|
|
(Mark One)
|
|
Q
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2013
|
|
or
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from to
|
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
|
27-0423711
(I.R.S. Employer
Identification No.)
|
599 Lexington Avenue
New York, New York
(Address of Principal Executive Offices)
|
10022
(Zip Code)
|
|
Large accelerated filer
o
|
|
Accelerated filer
Q
|
|
Non-accelerated filer
o
(Do not check if a smaller
reporting company)
|
|
Smaller reporting company
o
|
|
|
Item No.
|
|
|
Page No.
|
|
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
||
|
|
|
||
|
|
|||
|
|
|||
|
|
|||
|
||||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
As of June 30,
|
|
As of December 31,
|
||||
|
2013
|
|
2012
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
36,881
|
|
|
$
|
83,538
|
|
Cash collateral pledged
|
10,891
|
|
|
9,160
|
|
||
Securities owned, at fair value
|
438,514
|
|
|
624,127
|
|
||
Securities borrowed
|
581,677
|
|
|
408,096
|
|
||
Other investments
|
84,732
|
|
|
84,930
|
|
||
Receivable from brokers
|
25,899
|
|
|
71,306
|
|
||
Fees receivable, net of allowance
|
42,408
|
|
|
34,707
|
|
||
Due from related parties
|
24,024
|
|
|
21,022
|
|
||
Fixed assets, net of accumulated depreciation and amortization of $32,930 and $30,003, respectively
|
29,977
|
|
|
32,202
|
|
||
Goodwill
|
36,207
|
|
|
28,545
|
|
||
Intangible assets, net of accumulated amortization of $24,822 and $22,945, respectively
|
13,917
|
|
|
12,984
|
|
||
Other assets
|
18,508
|
|
|
16,278
|
|
||
Consolidated Funds
|
|
|
|
||||
Cash and cash equivalents
|
743
|
|
|
3,559
|
|
||
Securities owned, at fair value
|
40,785
|
|
|
3,525
|
|
||
Other investments, at fair value
|
193,282
|
|
|
204,205
|
|
||
Other assets
|
550
|
|
|
292
|
|
||
Total Assets
|
$
|
1,578,995
|
|
|
$
|
1,638,476
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Securities sold, not yet purchased, at fair value
|
$
|
153,126
|
|
|
$
|
177,937
|
|
Securities sold under agreement to repurchase
|
6,311
|
|
|
165,945
|
|
||
Securities loaned
|
581,643
|
|
|
410,441
|
|
||
Payable to brokers
|
142,312
|
|
|
188,788
|
|
||
Compensation payable
|
16,165
|
|
|
45,752
|
|
||
Short-term borrowings and other debt
|
4,376
|
|
|
4,132
|
|
||
Fees payable
|
3,489
|
|
|
5,277
|
|
||
Due to related parties
|
527
|
|
|
662
|
|
||
Accounts payable, accrued expenses and other liabilities
|
52,621
|
|
|
55,425
|
|
||
Consolidated Funds
|
|
|
|
||||
Securities sold, not yet purchased, at fair value
|
10,346
|
|
|
—
|
|
||
Payable to brokers
|
10,231
|
|
|
—
|
|
||
Capital withdrawals payable
|
—
|
|
|
2,891
|
|
||
Accounts payable, accrued expenses and other liabilities
|
160
|
|
|
414
|
|
||
Total Liabilities
|
981,307
|
|
|
1,057,664
|
|
||
Commitments and Contingencies (Note 13)
|
|
|
|
||||
Redeemable non-controlling interests
|
91,562
|
|
|
85,703
|
|
||
Stockholders' equity
|
|
|
|
||||
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Class A common stock, par value $0.01 per share: 250,000,000 shares authorized, 130,519,096 shares issued and 117,861,088 outstanding as of June 30, 2013 and 123,740,112 shares issued and 112,447,892 outstanding as of December 31, 2012, respectively (including 482,522 and 336,895 restricted shares, respectively)
|
1,160
|
|
|
1,135
|
|
||
Class B common stock, par value $0.01 per share: 250,000,000 authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
728,976
|
|
|
713,211
|
|
||
(Accumulated deficit) retained earnings
|
(189,348
|
)
|
|
(187,865
|
)
|
||
Accumulated other comprehensive income (loss)
|
110
|
|
|
356
|
|
||
Less: Class A common stock held in treasury, at cost, 12,330,829 and 11,292,220 shares as of June 30, 2013 and December 31, 2012, respectively.
|
(34,772
|
)
|
|
(31,728
|
)
|
||
Total Stockholders' Equity
|
506,126
|
|
|
495,109
|
|
||
Total Liabilities and Stockholders' Equity
|
$
|
1,578,995
|
|
|
$
|
1,638,476
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Investment banking
|
$
|
25,571
|
|
|
$
|
16,254
|
|
|
$
|
42,737
|
|
|
$
|
31,884
|
|
Brokerage
|
31,521
|
|
|
24,568
|
|
|
58,121
|
|
|
48,581
|
|
||||
Management fees
|
9,698
|
|
|
9,932
|
|
|
19,191
|
|
|
19,649
|
|
||||
Incentive income
|
1,954
|
|
|
580
|
|
|
4,565
|
|
|
1,271
|
|
||||
Interest and dividends
|
10,521
|
|
|
5,868
|
|
|
19,842
|
|
|
11,240
|
|
||||
Reimbursement from affiliates
|
1,214
|
|
|
1,381
|
|
|
2,699
|
|
|
2,426
|
|
||||
Other revenues
|
485
|
|
|
831
|
|
|
963
|
|
|
1,698
|
|
||||
Consolidated Funds
|
|
|
|
|
|
|
|
||||||||
Interest and dividends
|
241
|
|
|
30
|
|
|
253
|
|
|
91
|
|
||||
Other revenues
|
2
|
|
|
26
|
|
|
77
|
|
|
109
|
|
||||
Total revenues
|
81,207
|
|
|
59,470
|
|
|
148,448
|
|
|
116,949
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Employee compensation and benefits
|
47,507
|
|
|
43,097
|
|
|
91,730
|
|
|
89,780
|
|
||||
Floor brokerage and trade execution
|
4,893
|
|
|
4,182
|
|
|
9,371
|
|
|
7,934
|
|
||||
Interest and dividends
|
7,240
|
|
|
3,207
|
|
|
13,658
|
|
|
4,931
|
|
||||
Professional, advisory and other fees
|
3,002
|
|
|
3,695
|
|
|
6,855
|
|
|
7,621
|
|
||||
Service fees
|
2,687
|
|
|
3,155
|
|
|
5,264
|
|
|
5,392
|
|
||||
Communications
|
3,979
|
|
|
3,853
|
|
|
8,753
|
|
|
7,254
|
|
||||
Occupancy and equipment
|
6,548
|
|
|
5,544
|
|
|
12,267
|
|
|
10,786
|
|
||||
Depreciation and amortization
|
2,609
|
|
|
2,363
|
|
|
5,162
|
|
|
4,518
|
|
||||
Client services and business development
|
4,659
|
|
|
3,753
|
|
|
8,758
|
|
|
7,579
|
|
||||
Other expenses
|
3,003
|
|
|
3,941
|
|
|
6,987
|
|
|
7,360
|
|
||||
Consolidated Funds
|
|
|
|
|
|
|
|
||||||||
Interest and dividends
|
106
|
|
|
4
|
|
|
106
|
|
|
20
|
|
||||
Professional, advisory and other fees
|
92
|
|
|
561
|
|
|
488
|
|
|
849
|
|
||||
Floor brokerage and trade execution
|
180
|
|
|
—
|
|
|
180
|
|
|
—
|
|
||||
Other expenses
|
107
|
|
|
70
|
|
|
145
|
|
|
140
|
|
||||
Total expenses
|
86,612
|
|
|
77,425
|
|
|
169,724
|
|
|
154,164
|
|
||||
Other income (loss)
|
|
|
|
|
|
|
|
||||||||
Net gains (losses) on securities, derivatives and other investments
|
4,994
|
|
|
9,787
|
|
|
16,801
|
|
|
29,458
|
|
||||
Consolidated Funds
|
|
|
|
|
|
|
|
||||||||
Net realized and unrealized gains (losses) on investments and other transactions
|
3,711
|
|
|
(2,417
|
)
|
|
8,781
|
|
|
3,547
|
|
||||
Net realized and unrealized gains (losses) on derivatives
|
158
|
|
|
373
|
|
|
462
|
|
|
414
|
|
||||
Net gains (losses) on foreign currency transactions
|
48
|
|
|
23
|
|
|
(167
|
)
|
|
(15
|
)
|
||||
Total other income (loss)
|
8,911
|
|
|
7,766
|
|
|
25,877
|
|
|
33,404
|
|
||||
Income (loss) before income taxes
|
3,506
|
|
|
(10,189
|
)
|
|
4,601
|
|
|
(3,811
|
)
|
||||
Income tax expense (benefit)
|
158
|
|
|
191
|
|
|
334
|
|
|
333
|
|
||||
Net income (loss)
|
3,348
|
|
|
(10,380
|
)
|
|
4,267
|
|
|
(4,144
|
)
|
||||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries
|
2,255
|
|
|
(2,434
|
)
|
|
5,750
|
|
|
(193
|
)
|
||||
Net income (loss) attributable to Cowen Group, Inc. stockholders
|
$
|
1,093
|
|
|
$
|
(7,946
|
)
|
|
$
|
(1,483
|
)
|
|
$
|
(3,951
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
117,235
|
|
|
114,561
|
|
|
115,471
|
|
|
114,420
|
|
||||
Diluted
|
120,901
|
|
|
114,561
|
|
|
115,471
|
|
|
114,420
|
|
||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.01
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
Diluted
|
$
|
0.01
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
|
Six Months Ended June 30, 2013
|
|
Six Months Ended June 30, 2012
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
$
|
4,267
|
|
|
|
|
|
|
$
|
(4,144
|
)
|
||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
|
|
(4
|
)
|
|
|
|
|
|
72
|
|
|
|
||||||
Defined benefit pension plans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost arising during the period
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
||||||
Net gain/(loss) arising during the period
|
(252
|
)
|
|
|
|
|
|
160
|
|
|
|
|
|
||||||
Add: amortization of prior service cost included in net periodic pension cost
|
10
|
|
|
(242
|
)
|
|
|
|
10
|
|
|
170
|
|
|
|
||||
Total other comprehensive income, net of tax
|
|
|
|
|
(246
|
)
|
|
|
|
|
|
242
|
|
||||||
Comprehensive income (loss)
|
|
|
|
|
$
|
4,021
|
|
|
|
|
|
|
$
|
(3,902
|
)
|
|
Common Shares Outstanding
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Earnings/ (Accumulated deficit)
|
|
Total Stockholders' Equity
|
|
Redeemable Non-controlling Interest
|
|||||||||||||||
Balance, December 31, 2012
|
112,447,892
|
|
|
$
|
1,135
|
|
|
$
|
(31,728
|
)
|
|
$
|
713,211
|
|
|
$
|
356
|
|
|
$
|
(187,865
|
)
|
|
$
|
495,109
|
|
|
$
|
85,703
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,483
|
)
|
|
(1,483
|
)
|
|
5,750
|
|
|||||||
Defined benefit plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(242
|
)
|
|
—
|
|
|
(242
|
)
|
|
—
|
|
|||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|||||||
Capital contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,181
|
|
|||||||
Capital withdrawals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,072
|
)
|
|||||||
Restricted stock awards issued
|
3,937,337
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Common stock issued upon acquisition (See Note 2)
|
2,514,468
|
|
|
25
|
|
|
—
|
|
|
6,272
|
|
|
—
|
|
|
—
|
|
|
6,297
|
|
|
—
|
|
|||||||
Purchase of treasury stock, at cost
|
(1,038,609
|
)
|
|
—
|
|
|
(3,044
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,044
|
)
|
|
—
|
|
|||||||
Amortization of share based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
9,493
|
|
|
—
|
|
|
—
|
|
|
9,493
|
|
|
—
|
|
|||||||
Balance, June 30, 2013
|
117,861,088
|
|
|
$
|
1,160
|
|
|
$
|
(34,772
|
)
|
|
$
|
728,976
|
|
|
$
|
110
|
|
|
$
|
(189,348
|
)
|
|
$
|
506,126
|
|
|
$
|
91,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Common Shares Outstanding
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Earnings/ (Accumulated deficit)
|
|
Total Stockholders' Equity
|
|
Redeemable Non-controlling Interest
|
|||||||||||||||
Balance, December 31, 2011
|
114,047,637
|
|
|
$
|
1,135
|
|
|
$
|
(16,902
|
)
|
|
$
|
688,427
|
|
|
$
|
(215
|
)
|
|
$
|
(163,980
|
)
|
|
$
|
508,465
|
|
|
$
|
104,587
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,951
|
)
|
|
(3,951
|
)
|
|
(193
|
)
|
|||||||
Defined benefit plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|
—
|
|
|
170
|
|
|
—
|
|
|||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|||||||
Deconsolidation of funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,104
|
)
|
||||||||||||||
Consolidation of funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,521
|
|
|||||||
Capital withdrawals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,351
|
)
|
|||||||
Restricted stock awards issued
|
2,701,314
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Purchase of treasury stock, at cost
|
(2,540,683
|
)
|
|
—
|
|
|
(6,357
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,357
|
)
|
|
—
|
|
|||||||
Amortization of share based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
13,526
|
|
|
—
|
|
|
—
|
|
|
13,526
|
|
|
—
|
|
|||||||
Balance, June 30, 2012
|
114,208,268
|
|
|
$
|
1,135
|
|
|
$
|
(23,259
|
)
|
|
$
|
701,953
|
|
|
$
|
27
|
|
|
$
|
(167,931
|
)
|
|
$
|
511,925
|
|
|
$
|
98,460
|
|
a.
|
Basis of presentation
|
b.
|
Principles of consolidation
|
c.
|
Use of estimates
|
d.
|
Valuation of investments and derivative contracts
|
i.
|
Portfolio funds—
Portfolio funds (“Portfolio Funds”) include interests in funds and investment companies managed by the Company or its affiliates. The Company follows US GAAP regarding fair value measurements and disclosures relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). The guidance permits, as a practical expedient, an entity holding investments in certain entities that either are investment companies as defined by the AICPA Audit and Accounting Guide, Investment Companies, or have attributes similar to an investment company, and calculate net asset value per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment.
|
ii.
|
Real estate investments—
Real estate investments are valued at fair value. The fair value of real estate investments are estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Real estate investments without a public market are valued based on assumptions and valuation techniques used by the Company. Such valuation techniques may include discounted cash flow analysis, prevailing market capitalization rates or earnings multiples applied to earnings from the investment, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties, consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence, as well as independent external appraisals. In general, the Company considers several valuation techniques when measuring the fair value of a real estate investment. However, in certain circumstances, a single valuation technique may be appropriate. Real estate investments are reviewed on a quarterly basis by the Company for significant changes at the property level or a significant change in the overall market which would impact the value of the real estate investment resulting in unrealized appreciation or depreciation.
|
e.
|
Securities borrowed and securities loaned
|
f.
|
Securities purchased under agreements to resell and securities sold under agreements to repurchase
|
a.
|
Operating Entities
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
|
(dollars in thousands)
|
||||||
U.S. Government securities (a)
|
$
|
3,506
|
|
|
$
|
137,478
|
|
Preferred stock
|
333
|
|
|
2,332
|
|
||
Common stocks
|
289,602
|
|
|
259,292
|
|
||
Convertible bonds (b)
|
4,426
|
|
|
6,202
|
|
||
Corporate bonds (c)
|
116,649
|
|
|
193,078
|
|
||
Options
|
18,883
|
|
|
20,546
|
|
||
Warrants and rights
|
2,247
|
|
|
2,354
|
|
||
Mutual funds
|
2,868
|
|
|
2,845
|
|
||
|
$
|
438,514
|
|
|
$
|
624,127
|
|
(a)
|
As of
June 30, 2013
, maturities ranged from July 2013 to April 2016 and interest rates ranged between
0.02%
and
5.95%
. As of
December 31, 2012
, maturities ranged from November 2013 to November 2022 and interest rates ranged between
0.25%
and
5.95%
.
|
(b)
|
As of
June 30, 2013
, the maturity was July 2014 with an interest rate of
5.00%
. As of
December 31, 2012
, maturities ranged from May 2014 to July 2014 with an interest rate of
5.00%
.
|
(c)
|
As of
June 30, 2013
, maturities ranged from September 2013 to October 2019 and interest rates ranged between
3.11%
and
12.00%
. As of
December 31, 2012
, maturities ranged from January 2013 to February 2041 and interest rates ranged between
3.09%
and
12.50%
.
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
|
(dollars in thousands)
|
||||||
(1) Portfolio Funds, at fair value
|
$
|
61,872
|
|
|
$
|
55,898
|
|
(2) Real estate investments, at fair value
|
2,158
|
|
|
1,864
|
|
||
(3) Equity method investments
|
20,424
|
|
|
26,462
|
|
||
(4) Lehman claims, at fair value
|
278
|
|
|
706
|
|
||
|
$
|
84,732
|
|
|
$
|
84,930
|
|
(1)
|
Portfolio Funds, at fair value
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
|
(dollars in thousands)
|
||||||
HealthCare Royalty Partners (a)(*)
|
$
|
9,214
|
|
|
$
|
7,866
|
|
HealthCare Royalty Partners II (a)(*)
|
4,239
|
|
|
6,415
|
|
||
Orchard Square Partners Credit Fund LP (formerly known as Ramius Global Credit Fund LP) (b)(*)
|
12,046
|
|
|
14,196
|
|
||
Tapestry Investment Co PCC Ltd (c)
|
81
|
|
|
194
|
|
||
Starboard Value and Opportunity Fund LP (d)(*)
|
16,665
|
|
|
15,706
|
|
||
Formation 8 Partners Fund I (e)
|
1,384
|
|
|
1,500
|
|
||
RCG LV Park Lane LLC (f)
|
685
|
|
|
708
|
|
||
RCGL 12E13th LLC (g)
|
400
|
|
|
—
|
|
||
RCG Longview Debt Fund V, L.P. (g)
|
7,260
|
|
|
—
|
|
||
Other private investment (h)
|
7,730
|
|
|
7,826
|
|
||
Other affiliated funds (i)(*)
|
2,168
|
|
|
1,487
|
|
||
|
$
|
61,872
|
|
|
$
|
55,898
|
|
(a)
|
HealthCare Royalty Partners and HealthCare Royalty Partners II are private equity funds and therefore distributions will be made when the underlying investments are liquidated.
|
(b)
|
Orchard Square Partners Credit Fund LP (formerly known as Ramius Global Credit Fund LP) has a quarterly redemption policy with a
60
day notice period and a
4%
penalty on redemptions of investments of less than a year in duration.
|
(c)
|
Tapestry Investment Company PCC Ltd is in the process of liquidation and redemptions will be made periodically at the investment managers' decision as the underlying investments are liquidated.
|
(d)
|
Starboard Value and Opportunity Fund LP permits quarterly withdrawals upon
ninety
days notice.
|
(e)
|
Formation 8 Partners Fund I is a private equity fund which invests in equity of early stage and growth transformational information and energy technology companies. Distributions will be made when the underlying investments are liquidated.
|
(f)
|
RCG LV Park Lane LLC is a single purpose entity formed to participate in a joint venture which acquired, at a discount, the mortgage notes on a portfolio of multifamily real estate properties located in Birmingham, Alabama. RCG LV Park Lane LLC is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.
|
(g)
|
RCGL 12E13th LLC and RCG Longview Debt Fund V, L.P. are real estate private equity structures and therefore distributions will be made when the underlying investments are liquidated.
|
(h)
|
Other private investment represents the Company's closed end investment in a wireless broadband communication provider in Italy.
|
(i)
|
The majority of these funds are affiliates of the Company or are managed by the Company and the investors can redeem from these funds as investments are liquidated.
|
(2)
|
Real estate investments, at fair value
|
(3)
|
Equity method investments
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
|
(dollars in thousands)
|
||||||
RCG Longview Debt Fund IV Management, LLC
|
$
|
1,336
|
|
|
$
|
1,954
|
|
RCG Longview Debt Fund V Partners, LLC
|
643
|
|
—
|
|
|||
HealthCare Royalty GP, LLC
|
751
|
|
642
|
||||
HealthCare Royalty GP II, LLC
|
718
|
|
1,086
|
||||
CBOE Stock Exchange, LLC
|
2,015
|
|
2,058
|
||||
Starboard Value LP
|
8,515
|
|
12,757
|
||||
RCG Longview Partners, LLC
|
1,857
|
|
1,535
|
||||
RCG Longview Louisiana Manager, LLC
|
1,613
|
|
1,866
|
||||
RCG Urban American, LLC
|
247
|
|
1,380
|
||||
RCG Urban American Management, LLC
|
45
|
|
545
|
||||
RCG Longview Equity Management, LLC
|
211
|
|
285
|
||||
Urban American Real Estate Fund II, LLC
|
1,537
|
|
1,636
|
||||
RCG Kennedy House, LLC
|
377
|
|
377
|
||||
Other
|
559
|
|
341
|
||||
|
$
|
20,424
|
|
|
$
|
26,462
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Revenues
|
$
|
4,019
|
|
|
$
|
4,810
|
|
|
$
|
9,074
|
|
|
$
|
9,962
|
|
Expenses
|
(1,420
|
)
|
|
(1,463
|
)
|
|
(2,838
|
)
|
|
(2,926
|
)
|
||||
Net realized and unrealized gains (losses)
|
285
|
|
|
19
|
|
|
322
|
|
|
109
|
|
||||
Net Income
|
$
|
2,884
|
|
|
$
|
3,366
|
|
|
$
|
6,558
|
|
|
$
|
7,145
|
|
(4)
|
Lehman Claims, at fair value
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
|
(dollars in thousands)
|
||||||
Common stocks
|
$
|
139,911
|
|
|
$
|
168,797
|
|
Corporate bonds (a)
|
55
|
|
|
61
|
|
||
Options
|
13,160
|
|
|
9,076
|
|
||
Warrants and rights
|
—
|
|
|
3
|
|
||
|
$
|
153,126
|
|
|
$
|
177,937
|
|
(a)
|
As of
June 30, 2013
and
December 31, 2012
, the maturity was January 2026 with an interest rate of
5.55%
.
|
|
As of June 30, 2013
|
||
|
(dollars in thousands)
|
||
Securities sold under agreements to repurchase
|
|
||
Agreements with Royal Bank of Canada bearing interest of 1.75% due on June 2015 to January 2016
|
$
|
6,311
|
|
|
$
|
6,311
|
|
|
As of December 31, 2012
|
||
|
(dollars in thousands)
|
||
Securities sold under agreements to repurchase
|
|
||
Agreements with Royal Bank of Canada bearing interest of 2.12% - 2.2% due on January 31, 2013 to June 25, 2013
|
$
|
29,039
|
|
Agreements with Barclays Capital Inc bearing interest of (0.05%) - 0.23% due on January 1, 2013
|
136,906
|
|
|
|
$
|
165,945
|
|
b.
|
Consolidated Funds
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
|
(dollars in thousands)
|
||||||
Common stocks
|
$
|
40,330
|
|
|
$
|
—
|
|
Government sponsored securities (a)
|
—
|
|
|
1,911
|
|
||
Commercial paper (b)
|
—
|
|
|
1,614
|
|
||
Options
|
455
|
|
|
—
|
|
||
|
$
|
40,785
|
|
|
$
|
3,525
|
|
(a)
|
As of
December 31, 2012
, maturities ranged from August 2013 to December 2014 and interest rates ranged between
0.28%
and
4.00%
.
|
(b)
|
As of
December 31, 2012
, commercial paper was purchased at a discount and matures on January 2, 2013.
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
|
(dollars in thousands)
|
||||||
(1) Portfolio Funds
|
$
|
177,848
|
|
|
$
|
190,081
|
|
(2) Lehman claims
|
15,434
|
|
|
14,124
|
|
||
|
$
|
193,282
|
|
|
$
|
204,205
|
|
(1)
|
Investments in Portfolio Funds, at fair value
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
|
(dollars in thousands)
|
||||||
Investments of Enterprise LP
|
$
|
170,300
|
|
|
$
|
173,348
|
|
Investments of consolidated fund of funds
|
7,548
|
|
|
16,733
|
|
||
|
$
|
177,848
|
|
|
$
|
190,081
|
|
|
|
|
Fair Value as of June 30, 2013
|
|
||||||||||||||
|
Strategy
|
|
Ramius Levered Multi-Strategy FOF LP
|
|
Ramius Multi-Strategy Master FOF LP
|
|
Ramius Vintage Multi-Strategy Master FOF LP
|
|
Total
|
|
||||||||
|
|
|
(dollars in thousands)
|
|
||||||||||||||
Tapestry Pooled Account V LLC*
|
Credit-Based
|
|
$
|
261
|
|
|
$
|
537
|
|
|
$
|
574
|
|
|
$
|
1,372
|
|
(a)
|
Externally Managed Portfolio Funds
|
Event Driven
|
|
1,183
|
|
|
1,774
|
|
|
2,500
|
|
|
5,457
|
|
(c)
|
||||
Externally Managed Portfolio Funds
|
Hedged Equity
|
|
—
|
|
|
—
|
|
|
719
|
|
|
719
|
|
(d)
|
||||
|
|
|
$
|
1,444
|
|
|
$
|
2,311
|
|
|
$
|
3,793
|
|
|
$
|
7,548
|
|
|
|
|
|
Fair value as of December 31, 2012
|
|
||||||||||||||||||
|
Strategy
|
|
Ramius Levered Multi-Strategy FOF LP
|
|
Ramius Multi-Strategy Master FOF LP
|
|
Ramius Vintage Multi-Strategy Master FOF LP
|
|
RTS Global 3X Fund LP
|
|
Total
|
|
||||||||||
|
|
|
(dollars in thousands)
|
|
||||||||||||||||||
Tapestry Pooled Account V LLC*
|
Credit-Based
|
|
$
|
315
|
|
|
$
|
649
|
|
|
$
|
693
|
|
|
$
|
—
|
|
|
$
|
1,657
|
|
(a)
|
Independently Advised Portfolio Funds*
|
Futures & Global Macro
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,161
|
|
|
7,161
|
|
(b)
|
|||||
Externally Managed Portfolio Funds
|
Event Driven
|
|
1,545
|
|
|
2,316
|
|
|
3,264
|
|
|
—
|
|
|
7,125
|
|
(c)
|
|||||
Externally Managed Portfolio Funds
|
Hedged Equity
|
|
—
|
|
|
—
|
|
|
790
|
|
|
—
|
|
|
790
|
|
(d)
|
|||||
|
|
|
$
|
1,860
|
|
|
$
|
2,965
|
|
|
$
|
4,747
|
|
|
$
|
7,161
|
|
|
$
|
16,733
|
|
|
(a)
|
The Credit‑Based strategy aims to generate returns via positions in the credit sensitive sphere of the fixed income markets. The strategy generally involves the purchase of corporate bonds with hedging of the interest exposure. The investments held in Tapestry Pooled Account V LLC, a related fund, are held solely in a credit based fund which the underlying fund's manager has placed in a side-pocket. The remaining amount of the investments within this category represents an investment in a fund that is in the process of liquidating. Distributions from this fund will be received as underlying investments are liquidated.
|
(b)
|
The Futures and Global Macro strategy is comprised of several portfolio accounts, each of which will be advised independently by a commodity trading advisor implementing primarily managed futures or global macro‑based investment strategies. The trading advisors (through their respective portfolio accounts) will trade independently of each other and, as a group, will employ a wide variety of systematic, relative value and discretionary trading programs in the global currency, fixed income, commodities and equity futures markets. In implementing their trading programs, the trading advisors will trade primarily in the futures and forward markets (as well as in related options). Although certain trading advisors may be permitted to use total return swaps and trade other financial instruments from time to time on an interim basis, the primary focus will be on the futures and forward markets. Redemption frequency of these portfolio accounts are monthly (and intra month for a
$10,000
fee) and the notification period for redemptions is
5
business days (or
3
business days for intra month redemptions).
|
(c)
|
The Event Driven strategy is generally implemented through various combinations and permutations of merger arbitrage, restructuring and distressed instruments. The investments in this category are primarily in a side pocket or suspended with undetermined payout dates.
|
(d)
|
The Hedged Equity strategy focuses on equity strategies with some directional market exposure. The strategy attempts to profit from market efficiencies and direction. The investee fund manager has side-pocketed investments.
|
(2)
|
Lehman Claims, at fair value
|
|
As of June 30, 2013
|
||
|
(dollars in thousands)
|
||
Common stocks
|
$
|
10,290
|
|
Options
|
56
|
|
|
|
$
|
10,346
|
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
|
(dollars in thousands)
|
||||||
Bank debt
|
$
|
156
|
|
|
$
|
79
|
|
Common stock
|
2,704
|
|
|
2,680
|
|
||
Preferred stock
|
997
|
|
|
997
|
|
||
Private equity
|
309
|
|
|
297
|
|
||
Restricted stock
|
73
|
|
|
26
|
|
||
Rights
|
2,362
|
|
|
1,714
|
|
||
Trade claims
|
128
|
|
|
128
|
|
||
Warrants
|
2
|
|
|
2
|
|
||
|
$
|
6,731
|
|
|
$
|
5,923
|
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
Description
|
(dollars in thousands)
|
||||||
Currency forwards
|
$
|
33
|
|
|
$
|
6
|
|
|
$
|
33
|
|
|
$
|
6
|
|
|
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
|
Strategy
|
|
(dollars in thousands)
|
||||||
RCG Longview Equity Fund, LP*
|
Real Estate
|
|
$
|
10,708
|
|
|
$
|
11,027
|
|
RCG Longview II, LP*
|
Real Estate
|
|
814
|
|
|
970
|
|
||
RCG Longview Debt Fund IV, LP*
|
Real Estate
|
|
25,694
|
|
|
30,572
|
|
||
RCG Longview, LP*
|
Real Estate
|
|
321
|
|
|
265
|
|
||
RCG Soundview, LLC*
|
Real Estate
|
|
441
|
|
|
2,374
|
|
||
RCG Urban American Real Estate Fund, L.P.*
|
Real Estate
|
|
1,938
|
|
|
1,987
|
|
||
RCG International Sarl*
|
Multi-Strategy
|
|
1,573
|
|
|
752
|
|
||
RCG Special Opportunities Fund, Ltd*
|
Multi-Strategy
|
|
85,151
|
|
|
80,166
|
|
||
RCG Endeavour, LLC*
|
Multi-Strategy
|
|
31
|
|
|
43
|
|
||
RCG Energy, LLC *
|
Energy
|
|
10,322
|
|
|
14,239
|
|
||
RCG Renergys, LLC*
|
Energy
|
|
1
|
|
|
1
|
|
||
Other Private Investments
|
Various
|
|
12,252
|
|
|
12,430
|
|
||
Real Estate Investments
|
Real Estate
|
|
13,057
|
|
|
12,321
|
|
||
|
|
|
$
|
162,303
|
|
|
$
|
167,147
|
|
*
|
These Portfolio Funds are affiliates of the Company.
|
|
As of December 31, 2012
|
||
|
(dollars in thousands)
|
||
Bond futures
|
$
|
489
|
|
Commodity forwards
|
(659
|
)
|
|
Commodity futures
|
47
|
|
|
Currency forwards
|
202
|
|
|
Currency futures
|
264
|
|
|
Energy futures
|
239
|
|
|
Equity future
|
(27
|
)
|
|
Index futures
|
(257
|
)
|
|
Interest rate futures
|
40
|
|
|
|
$
|
338
|
|
|
Assets at Fair Value as of June 30, 2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Securities owned and derivatives
|
|
|
|
|
|
|
|
||||||||
US Government securities
|
$
|
3,506
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,506
|
|
Preferred stock
|
—
|
|
|
—
|
|
|
333
|
|
|
333
|
|
||||
Common stocks
|
285,226
|
|
|
2,103
|
|
|
2,273
|
|
|
289,602
|
|
||||
Convertible bonds
|
—
|
|
|
4,426
|
|
|
—
|
|
|
4,426
|
|
||||
Corporate bonds
|
—
|
|
|
116,649
|
|
|
—
|
|
|
116,649
|
|
||||
Futures
|
93
|
|
|
—
|
|
|
—
|
|
|
93
|
|
||||
Currency forwards
|
—
|
|
|
635
|
|
|
—
|
|
|
635
|
|
||||
Equity swaps
|
177
|
|
|
146
|
|
|
—
|
|
|
323
|
|
||||
Options
|
18,348
|
|
|
535
|
|
|
—
|
|
|
18,883
|
|
||||
Warrants and rights
|
111
|
|
|
—
|
|
|
2,136
|
|
|
2,247
|
|
||||
Mutual funds
|
2,868
|
|
|
—
|
|
|
—
|
|
|
2,868
|
|
||||
Other investments
|
|
|
|
|
|
|
|
|
|
|
|||||
Portfolio Funds
|
—
|
|
|
29,040
|
|
|
32,832
|
|
|
61,872
|
|
||||
Real estate investments
|
—
|
|
|
—
|
|
|
2,158
|
|
|
2,158
|
|
||||
Lehman claim
|
—
|
|
|
—
|
|
|
278
|
|
|
278
|
|
||||
|
$
|
310,329
|
|
|
$
|
153,534
|
|
|
$
|
40,010
|
|
|
$
|
503,873
|
|
|
Liabilities at Fair Value as of June 30, 2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Securities sold, not yet purchased and derivatives
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
$
|
139,911
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
139,911
|
|
Corporate bonds
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
||||
Futures
|
583
|
|
|
—
|
|
|
—
|
|
|
583
|
|
||||
Currency forwards
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||
Equity swaps
|
13
|
|
|
84
|
|
|
—
|
|
|
97
|
|
||||
Options
|
12,729
|
|
|
431
|
|
|
—
|
|
|
13,160
|
|
||||
|
$
|
153,236
|
|
|
$
|
580
|
|
|
$
|
—
|
|
|
$
|
153,816
|
|
|
Assets at Fair Value as of December 31, 2012
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Securities owned and derivatives
|
|
|
|
|
|
|
|
||||||||
US Government securities
|
$
|
137,478
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
137,478
|
|
Preferred stock
|
—
|
|
|
—
|
|
|
2,332
|
|
|
2,332
|
|
||||
Common stocks
|
254,606
|
|
|
2,137
|
|
|
2,549
|
|
|
259,292
|
|
||||
Convertible bonds
|
—
|
|
|
6,202
|
|
|
—
|
|
|
6,202
|
|
||||
Corporate bonds
|
—
|
|
|
192,563
|
|
|
515
|
|
|
193,078
|
|
||||
Currency forwards
|
—
|
|
|
202
|
|
|
—
|
|
|
202
|
|
||||
Options
|
18,273
|
|
|
2,273
|
|
|
—
|
|
|
20,546
|
|
||||
Warrants and rights
|
641
|
|
|
—
|
|
|
1,713
|
|
|
2,354
|
|
||||
Mutual funds
|
2,845
|
|
|
—
|
|
|
—
|
|
|
2,845
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Portfolio Funds
|
—
|
|
|
30,228
|
|
|
25,670
|
|
|
55,898
|
|
||||
Real estate investments
|
—
|
|
|
—
|
|
|
1,864
|
|
|
1,864
|
|
||||
Lehman claim
|
—
|
|
|
—
|
|
|
706
|
|
|
706
|
|
||||
|
$
|
413,843
|
|
|
$
|
233,605
|
|
|
$
|
35,349
|
|
|
$
|
682,797
|
|
|
Liabilities at Fair Value as of December 31, 2012
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Securities sold, not yet purchased and derivatives
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
$
|
168,797
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
168,797
|
|
Corporate bonds
|
—
|
|
|
61
|
|
|
—
|
|
|
61
|
|
||||
Futures
|
370
|
|
|
—
|
|
|
—
|
|
|
370
|
|
||||
Currency forwards
|
—
|
|
|
603
|
|
|
—
|
|
|
603
|
|
||||
Options
|
8,990
|
|
|
86
|
|
|
—
|
|
|
9,076
|
|
||||
Warrants and rights
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
|
$
|
178,157
|
|
|
$
|
750
|
|
|
$
|
3
|
|
|
$
|
178,910
|
|
|
Assets at Fair Value as of June 30, 2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Securities owned
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
$
|
40,330
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,330
|
|
Options
|
455
|
|
|
—
|
|
|
—
|
|
|
455
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Portfolio Funds
|
—
|
|
|
—
|
|
|
177,848
|
|
|
177,848
|
|
||||
Lehman claims
|
—
|
|
|
—
|
|
|
15,434
|
|
|
15,434
|
|
||||
|
$
|
40,785
|
|
|
$
|
—
|
|
|
$
|
193,282
|
|
|
$
|
234,067
|
|
|
Assets at Fair Value as of December 31, 2012
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Securities owned
|
|
|
|
|
|
|
|
||||||||
US Government securities
|
$
|
1,911
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,911
|
|
Commercial paper
|
—
|
|
|
1,614
|
|
|
—
|
|
|
1,614
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Portfolio Funds
|
—
|
|
|
7,161
|
|
|
182,920
|
|
|
190,081
|
|
||||
Lehman claims
|
—
|
|
|
—
|
|
|
14,124
|
|
|
14,124
|
|
||||
|
$
|
1,911
|
|
|
$
|
8,775
|
|
|
$
|
197,044
|
|
|
$
|
207,730
|
|
|
Liabilities at Fair Value as of June 30, 2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Securities sold, not yet purchased and derivatives
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
$
|
10,290
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,290
|
|
Options
|
56
|
|
|
—
|
|
|
—
|
|
|
56
|
|
||||
|
$
|
10,346
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,346
|
|
|
Three Months Ended June 30, 2013
|
||||||||||||||||||||||||||||||
|
Balance at March 31, 2013
|
|
Transfers in
|
|
Transfers out
|
|
Purchases/(covers)
|
|
(Sales)/short buys
|
|
Realized gains (losses)
|
|
Unrealized gains (losses)
|
|
Balance at June 30, 2013
|
||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
$
|
2,332
|
|
|
$
|
—
|
|
|
$
|
(2,000
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
333
|
|
Common stocks
|
2,278
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
3
|
|
|
2,273
|
|
||||||||
Warrants and Rights
|
3,243
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,107
|
)
|
|
2,136
|
|
||||||||
Warrants and Rights, sold not yet purchased
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
1
|
|
|
—
|
|
||||||||
Portfolio Funds
|
25,559
|
|
|
—
|
|
|
—
|
|
|
8,981
|
|
|
(2,857
|
)
|
|
(286
|
)
|
|
1,435
|
|
|
32,832
|
|
||||||||
Real estate
|
1,875
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
283
|
|
|
2,158
|
|
||||||||
Lehman claim
|
660
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(382
|
)
|
|
—
|
|
|
—
|
|
|
278
|
|
||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Portfolio Funds
|
178,357
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,918
|
)
|
|
98
|
|
|
2,311
|
|
|
177,848
|
|
||||||||
Lehman claim
|
15,140
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
294
|
|
|
15,434
|
|
|
Three Months Ended June 30, 2012
|
||||||||||||||||||||||||||||||
|
Balance at March 31, 2012
|
|
Transfers in
|
|
Transfers out
|
|
Purchases/(covers)
|
|
(Sales)/short buys
|
|
Realized gains (losses)
|
|
Unrealized gains (losses)
|
|
Balance at June 30, 2012
|
||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
$
|
252
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
240
|
|
Common stocks
|
827
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(108
|
)
|
|
719
|
|
||||||||
Warrants and Rights
|
3,316
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
(497
|
)
|
|
2,844
|
|
||||||||
Warrants and Rights, sold not yet purchased
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
9
|
|
|
—
|
|
|
(2
|
)
|
|
3
|
|
||||||||
Portfolio Funds
|
19,012
|
|
|
—
|
|
|
—
|
|
|
1,230
|
|
|
(285
|
)
|
|
2
|
|
|
(83
|
)
|
|
19,876
|
|
||||||||
Real estate
|
2,579
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(501
|
)
|
|
—
|
|
|
1
|
|
|
2,079
|
|
||||||||
Lehman claim
|
574
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
157
|
|
|
731
|
|
||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Portfolio Funds
|
215,815
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
(2,138
|
)
|
|
(1,906
|
)
|
|
(2,283
|
)
|
|
209,507
|
|
||||||||
Lehman claim
|
5,346
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,192
|
|
|
—
|
|
|
6,538
|
|
|
Six Months Ended June 30, 2013
|
||||||||||||||||||||||||||||||
|
Balance at December 31, 2012
|
|
Transfers in
|
|
Transfers out
|
|
Purchases/(covers)
|
|
(Sales)/short buys
|
|
Realized gains (losses)
|
|
Unrealized gains (losses)
|
|
Balance at June 30, 2013
|
||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
$
|
2,332
|
|
|
$
|
—
|
|
|
$
|
(2,000
|
)
|
(e)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
333
|
|
Common stocks
|
2,549
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(273
|
)
|
|
260
|
|
|
(263
|
)
|
|
2,273
|
|
||||||||
Corporate Bond
|
515
|
|
|
—
|
|
|
—
|
|
|
2,735
|
|
|
(3,346
|
)
|
|
(914
|
)
|
|
1,010
|
|
|
—
|
|
||||||||
Warrants and Rights
|
1,713
|
|
|
290
|
|
(c)
|
—
|
|
|
166
|
|
|
(110
|
)
|
|
—
|
|
|
77
|
|
|
2,136
|
|
||||||||
Warrants and Rights, sold not yet purchased
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
1
|
|
|
—
|
|
||||||||
Portfolio Funds
|
25,670
|
|
|
—
|
|
|
—
|
|
|
12,571
|
|
|
(6,733
|
)
|
|
(278
|
)
|
|
1,602
|
|
|
32,832
|
|
||||||||
Real estate
|
1,864
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
294
|
|
|
2,158
|
|
||||||||
Lehman claim
|
706
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(382
|
)
|
|
—
|
|
|
(46
|
)
|
|
278
|
|
||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Portfolio Funds
|
182,920
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,949
|
)
|
|
320
|
|
|
4,557
|
|
|
177,848
|
|
||||||||
Lehman claim
|
14,124
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,449
|
)
|
|
1,360
|
|
|
1,399
|
|
|
15,434
|
|
|
Six Months Ended June 30, 2012
|
||||||||||||||||||||||||||||||||
|
Balance at December 31, 2011
|
|
Transfers in
|
|
|
Transfers out
|
|
|
Purchases/(covers)
|
|
(Sales)/short buys
|
|
Realized gains (losses)
|
|
Unrealized gains (losses)
|
|
Balance at June 30, 2012
|
||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
$
|
250
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
$
|
240
|
|
Common stocks
|
819
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(6
|
)
|
|
6
|
|
|
(100
|
)
|
|
719
|
|
||||||||
Warrants and Rights
|
1,534
|
|
|
—
|
|
|
|
(88
|
)
|
(b)
|
|
282
|
|
|
(65
|
)
|
|
56
|
|
|
1,125
|
|
|
2,844
|
|
||||||||
Warrants and Rights, sold not yet purchased
|
—
|
|
|
—
|
|
|
|
(1,004
|
)
|
(d)
|
|
(306
|
)
|
|
982
|
|
|
(35
|
)
|
|
366
|
|
|
3
|
|
||||||||
Portfolio Funds
|
16,919
|
|
|
—
|
|
|
|
—
|
|
|
|
2,851
|
|
|
(814
|
)
|
|
7
|
|
|
913
|
|
|
19,876
|
|
||||||||
Real estate
|
2,353
|
|
|
—
|
|
|
|
—
|
|
|
|
152
|
|
|
(501
|
)
|
|
—
|
|
|
75
|
|
|
2,079
|
|
||||||||
Lehman claim
|
553
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
178
|
|
|
731
|
|
||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Portfolio Funds
|
213,402
|
|
|
16,227
|
|
(a)
|
|
(17,151
|
)
|
(a)
|
|
434
|
|
|
(5,026
|
)
|
|
(1,692
|
)
|
|
3,313
|
|
|
209,507
|
|
||||||||
Lehman claim
|
7,340
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(2,291
|
)
|
|
1,914
|
|
|
(425
|
)
|
|
6,538
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||
|
Fair Value at June 30, 2013
|
|
Valuation techniques
|
|
Unobservable Inputs
|
|
Range
|
||
|
|
|
|
|
|
|
|
||
Common and preferred stocks
|
$
|
2,606
|
|
|
Discounted cash flows, market multiples, recent transactions, bid levels, and comparable transactions
|
|
Market multiples and DCF discount rate
|
|
DCF discount rates: 15%-25%, Market multiples: 9x-10x
|
Warrants and rights, net
|
2,136
|
|
|
Model based
|
|
Volatility
|
|
Volatility: 20% to 150%
|
|
|
$
|
4,742
|
|
|
|
|
|
|
|
Other level 3 assets and liabilities (a)
|
228,550
|
|
|
|
|
|
|
|
|
Total level 3 assets and liabilities
|
$
|
233,292
|
|
|
|
|
|
|
|
(a)
|
Quantitative disclosures of unobservable inputs and assumptions are not required for investments for which NAV per share is used as a practical expedient to determine fair value, as their redemption features rather than observability of inputs cause them to be classified as a level 3 type asset within the fair value hierarchy. In addition, the fair value of the Consolidated Funds' investments are determined based on net as
set value and therefore quantitative disclosures are not included in the table above. The quantitative disclosures also exclude financial instruments for which the determination of fair value is based on prices from prior transactions.
|
|
As of June 30,
|
|
As of December 31,
|
||||
|
2013
|
|
2012
|
||||
|
(dollars in thousands)
|
||||||
Redeemable non-controlling interests in consolidated subsidiaries
|
|
|
|
||||
Operating companies
|
$
|
7,197
|
|
|
$
|
4,106
|
|
Consolidated funds
|
84,365
|
|
|
81,597
|
|
||
|
$
|
91,562
|
|
|
$
|
85,703
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries
|
|
|
|
|
|
|
|
||||||||
Operating companies
|
$
|
1,601
|
|
|
$
|
301
|
|
|
$
|
3,396
|
|
|
$
|
594
|
|
Consolidated funds
|
654
|
|
|
(2,735
|
)
|
|
2,354
|
|
|
(787
|
)
|
||||
|
$
|
2,255
|
|
|
$
|
(2,434
|
)
|
|
$
|
5,750
|
|
|
$
|
(193
|
)
|
|
Shares Subject
to Option |
|
Weighted Average
Exercise Price/Share |
|
Weighted Average
Remaining Term |
|
Aggregate Intrinsic
Value(1) |
||||||
|
|
|
|
|
(in years)
|
|
(dollars in thousands)
|
||||||
Balance outstanding at December 31, 2012
|
773,763
|
|
|
$
|
12.58
|
|
|
1.6
|
|
|
$
|
—
|
|
Options granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Options acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Options expired
|
(114,969
|
)
|
|
16.00
|
|
|
—
|
|
|
—
|
|
||
Balance outstanding at June 30, 2013
|
658,794
|
|
|
$
|
11.99
|
|
|
1.3
|
|
|
$
|
—
|
|
Options exercisable at June 30, 2013
|
558,792
|
|
|
$
|
13.51
|
|
|
0.8
|
|
|
$
|
—
|
|
(1)
|
Based on the Company's closing stock price of
$2.89
on
June 30, 2013
and
$2.45
on
December 31, 2012
.
|
|
Shares Subject
to Option |
|
Weighted Average
Exercise Price/Share |
|
Weighted Average
Remaining Term |
|
Aggregate Intrinsic
Value(1) |
||||||
|
|
|
|
|
(in years)
|
|
(dollars in thousands)
|
||||||
Balance outstanding at December 31, 2012
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
SAR's granted
|
400,000
|
|
|
2.90
|
|
|
4.71
|
|
|
—
|
|
||
SAR's acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
SAR's expired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Balance outstanding at June 30, 2013
|
400,000
|
|
|
$
|
2.90
|
|
|
4.71
|
|
|
$
|
—
|
|
SAR's exercisable at June 30, 2013
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
(1)
|
Based on the Company's closing stock price of
$2.89
on
June 30, 2013
.
|
|
Nonvested Restricted Shares and Restricted Stock Units
|
|
Weighted-Average
Grant Date Fair Value |
|||
Balance outstanding at December 31, 2012
|
10,252,023
|
|
|
$
|
4.15
|
|
Granted
|
6,384,072
|
|
|
2.55
|
|
|
Vested
|
(3,830,086
|
)
|
|
3.98
|
|
|
Cancelled
|
—
|
|
|
—
|
|
|
Forfeited
|
(107,334
|
)
|
|
3.32
|
|
|
Balance outstanding at June 30, 2013
|
12,698,675
|
|
|
$
|
3.41
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Components of net periodic benefit cost included in employee compensation and benefits
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
47
|
|
|
53
|
|
|
98
|
|
|
106
|
|
||||
Expected return on plan assets
|
(59
|
)
|
|
(59
|
)
|
|
(122
|
)
|
|
(116
|
)
|
||||
Amortization of (loss) / gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service cost
|
5
|
|
|
5
|
|
|
10
|
|
|
10
|
|
||||
Effect of settlement
|
(95
|
)
|
|
(1
|
)
|
|
(95
|
)
|
|
(3
|
)
|
||||
Net periodic benefit cost
|
$
|
(102
|
)
|
|
$
|
(2
|
)
|
|
$
|
(109
|
)
|
|
$
|
(3
|
)
|
|
Equipment Leases (a)
|
|
Service Payments
|
|
Facility Leases (b)
|
||||||
|
(dollars in thousands)
|
||||||||||
2013
|
$
|
1,650
|
|
|
$
|
7,632
|
|
|
$
|
10,175
|
|
2014
|
1,548
|
|
|
10,776
|
|
|
18,876
|
|
|||
2015
|
1,051
|
|
|
2,645
|
|
|
16,126
|
|
|||
2016
|
194
|
|
|
165
|
|
|
13,039
|
|
|||
2017
|
—
|
|
|
—
|
|
|
9,938
|
|
|||
Thereafter
|
—
|
|
|
—
|
|
|
43,733
|
|
|||
|
$
|
4,443
|
|
|
$
|
21,218
|
|
|
$
|
111,887
|
|
(a)
|
Equipment Leases include the Company's commitments relating to operating and capital leases. See Note 14 for further information on the capital lease minimum payments which are included in the table.
|
(b)
|
The Company has entered into various agreements to sublease certain of its premises. The Company recorded sublease income related to these leases of
$0.4 million
and
$0.3 million
for the
three months ended
June 30, 2013
and 2012, respectively, and
$0.7 million
and
$0.8 million
for the
six months ended
June 30, 2013
and
2012
, respectively.
|
|
As of June 30, 2013
|
|
As of December 31, 2012
|
||||
|
(dollars in thousands)
|
||||||
Notes payable
|
$
|
1,145
|
|
|
$
|
206
|
|
Capital lease obligations
|
3,231
|
|
|
3,926
|
|
||
|
$
|
4,376
|
|
|
$
|
4,132
|
|
Location
|
|
Amount
|
|
Maturity
|
||
|
|
(dollars in thousands)
|
|
|
||
San Francisco
|
|
$
|
82
|
|
|
May 12, 2014
|
New York
|
|
$
|
1,193
|
|
|
September 3, 2013
|
New York
|
|
$
|
6,754
|
|
|
December 12, 2013
|
New York
|
|
$
|
1,002
|
|
|
February 22, 2014
|
New York
|
|
$
|
1,861
|
|
|
March 19, 2014
|
|
Capital Lease
Obligation |
|
Short Term
Borrowings |
||||
|
(dollars in thousands)
|
||||||
2013
|
$
|
771
|
|
|
$
|
1,135
|
|
2014
|
1,402
|
|
|
46
|
|
||
2015
|
1,051
|
|
|
—
|
|
||
2016
|
194
|
|
|
—
|
|
||
2017
|
—
|
|
|
—
|
|
||
Thereafter
|
—
|
|
|
—
|
|
||
Subtotal
|
3,418
|
|
|
1,181
|
|
||
Less: Amount representing interest (a)
|
(187
|
)
|
|
(36
|
)
|
||
Total
|
$
|
3,231
|
|
|
$
|
1,145
|
|
(a)
|
Amount necessary to reduce net minimum lease payments to present value calculated at the Company's implicit rate at lease inception.
|
|
Treasury stock shares
|
|
Cost
(dollars in thousands) |
|
Average cost
per share |
|||||
Balance outstanding at December 31, 2012
|
11,292,220
|
|
|
$
|
31,728
|
|
|
$
|
2.81
|
|
Shares purchased for minimum tax withholding under the Equity Plan
|
949,312
|
|
|
2,808
|
|
|
2.96
|
|
||
Purchase of treasury stock
|
89,297
|
|
|
236
|
|
|
2.64
|
|
||
Balance outstanding at June 30, 2013
|
12,330,829
|
|
|
$
|
34,772
|
|
|
$
|
2.82
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(dollars in thousands, except per share data)
|
||||||||||||||
Net income (loss)
|
3,348
|
|
|
(10,380
|
)
|
|
$
|
4,267
|
|
|
$
|
(4,144
|
)
|
||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries
|
2,255
|
|
|
(2,434
|
)
|
|
5,750
|
|
|
(193
|
)
|
||||
Net income (loss) less Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries
|
1,093
|
|
|
(7,946
|
)
|
|
(1,483
|
)
|
|
(3,951
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Shares for basic and diluted calculations:
|
|
|
|
|
|
|
|
||||||||
Weighted average shares used in basic computation
|
117,235
|
|
|
114,561
|
|
|
115,471
|
|
|
114,420
|
|
||||
Stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock appreciation rights
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Restricted stock
|
3,666
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average shares used in diluted computation
|
120,901
|
|
|
114,561
|
|
|
$
|
115,471
|
|
|
$
|
114,420
|
|
||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.01
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
Diluted
|
$
|
0.01
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
|
Three Months Ended June 30, 2013
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Alternative
Investment |
|
Broker-Dealer (1)
|
|
Total Economic Income/(Loss)
|
|
Funds
Consolidation |
|
Other
Adjustments |
|
|
|
US GAAP
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
25,571
|
|
|
$
|
25,571
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
25,571
|
|
Brokerage
|
—
|
|
|
33,300
|
|
|
33,300
|
|
|
—
|
|
|
(1,779
|
)
|
|
(e)
|
|
31,521
|
|
||||||
Management fees
|
14,606
|
|
|
—
|
|
|
14,606
|
|
|
(286
|
)
|
|
(4,622
|
)
|
|
(a)
|
|
9,698
|
|
||||||
Incentive income
|
3,765
|
|
|
—
|
|
|
3,765
|
|
|
—
|
|
|
(1,811
|
)
|
|
(a)
|
|
1,954
|
|
||||||
Investment Income
|
3,834
|
|
|
(271
|
)
|
|
3,563
|
|
|
—
|
|
|
(3,563
|
)
|
|
(c)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,521
|
|
|
(c)
|
|
10,521
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(196
|
)
|
|
1,410
|
|
|
(b)
|
|
1,214
|
|
||||||
Other revenue
|
114
|
|
|
164
|
|
|
278
|
|
|
—
|
|
|
207
|
|
|
(c)
|
|
485
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
243
|
|
|
—
|
|
|
|
|
243
|
|
||||||
Total revenues
|
22,319
|
|
|
58,764
|
|
|
81,083
|
|
|
(239
|
)
|
|
363
|
|
|
|
|
81,207
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee compensation and benefits
|
10,411
|
|
|
37,303
|
|
|
47,714
|
|
|
—
|
|
|
(207
|
)
|
|
|
|
47,507
|
|
||||||
Interest and dividends
|
50
|
|
|
22
|
|
|
72
|
|
|
—
|
|
|
7,168
|
|
|
(c)
|
|
7,240
|
|
||||||
Non-compensation expenses—Fixed
|
8,471
|
|
|
15,312
|
|
|
23,783
|
|
|
—
|
|
|
(23,783
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses—Variable
|
1,139
|
|
|
7,423
|
|
|
8,562
|
|
|
—
|
|
|
(8,562
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,380
|
|
|
(c)(d)
|
|
31,380
|
|
||||||
Reimbursement from affiliates
|
(1,411
|
)
|
|
—
|
|
|
(1,411
|
)
|
|
—
|
|
|
1,411
|
|
|
(b)
|
|
—
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
485
|
|
|
—
|
|
|
|
|
485
|
|
||||||
Total expenses
|
18,660
|
|
|
60,060
|
|
|
78,720
|
|
|
485
|
|
|
7,407
|
|
|
|
|
86,612
|
|
||||||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net gain (loss) on securities, derivatives and other investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,994
|
|
|
(c)
|
|
4,994
|
|
||||||
Consolidated Funds net gains (losses)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,378
|
|
|
2,539
|
|
|
|
|
3,917
|
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,378
|
|
|
7,533
|
|
|
|
|
8,911
|
|
||||||
Income (loss) before income taxes and non-controlling interests
|
3,659
|
|
|
(1,296
|
)
|
|
2,363
|
|
|
654
|
|
|
489
|
|
|
|
|
3,506
|
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
158
|
|
|
(b)
|
|
158
|
|
||||||
Economic Income (Loss) / Net income (loss) before non-controlling interests
|
3,659
|
|
|
(1,296
|
)
|
|
2,363
|
|
|
654
|
|
|
331
|
|
|
|
|
3,348
|
|
||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries
|
(893
|
)
|
|
—
|
|
|
(893
|
)
|
|
(654
|
)
|
|
(708
|
)
|
|
|
|
(2,255
|
)
|
||||||
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc. stockholders
|
$
|
2,766
|
|
|
$
|
(1,296
|
)
|
|
$
|
1,470
|
|
|
$
|
—
|
|
|
$
|
(377
|
)
|
|
|
|
$
|
1,093
|
|
|
Three Months Ended June 30, 2012
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Alternative
Investment |
|
Broker-Dealer (1)
|
|
Total
Economic Income/(Loss) |
|
Funds
Consolidation |
|
Other
Adjustments |
|
|
|
US GAAP
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
16,254
|
|
|
$
|
16,254
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
16,254
|
|
Brokerage
|
—
|
|
|
24,568
|
|
|
24,568
|
|
|
—
|
|
|
—
|
|
|
|
|
24,568
|
|
||||||
Management fees
|
14,586
|
|
|
—
|
|
|
14,586
|
|
|
(394
|
)
|
|
(4,260
|
)
|
|
(a)
|
|
9,932
|
|
||||||
Incentive income
|
2,583
|
|
|
—
|
|
|
2,583
|
|
|
—
|
|
|
(2,003
|
)
|
|
(a)
|
|
580
|
|
||||||
Investment Income
|
6,694
|
|
|
1,592
|
|
|
8,286
|
|
|
—
|
|
|
(8,286
|
)
|
|
(c)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,868
|
|
|
(c)
|
|
5,868
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
|
1,435
|
|
|
(b)
|
|
1,381
|
|
||||||
Other revenue
|
216
|
|
|
(287
|
)
|
|
(71
|
)
|
|
—
|
|
|
902
|
|
|
(c)
|
|
831
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|
—
|
|
|
|
|
56
|
|
||||||
Total revenues
|
24,079
|
|
|
42,127
|
|
|
66,206
|
|
|
(392
|
)
|
|
(6,344
|
)
|
|
|
|
59,470
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee compensation and benefits
|
13,500
|
|
|
28,145
|
|
|
41,645
|
|
|
—
|
|
|
1,452
|
|
|
|
|
43,097
|
|
||||||
Interest and dividends
|
12
|
|
|
47
|
|
|
59
|
|
|
—
|
|
|
3,148
|
|
|
(c)
|
|
3,207
|
|
||||||
Non-compensation expenses—Fixed
|
8,560
|
|
|
15,929
|
|
|
24,489
|
|
|
—
|
|
|
(24,489
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses—Variable
|
1,138
|
|
|
6,000
|
|
|
7,138
|
|
|
—
|
|
|
(7,138
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,486
|
|
|
(c)(d)
|
|
30,486
|
|
||||||
Reimbursement from affiliates
|
(1,435
|
)
|
|
—
|
|
|
(1,435
|
)
|
|
—
|
|
|
1,435
|
|
|
(b)
|
|
—
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
635
|
|
|
—
|
|
|
|
|
635
|
|
||||||
Total expenses
|
21,775
|
|
|
50,121
|
|
|
71,896
|
|
|
635
|
|
|
4,894
|
|
|
|
|
77,425
|
|
||||||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net gains (losses) on securities, derivatives and other investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,787
|
|
|
(c)
|
|
9,787
|
|
||||||
Consolidated Funds net gains (losses)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,707
|
)
|
|
(314
|
)
|
|
|
|
(2,021
|
)
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,707
|
)
|
|
9,473
|
|
|
|
|
7,766
|
|
||||||
Income (loss) before income taxes and non-controlling interests
|
2,304
|
|
|
(7,994
|
)
|
|
(5,690
|
)
|
|
(2,734
|
)
|
|
(1,765
|
)
|
|
|
|
(10,189
|
)
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
191
|
|
|
(b)
|
|
191
|
|
||||||
Economic Income (Loss) / Net income (loss) before non-controlling interests
|
2,304
|
|
|
(7,994
|
)
|
|
(5,690
|
)
|
|
(2,734
|
)
|
|
(1,956
|
)
|
|
|
|
(10,380
|
)
|
||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries
|
(300
|
)
|
|
—
|
|
|
(300
|
)
|
|
2,734
|
|
|
—
|
|
|
|
|
2,434
|
|
||||||
Economic Income (Loss) / Net income (loss) attributable to Cowen Group, Inc. stockholders
|
$
|
2,004
|
|
|
$
|
(7,994
|
)
|
|
$
|
(5,990
|
)
|
|
$
|
—
|
|
|
$
|
(1,956
|
)
|
|
|
|
$
|
(7,946
|
)
|
|
Six Months Ended June 30, 2013
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Alternative
Investment
|
|
Broker-Dealer (1)
|
|
Total Economic Income/(Loss)
|
|
Funds
Consolidation
|
|
Other
Adjustments
|
|
|
|
US GAAP
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
42,737
|
|
|
$
|
42,737
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
42,737
|
|
Brokerage
|
—
|
|
|
61,317
|
|
|
61,317
|
|
|
—
|
|
|
(3,196
|
)
|
|
(e)
|
|
58,121
|
|
||||||
Management fees
|
28,750
|
|
|
—
|
|
|
28,750
|
|
|
(597
|
)
|
|
(8,962
|
)
|
|
(a)
|
|
19,191
|
|
||||||
Incentive income
|
8,892
|
|
|
—
|
|
|
8,892
|
|
|
—
|
|
|
(4,327
|
)
|
|
(a)
|
|
4,565
|
|
||||||
Investment Income
|
12,138
|
|
|
2,298
|
|
|
14,436
|
|
|
—
|
|
|
(14,436
|
)
|
|
(c)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,842
|
|
|
(c)
|
|
19,842
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(131
|
)
|
|
2,830
|
|
|
(b)
|
|
2,699
|
|
||||||
Other revenue
|
226
|
|
|
(389
|
)
|
|
(163
|
)
|
|
—
|
|
|
1,126
|
|
|
(c)
|
|
963
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
|
—
|
|
|
|
|
330
|
|
||||||
Total revenues
|
50,006
|
|
|
105,963
|
|
|
155,969
|
|
|
(398
|
)
|
|
(7,123
|
)
|
|
|
|
148,448
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee compensation and benefits
|
24,324
|
|
|
67,911
|
|
|
92,235
|
|
|
—
|
|
|
(505
|
)
|
|
|
|
91,730
|
|
||||||
Interest and dividends
|
131
|
|
|
65
|
|
|
196
|
|
|
—
|
|
|
13,462
|
|
|
(c)
|
|
13,658
|
|
||||||
Non-compensation expenses—Fixed
|
17,609
|
|
|
29,952
|
|
|
47,561
|
|
|
—
|
|
|
(47,561
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses—Variable
|
2,145
|
|
|
13,768
|
|
|
15,913
|
|
|
—
|
|
|
(15,913
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63,417
|
|
|
(c)(d)
|
|
63,417
|
|
||||||
Reimbursement from affiliates
|
(2,830
|
)
|
|
—
|
|
|
(2,830
|
)
|
|
—
|
|
|
2,830
|
|
|
(b)
|
|
—
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
919
|
|
|
—
|
|
|
|
|
919
|
|
||||||
Total expenses
|
41,379
|
|
|
111,696
|
|
|
153,075
|
|
|
919
|
|
|
15,730
|
|
|
|
|
169,724
|
|
||||||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net gains (losses) on securities, derivatives and other investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,801
|
|
|
(c)
|
|
16,801
|
|
||||||
Consolidated Funds net gains (losses)
|
—
|
|
|
—
|
|
|
—
|
|
|
3,671
|
|
|
5,405
|
|
|
|
|
9,076
|
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
3,671
|
|
|
22,206
|
|
|
|
|
25,877
|
|
||||||
Income (loss) before income taxes and non-controlling interests
|
8,627
|
|
|
(5,733
|
)
|
|
2,894
|
|
|
2,354
|
|
|
(647
|
)
|
|
|
|
4,601
|
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
334
|
|
|
(b)
|
|
334
|
|
||||||
Economic Income (Loss) / Net income (loss) before non-controlling interests
|
8,627
|
|
|
(5,733
|
)
|
|
2,894
|
|
|
2,354
|
|
|
(981
|
)
|
|
|
|
4,267
|
|
||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries
|
(2,692
|
)
|
|
—
|
|
|
(2,692
|
)
|
|
(2,354
|
)
|
|
(704
|
)
|
|
|
|
(5,750
|
)
|
||||||
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc. stockholders
|
$
|
5,935
|
|
|
$
|
(5,733
|
)
|
|
$
|
202
|
|
|
$
|
—
|
|
|
$
|
(1,685
|
)
|
|
|
|
$
|
(1,483
|
)
|
|
Six Months Ended June 30, 2012
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Alternative
Investment
|
|
Broker-Dealer (1)
|
|
Total Economic Income/(Loss)
|
|
Funds
Consolidation
|
|
Other
Adjustments
|
|
|
|
US GAAP
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
31,884
|
|
|
$
|
31,884
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
31,884
|
|
Brokerage
|
—
|
|
|
48,581
|
|
|
48,581
|
|
|
—
|
|
|
—
|
|
|
|
|
48,581
|
|
||||||
Management fees
|
28,606
|
|
|
—
|
|
|
28,606
|
|
|
(787
|
)
|
|
(8,170
|
)
|
|
(a)
|
|
19,649
|
|
||||||
Incentive income
|
6,605
|
|
|
—
|
|
|
6,605
|
|
|
—
|
|
|
(5,334
|
)
|
|
(a)
|
|
1,271
|
|
||||||
Investment Income
|
23,496
|
|
|
5,895
|
|
|
29,391
|
|
|
—
|
|
|
(29,391
|
)
|
|
(c)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,240
|
|
|
(c)
|
|
11,240
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(125
|
)
|
|
2,551
|
|
|
(b)
|
|
2,426
|
|
||||||
Other revenue
|
340
|
|
|
(27
|
)
|
|
313
|
|
|
—
|
|
|
1,385
|
|
|
(c)
|
|
1,698
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|
—
|
|
|
|
|
200
|
|
||||||
Total revenues
|
59,047
|
|
|
86,333
|
|
|
145,380
|
|
|
(712
|
)
|
|
(27,719
|
)
|
|
|
|
116,949
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee compensation and benefits
|
30,946
|
|
|
56,608
|
|
|
87,554
|
|
|
—
|
|
|
2,226
|
|
|
|
|
89,780
|
|
||||||
Interest and dividends
|
30
|
|
|
117
|
|
|
147
|
|
|
—
|
|
|
4,784
|
|
|
(c)
|
|
4,931
|
|
||||||
Non-compensation expenses—Fixed
|
15,529
|
|
|
30,203
|
|
|
45,732
|
|
|
—
|
|
|
(45,732
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses—Variable
|
2,447
|
|
|
11,566
|
|
|
14,013
|
|
|
—
|
|
|
(14,013
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58,444
|
|
|
(c)(d)
|
|
58,444
|
|
||||||
Reimbursement from affiliates
|
(2,551
|
)
|
|
—
|
|
|
(2,551
|
)
|
|
—
|
|
|
2,551
|
|
|
(b)
|
|
—
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
1,009
|
|
|
—
|
|
|
|
|
1,009
|
|
||||||
Total expenses
|
46,401
|
|
|
98,494
|
|
|
144,895
|
|
|
1,009
|
|
|
8,260
|
|
|
|
|
154,164
|
|
||||||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net gains (losses) on securities, derivatives and other investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,458
|
|
|
(c)
|
|
29,458
|
|
||||||
Consolidated Funds net gains (losses)
|
—
|
|
|
—
|
|
|
—
|
|
|
934
|
|
|
3,012
|
|
|
|
|
3,946
|
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
934
|
|
|
32,470
|
|
|
|
|
33,404
|
|
||||||
Income (loss) before income taxes and non-controlling interests
|
12,646
|
|
|
(12,161
|
)
|
|
485
|
|
|
(787
|
)
|
|
(3,509
|
)
|
|
|
|
(3,811
|
)
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
333
|
|
|
(b)
|
|
333
|
|
||||||
Economic Income (Loss) / Net income (loss) before non-controlling interests
|
12,646
|
|
|
(12,161
|
)
|
|
485
|
|
|
(787
|
)
|
|
(3,842
|
)
|
|
|
|
(4,144
|
)
|
||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries
|
(600
|
)
|
|
—
|
|
|
(600
|
)
|
|
787
|
|
|
6
|
|
|
|
|
193
|
|
||||||
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc. stockholders
|
$
|
12,046
|
|
|
$
|
(12,161
|
)
|
|
$
|
(115
|
)
|
|
$
|
—
|
|
|
$
|
(3,836
|
)
|
|
|
|
$
|
(3,951
|
)
|
•
|
Assets under management.
Our revenues from management fees are directly linked to assets under management. As a result, the future performance of our alternative investment business will depend on, among other things, our ability to retain assets under management and to grow assets under management from existing and new products. In addition, positive performance increases assets under management which results in higher management fees. As previously disclosed, redemptions in Ramius Multi-Strategy Fund Ltd triggered certain contractual rights of affiliates of UniCredit S.p.A (“UniCredit S.p.A”), which would have allowed them to withdraw their assets held in that fund upon 30 days notice. Such affiliates of UniCredit S.p.A instead agreed, pursuant to a modification agreement, to extend the time period pursuant to which the Company was required to return the bulk of its assets in our funds by the end of 2010. The Company returned a significant portion of the assets during 2010 and as of
June 30, 2013
, including redemptions effective on
July 1, 2013
, we have returned approximately $582 million to affiliates of UniCredit S.p.A with a remaining investment balance of approximately $146 million invested in our investment vehicles, including a fund of funds managed account.
|
•
|
Investment performance.
Our revenues from incentive income are linked to the performance of the funds and accounts that we manage. Performance also affects assets under management because it influences investors' decisions to invest assets in, or withdraw assets from, the funds and accounts managed by us.
|
•
|
Fee and allocation rates.
Our management fee revenues are linked to the management fee rates we charge as a percentage of assets under management. Our incentive income revenues are linked to the incentive allocation rates we charge as a percentage of performance-driven asset growth. Our incentive allocations are generally subject to “high-water marks,” whereby incentive income is generally earned by us only to the extent that the net asset value of a fund at the end of a measurement period exceeds the highest net asset value as of the end of the earlier measurement period for which we earned incentive income. Our incentive allocations, in some cases, are subject to performance hurdles.
|
•
|
Investment performance of our own capital.
We invest our own capital and the performance of such invested capital affects our revenues. As of
July 1, 2013
, we had investments of approximately
$117.6 million, $150.5 million and $14.3 million
in the Enterprise Fund (an entity which invests its capital in Ramius Enterprise Master Fund Ltd),
|
•
|
Underwriting, private placement and strategic/financial advisory fees.
Our revenues from investment banking are directly linked to the underwriting fees we earn in equity and debt securities offerings in which the Company acts as an underwriter, private placement fees earned in non-underwritten transactions, sales commissions earned in at-the-market offerings and success fees earned in connection with advising both buyers and sellers, principally in mergers and acquisitions. As a result, the future performance of our investment banking business will depend on, among other things, our ability to secure lead manager and co-manager roles in clients capital raising transactions as well as our ability to secure mandates as a client's strategic financial advisor.
|
•
|
Commissions.
Our commission revenues depend for the most part on our customer trading volumes.
|
•
|
Principal transactions.
Principal transactions revenue includes net trading gains and losses from the Company's market-making activities and net trading gains and losses on inventory and other firm positions. Commissions associated with these transactions are also included herein. In certain cases, the Company provides liquidity to clients buying or selling blocks of shares of listed stocks without previously identifying the other side of the trade at execution, which subjects the Company to market risk.
|
•
|
Equity research fees.
Equity research fees are paid to the Company for providing equity research. The Company also permits institutional customers to allocate a portion of their commissions to pay for research products and other services provided by third parties. Our ability to generate revenues relating to our equity research depends on the quality of our research and its relevance to our institutional customers and other clients.
|
•
|
Our alternative investment business was affected by the conditions impacting the global financial markets and the hedge fund industry during 2008, which was characterized by substantial declines in investment performance and unanticipated levels of requested redemptions. While the environment for investing in alternative investment products has since improved, the variability of redemptions could continue to affect our alternative investment business, and it is possible that we could intermittently experience redemptions above historical levels, regardless of fund performance.
|
•
|
Our broker-dealer business has been, and may continue to be, adversely affected by market conditions. Increased competition continues to affect our investment banking and capital markets businesses. The same factors also affect trading volumes in secondary financial markets, which affect our brokerage business. Commission rates, market volatility, increased competition from larger financial firms and other factors also affect our brokerage revenues and may cause these revenues to vary from period to period.
|
•
|
Our broker-dealer business focuses primarily on small to mid-capitalization and private companies in specific industry sectors. These sectors may experience growth or downturns independent of general economic and market conditions, or may face market conditions that are disproportionately better or worse than those impacting the economy and markets generally. In addition, increased government regulation has had, and may continue to have, a disproportionate effect on capital formation by smaller companies. Therefore, our broker-dealer business could be affected differently than overall market trends.
|
•
|
Hedge Funds
. Management fees for the Company's hedge funds are generally charged at an annual rate of up to
2%
of assets under management. Management fees are generally calculated monthly based on assets under management at the end of each month before incentive income.
|
•
|
Alternative Solutions. Management fees for the Alternative Solutions business are generally charged at an annual rate of up to
2%
of assets under management. Management fees are generally calculated monthly based on assets under management at the end of each month before incentive income or based on assets under management at
|
•
|
Real Estate Funds. Management fees from the Company's real estate funds are generally charged by their general partners at an annual rate from
1%
to
1.5%
of total capital commitments during the investment period and of invested capital or net asset value of the applicable fund after the investment period has ended. Management fees are typically paid to the general partners on a quarterly basis, at the beginning of the quarter in arrears, and are prorated for changes in capital commitments throughout the investment period and invested capital after the investment period. The general partners of the Company's real estate funds are owned jointly by the Company and third parties. Accordingly, the management fees (in addition to incentive income and investment income) generated by these real estate funds are split between the Company and the other general partners. Pursuant to US GAAP, these fees and other income received by the general partners that are accounted for under the equity method of accounting and are reflected under net gains (losses) on securities, derivatives and other investments in the condensed consolidated statements of operations.
|
•
|
HealthCare Royalty Partners Funds.
During the investment period (as defined in the management agreement of the HealthCare Royalty Partners funds), management fees for the HealthCare Royalty Partners funds are generally charged at an annual rate of up to
2%
of committed capital. After the investment period, management fees are generally charged at an annual rate of up to
2%
of net asset value. Management fees for the HealthCare Royalty Partners funds are calculated on a quarterly basis.
|
•
|
Ramius Trading Strategies.
Management fees for Ramius Trading Strategies Managed Futures Fund, a mutual fund launched in September 2011, are
1.60%
per annum (subject to an overall expense cap of
1.85%
). Management fees and platfor
m fees for the Company's private commodity trading advisory business are generally charged at an annual rate of up to
1.00%
. Management and platform fees are generally calculated monthly based on assets under management at the end of
each month.
|
•
|
Underwriting fees.
The Company earns underwriting revenues in securities offerings in which the Company acts as an underwriter, such as initial public offerings, follow-on equity offerings, debt offerings, and convertible security offerings. Underwriting revenues include management fees, selling concessions and underwriting fees. Fee revenue relating to underwriting commitments is recorded when all significant items relating to the underwriting process have been completed and the amount of the underwriting revenue has been determined. This generally is the point at which all of the following have occurred: (i) the issuer's registration statement has become effective with the SEC, or the other offering documents are finalized; (ii) the Company has made a firm commitment for the purchase of securities from the issuer; and (iii) the Company has been informed of the number of securities that it has been allotted.
|
•
|
Strategic/financial advisory fees.
The Company's strategic advisory revenues include success fees earned in connection with advising companies, principally in mergers and acquisitions and liability management transactions. The Company also earns fees for related advisory work such as providing fairness opinions. The Company records strategic advisory revenues when the services for the transactions are completed under the terms of each assignment or engagement and collection is reasonably assured. Expenses associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded.
|
•
|
Placement and sales agent fees. The Company earns agency placement fees and sales agent commissions in non-underwritten transactions such as private placements of debt and equity and debt securities, including, private investment in public equity transactions (“PIPEs”), and as sales agent in at-the-market offerings of equity securities. The Company records placement revenues when the services for the transactions are completed under the terms of each assignment or engagement and collection is reasonably assured. The Company records sales agent commissions on a trade date basis. Expenses associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded.
|
•
|
Commissions.
Commission revenue includes fees from executing client transactions. These fees are recognized on a trade date basis. The Company permits institutional customers to allocate a portion of their commissions to pay for research products and other services provided by third parties. The amounts allocated for those purposes are commonly referred to as soft dollar arrangements. Commissions on soft dollar brokerage are recorded net of the related expenditures on an accrual basis. Commission revenues also includes fees from making algorithms available to clients.
|
•
|
Principal Transactions.
Principal transaction, net revenue includes net trading gains and losses from the Company's market-making activities in fixed income and over-the-counter equity securities, listed options trading, trading of convertible securities, and trading gains and losses on inventory and other firm positions, which include warrants previously received as part of investment banking transactions. Commissions associated with these transactions are also included herein. In certain cases, the Company provides liquidity to clients buying or selling blocks of shares of listed stocks without previously identifying the other side of the trade at execution, which subjects the Company to market risk. These positions are typically held for a very short duration.
|
•
|
Equity Research Fees.
Equity research fees are paid to the Company for providing equity research. Revenue is recognized once an arrangement exists, access to research has been provided, the fee amount is fixed or determinable, and collection is reasonably assured.
|
•
|
Compensation and Benefits.
Compensation and benefits is comprised of salaries, benefits, discretionary cash bonuses and equity-based compensation. Annual incentive compensation is variable, and the amount paid is generally based on a combination of employees' performance, their contribution to their business segment, and the Company's performance. Generally, compensation and benefits comprise a significant portion of total expenses, with annual incentive compensation comprising a significant portion of total compensation and benefits expenses.
|
•
|
Interest and Dividends.
Interest and dividend expense relates primarily to trading activity with respect to the Company's investments.
|
•
|
General, Administrative and Other.
General, administrative and other expenses are primarily related to professional services, occupancy and equipment, business development expenses, communications, insurance and other miscellaneous expenses. These expenses may also include certain one-time charges and non-cash expenses.
|
•
|
Consolidated Funds Expenses.
Certain funds are consolidated by the Company pursuant to US GAAP. As such, the Company's condensed consolidated financial statements reflect the expenses of these consolidated entities and the portion attributable to other investors is allocated to a redeemable non-controlling interest.
|
|
|
Platform
|
|||||||||||||||||||
|
|
Hedge Funds (a) (b)
|
|
Alternative Solutions (c)
|
|
Ramius Trading Strategies (d)
|
|
Real Estate (a)
|
|
Healthcare Royalty Partners (e) (f)
|
|
Other (g)
|
|
Total
|
|||||||
|
|
(dollars in millions)
|
|||||||||||||||||||
January 1, 2010
|
|
1,608
|
|
|
2,376
|
|
|
—
|
|
|
1,628
|
|
|
807
|
|
|
1,429
|
|
|
7,848
|
|
Net Subscriptions/(Redemptions)
|
|
(392
|
)
|
|
323
|
|
|
78
|
|
|
—
|
|
|
234
|
|
|
800
|
|
|
1,043
|
|
Performance (h)
|
|
169
|
|
|
93
|
|
|
4
|
|
|
|
|
|
|
(115
|
)
|
|
151
|
|
||
January 1, 2011
|
|
1,385
|
|
|
2,792
|
|
|
82
|
|
|
1,628
|
|
|
1,041
|
|
|
2,114
|
|
|
9,042
|
|
Net Subscriptions/(Redemptions)
|
|
493
|
|
|
56
|
|
|
194
|
|
|
—
|
|
|
432
|
|
|
125
|
|
|
1,300
|
|
Performance (h)
|
|
39
|
|
|
(98
|
)
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(77
|
)
|
January 1, 2012
|
|
1,917
|
|
|
2,750
|
|
|
262
|
|
|
1,628
|
|
|
1,473
|
|
|
2,235
|
|
|
10,265
|
|
Net Subscriptions/(Redemptions)
|
|
59
|
|
|
(370
|
)
|
|
(111
|
)
|
|
(95
|
)
|
|
—
|
|
|
(2,130
|
)
|
|
(2,647
|
)
|
Performance (h)
|
|
373
|
|
|
85
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
453
|
|
January 1, 2013
|
|
2,349
|
|
|
2,465
|
|
|
146
|
|
|
1,533
|
|
|
1,473
|
|
|
105
|
|
|
8,071
|
|
Net Subscriptions/(Redemptions)
|
|
244
|
|
|
607
|
|
|
(38
|
)
|
|
222
|
|
|
—
|
|
|
(25
|
)
|
|
1,010
|
|
Performance (h)
|
|
190
|
|
|
(228
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
July 1, 2013
|
|
2,783
|
|
|
2,844
|
|
|
106
|
|
|
1,755
|
|
|
1,473
|
|
|
80
|
|
|
9,041
|
|
|
|
Platform
|
|||||||||||||||||||
|
|
Hedge Funds (a) (b)
|
|
Alternative Solutions (c)
|
|
Ramius Trading Strategies (d)
|
|
Real Estate (a)
|
|
Healthcare Royalty Partners (e) (f)
|
|
Other (g)
|
|
Total
|
|||||||
|
|
(dollars in millions)
|
|||||||||||||||||||
April 1, 2013
|
|
2,565
|
|
|
3,022
|
|
|
119
|
|
|
1,661
|
|
|
1,473
|
|
|
91
|
|
|
8,931
|
|
Net Subscriptions/(Redemptions)
|
|
163
|
|
|
80
|
|
|
(9
|
)
|
|
94
|
|
|
—
|
|
|
(11
|
)
|
|
317
|
|
Performance (h)
|
|
55
|
|
|
(258
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(207
|
)
|
July 1, 2013
|
|
2,783
|
|
|
2,844
|
|
|
106
|
|
|
1,755
|
|
|
1,473
|
|
|
80
|
|
|
9,041
|
|
(a)
|
The Company owns between 30% and 55% of the general partners or managing members of the real estate business, the activist business and the long/short credit business (as of 4/1/13) (the single strategy hedge funds). We do not possess unilateral control over any of these general partners or managing members.
|
(b)
|
These amounts include the Company's invested capital of approximately $117.6 million, $118.2 million and $125.8 million as of
July 1, 2013
, January 1, 2013 and January 1, 2012, respectively.
|
(c)
|
These amounts include the Company's invested capital of approximately $1.5 million, $2.5 million and $5.2 million as of
July 1, 2013
, January 1, 2013 and January 1, 2012, respectively.
|
(d)
|
These amounts include Ramius Trading Strategies Managed Futures Fund and the Company's invested capital of approximately $2.4 million, $19.4 million and $22.3 million as of
July 1, 2013
, January 1, 2013 and January 1, 2012, respectively. RTS Global 3X was liquidated on March 31, 2013, therefore, the notional amount of the Company's investment in RTS Global 3X Fund LP is only included in the Company's assets under management as of January 1, 2013 and prior years.
|
(e)
|
These amounts include the Company's invested capital of approximately $14.9 million, $16.0 million and $8.6 million as of
July 1, 2013
, January 1, 2013 and January 1, 2012, respectively.
|
(f)
|
This amount reflects committed capital.
|
(g)
|
The Company's cash management services business provided clients with investment guidelines for managing cash and established investment programs for managing their cash in separately managed accounts. Given the current focus of the Company's alternative investment management business and the areas where the Company believes it can achieve long term growth, as of November 1, 2012, the Company no longer offered cash management services and arranged for the transfer of the remaining assets under management related to such business to another asset manager. This transfer was completed in December 2012. The Company continues to provide mortgage advisory services where the Company manages collateralized debt obligations held by investors.
|
(h)
|
Net performance is net of all management and incentive fees and includes the effect of any foreign exchange translation adjustments and leverage in certain funds.
|
Strategy
|
Net Value
|
|
% of Stockholders' Equity
|
||
|
(dollars in millions)
|
|
|
||
Trading
|
$
|
235.0
|
|
|
46%
|
Merchant Banking
|
110.1
|
|
|
22%
|
|
Real Estate
|
59.9
|
|
|
12%
|
|
Total
|
405.0
|
|
|
80%
|
|
Stockholders' Equity
|
$
|
506.1
|
|
|
100%
|
|
Condensed Consolidated Statements of Operations
|
|||||||||||||
|
(unaudited)
|
|||||||||||||
|
Three Months Ended June 30,
|
|
Period to Period
|
|||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
Investment banking
|
$
|
25,571
|
|
|
$
|
16,254
|
|
|
$
|
9,317
|
|
|
57
|
%
|
Brokerage
|
31,521
|
|
|
24,568
|
|
|
6,953
|
|
|
28
|
%
|
|||
Management fees
|
9,698
|
|
|
9,932
|
|
|
(234
|
)
|
|
(2
|
)%
|
|||
Incentive income
|
1,954
|
|
|
580
|
|
|
1,374
|
|
|
237
|
%
|
|||
Interest and dividends
|
10,521
|
|
|
5,868
|
|
|
4,653
|
|
|
79
|
%
|
|||
Reimbursement from affiliates
|
1,214
|
|
|
1,381
|
|
|
(167
|
)
|
|
(12
|
)%
|
|||
Other revenues
|
485
|
|
|
831
|
|
|
(346
|
)
|
|
(42
|
)%
|
|||
Consolidated Funds revenues
|
243
|
|
|
56
|
|
|
187
|
|
|
334
|
%
|
|||
Total revenues
|
81,207
|
|
|
59,470
|
|
|
21,737
|
|
|
37
|
%
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Employee compensation and benefits
|
47,507
|
|
|
43,097
|
|
|
4,410
|
|
|
10
|
%
|
|||
Interest and dividends
|
7,240
|
|
|
3,207
|
|
|
4,033
|
|
|
126
|
%
|
|||
General, administrative and other expenses
|
31,380
|
|
|
30,486
|
|
|
894
|
|
|
3
|
%
|
|||
Consolidated Funds expenses
|
485
|
|
|
635
|
|
|
(150
|
)
|
|
(24
|
)%
|
|||
Total expenses
|
86,612
|
|
|
77,425
|
|
|
9,187
|
|
|
12
|
%
|
|||
Other income (loss)
|
|
|
|
|
|
|
|
|||||||
Net gain (loss) on securities, derivatives and other investments
|
4,994
|
|
|
9,787
|
|
|
(4,793
|
)
|
|
(49
|
)%
|
|||
Consolidated Funds net gains (losses)
|
3,917
|
|
|
(2,021
|
)
|
|
5,938
|
|
|
(294
|
)%
|
|||
Total other income (loss)
|
8,911
|
|
|
7,766
|
|
|
1,145
|
|
|
15
|
%
|
|||
Income (loss) before income taxes
|
3,506
|
|
|
(10,189
|
)
|
|
13,695
|
|
|
(134
|
)%
|
|||
Income taxes expense (benefit)
|
158
|
|
|
191
|
|
|
(33
|
)
|
|
(17
|
)%
|
|||
Net income (loss)
|
3,348
|
|
|
(10,380
|
)
|
|
13,728
|
|
|
(132
|
)%
|
|||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries
|
2,255
|
|
|
(2,434
|
)
|
|
4,689
|
|
|
(193
|
)%
|
|||
Net income (loss) attributable to Cowen Group, Inc. stockholders
|
$
|
1,093
|
|
|
$
|
(7,946
|
)
|
|
$
|
9,039
|
|
|
(114
|
)%
|
|
Condensed Consolidated Statements of Operations
|
|||||||||||||
|
(unaudited)
|
|||||||||||||
|
Six Months Ended June 30,
|
|
Period to Period
|
|||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
Investment banking
|
$
|
42,737
|
|
|
$
|
31,884
|
|
|
$
|
10,853
|
|
|
34
|
%
|
Brokerage
|
58,121
|
|
|
48,581
|
|
|
9,540
|
|
|
20
|
%
|
|||
Management fees
|
19,191
|
|
|
19,649
|
|
|
(458
|
)
|
|
(2
|
)%
|
|||
Incentive income
|
4,565
|
|
|
1,271
|
|
|
3,294
|
|
|
259
|
%
|
|||
Interest and dividends
|
19,842
|
|
|
11,240
|
|
|
8,602
|
|
|
77
|
%
|
|||
Reimbursement from affiliates
|
2,699
|
|
|
2,426
|
|
|
273
|
|
|
11
|
%
|
|||
Other revenues
|
963
|
|
|
1,698
|
|
|
(735
|
)
|
|
(43
|
)%
|
|||
Consolidated Funds revenues
|
330
|
|
|
200
|
|
|
130
|
|
|
65
|
%
|
|||
Total revenues
|
148,448
|
|
|
116,949
|
|
|
31,499
|
|
|
27
|
%
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Employee compensation and benefits
|
91,730
|
|
|
89,780
|
|
|
1,950
|
|
|
2
|
%
|
|||
Interest and dividends
|
13,658
|
|
|
4,931
|
|
|
8,727
|
|
|
177
|
%
|
|||
General, administrative and other expenses
|
63,417
|
|
|
58,444
|
|
|
4,973
|
|
|
9
|
%
|
|||
Consolidated Funds expenses
|
919
|
|
|
1,009
|
|
|
(90
|
)
|
|
(9
|
)%
|
|||
Total expenses
|
169,724
|
|
|
154,164
|
|
|
15,560
|
|
|
10
|
%
|
|||
Other income (loss)
|
|
|
|
|
|
|
|
|||||||
Net gain (loss) on securities, derivatives and other investments
|
16,801
|
|
|
29,458
|
|
|
(12,657
|
)
|
|
(43
|
)%
|
|||
Consolidated Funds net gains (losses)
|
9,076
|
|
|
3,946
|
|
|
5,130
|
|
|
130
|
%
|
|||
Total other income (loss)
|
25,877
|
|
|
33,404
|
|
|
(7,527
|
)
|
|
(23
|
)%
|
|||
Income (loss) before income taxes
|
4,601
|
|
|
(3,811
|
)
|
|
8,412
|
|
|
(221
|
)%
|
|||
Income taxes expense (benefit)
|
334
|
|
|
333
|
|
|
1
|
|
|
—
|
%
|
|||
Net income (loss)
|
4,267
|
|
|
(4,144
|
)
|
|
8,411
|
|
|
(203
|
)%
|
|||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries
|
5,750
|
|
|
(193
|
)
|
|
5,943
|
|
|
(3,079
|
)%
|
|||
Net income (loss) attributable to Cowen Group, Inc. stockholders
|
$
|
(1,483
|
)
|
|
$
|
(3,951
|
)
|
|
$
|
2,468
|
|
|
(62
|
)%
|
|
Economic Income (Loss)
|
|||||||||||||||||||||||||||||
|
Three Month Ended June 30,
|
|
|
|
|
|||||||||||||||||||||||||
|
2013
|
|
2012
|
|
Total
Period-to-Period
|
|||||||||||||||||||||||||
|
Alternative
Investment
|
|
|
|
Total
2013
|
|
Alternative
Investment
|
|
|
|
Total
2012
|
|
||||||||||||||||||
|
Broker-Dealer (a)
|
|
Broker-Dealer (a)
|
|
$ Change
|
|
% Change
|
|||||||||||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||||||||
Economic Income Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
25,571
|
|
|
$
|
25,571
|
|
|
$
|
—
|
|
|
$
|
16,254
|
|
|
$
|
16,254
|
|
|
$
|
9,317
|
|
|
57
|
%
|
Brokerage
|
—
|
|
|
33,300
|
|
|
33,300
|
|
|
—
|
|
|
24,568
|
|
|
24,568
|
|
|
8,732
|
|
|
36
|
%
|
|||||||
Management fees
|
14,606
|
|
|
—
|
|
|
14,606
|
|
|
14,586
|
|
|
—
|
|
|
14,586
|
|
|
20
|
|
|
—
|
%
|
|||||||
Incentive income (loss)
|
3,765
|
|
|
—
|
|
|
3,765
|
|
|
2,583
|
|
|
—
|
|
|
2,583
|
|
|
1,182
|
|
|
46
|
%
|
|||||||
Investment income (loss)
|
3,834
|
|
|
(271
|
)
|
|
3,563
|
|
|
6,694
|
|
|
1,592
|
|
|
8,286
|
|
|
(4,723
|
)
|
|
(57
|
)%
|
|||||||
Other revenues
|
114
|
|
|
164
|
|
|
278
|
|
|
216
|
|
|
(287
|
)
|
|
(71
|
)
|
|
349
|
|
|
(492
|
)%
|
|||||||
Total economic income revenues
|
22,319
|
|
|
58,764
|
|
|
81,083
|
|
|
24,079
|
|
|
42,127
|
|
|
66,206
|
|
|
14,877
|
|
|
22
|
%
|
|||||||
Economic Income Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Compensation and benefits
|
10,411
|
|
|
37,303
|
|
|
47,714
|
|
|
13,500
|
|
|
28,145
|
|
|
41,645
|
|
|
6,069
|
|
|
15
|
%
|
|||||||
Non-compensation expenses—Fixed
|
8,521
|
|
|
15,334
|
|
|
23,855
|
|
|
8,572
|
|
|
15,976
|
|
|
24,548
|
|
|
(693
|
)
|
|
(3
|
)%
|
|||||||
Non-compensation expenses—Variable
|
1,139
|
|
|
7,423
|
|
|
8,562
|
|
|
1,138
|
|
|
6,000
|
|
|
7,138
|
|
|
1,424
|
|
|
20
|
%
|
|||||||
Reimbursement from affiliates
|
(1,411
|
)
|
|
—
|
|
|
(1,411
|
)
|
|
(1,435
|
)
|
|
—
|
|
|
(1,435
|
)
|
|
24
|
|
|
(2
|
)%
|
|||||||
Total economic income expenses
|
18,660
|
|
|
60,060
|
|
|
78,720
|
|
|
21,775
|
|
|
50,121
|
|
|
71,896
|
|
|
6,824
|
|
|
9
|
%
|
|||||||
Net economic income (loss) (before non-controlling interest)
|
3,659
|
|
|
(1,296
|
)
|
|
2,363
|
|
|
2,304
|
|
|
(7,994
|
)
|
|
(5,690
|
)
|
|
8,053
|
|
|
(142
|
)%
|
|||||||
Non-controlling interest
|
(893
|
)
|
|
—
|
|
|
(893
|
)
|
|
(300
|
)
|
|
—
|
|
|
(300
|
)
|
|
(593
|
)
|
|
198
|
%
|
|||||||
Economic income (loss)
|
$
|
2,766
|
|
|
$
|
(1,296
|
)
|
|
$
|
1,470
|
|
|
$
|
2,004
|
|
|
$
|
(7,994
|
)
|
|
$
|
(5,990
|
)
|
|
$
|
7,460
|
|
|
(125
|
)%
|
|
Three Months Ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Non-compensation expenses—fixed:
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
$
|
73
|
|
|
$
|
59
|
|
|
$
|
14
|
|
|
24
|
%
|
Professional, advisory and other fees
|
2,341
|
|
|
3,119
|
|
|
(778
|
)
|
|
(25
|
)%
|
|||
Occupancy and equipment
|
6,238
|
|
|
5,220
|
|
|
1,018
|
|
|
20
|
%
|
|||
Depreciation and amortization
|
2,601
|
|
|
2,361
|
|
|
240
|
|
|
10
|
%
|
|||
Service fees
|
2,678
|
|
|
3,154
|
|
|
(476
|
)
|
|
(15
|
)%
|
|||
Other
|
9,924
|
|
|
10,635
|
|
|
(711
|
)
|
|
(7
|
)%
|
|||
Total
|
$
|
23,855
|
|
|
$
|
24,548
|
|
|
$
|
(693
|
)
|
|
(3
|
)%
|
|
Three Months Ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Non-compensation expenses—Variable:
|
|
|
|
|
|
|
|
|||||||
Floor brokerage and trade execution
|
$
|
3,649
|
|
|
$
|
2,906
|
|
|
$
|
743
|
|
|
26
|
%
|
Expenses related to Luxembourg reinsurance companies
|
516
|
|
|
735
|
|
|
(219
|
)
|
|
(30
|
)%
|
|||
Marketing and business development
|
4,397
|
|
|
3,497
|
|
|
900
|
|
|
26
|
%
|
|||
Total
|
$
|
8,562
|
|
|
$
|
7,138
|
|
|
$
|
1,424
|
|
|
20
|
%
|
|
Economic Income (Loss)
|
|||||||||||||||||||||||||||||
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||||||||||||||||||
|
2013
|
|
2012
|
|
Total
Period-to-Period
|
|||||||||||||||||||||||||
|
Alternative
Investment
|
|
|
|
Total
2013
|
|
Alternative
Investment
|
|
|
|
Total
2012
|
|
||||||||||||||||||
|
Broker-Dealer (a)
|
|
Broker-Dealer (a)
|
|
$ Change
|
|
% Change
|
|||||||||||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||||||||
Economic Income Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
42,737
|
|
|
$
|
42,737
|
|
|
$
|
—
|
|
|
$
|
31,884
|
|
|
$
|
31,884
|
|
|
$
|
10,853
|
|
|
34
|
%
|
Brokerage
|
—
|
|
|
61,317
|
|
|
61,317
|
|
|
—
|
|
|
48,581
|
|
|
48,581
|
|
|
12,736
|
|
|
26
|
%
|
|||||||
Management fees
|
28,750
|
|
|
—
|
|
|
28,750
|
|
|
28,606
|
|
|
—
|
|
|
28,606
|
|
|
144
|
|
|
1
|
%
|
|||||||
Incentive income (loss)
|
8,892
|
|
|
—
|
|
|
8,892
|
|
|
6,605
|
|
|
—
|
|
|
6,605
|
|
|
2,287
|
|
|
35
|
%
|
|||||||
Investment income (loss)
|
12,138
|
|
|
2,298
|
|
|
14,436
|
|
|
23,496
|
|
|
5,895
|
|
|
29,391
|
|
|
(14,955
|
)
|
|
(51
|
)%
|
|||||||
Other revenues
|
226
|
|
|
(389
|
)
|
|
(163
|
)
|
|
340
|
|
|
(27
|
)
|
|
313
|
|
|
(476
|
)
|
|
(152
|
)%
|
|||||||
Total economic income revenues
|
50,006
|
|
|
105,963
|
|
|
155,969
|
|
|
59,047
|
|
|
86,333
|
|
|
145,380
|
|
|
10,589
|
|
|
7
|
%
|
|||||||
Economic Income Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Compensation and benefits
|
24,324
|
|
|
67,911
|
|
|
92,235
|
|
|
30,946
|
|
|
56,608
|
|
|
87,554
|
|
|
4,681
|
|
|
5
|
%
|
|||||||
Non-compensation expenses—Fixed
|
17,740
|
|
|
30,017
|
|
|
47,757
|
|
|
15,559
|
|
|
30,320
|
|
|
45,879
|
|
|
1,878
|
|
|
4
|
%
|
|||||||
Non-compensation expenses—Variable
|
2,145
|
|
|
13,768
|
|
|
15,913
|
|
|
2,447
|
|
|
11,566
|
|
|
14,013
|
|
|
1,900
|
|
|
14
|
%
|
|||||||
Reimbursement from affiliates
|
(2,830
|
)
|
|
—
|
|
|
(2,830
|
)
|
|
(2,551
|
)
|
|
—
|
|
|
(2,551
|
)
|
|
(279
|
)
|
|
11
|
%
|
|||||||
Total economic income expenses
|
41,379
|
|
|
111,696
|
|
|
153,075
|
|
|
46,401
|
|
|
98,494
|
|
|
144,895
|
|
|
8,180
|
|
|
6
|
%
|
|||||||
Net economic income (loss) (before non-controlling interest)
|
8,627
|
|
|
(5,733
|
)
|
|
2,894
|
|
|
12,646
|
|
|
(12,161
|
)
|
|
485
|
|
|
2,409
|
|
|
497
|
%
|
|||||||
Non-controlling interest
|
(2,692
|
)
|
|
—
|
|
|
(2,692
|
)
|
|
(600
|
)
|
|
—
|
|
|
(600
|
)
|
|
(2,092
|
)
|
|
349
|
%
|
|||||||
Economic income (loss)
|
$
|
5,935
|
|
|
$
|
(5,733
|
)
|
|
$
|
202
|
|
|
$
|
12,046
|
|
|
$
|
(12,161
|
)
|
|
$
|
(115
|
)
|
|
$
|
317
|
|
|
(276
|
)%
|
|
Six Months Ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Non-compensation expenses—fixed:
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
$
|
196
|
|
|
$
|
147
|
|
|
$
|
49
|
|
|
33
|
%
|
Professional, advisory and other fees
|
5,413
|
|
|
6,410
|
|
|
(997
|
)
|
|
(16
|
)%
|
|||
Occupancy and equipment
|
11,593
|
|
|
9,753
|
|
|
1,840
|
|
|
19
|
%
|
|||
Depreciation and amortization
|
5,142
|
|
|
4,515
|
|
|
627
|
|
|
14
|
%
|
|||
Service fees
|
5,224
|
|
|
5,378
|
|
|
(154
|
)
|
|
(3
|
)%
|
|||
Other
|
20,189
|
|
|
19,676
|
|
|
513
|
|
|
3
|
%
|
|||
Total
|
$
|
47,757
|
|
|
$
|
45,879
|
|
|
$
|
1,878
|
|
|
4
|
%
|
|
Six Months Ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Non-compensation expenses—Variable:
|
|
|
|
|
|
|
|
|||||||
Floor brokerage and trade execution
|
$
|
6,623
|
|
|
$
|
5,578
|
|
|
$
|
1,045
|
|
|
19
|
%
|
Expenses related to Luxembourg reinsurance companies
|
1,032
|
|
|
1,345
|
|
|
(313
|
)
|
|
(23
|
)%
|
|||
Marketing and business development
|
8,258
|
|
|
7,090
|
|
|
1,168
|
|
|
16
|
%
|
|||
Total
|
$
|
15,913
|
|
|
$
|
14,013
|
|
|
$
|
1,900
|
|
|
14
|
%
|
•
|
pay our operating expenses, primarily consisting of compensation and benefits and general and administrative expenses; and
|
•
|
provide capital to facilitate the growth of our existing business.
|
|
As of June 30, 2013
|
||
|
(dollars in thousands)
|
||
Securities purchased under agreements to resell
|
|
||
Agreements with Royal Bank of Canada bearing interest of 1.75% due on June 2015 to January 2016
|
$
|
6,311
|
|
|
$
|
6,311
|
|
|
As of December 31, 2012
|
||
|
(dollars in thousands)
|
||
Securities sold under agreements to repurchase
|
|
||
Agreements with Royal Bank of Canada bearing interest of 2.12% - 2.2% due on January 31, 2013 to June 25, 2013
|
29,039
|
|
|
Agreements with Barclays Capital Inc bearing interest of (0.05%) - 0.23% due on January 1, 2013
|
136,906
|
|
|
|
$
|
165,945
|
|
Location
|
|
Amount
|
|
Maturity
|
||
|
|
(dollars in thousands)
|
|
|
||
San Francisco
|
|
$
|
82
|
|
|
May 12, 2014
|
New York
|
|
$
|
1,193
|
|
|
September 3, 2013
|
New York
|
|
$
|
6,754
|
|
|
December 12, 2013
|
New York
|
|
$
|
1,002
|
|
|
February 22, 2014
|
New York
|
|
$
|
1,861
|
|
|
March 19, 2014
|
i.
|
Portfolio funds
—
Portfolio funds (“Portfolio Funds”) include interests in funds and investment companies managed by the Company or its affiliates. The Company follows US GAAP regarding fair value measurements and disclosures relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). The guidance permits, as a practical expedient, an entity holding investments in certain entities that either are investment companies as defined by the AICPA Audit and Accounting Guide, Investment Companies, or have attributes similar to an investment company, and calculate net asset value per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment.
|
ii.
|
Real estate investments
—
Real estate investments are valued at fair value. The fair value of real estate investments are estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Real estate investments without a public market are valued based on assumptions and valuation techniques used by the Company. Such valuation techniques may include discounted cash flow analysis, prevailing market capitalization rates or earnings multiples applied to earnings from the investment, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties, consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence, as well as independent external appraisals. In general, the Company considers several valuation techniques when measuring the fair value of a real estate investment. However, in certain circumstances, a single valuation technique may be appropriate. Real estate investments are reviewed on a quarterly basis by the Company for significant changes at the property level or a significant change in the overall market which would impact the value of the real estate investment resulting in unrealized appreciation or depreciation.
|
•
|
Hedge Funds
. Management fees for the Company's hedge funds are generally charged at an annual rate of up to
2%
of assets under management. Management fees are generally calculated monthly based on assets under management at the end of each month before incentive income.
|
•
|
Alternative Solutions.
Management fees for the Alternative Solutions business are generally charged at an annual rate of up to
2%
of assets under management. Management fees are generally calculated monthly based on assets under management at the end of each month before incentive income or based on assets under management at the beginning of the month. Management fees earned from the Alternative Solutions business are based and initially calculated on estimated net asset values and actual fees ultimately earned could be impacted to the extent of any changes in these estimates.
|
•
|
Real Estate Funds.
Management fees from the Company's real estate funds are generally charged by their general partners at an annual rate from
1%
to
1.5%
of total capital commitments during the investment period and of invested capital or net asset value of the applicable fund after the investment period has ended. Management fees are typically paid to the general partners on a quarterly basis, at the beginning of the quarter in arrears, and are prorated for changes in capital commitments throughout the investment period and invested capital after the investment period. The general
|
•
|
HealthCare Royalty Partners (formerly Cowen HealthCare Royalty Partners) Funds.
During the investment period (as defined in the management agreement of the HealthCare Royalty Partners funds), management fees for the HealthCare Royalty Partners funds are generally charged at an annual rate of up to
2%
of committed capital. After the investment period, management fees are generally charged at an annual rate of up to
2%
of net asset value. Management fees for the HealthCare Royalty Partners funds are calculated on a quarterly basis.
|
•
|
Ramius Trading Strategies.
Management fees for Ramius Trading Strategies Managed Futures Fund, a mutual fund launched in September 2011, are
1.60%
per annum (subject to an overall expense cap of
1.85%
). Management fees and platform fees for the Company's private commodity trading advisory business are generally charged at an annual rate of up to
1.00%
. Management and platform fees are generally calculated monthly based on assets under management at the end of each month.
|
•
|
Underwriting fees.
The Company earns underwriting revenues in securities offerings in which the Company acts as an underwriter, such as initial public offerings, follow-on equity offerings, debt offerings, and convertible security offerings. Underwriting revenues include management fees, selling concessions and underwriting fees. Fee revenue relating to underwriting commitments is recorded when all significant items relating to the underwriting process have been completed and the amount of the underwriting revenue has been determined. This generally is the point at which all of the following have occurred: (i) the issuer's registration statement has become effective with the SEC, or the
|
•
|
Strategic/financial advisory fees.
The Company's strategic advisory revenues include success fees earned in connection with advising companies, principally in mergers and acquisitions and liability management transactions. The Company also earns fees for related advisory work such as providing fairness opinions. The Company records strategic advisory revenues when the services for the transactions are completed under the terms of each assignment or engagement and collection is reasonably assured. Expenses associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded.
|
•
|
Placement and sales agent fees. The Company earns agency placement fees and sales agent commissions in non-underwritten transactions such as private placements of debt and equity and debt securities, including, private investment in public equity transactions (“PIPEs”), and as sales agent in at-the-market offerings of equity securities. The Company records placement revenues when the services for the transactions are completed under the terms of each assignment or engagement and collection is reasonably assured. The Company records sales agent commissions on a trade date basis. Expenses associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
Month 1 (April 1, 2013 – April 30, 2013)
|
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
(3
|
)
|
Employee transactions(2)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
Month 2 (May 1, 2013 – May 31, 2013)
|
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
(3
|
)
|
Employee transactions(2)
|
|
403,865
|
|
|
$
|
2.80
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
403,865
|
|
|
$
|
2.80
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Month 3 (June 1, 2013 – June 30, 2013)
|
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
(3
|
)
|
Employee transactions(2)
|
|
479,449
|
|
|
$
|
3.13
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
479,449
|
|
|
$
|
3.13
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Total (April 1, 2013 – June 30, 2013)
|
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
(3
|
)
|
Employee transactions(2)
|
|
883,314
|
|
|
$
|
2.98
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
883,314
|
|
|
2.98
|
|
|
|
|
|
|
(1)
|
The Company's Board of Directors have authorized the repurchase, subject to market conditions, of up to $35.0 million of the Company's outstanding common stock.
|
(2)
|
Represents shares of common stock withheld in satisfaction of tax withholding obligations upon the vesting of equity awards.
|
(3)
|
Board approval of repurchases is based on dollar amount. The Company cannot estimate the number of shares that may yet be purchased.
|
|
|
|
|
COWEN GROUP, INC.
|
|
||
|
|
|
|
|
|
||
|
|
|
|
By:
|
|
/s/ PETER A. COHEN
|
|
|
|
|
|
Name:
|
|
Peter A. Cohen
|
|
|
|
|
|
Title:
|
|
Chief Executive Officer and President (principal executive officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ STEPHEN A. LASOTA
|
|
|
|
|
|
Name:
|
|
Stephen A. Lasota
|
|
|
Date:
|
August 7, 2013
|
|
Title:
|
|
Chief Financial Officer (principal financial officer and principal accounting officer)
|
|
Exhibit No.
|
|
Description
|
|
|
10.1
|
|
|
Employment Agreement between Cowen Group, Inc. and John Holmes dated August 2, 2012 (filed herewith).*
|
|
10.2
|
|
|
Employment Agreement between Cowen Group, Inc. and Michael Singer dated December 5, 2012 (filed herewith).*
|
|
31.1
|
|
|
Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
31.2
|
|
|
Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
32
|
|
|
Certification of CEO and CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (furnished herewith).
|
|
101.INS
|
|
|
XBRL INSTANCE DOCUMENT **
|
|
101.SCH
|
|
|
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT **
|
|
101.CAL
|
|
|
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT **
|
|
101.DEF
|
|
|
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT **
|
|
101.LAB
|
|
|
XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT **
|
|
101.PRE
|
|
|
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT **
|
*
|
Signifies management contract or compensatory plan or arrangement.
|
**
|
Pursuant to Rule 406T of Regulation S-T, this information shall not be deemed filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections.
|
Date: _____________
, 2012
|
(Signature) |
Title
|
Date
|
Identifying Number or
Brief Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
/s/ Peter A. Cohen
Peter A. Cohen
Chairman and Chief Executive Officer
|
By:
/s/ Jane Gerhard
Jane Gerhard
Head of Human Resources
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Cowen Group, Inc:
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 7, 2013
|
|
/s/ PETER A. COHEN
|
|
|
|
|
Name: Peter A. Cohen
Title:
Chief Executive Officer and President
(principal executive officer)
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Cowen Group, Inc:
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 7, 2013
|
|
/s/ STEPHEN A. LASOTA
|
|
|
|
|
Name: Stephen A. Lasota
Title: Chief Financial Officer (principal financial officer and principal accounting officer) |
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 7, 2013
|
|
/s/ PETER A. COHEN
|
|
|
|
|
Name: Peter A. Cohen
Title: Chief Executive Officer and President (principal executive officer) |
|
|
|
|
|
|
|
|
|
/s/ STEPHEN A. LASOTA
|
|
|
|
|
Name: Stephen A. Lasota
Title: Chief Financial Officer (principal financial officer and principal accounting officer) |
|