The unease has only intensified as the firm subsequently hit the financial headlines for a string of bad loans granted to fraudulent borrowers—First Brands in the US and MFS in the UK, both of which are now in insolvency proceedings.

These cases cast a shadow over Jefferies' reputation and its risk culture, particularly within its asset management platform, which is heavily exposed to what is now termed "private credit." This is Jefferies Credit's core business, which represents nearly half of the assets under management.

However, other seemingly minor vehicles, such as Point Bonita—where First Brands represents a 1/4 of the portfolio—are also affected. This raises questions that regulators might be well-advised to investigate further.

For now, Jefferies is ramping up efforts to reassure the market, signaling that the losses are entirely absorbable. This is, after all, not the first bump in the road for a bank that has already weathered many a storm. 

Yet, it will take more than that to dispel fears that more cockroaches might crawl out from the cracks. Furthermore, in the memory of any seasoned journalist, a financial institution has never been known to immediately admit the full extent of a critical situation.

To say the least, these setbacks arrived at a turning point, as Jefferies was trading at stratospheric valuations that left no room for error—as MarketScreener noted in these very columns just days before the stock's sharp decline.

This turbulence also clouds an otherwise stellar long-term track record. Jefferies, which climbed to the rank of the world's sixth-largest investment bank starting from almost nothing, has seen extraordinary expansion over the last four decades.

It owes much of this success to its leadership duo: Rich Handler, who has since become a social media star, and Brian Friedman.

Over the last decade, dividends per share have quadrupled and tangible book value per share has doubled. This growth is largely thanks to massive and perfectly timed share buybacks, executed during periods when the bank was trading at a deep discount to its book value.

Q1 2026 results may surprise the skeptics. Jefferies' investment banking division's revenues grew by a half, while market volatility proved extremely profitable for its trading operations.

The same applies to asset management, which remains a marginal part of the mix but continues to grow, despite the recent bad press.

Following the market correction, Jefferies' market capitalization has fallen back below its tangible book value, meaning that it has returned to oscillating around its long-term average.

In this context, it is no surprise to see the investment bank modestly resuming share buybacks, after wisely suspending them when the share price was flirting with all-time highs.

Earlier this week, the Financial Times reported rumors that Sumitomo Mitsui Financial Group, Japan's second-largest banking group—with which Jefferies already has a joint venture—might be considering a potential takeover of the American bank.

While this has been denied by Sumitomo and, frankly, quite improbable, this rumor is unlikely to soothe critics. They will undoubtedly see it as a sign that Jefferies, grappling with serious balance sheet issues, might be searching for a deep-pocketed partner to bail it out.