Jefferies Cuts Jobs, Asks Employees to Pay Back Bonus Should They Join Competitors in 2012

Jefferies Group Inc. (JEF), a mid-market pure play investment bank that has been battered for weeks by a steady feed of negative rumors, has more bad news to share. The firm is slashing 11 percent of its workforce, mainly in its equities division, as investors remain skeptical about the company's ability to stay independent, the Fox Business Network reported.

According to a memo obtained by Fox, Jefferies is rolling out a new compensation plan to claw back employees' discretionary compensation, such as bonuses, if they choose to leave the company and join a competitor voluntarily in 2012.

With all the turmoil surrounding Jefferies, the company wants to make sure it can keep the talents it needs by rewarding only those who are "in this together as partners" and are "committed to the long-term success" of the firm.

Jefferies has set aside $1.17 billion for employee compensation in the first nine months of its fiscal year, which is about 59 percent of the company's net revenue, according to the firm's latest quarterly filings with the Securities and Exchange Commission.

Jefferies did not respond to a request for comment on Tuesday.

Following the collapse of MF Global, which shook investor confidence in a wide array of financial firms, Jefferies' bonds were downgraded by rating agency Egan-Jones over short-term funding worries. Traders have since pounced, many surely believing they have spotted the next Bear Stearns, Lehman Brothers, or MF Global.

The company's efforts to assure the market it's not in trouble have been largely ignored, and bearish sentiment in the future of the bank has been underscored with heavy short-selling of its public shares. Over the past year, shares of Jefferies have lost over half of their market value.

The Memo Obtained by Fox Business Network: