Boyd L. Jefferies' announcement Thursday that he had agreed to plead guilty to securities violations and resign from his Los Angeles-based brokerage marks the downfall of a master stockbroker and innovator.
The news from the 56-year-old entrepreneur dumbfounded some associates and admirers who knew him for his legendary devotion to job and clients. "I always thought he was a straight shooter--aggressive but on this side of the law," said one professional money manager in New York.
In tears, his voice breaking, Jefferies dropped the news to his staff early Thursday morning. In the statement to employees and stockholders, he wasted no time getting to the point.
"It is with deep personal sorrow and regret that I announce my resignation as chairman and chief executive of Jefferies Group and Jefferies & Co.," he said. "For 25 years, Jefferies has been my life. I am proud of the organization we have built together; I know that the company will continue to grow and maintain its leadership position in our industry and in the market."
FOR THE RECORD
Los Angeles Times Saturday March 21, 1987 Home Edition Business Part 4 Page 2 Column 3 Financial Desk 1 inches; 23 words Type of Material: Correction
A Laguna Beach home pictured in Friday's Business section was incorrectly described as being owned by Boyd L. Jefferies. Actually, Jefferies sold the home last year.
Meanwhile, at Jefferies Group offices in downtown Los Angeles, security guards turned away journalists trying to go up to the company's 33rd-floor corporate headquarters in the Union Bank building.
Boyd Jefferies made his company the dominant force in so-called "third market" trading. It is known as the place big investors go to trade big blocks of stock off the floors of the major exchanges, often after the exchanges have closed. The company was controversial for helping corporate raiders acquire big blocks of target firms' stock.
One client said he used Jefferies because it was willing to trade in anything almost anytime. "You could always go to Jefferies and get a bid," the client said. "That didn't mean you would accept it, but they would always make you an offer."
"He (Boyd Jefferies) was the best there was in the block (trading) business," another associate said. "Nobody worked as hard as he did. That was his game."
In fact, insiders said, Boyd Jefferies acted more as a chief trader for the company than he did as chief executive. He was a star salesman, accounting for 2% to 2.5% of its gross commissions in 1986.
Friends and clients described Boyd Jefferies' downfall more as a shame and personal tragedy for the man than a setback for his firm. They said they had a hard time picturing Boyd without his business. He was a workaholic, often rising at 1:30 a.m. in his Laguna Beach home and getting to work by 3 a.m., not leaving until as late as 6 p.m.
Minneapolis takeover specialist Irwin L. Jacobs--a major Jefferies customer--said he would call the company as early as 3 a.m. and Boyd Jefferies would answer the phone, having come in to trade in European stocks. "There were no such thing as hours for Boyd," Jacobs said. "You could find Boyd seven days a week, 24 hours a day."
"From what I know of his work habits, it's a very serious blow to him. I don't think anybody loves the securities business more than he does," said an institutional client, who asked not to be identified. Most people, if barred from the securities business for a few years, would find something else to do, the client said, adding: "I don't know if he's the type that can do that."
Jefferies was devoted to his clients, a trait that made him one of the best and most popular salesmen on Wall Street.
A Los Angeles securities attorney remembers seeing the executive on a plane trip to Indianapolis to watch the Memorial Day 500-mile auto race. "He had his customers with him, and he really took care of them," the lawyer recalled. "In a non-flashy way, he made sure they had a tremendous time."
Lives on Opulent Scale
Fabulously rich, Boyd Jefferies owns a $5-million home in Laguna Beach that overlooks the Pacific Ocean as well as a $1-million condominium in Indian Wells near Palm Springs.
In what little spare time he had, Jefferies liked to ski and play tennis and golf, client Jacobs said. "He played sports like he worked--hard," Jacobs said.
After weekends in the desert, Jefferies would leave Indian Wells at midnight on Sunday--and head directly into the office in downtown Los Angeles.
Jefferies' plan to build a new home in a posh section of Indian Wells recently fell through in what was perhaps a hint of the problems to come. When a fellow country club member asked Jefferies what had happened, he is said to have replied: "Well, sometimes less is better."
Series of Setbacks
Thursday's announcement was the latest in a series of blows that Jefferies and his companies have suffered in recent months.
The troubles began in late November when it was disclosed that Jefferies and his companies had been subpoenaed by federal authorities in connection with the insider trading investigation involving professional speculator Ivan F. Boesky.
Then, late last month, Jefferies Group announced that the SEC had questioned the company's bookkeeping methods last year in accounting for a $5-million settlement over a disputed securities transaction.