Jefferies CEO gives his crisis-response advice after handling Archegos saga over a margarita

By Louis Goss

"The time to figure out what went wrong is after you stop the bleeding"Jeffries CEO Richard Handler

Jefferies Financial Group CEO Richard Handler has offered his advice to those who might face a crisis similar to the one caused by the collapse of Archegos Capital Management after it was revealed the Wall Street veteran made a quick decision to fully exit the family office while waiting for a spicy margarita.

Handler told Jefferies (JEF) staff to exit its Archegos positions while waiting for his cocktail on a vacation in the Turks and Caicos, in a quick decision that saw the investment bank record relatively minimal losses.

In a post on X, formerly Twitter, Handler, who is currently Wall Street's longest serving CEO, outlined the lessons he learned from Archegos' multi-billion dollar meltdown, suggesting the best course of action is to stay calm and fully exit any positions quickly to minimize losses.

"The time to figure out what went wrong is after you stop the bleeding," Handler said. "A manageable loss shows you respect the reality that everything is fragile and you understand your responsibility to protect your team from a catastrophic loss."

"Your first sale in a bad situation is always your best sale, so why not sell it all? Bad surprises never become good ones." Handler added. "Arrogance lets you think you can turn it all around, and that usually kills you."

Handler said the Archegos crisis had also taught him the importance of "humility" and "flat organizations" as he explained that "people need to feel safe to elevate problems quickly." "Never shoot the messenger," he said.

His advice comes as court testimony has revealed the inside story of the crisis that saw Bill Hwang's $36 billion investment firm, Archegos Capital Management, implode in March 2021 in a collapse that triggered billions worth of losses in the banking sector.

Bloomberg's reporting on the trial of Korean-born billionaire Hwang, who started Archegos to manage his assets, revealed that in the days before its collapse, the family office had embarked on a frantic campaign to save itself from the impacts of its failed bet on media conglomerate Viacom.

After being informed that Archegos was failing to answer Jefferies calls, Handler told staff that he wanted all positions in the family office gone and a tally of any losses by the time he'd come back from getting his cocktail, according to court testimony.

Handler's decision saw the bank record just a $40 million loss on Archegos' collapse, compared to the huge losses posted by rivals including UBS (UBS), Credit Suisse, Morgan Stanley (MS) and Nomura (JP:8604) which amounted to sums of $10 billion across the industry.

"Remember, we lost a lot of money here so this was not our finest hour. It would have been worse if our team did not rally to allow us to minimize our pain," Handler said.

-Louis Goss

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06-28-24 0546ET

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