Kelly and other people mentioned in the legal filing, including clients Aegerion Pharmaceuticals boss Marc Beer and Seattle Genetics CEO Clay Siegall, have strongly denied Christina Kelly's accusations of drug use and other debauchery.
"We cannot express how deeply we regret the agony and distraction that this has caused all of us, not to mention our clients, each of whom has categorically denied the allegations," Jefferies CEO Richard Handler and executive committee chairman Brian Friedman said in a memo.
"We are not happy to be in this unfair position," they added. "At the same time, we know that our individual and collective integrity is whatdefines Jefferies, and we will never compromise our values or our principles."
Kelly requested the leave himself to deal with the issue, according to the memo. Ben Lorello, the overall head of investment banking, will oversee the healthcare team.
A spokesman for Jefferies, a Leucadia National unit, declined to comment. Lawyers for Sage Kelly and Christina Kelly didn't respond to emails requesting comment.
The news was first reported by Bloomberg.