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(Mark One)
|
|
Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2014
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or
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|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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27-0423711
(I.R.S. Employer
Identification No.)
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599 Lexington Avenue
New York, New York
(Address of Principal Executive Offices)
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10022
(Zip Code)
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Large accelerated filer
o
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Accelerated filer
Q
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Non-accelerated filer
o
(Do not check if a smaller
reporting company)
|
|
Smaller reporting company
o
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|
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Item No.
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Page No.
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As of March 31, 2014
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As of December 31, 2013
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||||
Assets
|
|
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||||
Cash and cash equivalents
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$
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61,565
|
|
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$
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54,720
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Cash collateral pledged
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11,269
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10,907
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||
Securities owned, at fair value
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469,378
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311,039
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Receivable on derivative contracts, at fair value
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50,076
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10,075
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Securities borrowed
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1,319,938
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927,773
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Other investments
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144,147
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99,483
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Receivable from brokers
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56,946
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|
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66,980
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Fees receivable, net of allowance
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57,618
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45,067
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Due from related parties
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28,812
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26,910
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Fixed assets, net of accumulated depreciation and amortization of $21,753 and $21,853, respectively
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28,160
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26,999
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Goodwill
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37,240
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37,240
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Intangible assets, net of accumulated amortization of $24,821 and $26,610, respectively
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11,353
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12,094
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|
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Other assets
|
26,691
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17,561
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Consolidated Funds
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|
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||||
Cash and cash equivalents
|
1,825
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|
|
2,048
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|
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Other investments
|
179,390
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187,480
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Other assets
|
689
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|
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5,624
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||
Total Assets
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$
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2,485,097
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$
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1,842,000
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Liabilities and Stockholders' Equity
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|
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||||
Liabilities
|
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||||
Securities sold, not yet purchased, at fair value
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$
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139,347
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$
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130,954
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Securities sold under agreement to repurchase
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—
|
|
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3,657
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|
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Payable for derivative contracts, at fair value
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50,032
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7,674
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Securities loaned
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1,310,903
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918,577
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Payable to brokers
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151,109
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75,420
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Compensation payable
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34,152
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51,807
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Short-term borrowings and other debt
|
6,384
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|
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2,564
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Convertible debt
|
114,101
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|
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—
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Fees payable
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10,833
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6,324
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Due to related parties
|
408
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|
|
382
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Accounts payable, accrued expenses and other liabilities
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48,563
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45,290
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Consolidated Funds
|
|
|
|
||||
Capital withdrawals payable
|
—
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|
|
5,222
|
|
||
Accounts payable, accrued expenses and other liabilities
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1,579
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|
|
549
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Total Liabilities
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1,867,411
|
|
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1,248,420
|
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Commitments and Contingencies (Note 13)
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|
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|
||||
Redeemable non-controlling interests
|
85,448
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85,814
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Stockholders' equity
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||||
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized, no shares issued and outstanding
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—
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—
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Class A common stock, par value $0.01 per share: 250,000,000 shares authorized, 132,488,976 shares issued and 115,352,546 outstanding as of March 31, 2014 and 130,900,182 shares issued and 115,026,633 outstanding as of December 31, 2013, respectively (including 380,122 and 482,522 restricted shares, respectively)
|
1,160
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|
|
1,160
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|
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Class B common stock, par value $0.01 per share: 250,000,000 authorized, no shares issued and outstanding
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—
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|
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—
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Additional paid-in capital
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757,359
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737,341
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(Accumulated deficit) retained earnings
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(173,403
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)
|
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(183,243
|
)
|
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Accumulated other comprehensive income (loss)
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537
|
|
|
592
|
|
||
Less: Class A common stock held in treasury, at cost, 17,136,430 and 15,873,549 shares as of March 31, 2014 and December 31, 2013, respectively.
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(53,415
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)
|
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(48,084
|
)
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||
Total Stockholders' Equity
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532,238
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507,766
|
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Total Liabilities and Stockholders' Equity
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$
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2,485,097
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|
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$
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1,842,000
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|
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Three Months Ended March 31,
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||||||
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2014
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2013
|
||||
Revenues
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||||
Investment banking
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$
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49,562
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$
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17,166
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Brokerage
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32,830
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|
|
26,600
|
|
||
Management fees
|
8,924
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|
|
9,493
|
|
||
Incentive income
|
2,498
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|
|
2,611
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|
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Interest and dividends
|
9,252
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|
|
9,321
|
|
||
Reimbursement from affiliates
|
1,900
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|
|
1,485
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Other revenues
|
555
|
|
|
478
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||
Consolidated Funds
|
|
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||||
Interest and dividends
|
486
|
|
|
12
|
|
||
Other revenues
|
670
|
|
|
75
|
|
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Total revenues
|
106,677
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|
|
67,241
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|
||
Expenses
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|
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|
||||
Employee compensation and benefits
|
67,561
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|
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44,223
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|
||
Floor brokerage and trade execution
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5,655
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5,853
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Interest and dividends
|
7,072
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|
|
6,418
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|
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Professional, advisory and other fees
|
3,601
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3,853
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|
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Service fees
|
2,142
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2,577
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Communications
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3,246
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|
3,739
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|
||
Occupancy and equipment
|
6,397
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|
5,719
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|
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Depreciation and amortization
|
2,380
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2,553
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|
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Client services and business development
|
4,514
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|
4,099
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|
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Other expenses
|
3,158
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|
|
3,644
|
|
||
Consolidated Funds
|
|
|
|
||||
Interest and dividends
|
110
|
|
|
—
|
|
||
Professional, advisory and other fees
|
134
|
|
|
396
|
|
||
Floor brokerage and trade execution
|
2
|
|
|
—
|
|
||
Other expenses
|
56
|
|
|
38
|
|
||
Total expenses
|
106,028
|
|
|
83,112
|
|
||
Other income (loss)
|
|
|
|
||||
Net gains (losses) on securities, derivatives and other investments
|
11,354
|
|
|
11,807
|
|
||
Consolidated Funds
|
|
|
|
||||
Net realized and unrealized gains (losses) on investments and other transactions
|
2,164
|
|
|
5,070
|
|
||
Net realized and unrealized gains (losses) on derivatives
|
(21
|
)
|
|
304
|
|
||
Net gains (losses) on foreign currency transactions
|
(40
|
)
|
|
(215
|
)
|
||
Total other income (loss)
|
13,457
|
|
|
16,966
|
|
||
Income (loss) before income taxes
|
14,106
|
|
|
1,095
|
|
||
Income tax expense (benefit)
|
79
|
|
|
176
|
|
||
Net income (loss)
|
14,027
|
|
|
919
|
|
||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
4,187
|
|
|
3,495
|
|
||
Net income (loss) attributable to Cowen Group, Inc. stockholders
|
$
|
9,840
|
|
|
$
|
(2,576
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|||
Basic
|
115,680
|
|
|
113,798
|
|
||
Diluted
|
122,898
|
|
|
113,798
|
|
||
Earnings (loss) per share:
|
|
|
|
||||
Basic
|
$
|
0.09
|
|
|
$
|
(0.02
|
)
|
Diluted
|
$
|
0.08
|
|
|
$
|
(0.02
|
)
|
|
Three Months Ended March 31, 2014
|
|
Three Months Ended March 31, 2013
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
$
|
14,027
|
|
|
|
|
|
|
$
|
919
|
|
||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
|
|
37
|
|
|
|
|
|
|
(4
|
)
|
|
|
||||||
Defined benefit pension plan:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net gain/(loss) arising during the period
|
(92
|
)
|
|
|
|
|
|
(22
|
)
|
|
|
|
|
||||||
Add: amortization of prior service cost included in net periodic pension cost
|
—
|
|
|
(92
|
)
|
|
|
|
5
|
|
|
(17
|
)
|
|
|
||||
Total other comprehensive income, net of tax
|
|
|
|
|
(55
|
)
|
|
|
|
|
|
(21
|
)
|
||||||
Comprehensive income (loss)
|
|
|
|
|
$
|
13,972
|
|
|
|
|
|
|
$
|
898
|
|
|
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, 2013
|
115,026,633
|
|
|
1,160
|
|
|
(48,084
|
)
|
|
737,341
|
|
|
592
|
|
|
(183,243
|
)
|
|
507,766
|
|
|
85,814
|
|
|||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,840
|
|
|
9,840
|
|
|
4,187
|
|
|||||||
Defined benefit plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(92
|
)
|
|
—
|
|
|
(92
|
)
|
|
—
|
|
|||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|||||||
Capital contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,007
|
|
|||||||
Capital withdrawals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,560
|
)
|
|||||||
Restricted stock awards issued
|
1,588,794
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Purchase of treasury stock, at cost
|
(1,262,881
|
)
|
|
—
|
|
|
(5,331
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,331
|
)
|
|
—
|
|
|||||||
Warrants issued (see Note 5)
|
—
|
|
|
—
|
|
|
—
|
|
|
15,218
|
|
|
—
|
|
|
—
|
|
|
15,218
|
|
|
—
|
|
|||||||
Amortization of share based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
4,800
|
|
|
—
|
|
|
—
|
|
|
4,800
|
|
|
—
|
|
|||||||
Balance, March 31, 2014
|
115,352,546
|
|
|
$
|
1,160
|
|
|
$
|
(53,415
|
)
|
|
$
|
757,359
|
|
|
$
|
537
|
|
|
$
|
(173,403
|
)
|
|
$
|
532,238
|
|
|
$
|
85,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
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)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,576
|
)
|
|
(2,576
|
)
|
|
3,495
|
|
|||||||
Defined benefit plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|||||||
Capital contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
801
|
|
|||||||
Capital withdrawals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,968
|
)
|
|||||||
Restricted stock awards issued
|
844,734
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Common stock issued upon acquisition (See Note 2)
|
2,514,468
|
|
|
25
|
|
|
—
|
|
|
6,272
|
|
|
—
|
|
|
—
|
|
|
6,297
|
|
|
—
|
|
|||||||
Purchase of treasury stock, at cost
|
(155,295
|
)
|
|
—
|
|
|
(412
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(412
|
)
|
|
—
|
|
|||||||
Amortization of share based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
4,752
|
|
|
—
|
|
|
—
|
|
|
4,752
|
|
|
—
|
|
|||||||
Balance, March 31, 2013
|
115,651,799
|
|
|
$
|
1,160
|
|
|
$
|
(32,140
|
)
|
|
$
|
724,235
|
|
|
$
|
335
|
|
|
$
|
(190,441
|
)
|
|
$
|
503,149
|
|
|
$
|
81,031
|
|
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 debt and equity 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 March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
U.S. Government securities (a)
|
$
|
9
|
|
|
$
|
9
|
|
Preferred stock
|
324
|
|
|
324
|
|
||
Common stocks
|
270,349
|
|
|
176,939
|
|
||
Convertible bonds (b)
|
11,564
|
|
|
5,958
|
|
||
Corporate bonds (c)
|
167,349
|
|
|
121,372
|
|
||
Warrants and rights
|
4,265
|
|
|
5,912
|
|
||
Mutual funds
|
15,518
|
|
|
525
|
|
||
|
$
|
469,378
|
|
|
$
|
311,039
|
|
(a)
|
As of
March 31, 2014
, the maturity was April 2016 with an interest rate of
5.95%
. As of
December 31, 2013
, the maturity was April 2016 with an interest rate of
5.95%
.
|
(b)
|
As of
March 31, 2014
, maturities ranged from June 2014 to November 2014 and interest rates ranged between
4.00%
to
10.00%
. As of
December 31, 2013
, maturities ranged from May 2014 to October 2014 and interest rates ranged between
5.00%
to
10.00%
.
|
(c)
|
As of
March 31, 2014
, maturities ranged from September 2014 to February 2046 and interest rates ranged between
4.74%
and
12.25%
. As of
December 31, 2013
, maturities ranged from January 2014 to February 2046 and interest rates ranged between
3.38%
and
11.75%
.
|
Receivable on derivative contracts
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
Commodity Future
|
$
|
53
|
|
|
$
|
285
|
|
Cross Rate
|
10
|
|
|
22
|
|
||
Equity Swap
|
8
|
|
|
70
|
|
||
Options (a)
|
50,005
|
|
|
9,698
|
|
||
|
$
|
50,076
|
|
|
$
|
10,075
|
|
Payable for derivative contracts
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
Futures
|
$
|
62
|
|
|
$
|
275
|
|
Currency forwards
|
28
|
|
|
301
|
|
||
Equity and credit default swaps
|
735
|
|
|
525
|
|
||
Options (a)
|
49,207
|
|
|
6,573
|
|
||
|
$
|
50,032
|
|
|
$
|
7,674
|
|
As of March 31, 2014
|
|||||||||||||||||||
|
Gross amounts recognized
|
|
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition
(a) |
|
Net amounts included on the Condensed Consolidated Statements of Financial Condition
|
|
Amounts not offset on the condensed consolidated balance sheet but eligible for offsetting upon counterparty default (b)
|
|
Net amounts
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Receivable on derivative contracts, at fair value
|
$
|
50,076
|
|
|
$
|
—
|
|
|
$
|
50,076
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Payable for derivative contracts, at fair value
|
50,032
|
|
|
—
|
|
|
50,032
|
|
|
—
|
|
|
—
|
|
As of December 31, 2013
|
|||||||||||||||||||
|
Gross amounts recognized
|
|
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition
(a) |
|
Net amounts included on the Condensed Consolidated Statements of Financial Condition
|
|
Amounts not offset on the condensed consolidated balance sheet but eligible for offsetting upon counterparty default (b)
|
|
Net amounts
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Receivable on derivative contracts, at fair value
|
$
|
10,075
|
|
|
$
|
—
|
|
|
$
|
10,075
|
|
|
$
|
10,075
|
|
|
$
|
—
|
|
Payable for derivative contracts, at fair value
|
7,674
|
|
|
—
|
|
|
7,674
|
|
|
7,674
|
|
|
$
|
—
|
|
(a)
|
Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
|
(b)
|
Includes the amount of collateral held or posted.
|
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
(1) Portfolio Funds, at fair value
|
$
|
79,440
|
|
|
$
|
71,051
|
|
(2) Real estate investments, at fair value
|
42,283
|
|
|
2,088
|
|
||
(3) Equity method investments
|
22,034
|
|
|
25,966
|
|
||
(4) Lehman claims, at fair value
|
390
|
|
|
378
|
|
||
|
$
|
144,147
|
|
|
$
|
99,483
|
|
(1)
|
Portfolio Funds, at fair value
|
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
HealthCare Royalty Partners (a)(*)
|
$
|
10,784
|
|
|
$
|
9,741
|
|
HealthCare Royalty Partners II (a)(*)
|
6,140
|
|
|
4,961
|
|
||
Orchard Square Partners Credit Fund LP (b)(*)
|
13,828
|
|
|
12,674
|
|
||
Starboard Value and Opportunity Fund LP (c)(*)
|
18,439
|
|
|
17,495
|
|
||
Formation 8 Partners Fund I (d)
|
6,083
|
|
|
2,788
|
|
||
RCG LV Park Lane LLC (e)
|
706
|
|
|
678
|
|
||
RCGL 12E13th LLC (f)
|
584
|
|
|
558
|
|
||
RCG Longview Debt Fund V, L.P. (f)
|
11,856
|
|
|
11,979
|
|
||
Other private investment (g)
|
7,785
|
|
|
7,772
|
|
||
Other affiliated funds (h)(*)
|
3,235
|
|
|
2,405
|
|
||
|
$
|
79,440
|
|
|
$
|
71,051
|
|
(a)
|
HealthCare Royalty Partners, L.P. and HealthCare Royalty Partners II, L.P. are private equity funds and therefore distributions will be made when cash flows are received from the underlying investments, typically on a quarterly basis.
|
(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)
|
Starboard Value and Opportunity Fund LP permits quarterly withdrawals upon
90
days notice.
|
(d)
|
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.
|
(e)
|
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.
|
(f)
|
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.
|
(g)
|
Other private investment represents the Company's closed end investment in a portfolio fund that invests in a wireless broadband communication provider in Italy.
|
(h)
|
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 March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
RCG Longview Debt Fund IV Management, LLC
|
$
|
495
|
|
|
$
|
1,533
|
|
RCG Longview Debt Fund V Partners, LLC
|
1,672
|
|
1,497
|
|
|||
HealthCare Royalty GP, LLC
|
879
|
|
794
|
||||
HealthCare Royalty GP II, LLC
|
1,040
|
|
840
|
||||
HealthCare Royalty GP III, LLC
|
47
|
|
47
|
|
|||
CBOE Stock Exchange, LLC
|
1,283
|
|
1,351
|
||||
Starboard Value LP
|
10,019
|
|
14,263
|
||||
RCG Longview Partners, LLC
|
2,692
|
|
1,839
|
||||
RCG Urban American, LLC
|
346
|
|
316
|
||||
RCG Urban American Management, LLC
|
274
|
|
238
|
||||
RCG Longview Equity Management, LLC
|
106
|
|
292
|
||||
Urban American Real Estate Fund II, LLC
|
2,047
|
|
1,785
|
||||
RCG Kennedy House, LLC
|
483
|
|
502
|
||||
Other
|
651
|
|
669
|
||||
|
$
|
22,034
|
|
|
$
|
25,966
|
|
(4)
|
Lehman Claims, at fair value
|
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
Common stocks
|
$
|
139,290
|
|
|
$
|
130,899
|
|
Corporate bonds (a)
|
57
|
|
|
55
|
|
||
|
$
|
139,347
|
|
|
$
|
130,954
|
|
(a)
|
As of
March 31, 2014
and
December 31, 2013
, the maturity was January 2026 with an interest rate of
5.55%
.
|
|
As of December 31, 2013
|
||
|
(dollars in thousands)
|
||
Securities sold under agreements to repurchase
|
|
||
Agreements with Royal Bank of Canada bearing interest of 1.75% due June 2015 to November 2015
|
$
|
3,657
|
|
|
$
|
3,657
|
|
As of December 31, 2013
|
|||||||||||||||||||
|
Gross amounts recognized
|
|
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition
(a) |
|
Net amounts included on the Condensed Consolidated Statements of Financial Condition
|
|
Amounts not offset on the condensed consolidated balance sheet but eligible for offsetting upon counterparty default (b)
|
|
Net amounts
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Securities sold under agreements to repurchase
|
$
|
3,657
|
|
|
$
|
—
|
|
|
$
|
3,657
|
|
|
$
|
3,657
|
|
|
$
|
—
|
|
(a)
|
Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
|
(b)
|
Includes the amount of collateral held or posted.
|
As of March 31, 2014
|
|||||||||||||||||||
|
Gross amounts recognized
|
|
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition
(a) |
|
Net amounts included on the Condensed Consolidated Statements of Financial Condition
|
|
Amounts not offset on the condensed consolidated balance sheet but eligible for offsetting upon counterparty default (b)
|
|
Net amounts
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Securities borrowed
|
$
|
1,319,938
|
|
|
$
|
—
|
|
|
$
|
1,319,938
|
|
|
$
|
1,319,938
|
|
|
$
|
—
|
|
Securities loaned
|
1,310,903
|
|
|
—
|
|
|
1,310,903
|
|
|
1,310,903
|
|
|
—
|
|
As of December 31, 2013
|
|||||||||||||||||||
|
Gross amounts recognized
|
|
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition
(a) |
|
Net amounts included on the Condensed Consolidated Statements of Financial Condition
|
|
Amounts not offset on the condensed consolidated balance sheet but eligible for offsetting upon counterparty default (b)
|
|
Net amounts
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Securities borrowed
|
$
|
927,773
|
|
|
$
|
—
|
|
|
$
|
927,773
|
|
|
$
|
927,773
|
|
|
$
|
—
|
|
Securities loaned
|
918,577
|
|
|
—
|
|
|
918,577
|
|
|
918,577
|
|
|
—
|
|
(a)
|
Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
|
(b)
|
Includes the amount of cash collateral held/posted.
|
b.
|
Consolidated Funds
|
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
(1) Portfolio Funds
|
$
|
175,614
|
|
|
$
|
182,638
|
|
(2) Lehman claims
|
3,776
|
|
|
4,842
|
|
||
|
$
|
179,390
|
|
|
$
|
187,480
|
|
(1)
|
Investments in Portfolio Funds, at fair value
|
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
Investments of Enterprise LP
|
$
|
143,059
|
|
|
$
|
155,530
|
|
Investments of Merger Fund
|
32,555
|
|
|
26,963
|
|
||
Investments of consolidated fund of funds
|
—
|
|
|
145
|
|
||
|
$
|
175,614
|
|
|
$
|
182,638
|
|
(2)
|
Lehman Claims, at fair value
|
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
Bank debt
|
$
|
5
|
|
|
$
|
5
|
|
Common stock
|
2,527
|
|
|
2,677
|
|
||
Preferred stock
|
973
|
|
|
973
|
|
||
Private equity
|
409
|
|
|
406
|
|
||
Restricted stock
|
124
|
|
|
124
|
|
||
Rights
|
2,531
|
|
|
2,528
|
|
||
Trade claims
|
128
|
|
|
128
|
|
||
|
$
|
6,697
|
|
|
$
|
6,841
|
|
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
Description
|
(dollars in thousands)
|
||||||
Currency forwards
|
$
|
6
|
|
|
$
|
(21
|
)
|
|
$
|
6
|
|
|
$
|
(21
|
)
|
|
|
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
|
Strategy
|
|
(dollars in thousands)
|
||||||
RCG Longview Equity Fund, LP*
|
Real Estate
|
|
$
|
8,949
|
|
|
$
|
8,470
|
|
RCG Longview II, LP*
|
Real Estate
|
|
825
|
|
|
800
|
|
||
RCG Longview Debt Fund IV, LP*
|
Real Estate
|
|
15,308
|
|
|
17,641
|
|
||
RCG Longview, LP*
|
Real Estate
|
|
467
|
|
|
319
|
|
||
RCG Soundview, LLC*
|
Real Estate
|
|
442
|
|
|
442
|
|
||
RCG Urban American Real Estate Fund, L.P.*
|
Real Estate
|
|
2,003
|
|
|
1,812
|
|
||
RCG International Sarl*
|
Multi-Strategy
|
|
1,693
|
|
|
1,795
|
|
||
RCG Special Opportunities Fund, Ltd*
|
Multi-Strategy
|
|
82,692
|
|
|
82,119
|
|
||
RCG Endeavour, LLC*
|
Multi-Strategy
|
|
5
|
|
|
6
|
|
||
RCG Energy, LLC *
|
Energy
|
|
2,866
|
|
|
2,842
|
|
||
RCG Renergys, LLC*
|
Energy
|
|
1
|
|
|
1
|
|
||
Other Private Investments
|
Various
|
|
13,254
|
|
|
12,952
|
|
||
Real Estate Investments
|
Real Estate
|
|
16,947
|
|
|
15,024
|
|
||
|
|
|
$
|
145,452
|
|
|
$
|
144,223
|
|
*
|
Affiliates of the Company.
|
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
Common stocks
|
$
|
63,734
|
|
|
$
|
33,901
|
|
Corporate bond (a)
|
11,328
|
|
|
14,444
|
|
||
Options
|
434
|
|
|
200
|
|
||
|
$
|
75,496
|
|
|
$
|
48,545
|
|
(a)
|
As of
March 31, 2014
, maturities ranged from April 2016 to June 2019 and interest rates ranged between
8.50%
and
10.88%
. As of
December 31, 2013
, maturities ranged from April 2016 to October 2020 and interest rates ranged between
7.00%
and
10.88%
.
|
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
Description
|
(dollars in thousands)
|
||||||
Currency forwards
|
$
|
(4
|
)
|
|
$
|
(10
|
)
|
Options
|
(155
|
)
|
|
(54
|
)
|
||
Cross rate
|
(84
|
)
|
|
(92
|
)
|
||
|
$
|
(243
|
)
|
|
$
|
(156
|
)
|
|
Assets at Fair Value as of March 31, 2014
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Securities owned and derivatives
|
|
|
|
|
|
|
|
||||||||
US Government securities
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Preferred stock
|
—
|
|
|
—
|
|
|
324
|
|
|
324
|
|
||||
Common stocks
|
258,824
|
|
|
2,242
|
|
|
9,283
|
|
|
270,349
|
|
||||
Convertible bonds
|
—
|
|
|
9,614
|
|
|
1,950
|
|
|
11,564
|
|
||||
Corporate bonds
|
—
|
|
|
167,349
|
|
|
—
|
|
|
167,349
|
|
||||
Warrants and rights
|
997
|
|
|
—
|
|
|
3,268
|
|
|
4,265
|
|
||||
Mutual funds
|
15,518
|
|
|
—
|
|
|
—
|
|
|
15,518
|
|
||||
Receivable on derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Futures
|
53
|
|
|
—
|
|
|
—
|
|
|
53
|
|
||||
Currency forwards
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||
Equity swaps
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||
Options
|
7,149
|
|
|
—
|
|
|
42,856
|
|
|
50,005
|
|
||||
Other investments
|
|
|
|
|
|
|
|
|
|
|
|||||
Portfolio Funds
|
—
|
|
|
20,857
|
|
|
58,583
|
|
|
79,440
|
|
||||
Real estate investments
|
—
|
|
|
—
|
|
|
42,283
|
|
|
42,283
|
|
||||
Lehman claim
|
—
|
|
|
—
|
|
|
390
|
|
|
390
|
|
||||
|
$
|
282,550
|
|
|
$
|
200,080
|
|
|
$
|
158,937
|
|
|
$
|
641,567
|
|
|
Liabilities at Fair Value as of March 31, 2014
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Securities sold, not yet purchased and derivatives
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
$
|
139,290
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
139,290
|
|
Corporate bonds
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||
Payable for derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Futures
|
62
|
|
|
—
|
|
|
—
|
|
|
62
|
|
||||
Currency forwards
|
—
|
|
|
28
|
|
|
—
|
|
|
28
|
|
||||
Equity and credit default swaps
|
—
|
|
|
735
|
|
|
—
|
|
|
735
|
|
||||
Options
|
6,351
|
|
|
—
|
|
|
42,856
|
|
|
49,207
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration liability (a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,861
|
|
|
$
|
6,861
|
|
|
$
|
145,703
|
|
|
$
|
820
|
|
|
$
|
49,717
|
|
|
$
|
196,240
|
|
|
Assets at Fair Value as of December 31, 2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Securities owned and derivatives
|
|
|
|
|
|
|
|
||||||||
US Government securities
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Preferred stock
|
—
|
|
|
—
|
|
|
324
|
|
|
324
|
|
||||
Common stocks
|
171,277
|
|
|
2,103
|
|
|
3,559
|
|
|
176,939
|
|
||||
Convertible bonds
|
—
|
|
|
4,008
|
|
|
1,950
|
|
|
5,958
|
|
||||
Corporate bonds
|
—
|
|
|
121,372
|
|
|
—
|
|
|
121,372
|
|
||||
Warrants and rights
|
107
|
|
|
—
|
|
|
5,805
|
|
|
5,912
|
|
||||
Mutual funds
|
525
|
|
|
—
|
|
|
—
|
|
|
525
|
|
||||
Receivable on derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Futures
|
285
|
|
|
—
|
|
|
—
|
|
|
285
|
|
||||
Currency forwards
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
||||
Equity swaps
|
—
|
|
|
70
|
|
|
—
|
|
|
70
|
|
||||
Options
|
9,698
|
|
|
—
|
|
|
—
|
|
|
9,698
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Portfolio Funds
|
—
|
|
|
19,402
|
|
|
51,649
|
|
|
71,051
|
|
||||
Real estate investments
|
—
|
|
|
—
|
|
|
2,088
|
|
|
2,088
|
|
||||
Lehman claim
|
—
|
|
|
—
|
|
|
378
|
|
|
378
|
|
||||
|
$
|
181,901
|
|
|
$
|
146,977
|
|
|
$
|
65,753
|
|
|
$
|
394,631
|
|
|
Liabilities at Fair Value as of December 31, 2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Securities sold, not yet purchased and derivatives
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
$
|
130,899
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
130,899
|
|
Corporate bonds
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
||||
Payable for derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Futures
|
275
|
|
|
—
|
|
|
—
|
|
|
275
|
|
||||
Currency forwards
|
—
|
|
|
301
|
|
|
—
|
|
|
301
|
|
||||
Equity swaps
|
—
|
|
|
525
|
|
|
—
|
|
|
525
|
|
||||
Options
|
6,573
|
|
|
—
|
|
|
—
|
|
|
6,573
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability
|
—
|
|
|
—
|
|
|
6,937
|
|
|
6,937
|
|
||||
|
$
|
137,747
|
|
|
$
|
881
|
|
|
$
|
6,937
|
|
|
$
|
145,565
|
|
|
Assets at Fair Value as of March 31, 2014
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Portfolio Funds
|
$
|
—
|
|
|
$
|
32,555
|
|
|
$
|
143,059
|
|
|
$
|
175,614
|
|
Lehman claims
|
—
|
|
|
—
|
|
|
3,776
|
|
|
3,776
|
|
||||
|
$
|
—
|
|
|
$
|
32,555
|
|
|
$
|
146,835
|
|
|
$
|
179,390
|
|
|
Assets at Fair Value as of December 31, 2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Portfolio Funds
|
—
|
|
|
26,964
|
|
|
155,674
|
|
|
182,638
|
|
||||
Lehman claims
|
—
|
|
|
—
|
|
|
4,842
|
|
|
4,842
|
|
||||
|
$
|
—
|
|
|
$
|
26,964
|
|
|
$
|
160,516
|
|
|
$
|
187,480
|
|
|
Three Months Ended March 31, 2014
|
|||||||||||||||||||||||||||||||
|
Balance at December 31, 2013
|
|
Transfers in
|
|
Transfers out
|
|
Purchases/(covers)
|
|
(Sales)/shorts
|
|
Realized gains (losses)
|
|
Unrealized gains or losses
|
|
Balance at March 31, 2014
|
|||||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Preferred stock
|
$
|
324
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
324
|
|
Common stocks
|
3,559
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,724
|
|
|
9,283
|
|
|||||||||
Convertible bonds
|
1,950
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,950
|
|
|||||||||
Options, asset
|
—
|
|
|
—
|
|
|
—
|
|
|
35,710
|
|
|
—
|
|
|
—
|
|
|
7,146
|
|
|
42,856
|
|
|||||||||
Options, liability
|
—
|
|
|
—
|
|
|
—
|
|
|
35,710
|
|
|
—
|
|
|
—
|
|
|
7,146
|
|
|
42,856
|
|
|||||||||
Warrants and Rights, asset
|
5,805
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
(1,328
|
)
|
|
—
|
|
|
(1,209
|
)
|
|
3,268
|
|
||||||||
Portfolio Funds
|
51,649
|
|
|
—
|
|
|
|
—
|
|
|
4,385
|
|
|
(1,242
|
)
|
|
180
|
|
|
3,611
|
|
|
58,583
|
|
||||||||
Real estate
|
2,088
|
|
|
—
|
|
|
—
|
|
|
40,000
|
|
|
(27
|
)
|
|
—
|
|
|
222
|
|
|
42,283
|
|
|||||||||
Lehman claim
|
378
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
390
|
|
|||||||||
Contingent consideration liability
|
6,937
|
|
|
—
|
|
|
—
|
|
|
(76
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,861
|
|
|||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Portfolio Funds
|
155,674
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(15,944
|
)
|
|
—
|
|
|
3,329
|
|
|
143,059
|
|
||||||||
Lehman claim
|
4,842
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(980
|
)
|
|
—
|
|
|
(86
|
)
|
|
3,776
|
|
|
Three Months Ended March 31, 2013
|
|
|
||||||||||||||||||||||||||||||
|
Balance at December 31, 2012
|
|
Transfers in
|
|
|
Transfers out
|
|
|
Purchases/(covers)
|
|
(Sales)/shorts
|
|
Realized gains (losses)
|
|
Unrealized gains or losses
|
|
Balance at March 31, 2013
|
||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
$
|
2,332
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,332
|
|
Common stocks
|
2,549
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(265
|
)
|
|
260
|
|
|
(266
|
)
|
|
2,278
|
|
||||||||
Corporate Bond
|
515
|
|
|
—
|
|
|
|
—
|
|
|
|
2,735
|
|
|
(3,346
|
)
|
|
(914
|
)
|
|
1,010
|
|
|
—
|
|
||||||||
Warrants and Rights, asset
|
1,713
|
|
|
290
|
|
(a)
|
|
—
|
|
|
|
166
|
|
|
(110
|
)
|
|
—
|
|
|
1,184
|
|
|
3,243
|
|
||||||||
Warrants and Rights, liability
|
3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||||
Portfolio Funds
|
25,670
|
|
|
—
|
|
|
|
—
|
|
|
|
3,590
|
|
|
(3,876
|
)
|
|
8
|
|
|
167
|
|
|
25,559
|
|
||||||||
Real estate
|
1,864
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
1,875
|
|
||||||||
Lehman claim
|
706
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
660
|
|
||||||||
Contingent consideration liability
|
8,116
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,116
|
|
||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Portfolio Funds
|
182,920
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(7,031
|
)
|
|
222
|
|
|
2,246
|
|
|
178,357
|
|
||||||||
Lehman claim
|
14,124
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1,449
|
)
|
|
1,360
|
|
|
1,105
|
|
|
15,140
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||
|
Fair Value at March 31, 2014
|
|
Valuation techniques
|
|
Unobservable Inputs
|
|
Range
|
||
|
|
|
|
|
|
|
|
||
Level 3 Assets
|
|
|
|
|
|
|
|
||
Common and preferred stocks
|
$
|
9,198
|
|
|
Discounted cash flows, market multiples, recent transactions, bid levels, and comparable transactions
|
|
Market multiples
|
|
2x to 3x
|
Warrants and rights, net
|
3,268
|
|
|
Model based
|
|
Volatility
|
|
20% to 100% (weighted average 36%)
|
|
Options
|
42,856
|
|
|
Option pricing models, credit valuation adjustment, debt valuation adjustment
|
|
Volatility Credit spreads
|
|
30% to 45% 600bps - 750 bps
|
|
Other level 3 assets (a)
|
250,450
|
|
|
|
|
|
|
|
|
Total level 3 assets
|
305,772
|
|
|
|
|
|
|
|
|
Level 3 Liabilities
|
|
|
|
|
|
|
|
||
Options
|
42,856
|
|
|
Option pricing models, credit valuation adjustment, debt valuation adjustment
|
|
Volatility Credit spreads
|
|
30% to 45% 600bps - 750 bps
|
|
Contingent consideration
|
6,861
|
|
|
Discounted cash flows
|
|
Projected cash flow and discount rate
|
|
0% to 9%
|
|
Total level 3 liabilities
|
$
|
49,717
|
|
|
|
|
|
|
|
(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 asset 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 March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
Redeemable non-controlling interests in consolidated subsidiaries and funds
|
|
|
|
||||
Operating companies
|
$
|
10,840
|
|
|
$
|
12,009
|
|
Consolidated funds
|
74,608
|
|
|
73,805
|
|
||
|
$
|
85,448
|
|
|
$
|
85,814
|
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(dollars in thousands)
|
||||||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
|
|
|
||||
Operating companies
|
$
|
3,439
|
|
|
$
|
1,795
|
|
Consolidated funds
|
748
|
|
|
1,700
|
|
||
|
$
|
4,187
|
|
|
$
|
3,495
|
|
|
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, 2013
|
300,006
|
|
|
$
|
7.19
|
|
|
2.40
|
|
|
$
|
—
|
|
Options granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Options acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Options expired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Balance outstanding at March 31, 2014
|
300,006
|
|
|
$
|
7.19
|
|
|
2.16
|
|
|
$
|
—
|
|
Options exercisable at March 31, 2014
|
300,006
|
|
|
$
|
7.19
|
|
|
2.16
|
|
|
$
|
—
|
|
(1)
|
Based on the Company's closing stock price of
$4.41
on
March 31, 2014
and
$3.91
on
December 31, 2013
.
|
|
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, 2013
|
400,000
|
|
|
$
|
2.90
|
|
|
4.21
|
|
|
$
|
608
|
|
SAR's granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
SAR's acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
SAR's expired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Balance outstanding at March 31, 2014
|
400,000
|
|
|
2.90
|
|
|
3.96
|
|
|
$
|
864
|
|
|
SAR's exercisable at March 31, 2014
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
|
(1)
|
Based on the Company's closing stock price of
$4.41
on
March 31, 2014
and
$3.91
on
December 31, 2013
.
|
|
Nonvested Restricted Shares and Restricted Stock Units
|
|
Weighted-Average
Grant Date Fair Value |
|||
Balance outstanding at December 31, 2013
|
13,551,544
|
|
|
$
|
3.37
|
|
Granted (1)
|
7,694,398
|
|
|
3.78
|
|
|
Vested
|
(1,652,652
|
)
|
|
2.84
|
|
|
Canceled
|
—
|
|
|
—
|
|
|
Forfeited
|
(57,251
|
)
|
|
3.21
|
|
|
Balance outstanding at March 31, 2014
|
19,536,039
|
|
|
$
|
3.58
|
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(dollars in thousands)
|
||||||
Components of net periodic benefit cost included in employee compensation and benefits
|
|
|
|
||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
33
|
|
|
51
|
|
||
Expected return on plan assets
|
(66
|
)
|
|
(63
|
)
|
||
Amortization of (loss) / gain
|
—
|
|
|
—
|
|
||
Amortization of prior service cost
|
—
|
|
|
5
|
|
||
Effect of curtailment
|
—
|
|
|
—
|
|
||
Effect of special termination benefits
|
—
|
|
|
—
|
|
||
Effect of settlement
|
—
|
|
|
—
|
|
||
Net periodic benefit cost
|
$
|
(33
|
)
|
|
$
|
(7
|
)
|
|
Equipment Leases (a)
|
|
Service Payments
|
|
Facility Leases (b)
|
||||||
|
(dollars in thousands)
|
||||||||||
2014
|
$
|
2,181
|
|
|
$
|
9,036
|
|
|
$
|
13,848
|
|
2015
|
2,603
|
|
|
7,667
|
|
|
17,789
|
|
|||
2016
|
2,284
|
|
|
3,367
|
|
|
14,698
|
|
|||
2017
|
2,198
|
|
|
2,714
|
|
|
11,587
|
|
|||
2018
|
2,198
|
|
|
2,609
|
|
|
11,296
|
|
|||
Thereafter
|
813
|
|
|
22
|
|
|
41,601
|
|
|||
|
$
|
12,277
|
|
|
$
|
25,415
|
|
|
$
|
110,819
|
|
(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
$0.3 million
and
$0.3 million
for the
three months ended
March 31, 2014
and
2013
.
|
|
As of March 31, 2014
|
|
As of December 31, 2013
|
||||
|
(dollars in thousands)
|
||||||
Convertible debt
|
$
|
114,101
|
|
|
$
|
—
|
|
Note payable
|
1,428
|
|
|
41
|
|
||
Capital lease obligations
|
4,956
|
|
|
2,523
|
|
||
|
$
|
120,485
|
|
|
$
|
2,564
|
|
|
Convertible Debt
|
|
Notes payable
|
|
Capital Lease
Obligation |
||||||
|
(dollars in thousands)
|
||||||||||
2014
|
$
|
2,284
|
|
|
$
|
1,448
|
|
|
$
|
1,236
|
|
2015
|
4,411
|
|
|
—
|
|
|
1,343
|
|
|||
2016
|
4,411
|
|
|
—
|
|
|
1,025
|
|
|||
2017
|
4,411
|
|
|
—
|
|
|
938
|
|
|||
2018
|
4,411
|
|
|
—
|
|
|
938
|
|
|||
Thereafter
|
151,688
|
|
|
—
|
|
|
79
|
|
|||
Subtotal
|
171,616
|
|
|
1,448
|
|
|
5,559
|
|
|||
Less: Amount representing interest (a)
|
(57,515
|
)
|
|
(20
|
)
|
|
(603
|
)
|
|||
Total
|
$
|
114,101
|
|
|
$
|
1,428
|
|
|
$
|
4,956
|
|
(a)
|
Amount necessary to reduce net minimum payments to present value calculated at the Company's implicit rate at inception. This amount also includes the unamortized discount on the convertible debt.
|
Location
|
|
Amount
|
|
Maturity
|
||
|
|
(dollars in thousands)
|
|
|
||
San Francisco
|
|
$
|
82
|
|
|
May 2014
|
Boston
|
|
$
|
382
|
|
|
March 2015
|
New York
|
|
$
|
1,191
|
|
|
September 2014
|
New York
|
|
$
|
6,746
|
|
|
December 2014
|
New York
|
|
$
|
1,000
|
|
|
February 2015
|
New York
|
|
$
|
1,861
|
|
|
June 2014
|
|
Treasury stock shares
|
|
Cost
(dollars in thousands) |
|
Average cost
per share |
|||||
Balance outstanding at December 31, 2013
|
15,873,549
|
|
|
$
|
48,084
|
|
|
$
|
3.03
|
|
Shares purchased for minimum tax withholding under the Equity Plan or other similar transactions
|
452,809
|
|
|
1,920
|
|
|
4.24
|
|
||
Purchase of treasury stock
|
810,072
|
|
|
3,411
|
|
|
4.21
|
|
||
Balance outstanding at March 31, 2014
|
17,136,430
|
|
|
$
|
53,415
|
|
|
$
|
3.12
|
|
|
Foreign currency translation (a)
|
|
Defined benefit plans (a)
|
|
Total
|
||||||
|
(dollars in thousands)
|
||||||||||
Balance at December 31, 2013
|
248
|
|
|
344
|
|
|
592
|
|
|||
Net change
|
37
|
|
|
(92
|
)
|
|
(55
|
)
|
|||
Balance at March 31, 2014
|
$
|
285
|
|
|
$
|
252
|
|
|
$
|
537
|
|
|
|
|
|
|
|
||||||
|
Foreign currency translation (a)
|
|
Defined benefit plans (a)
|
|
Total
|
||||||
|
(dollars in thousands)
|
||||||||||
Balance at December 31, 2012
|
$
|
258
|
|
|
$
|
98
|
|
|
$
|
356
|
|
Net change
|
(4
|
)
|
|
(17
|
)
|
|
(21
|
)
|
|||
Balance at March 31, 2013
|
$
|
254
|
|
|
$
|
81
|
|
|
$
|
335
|
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
|
|
||||||
Net income (loss)
|
$
|
14,027
|
|
|
$
|
919
|
|
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
4,187
|
|
|
3,495
|
|
||
Net income (loss) attributable to Cowen Group, Inc. stockholders
|
9,840
|
|
|
(2,576
|
)
|
||
|
|
|
|
||||
Shares for basic and diluted calculations:
|
|
|
|
||||
Weighted average shares used in basic computation
|
115,680
|
|
|
113,798
|
|
||
Warrants
|
—
|
|
|
—
|
|
||
Stock options
|
—
|
|
|
—
|
|
||
Stock appreciation rights
|
54
|
|
|
—
|
|
||
Restricted stock
|
7,164
|
|
|
—
|
|
||
Weighted average shares used in diluted computation
|
122,898
|
|
|
113,798
|
|
||
Earnings (loss) per share:
|
|
|
|
||||
Basic
|
$
|
0.09
|
|
|
$
|
(0.02
|
)
|
Diluted
|
$
|
0.08
|
|
|
$
|
(0.02
|
)
|
|
Three Months Ended March 31, 2014
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Alternative
Investment
|
|
Broker-Dealer (1)
|
|
Total Economic Income/(Loss)
|
|
Funds
Consolidation
|
|
Other
Adjustments
|
|
|
|
US GAAP
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
49,562
|
|
|
$
|
49,562
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
49,562
|
|
Brokerage
|
—
|
|
|
34,349
|
|
|
34,349
|
|
|
—
|
|
|
(1,519
|
)
|
|
(e)
|
|
32,830
|
|
||||||
Management fees
|
14,089
|
|
|
—
|
|
|
14,089
|
|
|
(234
|
)
|
|
(4,931
|
)
|
|
(a)
|
|
8,924
|
|
||||||
Incentive income
|
4,726
|
|
|
—
|
|
|
4,726
|
|
|
—
|
|
|
(2,228
|
)
|
|
(a)
|
|
2,498
|
|
||||||
Investment Income
|
8,328
|
|
|
(156
|
)
|
|
8,172
|
|
|
—
|
|
|
(8,172
|
)
|
|
(c)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,252
|
|
|
(c)
|
|
9,252
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(80
|
)
|
|
1,980
|
|
|
(b)
|
|
1,900
|
|
||||||
Other revenue
|
(43
|
)
|
|
(102
|
)
|
|
(145
|
)
|
|
—
|
|
|
700
|
|
|
(c)
|
|
555
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
1,156
|
|
|
—
|
|
|
|
|
1,156
|
|
||||||
Total revenues
|
27,100
|
|
|
83,653
|
|
|
110,753
|
|
|
842
|
|
|
(4,918
|
)
|
|
|
|
106,677
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee compensation and benefits
|
13,387
|
|
|
53,570
|
|
|
66,957
|
|
|
—
|
|
|
604
|
|
|
|
|
67,561
|
|
||||||
Non-compensation expenses—Fixed
|
8,894
|
|
|
13,921
|
|
|
22,815
|
|
|
—
|
|
|
(22,815
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses—Variable
|
749
|
|
|
8,688
|
|
|
9,437
|
|
|
—
|
|
|
(9,437
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,093
|
|
|
(c)(d)
|
|
31,093
|
|
||||||
Interest and dividends
|
609
|
|
|
34
|
|
|
643
|
|
|
—
|
|
|
6,429
|
|
|
(c)
|
|
7,072
|
|
||||||
Reimbursement from affiliates
|
(1,726
|
)
|
|
—
|
|
|
(1,726
|
)
|
|
—
|
|
|
1,726
|
|
|
(b)
|
|
—
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
302
|
|
|
—
|
|
|
|
|
302
|
|
||||||
Total expenses
|
21,913
|
|
|
76,213
|
|
|
98,126
|
|
|
302
|
|
|
7,600
|
|
|
|
|
106,028
|
|
||||||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net gains (losses) on securities, derivatives and other investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,354
|
|
|
(c)
|
|
11,354
|
|
||||||
Consolidated Funds net gains (losses)
|
—
|
|
|
—
|
|
|
—
|
|
|
207
|
|
|
1,896
|
|
|
|
|
2,103
|
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
207
|
|
|
13,250
|
|
|
|
|
13,457
|
|
||||||
Income (loss) before income taxes and non-controlling interests
|
5,187
|
|
|
7,440
|
|
|
12,627
|
|
|
747
|
|
|
732
|
|
|
|
|
14,106
|
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|
(b)
|
|
79
|
|
||||||
Economic Income (Loss) / Net income (loss) before non-controlling interests
|
5,187
|
|
|
7,440
|
|
|
12,627
|
|
|
747
|
|
|
653
|
|
|
|
|
14,027
|
|
||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries
|
(2,625
|
)
|
|
—
|
|
|
(2,625
|
)
|
|
(747
|
)
|
|
(815
|
)
|
|
|
|
(4,187
|
)
|
||||||
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc. stockholders
|
$
|
2,562
|
|
|
$
|
7,440
|
|
|
$
|
10,002
|
|
|
$
|
—
|
|
|
$
|
(162
|
)
|
|
|
|
$
|
9,840
|
|
|
Three Months Ended March 31, 2013
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Alternative
Investment
|
|
Broker-Dealer (1)
|
|
Total Economic Income/(Loss)
|
|
Funds
Consolidation
|
|
Other
Adjustments
|
|
|
|
US GAAP
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
17,166
|
|
|
$
|
17,166
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
17,166
|
|
Brokerage
|
—
|
|
|
28,017
|
|
|
28,017
|
|
|
—
|
|
|
(1,417
|
)
|
|
(e)
|
|
26,600
|
|
||||||
Management fees
|
14,144
|
|
|
—
|
|
|
14,144
|
|
|
(311
|
)
|
|
(4,340
|
)
|
|
(a)
|
|
9,493
|
|
||||||
Incentive income
|
5,126
|
|
|
—
|
|
|
5,126
|
|
|
—
|
|
|
(2,515
|
)
|
|
(a)
|
|
2,611
|
|
||||||
Investment Income
|
8,304
|
|
|
2,568
|
|
|
10,872
|
|
|
—
|
|
|
(10,872
|
)
|
|
(c)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,321
|
|
|
(c)
|
|
9,321
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
1,420
|
|
|
(b)
|
|
1,485
|
|
||||||
Other revenue
|
113
|
|
|
(553
|
)
|
|
(440
|
)
|
|
—
|
|
|
918
|
|
|
(c)
|
|
478
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
87
|
|
|
—
|
|
|
|
|
87
|
|
||||||
Total revenues
|
27,687
|
|
|
47,198
|
|
|
74,885
|
|
|
(159
|
)
|
|
(7,485
|
)
|
|
|
|
67,241
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee compensation and benefits
|
13,638
|
|
|
30,608
|
|
|
44,246
|
|
|
—
|
|
|
(23
|
)
|
|
|
|
44,223
|
|
||||||
Non-compensation expenses—Fixed
|
9,138
|
|
|
13,265
|
|
|
22,403
|
|
|
—
|
|
|
(22,403
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses—Variable
|
1,006
|
|
|
7,720
|
|
|
8,726
|
|
|
—
|
|
|
(8,726
|
)
|
|
(c)(d)
|
|
—
|
|
||||||
Non-compensation expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,037
|
|
|
(c)(d)
|
|
32,037
|
|
||||||
Interest and dividends
|
81
|
|
|
43
|
|
|
124
|
|
|
—
|
|
|
6,294
|
|
|
(c)
|
|
6,418
|
|
||||||
Reimbursement from affiliates
|
(1,420
|
)
|
|
—
|
|
|
(1,420
|
)
|
|
—
|
|
|
1,420
|
|
|
(b)
|
|
—
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
434
|
|
|
—
|
|
|
|
|
434
|
|
||||||
Total expenses
|
22,443
|
|
|
51,636
|
|
|
74,079
|
|
|
434
|
|
|
8,599
|
|
|
|
|
83,112
|
|
||||||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net gains (losses) on securities, derivatives and other investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,807
|
|
|
(c)
|
|
11,807
|
|
||||||
Consolidated Funds net gains (losses)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,293
|
|
|
2,866
|
|
|
|
|
5,159
|
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,293
|
|
|
14,673
|
|
|
|
|
16,966
|
|
||||||
Income (loss) before income taxes and non-controlling interests
|
5,244
|
|
|
(4,438
|
)
|
|
806
|
|
|
1,700
|
|
|
(1,411
|
)
|
|
|
|
1,095
|
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
176
|
|
|
(b)
|
|
176
|
|
||||||
Economic Income (Loss) / Net income (loss) before non-controlling interests
|
5,244
|
|
|
(4,438
|
)
|
|
806
|
|
|
1,700
|
|
|
(1,587
|
)
|
|
|
|
919
|
|
||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries
|
(2,075
|
)
|
|
—
|
|
|
(2,075
|
)
|
|
(1,700
|
)
|
|
280
|
|
|
|
|
(3,495
|
)
|
||||||
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc. stockholders
|
$
|
3,169
|
|
|
$
|
(4,438
|
)
|
|
$
|
(1,269
|
)
|
|
$
|
—
|
|
|
$
|
(1,307
|
)
|
|
|
|
$
|
(2,576
|
)
|
•
|
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
March 31, 2014
, including redemptions effective on
April 1, 2014
, we have returned approximately $639 million to affiliates of UniCredit S.p.A with a remaining investment balance of approximately $109 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
March 31, 2014
, we had investments of approximately
$93.9 million, $198.3 million, $15.0 million, and $58.3 million
in the Enterprise Fund (an entity which invests its capital in Ramius Enterprise Master Fund Ltd), Cowen Overseas Investment LP (“COIL”), Ramius Optimum Investments LLC ("ROIL"), and other investments, respectively. Enterprise Fund is a fund vehicle that currently has external investors, is closed to new investors and is in liquidation. COIL and ROIL are wholly owned entities managed by Ramius which the Company uses solely for the firm's invested capital.
|
•
|
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
.
|
•
|
Mutual Funds.
Management fees for the Company’s mutual funds (Ramius Trading Strategies Managed Futures Fund, Ramius Event Driven Equity Fund, Ramius Hedged Alpha Fund (formerly known as Ramius Dynamic Replication Fund) and Ramius Strategic Volatility Fund) are generally charged at an annual rate of up to
1.60%
of assets under management (subject to an overall expense cap of up to
2.1%
).
|
•
|
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.
Management fees from the Company's real estate business are generally charged by their general partners at an annual rate from
0.75%
to
1.50%
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 funds on the RCG Longview platform 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.
During the investment period (as defined in the management agreement of the HealthCare Royalty Partners funds), management fees for the funds advised by HealthCare Royalty Partners 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 t
o
2%
of net asset value. Management fees for the HealthCare Royalty Partners funds are calculated on a quarterly basis.
|
•
|
Ramius Trading Strategies.
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%
.
Management and platform fees are generally calculated monthly based on each account's notional trading level 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 loans and debt and equity 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 over-the-counter equity securities, 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) (j)
|
|
Alternative Solutions (a) (c) (k)
|
|
Ramius Trading Strategies (d) (l)
|
|
Real Estate (a) (m)
|
|
Healthcare Royalty Partners (e) (f) (n)
|
|
Other (g) (o)
|
|
Total
|
||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||
January 1, 2012
|
|
$
|
1,917
|
|
|
$
|
2,750
|
|
|
$
|
262
|
|
|
$
|
1,628
|
|
|
$
|
1,473
|
|
|
$
|
2,235
|
|
|
$
|
10,265
|
|
Subscriptions
|
|
392
|
|
|
1,407
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,163
|
|
|
4,962
|
|
|||||||
Redemptions
|
|
(333
|
)
|
|
(1,777
|
)
|
|
(111
|
)
|
|
(95
|
)
|
|
—
|
|
|
(5,293
|
)
|
|
(7,609
|
)
|
|||||||
Performance (h)
|
|
373
|
|
|
85
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
453
|
|
|||||||
Net Return (i)
|
|
19.46
|
%
|
|
3.09
|
%
|
|
(1.91
|
)%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
4.41
|
%
|
|||||||
January 1, 2013
|
|
2,349
|
|
|
2,465
|
|
|
146
|
|
|
1,533
|
|
|
1,473
|
|
|
105
|
|
|
8,071
|
|
|||||||
Subscriptions
|
|
819
|
|
|
1,450
|
|
|
—
|
|
|
222
|
|
|
50
|
|
|
—
|
|
|
2,541
|
|
|||||||
Redemptions
|
|
(368
|
)
|
|
(792
|
)
|
|
(53
|
)
|
|
(116
|
)
|
|
—
|
|
|
(38
|
)
|
|
(1,367
|
)
|
|||||||
Performance (h)
|
|
368
|
|
|
(187
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
182
|
|
|||||||
Net Return (i)
|
|
15.67
|
%
|
|
(7.59
|
)%
|
|
0.68
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2.25
|
%
|
|||||||
January 1, 2014
|
|
3,168
|
|
|
2,936
|
|
|
94
|
|
|
1,639
|
|
|
1,523
|
|
|
67
|
|
|
9,427
|
|
|||||||
Subscriptions
|
|
616
|
|
|
393
|
|
|
—
|
|
|
—
|
|
|
107
|
|
|
—
|
|
|
1,116
|
|
|||||||
Redemptions
|
|
(72
|
)
|
|
(61
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(143
|
)
|
|||||||
Performance (h)
|
|
53
|
|
|
113
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|||||||
Net Return (i)
|
|
1.67
|
%
|
|
3.85
|
%
|
|
(2.13
|
)%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.74
|
%
|
|||||||
April 1, 2014
|
|
$
|
3,765
|
|
|
$
|
3,381
|
|
|
$
|
88
|
|
|
$
|
1,639
|
|
|
$
|
1,630
|
|
|
$
|
61
|
|
|
$
|
10,564
|
|
(a)
|
The Company owns between 30% and 55% of the general partners or managing members of the real estate business, the activist business, the long/short credit business (as of July 2013) (the single strategy hedge funds) and the alternative solutions business (as of September 2013).
|
(b)
|
These amounts include the Ramius Event Driven Equity Fund and the Company's invested capital of approximately $163.2 million, $155.6 million and $147.3 million as of
April 1, 2014
, January 1, 2014 and January 1, 2013, respectively.
|
(c)
|
These amounts include the Company's invested capital of approximately $0.4 million and $2.5 million as of
April 1, 2014
and January 1, 2013, respectively. There are no amounts related to the Company's invested capital as of January 1, 2014.
|
(d)
|
These amounts include Ramius Trading Strategies Managed Futures Fund and the Company's invested capital of approximately $19.4 million as of January 1, 2013. 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 $18.9 million, $16.4 million and $16.0 million as of
April 1, 2014
, January 1, 2014 and January 1, 2013, 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 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)
|
Performance and net returns are net of all management and incentive fees and includes the effect of any foreign exchange translation adjustments and leverage in certain funds.
|
(i)
|
Net returns are calculated on the platform as a whole. Net return of individual funds will vary based on the timing and strategy the respective funds.
|
(j)
|
The Company’s actively marketed hedge fund products have varying liquidity terms typically ranging from daily to quarterly liquidity with less liquidity applying to certain co-investment vehicles. In 2010, the Company suspended redemption rights with respect to certain hedge funds that are being wound down. The hedge funds that have suspended redemption rights represent approximately 14.4% of the total hedge fund assets under management.
|
(k)
|
The Company’s actively marketed alternative solutions products have varying liquidity terms typically ranging from daily to quarterly liquidity. Since 2008, the Company has suspended redemption rights for a number of alternative solutions funds that are being wound down. The alternative solutions funds that have suspended redemption rights represent approximately 1.3% of the total alternative solutions assets under management.
|
(l)
|
The Ramius Trading Strategies products offer investors daily liquidity.
|
(m)
|
The real estate business does not provide investors with redemption rights. Investors receive distributions upon dispositions of the underlying real estate investments.
|
(n)
|
The Healthcare Royalty funds do not provide investors with redemption rights. Investors receive distributions upon realizations of the funds’ investments.
|
(o)
|
The collateralized debt obligations managed by the Company is an amortizing pool of assets with cash returned to investors in periodic distributions as it becomes available.
|
Strategy
|
Net Value
|
|
% of Stockholders' Equity
|
||
|
(dollars in millions)
|
|
|
||
Trading
|
$
|
378.1
|
|
|
71%
|
Merchant Banking
|
100.9
|
|
|
19%
|
|
Real Estate
|
95.4
|
|
|
18%
|
|
Total
|
574.4
|
|
|
108%
|
|
Stockholders' Equity
|
$
|
532.2
|
|
|
100%
|
|
Condensed Consolidated Statements of Operations
|
|||||||||||||
|
Three Months Ended March 31,
|
|
Period to Period
|
|||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
Investment banking
|
$
|
49,562
|
|
|
$
|
17,166
|
|
|
$
|
32,396
|
|
|
189
|
%
|
Brokerage
|
32,830
|
|
|
26,600
|
|
|
6,230
|
|
|
23
|
%
|
|||
Management fees
|
8,924
|
|
|
9,493
|
|
|
(569
|
)
|
|
(6
|
)%
|
|||
Incentive income
|
2,498
|
|
|
2,611
|
|
|
(113
|
)
|
|
(4
|
)%
|
|||
Interest and dividends
|
9,252
|
|
|
9,321
|
|
|
(69
|
)
|
|
(1
|
)%
|
|||
Reimbursement from affiliates
|
1,900
|
|
|
1,485
|
|
|
415
|
|
|
28
|
%
|
|||
Other revenues
|
555
|
|
|
478
|
|
|
77
|
|
|
16
|
%
|
|||
Consolidated Funds revenues
|
1,156
|
|
|
87
|
|
|
1,069
|
|
|
1,229
|
%
|
|||
Total revenues
|
106,677
|
|
|
67,241
|
|
|
39,436
|
|
|
59
|
%
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Employee compensation and benefits
|
67,561
|
|
|
44,223
|
|
|
23,338
|
|
|
53
|
%
|
|||
Interest and dividends
|
7,072
|
|
|
6,418
|
|
|
654
|
|
|
10
|
%
|
|||
General, administrative and other expenses
|
31,093
|
|
|
32,037
|
|
|
(944
|
)
|
|
(3
|
)%
|
|||
Consolidated Funds expenses
|
302
|
|
|
434
|
|
|
(132
|
)
|
|
(30
|
)%
|
|||
Total expenses
|
106,028
|
|
|
83,112
|
|
|
22,916
|
|
|
28
|
%
|
|||
Other income (loss)
|
|
|
|
|
|
|
|
|||||||
Net gain (loss) on securities, derivatives and other investments
|
11,354
|
|
|
11,807
|
|
|
(453
|
)
|
|
(4
|
)%
|
|||
Consolidated Funds net gains (losses)
|
2,103
|
|
|
5,159
|
|
|
(3,056
|
)
|
|
(59
|
)%
|
|||
Total other income (loss)
|
13,457
|
|
|
16,966
|
|
|
(3,509
|
)
|
|
(21
|
)%
|
|||
Income (loss) before income taxes
|
14,106
|
|
|
1,095
|
|
|
13,011
|
|
|
1,188
|
%
|
|||
Income taxes expense (benefit)
|
79
|
|
|
176
|
|
|
(97
|
)
|
|
(55
|
)%
|
|||
Net income (loss)
|
14,027
|
|
|
919
|
|
|
13,108
|
|
|
1,426
|
%
|
|||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
4,187
|
|
|
3,495
|
|
|
692
|
|
|
20
|
%
|
|||
Net income (loss) attributable to Cowen Group, Inc. stockholders
|
$
|
9,840
|
|
|
$
|
(2,576
|
)
|
|
$
|
12,416
|
|
|
(482
|
)%
|
|
Economic Income (Loss)
|
|||||||||||||||||||||||||||||
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||||||||||||||||||
|
2014
|
|
2013
|
|
Total
Period-to-Period
|
|||||||||||||||||||||||||
|
Alternative
Investment
|
|
|
|
Total
2014
|
|
Alternative
Investment
|
|
|
|
Total
2013
|
|
||||||||||||||||||
|
Broker-Dealer (a)
|
|
Broker-Dealer (a)
|
|
$ Change
|
|
% Change
|
|||||||||||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||||||||
Economic Income Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
49,562
|
|
|
$
|
49,562
|
|
|
$
|
—
|
|
|
$
|
17,166
|
|
|
$
|
17,166
|
|
|
$
|
32,396
|
|
|
189
|
%
|
Brokerage
|
—
|
|
|
34,349
|
|
|
34,349
|
|
|
—
|
|
|
28,017
|
|
|
28,017
|
|
|
6,332
|
|
|
23
|
%
|
|||||||
Management fees
|
14,089
|
|
|
—
|
|
|
14,089
|
|
|
14,144
|
|
|
—
|
|
|
14,144
|
|
|
(55
|
)
|
|
—
|
%
|
|||||||
Incentive income (loss)
|
4,726
|
|
|
—
|
|
|
4,726
|
|
|
5,126
|
|
|
—
|
|
|
5,126
|
|
|
(400
|
)
|
|
(8
|
)%
|
|||||||
Investment income (loss)
|
8,328
|
|
|
(156
|
)
|
|
8,172
|
|
|
8,304
|
|
|
2,568
|
|
|
10,872
|
|
|
(2,700
|
)
|
|
(25
|
)%
|
|||||||
Other income (loss)
|
(43
|
)
|
|
(102
|
)
|
|
(145
|
)
|
|
113
|
|
|
(553
|
)
|
|
(440
|
)
|
|
295
|
|
|
(67
|
)%
|
|||||||
Total economic income revenues
|
27,100
|
|
|
83,653
|
|
|
110,753
|
|
|
27,687
|
|
|
47,198
|
|
|
74,885
|
|
|
35,868
|
|
|
48
|
%
|
|||||||
Economic Income Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Compensation and benefits
|
13,387
|
|
|
53,570
|
|
|
66,957
|
|
|
13,638
|
|
|
30,608
|
|
|
44,246
|
|
|
22,711
|
|
|
51
|
%
|
|||||||
Non-compensation expenses—Fixed
|
8,894
|
|
|
13,921
|
|
|
22,815
|
|
|
9,138
|
|
|
13,265
|
|
|
22,403
|
|
|
412
|
|
|
2
|
%
|
|||||||
Non-compensation expenses—Variable
|
749
|
|
|
8,688
|
|
|
9,437
|
|
|
1,006
|
|
|
7,720
|
|
|
8,726
|
|
|
711
|
|
|
8
|
%
|
|||||||
Interest expense
|
609
|
|
|
34
|
|
|
643
|
|
|
81
|
|
|
43
|
|
|
124
|
|
|
519
|
|
|
419
|
%
|
|||||||
Reimbursement from affiliates
|
(1,726
|
)
|
|
—
|
|
|
(1,726
|
)
|
|
(1,420
|
)
|
|
—
|
|
|
(1,420
|
)
|
|
(306
|
)
|
|
22
|
%
|
|||||||
Total economic income expenses
|
21,913
|
|
|
76,213
|
|
|
98,126
|
|
|
22,443
|
|
|
51,636
|
|
|
74,079
|
|
|
24,047
|
|
|
32
|
%
|
|||||||
Net economic income (loss) (before non-controlling interest)
|
5,187
|
|
|
7,440
|
|
|
12,627
|
|
|
5,244
|
|
|
(4,438
|
)
|
|
806
|
|
|
11,821
|
|
|
1,467
|
%
|
|||||||
Non-controlling interest
|
(2,625
|
)
|
|
—
|
|
|
(2,625
|
)
|
|
(2,075
|
)
|
|
—
|
|
|
(2,075
|
)
|
|
(550
|
)
|
|
27
|
%
|
|||||||
Economic income (loss)
|
$
|
2,562
|
|
|
$
|
7,440
|
|
|
$
|
10,002
|
|
|
$
|
3,169
|
|
|
$
|
(4,438
|
)
|
|
$
|
(1,269
|
)
|
|
$
|
11,271
|
|
|
(888
|
)%
|
|
Three Months Ended March 31,
|
|
Period-to-Period
|
|||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Non-compensation expenses—fixed:
|
|
|
|
|
|
|
|
|||||||
Communications
|
$
|
3,244
|
|
|
$
|
3,007
|
|
|
$
|
237
|
|
|
8
|
%
|
Professional, advisory and other fees
|
3,263
|
|
|
3,072
|
|
|
191
|
|
|
6
|
%
|
|||
Occupancy and equipment
|
6,039
|
|
|
5,355
|
|
|
684
|
|
|
13
|
%
|
|||
Depreciation and amortization
|
2,377
|
|
|
2,541
|
|
|
(164
|
)
|
|
(6
|
)%
|
|||
Service fees
|
2,140
|
|
|
2,546
|
|
|
(406
|
)
|
|
(16
|
)%
|
|||
Expenses from equity investments
|
3,131
|
|
|
3,397
|
|
|
(266
|
)
|
|
(8
|
)%
|
|||
Other
|
2,621
|
|
|
2,485
|
|
|
136
|
|
|
5
|
%
|
|||
Total
|
$
|
22,815
|
|
|
$
|
22,403
|
|
|
$
|
412
|
|
|
2
|
%
|
|
Three Months Ended March 31,
|
|
Period-to-Period
|
|||||||||||
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Non-compensation expenses—Variable:
|
|
|
|
|
|
|
|
|||||||
Floor brokerage and trade execution
|
$
|
4,611
|
|
|
$
|
4,349
|
|
|
$
|
262
|
|
|
6
|
%
|
Expenses related to Luxembourg reinsurance companies
|
401
|
|
|
516
|
|
|
(115
|
)
|
|
(22
|
)%
|
|||
Marketing and business development
|
4,425
|
|
|
3,861
|
|
|
564
|
|
|
15
|
%
|
|||
Total
|
$
|
9,437
|
|
|
$
|
8,726
|
|
|
$
|
711
|
|
|
8
|
%
|
•
|
pay our operating expenses, primarily consisting of compensation and benefits, interest on convertible debt and other general and administrative expenses; and
|
•
|
provide capital to facilitate the growth of our existing business.
|
|
As of December 31, 2013
|
||
|
(dollars in thousands)
|
||
Securities sold under agreements to repurchase
|
|
||
Agreements with Royal Bank of Canada bearing interest of 1.75% due June 2015 to November 2015
|
$
|
3,657
|
|
|
$
|
3,657
|
|
Location
|
|
Amount
|
|
Maturity
|
||
|
|
(dollars in thousands)
|
|
|
||
San Francisco
|
|
$
|
82
|
|
|
May 2014
|
Boston
|
|
$
|
382
|
|
|
March 2015
|
New York
|
|
$
|
1,191
|
|
|
September 2014
|
New York
|
|
$
|
6,746
|
|
|
December 2014
|
New York
|
|
$
|
1,000
|
|
|
February 2015
|
New York
|
|
$
|
1,861
|
|
|
June 2014
|
|
Total
|
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years |
||||||||
|
(dollars in thousands)
|
||||||||||||||
Equipment Leases, Service Payments and Facility Leases
|
|
|
|
|
|
|
|
||||||||
Real Estate
|
$
|
110,819
|
|
|
$
|
46,335
|
|
|
$
|
22,883
|
|
|
$
|
41,601
|
|
Service Payments
|
25,415
|
|
|
20,070
|
|
|
5,323
|
|
|
22
|
|
||||
Capital leases
|
5,559
|
|
|
3,604
|
|
|
1,876
|
|
|
79
|
|
||||
Aircraft
|
6,718
|
|
|
3,464
|
|
|
2,520
|
|
|
734
|
|
||||
Total
|
148,511
|
|
|
73,473
|
|
|
32,602
|
|
|
42,436
|
|
||||
Debt
|
|
|
|
|
|
|
|
||||||||
Convertible Debt
|
171,616
|
|
|
11,106
|
|
|
114,101
|
|
|
—
|
|
||||
Notes Payable
|
1,428
|
|
|
1,428
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
173,044
|
|
|
$
|
12,534
|
|
|
$
|
160,510
|
|
|
$
|
—
|
|
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 debt and equity 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
.
|
•
|
Mutual Funds.
Management fees for the Company’s mutual funds (Ramius Trading Strategies Managed Futures Fund, Ramius Event Driven Equity Fund, Ramius Hedged Alpha Fund (formerly known as Ramius Dynamic Replication Fund) and Ramius Strategic Volatility Fund) are generally charged at an annual rate of up to
1.60%
of assets under management (subject to an overall expense cap of up to
2.1%
).
|
•
|
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.
Management fees from the Company's real estate business are generally charged by their general partners at an annual rate from
0.75%
to
1.50%
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 funds on the RCG Longview platform 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.
During the investment period (as defined in the management agreement of the HealthCare Royalty Partners funds), management fees for the funds advised by HealthCare Royalty Partners 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 t
o
2%
of net asset value. Management fees for the HealthCare Royalty Partners funds are calculated on a quarterly basis.
.
|
•
|
Ramius Trading Strategies.
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%
.
Management and platform fees are generally calculated monthly based on each account's notional trading level 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 loans and debt and equity 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 (January 1, 2014 – January 31, 2014)
|
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
(3
|
)
|
Employee transactions(2)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
—
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Month 2 (February 1, 2014 – February 28, 2014)
|
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
(3
|
)
|
Employee transactions(2)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
—
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Month 3 (March 1, 2014 – March 31, 2014)
|
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
810,072
|
|
|
$
|
4.21
|
|
|
—
|
|
|
—
|
|
(3
|
)
|
Employee transactions(2)
|
|
452,809
|
|
|
$
|
4.24
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
1,262,881
|
|
|
$
|
4.22
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Total (January 1, 2014 – March 31, 2014)
|
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
810,072
|
|
|
$
|
4.21
|
|
|
—
|
|
|
—
|
|
(3
|
)
|
Employee transactions(2)
|
|
452,809
|
|
|
$
|
4.24
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
1,262,881
|
|
|
$
|
4.22
|
|
|
|
|
|
|
(1)
|
The Company's Board of Directors have authorized the repurchase, subject to market conditions, of up to $60.0 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 or other similar transactions.
|
(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:
|
May 8, 2014
|
|
Title:
|
Chief Financial Officer (principal financial officer and principal accounting officer)
|
|
Exhibit No.
|
|
Description
|
|
|
4.1
|
|
|
First Supplemental Indenture by and between Cowen Group, Inc., as Issuer and The Bank of New York Mellon, as Trustee.
|
|
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
|
|
|
|
|
COWEN GROUP, INC.
|
|
|
|
|
|
|
By:
|
/s/ STEPHEN A. LASOTA
|
|
|
|
|
|
Name:
|
Stephen A. Lasota
|
|
|
|
|
|
Title:
|
Chief Financial Officer (principal financial officer and principal accounting officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
THE BANK OF NEW YORK MELLON, as Trustee
|
|
|
|
|
|
|
By:
|
/s/ FRANCINE KINCAID
|
|
|
|
|
|
Name:
|
Francine Kincaid
|
|
|
|
|
|
Title:
|
Vice President
|
|
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:
|
May 8, 2014
|
|
/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:
|
May 8, 2014
|
|
/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:
|
May 8, 2014
|
|
/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) |
|