ESG Reddit Mentions | ChartExchange

# Recap So Far:
This started out with a post that noticed [Apes were validated](https://www.reddit.com/r/Superstonk/comments/1qs4irp/calling_all_apes_to_page_6/) in catching the market corruption.
It then evolved into reading through the Dilorio Emails to figure out [why they were included](https://www.reddit.com/r/Superstonk/comments/1qtdjub/apes_and_the_files_a_meta_overview/) in the Epstein Files and it eventually evolved into the [Milken tree of financial corruption](https://www.reddit.com/r/Superstonk/comments/1qwvb05/apes_and_the_epstein_files_the_dilorio_emails_and/).
We left off at the idea that Jefferies is in unique position regarding GME.
# Jefferies Corporate Organization
In my last write up I talked about Citadel and Virtu who are Market Makers and have vertically integrated ecosystems. They fulfill retail orders by paying for order flow, or front running an order, then filling it with LIT market matches (30-40% of the time) or use a dark pool to internalize the order (60-70% of the time).
But Jefferies is not a Retail Market Maker. It's something else entirely. Where other players are vertically built, Jefferies is horizontally built.
We've explored Rich Handler who sits at the top in the overarching Jefferies Financial Group, but just below him are 6 pillars that form the company.
* Jefferies LLC
* Jefferies International Ltd
* Jefferies Financial Services, Inc.
* Jefferies Investment Advisers LLC
* Jefferies Capital Services, LLC
* Leucadia Asset Management LLC
There is one additional big partnership and that is with Sumitomo Mitsui (SMBC). This is a Japanese based, multi-national bank who has purchases 20% of Jefferies. This gives Jefferies access to cheaper, Yen-based, financing. That sounds familiar.
* Sumitomo Mitsui (SMBC)
And finally, we have ComputerShare who has a contract with Jefferies as the transfer agent. CS manages the ledgers while Jefferies own them. This gives JEF the first look at the numbers and lets them make take the best positions.
* ComputerShare
That's a lot. But let's dig in and see what we find.
# Jefferies Financial Group
The big daddy of them all. The top of the food chain. The timing of this investigation is good. They filed a [13-F](https://13f.info/manager/0000096223-jefferies-financial-group-inc) on Feb 9th for Q4 2025 which showed $19.6 billion worth of assets on the sheet. They file this in such a way that everything comes under 1 roof and lands right here. This structure makes it very transparent from the top as a CEO or SEC puppet, but really muddy from the bottom as a retail investor. Seems to be a theme. Every other pillar is labeled as an "other included manager."
# Jefferies LLC
This is one of the pillars that we are familiar with as they are the Primary U.S. Broker Dealer. But it's soooooo much more than that. This pillar is a Broker-Dealer, a Market Maker, a Prime Broker, a Custodial/Clearing Agent, and has a sprinkle of research in there. If you just said WTF and scratched your head, you would be absolutely right and definitely not alone. So, let's break it down.
**Broker-Dealer**
This is exactly what it sounds like. They are both brokers - agents who help investors move securities, and dealers - agents who move their own portfolio.
That's right. They can buy and sell for their client or themselves. Whatever is convenient or profitable at the time.
Here's a comparison of different Broker-Dealers:
|Business|Type|Method|How|
|:-|:-|:-|:-|
|Jefferies LLC|Institutional|Principal|Market Making|
|Goldman Sachs|Institutional|Principal|Large Block Trade|
|Virtu Financial|Institutional|Principal|High-Frequency|
|Fidelity|Retail|Agent|Routes to Others|
|Vanguard|Retail|Agent|Low-cost routing|
|Charles Schwab|Retail|Hybrid|Both|
|WeBull|Retail|Agent|PFOF|
|Robinhood|Retail|Agent|PFOF|
Legally, they cannot play against your position. They have certain barriers set up to prevent cross chat and coordination (called Chinese Walls - after the Great Wall of China). The Trading Desk can't tell Research what they just bought. And Investment Bankers (who know about mergers and such) can't talk to the Market Maker to help them get ahead of demand by hording stock. This is the basis of [FINRA Rule 5280](https://www.finra.org/rules-guidance/rulebooks/finra-rules/5280).
But when has a rule stopped anyone on Wall St? We live in the age of information. So not sending a direct email or calling the Research Floor from the Trading Desk still leaves dozens of options and entices questionable behavior. This is commonly called "The Game," and has been studied by [Daniela Peluso](https://kar.kent.ac.uk/75625/) (free article download. It's a good one).
There are common phrases that get sent around. Here's a few:
* **"Aggressive Axed Seller":** Signals the desk is struggling to offload a massive position, hinting at downward pressure.
* **"Real Money Better Buying":** This is code for "long-only institutional investors (like pension funds) are buying," which signals a high-conviction, long-term move rather than a short-term hedge fund scalp.
* **"Seeing Two-Way Flow":** This is often a way to hide that the firm is actually heavily weighted on one side by claiming there is equal buying and selling interest.
And in 2020-2021 a bunch of young'uns got busted having straight up conversations on [WhatsApp and Signal](https://gulfnews.com/business/banking/18-billion-fine-for-trading-on-whatsapp-others-16-firms-penalised-for-talking-deals-trades-on-personal-apps-1.1664321334713). That encryption isn't as good as people think.
Now a days [FINRA](https://www.finra.org/rules-guidance/guidance/reports/2026-finra-annual-regulatory-oversight-report), SEC, as well as these massive financial institutions are all using AI tools to monitor sentiment changes. Regulatory agencies are tracking low-level peons to "enforce the rules" if their tune changes to suddenly. But really, it's because it sends a message of rule enforcement without really enacting change. On the other hand, the hedge funds are tracking message boards to trade off vibes. It's a weird artificial-battle going on in the market research and publication space for the sake of getting over the wall.
**Market Maker**
We are generally familiar with the Market Makers Citadel and Virtu. They match a 'bid' to an 'ask' and try different techniques to extract as much profit from retail, and each other, as possible. But those are high-frequency Market Makers where Jefferies is an Institutional Market Maker. This means they operate by moving huge block trades to other institutions and get the capital up front.
|Business|Strategy|Inventory|
|:-|:-|:-|
|Citadel/Virtu|Capture millions of tiny spreads from retail|Be net-zero by end of the day|
|Jefferies|Send massive blocks to institutions|Hold large positions for days to months|
**Prime Broker**
This term should also sound familiar. These are the guys that offer services to hedge funds and some other institutional investors. They are like the concierge for rich people to invest and for shorts to short.
First, they help with financing, margin, and possibly finding investors so that a hedge fund can maximize their leverage. Next, they assist with "locates" to reasonably find shares to sell/lend. And finally, they offer "Integrated Reporting" to see real time stats on things related to their goal. They use something called the [JPrime Portal](https://www.jprime.com/Default.aspx?ReturnUrl=%2F) to facilitate this.
This is where Stormtroopers are cloned, raised, and outfitted.
**Custodial/Clearing Agent**
This aspect focuses on housing assets for clients. They are like the bank, but for financial institutions. They handle all the related money - like dividends, stock splits, etc. as well as all the paperwork.
So when you DRS, this is the department that has to check to see if that share was lent out, if it was pledged as collateral, and they have to register it as withdrawn from the DTCC.
Make their lives hell, boys.
**Fitting it all together**
* The Custodial Agent holds a ton of resources in their vault.
* The Prime Broker then sets up financing, agrees to margin size, and finds investors.
* Then Jefferies loans money to the hedge fund client.
* For longs: The hedge fund buys shares through the Broker-Dealer.
* *These shares go into the Custodial Agent vault.*
* For shorts: The hedge fund borrows and sells shares through the Broker-Dealer.
* *The cash raised from the sale goes into the vault.*
* Jefferies then loans 140% of the shares to enable short activity.
If you're thinking 140% is a random number, it's actually due to [SEC Rule 15c3-3](https://www.finra.org/rules-guidance/guidance/interpretations-financial-operational-rules/sea-rule-15c3-3-and-related-interpretations) which outlines how these institutions can legally rehypothecate shares to that specific percent. Or more if they want. It's really more of a suggestion.
That was a lot for a single pillar. Take a break. Get some water. There's 5 more pillars to go before we reach the meaty part. The rest are not quite as big.
# Jefferies Financial Services, Inc
Welcome back. I hope you're refreshed and ready for more. According to Jefferies [financial wellness report](https://s204.q4cdn.com/176394273/files/doc_financials/2025/ar/2025_Annual_Report_DIGITAL-01282026.pdf), Jefferies Financial Services, Inc (JFSI) is a Services and Financing Entity. Well that's pretty generic... But way down there, starting at page 29, we get some bits and pieces of what JFSI does.
They dabble in Specialized Capital Markets. I had to look this up since it also seems generic but I think [Adam Perez and Jospeh Tolm](https://www.cambridgeassociates.com/wp-content/uploads/2025/01/2025-01-Specialty-Finance-Investing-A-Versatile-Tool-for-Private-Credit-Investors.pdf) summarize it well here:
>"It is an umbrella term that incorporates several niche strategies, with a common thread being lending to non-bank financial businesses backed by a pool of collateral. Because of this, specialty finance has often been called asset-backed finance or private asset backed securities (ABS). Private ABS differs from its public counterparts as it can be backed by smaller loans or esoteric assets that would likely have trouble securitizing in the public securitization markets."
They get you stuff that you might not want the public to see from people you might not want the public to see; such as certain equities, debt structures, or swaps. There it is. Swaps.
JFSI specializes in Derivatives and Swaps which explains why their "Sold, not yet purchased" is so high.
# Jefferies Investment Advisers LLC
JIA is a private investment arm and the only arm with fiduciary duty. That means this one HAS to do what's best for the client. That's kind of messed up considering how big this machine is.
This pillar has wealth management for wealthy clients. Most of the workers are both financial advisors and brokers so that they can give advice and can execute what the client wants. Or they mark the account as "discretionary" and manage it however Jefferies wants. An independent account has control over their actions and assets where a discretionary account gives control of actions and assets to Jefferies. Whatever is easier as long as the account balance keeps rising, right?
This entity files a [Form ADV](https://adviserinfo.sec.gov/firm/summary/325421) which shows that this pillar has $24.5 billion AUM. Guess how much is discretionary. >!$21 billion.!< The wealthy seem to be so lazy they don't manage their own money anymore!
# Jefferies Capital Services, LLC
JCS focuses on capital. It's a pretty straight forward name this time. They raise money, loan money, and underwrite bonds to sell for money. They're all about moving cash.
* They give a corporate client a massive loan.
* The client has to put up huge amounts of shares as collateral.
* Those shares go to the custodial agent (the Vault) and are used as locates.
* JCS does not want to hold the risk of a loan defaulting, so they package it into bonds (CLOs) and sell it off as investment instruments to private investors or the public as a solid investment.
* JCS gets the money but puts the risk on someone else's book.
Just a point of connection: if hedge funds think the bonds are garbage, they can go to the Broker-Dealer and short the CLO. Yeah. You can short bonds. Or if you don't want to do it yourself, you can go back to JFSI and get a total return swap on those bonds.
# Jefferies International, Ltd
It's time to think outside the USA and jump the Atlantic. JIL is based in London, is subject to their security laws, and is part of EMEA (Europe, Middle East, Africa) regulatory world. The USA has the Security and Exchange Commission (SEC), but this London pillar answers to the Financial Conduct Authority (FCA). That sounds so perfectly British.
JEF is a Primary Broker for the US. JIL is a Primary Dealer for several European Nations (including Germany). This means JIL is the first buyer of European government debt which in exchange it uses as collateral to do basically everything it does here in America.
Remember that 140% rehypothecation the SEC mildly suggests? Well the stuffy British FCA is much more stiff on the matter. Just kidding. They allow unlimited rehypothecation (if they sign the [Title Transfer Collateral Arrangement](https://www.lawinsider.com/dictionary/title-transfer-collateral-arrangement))! WTF?!
So, a hedge fund can pledge assets to JIL and they can be used as locates infinitely.
Oh, and at the end of the trading day, Jefferies sweeps assets between US and UK to balance the books for US regulations and European optimization. Cool....
One more thing, JIL does not report on the 13-F. They're in London precisely to evade US regulations. Whatever is sitting over there is found in this [vague document](https://s3.eu-west-2.amazonaws.com/document-api-images-live.ch.gov.uk/docs/SyZXp4ZqUGG9nP9UHrLflE3oIE7MjUXNOXMNr4k6V4o/application-pdf?X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=ASIAWRGBDBV3PKYT5WQ5%2F20260213%2Feu-west-2%2Fs3%2Faws4_request&X-Amz-Date=20260213T220905Z&X-Amz-Expires=60&X-Amz-Security-Token=IQoJb3JpZ2luX2VjEC0aCWV1LXdlc3QtMiJHMEUCIHBBUWsV1Xyw1DE9trk3xO3EyQ%2Fix7d29ZnyP2GB1mY8AiEA16Z%2Fuhl1xIF%2BfCmIgBOP27sakpMaMKZjdSJdHtJEZ%2BkqigQI9v%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FARAFGgw0NDkyMjkwMzI4MjIiDDBFMwVV2UEUlZH64CreAx29iVXX54OCJicQyTNMreGBzUegZcvYECevLhidtXGWCMuHF1BMsbDJievsKyWpSNvtZjh1Of%2BS7XsHR8vWIo8CHQOaHjTTMsAeAcn6fdL7iUcS%2Fn04AkjKkhtDEGovocYbk8Zniddxv9A%2BrmL78ADfDg2G76m2BQjWtwVbTcGsHZCBpOU1f6pOYtTFsiHIYf8mvoTF4NZJDtHl5erO5Q3zF%2F31YzFPhRC%2FNX9EJ6isixLe6wXBxZn7PiiVE%2Bid0D2klUkoVnKA6psJq97%2FRrcyT7YUiv0vghrgNva4dyV45xm51sbzssip2OT5ngDGHiewTwWkvyHDaR4lINJitAjo4ryG1V54hNp%2FxNpsUoeAXseSiG9CJ8bdrDOHZ%2FQVRkejDszqieid49zHKrUlGDbXjScZkCS1Uih%2BWVimYlzMK1jXZWUE7lcsPtnTcptWmmusmNhsw%2BIRIWSFBAFtq976Z7iKTY0HkI7VIJkXnas6J%2FktQI%2Fv1hTZ5nP2tAf%2FHRmZQAhNzdunZjKxaEqcX5gK6DoaeW70Tuow7sDxIwVwVnniWGpa7f8fBKSLFBtIDFzln8gpU8ZSSxlI2FMon%2BrYV2iXZrOwQVZxZOGZ%2F1yZNnxoUooJYZJJdHb3d40wqaK%2BzAY6pQF3uOiwWwN5m0tqrSs9vBCtNsY41s7SGKBrFVqelqhlTwW3s8dhIQCVs49FlO0sieHL6rudQPkHTw55mCpkOBWsPvWSd6UwvUR7%2By36W1Y9UtXLo2YBWFyOyTboFL4btJnvBOY0FjRH4WyPtUl2L2tSmae0k1MgJYUNcGWmvRjINWNXKPidVR8lmmf0u6zJ45VAKBXuT5nIOVGMfv5Kl0biWRWiHO4%3D&X-Amz-SignedHeaders=host&response-content-disposition=inline%3Bfilename%3D%22companies_house_document.pdf%22&X-Amz-Signature=9b78e52d67363ebd797b84833f3ba46cfc9a5a2543bbb33bf42e930a66846f18). There are numbers, but no specific positions. It should be noted that 97% of Jefferies US based assets are pledged to this wing. This allows them to sweep assets wherever they want, whenever they want.
The new 2025 financial wellness report comes out in May.
# Leucadia Asset Management LLC
Our final pillar, and at last, a unique name. Through Leucadia, Jefferies both invests, or partners with others, to get into specialized markets and gather specialized data.
They call this "strategic partnerships". They buy some, or all, of a hedge fund. In return they get a portion of the fees, they get to route the hedge fund business through their Prime Broker, Broker-Dealer, International Side, and they get a lot of data. Jefferies then pumps in their capital to accelerate the returns.
Here are the 19 financial entities that fall under the Leucadia umbrella:
|**Entity Name**|**Specialization**|
|:-|:-|
|**Schonfeld Strategic Advisors**|Multi-manager, multi-strategy equity.|
|**Hildene Capital Management**|Asset-backed & opportunistic credit.|
|**Monashee Investment Management**|Capital markets and arbitrage.|
|**Point Bonita Capital**|Asset-based lending and receivables.|
|**Dymon Asia Capital**|Asian-focused multi-strategy.|
|**FourSixThree Capital**|Event-driven and distressed credit.|
|**Manteio Capital**|Quantitative multi-strategy.|
|**Illuminate Financial**|Fintech and financial infrastructure.|
|**Pacific Way Capital Management**|Multi-manager equity (2025 addition).|
|**Greykite Investment Adviser**|European opportunistic real estate.|
|**StemPoint Capital**|Global life sciences and biotech.|
|**Catenary Alternatives**|Alternative asset strategies.|
|**Pearlstone Alternative**|UK and European long/short credit.|
|**ISO-mts Capital Management**|Specialized credit and debt.|
|**Tephra Digital**|Digital assets and blockchain.|
|**Kathmandu Capital**|Global long/short equity.|
|**3 5 2 Capital**|Asset-backed securities (ABS).|
|**Solanas ESG**|Energy infrastructure and sustainability.|
|**CoreCommodity Management**|Commodity-focused strategies.|
This article is getting too big, so I will not be diving into each of these companies right now. But if someone else needs a starting point, look into these devious tentacles.
This completes Jefferies Internalization, or financial loop.
* Capital Services originates the loan.
* Investment Advisors give the information.
* Leucadia manages the fund.
* Jefferies LLC provides the assets to locate and completes the trade.
* Financial Services creates the swaps, derivatives, and synthetic hedging.
* International is the escape hatch for infinite locates.
That was a lot, and it looks like a perfect machine. Do not feel defeated. Chin up. Let's do some Financial Forensics and tear this bloated corpse apart.
# Financial Forensics
If you've been keeping track at home, we have a bunch of forms that contain a bunch of data but its obscure, to put it lightly.
Jefferies LLC - the parent company reports $19.6 billion on their 13-F.
Well, 13-F requires very little. But the balance sheet has more info.
|Security Type|On 13F ($19.6B)|On Balance Sheet ($34.7B)|
|:-|:-|:-|
|Stocks|Yes|Yes|
|Short Positions|No|Yes|
|Bonds|No|Yes|
|Cash|No|Yes|
|Anything Borrowed|No|Yes|
|Foreign Equities|No|Yes|
This establishes that there is $15.09 billion (43.49% of the company) in things other than long positions - such as shorts, bonds, cash, borrowed assets, and foreign stuff. We need a new form.
Luckily, we're just in time for the [Jefferies Financial Group 10-K](https://stocklight.com/stocks/us/nyse-jef/jefferies-financial-group/annual-reports/nyse-jef-2022-10K-22569507.pdf)! There's lots of info in this form, but the important thing is that we can see those missing categories.
Let's fill in our chart a little more. But instead of what's on the balance sheet (because it's already balanced), let's look at all assets to get a bigger picture.
|Security Type|Total Assets ($64.36B)|
|:-|:-|
|Stocks|19.6|
|Short Positions|XX.XX|
|Bonds|0.8|
|Cash|6.65|
|Anything Borrowed|7.51|
|Foreign Equities|7.20|
|Settlements, receivables, agreements|11.35|
Short positions are not explicitly listed. But in this case, I set it up to be simple subtraction (11.25). But we can derive them from "Financial instruments sold, not yet purchased" (which can be found on page 41).
Notice the gap between $11.25 billion Financial instruments sold, not yet purchased with only $7.51 billion borrowed shares. This indicates Jefferies is overall net short $3.75 billion.
# Follow the Money
We learned what is contained in each asset and we boiled it down to figure out short value. But we need to look at the [10-K](https://stocklight.com/stocks/us/nyse-jef/jefferies-financial-group/annual-reports/nyse-jef-2025-10K-25565568.pdf) to see more details about the "Financial instruments sold, not yet purchased." Let's look from 2020 to today to get a glimpse of the GME timeline.
|**Fiscal Year**|**Financial Instruments Sold, Not Yet Purchased**|**Year-over-Year Change**|
|:-|:-|:-|
|**2025**|**$12.31 B**|\+9.4%|
|**2024**|**$11.25 B**|\+15.2%|
|**2023**|**$9.76 B**|\+11.3%|
|**2022**|**$8.77 B**|\-16.8%|
|**2021**|**$10.54 B**|\+36.2%|
|**2020**|**$7.74 B**|—|
A key event in 2021 really rocked the boat. But even after a -16.8% year, they still didn't return to base line. In fact, 2025 has shorting at all-time highs. This strongly suggests they maintained the Golden Rule - NEVER EVER EVER close a naked short.
You know what correlates with net shorting? Paying interest rates to maintain the position. This should make sense with all the "Hard to Borrow" folks tracking the cost to borrow.
For Jefferies this shows up in 2 main places:
* Interest on Securities Loaned - They pay interest to the hedge fund providing shares.
* Interest on Repurchase Agreements - Since they use their long inventory ($8.8B in the LLC) as collateral to get cash, they pay interest on that cash. You can pay fractions of a dollar (cents), but you can't really pay fractions of a share. So, they just make it all cash.
Cool. But what does this tell us?
It tells us that in 2020 and 2021 Jefferies had nearly 0 in interest rates. And in 2024 and 2025 it's costing about $1.5 billion per year!
In fact, they have what is called a negative carry, meaning that in 2025 they lost $54.9 million to maintain their position.
# What about GME
Of all the forms I have referenced, there are no short positions clearly stated. That info lives in a black box. That means we have to infer some things.
* First, let's start with the share offering ("At-The-Market equity offering"). Jefferies helped get the shares to their "Initial Commitment" which is the first place they go after creation. It's like setting them free into the wild. But Jefferies had FTDs and needed to clear their books. They had the opportunity to use a different pillar to give those shares their first commitment without having to buy from the open market. Curious. The share offering started June7th, 2024 and completed June 11th, 2024, and wouldn't you know it, [two of those days had no FTDs](https://chartexchange.com/symbol/nyse-gme/failure-to-deliver/) during a price a run up. Suspicious.
* Second, the general short position is broken down further into "level 1(Equities)" or it exists at JFSI. A lvl 1 equity is a stock with high liquidity and high volume. While it's no longer the case, it's the historic category GME occupies. A short on JFSI's balance sheet means it is the hedge to a swap position.
* Third, we can see Securities Borrowed has spiked. To hold Hard-to-Borrow shares, the interest rates rises. And on the 10-k we saw interest has exploded over the past 5 years.
* Fourth, we have to look at derivatives. We know that Wolverine is the primary derivative dealer for GME. This means Jefferies has to buy puts and calls to use them. But.... as a Global Prime Broker and Market Maker they can make their own synthetic derivative using something called [Black-Scholes model](https://en.wikipedia.org/wiki/Black%E2%80%93Scholes_model) to mimic a call/put without actually having the call. This method makes it so they need fewer derivative contracts to get their desired price action. But they still have a ton of derivative contracts. Stock derivatives are listed as "Notes to Financial Statements," and even better, we can see $2.79 billion worth on JFSI which means they are hedging against a massive amount of synthetic exposure for clients (Swaps). Over 90% of these are OTC which means they're not through OCC and remain private. Sketchy.
So, they've likely siphoned stock from the ATM equity offering. They have "Financial Instruments Sold, not yet purchased" in a place that suggests they're hedging for downward pressure. They borrowed an expensive stock as told by the interest they're paying. They are buying derivatives to hedge even more.
If it walks like a duck, and quacks like a duck, it's likely short and naked like a duck.
# Why does this matter?
With all this info we can calculate some prices! Lets GOOOOOOO!!!!!
GME has 447,500,000 outstanding shares.
If Jefferies is short for 140% of the shares, then we can calculate "hurt points."
|**GME Price**|**Total Short Liability**|**Unrealized Loss (from $23.57)**|**Impact on $10.6B Equity**|
|:-|:-|:-|:-|
|**$23.57** (Current)|$14.76 B|**$0**|**Baseline**|
|**$27.00**|$16.92 B|**($2.16 B)**|**25% of Equity Wiped** |
|**$35.00**|$21.92 B|**($7.16 B)**|**67% of Equity Wiped**|
|**$40.50**|$25.37 B|**($10.61 B)**|**100% Equity Wiped**|

140% is the theoretical maximum a single company can rehypothecate. That would be about 650 million shorts.
To maintain this position they would have certain things on their balance sheet:
* A liability of about $15 billion in the short category ($11 billion).
* About $15 billion in cash collateral ($7 billion).
* And they would be paying $1.6 billion+ per year in interest ($1.5 billion).
This is not that far from reality based on the balance sheets. Things are indeed shuffled, hidden, and infinitely rehypothecated.
SMBC is the lifeblood holding Jefferies together. JEF only made about $631 million in 2025 - which is small considering how massive they are. The SMBC partnership has provided $2.5 billion in equity and cheap financing. This basically saved JEF to be able to maintain its positions for a while longer and in turn established a war of attrition between retail investors and the Japanese Mega Bank (economy). Let's keep eyes on those Yen.
# Important Points
Through this exploration I learned a few things that didn't really fit into the flow above. These are just some extras.
If things get harder to locate, the cost goes up. That makes sense. But what about when the cost to borrow goes negative? That's actually the Prime Broker paying some hedge fund to stay in their garbage position! It's a net loss but keeps everyone from blowing up into "unrealized loss" territory
A bank will hold a short position to match a hedge funds swap. This is so if a stock goes down, then the bank does not have to pay up with their own money. This effectively doubles (or more) the downward pressure on a stock as the Prime Broker holds the short position, but the hedge funds use swaps and derivatives to continue to beat down the stock price by forcing delta hedging.

Next time I might investigate Citadel and see what's up with these junk bonds.