Wsw/26"/mike1st/mark2nd

Participating fully in Wall Street's current sound and fury is West Los Angeles-based Jefferies Group Inc., the brokerage and investment banking shop known for trading large blocks of stock and underwriting and trading junk bonds.

Jefferies, itself publicly held, saw its stock soar to near $60 a share on the strength of the bull market during the first half of the year and on rumors that a takeover was in the works. But with Jefferies' marriage plans evidently scuttled, and with the junk-bond market in a deep freeze, the company's stock recently sank as low as $16.56 a share, off 72 percent from its high.

It probably doesn't help that Jefferies also is known for its work with oil companies and real estate investment trusts, two sectors that have been depressed for months. But perhaps the worst is over. With Wall Street's latest rally, Jefferies was trading at nearly $26 a share last week, up 57 percent from its low. One would expect Chairman and CEO Frank Baxter, a 24-year Jefferies veteran, to show some ruffled feathers, but he seemed cool as a cucumber last week.

"I try to focus completely on how to service our clients," he said. "The stock price is like the weather: There is not too much I can do about it. I try to worry about things I can do something about."

Baxter was similarly even-toned when asked when the junk bond market would come back. "There are two kinds of people: Those who don't know, and those who don't know they don't know," he said.

Baxter has been through some rough spots before he assumed his current mantles in 1987, after founder Boyd Jefferies pleaded guilty to securities law violations in connection with the Drexel Burnham Lambert scandals. Starting out in those awkward circumstances, Baxter has led Jefferies from a large-block trading firm to a nearly full-service investment bank and brokerage.

Last January he took a seat on the board of governors of the National Association of Securities Dealers, with an eye toward developing policies that address the changes taking place in the trading of stocks and bonds.

The Internet and other off-exchange forms of trading stock are gathering steam, Baxter said, but he warned against what he calls the "fallacy of displacement." Just as television didn't kill radio or movie theaters, the Internet will not kill the securities exchanges. Nonetheless, he added, the exchanges will have to become something other than "mere intermediaries" to survive.

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