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Jefferies has "not been operating at normal levels" this year, but is well-positioned for 2017.
That's according to a candid letter CEO Richard Handler sent to staff Thursday to mark the end of the fiscal year.
"The first quarter of 2016 was one of the most painful periods we have experienced in our careers," Handler and chairman Brian Friedman wrote.
"Our results were horrible, as we dug ourselves into a pretty good-sized hole."
Performance has since bounced back, he said, although "the aggregate result for 2016 clearly will not be acceptable for any of us."
Important markets like initial public offerings and leveraged finance were quieter than normal even after the first quarter, Handler said. The firm has "shrunk or eliminated" challenged businesses and will continue to do so going forward.
"We believe in our bones that 2017 should be a year in which we can truly break out and optimize all our hard work over these past two challenging years," he wrote.
Handler finished the letter by asking staff to be honest and realistic in their year-end compensation expectations, to "give December their all in terms of work ethic," and to be ready to "hit the ground running full force" on January 3 next year.