.8 million, equating to an effective tax rate of 26.5%.

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Note 17. Commitments, Contingencies and Guarantees

Commitments

The following table summarizes our commitments at August 31, 2020 (in millions):

Expected Maturity Date (fiscal years) 2022 2024 2026

and and and Maximum 2020 2021 2023 2025 Later Payout Equity commitments (1) $ 0.2 $ 106.7 $ 1.4 $ — $ 7.2 $ 115.5 Loan commitments (1) — 295.0 35.0 — — 330.0

Underwriting commitments 64.0 — — — — 64.0 Forward starting reverse repos (2) 6,184.5 — — — — 6,184.5 Forward starting repos (2) 3,870.8 100.0 — — — 3,970.8 Other unfunded commitments (1) — 136.4 — 5.1 — 141.5 Total commitments $ 10,119.5 $ 638.1 $ 36.4 $ 5.1 $ 7.2 $ 10,806.3

(1) Equity, loan and other unfunded commitments are presented by contractual maturity date. The amounts, however, are available on demand. (2) At August 31, 2020, $6,183.8 million within forward starting securities purchased under agreements to resell and $3,670.6 million within forward starting securities sold under agreements to repurchase settled within three business days.

Equity Commitments. Includes a commitment to invest in our joint venture, Jefferies Finance, and commitments to invest in private equity funds and in Jefferies Capital Partners, LLC, the manager of the private equity funds, which consists of a team led by one of our directors and Chairman of the Executive Committee. At August 31, 2020, our outstanding commitments relating to Jefferies Capital Partners, LLC and its private equity funds were $11.2 million.

See Note 9, Investments, for additional information regarding our investments in Jefferies Finance.

Additionally, at August 31, 2020, we had other outstanding equity commitments to invest up to $6.7 million in various other investments.

Loan Commitments. From time to time we make commitments to extend credit to investment banking and other clients in loan syndication, acquisition finance and securities transactions and to SPE sponsors in connection with the funding of CLO and other asset-backed transactions. These commitments and any related drawdowns of these facilities typically have fixed maturity dates and are contingent on certain representations, warranties and contractual conditions applicable to the borrower. At August 31, 2020, we had $80.0 million of outstanding loan commitments to clients. Loan commitments outstanding at August 31, 2020 also include our portion of the outstanding secured revolving credit facility provided to Jefferies Finance to support loan underwritings by Jefferies Finance. See Note 9, Investments, for additional information.

Underwriting Commitments. In connection with investment banking activities, we may from time to time provide underwriting commitments to our clients in connection with capital raising transactions.

Forward Starting Reverse Repos and Repos. We enter into commitments to take possession of securities with agreements to resell on a forward starting basis and to sell securities with agreements to repurchase on a forward starting basis that are primarily secured by U.S. government and agency securities.

Other Unfunded Commitments. Other unfunded commitments include obligations in the form of revolving notes, warehouse financings and debt securities to provide financing to asset-backed and CLO vehicles. Upon advancing funds, drawn amounts are collateralized by the assets of an entity.

Guarantees

Derivative Contracts. As a dealer, we make markets and trade in a variety of derivative instruments. Certain derivative contracts that we have entered into meet the accounting definition of a guarantee under U.S. GAAP, including credit default swaps, written foreign currency options and written equity put options. On certain of these contracts, such as written interest rate caps and foreign currency options, the maximum payout cannot be quantified since the increase in interest or foreign exchange rates are not contractually limited by the terms of the contract. As such, we have disclosed notional values as a measure of our maximum potential payout under these contracts.

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The following table summarizes the notional amounts associated with our derivative contracts meeting the definition of a guarantee under U.S. GAAP at August 31, 2020 (in millions):

Expected Maturity Date (Fiscal Years) 2022 2024 2026

and and and Notional/ Maximum 2020 2021 2023 2025 Later Payout Guarantee Type: Derivative contracts—non-credit related $ 6,295.6 $ 4,149.9 $ 6,458.1 $ 1,345.6 $ 52.0 $ 18,301.2 Written derivative contracts—credit related — — 1.0 5.4 — 6.4 Total derivative contracts $ 6,295.6 $ 4,149.9 $ 6,459.1 $ 1,351.0 $ 52.0 $ 18,307.6

The derivative contracts deemed to meet the definition of a guarantee under U.S. GAAP are before consideration of hedging transactions and only reflect a partial or “one-sided” component of any risk exposure. Written equity options and written credit default swaps are often executed in a strategy that is in tandem with long cash instruments (e.g., equity and debt securities). We substantially mitigate our exposure to market risk on these contracts through hedges, such as other derivative contracts and/or cash instruments, and we manage the risk associated with these contracts in the context of our overall risk management framework. We believe notional amounts overstate our expected payout and that fair value of these contracts is a more relevant measure of our obligations. At August 31, 2020, the fair value of derivative contracts meeting the definition of a guarantee is approximately $197.9 million.

Standby Letters of Credit. At August 31, 2020, we provided guarantees to certain counterparties in the form of standby letters of credit in the amount of $20.4 million, all of which expire within one year. Standby letters of credit commit us to make payment to the beneficiary if the guaranteed party fails to fulfill its obligation under a contractual arrangement with that beneficiary. Since commitments associated with these collateral instruments may expire unused, the amount shown does not necessarily reflect the actual future cash funding requirement. Other Guarantees. We are members of various exchanges and clearing houses. In the normal course of business, we provide guarantees to securities clearing houses and exchanges. These guarantees generally are required under the standard membership agreements, such that members are required to guarantee the performance of other members. Additionally, if a member becomes unable to satisfy its obligations to the clearing house, other members would be required to meet these shortfalls. To mitigate these performance risks, the exchanges and clearing houses often require members to post collateral. Our obligations under such guarantees could exceed the collateral amounts posted. Our maximum potential liability under these arrangements cannot be quantified; however, the potential for us to be required to make payments under such guarantees is deemed remote. Accordingly, no liability has been recognized for these arrangements. Additionally, we provide certain indemnifications in connection with third-party clearing and execution arrangements whereby a third party may clear and settle transactions on behalf of our clients. These indemnifications generally have standard contractual terms and are entered into in the ordinary course of business. Our obligations in respect of such transactions are secured by the assets in our client’s account, as well as any proceeds received from the transactions cleared and settled on behalf of our client. However, we believe that it is unlikely we would have to make any material payments under these arrangements and no material liabilities related to these indemnifications have been recognized.

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Note 18. Net Capital Requirements

As a broker-dealer registered with the SEC and a member firm of the Financial Industry Regulatory Authority (“FINRA”), Jefferies LLC is subject to the SEC Uniform Net Capital Rule (“Rule 15c3-1”), which requires the maintenance of minimum net capital, and has elected to calculate minimum capital requirements using the alternative method permitted by Rule 15c3-1 in calculating net capital. Jefferies LLC, as a dually-registered U.S broker -dealer and futures commission merchant (“FCM”), is also subject to Rule 1.17 of the Commodity Futures Trading Commission (“CFTC”), which sets forth minimum financial requirements. The minimum net capital requirement in determining excess net capital for a dually-registered U.S. broker- dealer and FCM is equal to the greater of the requirement under Rule 15c3-1 or CFTC Rule 1.17.

At August 31, 2020, Jefferies LLC’s net capital and excess net capital were as follows (in thousands):

Net Capital Excess Net Capital Jefferies LLC $ 1,612,465 $ 1,531,871

FINRA is the designated examining authority for Jefferies LLC and the National Futures Association is the designated self-regulatory organization for Jefferies LLC as an FCM.

The regulatory capital requirements referred to above may restrict our ability to withdraw capital from our regulated subsidiaries.

Note 19. Segment Reporting

We operate in two reportable business segments – (1) Investment Banking and Capital Markets and (2) Asset Management. The Investment Banking and Capital Markets reportable business segment includes our securities, commodities, futures and foreign exchange capital markets activities and investment banking business, which is composed of financial advisory and underwriting activities. The Investment Banking and Capital Markets reportable business segment provides the sales, trading, origination and advisory effort for various fixed income, equity and advisory products and services. The Asset Management reportable business segment provides investment management services to investors in the U.S. and overseas and invests capital in hedge funds, separately managed accounts and third-party asset managers.

Our reportable business segment information is prepared using the following methodologies:

• Net revenues and non-interest expenses directly associated with each reportable business segment are included in determining earnings (loss) before income taxes.

• Net revenues and non-interest expenses not directly associated with specific reportable business segments are allocated based on the most relevant measures applicable, including each reportable business segment’s net revenues, headcount and other factors.

• Reportable business segment assets include an allocation of indirect corporate assets that have been fully allocated to our reportable business segments, generally based on each reportable business segment’s capital utilization.

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Our net revenues, non-interest expenses and earnings (loss) before income taxes by reportable business segment are summarized below (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019 Investment Banking and Capital Markets: Net revenues $ 1,274.1 $ 757.4 $ 3,451.8 $ 2,274.9 Non-interest expenses 992.7 671.2 2,706.0 1,991.0 Earnings before income taxes $ 281.4 $ 86.2 $ 745.8 $ 283.9 Asset Management: Net revenues $ 109.3 $ 19.8 $ 136.7 $ 89.8 Non-interest expenses 27.3 22.9 110.9 72.9 Earnings (loss) before income taxes $ 82.0 $ (3.1) $ 25.8 $ 16.9 Total: Net revenues $ 1,383.4 $ 777.2 $ 3,588.5 $ 2,364.7 Non-interest expenses 1,020.0 694.1 2,816.9 2,063.9 Earnings before income taxes $ 363.4 $ 83.1 $ 771.6 $ 300.8

The following table summarizes our total assets by reportable business segment (in millions):

August 31, 2020 November 30, 2019 Investment Banking and Capital Markets $ 43,552.0 $ 40,565.8 Asset Management 3,108.4 2,950.3

Total assets $ 46,660.4 $ 43,516.1 Net Revenues by Geographic Region

Net revenues for the Investment Banking and Capital Markets reportable business segment are recorded in the geographic region in which the position was risk-managed or, in the case of investment banking, in which the senior coverage banker is located. For the Asset Management reportable business segment, net revenues are allocated according to the location of the investment advisor. Net revenues by geographic region were as follows (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019

Americas (1) $ 1,102.6 $ 613.4 $ 2,807.0 $ 1,871.3

Europe (2) 209.1 136.9 558.0 413.6

Asia 71.7 26.9 223.5 79.8

Net revenues $ 1,383.4 $ 777.2 $ 3,588.5 $ 2,364.7

(1) Substantially all relates to U.S. results. (2) Substantially all relates to U.K. results.

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Note 20. Related Party Transactions

Officers, Directors and Employees. The following sets forth information regarding related party transactions with our officers, directors and employees:

• At August 31, 2020 and November 30, 2019, we had $30.8 million and $34.8 million, respectively, of loans outstanding to certain of our officers and employees (none of whom are executive officers or directors) that are included in Other assets in our Consolidated Statements of Financial Condition.

• In June 2020, we sold an investment in a limited partnership to one of our employees for $0.5 million.

• Receivables from and payables to customers include balances arising from officers’, directors’ and employees’ individual security transactions. These transactions are subject to the same regulations as all customer transactions and are provided on substantially the same terms.

• One of our directors had an investment in a hedge fund managed by us of approximately $3.6 million at November 30, 2019. In May 2020, the director fully redeemed his interest in this fund due to the wind down of an asset management platform.

See Note 8, Variable Interest Entities, and Note 17, Commitments, Contingencies and Guarantees, for further information regarding related party transactions with our officers, directors and employees.

Jefferies. The following is a description of our related party transactions with Jefferies and its affiliates:

• We provide services to and receive services from Jefferies under service agreements (in millions): Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019

Charges to Jefferies for services provided $ 13.8 $ 9.8 $ 34.3 $ 36.1

Charges from Jefferies for services received 4.2 6.4 19.6 7.8 • We also provide investment banking and capital markets and asset management services to Jefferies and its affiliates. The following table presents the revenues earned by type of services provided (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019

Investment banking $ — $ 2.4 $ — $ 10.3

Commissions and other fees 0.4 1.1 1.1 2.3 • Receivables from and payables to Jefferies, included in Other assets and Accrued expenses and other liabilities, respectively, in our Consolidated Statements of Financial Condition (in millions):

August 31, November 30,

2020 2019

Receivable from Jefferies $ 3.2 $ 0.9

Payable to Jefferies — 4.3

• During the nine months ended August 31, 2020, we paid distributions of $164.7 million to Jefferies, based on our results for the nine months ended May 31, 2020. At August 31, 2020, we have accrued a distribution payable of $134.0 million, based on our results for the three months ended August 31, 2020.

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• Pursuant to a tax sharing agreement entered into between us and Jefferies, payments are made between us and Jefferies to settle current tax receivables and payables. At August 31, 2020, a net current tax payable to Jefferies of $206.7 million is included in Accrued expenses and other liabilities, in our Consolidated Statements of Financial Condition. At November 30, 2019, a net current tax receivable from Jefferies of $24.4 million is included in Other assets, in our Consolidated Statements of Financial Condition. During the three and nine months ended August 31, 2020, we made payments of $10.0 million and $42.0 million, respectively, to Jefferies, which reduced the cumulative net current tax payable. • We purchase securities from and sell securities to Jefferies, at fair value (in millions). There were no gains or losses on these transactions.

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019

Securities purchased from Jefferies $ 20.2 $ — $ 60.1 $ 885.6

Securities sold to Jefferies 0.1 22.9 0.1 40.8 • In connection with foreign exchange contracts entered into under a prime brokerage agreement with an affiliate of Jefferies, we have $2.7 million and $9.9 million at August 31, 2020 and November 30, 2019, respectively, included in Payables— brokers, dealers and clearing organizations. • We enter into OTC foreign exchange contracts with a subsidiary of Jefferies. In connection with these contracts, we had $0.1 million included in Financial instruments owned, at fair value and $0.6 million included in Financial instruments sold, not yet purchased, at fair value, in our Consolidated Statements of Financial Condition at August 31, 2020 and November 30, 2019, respectively. Net gains (losses) relating to these contracts, which are included in Principal transactions revenues in our Consolidated Statements of Earnings, are as follows (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019

Net gains on foreign exchange contracts $ 0.6 $ 1.2 $ 1.6 $ 1.9

• Two of our directors had investments totaling $0.4 million at November 30, 2019 in a hedge fund managed by Jefferies. In December 2019, both directors fully redeemed their interests in this fund.

• We have investments in hedge funds managed by Jefferies of $237.0 million and $223.5 million at August 31, 2020 and November 30, 2019, respectively, included in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition. Net gains on our investments in these hedge funds, which are included in Principal transactions revenues in our Consolidated Statements of Earnings, are as follows (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019

Net gains from our investments $ 7.7 $ 1.0 $ 14.0 $ 3.3

• In connection with our capital markets activities, from time to time we make a market in long-term debt securities of Jefferies (i.e., we buy and sell debt securities issued by Jefferies). At August 31, 2020 and November 30, 2019, approximately $2.5 million and $0.1 million, respectively, of debt issued by Jefferies is included in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition.

• We have entered into a sublease agreement with an affiliate of Jefferies for office space. For the three and nine months ended August 31, 2020, we received payments for rent and other expenses of $0.2 million and $0.6 million, respectively, from this affiliate.

• In June 2020, Jefferies paid us $2.9 million for the transfer of one of its asset management divisions, which included a net related liability to us.

For information on transactions with our equity method investees, see Note 9, Investments.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This report contains or incorporates by reference “forward looking statements” within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward looking statements include statements about our future and statements that are not historical facts. These forward looking statements are usually preceded by the words “believe,” “intend,” “may,” “will,” or similar expressions. Forward looking statements may contain expectations regarding revenues, earnings, operations and other results, and may include statements of future performance, plans and objectives. Forward looking statements also include statements pertaining to our strategies for future development of our business and products. Forward looking statements represent only our belief regarding future events, many of which by their nature are inherently uncertain. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors that could cause actual results to differ, perhaps materially, from those in our forward looking statements is contained in this report and other documents we file. You should read and interpret any forward looking statement together with these documents, including the following:

• the description of our business and risk factors contained in our Annual Report on Form 10-K for the year ended November 30, 2019 and filed with the Securities and Exchange Commission (“SEC”) on January 29, 2020;

• the discussion of our analysis of financial condition and results of operations contained in this report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein;

• the discussion of our risk management policies, procedures and methodologies contained in this report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Risk Management” herein;

• the notes to the consolidated financial statements contained in this report; and

• cautionary statements we make in our public documents, reports and announcements.

Any forward looking statement speaks only as of the date on which that statement is made. We will not update any forward looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as required by applicable law.

Our business, by its nature, does not produce predictable or necessarily recurring earnings. Our results in any given period can be materially affected by conditions in global financial markets, economic conditions generally and our own activities and positions. For a further discussion of the factors that may affect our future operating results, see “Risk Factors” in Part II, Item 1A in this Quarterly Report on Form 10-Q and Part I, Item 1A of our Annual Report on Form 10-K for the year ended November 30, 2019.

During March 2020, the global novel coronavirus (“COVID-19”) pandemic and initial actions taken in response wreaked havoc on the global economy and all financial markets, and adversely affected our businesses. Subsequently, with various government actions and more clarity from the U.S. Federal Reserve Bank on future interest rate policy, the equity markets have experienced a strong rebound and a supportive trading environment for investors has emerged along with renewed activity in the equity and debt new issue capital markets. We have experienced strong market volumes and increased client activity across our capital markets business with considerably improved performance. Our investment banking backlog remains solid and our current level of incoming new business is strong. Our leadership is continuously monitoring circumstances around COVID-19, as well as economic and capital market conditions, and providing frequent communications to both our clients and our employees.

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Consolidated Results of Operations

Overview

The following table provides an overview of our consolidated results of operations (dollars in thousands):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 % Change 2020 2019 % Change Net revenues $ 1,383,444 $ 777,159 78.0% $ 3,588,507 $ 2,364,728 51.8% Non-interest expenses 1,020,043 694,084 47.0% 2,816,860 2,063,930 36.5% Earnings before income taxes 363,401 83,075 337.4% 771,647 300,798 156.5% Income tax expense 95,870 18,250 425.3% 203,855 79,789 155.5% Net earnings 267,531 64,825 312.7% 567,792 221,009 156.9% Net earnings (loss) attributable to noncontrolling interests (531) (143) 271.3% (4,397) 140 N/M Net earnings attributable to Jefferies Group LLC 268,062 64,968 312.6% 572,189 220,869 159.1%

Effective tax rate 26.4% 22.0% 26.4% 26.5%

N/M — Not Meaningful

Executive Summary

Three Months Ended August 31, 2020

Consolidated Results • Net revenues for the three months ended August 31, 2020 were a record of $1,383.4 million, up 78.0% compared with $777.2 million for the three months ended August 31, 2019.

• Our results in the three months ended August 31, 2020 reflect record results in our investment banking business, record equities net revenues, strong fixed income net revenues, and record performance in asset management. Our record results reflect our increasing market share as a result of our continual investment in expanding and strengthening our business, which includes our longstanding and significant position in the U.S., our meaningfully strengthened effort in Europe and our growing presence across Asia, as well as a strong trading backdrop as our clients continued to navigate the COVID-19 pandemic. Business Results • Our investment banking net revenues of $588.8 million for the three months ended August 31, 2020 were an increase of 46.0% from the prior year quarter, reflecting record revenues in equity underwriting and solid performance in debt underwriting, partially offset by lower revenues in mergers and acquisitions. Our record results in equity underwriting and our solid performance in debt underwriting was a result of clients taking advantage of both a strong rebound in equity valuations, and in loan and bond prices to raise capital. Our advisory revenues were lower than the prior year quarter due to the impact of the uncertainty created by COVID-19 on initiating and completing merger and acquisition transactions. Our investment banking backlog remains solid across all products.

• Our investment banking results also include a net loss of $11.8 million from our share of the net earnings of our Jefferies Finance LLC (“Jefferies Finance”) joint venture, compared with a net loss of $8.2 million from our share of the net earnings from our Jefferies Finance joint venture in the prior year quarter, which included $12.5 million in costs from refinancing its debt.

• Our record equities net revenues increased 65.0% compared to the prior year quarter, primarily due to the continued expansion of our business both from a product and geographic perspective, as well as increased market volumes.

• Our fixed income net revenues were solid and improved by 126.7% compared to the prior year quarter, driven by continued strong client activity across products and geographies.

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• Record asset management net revenues of $109.3 million for the three months ended August 31, 2020, were meaningfully higher than the $19.8 million recorded in the prior year quarter, primarily as a result of higher investment returns. Since the prior year quarter, we made capital investments in several new separately managed accounts and funds. In addition, our results reflect improved performance across most of our historical platforms.

• Net revenues in our other business category in the three months ended August 31, 2020 were $30.1 million, compared with net revenues of $12.4 million in the prior year quarter. Results in the current year quarter include net revenues of $18.5 million due to our share of the net income of Berkadia Commercial Mortgage Holding LLC (“Berkadia”) compared with $24.3 million in the prior year quarter. The results in the current year quarter also include unrealized net mark-to-market gains related to certain investments, compared with mark-to-market losses in the prior year quarter.

Expenses

• Non-interest expenses for the three months ended August 31, 2020 increased $325.9 million to $1,020.0 million, compared with $694.1 million for the prior year quarter, consistent with the higher net revenues in our core operating businesses.

• Compensation and benefits expense for the three months ended August 31, 2020 was $725.6 million, an increase of $313.7 million, or 76.1%, from the comparable prior year quarter, consistent with higher net revenues. Compensation and benefits expense as a percentage of Net revenues was 52.4% for the three months ended August 31, 2020, compared with 53.0%, in the prior year quarter.

• Non-compensation expenses for the three months ended August 31, 2020 increased $12.4 million, or 4.4%, to $294.5 million, compared with $282.1 million for the three months ended August 31, 2019. The increase in non-compensation expenses was primarily due to increased Underwriting costs and Floor brokerage and clearing fees on increased volumes, as well as higher Technology and communication expenses, partially offset by lower Business development expenses.

Nine Months Ended August 31, 2020

Consolidated Results • Net revenues for the nine months ended August 31, 2020 were a record of $3,588.5 million, compared with $2,364.7 million for the nine months ended August 31, 2019.

• Our record results in the nine months ended August 31, 2020 reflect record net revenues in all of investment banking, equities, fixed income and asset management for the period. We believe our record equities and fixed income net revenues were primarily due to increasing market share, higher trading volumes and increased levels of volatility resulting primarily from the impact of COVID-19, and the effect of governments’ policy response on the markets in the second and third quarter of the current year. Business Results • Our net revenues for the nine months ended August 31, 2020 increased 51.8% as compared to the prior nine months ended August 31, 2019. These results reflect record nine months performance in mergers and acquisitions, record net revenues in equity underwriting and solid performance in debt underwriting, as well as record net revenues in all of equities, fixed income and asset management.

• Our investment banking results were strong during the nine months ended August 31, 2020, reflecting record nine month performance in mergers and acquisitions, record results in equity underwriting and solid performance in debt underwriting. Our advisory revenues were a record $696.7 million, an increase of 21.7%, or $124.3 million, compared to the prior nine months ended August 31, 2019, while our underwriting revenues for the nine months ended August 31, 2020 were $898.7 million, up $334.8 million, or 59.4%, with broad contribution across sectors.

• Our investment banking results also include a net loss of $51.1 million from our share of the net earnings of our Jefferies Finance joint venture, reflecting unrealized losses related to the write-down of commitments and loans held-for-sale, as well as reserves recorded on the loan portfolio, primarily due to the impact of COVID-19 on the markets and the economy. This compares with net revenues of $15.7 million from our share of the net earnings from our Jefferies Finance joint venture in the prior year period, inclusive of $12.5 million in costs from refinancing its debt. Other investment banking results during the nine months ended August 31, 2020 also includes a $28.5 million write- down of an investment.

• Our record equities net revenues reflect an increase of 39.7% compared to the prior year period, driven by strong results across most businesses. Our strong performance was a result of the continued expansion of our business both from a product and geographic perspective, increased market volumes and strong client activity and continued momentum across our client franchise. We increased our market share globally in the first half of this year and remain positioned to be able to respond to our clients’ dynamic needs.

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• Our record fixed income net revenues improved by 107.9% compared to the prior year period, primarily due to strong trading volumes, as clients continued to navigate through uncertainty, and the businesses having successfully managed through the markets’ high level of volatility during the period.

• Asset management record net revenues of $136.7 million for the nine months ended August 31, 2020 were higher than the $89.8 million recorded in the prior year period, primarily as a result of higher investment returns. Since the prior year period, we made capital investments in several new separately managed accounts and funds. In addition, our results reflect improved performance across most of our historical platforms.

• Net revenues in our other business category in the nine months ended August 31, 2020 were $90.0 million, compared with $53.6 million in the prior year period. Results in the current year period include gains of $61.5 million from hedges that were bought and sold in the first quarter. Results in the current year period also include net revenues of $40.4 million due to our share of the net income of Berkadia, compared with net revenues of $72.2 million from Berkadia in the prior year period.

Expenses

• Non-interest expenses for the nine months ended August 31, 2020 increased $753.0 million to $2,816.9 million, compared with $2,063.9 million for the prior year period, consistent with the higher net revenues in our core operating businesses.

• Compensation and benefits expense for the nine months ended August 31, 2020 was $1,932.3 million, an increase of $670.8 million, or 53.2%, from the comparable prior year period, consistent with the 51.8% growth in net revenues. Compensation and benefits expense as a percentage of Net revenues was 53.8% for the nine months ended August 31, 2020, compared with 53.3% in the prior year period.

• Non-compensation expenses for the nine months ended August 31, 2020 increased $82.1 million, or 10.2%, to $884.5 million, compared with $802.4 million for the nine months ended August 31, 2019. The increase in non-compensation expenses was primarily due to increased Floor brokerage and clearing fees and Underwriting costs, as well as higher Technology and communication expenses and higher Other expenses, which included our charitable donations of $8.6 million, in memory of Peg Broadbent, our longstanding, esteemed Chief Financial Officer (“CFO”) who tragically died from complications of COVID-19 in March, which was partially offset by lower Business development expenses as business travel and events were curtailed due to COVID-19.

Headcount

• At August 31, 2020, we had 3,893 employees globally, an increase of 117 employees from our headcount of 3,776 at August 31, 2019. Our headcount increased primarily as a result of our expansion in equities and research in Asia and Australia. We also had continued additions in corporate services to support business growth. The increase was partially offset by reductions in our asset management business due to the wind down of an asset management platform.

Revenues by Source

For presentation purposes, the remainder of “Consolidated Results of Operations” is presented on a detailed product and expense basis, rather than on a business segment basis. Net revenues presented for our Investment Banking and Capital Markets businesses include allocations of interest income and interest expense as we assess the profitability of these businesses inclusive of the net interest revenue or expense associated with the respective activities, which is a function of the mix of each business’s associated assets and liabilities and the related funding costs.

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The composition of our net revenues has varied over time as financial markets and the scope of our operations have changed. The composition of net revenues can also vary from period to period due to fluctuations in economic and market conditions, and our own performance. The following provides a summary of “Net Revenues by Source” (dollars in thousands):

Three Months Ended August 31, Nine Months Ended August 31, 2020 2019 2020 2019 % of Net % of Net % of Net % of Net Amount Revenues Amount Revenues % Change Amount Revenues Amount Revenues % Change

Advisory $ 171,438 12.4 % $ 213,350 27.5 % (19.6)% $ 696,677 19.4 % $ 572,386 24.2 % 21.7%

Equity underwriting 305,380 22.1 97,494 12.5 213.2 % 561,455 15.6 256,853 10.8 118.6%

Debt underwriting 139,019 10.0 101,689 13.1 36.7 % 337,198 9.4 306,977 13.0 9.8%

Total underwriting 444,399 32.1 199,183 25.6 123.1 % 898,653 25.0 563,830 23.8 59.4%

Other investment banking (27,013) (2.0) (9,108) (1.2) 196.6 % (112,776) (3.1) (7,116) (0.3) N/M

Total investment banking 588,824 42.5 403,425 51.9 46.0 % 1,482,554 41.3 1,129,100 47.7 31.3%

Equities 318,824 23.0 193,229 24.9 65.0 % 801,596 22.3 573,851 24.3 39.7%

Fixed income 336,347 24.3 148,334 19.1 126.7 % 1,077,673 30.0 518,346 21.9 107.9%

Total capital markets 655,171 47.3 341,563 44.0 91.8 % 1,879,269 52.3 1,092,197 46.2 72.1%

Other 30,120 2.3 12,374 1.6 143.4 % 89,953 2.6 53,587 2.3 67.9%

Total Investment Banking and Capital Markets (1) (2) 1,274,115 92.1 757,362 97.5 68.2 % 3,451,776 96.2 2,274,884 96.2 51.7%

Asset management fees and revenues 6,772 0.5 4,220 0.5 60.5 % 23,068 0.6 16,350 0.7 41.1%

Investment return (3) (4) 115,556 8.4 24,866 3.2 364.7 % 150,339 4.2 104,442 4.4 43.9% Allocated net interest (3) (5) (12,999) (1.0) (9,289) (1.2) 39.9 % (36,676) (1.0) (30,948) (1.3) 18.5%

Total Asset Management 109,329 7.9 19,797 2.5 452.3 % 136,731 3.8 89,844 3.8 52.2%

Net revenues $ 1,383,444 100.0 % $ 777,159 100.0 % 78.0 % $ 3,588,507 100.0 % $ 2,364,728 100.0 % 51.8%

(1) Includes net interest revenues of $3.3 million and $5.4 million for the three and nine months ended August 31, 2020, respectively, and $30.4 million and $51.4 million for the three and nine months ended August 31, 2019, respectively. (2) Allocated net interest is not separately disaggregated for Investment Banking and Capital Markets. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement. (3) Net revenues attributed to the Investment return in Asset Management have been disaggregated to separately present Investment return and Allocated net interest (see footnote 5 below). This disaggregation is intended to increase transparency and to make clearer actual Investment return. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to our credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods. (4) Includes net interest expenses of $6.0 million and $19.6 million for the three and nine months ended August 31, 2020, respectively, and $2.0 million and $3.7 million for the three and nine months ended August 31, 2019, respectively. (5) Allocated net interest represents the allocation of our long-term debt interest expense to Asset Management, net of interest income on our Cash and cash equivalents and other sources of liquidity. Investment Banking Revenues Investment banking is comprised of revenues from:

• advisory services with respect to mergers and acquisitions and restructurings and recapitalizations;

• underwriting services, which include underwriting and placement services related to corporate debt, municipal bonds, mortgage-backed and asset-backed securities and equity and equity-linked securities and loan syndication;

• our share of net earnings from our corporate lending joint venture Jefferies Finance; and

• securities and loans received or acquired in connection with our investment banking activities.

Table of Contents JEFFERIES GROUP LLC AND SUBSIDIARIES The following table sets forth our investment banking revenues (dollars in thousands):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 % Change 2020 2019 % Change

Advisory $ 171,438 $ 213,350 (19.6)% $ 696,677 $ 572,386 21.7%

Equity underwriting 305,380 97,494 213.2 % 561,455 256,853 118.6% Debt underwriting 139,019 101,689 36.7 % 337,198 306,977 9.8% Total underwriting 444,399 199,183 123.1 % 898,653 563,830 59.4% Other investment banking (27,013) (9,108) 196.6 % (112,776) (7,116) 1,484.8% Total investment banking $ 588,824 $ 403,425 46.0 % $ 1,482,554 $ 1,129,100 31.3%

The following table sets forth our investment banking activities (dollars in billions):

Deals Completed Aggregate Value Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended

August 31, August 31, August 31, August 31, 2020 2019 2020 2019 2020 2019 2020 2019

Advisory transactions (1) 48 51 149 147 $ 29.3 $ 110.2 $ 110.3 $ 211.3 Public and private debt financings 213 292 449 565 72.2 43.7 185.4 124.7 Public and private equity and convertible offerings (2) 99 45 205 115 34.5 14.2 71.7 34.6 (1) The number of advisory deals completed includes nine and 19 restructuring and recapitalization transactions during the three and nine months ended August 31, 2020, respectively, and three and 12 restructuring and recapitalization transactions during the three and nine months ended August 31, 2019, respectively. (2) We acted as sole or joint bookrunner on 99 and 199 offerings during the three and nine months ended August 31, 2020, respectively, and 44 and 112 offerings during the three and nine and August 31, 2019, respectively. Three Months Ended August 31, 2020

• Investment banking revenues were a record for the three months ended August 31, 2020 of $588.8 million, compared with $403.4 million for the three months ended August 31, 2019, reflecting record revenues in equity underwriting and solid performance in debt underwriting, partially offset by lower revenues in mergers and acquisitions.

• Our underwriting revenues for the three months ended August 31, 2020 were $444.4 million, an increase of 123.1% from $199.2 million in the prior year quarter, due to record results in equity underwriting and solid performance in debt underwriting as clients took advantage of both a strong rebound in equity valuations, and in loan and bond prices to raise capital. Our advisory revenues were $171.4 million, or 19.6% lower than the prior year quarter, primarily due to the impact of the uncertainty created by COVID-19 on initiating and completing merger and acquisition transactions. From equity and debt underwriting activities, we generated $305.4 million and $139.0 million in revenues, respectively, for the three months ended August 31, 2020, compared with $97.5 million and $101.7 million in revenues, respectively, in the prior year quarter.

• Other investment banking revenues were a loss of $27.0 million for the three months ended August 31, 2020, compared with a loss of $9.1 million for the three months ended August 31, 2019. Other investment banking revenues during the three months ended August 31, 2020 include a net loss of $11.8 million from our share of the net earnings of our Jefferies Finance joint venture, reflecting losses related to reserves recorded on the loan portfolio during the current year quarter, primarily due to the impact of COVID-19 on the markets and economy. This compares with a net loss of $8.2 million from our share of the net results from our Jefferies Finance joint venture in the prior year quarter, which included $12.5 million in costs from refinancing its debt. The results in both quarters also include the amortization of costs and allocated interest expense related to our investment in the Jefferies Finance business. 68

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Nine Months Ended August 31, 2020

• Investment banking revenues were a record of $1,482.6 million for the nine months ended August 31, 2020, compared with $1,129.1 million in the prior year period, reflecting record performance in mergers and acquisitions, record results in equity underwriting and solid performance in debt underwriting. The prior year period results were impacted by the significant industry-wide decline in equity and leverage finance activity across the U.S. and Europe during the period.

• Our advisory revenues were a record $696.7 million, up $124.3 million, or 21.7% higher than the prior year period, reflecting record performance in our mergers and acquisitions business. Our underwriting revenues for the nine months ended August 31, 2020 were $898.7 million, an increase of $334.8 million, or 59.4%, from the same period last year, due to record results in equity underwriting and solid performance in debt underwriting, with broad contribution across sectors. From equity and debt underwriting activities, we generated $561.5 million and $337.2 million in revenues, respectively, for the nine months ended August 31, 2020, compared with $256.9 million and $307.0 million in revenues, respectively, in the prior year period.

• Other investment banking revenues were a loss of $112.8 million for the nine months ended August 31, 2020, compared with revenues of $7.1 million for the nine months ended August 31, 2019. Other investment banking revenues during the nine months ended August 31, 2020 include a net loss of $51.1 million from our share of the net earnings of our Jefferies Finance joint venture, reflecting unrealized losses related to the write-down of commitments and loans held-for-sale, as well as reserves recorded on the loan portfolio during the current year period, primarily due to the impact of COVID-19 on the markets and the economy. This compares with net revenues of $15.7 million in the prior year period from our share of the net earnings from our Jefferies Finance joint venture and $12.5 million in costs from refinancing its debt. Other investment banking results during the nine months ended August 31, 2020 also include a $28.5 million write-down of a private equity investment. The results in both periods also include the amortization of costs and allocated interest expense related to our investment in the Jefferies Finance business.

Equities Net Revenues Equities is comprised of net revenues from: • services provided to our clients from which we earn commissions or spread revenue by executing, settling and clearing transactions for clients;

• advisory services offered to clients;

• financing, securities lending, outsourced trading and other prime brokerage services offered to clients; and

• wealth management services, which includes providing clients access to all of our institutional execution capabilities.

Three Months Ended August 31, 2020

• Total record equities net revenues were $318.8 million for the three months ended August 31, 2020, an increase of 65.0%, compared with $193.2 million for the prior year quarter, driven by record results in our core equities business. Our strong performance was a result of the continued expansion of our business both from a product and geographic perspective, as well as increased market volumes. We continued to see expansion across our client franchise as we believe we provided consistent and exceptional advisory and execution capabilities to our clients globally throughout this unprecedented period.

• Our results include record net revenues in our Asia cash equities businesses, which was driven by our recent expansion and investment across Asian markets, as well as in our domestic and international convertibles businesses, which continue to be market leading and part of our globalization strategy. The majority of our businesses had higher results in the quarter as compared to the prior year period.

• Results in our global cash equities businesses were driven by increased client activity, which is a result of higher market volumes and the continued globalization of our advisory and execution franchise. The growth in our record global convertibles business was driven by higher trading volumes and volatility, increased primary issuance, and increased client flow. The higher results in our global electronic trading business were driven by increased global market volumes and volatility. Our exchange traded funds business had higher results driven by increased trading revenues and the market environment.

• Our equity options business had lower revenues as compared to the prior year quarter, driven by a decline in trading results and client activity. Results in our prime services business were lower as a result of the market environment, partially offset by the expansion and momentum of our outsourced trading franchise. • The increase in our global equities net revenues also included gains on certain block positions, as compared with losses on certain block positions in the prior year quarter.

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Nine Months Ended August 31, 2020

• In May 2020, Greenwich Associates named us as the top firm in helping clients navigate the markets as COVID-19 significantly impacted equity markets in mid-March, causing volatility and increased trading volumes. These results were based on a survey they had recently conducted of more than 75 buy-side institutions evaluating brokers’ performances in providing clients with liquidity, hedging solutions, market color and insights.

• Total equities net revenues were a record $801.6 million for the nine months ended August 31, 2020, an increase of 39.7%, compared with $573.9 million for the prior year period, driven by strong results across most businesses. Our strong performance was a result of the continued expansion of our business both from a product and geographic perspective, increased market volumes and strong client activity and the continued momentum across our client franchise. We increased our market share globally in the first half of this year and remain positioned to be able to respond to our clients’ dynamic needs.

• Our overall results included record net revenues across each region including the Americas, Europe, and Asia. Our regional businesses are continuing to benefit from our expansion as well as our globalization strategy across advisory and execution capabilities.

• On a product basis, our overall results included record net revenues in our Europe and Asia-Pacific cash equities businesses and across most of our individual global businesses including electronic trading and convertibles. Our electronic trading and convertibles franchises continued to maintain several market-leading positions, while our cash equities franchise continued to improve market share and competitive positioning across the Americas, Europe, and Asia.

• Results in our global cash equities businesses were driven by increased client activity, market volumes and improved trading. While global market volumes and higher volatility drove an increase in commissions, our results in Asia-Pacific were also driven by our expansion and investment in the region across advisory and execution capabilities. The record growth in our global convertibles business was driven by strong primary and secondary trading activity and higher volatility. Our global electronic trading business achieved record results, which were driven by increased global market volumes, volatility, and the continued strength of the global platform. Our exchange traded funds business had higher results driven by increased trading revenues and the market environment.

• The increase and record results in our global equities business was partially offset by lower revenues in our prime services and equity options businesses. Results in our prime services business was driven by the overall market environment, partially offset by the growth of our outsourced trading franchise. Results in our equity options business were driven by lower client volumes and trading results.

Fixed Income Net Revenues Fixed income is comprised of net revenues from:

• executing transactions for clients and making markets in securitized products, investment grade, high-yield, emerging markets, municipal and sovereign securities and bank loans, as well as foreign exchange execution on behalf of clients;

• interest rate derivatives and credit derivatives; and

• financing services offered to clients.

Three Months Ended August 31, 2020

• Fixed income net revenues totaled $336.3 million for the three months ended August 31, 2020, an increase of 126.7% from net revenues of $148.3 million for the three months ended August 31, 2019, driven by continued strong client activity across products and geographies.

• Net revenues for the three months ended August 31, 2020 were higher in our U.S. and international securitized markets groups due to increased demand in the securitization markets for most of these product classes, as compared with the prior year quarter which included trading losses due to declining yields and a flattening and inverted U.S. Treasury yield curve.

• Strong performance across our credit businesses, including our leveraged credit, European and Asian credit and investment grade corporates businesses reflected healthy global capital markets activity and tightening credit spreads. Our global emerging markets business similarly benefited in the current year quarter, with government support of the credit markets driving increased client trading activity and opportunities.

• The current year quarter results also included improved revenues in our municipal securities business, which benefited from the return of investors to the municipals market as spreads tightened.

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Nine Months Ended August 31, 2020

• Fixed income net revenues totaled a record $1,077.7 million for the nine months ended August 31, 2020, an increase of 107.9% from net revenues of $518.3 million for the nine months ended August 31, 2019, primarily due to strong trading volumes, as clients continued to navigate through uncertainty, and the businesses having successfully managed through the markets’ high level of volatility during the period.

• Our U.S. rates business had record net revenues in the current year period, benefiting from increased volatility and bid-offer spreads. Similarly, our international rates business performed strongly in comparable market conditions, but also underperformed in the prior year period, as concerns over Brexit and economic challenges in other European countries limited trading opportunities.

• Our leveraged credit, European and Asian credit and investment grade corporates businesses generated robust revenues across regions due to increased client activity and higher levels of volatility during the current year period. Similarly, revenues from our global emerging markets business benefited from more favorable market conditions driving strong investor demand, as well as an increase in new issuance.

• Revenues in our U.S. securitized markets group were higher due to an increase in demand in the securitization markets, as client interest improved for structured products in the latter part of the current year period.

• The current year period results were partially offset by trading losses in our municipal securities business, which was impacted by the significant sell-off in the second quarter of the current year period before experiencing a return in investor demand in the third quarter of the current year period. Other Other is comprised of revenues from:

• Berkadia and other investments (other than Jefferies Finance, which is included in Other investment banking);

• principal investments in private equity and hedge funds managed by third parties or related parties and are not part of our Leucadia Asset Management platform; and

• investments held as part of employee benefit plans, including deferred compensation plans (for which we incur equal and offsetting compensation expenses).

Three Months Ended August 31, 2020

• Net revenues from our other business category were $30.1 million for the three months ended August 31, 2020, an increase of $17.7 million compared with net revenues of $12.4 million for the three months ended August 31, 2019.

• Results in the current year quarter include net revenues of $18.5 million due to our share of the net income of Berkadia compared with $24.3 million in the prior year quarter.

• The results in the current year quarter also include unrealized net mark-to-market gains related to certain investments, compared with mark- to-market losses in the prior year quarter.

Nine Months Ended August 31, 2020

• Net revenues from our other business category totaled $90.0 million for the nine months ended August 31, 2020, an increase of $36.4 million compared with net revenues of $53.6 million for the nine months ended August 31, 2019.

• Results in the current year period include gains of $61.5 million from hedges that were bought and sold in the first quarter as we took a more cautious market risk position due to the onset of the COVID-19 pandemic.

• Results in the current year period also include net revenues of $40.4 million due to our share of the net income of Berkadia, compared with net revenues of $72.2 million in the prior year period. The lower net revenues in the current year period are due to the impairment of mortgage servicing rights as a result of lower interest rates, higher loan loss provisions and a decline in loan originations due to the impact of COVID-19 in the second quarter of the current year period. Asset Management Asset management revenue includes the following:

• management and performance fees from funds and accounts managed by us;

• revenue from strategic partners pursuant to agreements which entitle us to portions of our partner’ revenues and/or profits; and

• investment income from our investments managed by our asset management business and other strategic partners.

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The key components of asset management revenues are the level of assets under management and the performance return, whether on an absolute basis or relative to a benchmark or hurdle. These components can be affected by financial markets, profits and losses in the applicable investment portfolios and client capital activity. Further, asset management fees vary with the nature of investment management services. The terms under which clients may terminate our investment management authority, and the requisite notice period for such termination, varies depending on the nature of the investment vehicle and the liquidity of the portfolio assets. Performance fees are generally recognized once a year, typically in December, at the end of the relevant performance period, to the extent that the benchmark return has been met.

The following summarizes the results of our Asset Management businesses by asset class (dollars in thousands):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 % Change 2020 2019 % Change Asset management fees:

Equities $ 1,215 $ 633 91.9 % $ 5,162 $ 3,344 54.4 % Multi-asset 398 2,707 (85.3)% 3,092 11,215 (72.4)% Total asset management fees 1,613 3,340 (51.7)% 8,254 14,559 (43.3)% Revenue from arrangements with strategic partners (1) 5,159 880 486.3 % 14,814 1,791 727.1 % Total asset management fees and revenues 6,772 4,220 60.5 % 23,068 16,350 41.1 % Investment return 115,556 24,866 364.7 % 150,339 104,442 43.9 % Allocated net interest (12,999) (9,289) 39.9 % (36,676) (30,948) 18.5 % Total Asset Management $ 109,329 $ 19,797 452.3 % $ 136,731 $ 89,844 52.2 %

(1) These amounts include our share of revenues received by third party asset management companies with which we have revenue and profit share arrangements. Three Months Ended August 31, 2020

• Asset management net revenues in the three months ended August 31, 2020 were a record $109.3 million, meaningfully higher than the $19.8 million recorded in the prior year quarter, primarily as a result of higher investment returns. Since the prior year quarter, we made capital investments in several new separately managed accounts and funds. In addition, our results reflect improved performance across most of our historical platforms. Nine Months Ended August 31, 2020

• Asset management net revenues in the nine months ended August 31, 2020 were a record $136.7 million, compared with $89.8 million in the prior year period, primarily as a result of higher investment returns. Since the prior year period, we made capital investments in several new separately managed accounts and funds. In addition, our results reflect improved performance across most of our historical platforms. The current year period also included higher revenues from our share of fees received by third party asset management companies with which we have revenue and profit share arrangements.

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Assets under Management

Assets under management by predominant asset class were as follows (in millions):

August 31, 2020 November 30, 2019 Assets under management (1): Equities $ 444 $ 110 Multi-asset (2) — 730 Total $ 444 $ 840

(1) Assets under management include third-party net assets actively managed by us, including hedge funds and certain managed accounts. The amount at November 30, 2019 also includes $150 million of assets under management in a strategy, which represents a net asset value equivalent of an asset management strategy where we earn performance fees. We may consolidate certain funds and for such consolidated funds, assets under management includes the pro-rata portion of third-party net assets in consolidated funds based on the percentage ownership of third-party investors in the consolidated fund. The above amounts do not include assets under management at non-consolidated strategic partners or investments or Jefferies Financial Group Inc. (“Jefferies”). (2) During the three months ended August 31, 2020, the assets under management in this asset class were liquidated and the funds were returned to the third-party investors. Change in assets under management were as follows (in millions):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 2020 2019 Asset under management: Balance, beginning of period $ 879 $ 952 $ 840 $ 1,463 Net cash flow in (out) (424) (155) (304) (680) Net market appreciation (depreciation) (11) 89 (92) 103 Balance, end of period $ 444 $ 886 $ 444 $ 886

The change in assets under management during the three months ended August 31, 2020 is primarily due to the liquidation and redemptions from certain funds. The change in assets under management during the nine months ended August 31, 2020 is primarily due to the liquidation and redemptions from certain funds and market depreciation during the period. The change in assets under management during the three and nine months ended August 31, 2019 is primarily due to redemptions from certain funds and separately managed accounts, partially offset by market appreciation. Our definition of assets under management is not based on any definition contained in any of our investment management agreements and differs from the manner in which “Regulatory Assets Under Management” is reported to the SEC on Form ADV. 73

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Asset Management Investments

Our asset management business invests directly in hedge funds and separately managed accounts where we or our Parent acts as the asset manager. Additionally, we make investments in and enter into revenue sharing arrangements with third-party asset managers. The following table represents our investments by asset manager (in thousands):

August 31, 2020 November 30, 2019 Jefferies Group LLC; as manager:

Fund investments (1) $ 267 $ 22,695

Separately managed accounts (2) 224,049 344,549

Total $ 224,316 $ 367,244

Jefferies Financial Group Inc.; as manager:

Fund investments $ 231,720 $ 218,109

Separately managed accounts (2) — 43,153

Total $ 231,720 $ 261,262

Third-party as asset manager:

Fund investments (3) $ 634,107 $ 289,930

Separately managed accounts (2) 271,689 266,484

Total $ 905,796 $ 556,414

Total asset management investments (4) $ 1,361,832 $ 1,184,920

(1) Due to the level or nature of an investment in a fund, we may consolidate that fund; and accordingly, the assets and liabilities of the fund are included in the representative line items in our consolidated financial statements. At August 31, 2020 and November 30, 2019, $0.1 million and $22.6 million, respectively, represents net investments in funds that have been consolidated in our financial statements. (2) Where we have investments in a separately managed account, the assets and liabilities of such account are presented in our consolidated financial statements within each respective line item. (3) The increase for the nine months ended August 31, 2020 was primarily due to an investment in a new fund in the current year period. (4) Of the $1,361.8 million total invested in the funds at August 31, 2020, $915.8 million was sourced from the proceeds of long-term and permanent capital. At August 31, 2020 and November 30, 2019, we have borrowed $446.0 million and $135.0 million, respectively, under credit facility agreements, which are secured by a combination of our investment in a fund managed by Jefferies, with a carrying value of $231.7 million and $218.1 million at August 31, 2020 and November 30, 2019, respectively, and our investment in certain funds managed by third-parties with a carrying value of $623.4 million at August 31, 2020.

Our asset management investments generated an investment return of $115.6 million and $150.3 million for the three and nine months ended August 31, 2020, respectively, and $24.9 million and $104.4 million for the three and nine months ended August 31, 2019, respectively.

Table of Contents JEFFERIES GROUP LLC AND SUBSIDIARIES Non-interest Expenses

Non-interest expenses were as follows (dollars in thousands):

Three Months Ended Nine Months Ended

August 31, August 31, 2020 2019 % Change 2020 2019 % Change Compensation and benefits $ 725,555 $ 411,936 76.1 % $ 1,932,332 $ 1,261,506 53.2 % Non-compensation expenses:

Floor brokerage and clearing fees 66,744 54,247 23.0 % 204,943 168,698 21.5 % Technology and communications 102,635 86,649 18.4 % 287,413 247,464 16.1 % Occupancy and equipment rental 27,053 29,300 (7.7)% 78,951 87,587 (9.9)% Business development 7,637 36,526 (79.1)% 45,953 103,430 (55.6)% Professional services 41,173 42,379 (2.8)% 127,832 117,372 8.9 % Underwriting costs 29,071 14,647 98.5 % 59,085 36,045 63.9 % Other 20,175 18,400 9.6 % 80,351 41,828 92.1 % Total non-compensation expenses 294,488 282,148 4.4 % 884,528 802,424 10.2 % Total non-interest expenses $ 1,020,043 $ 694,084 47.0 % $ 2,816,860 $ 2,063,930 36.5 %

Compensation and Benefits

• Compensation and benefits expense consists of salaries, benefits, commissions, annual cash compensation awards and the amortization of share-based and cash compensation awards to employees.

• Cash and share-based awards and a portion of cash awards granted to employees as part of year end compensation generally contain provisions such that employees who terminate their employment or are terminated without cause may continue to vest in their awards, so long as those awards are not forfeited as a result of other forfeiture provisions (primarily non-compete clauses) of those awards. Accordingly, the compensation expense for a portion of awards granted at year end as part of annual compensation is recorded in the year of the award. Compensation and benefits expense includes amortization expense associated with these awards to the extent there are respective future service periods. In addition, the senior executive awards contain market and performance conditions.

• Compensation and benefits expense was $725.6 million and $1,932.3 million for the three and nine months ended August 31, 2020, respectively, compared with $411.9 million and $1,261.5 million for the three and nine months ended August 31, 2019, respectively, increasing in line with our significant increase in net revenues. A significant portion of our compensation expense remains highly variable.

• Compensation and benefits expense as a percentage of Net revenues was 52.4% and 53.8% for the three and nine months ended August 31, 2020, respectively, compared with 53.0% and 53.3% for the three and nine months ended August 31, 2019, respectively.

• Compensation expense related to the amortization of share- and cash-based awards amounted to $73.0 million and $241.5 million for the three and nine months ended August 31, 2020, respectively, compared with $78.9 million and $224.7 million for the three and nine months ended August 31, 2019, respectively.

• Employee headcount was 3,893 at August 31, 2020 and 3,776 at August 31, 2019. Since August 31, 2019, our headcount increased, primarily as a result of our expansion in equities and research in Asia and Australia. We also had continued additions in corporate services to support business growth. The increase was partially offset by reductions in our asset management business due to the wind down of an asset management platform.

• Refer to Note 15, Compensation Plans, in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on compensation and benefits. 75

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Non-Compensation Expenses

Three Months Ended August 31, 2020 • Non-compensation expenses were $294.5 million for the three months ended August 31, 2020, an increase of $12.4 million, or 4.4%, compared with $282.1 million in the three months ended August 31, 2019. The increase in non-compensation expenses was primarily due to higher Underwriting costs primarily due to an increase in the number of transactions and higher Floor brokerage and clearing fees due to an increase in trading volumes across the equities and fixed income businesses, as well as growth in certain asset management funds and resultant trading activity. The increase was also due to higher Technology and communication expenses primarily related to increased market data and connectivity usage and costs associated with the development of various trading systems and continued costs associated with a largely remote working environment. The increase in non-compensation expenses was partially offset by lower Business development expenses as business travel and hosted events were curtailed due to COVID-19. • Non-compensation expenses as a percentage of Net revenues was 21.3% and 36.3% for the three months ended August 31, 2020 and August 31, 2019, respectively, demonstrating the operating leverage inherent in our business.

Nine Months Ended August 31, 2020

• Non-compensation expenses were $884.5 million for the nine months ended August 31, 2020, an increase of $82.1 million, or 10.2%, compared with $802.4 million in the nine months ended August 31, 2019. The increase in non-compensation expenses was primarily due to higher Floor brokerage and clearing fees due to an increase in trading volumes primarily across our equities businesses, as well as in the fixed income businesses, as well as growth in certain asset management funds and resultant trading activity and higher Underwriting costs primarily due to an increase in the number of transactions. The increase was also due to higher Technology and communication expenses primarily related to costs associated with the development of various trading systems, increased market data and connectivity usage and costs associated with our move to a largely remote working environment. Non-compensation expense also increased due to higher Other expenses, which included our charitable donations of $8.6 million, in memory of Peg Broadbent, our longstanding, esteemed CFO who tragically died from complications of COVID-19 in March and our donation made to various charities in support of the Australian wildfire relief effort. The increase in Other expenses also included a write-off of goodwill and intangible assets related to the wind down of an asset management platform. The increase in non-compensation expenses was partially offset by lower Business development expenses as business travel and hosted events were curtailed due to COVID-19. • Non-compensation expenses as a percentage of Net revenues was 24.6% and 33.9% for the nine months ended August 31, 2020 and August 31, 2019, respectively, demonstrating the operating leverage inherent in our business. Income Taxes

• For the three and nine months ended August 31, 2020, the provision for income taxes was $95.9 million and $203.9 million, respectively, equating to an effective tax rate of 26.4% in both periods. For the three and nine months ended August 31, 2019, the provision for income taxes was $18.3 million and $79.8 million, respectively, equating to an effective tax rate of 22.0% and 26.5%, respectively.

• The increase in the effective tax rate for the three months ended August 31, 2020, as compared to the prior year quarter, is primarily due to a larger net tax benefit recorded during the prior year quarter resulting from the settlement of various state and local exams and expiring statutes of limitation. The effective tax rate for the nine months ended August 31, 2020, as compared to the prior year period, is largely unchanged. • Refer to Note 16, Income Taxes, in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on income taxes.

Accounting Developments

For a discussion of recently issued accounting developments and their impact on our consolidated financial statements, see Note 3, Accounting Developments, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

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Critical Accounting Policies

Our consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), which requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and related notes. Actual results can and may differ from estimates. These differences could be material to our consolidated financial statements.

We believe our application of U.S. GAAP and the associated estimates are reasonable. Our accounting estimates are reevaluated, and adjustments are made when facts and circumstances dictate a change. Historically, we have found our application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates.

We believe our critical accounting policies (policies that are both material to the financial condition and results of operations and require our most subjective or complex judgments) are our valuation of certain financial instruments and assessment of goodwill.

For further discussions of the following significant accounting policies and other significant accounting policies, see Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2019 and Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Valuation of Financial Instruments

Financial instruments owned and Financial instruments sold, not yet purchased are recorded at fair value. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Unrealized gains or losses are generally recognized in Principal transactions revenues in our Consolidated Statements of Earnings.

For information on the composition of our Financial instruments owned and Financial instruments sold, not yet purchased recorded at fair value, see Note 4, Fair Value Disclosures, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Fair Value Hierarchy – In determining fair value, we maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs reflect our assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. We apply a hierarchy to categorize our fair value measurements broken down into three levels based on the transparency of inputs, where Level 1 uses observable prices in active markets and Level 3 uses valuation techniques that incorporate significant unobservable inputs. Greater use of management judgment is required in determining fair value when inputs are less observable or unobservable in the marketplace, such as when the volume or level of trading activity for a financial instrument has decreased and when certain factors suggest that observed transactions may not be reflective of orderly market transactions. Judgment must be applied in determining the appropriateness of available prices, particularly in assessing whether available data reflects current prices and/or reflects the results of recent market transactions. Prices or quotes are weighed when estimating fair value with greater reliability placed on information from transactions that are considered to be representative of orderly market transactions.

Fair value is a market based measure; therefore, when market observable inputs are not available, our judgment is applied to reflect those judgments that a market participant would use in valuing the same asset or liability. The availability of observable inputs can vary for different products. We use prices and inputs that are current as of the measurement date even in periods of market disruption or illiquidity. The valuation of financial instruments categorized within Level 3 of the fair value hierarchy involves the greatest extent of management judgment. (See Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2019 and Note 4, Fair Value Disclosures, in our consolidated financial statements included in this Quarterly Report on Form 10- Q for further information on the definitions of fair value, Level 1, Level 2 and Level 3 and related valuation techniques.)

Level 3 Assets and Liabilities – For information on the composition and activity of our Level 3 assets and Level 3 liabilities, see Note 4, Fair Value Disclosures, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Controls Over the Valuation Process for Financial Instruments – Our Independent Price Verification Group, independent of the trading function, plays an important role in determining that our financial instruments are appropriately valued and that fair value measurements are reliable. This is particularly important where prices or valuations that require inputs are less observable. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and that the assumptions are reasonable. Where a pricing model is used to determine fair value, these control processes include reviews of the pricing model’s theoretical soundness and appropriateness by risk management personnel with relevant expertise who are independent from the trading desks. In addition, recently executed comparable transactions and other observable market data are considered for purposes of validating assumptions underlying the model. 77

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Goodwill

At August 31, 2020, Goodwill recorded in our Consolidated Statement of Financial Condition is $1,644.0 million (3.5% of total assets). The nature and accounting for goodwill is discussed in Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2019 and Note 10, Goodwill and Intangible Assets, in our consolidated financial statements included in this Quarterly Report on Form 10-Q. Goodwill must be allocated to reporting units and tested for impairment at least annually, or when circumstances or events make it more likely than not that an impairment occurred. Goodwill is tested by comparing the estimated fair value of each reporting unit with its carrying value. Our annual goodwill impairment testing date is August 1, which did not indicate any goodwill impairment in any of our reporting units at August 1, 2020.

We use allocated tangible equity plus allocated goodwill and intangible assets for the carrying amount of each reporting unit. The amount of tangible equity allocated to a reporting unit is based on our cash capital model deployed in managing our businesses, which seeks to approximate the capital a business would require if it were operating independently. For further information on our Cash Capital Policy, refer to the Liquidity, Financial Condition and Capital Resources section herein. Intangible assets are allocated to a reporting unit based on either specifically identifying a particular intangible asset as pertaining to a reporting unit or, if shared among reporting units, based on an assessment of the reporting unit’s benefit from the intangible asset in order to generate results.

Estimating the fair value of a reporting unit requires management judgment and often involves the use of estimates and assumptions that could have a significant effect on whether or not an impairment charge is recorded and the magnitude of such a charge. Estimated fair values for our reporting units utilize market valuation methods that incorporate price-to-earnings and price-to-book multiples of comparable public companies. Under the market approach, the key assumptions are the selected multiples and our internally developed forecasts of future profitability, growth and return on equity for each reporting unit. The weight assigned to the multiples requires judgment in qualitatively and quantitatively evaluating the size, profitability and the nature of the business activities of the reporting units as compared to the comparable publicly-traded companies. In addition, as the fair values determined under the market approach represent a noncontrolling interest, we apply a control premium to arrive at the estimate fair value of each reporting unit on a controlling basis.

The carrying values of goodwill by reporting unit at August 31, 2020 are as follows: $565.2 million in Investment Banking, $160.5 million in Equities and Wealth Management, $917.9 million in Fixed Income and $0.4 million in Asset Management. The results of our assessment on August 1, 2020 indicated that all our reporting units had a fair value in excess of their carrying amounts based on current projections. The valuation methodology for our reporting units are sensitive to management’s forecasts of future profitability, which are a significant component of the valuation and come with a level of uncertainty regarding trading volumes and capital market transaction levels. Refer to Note 10, Goodwill and Intangible Assets, in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for details on the write-off of certain goodwill and intangible assets related to the wind down of an asset management platform.

Refer to Note 10, Goodwill and Intangible Assets, in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on goodwill.

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Liquidity, Financial Condition and Capital Resources

Our CFO and Global Treasurer are responsible for developing and implementing our liquidity, funding and capital management strategies. These policies are determined by the nature and needs of our day to day business operations, business opportunities, regulatory obligations, and liquidity requirements. Our actual levels of capital, total assets and financial leverage are a function of a number of factors, including asset composition, business initiatives and opportunities, regulatory requirements and cost and availability of both long term and short term funding. We have historically maintained a balance sheet consisting of a large portion of our total assets in cash and liquid marketable securities, arising principally from traditional securities brokerage and trading activity. The liquid nature of these assets provides us with flexibility in financing and managing our business. We maintain modest leverage to support our investment grade ratings. The growth of our balance sheet is supported by our equity and we have quantitative metrics in place to monitor leverage and double leverage. Our capital plan is robust, in order to sustain our operating model through stressed conditions. We maintain adequate financial resources to support business activities in both normal and stressed market conditions, including a buffer in excess of our regulatory, or other internal or external, requirements. Our access to funding and liquidity is stable and efficient to ensure that there is sufficient liquidity to meet our financial obligations in normal and stressed market conditions.

Our Balance Sheet

A business unit level balance sheet and cash capital analysis are prepared and reviewed with senior management on a weekly basis. As a part of this balance sheet review process, capital is allocated to all assets and gross balance sheet limits are adjusted, as necessary. This process ensures that the allocation of capital and costs of capital are incorporated into business decisions. The goals of this process are to protect the firm’s platform, enable our businesses to remain competitive, maintain the ability to manage capital proactively and hold businesses accountable for both balance sheet and capital usage.

We actively monitor and evaluate our financial condition and the composition of our assets and liabilities. We continually monitor our overall securities inventory, including the inventory turnover rate, which confirms the liquidity of our overall assets. Substantially all of our financial instruments are valued on a daily basis and we monitor and employ balance sheet limits for our various businesses.

The following table provides detail on key balance sheet asset and liability items (dollars in millions):

August 31, November 30,

2020 2019 % Change Total assets $ 46,660.4 $ 43,516.1 7.2 % Cash and cash equivalents 6,749.7 5,567.9 21.2 % Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations 986.1 796.8 23.8 % Financial instruments owned 17,555.7 16,363.4 7.3 % Financial instruments sold, not yet purchased 10,994.4 10,532.5 4.4 % Total Level 3 assets 432.9 332.2 30.3 %

Securities borrowed $ 7,268.4 $ 7,624.6 (4.7)% Securities purchased under agreements to resell 5,327.4 4,299.6 23.9 % Total securities borrowed and securities purchased under agreements to resell $ 12,595.8 $ 11,924.2 5.6 %

Securities loaned $ 1,929.7 $ 1,525.1 26.5 % Securities sold under agreements to repurchase 7,259.0 7,504.7 (3.3)% Total securities loaned and securities sold under agreements to repurchase $ 9,188.7 $ 9,029.8 1.8 %

Total assets at August 31, 2020 and November 30, 2019 were $46.7 billion and $43.5 billion, respectively, an increase of 7.2%. During the three and nine months ended August 31, 2020, average total assets were approximately 17.1% and 18.9% higher, respectively, than total assets at August 31, 2020.

Table of Contents JEFFERIES GROUP LLC AND SUBSIDIARIES Our total Financial instruments owned inventory was $17.6 billion at August 31, 2020, an increase of 7.3%, from $16.4 billion at November 30, 2019, respectively. During the nine months ended August 31, 2020, our total Financial instruments owned inventory increased primarily due to an increase in government and federal agency obligations, investments at fair value, mortgage-backed and other asset-backed securities and corporate debt securities, partially offset by decreases in municipal securities and loans and other receivables. Financial instruments sold, not yet purchased inventory was $11.0 billion at August 31, 2020, an increase of 4.4% from $10.5 billion at November 30, 2019, with the increase primarily driven by increases in government and federal agency and sovereign obligations, partially offset by a decrease in corporate equity securities. Our overall net inventory position was $6.6 billion and $5.8 billion at August 31, 2020 and November 30, 2019, respectively, with the increase primarily due to an increase in corporate equity and corporate debt securities, investments at fair value and mortgage-backed and other asset-backed securities, partially offset by decreases in sovereign obligations and municipal securities. Our Level 3 Financial instruments owned as a percentage of total Financial instruments owned was 2.5% and 1.9% at August 31, 2020 and November 30, 2019, respectively. The increase in our total Level 3 Financial instruments owned at August 31, 2020 as compared to November 30, 2019 is reflective of the increased pricing subjectivity experienced for certain financial assets during the nine months ended August 31, 2020 given the disruptive market impact of COVID-19.

Securities financing assets and liabilities include financing for our financial instruments trading activity, matched book transactions and mortgage finance transactions. Matched book transactions accommodate customers, as well as obtain securities for the settlement and financing of inventory positions. The aggregate outstanding balance of our securities borrowed and securities purchased under agreements to resell increased by 5.6% from November 30, 2019 to August 31, 2020, due to increases in our firm financing of our inventory, partially offset by an increase in the netting benefit for our collateralized financing transactions and a decrease in our matched book transactions. The outstanding balance of our securities loaned and securities sold under agreement to repurchase increased by 1.8% from November 30, 2019 to August 31, 2020, due to an increase in firm financing of our inventory, partially offset by an increase in the netting benefit for our collateralized financing transactions and a decrease in our matched book transactions. Our average month end balance of total reverse repos and stock borrows during the three and nine months ended August 31, 2020 were 30.2% and 33.3% higher, respectively, than the August 31, 2020 balance. Our average month end balance of total repos and stock loans during the three and nine months ended August 31, 2020 were 62.2% and 74.8% higher, respectively, than the August 31, 2020 balance.

The following table presents our period end balance, average balance and maximum balance at any month end within the periods presented for Securities purchased under agreements to resell and Securities sold under agreements to repurchase (dollars in millions):

Nine Months Ended Year Ended

August 31, November 30,

2020 2019 Securities Purchased Under Agreements to Resell: Period end $ 5,327 $ 4,300 Month end average 8,282 7,762 Maximum month end 12,061 11,589 Securities Sold Under Agreements to Repurchase: Period end $ 7,259 $ 7,505 Month end average 13,941 14,686 Maximum month end 18,979 19,654

Fluctuations in the balance of our repurchase agreements from period to period and intraperiod are dependent on business activity in those periods. Additionally, the fluctuations in the balances of our securities purchased under agreements to resell are influenced in any given period by our clients’ balances and our clients’ desires to execute collateralized financing arrangements via the repurchase market or via other financing products. Average balances and period end balances will fluctuate based on market and liquidity conditions and we consider the fluctuations intraperiod to be typical for the repurchase market.

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Leverage Ratios The following table presents total assets, total equity, total Jefferies Group LLC member’s equity and tangible Jefferies Group LLC member’s equity with the resulting leverage ratios (dollars in thousands):

August 31, November 30,

2020 2019 Total assets $ 46,660,448 $ 43,516,115

Total equity $ 6,504,454 $ 6,129,747

Total Jefferies Group LLC member’s equity $ 6,487,890 $ 6,125,472 Deduct: Goodwill and intangible assets (1,805,511) (1,814,141) Tangible Jefferies Group LLC member’s equity $ 4,682,379 $ 4,311,331

Leverage ratio (1) 7.2 7.1 Tangible gross leverage ratio (2) 9.6 9.7

(1) Leverage ratio equals total assets divided by total equity. (2) Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible Jefferies Group LLC member’s equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio. Liquidity Management

The key objectives of the liquidity management framework are to support the successful execution of our business strategies while ensuring sufficient liquidity through the business cycle and during periods of financial distress. Our liquidity management policies are designed to mitigate the potential risk that we may be unable to access adequate financing to service our financial obligations without material franchise or business impact.

The principal elements of our liquidity management framework are our Contingency Funding Plan, our Cash Capital Policy and our assessment of Maximum Liquidity Outflow (“MLO”).

Contingency Funding Plan. Our Contingency Funding Plan is based on a model of a potential liquidity contraction over a one year time period. This incorporates potential cash outflows during a liquidity stress event, including, but not limited to, the following:

• Repayment of all unsecured debt maturing within one year and no incremental unsecured debt issuance;

• Maturity rolloff of outstanding letters of credit with no further issuance and replacement with cash collateral;

• Higher margin requirements than currently exist on assets on securities financing activity, including repurchase agreements;

• Liquidity outflows related to possible credit downgrade;

• Lower availability of secured funding;

• Client cash withdrawals;

• The anticipated funding of outstanding investment and loan commitments; and

• Certain accrued expenses and other liabilities and fixed costs.

Cash Capital Policy. We maintain a cash capital model that measures long-term funding sources against requirements. Sources of cash capital include our equity and the noncurrent portion of long-term borrowings. Uses of cash capital include the following:

• Illiquid assets such as equipment, goodwill, net intangible assets, exchange memberships, deferred tax assets and certain investments;

• A portion of securities inventory that is not expected to be financed on a secured basis in a credit stressed environment (i.e., margin requirements); and • Drawdowns of unfunded commitments.

To ensure that we do not need to liquidate inventory in the event of a funding crisis, we seek to maintain surplus cash capital, which is reflected in the leverage ratios we maintain. Our total long-term capital of $12.5 billion at August 31, 2020 exceeded our cash capital requirements.

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MLO. Our businesses are diverse, and our liquidity needs are determined by many factors, including market movements, collateral requirements and client commitments, all of which can change dramatically in a difficult funding environment. During a liquidity crisis, credit-sensitive funding, including unsecured debt and some types of secured financing agreements, may be unavailable, and the terms (e.g., interest rates, collateral provisions and tenor) or availability of other types of secured financing may change. As a result of our policy to ensure we have sufficient funds to cover what we estimate may be needed in a liquidity crisis, we hold more cash and unencumbered securities and have greater long-term debt balances than our businesses would otherwise require. As part of this estimation process, we calculate an MLO that could be experienced in a liquidity crisis. MLO is based on a scenario that includes both a market-wide stress and firm-specific stress, characterized by some or all of the following elements:

• Global recession, default by a medium-sized sovereign, low consumer and corporate confidence, and general financial instability.

• Severely challenged market environment with material declines in equity markets and widening of credit spreads.

• Damaging follow-on impacts to financial institutions leading to the failure of a large bank.

• A firm-specific crisis potentially triggered by material losses, reputational damage, litigation, executive departure, and/or a ratings downgrade.

The following are the critical modeling parameters of the MLO:

• Liquidity needs over a 30-day scenario.

• A two-notch downgrade of our long-term senior unsecured credit ratings.

• No support from government funding facilities.

• A combination of contractual outflows, such as upcoming maturities of unsecured debt, and contingent outflows (e.g., actions though not contractually required, we may deem necessary in a crisis). We assume that most contingent outflows will occur within the initial days and weeks of a crisis.

• No diversification benefit across liquidity risks. We assume that liquidity risks are additive.

The calculation of our MLO under the above stresses and modeling parameters considers the following potential contractual and contingent cash and collateral outflows:

• All upcoming maturities of unsecured long-term debt, commercial paper, promissory notes and other unsecured funding products assuming we will be unable to issue new unsecured debt or rollover any maturing debt.

• Repurchases of our outstanding long-term debt in the ordinary course of business as a market maker.

• A portion of upcoming contractual maturities of secured funding trades due to either the inability to refinance or the ability to refinance only at wider haircuts (i.e., on terms which require us to post additional collateral). Our assumptions reflect, among other factors, the quality of the underlying collateral and counterparty concentration.

• Collateral postings to counterparties due to adverse changes in the value of our over-the-counter (“OTC”) derivatives and other outflows due to trade terminations, collateral substitutions, collateral disputes, collateral calls or termination payments required by a two-notch downgrade in our credit ratings.

• Variation margin postings required due to adverse changes in the value of our outstanding exchange-traded derivatives and any increase in initial margin and guarantee fund requirements by derivative clearing houses. • Liquidity outflows associated with our prime services business, including withdrawals of customer credit balances, and a reduction in customer short positions.

• Liquidity outflows to clearing banks to ensure timely settlements of cash and securities transactions.

• Draws on our unfunded commitments considering, among other things, the type of commitment and counterparty.

• Other upcoming large cash outflows, such as tax payments.

Based on the sources and uses of liquidity calculated under the MLO scenarios, we determine, based on a calculated surplus or deficit, additional long-term funding that may be needed versus funding through the repurchase financing market and consider any adjustments that may be necessary to our inventory balances and cash holdings. At August 31, 2020, we had sufficient excess liquidity to meet all contingent cash outflows detailed in the MLO. We regularly refine our model to reflect changes in market or economic conditions and our business mix.

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Sources of Liquidity

The following are financial instruments that are cash and cash equivalents or are deemed by management to be generally readily convertible into cash, marginable or accessible for liquidity purposes within a relatively short period of time (dollars in thousands):

Average Balance Three Months ended

August 31, 2020 August 31, 2020 (1) November 30, 2019 Cash and cash equivalents: Cash in banks $ 1,431,834 $ 2,290,893 $ 983,816 Money market investments (2) 5,317,872 3,304,669 4,584,087 Total cash and cash equivalents 6,749,706 5,595,562 5,567,903 Other sources of liquidity: Debt securities owned and securities purchased under agreements to resell (3) 1,122,768 988,506 972,624 Other (4) 216,088 282,436 377,296 Total other sources 1,338,856 1,270,942 1,349,920 Total cash and cash equivalents and other liquidity sources $ 8,088,562 $ 6,866,504 $ 6,917,823 Total cash and cash equivalents and other liquidity sources as % of Total assets 17.3% 15.9% Total cash and cash equivalents and other liquidity sources as % of Total assets less goodwill and intangible assets 18.0% 16.6%

(1) Average balances are calculated based on weekly balances. (2) At August 31, 2020 and November 30, 2019, $4,987.0 million and $4,496.7 million, respectively, was invested in U.S. government money funds that invest at least 99.5% of its total assets in cash, securities issued by the U.S. government and U.S. government-sponsored entities and repurchase agreements that are fully collateralized by cash or government securities. The remaining $330.9 million and $87.4 million at August 31, 2020 and November 30, 2019, respectively, are invested in AAA rated prime money funds. The average balance of U.S. government money funds for the three months ended August 31, 2020 was $3,240.4 million. (3) Consists of high quality sovereign government securities and reverse repurchase agreements collateralized by U.S. government securities and other high quality sovereign government securities; deposits with a central bank within the European Economic Area, Canada, Australia, Japan, Switzerland or the U.S.; and securities issued by a designated multilateral development bank and reverse repurchase agreements with underlying collateral comprised of these securities. (4) Other includes unencumbered inventory representing an estimate of the amount of additional secured financing that could be reasonably expected to be obtained from our Financial instruments owned that are currently not pledged after considering reasonable financing haircuts. In addition to the cash balances and liquidity pool presented above, the majority of financial instruments (both long and short) in our trading accounts are actively traded and readily marketable. At August 31, 2020, we had the ability to readily obtain repurchase financing for 74.4% of our inventory at haircuts of 10% or less, which reflects the liquidity of our inventory. In addition, as a matter of our policy, all of these assets have internal capital assessed, which is in addition to the funding haircuts provided in the securities finance markets. Additionally, certain of our Financial instruments owned, primarily consisting of bank loans, consumer loans and investments are predominantly funded by long term capital. Under our cash capital policy, we model capital allocation levels that are more stringent than the haircuts used in the market for secured funding; and we maintain surplus capital at these more stringent levels. We continually assess the liquidity of our inventory based on the level at which we could obtain financing in the marketplace for a given asset. Assets are considered to be liquid if financing can be obtained in the repurchase market or the securities lending market at collateral haircut levels of 10% or less. The following summarizes our financial instruments by asset class that we consider to be of a liquid nature and the amount of such assets that have not been pledged as collateral at August 31, 2020 and November 30, 2019 (in thousands):

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August 31, 2020 November 30, 2019 Unencumbered Unencumbered Liquid Financial Liquid Financial Liquid Financial Liquid Financial Instruments Instruments (2) Instruments Instruments (2) Corporate equity securities $ 2,356,376 $ 215,732 $ 2,403,589 $ 256,624 Corporate debt securities 2,075,043 18,327 1,893,605 29,412 U.S. government, agency and municipal securities 3,587,929 140,474 2,894,264 151,414 Other sovereign obligations 2,545,333 998,904 2,633,636 969,800 Agency mortgage-backed securities (1) 1,922,293 — 1,757,077 — Loans and other receivables 569,620 — 655,120 — Total $ 13,056,594 $ 1,373,437 $ 12,237,291 $ 1,407,250

(1) Consists solely of agency mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae. These securities include pass- through securities, securities backed by adjustable rate mortgages, collateralized mortgage obligations, commercial mortgage-backed securities and interest- and principal-only securities. (2) Unencumbered liquid balances represent assets that can be sold or used as collateral for a loan, but have not been.

Average liquid financial instruments were $16.1 billion and $16.4 billion for the three and nine months ended August 31, 2020, respectively, and $15.2 billion and $16.3 billion for the three and twelve months ended November 30, 2019, respectively. Average unencumbered liquid financial instruments were $1.3 billion and $1.4 billion for the three and nine months ended August 31, 2020, respectively, and $1.5 billion and $1.6 billion for the three and twelve months ended November 30, 2019, respectively.

In addition to being able to be readily financed at modest haircut levels, we estimate that each of the individual securities within each asset class above could be sold into the market and converted into cash within three business days under normal market conditions, assuming that the entire portfolio of a given asset class was not simultaneously liquidated. There are no restrictions on the unencumbered liquid securities, nor have they been pledged as collateral.

Sources of Funding and Capital Resources

Our assets are funded by equity capital, senior debt, securities loaned, securities sold under agreements to repurchase, customer free credit balances, bank loans and other payables.

Secured Financing

We rely principally on readily available secured funding to finance our inventory of financial instruments. Our ability to support increases in total assets is largely a function of our ability to obtain short and intermediate-term secured funding, primarily through securities financing transactions. We finance a portion of our long inventory and cover some of our short inventory by pledging and borrowing securities in the form of repurchase or reverse repurchase agreements (collectively “repos”), respectively. Approximately 68.8% of our cash and noncash repurchase financing activities use collateral that is considered eligible collateral by central clearing corporations. Central clearing corporations are situated between participating members who borrow cash and lend securities (or vice versa); accordingly, repo participants contract with the central clearing corporation and not one another individually. Therefore, counterparty credit risk is borne by the central clearing corporation which mitigates the risk through initial margin demands and variation margin calls from repo participants. The comparatively large proportion of our total repo activity that is eligible for central clearing reflects the high quality and liquid composition of the inventory we carry in our trading books. For those asset classes not eligible for central clearing house financing, we seek to execute our bi-lateral financings on an extended term basis and the tenor of our repurchase and reverse repurchase agreements generally exceeds the expected holding period of the assets we are financing. The weighted average maturity of cash and noncash repurchase agreements for non-clearing corporation eligible funded inventory is approximately six months at August 31, 2020.

Our ability to finance our inventory via central clearinghouses and bi-lateral arrangements is augmented by our ability to draw bank loans on an uncommitted basis under our various banking arrangements. At August 31, 2020, short-term borrowings, which must be repaid within one year or less and include bank loans and overdrafts, borrowings under revolving credit facilities, floating rate puttable notes and equity-linked notes totaled $805.4 million. Interest under the bank lines is generally at a spread over the federal funds rate. Letters of credit are used in the normal course of business mostly to satisfy various collateral requirements in favor of exchanges in lieu of depositing cash or securities. Average daily short-term borrowings outstanding were $643.5 million and $592.3 million for the three and nine months ended August 31, 2020, respectively.

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Our short-term borrowings include the following facilities:

• Credit Facility. One of our subsidiaries has a credit facility agreement (“Credit Facility”) with JPMorgan Chase Bank, N.A. under which we have borrowed $246.0 million at August 31, 2020. Interest is based on an annual alternative base rate or an adjusted London Interbank Offered Rate (“LIBOR”), as defined in the Credit Facility. The Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain a specified level of tangible net worth. The covenants also require the borrower to maintain specified leverage amounts and impose certain restrictions on the borrower’s future indebtedness. At August 31, 2020, we were in compliance with all debt covenants under the Credit Facility.

• Royal Bank of Canada (“RBC”) Credit Facility. One of our subsidiaries has a credit facility agreement with the Royal Bank of Canada (“RBC Credit Facility”) for a committed amount of $200.0 million. Interest is based on a rate per annum equal to LIBOR plus an applicable margin of 2.05%. The RBC Credit Facility contains certain covenants that, among other things, require Jefferies Group LLC to maintain a specified level of tangible net worth. The covenants also impose certain restrictions on the borrower’s future indebtedness. At August 31, 2020, we were in compliance with all debt covenants under the RBC Credit Facility.

• Intraday Credit Facility. The Bank of New York Mellon has agreed to make revolving intraday credit advances (“Intraday Credit Facility”) for an aggregate committed amount of $150.0 million. The Intraday Credit facility is structured so that advances are generally repaid before the end of each business day. However, if an advance is not repaid by the end of any business day, the advance is converted to an overnight loan. Intraday loans accrue interest at a rate of 0.12%. Interest is charged based on the number of minutes in a day the advance is outstanding. Overnight loans are charged interest at the base rate plus 3% on a daily basis. The base rate is the higher of the federal funds rate plus 0.50% or the prime rate in effect at that time. The Intraday Credit Facility contains financial covenants, which include a minimum regulatory net capital requirement for Jefferies LLC. At August 31, 2020, we were in compliance with all debt covenants under the Intraday Credit Facility.

For additional details on our short-term borrowings, refer to Note 11, Short-Term Borrowings, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

In addition to the above financing arrangements, we issue notes backed by eligible collateral under a master repurchase agreement, which provides an additional financing source for our inventory (our “repurchase agreement financing program”). The notes issued under the program are presented within Other secured financings in our Consolidated Statements of Financial Condition. At August 31, 2020, the outstanding notes were $2.8 billion, bear interest at a spread over LIBOR and mature from September 2020 to May 2022.

For additional details on our repurchase agreement financing program, refer to Note 8, Variable Interest Entities, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Total Long-Term Capital At August 31, 2020 and November 30, 2019, we had total long-term capital of $12.5 billion and $12.3 billion, respectively, resulting in a long-term debt to equity capital ratio of 0.92:1 and 1.01:1, respectively. See “Equity Capital” herein for further information on our change in total equity. Our total long-term capital base at August 31, 2020 and November 30, 2019 was as follows (in thousands):

August 31, 2020 November 30, 2019 Long-Term Debt (1) $ 5,987,433 $ 6,213,648 Total Equity 6,504,454 6,129,747 Total Long-Term Capital $ 12,491,887 $ 12,343,395

(1) Long-term debt at August 31, 2020 excludes $761.4 million of our 6.875% Senior Notes, as these notes mature on April 15, 2021, $189.6 million of our outstanding borrowings under our senior secured revolving credit facility (“Revolving Credit Facility”) and $50.0 million of our secured bank loan. Long-term debt at November 30, 2019 excludes $550.6 million of our 2.375% Euro Medium Term Notes, as these notes matured on May 20, 2020, $189.1 million of our outstanding borrowings under our Revolving Credit Facility and $50.0 million of our secured bank loan.

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Long-Term Debt

During the nine months ended August 31, 2020, long-term debt decreased $14.9 million, primarily due to the maturity and repayment of our 2.375% Euro Medium Term Notes, partially offset by approximately $244.4 million structured notes issuances, net of retirements, and a $150.0 million principal amount issuance of additional 5.125% Senior Notes due 2023. At August 31, 2020, all of our structured notes contain various interest rate payment terms and are accounted for at fair value, with changes in fair value resulting from a change in the instrument-specific credit risk presented in other comprehensive income and changes in fair value resulting from non-credit components recognized in Principal transactions revenues. The fair value of all of our structured notes at August 31, 2020 was $1,522.1 million. Subsequent to quarter-end, on October 7, 2020, we issued 2.75% Senior Notes with a principal amount of $500.0 million, due 2032. For further information, see Note 12, Long-Term Debt, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

We have a Revolving Credit Facility with a group of commercial banks for an aggregate principal amount of $190.0 million. At August 31, 2020, borrowings under the Revolving Credit Facility amounted to $189.6 million. Interest is based on an annual alternative base rate or an adjusted LIBOR, as defined in the Revolving Credit Facility. The Revolving Credit Facility contains certain covenants that, among other things, requires Jefferies Group LLC to maintain specified level of tangible net worth and liquidity amounts, and imposes certain restrictions on future indebtedness of and requires specified levels of regulated capital for certain of our subsidiaries. Throughout the period and at August 31, 2020, no instances of noncompliance with the Revolving Credit Facility covenants occurred and we expect to remain in compliance given our current liquidity and anticipated funding requirements given our business plan and profitability expectations. For further information, see Note 12, Long-Term Debt, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

At August 31, 2020, our long-term debt, excluding the Revolving Credit Facility and the Secured Bank Loan, has a weighted average maturity of approximately 9.6 years.

Our long-term debt ratings at August 31, 2020 are as follows:

Rating Outlook Moody’s (1) Baa3 Stable S&P (2) BBB Negative Fitch Ratings BBB Stable (1) On April 15, 2020, Moody’s affirmed our rating of Baa3 and rating outlook of stable. (2) On April 14, 2020, S&P affirmed our rating of BBB and revised our rating outlook from stable to negative. At August 31, 2020, the long-term ratings on our principal operating broker-dealers, Jefferies LLC and Jefferies International Limited (a broker-dealer in the United Kingdom (“U.K.”)) are as follows:

Jefferies LLC Jefferies International Limited Rating Outlook Rating Outlook Moody’s (1) Baa2 Stable Baa2 Stable S&P (2) BBB+ Negative BBB+ Negative

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(1) On April 15, 2020, Moody’s affirmed our rating of Baa2 and rating outlook of stable on Jefferies LLC and Jefferies International Limited. (2) On April 14, 2020, S&P affirmed our rating of BBB+ and revised our rating outlook from stable to negative on Jefferies LLC and Jefferies International Limited. Access to external financing to finance our day to day operations, as well as the cost of that financing, is dependent upon various factors, including our debt ratings. Our current debt ratings are dependent upon many factors, including industry dynamics, operating and economic environment, operating results, operating margins, earnings trend and volatility, balance sheet composition, liquidity and liquidity management, our capital structure, our overall risk management, business diversification and our market share and competitive position in the markets in which we operate. Deteriorations in any of these factors could impact our credit ratings. While certain aspects of a credit rating downgrade are quantifiable pursuant to contractual provisions, the impact on our business and trading results in future periods is inherently uncertain and depends on a number of factors, including the magnitude of the downgrade, the behavior of individual clients and future mitigating action taken by us.

In connection with certain over-the-counter derivative contract arrangements and certain other trading arrangements, we may be required to provide additional collateral to counterparties, exchanges and clearing organizations in the event of a credit rating downgrade. At August 31, 2020, the amount of additional collateral that could be called by counterparties, exchanges and clearing organizations under the terms of such agreements in the event of a downgrade of our long-term credit rating below investment grade was $76.0 million. For certain foreign clearing organizations, credit rating is only one of several factors employed in determining collateral that could be called. The above represents management’s best estimate for additional collateral to be called in the event of a credit rating downgrade. The impact of additional collateral requirements is considered in our Contingency Funding Plan and calculation of MLO, as described above.

Equity Capital

As compared to November 30, 2019, the $362.4 million increase to total Jefferies Group LLC member’s equity at August 31, 2020 is primarily attributed to net earnings, partially offset by distributions to Jefferies. During the three and nine months ended August 31, 2020, we recognized gains due to foreign currency translation adjustments, net of tax, of $74.9 million and $37.3 million, respectively, the majority of which is due to our £865.2 million investment in our London subsidiaries at August 31, 2020. The gains or losses resulting from translating foreign currency financial statements into U.S. dollars, net of hedging gains or losses and taxes, if any, are included in Other comprehensive income. For further information on foreign currency translations, see Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2019. During the nine months ended August 31, 2020, we paid distributions of $164.7 million to Jefferies, based on our results for the nine months ended May 31, 2020. At August 31, 2020, we have accrued a distribution payable of $134.0 million, based on our results for the three months ended August 31, 2020. Net Capital

As a broker-dealer registered with the SEC and member firms of the Financial Industry Regulatory Authority (“FINRA”), Jefferies LLC is subject to the Securities and Exchange Commission Uniform Net Capital Rule (“Rule 15c3-1”), which requires the maintenance of minimum net capital, and has elected to calculate minimum capital requirements using the alternative method permitted by Rule 15c3-1 in calculating net capital. Jefferies LLC, as a dually-registered U.S. broker-dealer and futures commission merchant (“FCM”), is also subject to Rule 1.17 of the Commodity Futures Trading Commission (“CFTC”), which sets forth minimum financial requirements. The minimum net capital requirement in determining excess net capital for a dually-registered U.S. broker-dealer and FCM is equal to the greater of the requirement under Rule 15c3-1 or CFTC Rule 1.17.

At August 31, 2020, Jefferies LLC’s net capital and excess net capital were as follows (in thousands):

Net Capital Excess Net Capital Jefferies LLC $ 1,612,465 $ 1,531,871

FINRA is the designated examining authority for Jefferies LLC and the National Futures Association is the designated self-regulatory organization for Jefferies LLC as an FCM.

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Certain other U.S. and non-U.S. subsidiaries are subject to capital adequacy requirements as prescribed by the regulatory authorities in their respective jurisdictions, including Jefferies International Limited which is subject to the regulatory supervision and requirements of the Financial Conduct Authority in the U.K. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law on July 21, 2010. The Dodd-Frank Act contains provisions that require the registration of all swap dealers, major swap participants, security-based swap dealers, and/or major security-based swap participants. The CFTC has finalized rules establishing capital requirements and financial reporting requirements for CFTC-registered swap dealers not subject to regulation by a banking regulator. We expect that these provisions will result in modifications to the regulatory capital requirements of some of our entities, and will result in some of our other entities becoming subject to regulatory capital requirements for the first time, including Jefferies Financial Services, Inc., which registered as a swap dealer with the CFTC during January 2013 and Jefferies Financial Products LLC, which registered during August 2014. We may also be required in the future to register one or more additional subsidiaries as security-based swap dealers with the SEC. Compliance with these rules is required by October 6, 2021.

The regulatory capital requirements referred to above may restrict our ability to withdraw capital from our regulated subsidiaries. The U.K. formally withdrew from the European Union (“EU”) on January 31, 2020 and entered a transition period that is scheduled to expire on December 31, 2020. During the transition period, existing arrangements between the U.K. and EU will remain in place while the U.K. and EU seek to negotiate a free trade agreement that will govern their future trading relationship. We have taken steps to ensure our ability to provide services to our European clients without interruption. As such, we have established a wholly-owned subsidiary of our U.K. broker-dealer in Germany, which has been approved as an authorized Market in Financial Instruments Directive investment firm by the German regulator and which will enable us to conduct business across all of our European investment banking, fixed income and equity platforms. The new entity started trading in 2019 with EU clients with further clients migrating throughout 2020, and our plans contemplate providing sufficient capital pursuant to the regulatory requirements for the planned operations as well pursuant to requirements of relevant clearing organizations. Off-Balance Sheet Arrangements and Contractual Obligations

Off-Balance Sheet Arrangements

We have contractual commitments arising in the ordinary course of business for securities loaned or purchased under agreements to resell, repurchase agreements, future purchases and sales of foreign currencies, securities transactions on a when-issued basis and underwriting. Each of these financial instruments and activities contains varying degrees of off-balance sheet risk whereby the fair values of the securities underlying the financial instruments may be in excess of, or less than, the contract amount. The settlement of these transactions is not expected to have a material effect upon our consolidated financial statements.

In the normal course of business, we engage in other off-balance sheet arrangements, including derivative contracts. Neither derivatives’ notional amounts nor underlying instrument values are reflected as assets or liabilities in our Consolidated Statements of Financial Condition. Rather, the fair values of derivative contracts are reported in our Consolidated Statements of Financial Condition as Financial instruments owned or Financial instruments sold, not yet purchased as applicable. Derivative contracts are reflected net of cash paid or received pursuant to credit support agreements and are reported on a net by counterparty basis when a legal right of offset exists under an enforceable master netting agreement. For additional information about our accounting policies and our derivative activities, see Note 2, Summary of Significant Accounting Policies, in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2019 and Note 4, Fair Value Disclosures, and Note 5, Derivative Financial Instruments, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

We are routinely involved with variable interest entities (“VIEs”) in the normal course of business. At August 31, 2020, we did not have any commitments to purchase assets from these VIEs. For additional information regarding our involvement with VIEs, see Note 7, Securitization Activities, and Note 8, Variable Interest Entities, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Due to the uncertainty regarding the timing and amounts that will ultimately be paid, our liability for unrecognized tax benefits has been excluded from the below contractual obligations table. See Note 16, Income Taxes, in our consolidated financial statements included in this Quarterly Report on Form 10-Q for further information for further information.

For information on our commitments and guarantees, see Note 17, Commitments, Contingencies and Guarantees, in our consolidated financial statements included in this Quarterly Report on Form 10-Q. 88

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Contractual Obligations

The table below provides information about our contractual obligations at August 31, 2020. The table presents principal cash flows with expected maturity dates (in millions):

Expected Maturity Date 2022 2024 2026

and and and

2020 2021 2023 2025 Later Total Debt obligations: Unsecured long-term debt (contractual principal payments net of unamortized discounts and premiums) (1) $ — $ 761.4 $ 768.6 $ 617.7 $ 4,601.1 $ 6,748.8 Revolving credit facility (1) — 189.6 — — — 189.6 Secured bank loan (1) — 50.0 — — — 50.0 Interest payment obligations on long-term debt (2) 98.2 289.3 491.3 431.7 1,685.0 2,995.5 Total $ 98.2 $ 1,290.3 $ 1,259.9 $ 1,049.4 $ 6,286.1 $ 9,983.9

(1) For additional information on long-term debt, see Note 12, Long-Term Debt, in our consolidated financial statements included in this Quarterly Report on Form 10-Q. (2) Amounts based on applicable interest rates at August 31, 2020.

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Risk Management

Overview

Risk is an inherent part of our business and activities. The extent to which we properly and effectively identify, assess, monitor and manage each of the various types of risk involved in our activities is critical to our financial soundness, viability and profitability. Accordingly, we have a comprehensive risk management approach, with a formal governance structure and processes to identify, assess, monitor and manage risk. Principal risks involved in our business activities include market, credit, liquidity and capital, operational, legal and compliance, new business and reputational risk.

Risk management is a multifaceted process that requires communication, judgment and knowledge of financial products and markets. Our risk management process encompasses the active involvement of executive and senior management, and also many departments independent of the revenue-producing business units, including the Risk Management, Operations, Compliance, Legal and Finance Departments. Our risk management policies, procedures and methodologies are flexible in nature and are subject to ongoing review and modification.

In achieving our strategic business objectives, our risk appetite incorporates keeping our clients’ interests at the top of our priority list and ensuring we are in compliance with applicable laws, rules and regulations, as well as adhering to the highest ethical standards. We undertake prudent and conservative risk-taking that protects the capital base and franchise, utilizing risk limits and tolerances that avoid outsized risk-taking. We maintain a diversified business mix and avoid significant concentrations to any sector, product, geography, or activity and set quantitative concentration limits to manage this risk. We consider contagion, second order effects and correlation in our risk assessment process and actively seek out value opportunities of all sizes. We manage the risk of opportunities larger than our approved risk levels through risk sharing and risk distribution, sell-down and hedging as appropriate. We have a limited appetite for illiquid assets and complex derivative financial instruments. We maintain the asset quality of our balance sheet through conducting trading activity in liquid markets and generally ensure high turnover of our inventory. We subject less liquid positions and derivative financial instruments to oversight and use a wide variety of specific metrics, limits, and constraints to manage these risks. We protect our reputation and franchise, as well as our standing within the market. We operate a federated approach to risk management with risk oversight responsibilities assigned to those areas of the business that have the appropriate knowledge.

For discussion of liquidity and capital risk management, refer to the “Liquidity, Financial Condition and Capital Resources” section herein.

Governance and Risk Management Structure and Risk Policy Framework

For a discussion of our governance and risk management structure and our risk management framework, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended November 30, 2019.

Risk Considerations We apply a comprehensive framework of limits on a variety of key metrics to constrain the risk profile of our business activities. The size of the limits reflects our risk tolerance for a certain activity under normal business conditions. Key metrics included in our risk management framework include inventory position and exposure limits on a gross and net basis, scenario analysis and stress tests, Value-at-Risk (“VaR”), sensitivities, exposure concentrations, aged inventory, amount of Level 3 assets, counterparty exposure, leverage and cash capital.

Market Risk

Market risk is defined as the risk of loss due to fluctuations in the market value of financial assets and liabilities attributable to changes in market variables.

Our market risk principally arises from interest rate risk, from exposure to changes in the yield curve, the volatility of interest rates, and credit spreads, and from equity price risks from exposure to changes in prices and volatilities of individual equities, equity baskets and equity indices. In addition, commodity price risk results from exposure to the changes in prices and volatilities of individual commodities, commodity baskets and commodity indices, and foreign exchange risk results from changes in foreign currency rates.

Market risk is present in our market making, proprietary trading, underwriting, specialist and investing activities and is principally managed by diversifying exposures, controlling position sizes, and establishing economic hedges in related securities or derivatives. Due to imperfections in correlations, gains and losses can occur even for positions that are economically hedged. Position limits in trading and inventory accounts are established and monitored on an ongoing basis. Each day, consolidated position and exposure reports are prepared and distributed to various levels of management, which enable management to monitor inventory levels and the results of our trading businesses.

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VaR

VaR is a statistical estimate of the potential loss from adverse market movements over a specified time horizon within a specified probability (confidence level). It provides a common risk measure across financial instruments, markets and asset classes. We estimate VaR using a model that simulates revenue and loss distributions on our trading portfolios by applying historical market changes to the current portfolio. We calculate a one-day VaR using a one year look-back period measured at a 95% confidence level.

As with all measures of VaR, our estimate has inherent limitations due to the assumption that historical changes in market conditions are representative of the future. Furthermore, the VaR model measures the risk of a current static position over a one-day horizon and might not capture the market risk over a longer time horizon where moves may be more extreme. Previous changes in market risk factors may not generate accurate predictions of future market movements. While we believe the assumptions and inputs in our risk model are reasonable, we could incur losses greater than the reported VaR. Consequently, this VaR estimate is only one of a number of tools we use in our daily risk management activities.

Our average daily VaR increased to $10.46 million for the three months ended August 31, 2020 from $9.16 million for the three months ended May 31, 2020. The increase was primarily driven by continued market volatility early in the current quarter, as well as increased equity exposure as we continue to build out our Asset Management business, partially offset by a decrease in interest rate risk and an increase in the diversification benefit across asset classes and business divisions. The following table illustrates each separate component of VaR for each component of market risk by interest rate, equity, currency and commodity products, as well as for our overall trading positions using the past 365 days of historical data (in millions):

Daily VaR (1) Value-at-Risk in Trading Portfolios VaR at Daily VaR for the Three Months Ended Daily VaR for the Three Months Ended May August 31, August 31, 2020 VaR at May 31, 2020 Risk Categories 2020 Average High Low 31, 2020 Average High Low Interest Rates $ 8.92 $ 8.65 $ 11.06 $ 7.19 $ 10.34 $ 9.31 $ 12.50 $ 5.96 Equity Prices 9.95 8.16 13.07 4.79 8.69 5.89 9.30 3.68 Currency Rates 0.26 0.21 2.17 0.12 0.21 0.20 0.39 0.10 Commodity Prices 0.37 0.91 1.56 0.24 1.18 0.64 1.18 0.28 Diversification Effect (2) (5.03) (7.47) N/A N/A (10.25) (6.88) N/A N/A Firmwide $ 14.47 $ 10.46 $ 14.47 $ 7.62 $ 10.17 $ 9.16 $ 10.81 $ 6.81

(1) For the VaR numbers reported above, a one-day time horizon, with a one year look-back period, and a 95% confidence level were used. (2) The diversification effect is not applicable for the maximum and minimum VaR values as the firmwide VaR and the VaR values for the four risk categories might have occurred on different days during the period. The aggregated VaR presented here is less than the sum of the individual components (i.e., interest rate risk, foreign exchange rate risk, equity risk and commodity price risk) due to the benefit of diversification among the four risk categories. Diversification benefit equals the difference between aggregated VaR and the sum of VaRs for the four risk categories and arises because the market risk categories are not perfectly correlated.

The primary method used to test the efficacy of the VaR model is to compare our actual daily net revenue for those positions included in our VaR calculation with the daily VaR estimate. This evaluation is performed at various levels of the trading portfolio, from the overall level down to specific business lines. For the VaR model, trading related revenue is defined as principal transactions revenues, trading related commissions, revenue from securitization activities and net interest income.

For a 95% confidence one day VaR model (i.e., no intra-day trading), assuming current changes in market value are consistent with the historical changes used in the calculation, net trading losses would not be expected to exceed the VaR estimates more than twelve times on an annual basis (i.e., once in every 20 days). During the three months ended August 31, 2020, results of the evaluation at the aggregate level demonstrated one day when the net trading loss exceeded the 95% one day VaR.

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The chart below reflects our daily VaR over the last four quarters with the increase in the three months ended August 31, 2020 due to continued market volatility and as certain businesses took advantage of the market rebound. Daily Net Trading Revenue

There were eight days with trading losses out of a total of 65 trading days in the three months ended August 31, 2020. The histogram below presents the distribution of our actual daily net trading revenue for substantially all of our trading activities for the three months ended August 31, 2020 (in millions).

Other Risk Measures

Certain positions within financial instruments are not included in the VaR model because VaR is not the most appropriate measure of risk. Accordingly, Risk Management has additional procedures in place to assure that the level of potential loss that would arise from market movements are within acceptable levels. Such procedures include performing stress tests, monitoring concentration risk and tracking price target/stop loss levels. The table below presents the potential reduction in net income associated with a 10% stress of the fair value of the positions that are not included in the VaR model at August 31, 2020 (in thousands):

10% Sensitivity Investment in funds (1) $ 92,033 Private investments 20,249 Corporate debt securities in default 6,770 Trade claims 4,052

(1) Includes investments in hedge funds, fund of funds and private equity funds. For additional details on these investments refer to “Investments at Fair Value” within Note 4, Fair Value Disclosures, in our consolidated financial statements included in this Quarterly Report on Form 10-Q. 92

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The impact of changes in our own credit spreads on our structured notes for which the fair value option was elected is not included in VaR. The estimated credit spread risk sensitivity for each one basis point widening in our own credit spreads on financial liabilities for which the fair value option was elected was an increase in value of approximately $1.2 million at August 31, 2020, which is included in other comprehensive income.

Stress Tests and Scenario Analysis Stress tests are used to analyze the potential impact of specific events or extreme market moves on the current portfolio both firm-wide and within business segments. Stress testing is an important part of our risk management approach because it allows us to quantify our exposure to tail risks, highlight potential loss concentrations, undertake risk/reward analysis, set risk controls and overall assess and mitigate our risk.

We employ a range of stress scenarios, which comprise both historical market price and rate changes and hypothetical market environments, and generally involve simultaneous changes of many risk factors. Indicative market changes in the scenarios include, but are not limited to, a large widening of credit spreads, a substantial decline in equities markets, significant moves in selected emerging markets, large moves in interest rates and changes in the shape of the yield curve.

Unlike our VaR, which measures potential losses within a given confidence interval, stress scenarios do not have an associated implied probability. Rather, stress testing is used to estimate the potential loss from market moves that tend to be larger than those embedded in the VaR calculation. Stress testing complements VaR to cover for potential limitations of VaR such as the breakdown in correlations, non-linear risks, tail risk and extreme events and capturing market moves beyond the confidence levels assumed in the VaR calculations.

Stress testing is performed and reported at least weekly as part of our risk management process and on an ad hoc basis in response to market events or concerns. Current stress tests provide estimated revenue and loss of the current portfolio through a range of both historical and hypothetical events. The stress scenarios are reviewed and assessed at least annually so that they remain relevant and up to date with market developments. Additional hypothetical scenarios are also conducted on a sub-portfolio basis to assess the impact of any relevant idiosyncratic stress events as needed.

Counterparty Credit Risk

Credit risk is the risk of loss due to adverse changes in a counterparty’s credit worthiness or its ability or willingness to meet its financial obligations in accordance with the terms and conditions of a financial contract.

We are exposed to credit risk as a trading counterparty to other broker-dealers and customers, as a direct lender and through extending loan commitments, as a holder of securities and as a member of exchanges and clearing organizations. Credit exposure exists across a wide-range of products, including cash and cash equivalents, loans, securities finance transactions and over-the-counter derivative contracts. The main sources of credit risk are:

• Loans and lending arising in connection with our investment banking and capital markets activities, which reflects our exposure at risk on a default event with no recovery of loans. Current exposure represents loans that have been drawn by the borrower and lending commitments that are outstanding. In addition, credit exposures on forward settling traded loans are included within our loans and lending exposures for consistency with the balance sheet categorization of these items. Loans and lending also arise in connection with our portion of a Secured Revolving Credit Facility that is with us and Massachusetts Mutual Life Insurance Company, to be funded equally, to support loan underwritings by Jefferies Finance. For further information on this facility, refer to Note 9, Investments, in our consolidated financial statements included in this Quarterly Report on Form 10-Q. In addition, we have loans outstanding to certain of our officers and employees (none of whom are executive officers or directors). For further information on these employee loans, refer to Note 20, Related Party Transactions, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

• Securities and margin financing transactions, which reflect our credit exposure arising from reverse repurchase agreements, repurchase agreements and securities lending agreements to the extent the fair value of the underlying collateral differs from the contractual agreement amount and from margin provided to customers.

• OTC derivatives, which are reported net by counterparty when a legal right of setoff exists under an enforceable master netting agreement. OTC derivative exposure is based on a contract at fair value, net of cash collateral received or posted under credit support agreements. In addition, credit exposures on forward settling trades are included within our derivative credit exposures.

• Cash and cash equivalents, which includes both interest-bearing and non-interest-bearing deposits at banks.

Credit is extended to counterparties in a controlled manner and in order to generate acceptable returns, whether such credit is granted directly or is incidental to a transaction. All extensions of credit are monitored and managed as a whole to limit exposure to loss related to credit risk. Credit risk is managed according to the Credit Risk Policy, which sets out the process for identifying

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counterparty credit risk, establishing counterparty limits, and managing and monitoring credit limits. The policy includes our approach for:

• Client on-boarding and approving counterparty credit limits;

• Negotiating, approving and monitoring credit terms in legal and master documentation;

• Determining the analytical standards and risk parameters for ongoing management and monitoring credit risk books;

• Actively managing daily exposure, exceptions and breaches; and

• Monitoring daily margin call activity and counterparty performance.

Counterparty credit exposure limits are granted within our credit ratings framework, as detailed in the Credit Risk Policy. The Credit Risk Department assesses counterparty credit risk and sets credit limits at the counterparty master agreement level. Limits must be approved by appropriate credit officers and initiated in our credit and trading systems before trading commences. All credit exposures are reviewed against approved limits on a daily basis.

Our Secured Revolving Credit Facility, which supports loan underwritings by Jefferies Finance, is governed under separate policies other than the Credit Risk Policy and is approved by our Board of Directors. The loans outstanding to certain of our officers and employees are extended pursuant to a review by our most senior management.

Current counterparty credit exposures at August 31, 2020 and November 30, 2019 are summarized in the tables below and provided by credit quality, region and industry (in millions). Credit exposures presented take netting and collateral into consideration by counterparty and master agreement. Collateral taken into consideration includes both collateral received as cash as well as collateral received in the form of securities or other arrangements. Current exposure is the loss that would be incurred on a particular set of positions in the event of default by the counterparty, assuming no recovery. Current exposure equals the fair value of the positions less collateral. Issuer risk is the credit risk arising from inventory positions (for example, corporate debt securities and secondary bank loans). Issuer risk is included in our country risk exposure tables below.

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Counterparty Credit Exposure by Credit Rating Securities and Margin Cash and Total with Cash and Loans and Lending Finance OTC Derivatives Total Cash Equivalents Cash Equivalents At At At At At At November November November November November November 30, 30, 30, 30, 30, 30, August 31, August 31, August 31, August 31, August 31, August 31, 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

AAA Range $ — $ — $ 0.3 $ 1.5 $ 0.1 $ — $ 0.4 $ 1.5 $ 5,317.9 $ 4,584.1 $ 5,318.3 $ 4,585.6

AA Range 45.1 45.2 100.3 43.0 21.5 3.7 166.9 91.9 3.9 5.3 170.8 97.2

A Range 0.2 1.1 466.2 531.9 133.7 152.4 600.1 685.4 1,425.1 976.3 2,025.2 1,661.7 BBB Range 250.0 250.2 122.5 140.9 24.9 48.3 397.4 439.4 1.5 1.6 398.9 441.0

BB or Lower 40.0 15.0 17.8 6.6 239.7 154.1 297.5 175.7 0.1 — 297.6 175.7

Unrated 98.9 94.2 — — 0.2 6.8 99.1 101.0 1.2 0.6 100.3 101.6

Total $ 434.2 $ 405.7 $ 707.1 $ 723.9 $ 420.1 $ 365.3 $ 1,561.4 $ 1,494.9 $ 6,749.7 $ 5,567.9 $ 8,311.1 $ 7,062.8

Counterparty Credit Exposure by Region Securities and Margin Cash and Total with Cash and Loans and Lending Finance OTC Derivatives Total Cash Equivalents Cash Equivalents At At At At At At November November November November November November 30, 30, 30, 30, 30, 30, August 31, August 31, August 31, August 31, August 31, August 31, 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

Asia/Latin America/Other $ 15.0 $ 15.0 $ 51.0 $ 50.5 $ 7.1 $ 0.3 $ 73.1 $ 65.8 $ 226.0 $ 100.4 $ 299.1 $ 166.2

Europe 0.1 — 282.0 324.1 62.5 101.1 344.6 425.2 92.1 74.1 436.7 499.3

North America 419.1 390.7 374.1 349.3 350.5 263.9 1,143.7 1,003.9 6,431.6 5,393.4 7,575.3 6,397.3

Total $ 434.2 $ 405.7 $ 707.1 $ 723.9 $ 420.1 $ 365.3 $ 1,561.4 $ 1,494.9 $ 6,749.7 $ 5,567.9 $ 8,311.1 $ 7,062.8

Counterparty Credit Exposure by Industry Securities and Margin Cash and Total with Cash and Loans and Lending Finance OTC Derivatives Total Cash Equivalents Cash Equivalents At At At At At At November November November November November November 30, 30, 30, 30, 30, 30, August 31, August 31, August 31, August 31, August 31, August 31, 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

Asset Managers $ 0.1 $ — $ — $ 1.7 $ — $ — $ 0.1 $ 1.7 $ 5,317.9 $ 4,584.1 $ 5,318.0 $ 4,585.8 Banks, Broker- dealers 250.2 250.7 513.4 526.7 182.7 206.8 946.3 984.2 1,431.8 983.8 2,378.1 1,968.0

Corporates 106.6 81.3 — — 228.2 154.4 334.8 235.7 — — 334.8 235.7

Other 77.3 73.7 193.7 195.5 9.2 4.1 280.2 273.3 — — 280.2 273.3

Total $ 434.2 $ 405.7 $ 707.1 $ 723.9 $ 420.1 $ 365.3 $ 1,561.4 $ 1,494.9 $ 6,749.7 $ 5,567.9 $ 8,311.1 $ 7,062.8

For additional information regarding credit exposure to OTC derivative contracts, refer to Note 5, Derivative Financial Instruments, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

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Country Risk Exposure

Country risk is the risk that events or developments that occur in the general environment of a country or countries due to economic, political, social, regulatory, legal or other factors, will affect the ability of obligors of the country to honor their obligations. We define the country of risk as the country of jurisdiction or domicile of the obligor and monitor country risk resulting from both trading positions and counterparty exposure, which may not include the offsetting benefit of any financial instruments utilized to manage market risk. The following tables reflect our top exposure at August 31, 2020 and November 30, 2019 to the sovereign governments, corporations and financial institutions in those non- U.S. countries in which we have a net long issuer and counterparty exposure (in millions):

August 31, 2020 Issuer Risk Counterparty Risk Issuer and Counterparty Risk Fair Value of Fair Value of Net Derivative Cash and Excluding Cash Including Cash Long Debt Short Debt Notional Loans and Securities and OTC Cash and Cash and Cash Securities Securities Exposure Lending Margin Finance Derivatives Equivalents Equivalents Equivalents Australia $ 35.2 $ (19.6) $ 1,514.3 $ — $ 14.3 $ — $ 13.4 $ 1,544.2 $ 1,557.6 Germany 589.6 (507.8) 894.9 — 68.6 11.5 16.4 1,056.8 1,073.2 United 361.2 (140.5) (39.1) 0.1 45.3 11.4 71.9 238.4 310.3 Kingdom

Hong Kong 46.8 (23.1) — — 0.2 — 152.0 23.9 175.9

Italy 1,458.4 (1,094.3) (212.1) — — 0.4 — 152.4 152.4

Canada 343.8 (294.9) (0.5) — 21.7 78.7 1.7 148.8 150.5

China 498.1 (372.3) (22.8) — — — — 103.0 103.0

Switzerland 110.9 (84.1) 1.1 — 28.1 2.5 3.5 58.5 62.0

Portugal 202.0 (141.0) (0.4) — — — — 60.6 60.6

France 501.2 (493.9) (107.2) — 124.6 23.6 — 48.3 48.3 Total $ 4,147.2 $ (3,171.5) $ 2,028.2 $ 0.1 $ 302.8 $ 128.1 $ 258.9 $ 3,434.9 $ 3,693.8

November 30, 2019 Issuer Risk Counterparty Risk Issuer and Counterparty Risk Fair Value of Fair Value of Net Derivative Including Cash Long Debt Short Debt Notional Loans and Securities and OTC Cash and Cash Excluding Cash and and Cash Securities Securities Exposure Lending Margin Finance Derivatives Equivalents Cash Equivalents Equivalents Netherlands $ 946.0 $ (329.7) $ (100.1) $ — $ 42.6 $ 0.5 $ — $ 559.3 $ 559.3 United Kingdom 416.1 (199.9) (124.4) — 60.7 37.6 54.1 190.1 244.2 Italy 1,262.3 (1,192.4) 105.4 — — 0.4 — 175.7 175.7 France 423.4 (296.2) (93.1) — 94.2 40.9 — 169.2 169.2 Canada 380.4 (362.2) 7.4 — 0.3 81.2 1.9 107.1 109.0 Spain 249.2 (137.3) (25.7) — 3.3 — — 89.5 89.5 Japan 76.0 (171.6) 133.8 — 24.7 — 13.2 62.9 76.1 China 283.3 (236.9) 25.6 — — — — 72.0 72.0 Mexico 112.0 (68.3) 13.0 — — — — 56.7 56.7 Germany 238.2 (321.3) 19.3 — 88.3 14.4 13.6 38.9 52.5 Total $ 4,386.9 $ (3,315.8) $ (38.8) $ — $ 314.1 $ 175.0 $ 82.8 $ 1,521.4 $ 1,604.2

We have no material exposure to countries where either sovereign or non-sovereign sectors pose potential default risk as the result of liquidity concerns.

Operational Risk

Operational risk refers to the risk of loss resulting from our operations, including, but not limited to, improper or unauthorized execution and processing of transactions, deficiencies in our operating systems, business disruptions and inadequacies or breaches in our internal control processes. Our businesses are highly dependent on our ability to process, on a daily basis, a large number of transactions across numerous and diverse markets in many currencies. In addition, the transactions we process have become increasingly complex. If our financial, accounting or other data processing systems do not operate properly or are disabled or if there are other shortcomings or failures in our internal processes, people or systems, we could suffer an impairment to our liquidity, financial loss, a disruption of our businesses, liability to clients, regulatory intervention or reputational damage.

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These systems may fail to operate properly or become disabled as a result of events that are wholly or partially beyond our control, including a disruption of electrical or communications services or our inability to occupy one or more of our buildings. The inability of our systems to accommodate an increasing volume of transactions could also constrain our ability to expand our businesses.

We also face the risk of operational failure or termination of any of the clearing agents, exchanges, clearing houses or other financial intermediaries we use to facilitate our securities transactions. Any such failure or termination could adversely affect our ability to effect transactions and manage our exposure to risk. In addition, despite the contingency plans we have in place, our ability to conduct business may be adversely impacted by a disruption in the infrastructure that supports our businesses and the communities in which they are located. This may include a disruption involving electrical, communications, transportation or other services used by us or third parties with which we conduct business.

Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. Although we take protective measures and endeavor to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to unauthorized access, computer viruses or other malicious code, and other events that could have a security impact. If one or more of such events occur, this potentially could jeopardize our or our clients’ or counterparties’ confidential and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our, our clients’, our counterparties’ or third parties’ operations. We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance maintained by us.

Our Operational Risk framework includes governance, collection of operational risk incidents, proactive operational risk management, and periodic review and analysis of business metrics to identify and recommend controls and process-related enhancements. Each revenue producing and support department is responsible for the management and reporting of operational risks and the implementation of the Operational Risk policy and processes within the department. Operational Risk policy, framework, infrastructure, methodology, processes, guidance and oversight of the operational risk processes are centralized and consistent firm wide and also subject to regional operational risk governance.

Our leadership is continuously monitoring circumstances around COVID-19, as well as economic and capital market conditions, and providing frequent communications to both our clients and our employees. We have adopted enhanced cleaning practices across our offices, have restricted business travel, and have monitored the health and welfare of our employees and worked actively with many individuals diagnosed with COVID-19. We implemented our Business Continuity Planning plan and have largely moved to a remote working environment across all functions without any significant disruptions to our business or control processes. Additionally, we are working continuously with all of our critical vendors regarding their own pandemic responses to ensure there is minimal impact on our business operations. Model Risk

Model risk refers to the risk of losses resulting from decisions that are based on the output of models, due to errors or weaknesses in the design and development, implementation, or improper use of models. We use quantitative models primarily to value certain financial assets and liabilities and to monitor and manage our risk. Model risk is a function of the model materiality, frequency of use, complexity and uncertainty around inputs and assumptions used in a given model. Robust model risk management is a core part of our risk management approach and is overseen through our risk governance structure and risk management controls.

Legal and Compliance Risk

Legal and compliance risk includes the risk of noncompliance with applicable legal and regulatory requirements. We are subject to extensive regulation in the different jurisdictions in which we conduct our business. We have various procedures addressing issues such as regulatory capital requirements, sales and trading practices, use of and safekeeping of customer funds, credit granting, collection activities, anti-money laundering and record keeping. These risks also reflect the potential impact that changes in local and international laws and tax statutes have on the economics and viability of current or future transactions. In an effort to mitigate these risks, we continuously review new and pending regulations and legislation and participate in various industry interest groups. We also maintain an anonymous hotline for employees or others to report suspected inappropriate actions by us or by our employees or agents.

New Business Risk

New business risk refers to the risks of entering into a new line of business or offering a new product. By entering a new line of business or offering a new product, we may face risks that we are unaccustomed to dealing with and may increase the magnitude of the risks we currently face. The New Business Committee reviews proposals for new businesses and new products to determine if we are prepared to handle the additional or increased risks associated with entering into such activities.

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Reputational Risk

We recognize that maintaining our reputation among clients, investors, regulators and the general public is an important aspect of minimizing legal and operational risks. Maintaining our reputation depends on a large number of factors, including the selection of our clients and the conduct of our business activities. We seek to maintain our reputation by screening potential clients and by conducting our business activities in accordance with high ethical standards. Our reputation and business activity can be affected by statements and actions of third parties, even false or misleading statements by them. We actively monitor public comment concerning us and are vigilant in seeking to assure accurate information and perception prevails.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Quantitative and qualitative disclosures about market risk are set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Risk Management” in Part I, Item 2 of this Form 10-Q.

Item 4. Controls and Procedures.

Our Management, under the direction of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

No change in our internal control over financial reporting occurred during the quarter ended August 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION Item 1. Legal Proceedings

Many aspects of our business involve substantial risks of legal and regulatory liability. In the normal course of business, we have been named as defendants or co-defendants in lawsuits involving primarily claims for damages. We are also involved in a number of judicial and regulatory matters, including exams, investigations and similar reviews, arising out of the conduct of our business. Based on currently available information, we do not believe that any matter will have a material adverse effect on our consolidated financial statements.

Item 1A. Risk Factors

Information regarding our risk factors appears in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended November 30, 2019 filed with the SEC on January 29, 2020. These risk factors describe some of the assumptions, risks, uncertainties and other factors that could adversely affect our business or that could otherwise result in changes that differ materially from our expectations. In addition, the following risk factors have occurred since previously reporting our risk factors in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended November 30, 2019. The effects of the outbreak of the novel coronavirus (“COVID-19”) have negatively affected the global economy, the United States economy and the global financial markets, and may disrupt our operations and our clients’ operations, which could have an adverse effect on our business, financial condition and results of operations. The ongoing COVID-19 global and national health emergency has caused significant disruption in the international and United States economies and financial markets. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability. The United States now has the world’s most reported COVID-19 cases, and all 50 states and the District of Columbia have reported cases of infected individuals. Several states, including New York, where we are headquartered, have declared states of emergency. Similar impacts have been experienced in every country in which we do business. Impacts to our business could be widespread and global, and material impacts may be possible, including the following: • Employees contracting COVID-19 • Reductions in our operating effectiveness as our employees work from home or disaster-recovery locations • Unavailability of key personnel necessary to conduct our business activities • Unprecedented volatility in global financial markets • Reductions in revenue across our operating businesses • Delay in planned entry into, or expansion of, investments or projects in China and surrounding areas • Closure of our offices or the offices of our clients • De-globalization We are taking precautions to protect the safety and well-being of our employees and customers. However, no assurance can be given that the steps being taken will be deemed to be adequate or appropriate, nor can we predict the level of disruption which will occur to our employee’s ability to provide customer support and service. Although the onset of the COVID-19 pandemic resulted in meaningfully lower stock prices for many companies, as well as the trading prices for our own securities, the markets have not only stabilized but returned to near pre-COVID-19 levels. However, the further spread of the COVID-19 outbreak may materially negatively impact stock and other securities prices and materially disrupt banking and other financial activity generally and in the areas in which we operate. This would likely result in a decline in demand for our products and services, which would negatively impact our liquidity position and our growth strategy. Any one or more of these developments could have a material adverse effect on our and our consolidated subsidiaries’ business, operations, consolidated financial condition, and consolidated results of operations.

We may incur losses as a result of unforeseen or catastrophic events, including the emergence of a pandemic, terrorist attacks, extreme weather events or other natural disasters. The occurrence of unforeseen or catastrophic events, including the emergence of a pandemic, such as COVID-19, or other widespread health emergency (or concerns over the possibility of such an emergency), terrorist attacks, extreme terrestrial or solar weather events or other natural disasters, could create economic and financial disruptions, and could lead to operational difficulties (including travel limitations) that could impair our ability to manage our businesses.

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Table of Contents JEFFERIES GROUP LLC AND SUBSIDIARIES

Abrupt changes in market and general economic conditions have in the past adversely affected, and may in the future adversely affect, our business and profitability and cause volatility in our results of operations. Economic and market conditions have had, and will continue to have, a direct and material impact on our results of operations and financial condition because performance in the financial services industry is heavily influenced by the overall strength of general economic conditions and financial market activity. Our investment banking revenue, in the form of advisory services and underwriting, is directly related to general economic conditions and corresponding financial market activity. When the outlook for such economic conditions is uncertain or negative, financial market activity generally tends to decrease, which reduces our investment banking revenues. Reduced expectations of U.S. economic growth or a decline in the global economic outlook could cause financial market activity to decrease and negatively affect our investment banking revenues. A sustained and continuing market downturn could lead to or exacerbate declines in the number of securities transactions executed for customers and, therefore, to a decline in the revenues we receive from commissions and spreads. Correspondingly, a reduction of prices of the securities we hold in inventory or as investments would lead to reduced revenues. Revenues from our asset management businesses have been and may continue to be negatively impacted by declining securities prices, as well as widely fluctuating securities prices. Because our asset management businesses hold long and short positions in equity and debt securities, changes in the prices of these securities, as well as any decrease in the liquidity of these securities, may materially and adversely affect our revenues from asset management. In addition, global economic conditions and global financial markets remain vulnerable to the potential risks posed by certain events, which could include, among other things, political and financial uncertainty in the United States and the European Union, renewed concern about China's economy, complications involving terrorism and armed conflicts around the world, or other challenges to global trade or travel, such as might occur in the event of a wider pandemic involving COVID-19. More generally, because our business is closely correlated to the general economic outlook, a significant deterioration in that outlook or realization of certain events would likely have an immediate and significant negative impact on our business and overall results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 6. Exhibits

Exhibit No. Description 3.1 Certificate of Formation of Jefferies Group LLC effective as of March 1, 2013 is incorporated herein by reference to Exhibit 3.2 of Registrant’s Form 8-K filed on March 1, 2013. 3.2 Certificate of Conversion of Jefferies Group LLC effective as of March 1, 2013 is incorporated herein by reference to Exhibit 3.1 of Registrant’s Form 8-K filed on March 1, 2013. 3.3 Limited Liability Company Agreement of Jefferies Group LLC dated as of March 1, 2013 (with Schedule A supplemented effective May 23, 2018) is incorporated herein by reference to Exhibit 3.3 of Registrant’s Form 10-K filed on January 29, 2019. 4 Instruments defining the rights of holders of long-term debt securities of the Registrant and its subsidiaries are omitted pursuant to Item 601(b)(4) (iii) of Regulation S-K. Registrant hereby agrees to furnish copies of these instruments to the Commission upon request. 31.1* Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer. 31.2* Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer. 32* Rule 13a-14(b)/15d-14(b) and Section 1350 of Title 18 U.S.C. Certification by the Chief Executive Officer and Chief Financial Officer. 101* Interactive data files pursuant to Rule 405 of Regulation S-T, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Statements of Financial Condition as of August 31, 2020 and November 30, 2019; (ii) the Consolidated Statements of Earnings for the three and nine months ended August 31, 2020 and 2019; (iii) the Consolidated Statements of Comprehensive Income for the three and nine months ended August 31, 2020 and 2019; (iv) the Consolidated Statements of Changes in Equity for the three and nine months ended August 31, 2020 and 2019; (v) the Consolidated Statements of Cash Flows for the nine months ended August 31, 2020 and 2019 and (vi) the Notes to Consolidated Financial Statements. 104 Cover page interactive data file pursuant to Rule 406 of Regulation S-T, formatted in iXBRL (included in Exhibit 101)

* Filed herewith.

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Table of Contents

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

JEFFERIES GROUP LLC (Registrant)

Date: October 9, 2020 By: /s/ Matt Larson Matt Larson Chief Financial Officer (duly authorized officer)

102 Exhibit 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION BY THE CHIEF FINANCIAL OFFICER

I, Matt Larson, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Jefferies Group LLC; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 9, 2020 By: /s/ Matt Larson Matt Larson Chief Financial Officer Exhibit 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

I, Richard B. Handler, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Jefferies Group LLC; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 9, 2020 By: /s/ Richard B. Handler Richard B. Handler Chief Executive Officer Exhibit 32

Rule 13a-14(b)/15d-14(b) and Section 1350 of Title 18 U.S.C. CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

I, Richard B. Handler, Chief Executive Officer, and I, Matt Larson, Chief Financial Officer, of Jefferies Group LLC, a Delaware limited liability company (the “Company”), each hereby certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Company’s periodic report on Form 10-Q for the period ended August 31, 2020 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. * * *

CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER

/s/ Richard B. Handler /s/ Matt Larson Richard B. Handler Matt Larson

Date: October 9, 2020 Date: October 9, 2020

A signed original of this written statement required by Section 906 has been provided to Jefferies Group LLC and will be retained by Jefferies Group LLC and furnished to the Securities and Exchange Commission or its staff upon request.

Annex II

Form 8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

FORM 8-K

CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): September 30, 2020

Jefferies Group LLC (Exact name of registrant as specified in its charter)

Delaware 001-14947 95-4719745 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.)

520 Madison Ave., New York, New York 10022 (Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 212-284-2550

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Trading Name of each exchange Title of each class Symbol(s) on which registered 4.850% Senior Notes Due 2027 JEF /27A New York Stock Exchange 5.125% Senior Notes Due 2023 JEF /23 New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company: ☐

Item 8.01. Other Events. On September 30, 2020, Jefferies Group LLC (the “Company”) and its wholly owned subsidiary Jefferies Group Capital Finance Inc. (“Jefferies Capital” and, together with the Company, the “Issuers”) entered into a purchase agreement (the “Purchase Agreement”) with Jefferies LLC, as representative of the several underwriters identified in Schedule A to the Purchase Agreement, whereby the Issuers agreed to issue and sell to the underwriters $500,000,000 aggregate principal amount of their 2.75% Senior Notes due 2032 (the “Notes”). The Notes were registered under the Issuers’ Shelf Registration Statement on Form S-3, as amended (File Nos. 333-229494 and 333-229494-01). The sale of the Notes pursuant to the Purchase Agreement closed on October 7, 2020, on which date the Issuers issued the Notes pursuant to the Issuers’ Senior Debt Indenture (the “Indenture”), dated as of May 26, 2016, between the Issuers and The Bank of New York Mellon, as trustee (the “Trustee”), as supplemented by the Officers’ Certificate (the “Officers’ Certificate”) establishing the terms of the Notes dated October 7, 2020.

The Issuers estimate that the aggregate net proceeds from the issuance and sale of the Notes, after deducting the underwriting discount and expenses relating to the offering, will be approximately $491,590,000. The Company intends to use the net proceeds for general corporate purposes, which may include the further development and diversification of its businesses.

The foregoing summary of the Purchase Agreement, the Notes, the Indenture and the Officers’ Certificate is qualified in its entirety by reference to the documents filed as exhibits to this report.

Item 9.01. Financial Statements and Exhibits (d) Exhibits.

Number Exhibit 1.1 Purchase Agreement dated September 30, 2020 between Jefferies Group LLC, Jefferies Group Capital Finance Inc. and Jefferies LLC, as representative of the several underwriters identified in Schedule A thereto, relating to the Notes* 4.1 Senior Debt Indenture, by and among Jefferies Group LLC and Jefferies Group Capital Finance Inc. and The Bank of New York Mellon, as Trustee, dated May 26, 2016, incorporated herein by reference to Exhibit 4.1 of the Form 8-A of Jefferies Group LLC and Jefferies Group Capital Finance Inc. filed on January 17, 2017 4.2 Officers’ Certificate establishing the terms of the Notes* 4.3 Form of Global Note* 5.1 Opinion of Sidley Austin LLP* 23.1 Consent of Sidley Austin LLP (included in Exhibit 5.1)* 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Jefferies Group LLC

By: /s/ Michael J. Sharp Name: Michael J. Sharp Title: General Counsel, Executive Vice President

Date: October 7, 2020

3 Exhibit 1.1 Execution Copy

JEFFERIES GROUP LLC (a Delaware limited liability company)

JEFFERIES GROUP CAPITAL FINANCE INC. (a Delaware corporation)

2.75% Senior Notes due 2032

PURCHASE AGREEMENT

Dated: September 30, 2020

JEFFERIES GROUP LLC (a Delaware limited liability company)

JEFFERIES GROUP CAPITAL FINANCE INC. (a Delaware corporation)

$500,000,000

2.75% Senior Notes due 2032

PURCHASE AGREEMENT

September 30, 2020

JEFFERIES LLC As Representative of the several Underwriters named in Schedule A hereto c/o Jefferies LLC 520 Madison Avenue New York, New York 10022

Ladies and Gentlemen: Jefferies Group LLC, a Delaware limited liability company (the “Company”), and Jefferies Group Capital Finance Inc., a Delaware corporation and wholly owned subsidiary of the Company (the “Co-Issuer” and together with the Company, the “Issuers”), confirm their agreement with you and each of the other Underwriters named in Schedule A hereto (collectively, the “Underwriters”), for whom you are acting as Representative (in such capacity, the “Representative”), with respect to the issue and sale by the Issuers and the purchase by the Underwriters, acting severally and not jointly, of the respective principal amounts set forth in said Schedule A of $500,000,000 aggregate principal amount of the Issuers’ 2.75% Senior Notes due 2032 (the “Securities”). To the extent that there are no additional Underwriters listed on Schedule A other than you, the term Representative as used herein shall mean you, as Underwriter, and the terms Representatives and Underwriters shall mean either the singular or plural as the context requires. The Securities are to be issued as part of a series of notes pursuant to an Indenture dated as of May 26, 2016 (the “Indenture”), among the Issuers and The Bank of New York Mellon, as trustee (the “Trustee”). The term “Indenture,” as used herein, includes the Officers’ Certificate (as defined in the Indenture), to be dated as of Closing Time (as defined herein), establishing the form and terms of the Securities pursuant to Section 3.01 of the Indenture.

The Issuers understand that the Underwriters propose to make a public offering of the Securities as soon as the Representative deems advisable after this Agreement has been executed and delivered.

The Issuers have filed with the Securities and Exchange Commission (the “Commission”) an automatic shelf registration statement on Form S-3 (File Nos. 333-229494 and 333-229494-01), including the related preliminary prospectus or prospectuses, which registration statement became effective upon filing under Rule 462(e) of the rules and regulations of the Commission (the “1933 Act Regulations”) under the Securities Act of 1933, as amended (the “1933 Act”). Such registration statement, as amended, covers the registration of the Securities under the 1933 Act. Promptly after execution and delivery of this Agreement, the Issuers will prepare and file a prospectus in accordance with the provisions of Rule 430B (“Rule 430B”) of the 1933 Act Regulations and paragraph (b) of Rule 424 (“Rule 424(b)”) of the 1933 Act Regulations. Any information included in such prospectus that was omitted from such registration statement at the time it became

1 effective but that is deemed to be part of and included in such registration statement pursuant to Rule 430B is referred to as “Rule 430B Information.” Each prospectus used in connection with the offering of the Securities that omitted Rule 430B Information is herein called a “preliminary prospectus.” Such registration statement, at any given time, including the amendments thereto to such time, the exhibits and any schedules thereto at such time, the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act at such time and the documents otherwise deemed to be a part thereof or included therein by 1933 Act Regulations, is herein called the “Registration Statement.” The Registration Statement at the time it originally became effective is herein called the “Original Registration Statement.” The final prospectus in the form first furnished to the Underwriters for use in connection with the offering of the Securities, including the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act at the time of the execution of this Agreement and any preliminary prospectuses that form a part thereof, is herein called the “Prospectus.” For purposes of this Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”).

All references in this Purchase Agreement to financial statements and schedules and other information which is “contained,” “included” or “stated” (or other references of like import) in the Registration Statement, Prospectus or preliminary prospectus shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated by reference in or otherwise deemed by 1933 Act Regulations to be a part of or included in the Registration Statement, Prospectus or preliminary prospectus, as the case may be, prior to the date hereof; and all references in this Purchase Agreement to amendments or supplements to the Registration Statement, Prospectus or preliminary prospectus shall be deemed to include any document filed under the Securities Exchange Act of 1934, as amended (the “1934 Act”), which is incorporated by reference in or otherwise deemed by 1933 Act Regulations to be a part of or included in the Registration Statement, Prospectus or preliminary prospectus, as the case may be.

SECTION 1. Representations and Warranties. (a) Representations and Warranties by the Issuers. The Issuers jointly and severally represent and warrant to each Underwriter as of the date hereof, the Applicable Time referred to in Section 1(a)(ii) hereof and as of the Closing Time referred to in Section 2(b) hereof, and agrees with each Underwriter, as follows: (i) Status as a Well-Known Seasoned Issuer. (A) At the time of filing the Original Registration Statement, (B) at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) of the 1933 Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the 1934 Act or form of prospectus), (C) at the time the Issuers or any person acting on their behalf (within the meaning, for this clause only, of Rule 163(c) of the 1933 Act Regulations) made any offer relating to the Securities in reliance on the exemption of Rule 163 of the 1933 Act Regulations and (D) at the date hereof, the Company was and is a “well-known seasoned issuer” as defined in Rule 405 of the 1933 Act Regulations (“Rule 405”), including not having been and not being an “ineligible issuer” as defined in Rule 405. The Registration Statement is an “automatic shelf registration statement,” as defined in Rule 405, and the Securities, since their registration on the Registration Statement, have been and remain eligible for registration by the Issuers on a Rule 405 “automatic shelf registration statement”. The Issuers have not received from the Commission any notice pursuant to Rule 401(g)(2) of the 1933 Act Regulations objecting to the use of the automatic shelf registration statement form. At the time of filing the Original Registration Statement, at the earliest time thereafter that the Issuers or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the 1933 Act Regulations) of the Securities and at the date hereof, neither of the Issuers was, and each is not, an “ineligible issuer,” as defined in Rule 405.

(ii) Registration Statement, Prospectus and Disclosure at Time of Sale. The Original Registration Statement became effective upon filing under Rule 462(e) of the 1933 Act Regulations (“Rule 462(e)”) on February 1, 2019. No stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Issuers, are contemplated by the Commission, and any request on the part of the Commission for additional information with respect to the Registration Statement has been complied with. Neither the Issuers, nor any person acting on the Issuers’ behalf (within the meaning, for this paragraph only, of Rule 163(c) of the 1933 Act Regulations), has made any offer that is a written communication relating to the Securities prior to the filing of the Original Registration Statement. At the respective times the Original Registration Statement and each amendment thereto became effective, at each deemed effective date with respect to the Underwriters pursuant to Rule 430B(f)(2) of the 1933 Act Regulations and at the Closing Time, the Registration Statement complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the Trust Indenture Act of 1939, as amended (the “1939 Act”) and the rules and regulations of the Commission under the 1939 Act (the “1939 Act Regulations”), and did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Issuers make no representations or warranties as to (i) that part of the Registration Statement which shall constitute the Statement of Eligibility and Qualification (Form T-1) under the 1939 Act of the Trustee or (ii) the information contained in or omitted from the Registration Statement or the Prospectus (or any supplement thereto) in reliance upon and in conformity with information furnished in writing to the Issuers by or on behalf of any Underwriter through the Representative specifically for inclusion in the Registration Statement or the Prospectus (or any supplement thereto). Neither the Prospectus nor any amendments or supplements thereto, at the time the Prospectus or any such amendment or supplement was issued and at the Closing Time, included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each preliminary prospectus (including the prospectus or prospectuses filed as part of the Original Registration Statement or any amendment thereto) complied when so filed in all material respects with the 1933 Act Regulations and each preliminary prospectus and the Prospectus delivered to the Underwriters for use in connection with this offering was identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. As of the Applicable Time, neither (x) any Issuer General Use Free Writing Prospectus(es) (as defined below) issued at or prior to the Applicable Time (as defined below) and the Statutory Prospectus (as defined below), considered together (collectively, the “General Disclosure Package”), nor (y) any individual Issuer Limited Use Free Writing Prospectus, when considered together with the General Disclosure Package, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

As of the time of the filing of the Final Term Sheet, the General Disclosure Package, when considered together with the Final Term Sheet (as defined in Section 3(b)), will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As used in this subsection and elsewhere in this Agreement: “Applicable Time” means 4:00 p.m. (Eastern time) on September 30, 2020 or such other time as agreed by the Company and the Representative. “Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 of the 1933 Act Regulations (“Rule 433”), relating to the Securities that (i) is required to be filed with the Commission by the Issuers, (ii) is a “road show that is a written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission or (iii) is exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a description of the Securities or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Issuers’ records pursuant to Rule 433(g). “Issuer General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors, as evidenced by its being specified in Schedule C hereto. “Issuer Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus. “Statutory Prospectus” as of any time means the prospectus relating to the Securities that is included in the Registration Statement immediately prior to that time, including any document incorporated by reference therein and any preliminary or other prospectus deemed to be a part thereof. Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Securities or until any earlier date that the issuer notified or notifies the Representative as described in Section 3(e), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, including any document incorporated by reference therein and any preliminary or other prospectus deemed to be a part thereof that has not been superseded or modified. The representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus made in reliance upon and in conformity with written information furnished to the Issuers by any Underwriter through the Representative expressly for use therein. (iii) Incorporated Documents. The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the “1934 Act Regulations”), and, when read together with the other information in the Prospectus, (a) at the time the Original Registration Statement became effective, (b) at the earlier of the time the Prospectus was first used and the date and time of the first contract of sale of Securities in this offering and (c) at the Closing Time, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

(iv) No Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the Prospectus, except as otherwise stated therein, (A) there has been no material adverse change in the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, (B) there have been no transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its subsidiaries taken as a whole, and (C) except as in the ordinary course of business consistent with past practices, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock. (v) Good Standing of the Company and the Subsidiary. The Company and Jefferies LLC, a Delaware limited liability company (the “Subsidiary”), are validly existing in good standing under the laws of the jurisdiction in which they are formed with full power and authority to own or lease, as the case may be, and to operate their properties and conduct their business as described in the Prospectus, and the Company and the Subsidiary are in good standing and duly qualified to do business under the laws of each jurisdiction that requires such qualification of the Company or the Subsidiary, except where the failure to be so qualified would not have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business. The Co-Issuer has been duly incorporated and is validly existing in good standing under the laws of the jurisdiction in which it is chartered or organized with full corporate power and authority to own or lease, as the case may be, and to operate its properties and conduct its business as described in the Prospectus, and is in good standing and duly qualified to do business as a foreign corporation under the laws of each jurisdiction that requires such qualification of the Co-Issuer, except where the failure to be so qualified would not have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business. (vi) Capital Stock of the Subsidiaries. All the outstanding shares of capital stock or membership interests of each subsidiary of the Company have been duly and validly authorized and issued and, with respect to each subsidiary that is a corporation, are fully paid and nonassessable, and, except as otherwise set forth in the Prospectus (or as represented by minority interests as disclosed in the financial statements incorporated by reference therein), all outstanding shares of capital stock, membership interests or other equity interests of the subsidiaries are owned by the Company either directly or through wholly owned subsidiaries free and clear of any perfected security interest or any other security interests, claims, liens or encumbrances (other than, in the case of certain non-U.S. subsidiaries, director qualifying shares which individually and in the aggregate represent an immaterial ownership interest in such subsidiaries). The Subsidiary is the only subsidiary that is a Significant Subsidiary (as such term is defined by Rule 405) of the Company. (vii) Capitalization. The Company’s authorized equity capitalization is as set forth in the Prospectus and the Securities conform in all material respects to the description thereof contained or incorporated by reference in the Prospectus; and, except as set forth in the Prospectus, no options, warrants or other rights to purchase, agreements or other obligations to issue (other than equity compensation grants and awards under the Company’s plans in the ordinary course consistent with past practice), or rights to convert any obligations into or exchange any securities for, shares of capital stock of or ownership interests in the Company are outstanding.

(viii) (A) Accuracy of Exhibits and Statements. There is no franchise, contract or other document of a character required to be described in the Registration Statement or Prospectus, or to be filed as an exhibit thereto, which is not described or filed as required; and the statements in (I) the Prospectus under the headings “Certain ERISA Considerations”, “Description of the Notes” and “Description of Securities We May Offer - Debt Securities” and (II) the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2019 under the headings “Part I - Item 1. Business - Regulation” and “Part I - Item 3. - Legal Proceedings”, insofar as such statements summarize legal matters, agreements, documents or proceedings discussed therein, are accurate and fair summaries of such legal matters, agreements, documents or proceedings. (B) The statements set forth in the Prospectus under the heading “Material United States Federal Income Tax Consequences,” insofar as such statements purport to describe certain federal tax laws of the United States, are accurate and complete in all material respects. (ix) Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Issuers and constitutes a valid and binding obligation of the Issuers. (x) Investment Company Act. Each of the Issuers is not and, after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Prospectus, will not be an “investment company” as defined in the Investment Company Act of 1940, as amended. (xi) Absence of Further Requirements. No consent, approval, authorization, filing with or order of any court or governmental agency or body is required in connection with the transactions contemplated herein, except such as have been obtained under the 1933 Act and the 1939 Act and such as may be required under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Underwriters in the manner contemplated herein and in the Prospectus. (xii) Absence of Conflicts. Neither the issue and sale of the Securities nor the consummation of any other of the transactions herein contemplated nor the fulfillment of the terms hereof will conflict with, result in a breach or violation or imposition of any lien, charge or encumbrance upon any property or assets of the Issuers or any of their subsidiaries pursuant to, (i) the organizational documents of the Issuers or any of their subsidiaries, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Issuers or any of their subsidiaries are a party or bound or to which their property is subject, or (iii) any statute, law, rule, regulation, judgment, order or decree applicable to the Issuers or any of their subsidiaries of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Issuers or any of their subsidiaries or any of their properties, which violation or default would, in the case of clauses (ii) and (iii) above, either individually or in the aggregate with all other violations and defaults referred to in this paragraph (xii) (if any), have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto filed after the date hereof). (xiii) Absence of Registration Rights. No holders of securities of the Issuers have rights to the registration of such securities under the Registration Statement. (xiv) Financial Statements.

(a) The consolidated historical financial statements and schedules of the Company and its consolidated subsidiaries included in the Prospectus, the Registration Statement and the General Disclosure Package present fairly in all material respects the financial condition, results of operations and cash flows of the Company as of the dates and for the periods indicated, comply as to form with the applicable accounting requirements of the 1933 Act and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise noted therein). (b) The consolidated historical financial statements and schedules of Jefferies Finance LLC (“Jefferies Finance”) and its consolidated subsidiaries included in the Prospectus, the Registration Statement and the General Disclosure Package present fairly in all material respects the financial condition, results of operations and cash flows of Jefferies Finance as of the dates and for the periods indicated, comply as to form with the applicable accounting requirements of the 1933 Act and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise noted therein). (c) The consolidated historical financial statements and schedules of Berkadia Commercial Mortgage Holding LLC (“Berkadia”) and its consolidated subsidiaries included in the Prospectus, the Registration Statement and the General Disclosure Package present fairly in all material respects the financial condition, results of operations and cash flows of Berkadia as of the dates and for the periods indicated, comply as to form with the applicable accounting requirements of the 1933 Act and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise noted therein). (xv) Absence of Proceedings. No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Issuers or any of their subsidiaries or their property is pending or, to the best knowledge of the Issuers, threatened that (i) could reasonably be expected to have a material adverse effect on the performance of this Agreement or the consummation of any of the transactions contemplated hereby or (ii) could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto filed after the date hereof). (xvi) Possession of Properties. Each of the Issuers and each of their subsidiaries owns or leases all such properties as are necessary to the conduct of its operations as presently conducted. (xvii) Absence of Defaults. Neither of the Issuers nor any subsidiary thereof is in violation or default of (i) any provision of its organizational documents, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which it is a party or bound or to which its property is subject, or (iii) any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Issuers or such subsidiary or any of its properties, as applicable, which violation or default would, in the case of clauses (ii) and (iii) above, either individually or in the aggregate with all other violations and defaults referred to in this paragraph (xvii) (if any), have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto filed after the date hereof).

(xviii) Independent Registered Public Accounting Firm. (a) Deloitte & Touche LLP, who has audited the financial statements of the Company and its consolidated subsidiaries and delivered its report with respect to the audited consolidated financial statements incorporated by reference in the Prospectus, is an independent registered public accounting firm with respect to the Company as required by the 1933 Act and the applicable published rules and regulations of the Public Company Accounting Oversight Board. (b) Deloitte & Touche LLP, who has audited the financial statements of Jefferies Finance and its consolidated subsidiaries and delivered its report with respect to the audited consolidated financial statements incorporated by reference in the Prospectus, is an independent registered public accounting firm with respect to the Company as required by the 1933 Act and the applicable published rules and regulations of the Public Company Accounting Oversight Board. (c) PricewaterhouseCoopers LLP, who has audited the financial statements of Berkadia and its consolidated subsidiaries and delivered its report with respect to the audited consolidated financial statements incorporated by reference in the Prospectus, is an independent registered public accounting firm with respect to the Company as required by the 1933 Act and the applicable published rules and regulations of the Public Company Accounting Oversight Board. (xix) Tax Laws. The Issuers have filed all foreign, federal, state and local tax returns that are required to be filed or has requested extensions thereof (except in any case in which the failure so to file would not have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto filed after the date hereof) and has paid all taxes shown by such returns to be payable and any other assessment, fine or penalty levied against it, to the extent that any of the foregoing is due and payable, except for any such assessment, fine or penalty that is currently being contested in good faith or as would not have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto filed after the date hereof). (xx) Absence of Labor Dispute. No labor problem or dispute with the employees of the Issuers or any of their subsidiaries exists or is threatened or imminent, and the Issuers are not aware of any existing or imminent labor disturbance by the employees of any of its or its subsidiaries’ principal suppliers, contractors or customers, that could have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto filed after the date hereof). (xxi) Insurance. The Issuers and each of their subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged; all material policies of insurance and fidelity or surety bonds insuring the Issuers or any of their subsidiaries or their respective businesses, assets, employees, officers and directors are in full force and effect; the Issuers and their subsidiaries are in compliance with the terms of such policies and instruments in all material respects; and there are no claims by the Issuers or any of their subsidiaries under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause, except

8 for claims that in the aggregate are not significant in amount; neither the Issuers nor any such subsidiary has been refused any insurance coverage sought or applied for; and neither the Issuers nor any such subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto filed after the date hereof). (xxii) Dividends. No subsidiary of the Company or the Co-Issuer is currently prohibited, directly or indirectly, from paying any dividends to the Company or Co-Issuer, as the case may be, from making any other distribution on such subsidiary’s equity interests, from repaying to the Company or Co-Issuer any loans or advances to such subsidiary from the Company or Co-Issuer or from transferring any of such subsidiary’s property or assets to the Company or Co-Issuer or any other subsidiary of the Company or Co-Issuer, except as described in or contemplated by the Prospectus. (xxiii) Possession of Licenses and Permits. The Issuers and their subsidiaries possess all licenses, certificates, permits and other authorizations issued by the appropriate federal, state or foreign regulatory authorities necessary and material to the conduct of their respective businesses, and neither the Issuers nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto filed after the date hereof). (xxiv) Accounting Controls and Disclosure Controls. The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorizations; (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (c) access to assets is permitted only in accordance with management’s general or specific authorization; and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as described in the Prospectus, since the end of the Company’s most recent audited fiscal year, there has been (I) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (II) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company and its consolidated subsidiaries employ disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and is accumulated and communicated to the Company’s management, including its principal executive officer or officers and principal financial officer or officers, as appropriate, to allow timely decisions regarding disclosure. (xxv) Absence of Manipulation. The Issuers have not taken, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in, under the 1934 Act or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.

(xxvi) Compliance with the Sarbanes-Oxley Act. There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906 related to certifications. (xxvii) Environmental Laws. The Issuers and their subsidiaries are (i) in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received and are in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) have not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except where such non-compliance with Environmental Laws, failure to receive required permits, licenses or other approvals, or liability would not, individually or in the aggregate, have a material adverse change in the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto filed after the date hereof). Except as set forth in the Prospectus, neither the Issuers nor any of their subsidiaries has been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended. (xxviii) ERISA. Each of the Issuers and their subsidiaries has fulfilled its obligations, if any, under the minimum funding standards of Section 302 of the United States Employee Retirement Income Security Act of 1974 (“ERISA”) and the regulations and published interpretations thereunder with respect to each “plan” (as defined in Section 3(3) of ERISA and such regulations and published interpretations) in which employees of the Issuers and their subsidiaries are eligible to participate and each such plan is in compliance in all material respects with the presently applicable provisions of ERISA and such regulations and published interpretations. The Issuers and their subsidiaries have not incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other than for the payment of premiums in the ordinary course) or to any such plan under Title IV of ERISA. (xxix) Pending Proceedings and Examinations. The Registration Statement is not the subject of a pending proceeding or examination under Section 8(d) or 8(e) of the 1933 Act, and the Issuers are not the subject of a pending proceeding under Section 8A of the 1933 Act in connection with the offering of the Securities. (xxx) Redemption. The Issuers have determined that there is no more than a remote likelihood that they will exercise their right to redeem the Securities in circumstances where the amount that the Issuers would have to pay in redemption is based on the sum of the present values of the remaining scheduled payments of interest and principal on the Securities. The Issuers make this representation only in connection with the discussion in the Prospectus under the heading “Material United States Federal Income Tax Consequences”. (xxxi) Foreign Corrupt Practices Act. Neither the Issuers nor any of their subsidiaries nor, to the knowledge of the Issuers, any director, officer, agent, employee or affiliate of the Issuers or any of their subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a

10 violation by either Issuer or any subsidiary of the FCPA, including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the Issuers and their subsidiaries have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed reasonably to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith. “FCPA” means Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder. (xxxii) Money Laundering Laws. The operations of the Issuers and their subsidiaries are and have been conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Issuers or any of their subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Issuers, threatened. (xxxiii) Cybersecurity. The Issuers and their subsidiaries’ information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate and perform in all material respects as required in connection with the operation of the business of the Issuers and their subsidiaries as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants. The Issuers and their subsidiaries have implemented and maintained commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and data, including “Personal Data,” used in connection with their businesses. “Personal Data” means (i) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (ii) any information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended; (iii) “personal data” as defined by the European Union General Data Protection Regulation (“GDPR”) (EU 2016/679); (iv) any information which would qualify as “protected health information” under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”); and (v) any other piece of information that allows the identification of such natural person, or his or her family, or permits the collection or analysis of any data related to an identified person’s health or sexual orientation. There have been no breaches, violations, outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the duty to notify any other person, nor any incidents under internal review or investigations relating to the same. The Issuers and their subsidiaries are presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access, misappropriation or modification.

(xxxiv) Compliance with Data Privacy Laws. The Issuers and their subsidiaries are, and at all prior times were, in material compliance with all applicable state and federal data privacy and security laws and regulations, including without limitation HIPAA, and the Company and its subsidiaries have taken commercially reasonable actions to prepare to comply with, and since May 25, 2018, have been and currently are in compliance with, the GDPR (collectively, the “Privacy Laws”). To ensure compliance with the Privacy Laws, the Company and its subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their policies and procedures relating to data privacy and security and the collection, storage, use, disclosure, handling, and analysis of Personal Data (the “Policies”). The Issuers and their subsidiaries have at all times made all disclosures to users or customers required by applicable laws and regulatory rules or requirements, and none of such disclosures made or contained in any Policy have, to the knowledge of the Issuers, been inaccurate or in violation of any applicable laws and regulatory rules or requirements in any material respect. The Issuers further certify that neither they nor any of their respective subsidiaries: (i) has received notice of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Laws, and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law. (xxxv) OFAC. Neither the Issuers nor any of their subsidiaries nor, to the knowledge of the Issuers, any director, officer, agent, employee or affiliate of the Issuers or any of their subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Issuers will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary or other person or entity, for the purpose of financing the activities of any subsidiary subject to, or any other person known to the Issuers to be currently subject to, any U.S. sanctions administered by OFAC. (xxxvi) Description of Securities and Indenture. The Securities and the Indenture conform in all material respects to the description thereof contained in the Prospectus. (xxxvii) Due Authorization of the Indenture and the Securities. The Indenture has been duly authorized, executed and delivered by the Issuers, has been duly qualified under the 1939 Act, and constitutes a legal, valid and binding instrument enforceable against the Issuers in accordance with its terms (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or other laws affecting creditors’ rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law); and the Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters pursuant to this Agreement, will constitute legal, valid and binding obligations enforceable against the Issuers in accordance with its terms (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or other laws affecting creditors’ rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law).

(b) Officer’s Certificates. Any certificate signed by any officer of either Issuer or any of its subsidiaries delivered to the Representative or to counsel for the Underwriters shall be deemed a representation and warranty by such Issuer to each Underwriter as to the matters covered thereby.

SECTION 2. Sale and Delivery to Underwriters; Closing. (a) Securities. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Issuers agree to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Issuers, at the price set forth in Schedule B, the aggregate principal amount of Securities set forth in Schedule A opposite the name of such Underwriter.

(b) Payment. Payment of the purchase price for, and delivery of certificates for, the Securities shall be made at the offices of Cooley LLP, 55 Hudson Yards, New York, New York 10001, or at such other place as shall be agreed upon by the Representative and the Issuers, at 9:00 A.M. (Eastern time) on the fifth business day after the date hereof, or such other time not later than ten business days after such date as shall be agreed upon by the Representative and the Issuers (such time and date of payment and delivery being herein called “Closing Time”).

Payment shall be made to the Issuers by wire transfer of immediately available funds to a bank account designated by the Issuers, against delivery to the Representative for the respective accounts of the Underwriters of certificates for the Securities to be purchased by them. It is understood that each Underwriter has authorized the Representative, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Securities which it has agreed to purchase. The Subsidiary, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Securities to be purchased by any Underwriter whose funds have not been received by the Closing Time, but such payment shall not relieve such Underwriter from its obligations hereunder.

(c) Denominations; Registration. Certificates for the Securities shall be in such denominations ($5,000 or integral multiples of $1,000 in excess thereof) and registered in such names as the Representative may request in writing at least one full business day before the Closing Time. The Securities will be made available for examination and packaging by the Representative in The City of New York not later than 10:00 A.M. (Eastern time) on the business day prior to the Closing Time.

SECTION 3. Covenants of the Issuers. The Issuers covenant with each Underwriter as follows: (a) Compliance with Securities Regulations and Commission Requests; Payment of Filing Fees. The Issuers, subject to Section 3(b), will comply with the requirements of Rule 430B and will notify the Representative immediately, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement or new registration statement relating to the Securities shall become effective, or any supplement to the Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or the filing of a new registration statement or any amendment or supplement to the Prospectus or any document incorporated by reference therein or otherwise deemed to be a part thereof or for additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or such new registration statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(e) of the 1933 Act concerning the Registration Statement and (v) if the Issuers become the subject of a proceeding under Section 8A of the 1933 Act in connection with the offering of the Securities. The Issuers will effect the filings required under Rule 424(b), in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and will take such steps as it deems necessary to ascertain promptly whether the form of prospectus supplement transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. The Issuers will make every reasonable effort to prevent the issuance of any stop order and, if any

13 stop order is issued, to obtain the lifting thereof at the earliest possible moment. The Issuers shall pay the required Commission filing fees relating to the Securities within the time required by Rule 456(b)(1) (i) of the 1933 Act Regulations without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the 1933 Act Regulations (including, if applicable, by updating the “Calculation of Registration Fee” table in accordance with Rule 456(b)(1)(ii) either in a post-effective amendment to the Registration Statement or on the cover page of a prospectus filed pursuant to Rule 424 (b)).

(b) Filing of Amendments and Exchange Act Documents; Preparation of Final Term Sheet. For so long as the Issuers are required by the 1933 Act to deliver a prospectus in connection with transactions contemplated hereby, the Issuers will give the Representative notice of its intention to file or prepare any amendment to the Registration Statement or new registration statement relating to the Securities or any amendment, supplement or revision to either any preliminary prospectus (including any prospectus included in the Original Registration Statement or amendment thereto at the time it became effective) or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, and the Issuers will furnish the Representative with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representative or counsel for the Underwriters shall object. The Issuers have given the Representative notice of any filings made pursuant to the 1934 Act or 1934 Act Regulations within 48 hours prior to the Applicable Time; the Issuers will give the Representative notice of its intention to make any such filing from the Applicable Time to the Closing Time and will furnish the Representative with copies of any such documents a reasonable amount of time prior to such proposed filing and will not file or use any such document to which the Representative or counsel for the Underwriters shall object. The Issuers will prepare a final term sheet (the “Final Term Sheet”) reflecting the final terms of the Securities, in form and substance satisfactory to the Representative, and shall file such Final Term Sheet as an “issuer free writing prospectus” pursuant to Rule 433 prior to the close of business two business days after the date hereof; provided that the Issuers shall furnish the Representative with copies of any such Final Term Sheet a reasonable amount of time prior to such proposed filing and will not use or file any such document to which the Representative or counsel to the Underwriters shall object. (c) Delivery of Registration Statements. The Issuers have furnished or will deliver to the Representative and counsel for the Underwriters, without charge, signed or photocopies of the Original Registration Statement and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein or otherwise deemed to be a part thereof) and signed copies of all consents and certificates of experts, and will also deliver to the Representative, without charge, a conformed copy of the Original Registration Statement and of each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Original Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(d) Delivery of Prospectuses. The Issuers have delivered to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter reasonably requested, and the Issuers hereby consent to the use of such copies for purposes permitted by the 1933 Act. The Issuers will furnish to each Underwriter, without charge, during the period when the Prospectus is required to be delivered under the 1933 Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(e) Continued Compliance with Securities Laws. The Issuers will comply with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations and the 1939 Act and the 1939 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this

Agreement and in the Prospectus. If at any time when a prospectus is required by the 1933 Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Issuers, to amend the Registration Statement or amend or supplement the Prospectus in order that the Prospectus will not include any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time to amend the Registration Statement or to file a new registration statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Issuers will promptly prepare and file with the Commission, subject to Section 3(b), such amendment, supplement or new registration statement as may be necessary to correct such statement or omission or to comply with such requirements, the Issuers will use their best efforts to have such amendment or new registration statement declared effective as soon as practicable (if it is not an automatic shelf registration statement with respect to the Securities) and the Issuers will furnish to the Underwriters such number of copies of such amendment, supplement or new registration statement as the Underwriters may reasonably request. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement (or any other registration statement relating to the Securities) or the Statutory Prospectus or any preliminary prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Issuers will promptly notify the Representative and will promptly amend or supplement, at their own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

(f) Blue Sky Qualifications. The Issuers will use their best efforts, in cooperation with the Underwriters, to qualify the Securities for offering and sale under the applicable securities laws of such states and other jurisdictions as the Representative may designate and to maintain such qualifications in effect for a period of not less than one year from date hereof; provided, however, that neither Issuer shall be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or so subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. The Issuers will also supply the Underwriters with such information as is necessary for the determination of the legality of the Securities for investment under the laws of such jurisdictions as the Underwriters may request.

(g) Rule 158. The Company will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings statement for the purposes of, and to provide to the Underwriters the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.

(h) Use of Proceeds. The Issuers will use the net proceeds received by them from the sale of the Securities in the manner specified in the Prospectus under “Use of Proceeds.”

(i) [RESERVED].

(j) Reporting Requirements. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations.

(k) Issuer Free Writing Prospectuses. The Issuers represent and agree that, unless they obtain the prior consent of the Representative, and each Underwriter represents and agrees that, unless it obtains the prior consent of the Issuers and the Representative, it has not made and will not make any offer relating to the

Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission; provided, however, that prior to the preparation of the Final Term Sheet in accordance with Section 3(b), the Underwriters are authorized to use the information with respect to the final terms of the Securities in communications conveying information relating to the offering to investors. Any such free writing prospectus consented to by the Issuers and the Representative is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Issuers represent that they have treated or agree that they will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and have complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely filing with the Commission where required, legending and record keeping.

SECTION 4. Payment of Expenses. (a) Expenses. The Issuers will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and of each amendment thereto, (ii) the preparation, printing and delivery to the Underwriters of this Agreement, any Agreement among Underwriters, the Indenture and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Securities, (iii) the preparation, issuance and delivery of the certificates for the Securities to the Underwriters, (iv) the fees and disbursements of the Issuers’ counsel, accountants and other advisors, (v) the qualification of the Securities under securities laws in accordance with the provisions of Section 3(f) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of the Blue Sky Survey and any supplement thereto, (vi) the printing and delivery to the Underwriters of copies of each preliminary prospectus, any Permitted Free Writing Prospectus and of the Prospectus and any amendments or supplements thereto and any cost associated with electronic delivery of any of the foregoing by the Underwriters to investors, (vii) the preparation, printing and delivery to the Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities, (ix) the costs and expenses of the Issuers relating to investor presentations on any “road show” undertaken in connection with the marketing of the Securities, including without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel and lodging expenses of the Representative and officers of the Issuers and any such consultants, and the cost of aircraft and other transportation chartered in connection with the road show, (x) any fees payable in connection with the rating of the Securities and (xi) the costs and expenses incurred by the Underwriters in connection with determining their compliance with the rules and regulations of The Financial Industry Regulatory Authority, Inc. (“FINRA”) related to the Underwriters’ participation in the offering and distribution of the Securities, including any related FINRA filing fees and the legal fees of, and disbursements by, counsel to the Underwriters.

(b) Termination of Agreement. If this Agreement is terminated by the Representative in accordance with the provisions of Section 5 or Section 9 (a)(i) hereof, the Issuers shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters.

SECTION 5. Conditions of Underwriters’ Obligations. The obligations of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Issuers contained in Section 1 hereof or in certificates of any officer of the Issuers or any subsidiary of the Issuers delivered pursuant to the provisions hereof, to the performance by the Issuers of their covenants and other obligations hereunder, and to the following further conditions:

(a) Effectiveness of Registration Statement; Filing of Prospectus; Payment of Filing Fee. The Registration Statement has become effective and at Closing Time no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of counsel to the Underwriters. A prospectus containing the Rule 430B Information shall have been filed with the Commission in the manner and within the time period required by Rule 424(b) without reliance on Rule 424(b)(8) (or a post-effective amendment providing such information shall have been filed and become effective in accordance with the requirements of Rule 430B). The Issuers shall have paid the required Commission filing fees relating to the Securities within the time period required by Rule 456(1)(i) of the 1933 Act Regulations without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the 1933 Act Regulations and, if applicable, shall have updated the “Calculation of Registration Fee” table in accordance with Rule 456(b)(1)(ii) either in a post-effective amendment to the Registration Statement or on the cover page of a prospectus filed pursuant to Rule 424(b).

(b) Opinion of Counsel for Issuers. At Closing Time, the Representative shall have received the favorable opinion, dated as of Closing Time, of Sidley Austin LLP, counsel for the Issuers, in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters to the effect set forth in Exhibit A hereto and to such further effect as counsel to the Underwriters may reasonably request.

(c) Opinion of Counsel for Underwriters. At Closing Time, the Representative shall have received the favorable opinion, dated as of Closing Time, of Cooley LLP, counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters with respect to the matters set forth in clauses (1), (4), (5), (7) and (8) and the last paragraph of Exhibit A hereto. In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York, the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to the Representative. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Issuers and their subsidiaries and certificates of public officials.

(d) Officers’ Certificate. At Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Prospectus or the General Disclosure Package, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of each Issuer and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Representative shall have received a certificate of the President or a Vice President of each of the Issuers and of the chief financial or chief accounting officer of each of the Issuers, dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1(a) hereof are true and correct with the same force and effect as though expressly made at and as of Closing Time, (iii) such Issuer has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or, to their knowledge, contemplated by the Commission.

(e) Chief Financial Officer’s Certificate. At the time of the execution of this Agreement, the Representative shall have received a certificate of the chief financial or chief accounting officer of the Company, with respect to certain financial information contained in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2019 and the preliminary prospectus and the Prospectus.

(f) Independent Accountants’ Comfort Letter.

(i) At the time of the execution of this Agreement, the Representative shall have received from Deloitte & Touche LLP a letter with respect to the Company and dated such date, in form and substance satisfactory to the Representative, together with signed or reproduced copies of such letter for each of the other Underwriters containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the preliminary prospectus and the Prospectus.

(ii) At Closing Time, the Representative shall have received from Deloitte & Touche LLP a letter with respect to Jefferies Finance and the Company dated such date, in form and substance satisfactory to the Representative, together with signed or reproduced copies of such letter for each of the other Underwriters containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the preliminary prospectus and the Prospectus.

(iii) At Closing Time, the Representative shall have received from PricewaterhouseCoopers LLP a letter with respect to Berkadia dated such date, in form and substance satisfactory to the Representative, together with signed or reproduced copies of such letter for each of the other Underwriters containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the preliminary prospectus and the Prospectus.

(g) Bring-down Comfort Letter. At Closing Time, the Representative shall have received from Deloitte & Touche LLP a letter with respect to the Company, dated as of the Closing Time, to the effect that it reaffirms the statements made in the letter furnished pursuant to subsection (f) of this Section, except that the specified date referred to shall be a date not more than five business days prior to Closing Time.

(h) Maintenance of Rating. At Closing Time, the Securities shall be rated at least Baa3 (stable) by Moody’s Investor’s Service Inc., BBB (stable) by Fitch Ratings and BBB (negative) by S&P Global Ratings, a division of S&P Global, Inc. Since the date of this Agreement, there shall not have occurred a downgrading in the rating assigned to the Securities or any of the Issuers’ other debt securities by any “nationally recognized statistical rating agency”, as that term is defined by the Commission in Section 3(a)(62) of the 1934 Act, and no such organization shall have publicly announced that it has under surveillance or review its rating of the Securities or any of the Issuers’ other debt securities.

(i) No Objection. FINRA has not raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements.

(j) Additional Documents. At Closing Time, counsel for the Underwriters shall have been furnished with such documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Issuers in connection with the issuance and sale of the Securities as herein contemplated shall be satisfactory in form and substance to the Representative and counsel for the Underwriters.

(k) Termination of Agreement. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representative by notice to the Company at any time at or prior to Closing Time, and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and remain in full force and effect.

SECTION 6. Indemnification. (a) Indemnification of Underwriters. (1) The Issuers, jointly and severally, agree to indemnify and hold harmless each Underwriter, its affiliates, as such term is defined in Rule 501(b) under the 1933 Act (each, an “Affiliate”), its directors, officers, employees and selling agents and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the Rule 430B Information, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, any Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Issuers; (iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Representative), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Issuers by any Underwriter through the Representative expressly for use in the Registration Statement (or any amendment thereto), including the Rule 430B Information or any preliminary prospectus any Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto).

(2) Insofar as this indemnity agreement may permit indemnification for liabilities under the 1933 Act of any person who is a partner of an Underwriter or who controls an underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and who, at the date of this Agreement, is a director or officer of either of the Issuers or controls either of the Issuers within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, such indemnity agreement is subject to the undertaking of the Issuers in the Registration Statement under Item 17 “Undertakings.”

(b) Indemnification of Issuers, Directors and Officers. Each Underwriter severally agrees to indemnify and hold harmless the Issuers, their directors, each of their officers who signed the Registration Statement, and each person, if any, who controls an Issuer within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a)(1) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment

19 thereto), including the Rule 430B Information or any preliminary prospectus, any Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Issuers by such Underwriter through the Representative expressly for use therein.

(c) Actions against Parties; Notification. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 6(a)(1) above, counsel to the indemnified parties shall be selected by the Representative and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by the Issuers. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

(d) Settlement without Consent if Failure to Reimburse. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(1) (ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

SECTION 7. Contribution. If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Issuers on the one hand and the Underwriters on the other hand from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Issuers on the one hand and of the Underwriters on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

The relative benefits received by the Issuers on the one hand and the Underwriters on the other hand in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement

(before deducting expenses) received by the Issuers and the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus bear to the aggregate initial public offering price of the Securities as set forth on the cover of the Prospectus.

The relative fault of the Issuers on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Issuers or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

The Issuers and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission.

No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Underwriter’s Affiliates, directors, officers, employees and selling agents shall have the same rights to contribution as such Underwriter, and each director of an Issuer, each officer of an Issuer who signed the Registration Statement, and each person, if any, who controls an Issuer within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Issuers. The Underwriters’ respective obligations to contribute pursuant to this Section 7 are several in proportion to the principal amount of Securities set forth opposite their respective names in Schedule A hereto and not joint.

SECTION 8. Representations, Warranties and Agreements to Survive. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Issuers or any of their subsidiaries submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Underwriter or its Affiliates, directors, officers, employees or selling agents, any person controlling any Underwriter, its officers or directors or any person controlling an Issuer, and (ii) delivery of and payment for the Securities.

SECTION 9. Termination of Agreement. (a) Termination; General. The Representative may terminate this Agreement, by notice to the Issuers, at any time at or prior to Closing Time (i) if there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Prospectus (exclusive of any supplement thereto filed after the date hereof) or the General Disclosure Package, any material adverse change

21 in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representative, impracticable or inadvisable to market the Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company has been suspended or materially limited by the Commission or the New York Stock Exchange, or if trading generally on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq National Market has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, FINRA or any other governmental authority, or a material disruption has occurred in commercial banking or securities settlement, or (iv) a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States, or (v) if a banking moratorium has been declared by either Federal or New York authorities.

(b) Liabilities. If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such termination and remain in full force and effect.

SECTION 10. [RESERVED]. SECTION 11. Tax Disclosure. Notwithstanding any other provision of this Agreement, immediately upon commencement of discussions with respect to the transactions contemplated hereby, the Issuers (and each employee, representative or other agent of the Issuers) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to the Issuers relating to such tax treatment and tax structure. For purposes of the foregoing, the term “tax treatment” is the purported or claimed federal income tax treatment of the transactions contemplated hereby, and the term “tax structure” includes any fact that may be relevant to understanding the purported or claimed federal income tax treatment of the transactions contemplated hereby.

SECTION 12. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to the Representative at 520 Madison Avenue, New York, New York 10022, Attention: Investment Grade Debt Capital Markets with a copy to the General Counsel, and notices to the Issuers shall be directed to the Company at 520 Madison Avenue, New York, New York 10022, Attention: Legal Department.

SECTION 13. No Advisory or Fiduciary Relationship. The Issuers acknowledge and agree that (a) the purchase and sale of the Securities pursuant to this Agreement, including the determination of the public offering price of the Securities and any related discounts and commissions, is an arm’s-length commercial transaction between the Issuers, on the one hand, and the several Underwriters, on the other hand, (b) in connection with the offering contemplated hereby and the process leading to such transaction each Underwriter is and has been acting solely as a principal and is not the agent or fiduciary of the Issuers or their affiliates, stockholders, creditors, employees or any other party, (c) no Underwriter has assumed or will assume an advisory or fiduciary responsibility in favor of the Issuers with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Issuers on other matters) and no Underwriter has any obligation to the Issuers with respect to the offering contemplated hereby except the obligations expressly set forth in this Agreement, (d) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve

22 interests that differ from those of the Issuers, and (e) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Issuers have consulted their own legal, accounting, regulatory and tax advisors to the extent they deemed appropriate.

SECTION 14. Integration. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Issuers and the Underwriters, or any of them, with respect to the subject matter hereof.

SECTION 15. Parties. This Agreement shall each inure to the benefit of and be binding upon the Underwriters and the Issuers and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters and the Issuers and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters and the Issuers and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase.

SECTION 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

SECTION 17. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

SECTION 18. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com (any such signature, an “Electronic Signature”)) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. The words “execution,” signed,” “signature,” and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement shall include any Electronic Signature, except to the extent electronic notices are expressly prohibited under this Agreement.

SECTION 19. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

SECTION 20. Acknowledgement and Consent to Bail-In of European Economic Area Financial Institutions. Notwithstanding and to the exclusion of any other term of this Agreement or any other agreements, arrangements or understandings between the Underwriters and the Company, the Company acknowledges and accepts that a BRRD Liability (as defined below) arising under this Agreement may be subject to the exercise of Bail-in Powers (as defined below) by the Relevant Resolution Authority (as defined below) and acknowledges, accepts, and agrees to be bound by:

(a) the effect of the exercise of Bail-in Powers by the Relevant Resolution Authority in relation to any BRRD Liability of the Underwriters to the Company under this Agreement, that (without limitation) may include and result in any of the following, or some combination thereof:

(b) the reduction of all, or a portion, of the BRRD Liability or outstanding amounts due thereon; (i) the conversion of all, or a portion, of the BRRD Liability into shares, other securities or other obligations of the Underwriters or another person, and the issue to or conferral on the Company of such shares, securities or obligations; (ii) the cancellation of the BRRD Liability; (iii) the amendment or alteration of any interest, if applicable, thereon, the maturity or the dates on which any payments are due, including by suspending payment for a temporary period;

(c) the variation of the terms of this Agreement, as deemed necessary by the Relevant Resolution Authority, to give effect to the exercise of Bail-in Powers by the Relevant Resolution Authority.

(d) As used in this Section 20, “Bail-in Legislation” means in relation to a member state of the European Economic Area which has implemented, or which at any time implements, the BRRD, the relevant implementing law, regulation, rule or requirement as described in the EU Bail-in Legislation Schedule from time to time; “Bail-in Powers” means any Write-down and Conversion Powers as defined in the EU Bail-in Legislation Schedule, in relation to the relevant Bail-in Legislation; “BRRD” means Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms; “EU Bail-in Legislation Schedule” means the document described as such, then in effect, and published by the Loan Market Association (or any successor person) from time to time at http://www.lma.eu.com/pages.aspx?p=499; “BRRD Liability” means a liability in respect of which the relevant Write-Down and Conversion Powers in the applicable Bail-in Legislation may be exercised; and “Relevant Resolution Authority” means the resolution authority with the ability to exercise any Bail-in Powers in relation to the relevant Underwriter.

SECTION 21. Recognition of U.S. Special Resolution Regimes. (a) In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.

(b) In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, default rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such default rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.

“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).

“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

(iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Issuers a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Underwriters and the Issuers in accordance with its terms.

Very truly yours,

JEFFERIES GROUP LLC

By: /s/ Michael J. Sharp Name: Michael J. Sharp Title: Executive Vice President and General Counsel

JEFFERIES GROUP CAPITAL FINANCE INC.

By: /s/ Michael J. Sharp Name: Michael J. Sharp Title: Executive Vice President and General Counsel

CONFIRMED AND ACCEPTED, as of the date first above written:

JEFFERIES LLC As Representative of the several Underwriters named in Schedule A hereto

By: /s/ Matt Casey Name: Matt Casey Title: Managing Director

SCHEDULE A

Principal Amount of Name of Underwriter Securities Jefferies LLC $ 425,000,000 Citigroup Global Markets Inc. $ 15,000,000 HSBC Securities (USA) Inc. $ 15,000,000 Natixis Securities Americas LLC $ 15,000,000 BNY Mellon Capital Markets, LLC $ 10,000,000 SMBC Nikko Securities America, Inc. $ 10,000,000 U.S. Bancorp Investments, Inc. $ 10,000,000 Total $500,000,000

Sch A-1 SCHEDULE B

JEFFERIES GROUP LLC

JEFFERIES GROUP CAPITAL FINANCE INC.

$500,000,000 2.75% Senior Notes due 2032

1. The initial public offering price of the Securities shall be 98.968% of the principal amount thereof, plus accrued interest, if any, from the date of issuance.

2. The purchase price to be paid by the Underwriters for the Securities shall be 98.418% of the principal amount thereof.

3. The interest rate on the Securities shall be 2.75% per annum.

4. The Company may redeem the Securities in whole or in part at any time, at its option, on at least 30 but not more than 60 days prior notice, at a redemption price to be calculated as described in the Prospectus.

Sch B-1

SCHEDULE C

1. Final Term Sheet, dated September 30, 2020

Sch C-1

Exhibit A

FORM OF OPINION OF COMPANY’S COUNSEL TO BE DELIVERED PURSUANT TO SECTION 5(b)

1. Each of the Company and Jefferies LLC (the “Subsidiary”) is a limited liability company validly existing and in good standing under the laws of the State of Delaware. Each of the Company and Jefferies LLC has limited liability company power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the General Disclosure Package (as defined below) and the Prospectus. The Company has the limited liability company power and authority to execute, deliver and perform its obligations under the Purchase Agreement, the Indenture and the Securities.

2. The Co-Issuer is a corporation validly existing and in good standing under the laws of the State of Delaware. The Co-Issuer has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the

General Disclosure Package and the Prospectus and to execute, deliver and perform its obligations under the Purchase Agreement, the Indenture and the Securities.

3. The statements in the Prospectus under the captions “Description of the Notes” and “Description of Securities We May Offer—Debt Securities” to the extent that such statements purport to describe certain provisions of the Indenture or the Securities, accurately describe such provisions in all material respects.

4. The Indenture has been duly qualified under the 1939 Act.

5. The Indenture has been duly authorized, executed and delivered by each Issuer and is a valid and binding agreement of each Issuer,

enforceable against each Issuer in accordance with its terms.

6. The Securities have been duly authorized by each Issuer and, when duly executed by authorized officers of each Issuer and authenticated by the Trustee, all in accordance with the Indenture, and delivered to and paid for by the Underwriters in accordance with the Purchase

Agreement, the Securities will be valid and binding obligations of the Issuers, enforceable against each Issuer in accordance with their terms, and will be entitled to the benefits of the Indenture.

7. To our knowledge, there are no legal or governmental proceedings before any court or governmental agency, authority or body or any arbitrator pending or threatened which are required to be disclosed in the Registration Statement or the Prospectus, other than those disclosed therein. To our knowledge, there are no contracts or other documents which are required to be disclosed in the Registration Statement or the Prospectus or to be filed or incorporated by reference as exhibits to the Registration Statement, other than those disclosed therein, filed therewith or incorporated by reference therein.

8. The statements in the Prospectus under the caption “Material United States Federal Income Tax Consequences,” to the extent that such statements purport to describe matters of United States federal income tax law and regulations or legal conclusions with respect thereto, accurately describe such matters in all material respects.

9. The Registration Statement has become effective under the 1933 Act; each of the Preliminary Prospectus and the Prospectus has been filed pursuant to Rule 424(b) of the 1933 Act Regulations in the manner and within the time period required by Rule 424(b) (without reference to Rule 424(b)(8) of the 1933 Act Regulations) and the FWP has been filed pursuant to Rule 433 of the 1933 Act Regulations in the manner and

within the time period required by Rule 433; and, to our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending by the Commission.

10. The Registration Statement, as of the date it first became effective, the Registration Statement (including the information in the Prospectus that was omitted from the Registration Statement at the time it first became effective but that is deemed, pursuant to Rule 430B(f) of the 1933 Act Regulations, to be part of and included in the Registration Statement), at September 30, 2020, and the Prospectus, as of the date of the Prospectus Supplement, each appeared on its face to be appropriately responsive in all material respects relevant to the offering of the

Securities to the applicable requirements of the 1933 Act and the 1933 Act Regulations for registration statements on Form S-3 or related prospectuses, as the case may be, except in each case that we express no opinion with respect to (A) financial statements and schedules and other financial data included or incorporated by reference therein or omitted therefrom, (B) the Incorporated Documents and (C) any trustee’s statement of eligibility on Form T-1 (a “Form T-1”).

11. The Incorporated Documents, as of the respective dates they were filed with the Commission, each appeared on its face to be appropriately responsive in all material respects to the applicable requirements of the 1934 Act, and the rules and regulations of the Commission

thereunder applicable thereto, except in each case that we express no opinion with respect to financial statements and schedules and other financial data included or incorporated by reference therein or omitted therefrom.

12. The Purchase Agreement has been duly authorized, executed and delivered by each Issuer.

13. Neither Issuer is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in

the Prospectus, neither Issuer will be required to be registered as an “investment company” as defined in the 1940 Act.

14. No consent, approval, authorization or other order of any federal regulatory body, federal administrative agency or other federal governmental body of the United States of America or any state regulatory body, state administrative agency or other state governmental

body of the State of New York is required under Applicable Laws for the execution and delivery by each Issuer of the Purchase Agreement and the issuance and sale of the Securities to the Underwriters as contemplated by the Purchase Agreement.

15. The execution and delivery by each Issuer of the Purchase Agreement, and the issuance and sale of the Securities by the Issuers to the Underwriters pursuant to the Purchase Agreement, do not (a) violate the limited liability company agreement of the Company or the certificate of incorporation or by-laws of the Co-Issuer, (b) violate any judgment, order

or decree listed in Schedule I attached hereto, (c) result in any breach of, or constitute a default under, any of the agreements or instruments

listed in Schedule II hereto or (d) result in a violation by either Issuer of any of the terms and provisions of any Applicable Laws.

As counsel to the Issuers in connection with the transactions described in the first paragraph above, we have participated in conferences with officers and other representatives of the Issuers, representatives of the independent public accountants for the Company and your representatives and counsel, at which conferences certain contents of the Registration Statement, the General Disclosure Package and the Prospectus and related matters were discussed. Although we are not passing upon or assuming responsibility for the accuracy, completeness or fairness of the statements included or incorporated by reference in or omitted from the Registration Statement, the General Disclosure Package, the Prospectus or the Incorporated Documents and have made no independent check or verification thereof (except as set forth in paragraphs (xiii) and (xiv) above), based upon our participation in such conferences, no facts have come to our attention that have caused us to believe that, insofar as is relevant to the offering of the Securities:

1. the Registration Statement, at the time it first became effective, or the Registration Statement (including the information in the Prospectus that was omitted from the Registration Statement at the time it first became effective but that is deemed, pursuant to Rule 430B(f) of the 1933

Act Regulations, to be part of and included in the Registration Statement), at September 30, 2020, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading,

2. the Preliminary Prospectus and the FWP, considered together (collectively, the “General Disclosure Package”), as of 4:00 p.m. (New York City time) on September 30, 2020, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or

3. the Prospectus, as of the date of the Prospectus Supplement or on the date hereof, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading,

except in each case that we express no belief and make no statement with respect to (A) financial statements and schedules and other financial data included or incorporated by reference in or omitted from the Registration Statement, the General Disclosure Package, the Prospectus or the Incorporated Documents or (B) any Form T-1. Exhibit 4.2

JEFFERIES GROUP LLC JEFFERIES GROUP CAPITAL FINANCE INC.

Officers’ Certificate Pursuant to Section 3.01 of the Indenture (2.75% Senior Notes due 2032)

October 7, 2020

The undersigned, Michael J. Sharp, Executive Vice President and Secretary of Jefferies Group LLC, a Delaware limited liability company (the “Company”), and Executive Vice President and Secretary of Jefferies Group Capital Finance Inc., a Delaware corporation (the “Co-Issuer”, and together with the Company, the “Issuers”), and John Stacconi, Global Treasurer of the Company and Treasurer of the Co-Issuer, pursuant to Section 3.01 of the Senior Debt Indenture, dated as of May 26, 2016 (the “Indenture”) by and among the Issuers and The Bank of New York Mellon, as trustee (the “Trustee”), and pursuant to resolutions duly adopted by the Board of Directors of the Company on February 1, 2019, December 22, 2017, September 19, 2016 and February 3, 2016 and the resolutions duly adopted by the Board of Directors of the Co-Issuer on February 1, 2019, December 26, 2017, October 20, 2016 and February 2, 2016 (collectively, the “Resolutions”), hereby establish and approve the terms of an issuance of debt securities of the Issuers, it being understood that any term used herein which is not defined herein shall have the meaning ascribed to it in the Indenture: 1. The title of the debt securities will be the “2.75% Senior Notes due 2032” (the “Notes”), and the CUSIP number for such debt securities will be 47233J DX3. 2. The initial aggregate principal amount of the Notes which may be authenticated and delivered under the Indenture (except for the Notes authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 3.04, 3.05, 3.06, 9.06 or 11.07 of the Indenture and except for any Notes which, pursuant to Section 3.03 of the Indenture, are deemed never to have been authenticated and delivered under the Indenture) is $500,000,000. 3. Interest will be paid to the persons in whose names the Notes are registered at the close of business on the Regular Record Date (as defined below). 4. The principal of the Notes shall be payable in full on October 15, 2032 (the “Maturity Date”). 5. The Notes shall bear interest at the rate of 2.75% per annum from and including October 7, 2020, payable each April 15 and October 15, commencing April 15, 2021, to holders of record at the close of business on the immediately preceding March 31 and September 30 (the “Regular Record Date”). 6. The principal of and interest on the Notes shall be payable at the Corporate Trust Office.

7. The Issuers will have the right to redeem the Notes, in whole or in part at any time, at the redemption price and upon the other terms and conditions as are set forth in the attached specimen Notes. 8. The Notes shall not be subject to redemption at the option of a Holder thereof or pursuant to any sinking fund or analogous provisions. 9. The Notes shall be issued in denominations of $5,000 and integral multiples of $1,000 in excess thereof. 10. The amount of principal and interest payable on the Notes are set forth in paragraphs 2 and 5 above. Such amounts shall not be determined by reference to any index or pursuant to any formula. 11. The currency in which payments of the principal of and interest on the Notes shall be payable is the United States dollar. 12. Subsection (12) of Section 3.01 of the Indenture shall not be applicable to the Notes. 13. The entire outstanding principal amount of the Notes shall be payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.02 of the Indenture. 14. Subsection (14) of Section 3.01 of the Indenture shall not be applicable to the Notes. 15. The Notes shall be subject to the Defeasance and Covenant Defeasance provisions of Article XIII of the Indenture. 16. The Notes shall be issued by the Issuers to The Depository Trust Company (“DTC”) in the form of one or more Global Securities as set forth in the form of Notes attached as Exhibit A, and there are no circumstances other than those set forth in Section 3.05 of the Indenture in which any Global Security may be transferred to, and registered and exchanged for Securities registered in the name of, a Person other than DTC or a nominee thereof. 17. There shall not be any additions to, eliminations of or changes to the Events of Default set forth in Section 5.02 of the Indenture that apply to the Notes. 18. There shall not be any additions to, eliminations of or changes to the covenants set forth in Article X of the Indenture that apply to the Notes. 19. The provisions of Article XII of the Indenture shall not apply to the Notes. 20. The Notes shall not be convertible or exchangeable for any other securities. 21. There shall not be any changes in the actions permitted or required by the Indenture to be taken by or on behalf of the Holders of the Notes. 22. There shall be no other terms of the Notes, except as set forth herein and in the Indenture.

Furthermore, the undersigned, pursuant to Section 2.01 of the Indenture and pursuant to the authority delegated by the Board of Directors of the Issuers to the undersigned in the Resolutions, hereby establish the form of Note, a true and complete specimen of which is attached as Exhibit A.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, I have hereunto signed my name as of the date first set forth above.

Jefferies Group LLC

/s/ Michael J. Sharp Michael J. Sharp Executive Vice President and Secretary

/s/ John Stacconi John Stacconi Global Treasurer

Jefferies Group Capital Finance Inc.

/s/ Michael J. Sharp Michael J. Sharp Executive Vice President and Secretary

/s/ John Stacconi John Stacconi Treasurer

Signature Page to Officers’ Certificate Pursuant to Section 3.01 of the Indenture Exhibit 4.3

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE 2016 INDENTURE.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO JEFFERIES GROUP LLC, JEFFERIES GROUP CAPITAL FINANCE INC. OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

EACH PURCHASER, INCLUDING ANY FIDUCIARY PURCHASING ON BEHALF OF THE PURCHASER, TRANSFEREE OR HOLDER OF THIS SECURITY WILL BE DEEMED TO HAVE REPRESENTED, IN ITS CORPORATE AND ITS FIDUCIARY CAPACITY, BY ITS PURCHASE AND HOLDING OF THIS SECURITY THAT EITHER: (A) IT IS NOT AN “EMPLOYEE BENEFIT PLAN” SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), A “PLAN” SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) OR AN ENTITY WHOSE ASSETS ARE DEEMED THE “PLAN ASSETS” OF SUCH EMPLOYEE BENEFIT PLAN OR PLAN UNDER 29 C.F.R. SECTION 2510.3-101 AS AMENDED BY SECTION 3(42) OF ERISA OR OTHERWISE (COLLECTIVELY A “PLAN”), AND IS NOT PURCHASING THIS SECURITY ON BEHALF OF OR WITH “PLAN ASSETS” OF ANY PLAN, OR WITH ANY ASSETS OF A GOVERNMENTAL, NON-U.S. OR CHURCH PLAN THAT IS SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”) OR (B) ITS PURCHASE, HOLDING AND DISPOSITION ARE ELIGIBLE FOR EXEMPTIVE RELIEF OR SUCH PURCHASE, HOLDING AND DISPOSITION ARE NOT PROHIBITED BY ERISA OR SECTION 4975 OF THE CODE OR ANY SIMILAR LAW.

THIS SECURITY IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY, NOR IS IT AN OBLIGATION OF, OR GUARANTEED BY, A BANK.

JEFFERIES GROUP LLC

JEFFERIES GROUP CAPITAL FINANCE INC.

2.75% SENIOR NOTE DUE 2032

CUSIP Number: 47233J DX3

No. $

Jefferies Group LLC, a limited liability company existing under the laws of Delaware (herein called the “Company”, which term includes any successor Person under the Indenture hereinafter referred to) and Jefferies Group Capital Finance Inc., a corporation existing under the laws of Delaware (herein called the “Co-Issuer”, which term includes any successor Person under the Indenture hereinafter referred to), (the Company and Co-Issuer, collectively, the “Issuers”), for value received as joint and several obligors, hereby promise to pay to Cede & Co., or registered assigns, the principal sum of ($) on October 15, 2032 and to pay interest thereon from October 7, 2020 or from the most recent Interest Payment Date to which interest has been paid or made available for payment, semi-annually on April 15 and October 15 in each year, commencing April 15, 2021, and at the Maturity thereof, at the rate of 2.75% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or made available for payment, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the March 31 or September 30 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest so payable, but not punctually paid or made available for payment, on any Interest Payment Date will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid in any other lawful manner not inconsistent with the requirements of any securities exchange on which these Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and any such interest on this Security will be made at the office or agency maintained for that purpose in New York, New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, against surrender of this Security in the case of any payment due at the Maturity of the principal thereof (other than any payment of interest that first becomes payable on a day other than an Interest Payment Date); provided, however, that at the option of the Issuers, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register; and provided, further, that if this Security is a Global Security, payment may be made pursuant to the Applicable Procedures of the Depositary as permitted in said Indenture.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Issuers have each caused this instrument to be duly executed.

Dated: October 7, 2020

JEFFERIES GROUP LLC

By: Name: Michael J. Sharp Title: Executive Vice President and General Counsel

JEFFERIES GROUP CAPITAL FINANCE INC.

By: Name: Michael J. Sharp Title: Executive Vice President and General Counsel

This is one of the Securities of the series designated herein and referred to in the Indenture.

Dated: October 7, 2020

THE BANK OF NEW YORK MELLON, as Trustee

By: Authorized Signatory

Reverse of Note

This Security is one of a duly authorized issue of securities of the Issuers (herein called the “Securities”), issued and to be issued in one or more series under a Senior Debt Indenture, dated as of May 26, 2016 (herein called the “Indenture”, which term shall have the meaning assigned to it in such instrument), among each of the Issuers and The Bank of New York Mellon, as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuers, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof initially limited in aggregate principal amount to $ .

Prior to July 15, 2032 (the date that is three months prior to the scheduled maturity of the Securities) (the “Par Call Date”), the Securities of this series are subject to redemption upon not less than 30 days’ nor more than 60 days’ notice, at any time, as a whole or in part, at the election of the Issuers, at a redemption price (“Redemption Price”) equal to the greater of:

(i) 100% of the principal amount of the Securities to be redeemed; or

(ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any such portion of such payments of interest accrued as of the date of redemption), discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below), plus basis points, plus in each case, accrued and unpaid interest to, but excluding, the date of redemption.

On or after the Par Call Date, the Securities of this series are subject to redemption upon not less than 30 days’ nor more than 60 days’ notice, at any time, as a whole or in part, at the election of the Issuers, at a Redemption Price equal to 100% of the principal amount of the Securities to be redeemed, plus accrued and unpaid interest to, but excluding, the date of redemption.

Notwithstanding the foregoing, installments of interest on Securities of this series that are due and payable on interest payment dates falling on or prior to a redemption date will be payable on the interest payment date to the registered holders as of the close of business on the relevant record date according to the Indenture.

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Securities.

“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of four Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Quotation Agent obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations, or (iii) if only one Reference Treasury Dealer Quotation is received, such quotation. “Quotation Agent” means the Reference Treasury Dealer appointed by the Company.

“Reference Treasury Dealer” means (i) Jefferies LLC (or its affiliates that are Primary Treasury Dealers) and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company will substitute therefore another Primary Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by the Company.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such reference treasury dealer at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price of such redemption date.

In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.

The Issuers will pay to any Holder of the Securities that is beneficially owned by a United States Alien Holder such additional amounts as may be necessary so that every net payment of principal of and interest on the Securities, after deduction or withholding for or on account of any present or future tax, assessment or other governmental charge imposed upon or as a result of such payment by the United States or any taxing authority thereof or therein, will not be less than the amount provided in the Securities to be then due and payable. We will not be required, however, to make any payment of additional amounts for or on account of:

(1) any tax, assessment or other governmental charge that would not have been imposed but for the existence of any present or former connection between such Holder or beneficial owner of such Securities (or between a fiduciary, settlor, beneficiary of, member or shareholder of, or possessor of a power over, such holder or beneficial owner, if such holder or beneficial owner is an estate, trust, partnership or corporation) and the United States, including, without limitation, such Holder or beneficial owner (or such fiduciary, settlor, beneficiary, member, shareholder or possessor), being or having been a citizen or resident or treated as a resident of the United States or being or having been engaged in trade or business or present in the United States or having or having had a permanent establishment in the United States;

(2) any tax, assessment or other governmental charge that would not have been imposed but for the presentation by the Holder of the Securities for payment on a date more than 10 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later;

(3) any estate, inheritance, gift, sales, transfer, excise, personal property or similar tax, assessment or other governmental charge;

(4) any tax, assessment or other governmental charge imposed by reason of such Holder’s or beneficial owner’s past or present status as a passive foreign investment company, a controlled foreign corporation, a personal holding company or foreign personal holding company with respect to the United States, or as a corporation which accumulates earnings to avoid United States federal income tax;

(5) any tax, assessment or other governmental charge which is payable otherwise than by withholding from payment of principal of, or interest on, the Securities;

(6) any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of, or interest on, the Securities if such payment can be made without withholding by any other paying agent;

(7) any tax, assessment or other governmental charge that is imposed by reason of a Holder’s or beneficial owner’s present or former status as (i) the actual or constructive owner of 10% or more of the total combined voting power of Jefferies Financial Group Inc. stock, as determined for purposes of Section 871(h)(3)(B) of the Internal Revenue Code of 1986, as amended (the “Code”), (or any successor provision) or (ii) a controlled foreign corporation that is related to us, as determined for purposes of Section 881(c)(3)(C) of the Code (or any successor provision);

(8) any tax, assessment or other governmental charge (i) in the nature of a backup withholding tax, (ii) as a result of the failure to comply with information reporting requirements or (iii) imposed or required pursuant to Sections 1471 through 1474 of the Code and the U.S. Treasury Regulations promulgated thereunder (commonly referred to as “FATCA”), or imposed under any substantially similar successor legislation, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection therewith;

(9) any tax, assessment or other governmental charge imposed solely because the Holder or the beneficial owner of the Securities (i) is a bank purchasing Securities in the ordinary course of its lending business or (ii) is a bank that is neither (a) buying Securities for investment purposes nor (b) buying Securities for resale to a third party that either is not a bank or holding Securities for investment purposes only;

(10) any tax, assessment or other governmental charge imposed in whole or in part by reason of such Holder’s or beneficial owner’s past or present status as a corporation that accumulates earnings to avoid U.S. federal income tax or as a private foundation, a foreign private foundation or other tax-exempt organization; or (11) any combinations of items identified in clauses (1) through (10) above.

In addition, we will not be required to pay any additional amounts to any Holder or beneficial owner that is a fiduciary or partnership or other than the sole beneficial owner of the Securities to the extent that a beneficiary or settlor with respect to such fiduciary, or a member of such partnership or a beneficial owner thereof would not have been entitled to the payment of such additional amounts had such beneficiary, settlor, member or beneficial owner been the holder of the Securities. In addition, if withholding of tax is required on the Securities linked to U.S. equities or equity indices under Treasury regulations promulgated under Section 871(m) of the Code, we will not be required to pay any additional amounts with respect to amounts withheld.

The term “United States Alien Holder” means any corporation, partnership, individual or fiduciary that is, for United States federal income tax purposes, a foreign corporation, a nonresident alien individual, a nonresident fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for United States federal income tax purpose, a foreign corporation, a nonresident alien individual or a nonresident fiduciary of a foreign estate or trust.

The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security or certain restrictive covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the Indenture.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

Unless the Issuers default in payment of the Redemption Price, on and after the redemption date, interest will cease to accrue on the Securities of this series or portions thereof called for redemption. If less than all of the Securities of this series are to be redeemed, the Securities to be redeemed shall be selected in accordance with the procedures of DTC.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuers and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Issuers and the Trustee with the consent of the Holders of a majority in principal amount of all Securities at the time Outstanding to be affected, considered together as one class for this purpose (such Securities to be affected may be Securities of the same or different series and, with respect to any series, may comprise fewer than all the Securities of such series). The Indenture also contains provisions (i) permitting the Holders of a majority in principal amount of the Securities at the time Outstanding to be affected under the Indenture, considered together as one class for this purpose (such affected Securities may be Securities of the same or different series and, with respect to any particular series, may comprise fewer than all the Securities of such series), on behalf of the Holders of all Securities so affected, to waive compliance by the Issuers with certain provisions of the Indenture and (ii) permitting the Holder of a majority in principal amount of the Securities at the time Outstanding of any series to be affected under the Indenture (with each such series being considered separately for this purpose), on behalf of the Holders of all Securities of such series, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 51% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity reasonably satisfactory to it, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 90 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.

If so provided pursuant to the terms of any specific Securities, the above-referenced provisions of the Indenture regarding the ability of Holders to waive certain defaults, or to request the Trustee to institute proceedings (or to give the Trustee other directions) in respect thereof, may be applied differently with regard to such Securities.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of each of the Issuers, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Issuers in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Issuers and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities of this series are issuable only in registered form without coupons in denominations of $5,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company or the Security Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Security for registration of transfer, the Issuers, the Trustee and any agent of the Issuers or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Issuers, the Trustee nor any such agent shall be affected by notice to the contrary.

This Security is a Global Security and is subject to the provisions of the Indenture relating to Global Securities, including the limitations in Section 3.05 thereof on transfers and exchanges of Global Securities.

This Security and the Indenture shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

6 Exhibit 5.1

SIDLEY AUSTIN LLP 787 SEVENTH AVENUE

NEW YORK, NY 10019 +1 212 839 5300 +1 212 839 5599 FAX

AMERICA • ASIA PACIFIC • EUROPE

October 7, 2020

Jefferies Group LLC 520 Madison Avenue New York, NY 10022

Jefferies Group Capital Finance Inc. 520 Madison Avenue New York, NY 10022

Re: Jefferies Group LLC

Ladies and Gentlemen:

We refer to the registration statement on Form S-3, File Nos. 333-229494 and 333-229494-01 (the “Registration Statement”), filed by Jefferies Group LLC, a Delaware limited liability company (the “Company”), and Jefferies Group Capital Finance Inc., a Delaware corporation (the “Co-Issuer,” and each of the Company and the Co-Issuer, an “Issuer” and, collectively, the “Issuers”), with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), which Registration Statement became effective upon filing pursuant to Rule 462(e) under the Securities Act. Pursuant to the Registration Statement, the Issuers are issuing $500,000,000 aggregate principal amount of their 2.75% Senior Notes due 2032 (the “Securities”). The Securities are being issued under an indenture, dated as of May 26, 2016 (the “Indenture”), between the Issuers and The Bank of New York Mellon, as trustee (the “Trustee”). The Securities are to be issued and sold by the Issuers pursuant to a purchase agreement dated September 30, 2020 (the “Purchase Agreement”) between the Issuers and the Underwriters named therein.

We have examined the Registration Statement, the Indenture, the Purchase Agreement, the Securities in global form and the resolutions adopted by the board of directors of each Issuer relating to the Registration Statement, the Indenture and the issuance of the Securities. We have also examined originals, or copies of originals certified to our satisfaction, of such agreements, documents, certificates and statements of the Issuers and other documents and instruments, and have examined such questions of law, as we have considered relevant and necessary as a basis for this opinion letter. We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of all persons and the conformity with the original documents of any copies thereof submitted to us for examination. As to facts

Sidley Austin (NY) LLP is a Delaware limited liability partnership doing business as Sidley Austin LLP and practicing in affiliation with other Sidley Austin partnerships.

Jefferies Group LLC Jefferies Group Capital Finance Inc. October 7, 2020 Page 2 relevant to the opinions expressed herein, we have relied without independent investigation or verification upon, and assumed the accuracy and completeness of, certificates, letters and oral and written statements and representations of public officials and officers and other representatives of the Issuers.

Based on and subject to the foregoing and the other limitations, qualifications and assumptions set forth herein, we are of the opinion that the Securities will constitute valid and binding obligations of each Issuer when the Securities are duly executed by duly authorized officers of each Issuer and duly authenticated by the Trustee, all in accordance with the provisions of the Indenture, and delivered to the purchasers thereof against payment of the agreed consideration therefor in accordance with the Purchase Agreement.

Our opinion is subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer and similar laws relating to or affecting creditors’ rights generally, and to general equitable principles (regardless of whether considered in a proceeding in equity or at law), including concepts of commercial reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief.

This opinion letter is limited to the General Corporation Law of the State of Delaware, the Delaware Limited Liability Company Act and the laws of the State of New York (excluding the securities laws of the State of New York), each as in effect on the date hereof. We express no opinion as to the laws, rules or regulations of any other jurisdiction, including, without limitation, the federal laws of the United States of America or any state securities or blue sky laws.

We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement and to all references to our Firm included in or made a part of the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.

Very truly yours,

/s/ Sidley Austin LLP