Jefferies is being sued by investors in its Point Bonita Capital trade finance fund over losses related to its holdings in collapsed US auto-parts supplier First Brands Group.
British Virgin Islands-based investors Eugenia II Investment Holdings and Eugenia III Investment Holdings filed a lawsuit yesterday in New York, alleging that Jefferies’ Leucadia Asset Management arm and its Point Bonita Capital fund defrauded them by misrepresenting the terms of their purchase of First Brands receivables.
The filing was confirmed by press reports and law firm Pomerantz, which has been mandated to investigate “whether Jefferies and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.”
Jefferies told Bloomberg it “unequivocally did not engage in fraud” and will “vigorously defend against these specious claims and expect to prevail on the merits”.
Read more: “Lender control” not product complexity behind First Brands failure
First Brands fell into bankruptcy last year, owing billions of dollars to a vast array of creditors including major banks and some private credit firms.
The investors suing Jefferies claim they were told Point Bonita had “cash dominion” over receivables it purchased from First Brands, meaning the fund would be paid directly by the invoice obligors, according to Bloomberg. Instead, Point Bonita allowed First Brands to collect and hold onto the cash it got from large retailers, which created the opportunity to falsify statements, according to the investors.
Jefferies incurred a $30m (£22.3m) loss linked to the collapse of First Brands, which impacted the US investment bank’s 2025 fourth-quarter results.
The collapse of First Brands was linked to financial difficulties compounded by the earlier bankruptcy of subprime auto lender Tricolor Holdings. The case has heightened scrutiny of the private credit market, with Jefferies being investigated by the US Securities and Exchange Commission over its links to First Brands.
Read more: Private credit defaults ‘contained’ as market heads towards $5tn
US federal prosecutors also indicted First Brands founder Patrick James and his brother Edward earlier this year, alleging the two stole money, by among other things, falsifying invoices for accounts receivable and financial statements, as well as hiding liabilities from lenders.
Jefferies itself previously said the investment bank is a victim of fraud.
Meanwhile, Raistone Capital, a trade finance firm with large exposure to First Brands, also filed for bankruptcy.
