Hedge Fund IsZo Says Jefferies ‘Hijacked’ Its Brokerage Account

Jefferies Group LLC overcharged and then “hijacked” the prime brokerage account of its client IsZo Capital Management, the activist hedge fund claimed in an arbitration filing.

The investment bank held back $5 million of IsZo’s money, later reduced to $2.5 million, to secure seven short positions in securities that are now worthless, IsZo claimed in an arbitration claim filed this week with the Financial Industry Regulatory Authority, or Finra.

The conflict arose in June, when IsZo, which manages more than $300 million, tried to close its Jefferies account and move its cash and holdings to another prime broker. Jefferies ...