An investigation by the U.S. Securities and Exchange Commission (SEC) is underway regarding Jefferies Financial Group's association with the bankrupt auto parts company First Brands Group, as reported by The Financial Times on Thursday.
The report, based on information from insiders, indicates that the SEC is assessing whether Jefferies provided adequate disclosure to investors about its Point Bonita fund's exposure to the failed auto business.
The investigation is in its preliminary stages, focusing on Jefferies' internal controls and potential conflicts of interest. The outcome is uncertain, and no allegations of misconduct have been made at this point.
Jefferies faced scrutiny last month when concerns arose about its exposure to First Brands, which defaulted due to intricate debt arrangements, heightening fears of similar risky loans across Wall Street.