|
|
(Mark One)
|
|
Q
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended March 31, 2016
|
|
or
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from to
|
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
|
27-0423711
(I.R.S. Employer
Identification No.)
|
599 Lexington Avenue
New York, New York
(Address of Principal Executive Offices)
|
10022
(Zip Code)
|
|
Large accelerated filer
o
|
|
Accelerated filer
Q
|
|
Non-accelerated filer
o
(Do not check if a smaller
reporting company)
|
|
Smaller reporting company
o
|
|
|
Item No.
|
|
|
Page No.
|
|
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
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|||
|
|
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||
|
|
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||
|
|
|||
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|
|||
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|||
|
||||
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|
|||
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|||
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|||
|
|
|||
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|
|||
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|
|||
|
|
|||
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
67,046
|
|
|
$
|
158,485
|
|
Cash collateral pledged
|
10,157
|
|
|
10,085
|
|
||
Securities owned, at fair value
|
627,767
|
|
|
610,234
|
|
||
Receivable on derivative contracts, at fair value
|
45,725
|
|
|
39,618
|
|
||
Other investments
|
166,785
|
|
|
140,647
|
|
||
Receivable from brokers
|
122,542
|
|
|
117,757
|
|
||
Fees receivable, net of allowance
|
41,172
|
|
|
34,413
|
|
||
Due from related parties
|
34,395
|
|
|
39,659
|
|
||
Fixed assets, net of accumulated depreciation and amortization of $29,457 and $29,953, respectively
|
37,684
|
|
|
27,231
|
|
||
Goodwill
|
58,361
|
|
|
58,361
|
|
||
Intangible assets, net of accumulated amortization of $29,438 and $28,301, respectively
|
24,526
|
|
|
25,663
|
|
||
Deferred tax asset, net
|
146,459
|
|
|
143,560
|
|
||
Other assets
|
43,442
|
|
|
71,531
|
|
||
Consolidated Funds
|
|
|
|
||||
Cash and cash equivalents
|
12,348
|
|
|
13,934
|
|
||
Securities owned, at fair value
|
40,523
|
|
|
32,000
|
|
||
Receivable on derivative contracts, at fair value
|
125
|
|
|
—
|
|
||
Other investments
|
394,478
|
|
|
263,818
|
|
||
Other assets
|
1,401
|
|
|
663
|
|
||
Total Assets
|
$
|
1,874,936
|
|
|
$
|
1,787,659
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Securities sold, not yet purchased, at fair value
|
$
|
412,810
|
|
|
$
|
257,159
|
|
Payable for derivative contracts, at fair value
|
25,134
|
|
|
21,183
|
|
||
Payable to brokers
|
23,837
|
|
|
131,789
|
|
||
Compensation payable
|
26,262
|
|
|
150,403
|
|
||
Notes payable and other debt
|
90,081
|
|
|
68,565
|
|
||
Convertible debt
|
124,251
|
|
|
122,401
|
|
||
Fees payable
|
1,746
|
|
|
5,638
|
|
||
Due to related parties
|
234
|
|
|
329
|
|
||
Accounts payable, accrued expenses and other liabilities
|
55,607
|
|
|
52,233
|
|
||
Consolidated Funds
|
|
|
|
||||
Due to related parties
|
1
|
|
|
3
|
|
||
Contributions received in advance
|
2,600
|
|
|
850
|
|
||
Securities sold, not yet purchased, at fair value
|
1,367
|
|
|
—
|
|
||
Payable for derivative contracts, at fair value
|
2
|
|
|
—
|
|
||
Payable to brokers
|
2,315
|
|
|
—
|
|
||
Capital withdrawals payable
|
—
|
|
|
78
|
|
||
Accounts payable, accrued expenses and other liabilities
|
831
|
|
|
124
|
|
||
Total Liabilities
|
767,078
|
|
|
810,755
|
|
||
Commitments and Contingencies (Note 11)
|
|
|
|
||||
Redeemable non-controlling interests
|
324,938
|
|
|
186,911
|
|
||
Stockholders' equity
|
|
|
|
||||
Preferred stock, par value $0.01 per share: 10,000,000 shares authorized, 120,750 shares issued and outstanding as of March 31, 2016 (aggregate liquidation preference of $120,750,000) and 120,750 shares issued and outstanding as of as of December 31, 2015 (aggregate liquidation preference of $120,750,000), respectively
|
1
|
|
|
1
|
|
||
Class A common stock, par value $0.01 per share: 250,000,000 shares authorized, 142,716,734 shares issued and 106,078,205 outstanding as of March 31, 2016 and 140,120,392 shares issued and 105,604,658 outstanding as of December 31, 2015, respectively (including 497,570 restricted shares, respectively)
|
1,167
|
|
|
1,167
|
|
||
Class B common stock, par value $0.01 per share: 250,000,000 authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
908,462
|
|
|
902,554
|
|
||
(Accumulated deficit) retained earnings
|
18,231
|
|
|
23,627
|
|
||
Accumulated other comprehensive income (loss)
|
(3
|
)
|
|
—
|
|
||
Less: Class A common stock held in treasury, at cost, 36,638,529 and 34,515,734 shares, respectively
|
(144,938
|
)
|
|
(137,356
|
)
|
||
Total Stockholders' Equity
|
782,920
|
|
|
789,993
|
|
||
Total Liabilities and Stockholders' Equity
|
$
|
1,874,936
|
|
|
$
|
1,787,659
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
Revenues
|
|
|
|
||||
Investment banking
|
$
|
26,147
|
|
|
$
|
65,233
|
|
Brokerage
|
50,935
|
|
|
35,454
|
|
||
Management fees
|
11,030
|
|
|
10,384
|
|
||
Incentive income
|
1,111
|
|
|
2,372
|
|
||
Interest and dividends
|
3,653
|
|
|
3,083
|
|
||
Reimbursement from affiliates
|
3,887
|
|
|
3,642
|
|
||
Other revenues
|
2,725
|
|
|
668
|
|
||
Consolidated Funds
|
|
|
|
||||
Interest and dividends
|
1,076
|
|
|
244
|
|
||
Other revenues
|
475
|
|
|
14
|
|
||
Total revenues
|
101,039
|
|
|
121,094
|
|
||
Expenses
|
|
|
|
||||
Employee compensation and benefits
|
63,181
|
|
|
95,864
|
|
||
Floor brokerage and trade execution
|
7,791
|
|
|
5,903
|
|
||
Interest and dividends
|
7,310
|
|
|
5,779
|
|
||
Professional, advisory and other fees
|
5,594
|
|
|
5,128
|
|
||
Service fees
|
2,184
|
|
|
1,886
|
|
||
Communications
|
4,139
|
|
|
3,642
|
|
||
Occupancy and equipment
|
8,005
|
|
|
6,828
|
|
||
Depreciation and amortization
|
3,067
|
|
|
2,138
|
|
||
Client services and business development
|
7,040
|
|
|
6,470
|
|
||
Other expenses
|
5,812
|
|
|
4,810
|
|
||
Consolidated Funds
|
|
|
|
||||
Interest and dividends
|
1,120
|
|
|
209
|
|
||
Professional, advisory and other fees
|
302
|
|
|
90
|
|
||
Floor brokerage and trade execution
|
22
|
|
|
10
|
|
||
Other expenses
|
372
|
|
|
49
|
|
||
Total expenses
|
115,939
|
|
|
138,806
|
|
||
Other income (loss)
|
|
|
|
||||
Net gains (losses) on securities, derivatives and other investments
|
3,188
|
|
|
38,991
|
|
||
Consolidated Funds
|
|
|
|
||||
Net realized and unrealized gains (losses) on investments and other transactions
|
(2,692
|
)
|
|
4,720
|
|
||
Net realized and unrealized gains (losses) on derivatives
|
3,102
|
|
|
397
|
|
||
Net gains (losses) on foreign currency transactions
|
(13
|
)
|
|
(31
|
)
|
||
Total other income (loss)
|
3,585
|
|
|
44,077
|
|
||
Income (loss) before income taxes
|
(11,315
|
)
|
|
26,365
|
|
||
Income tax expense (benefit)
|
(3,320
|
)
|
|
6,947
|
|
||
Net income (loss)
|
(7,995
|
)
|
|
19,418
|
|
||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
(4,297
|
)
|
|
2,720
|
|
||
Net income (loss) attributable to Cowen Group, Inc.
|
(3,698
|
)
|
|
16,698
|
|
||
Preferred stock dividends
|
1,698
|
|
|
—
|
|
||
Net income (loss) attributable to Cowen Group, Inc. common stockholders
|
$
|
(5,396
|
)
|
|
$
|
16,698
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|||
Basic
|
106,364
|
|
|
112,053
|
|
||
Diluted
|
106,364
|
|
|
118,590
|
|
||
Earnings (loss) per share:
|
|
|
|
||||
Basic
|
$
|
(0.05
|
)
|
|
$
|
0.15
|
|
Diluted
|
$
|
(0.05
|
)
|
|
$
|
0.14
|
|
|
Three Months Ended March 31, 2016
|
|
Three Months Ended March 31, 2015
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
|
|
|
$
|
(7,995
|
)
|
|
|
|
|
|
$
|
19,418
|
|
||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation
|
|
|
(3
|
)
|
|
|
|
|
|
(2
|
)
|
|
|
||||
Total other comprehensive income, net of tax
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
(2
|
)
|
||||
Comprehensive income (loss)
|
|
|
|
|
$
|
(7,998
|
)
|
|
|
|
|
|
$
|
19,416
|
|
|
Common Shares Outstanding
|
|
Common Stock
|
|
Preferred Shares Outstanding
|
|
Preferred 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, 2015
|
105,604,658
|
|
|
$
|
1,167
|
|
|
120,750
|
|
|
$
|
1
|
|
|
$
|
(137,356
|
)
|
|
$
|
902,554
|
|
|
$
|
—
|
|
|
$
|
23,627
|
|
|
$
|
789,993
|
|
|
$
|
186,911
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,698
|
)
|
|
(3,698
|
)
|
|
(4,297
|
)
|
|||||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|||||||||
Capital contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
217,633
|
|
|||||||||
Capital withdrawals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,267
|
)
|
|||||||||
Deconsolidation of entity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(73,042
|
)
|
|||||||||
Restricted stock awards issued
|
2,596,342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Purchase of treasury stock, at cost
|
(2,122,795
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,582
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,582
|
)
|
|
—
|
|
|||||||||
Preferred stock dividends (See Note 13)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,698
|
)
|
|
(1,698
|
)
|
|
—
|
|
|||||||||
Income tax effect from share based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(515
|
)
|
|
—
|
|
|
—
|
|
|
(515
|
)
|
|
—
|
|
|||||||||
Amortization of share based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,423
|
|
|
—
|
|
|
—
|
|
|
6,423
|
|
|
—
|
|
|||||||||
Balance, March 31, 2016
|
106,078,205
|
|
|
$
|
1,167
|
|
|
$
|
120,750
|
|
|
$
|
1
|
|
|
$
|
(144,938
|
)
|
|
$
|
908,462
|
|
|
$
|
(3
|
)
|
|
$
|
18,231
|
|
|
$
|
782,920
|
|
|
$
|
324,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
Common Shares Outstanding
|
|
Common Stock
|
|
Preferred Shares Outstanding
|
|
Preferred 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, 2014
|
111,691,199
|
|
|
$
|
1,160
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(79,771
|
)
|
|
$
|
772,296
|
|
|
$
|
17
|
|
|
$
|
(16,027
|
)
|
|
$
|
677,675
|
|
|
$
|
86,076
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,698
|
|
|
16,698
|
|
|
2,720
|
|
|||||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|||||||||
Capital contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,379
|
|
|||||||||
Capital withdrawals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,210
|
)
|
|||||||||
Restricted stock awards issued
|
1,367,618
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Purchase of treasury stock, at cost
|
(1,889,920
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,982
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,982
|
)
|
|
—
|
|
|||||||||
Income tax effect from share based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,536
|
|
|
—
|
|
|
—
|
|
|
1,536
|
|
|
|
||||||||||
Amortization of share based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,162
|
|
|
—
|
|
|
—
|
|
|
4,162
|
|
|
—
|
|
|||||||||
Balance, March 31, 2015
|
111,168,897
|
|
|
$
|
1,160
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(89,753
|
)
|
|
$
|
777,994
|
|
|
$
|
15
|
|
|
$
|
671
|
|
|
$
|
690,087
|
|
|
$
|
85,965
|
|
Cowen Group, Inc.
Condensed Consolidated Statements of Cash Flows (dollars in thousands)
(unaudited)
|
|||||||
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(7,995
|
)
|
|
$
|
19,418
|
|
Adjustments to reconcile net income (loss) to net cash provided by / (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
3,067
|
|
|
2,138
|
|
||
Amortization of debt issuance costs
|
291
|
|
|
291
|
|
||
Amortization of debt discount
|
1,665
|
|
|
1,524
|
|
||
Tax benefit (expense) from share-based payment arrangements
|
(515
|
)
|
|
1,536
|
|
||
Share-based compensation
|
6,423
|
|
|
4,162
|
|
||
Deferred tax benefit
|
(2,384
|
)
|
|
3,663
|
|
||
Deferred rent obligations
|
107
|
|
|
351
|
|
||
Net loss on disposal of fixed assets
|
—
|
|
|
31
|
|
||
Contingent liability adjustment
|
(2,135
|
)
|
|
—
|
|
||
Purchases of securities owned, at fair value
|
(1,293,147
|
)
|
|
(1,026,453
|
)
|
||
Proceeds from sales of securities owned, at fair value
|
1,263,611
|
|
|
1,252,567
|
|
||
Proceeds from sales of securities sold, not yet purchased, at fair value
|
1,068,580
|
|
|
525,223
|
|
||
Payments to cover securities sold, not yet purchased, at fair value
|
(910,751
|
)
|
|
(592,564
|
)
|
||
Net (gains) losses on securities, derivatives and other investments
|
(2,836
|
)
|
|
(38,661
|
)
|
||
Consolidated Funds
|
|
|
|
||||
Purchases of securities owned, at fair value
|
(7,355
|
)
|
|
—
|
|
||
Proceeds from sales of securities owned, at fair value
|
878
|
|
|
—
|
|
||
Proceeds from sales of securities sold, not yet purchased, at fair value
|
2,049
|
|
|
—
|
|
||
Payments to cover securities sold, not yet purchased, at fair value
|
(855
|
)
|
|
—
|
|
||
Purchases of other investments
|
(212,028
|
)
|
|
(985
|
)
|
||
Proceeds from sales of other investments
|
855
|
|
|
4,845
|
|
||
Net realized and unrealized (gains) losses on investments and other transactions
|
245
|
|
|
(4,769
|
)
|
||
(Increase) decrease in operating assets:
|
|
|
|
||||
Cash collateral pledged
|
(72
|
)
|
|
(617
|
)
|
||
Securities owned, at fair value, held at broker-dealer
|
8,004
|
|
|
13,164
|
|
||
Receivable on derivative contracts, at fair value
|
(6,106
|
)
|
|
(7,076
|
)
|
||
Securities borrowed
|
—
|
|
|
676,100
|
|
||
Receivable from brokers
|
(4,785
|
)
|
|
(24,843
|
)
|
||
Fees receivable, net of allowance
|
(6,759
|
)
|
|
(19,588
|
)
|
||
Due from related parties
|
5,264
|
|
|
2,377
|
|
||
Other assets
|
(11,257
|
)
|
|
(3,565
|
)
|
||
Consolidated Funds
|
|
|
|
||||
Cash and cash equivalents
|
1,586
|
|
|
(142
|
)
|
||
Receivable on derivative contracts, at fair value
|
(125
|
)
|
|
—
|
|
||
Other assets
|
(738
|
)
|
|
750
|
|
||
Increase (decrease) in operating liabilities:
|
|
|
|
||||
Securities sold, not yet purchased, at fair value, held at broker-dealer
|
(6,141
|
)
|
|
16,039
|
|
||
Payable for derivative contracts, at fair value
|
3,951
|
|
|
2,896
|
|
||
Securities loaned
|
—
|
|
|
(682,493
|
)
|
||
Payable to brokers
|
(107,952
|
)
|
|
(107,903
|
)
|
||
Compensation payable
|
(128,152
|
)
|
|
(70,004
|
)
|
||
Fees payable
|
(3,892
|
)
|
|
15,352
|
|
||
Due to related parties
|
(95
|
)
|
|
(76
|
)
|
||
Accounts payable, accrued expenses and other liabilities
|
3,841
|
|
|
(3,438
|
)
|
||
Consolidated Funds
|
|
|
|
||||
Contributions received in advance
|
1,750
|
|
|
—
|
|
||
Payable to brokers
|
2,314
|
|
|
—
|
|
||
Payable for derivative contracts, at fair value
|
2
|
|
|
—
|
|
||
Due to related parties
|
265
|
|
|
—
|
|
||
Accounts payable, accrued expenses and other liabilities
|
707
|
|
|
67
|
|
||
Net cash provided by / (used in) operating activities
|
$
|
(340,620
|
)
|
|
$
|
(40,683
|
)
|
|
|
|
|
||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
|
Cowen Group, Inc.
Condensed Consolidated Statements of Cash Flows (dollars in thousands)
(unaudited)
|
|||||||
|
|
|
|
||||
|
|
|
|
||||
|
Three Months Ended March 31,
|
||||||
(continued)
|
2016
|
|
2015
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of other investments
|
$
|
(16,187
|
)
|
|
$
|
(5,760
|
)
|
Payment to acquire loan held for investment (see Note 18)
|
—
|
|
|
(15,000
|
)
|
||
Proceeds from sales of other investments
|
5,937
|
|
|
35,050
|
|
||
Proceeds from loans held for investment
|
39,200
|
|
|
—
|
|
||
Purchase of fixed assets
|
(12,383
|
)
|
|
(301
|
)
|
||
Net cash provided by / (used in) investing activities
|
16,567
|
|
|
13,989
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings on notes and other debt
|
22,072
|
|
|
2,140
|
|
||
Repayments on notes and other debt
|
(660
|
)
|
|
(1,030
|
)
|
||
Income tax effect from share-based payment arrangements
|
(515
|
)
|
|
1,536
|
|
||
Purchase of treasury stock
|
(3,571
|
)
|
|
(7,205
|
)
|
||
Cash paid to acquire net assets (contingent liability payment)
|
—
|
|
|
(108
|
)
|
||
Capital withdrawals to redeemable non-controlling interests in operating entities
|
(2,267
|
)
|
|
(4,457
|
)
|
||
Consolidated Funds
|
|
|
|
||||
Capital contributions by redeemable non-controlling interests in Consolidated Funds
|
217,633
|
|
|
3,379
|
|
||
Capital withdrawals to redeemable non-controlling interests in Consolidated Funds
|
(78
|
)
|
|
(2,404
|
)
|
||
Net cash provided by / (used in) financing activities
|
232,614
|
|
|
(8,149
|
)
|
||
Change in cash and cash equivalents
|
(91,439
|
)
|
|
(34,843
|
)
|
||
Cash and cash equivalents at beginning of period
|
158,485
|
|
|
129,509
|
|
||
Cash and cash equivalents at end of period
|
$
|
67,046
|
|
|
$
|
94,666
|
|
|
|
|
|
||||
Supplemental non-cash information
|
|
|
|
||||
Purchase of treasury stock, at cost, through net settlement (see Note 13)
|
$
|
4,012
|
|
|
$
|
2,777
|
|
Preferred stock dividends declared (See Note 13)
|
$
|
1,698
|
|
|
$
|
—
|
|
Net assets of deconsolidated entities
|
$
|
73,309
|
|
|
$
|
—
|
|
|
For the three months ended March 31, 2015
|
||
|
(dollars in thousands,
except per share data)
|
||
|
(unaudited)
|
||
Revenues
|
$
|
132,363
|
|
Net income (loss) attributable to Cowen Group, Inc. common stockholders
|
16,547
|
|
|
|
|
||
Net income per common share:
|
|
||
Basic
|
$
|
0.15
|
|
Diluted
|
$
|
0.14
|
|
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 which may be 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.
In accordance with US GAAP, investments which are valued using NAV per share as a practical expedient are not categorized within the fair value hierarchy.
|
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.
|
Fixed Assets
|
Asset
|
Depreciable Lives
|
|
Principal Method
|
Telephone and computer equipment
|
3-8 years
|
|
Straight-line
|
Computer software
|
3-7 years
|
|
Straight-line
|
Furniture and fixtures
|
5-8 years
|
|
Straight-line
|
Leasehold improvements
|
5-15 years
|
|
Straight-line
|
Capitalized lease asset
|
5 years
|
|
Straight-line
|
Airplanes
|
15-20 years
|
|
Straight-line
|
Modifications to airplanes
|
4-10 years
|
|
Straight-line
|
f.
|
Debt
|
a.
|
Operating Entities
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
|
(dollars in thousands)
|
||||||
U.S. Government securities (a)
|
$
|
3,774
|
|
|
$
|
3,016
|
|
Preferred stock (b)
|
23,696
|
|
|
25,563
|
|
||
Common stocks (b)
|
589,359
|
|
|
516,108
|
|
||
Convertible bonds (c)
|
250
|
|
|
819
|
|
||
Corporate bonds (d)
|
6,853
|
|
|
47,192
|
|
||
Warrants and rights
|
2,731
|
|
|
3,059
|
|
||
Mutual funds (e)
|
1,104
|
|
|
14,477
|
|
||
|
$
|
627,767
|
|
|
$
|
610,234
|
|
(a)
|
As of
March 31, 2016
, maturities ranged from June 2016 to February 2017 with interest rates ranged between
0%
to
5.95%
. As of
December 31, 2015
, maturities ranged from January 2016 to August 2016 with interest rates ranged between
0%
to
5.95%
.
|
(b)
|
Included in preferred stocks and common stocks are investments in securities for which the Company has elected the fair value option with the fair value of
$4.8 million
and
$2.7 million
, respectively, at
March 31, 2016
and
$7.7 million
and
$7.4 million
, respectively, at
December 31, 2015
. These investments were acquired in connection with merchant banking transactions.
|
(c)
|
As of
March 31, 2016
, the maturity was March 2018 with an interest rate of
8%
. As of
December 31, 2015
, maturities ranged from July 2016 to March 2018 with interest rates ranged between
8%
to
10.00%
.
|
(d)
|
As of
March 31, 2016
, maturities ranged from August 2017 to February 2046 and interest rates ranged between
3.48%
to
7.25%
. As of
December 31, 2015
, maturities ranged from March 2016 to February 2046 and interest rates ranged between
3.25%
to
9.00%
.
|
(e)
|
Included in this amount as of
December 31, 2015
, are investments in affiliated funds of
$13.4 million
all of which was liquidated during the three months ended March 31, 2016.
|
Receivable on derivative contracts
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||||||||||
|
Number of contracts / Notional Value
|
|
Fair value
|
|
Number of contracts / Notional Value
|
|
Fair value
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Futures
|
$
|
17,143
|
|
|
$
|
1,289
|
|
|
$
|
9,416
|
|
|
$
|
189
|
|
Currency forwards
|
$
|
56,569
|
|
|
154
|
|
|
$
|
67,862
|
|
|
659
|
|
||
Equity swaps
|
$
|
21,012
|
|
|
811
|
|
|
$
|
118,488
|
|
|
2,327
|
|
||
Options other (a)
|
334,903
|
|
|
38,978
|
|
|
289,433
|
|
|
31,456
|
|
||||
Foreign currency options
|
$
|
280,507
|
|
|
4,493
|
|
|
$
|
283,797
|
|
|
4,987
|
|
||
|
|
|
$
|
45,725
|
|
|
|
|
$
|
39,618
|
|
Payable for derivative contracts
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||||||||||
|
Number of contracts / Notional Value
|
|
Fair value
|
|
Number of contracts / Notional Value
|
|
Fair value
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Futures
|
$
|
15,401
|
|
|
$
|
1,834
|
|
|
$
|
11,995
|
|
|
$
|
101
|
|
Currency forwards
|
$
|
43,658
|
|
|
426
|
|
|
$
|
44,156
|
|
|
463
|
|
||
Equity and credit default swaps
|
$
|
7,236
|
|
|
156
|
|
|
$
|
7,605
|
|
|
71
|
|
||
Options other (a)
|
15,775
|
|
|
22,718
|
|
|
16,632
|
|
|
20,548
|
|
||||
|
|
|
$
|
25,134
|
|
|
|
|
$
|
21,183
|
|
|
|
|
|
|
|
|
Gross amounts not offset in the Condensed Consolidated Statement of Financial Condition
|
|
|
||||||||||||||
|
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
|
|
Financial instruments
|
|
Cash Collateral pledged (b)
|
|
Net amounts
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
As of March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Receivable on derivative contracts, at fair value
|
$
|
45,725
|
|
|
$
|
—
|
|
|
$
|
45,725
|
|
|
$
|
—
|
|
|
$
|
7,305
|
|
|
$
|
38,420
|
|
Payable for derivative contracts, at fair value
|
25,134
|
|
|
—
|
|
|
25,134
|
|
|
—
|
|
|
582
|
|
|
24,552
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
As of December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Receivable on derivative contracts, at fair value
|
39,618
|
|
|
—
|
|
|
39,618
|
|
|
—
|
|
|
9,339
|
|
|
30,279
|
|
||||||
Payable for derivative contracts, at fair value
|
21,183
|
|
|
—
|
|
|
21,183
|
|
|
—
|
|
|
534
|
|
|
20,649
|
|
(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, 2016
|
|
As of December 31, 2015
|
||||
|
(dollars in thousands)
|
||||||
(1) Portfolio Funds, at fair value
|
$
|
118,599
|
|
|
$
|
113,281
|
|
(2) Equity method investments
|
47,893
|
|
|
27,067
|
|
||
(3) Lehman claims, at fair value
|
293
|
|
|
299
|
|
||
|
$
|
166,785
|
|
|
$
|
140,647
|
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
|
(dollars in thousands)
|
||||||
HealthCare Royalty Partners (a)(*)
|
$
|
12,251
|
|
|
$
|
12,127
|
|
HealthCare Royalty Partners II (a)(*)
|
7,176
|
|
|
6,006
|
|
||
Orchard Square Partners Credit Fund LP (b)
|
4,000
|
|
|
4,170
|
|
||
Starboard Value and Opportunity Fund LP (c)(*)
|
21,287
|
|
|
20,369
|
|
||
Starboard Partners Fund LP (d)(*)
|
9,396
|
|
|
14,036
|
|
||
Starboard Leaders Fund LP (e)(*)
|
1,209
|
|
|
1,080
|
|
||
Formation8 Partners Fund I, L.P. (f)
|
20,950
|
|
|
19,454
|
|
||
Eclipse Ventures Fund I, L.P.
(formerly Formation8 Partners Hardware Fund I, L.P.) (g)
|
1,733
|
|
|
1,101
|
|
||
RCG LV Park Lane LLC (h) (*)
|
575
|
|
|
809
|
|
||
RCGL 12E13th LLC (i) (*)
|
458
|
|
|
609
|
|
||
RCG Longview Debt Fund V, L.P. (i) (*)
|
18,170
|
|
|
18,147
|
|
||
RCG LPP SME Co-Invest, L.P. (j) (*)
|
2,468
|
|
|
2,468
|
|
||
Quadratic Fund LLC (k) (*)
|
4,865
|
|
|
—
|
|
||
Other private investment (l) (*)
|
7,534
|
|
|
6,909
|
|
||
Other affiliated funds (m)(*)
|
6,527
|
|
|
5,996
|
|
||
|
$
|
118,599
|
|
|
$
|
113,281
|
|
(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 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)
|
Starboard Partners Fund LP permits redemptions on a semi-annual basis on
180
days prior written notice subsequent to an initial two year lock up.
|
(e)
|
Starboard Leaders Fund LP does not permit withdrawals, but instead allows terminations with respect to capital commitments upon
30
days prior written notice at any time following the first anniversary of an investors initial capital contribution.
|
(f)
|
Formation8 Partners Fund I, L.P. is a private equity fund which invests in early stage and growth transformational information and energy technology companies. Distributions will be made when the underlying investments are liquidated.
|
(g)
|
Eclipse Ventures Fund I, L.P. (Formerly Formation8 Partners Hardware Fund I, L.P.) is a private equity fund which invests in early stage and growth hardware companies. Distributions will be made when the underlying investments are liquidated.
|
(h)
|
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.
|
(i)
|
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.
|
(j)
|
RCG LPP SME Co-Invest, L.P. is a single purpose entity formed to participate in a joint venture which acquired two fully entitled residential development sites in the New York City metro area. RCG LPP SME Co-Invest, L.P. is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.
|
(k)
|
Quadratic Fund LLC permits redemptions on a
30
days prior written notice.
|
(l)
|
Other private investment represents the Company's closed end investment in a portfolio fund that invests in a wireless broadband communication provider in Italy.
|
(m)
|
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)
|
Equity method investments
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
|
(dollars in thousands)
|
||||||
RCG Longview Debt Fund IV Management, LLC
|
$
|
331
|
|
|
$
|
331
|
|
RCG Longview Debt Fund V Partners, LLC
|
5,278
|
|
|
4,655
|
|
||
HealthCare Royalty GP, LLC
|
999
|
|
|
989
|
|
||
HealthCare Royalty GP II, LLC
|
1,215
|
|
|
1,017
|
|
||
HealthCare Royalty GP III, LLC
|
86
|
|
|
88
|
|
||
HealthCare Overflow Fund GP, LLC
|
50
|
|
|
—
|
|
||
Surf House Ocean Views Holdings, LLC
|
13,000
|
|
|
—
|
|
||
Starboard Value LP
|
22,805
|
|
|
15,769
|
|
||
RCG Longview Management, LLC
|
710
|
|
|
656
|
|
||
RCG Urban American, LLC
|
120
|
|
|
120
|
|
||
RCG Urban American Management, LLC
|
379
|
|
|
379
|
|
||
RCG Longview Equity Management, LLC
|
114
|
|
|
114
|
|
||
Urban American Real Estate Fund II, LLC
|
1,211
|
|
|
1,211
|
|
||
RCG Kennedy House, LLC
|
359
|
|
|
304
|
|
||
Other
|
1,236
|
|
|
1,434
|
|
||
|
$
|
47,893
|
|
|
$
|
27,067
|
|
|
|
|
|
(3)
|
Lehman Claims, at fair value
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
|
(dollars in thousands)
|
||||||
Common stocks
|
$
|
412,750
|
|
|
$
|
257,101
|
|
Corporate bonds (a)
|
60
|
|
|
58
|
|
||
|
$
|
412,810
|
|
|
$
|
257,159
|
|
(a)
|
As of
March 31, 2016
and
December 31, 2015
, the maturity was January 2026 with an interest rate of
5.55%
.
|
b.
|
Consolidated Funds
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
|
(dollars in thousands)
|
||||||
Preferred stock
|
$
|
28,000
|
|
|
$
|
32,000
|
|
Common stocks
|
7,100
|
|
|
—
|
|
||
Corporate bonds (a)
|
4,218
|
|
|
—
|
|
||
Term Loan
|
1,205
|
|
|
—
|
|
||
|
$
|
40,523
|
|
|
$
|
32,000
|
|
|
As of March 31, 2016
|
||
|
(dollars in thousands)
|
||
Common stocks
|
$
|
352
|
|
Corporate bonds (a)
|
1,015
|
|
|
|
$
|
1,367
|
|
|
As of March 31, 2016
|
||
|
(dollars in thousands)
|
||
Currency forwards
|
$
|
2
|
|
Equity swaps
|
61
|
|
|
Options
|
62
|
|
|
|
$
|
125
|
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
|
(dollars in thousands)
|
||||||
Investments of Enterprise LP
|
$
|
113,696
|
|
|
$
|
111,075
|
|
Investments of Merger Fund
|
280,782
|
|
|
74,348
|
|
||
Investments of Quadratic LLC
|
—
|
|
|
78,395
|
|
||
|
$
|
394,478
|
|
|
$
|
263,818
|
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
|
(dollars in thousands)
|
||||||
Common stock
|
736
|
|
|
724
|
|
||
Preferred stock
|
1,478
|
|
|
1,484
|
|
||
Restricted stock
|
124
|
|
|
124
|
|
||
Rights
|
—
|
|
|
321
|
|
||
Trade claims
|
128
|
|
|
128
|
|
||
|
$
|
2,466
|
|
|
$
|
2,781
|
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
Description
|
(dollars in thousands)
|
||||||
Currency forwards
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
|
Strategy
|
|
(dollars in thousands)
|
||||||
RCG Longview Equity Fund, LP*
|
Real Estate
|
|
$
|
7,407
|
|
|
$
|
7,635
|
|
RCG Longview II, LP*
|
Real Estate
|
|
702
|
|
|
698
|
|
||
RCG Longview Debt Fund IV, LP*
|
Real Estate
|
|
3,042
|
|
|
3,577
|
|
||
RCG Soundview, LLC*
|
Real Estate
|
|
452
|
|
|
452
|
|
||
RCG Urban American Real Estate Fund, L.P.*
|
Real Estate
|
|
307
|
|
|
312
|
|
||
RCG Special Opportunities Fund, Ltd*
|
Multi-Strategy
|
|
85,435
|
|
|
81,544
|
|
||
RCG Energy, LLC *
|
Energy
|
|
—
|
|
|
1,189
|
|
||
RCG Renergys, LLC*
|
Energy
|
|
1
|
|
|
1
|
|
||
Other Private Investments
|
Various
|
|
10,472
|
|
|
10,515
|
|
||
Other Real Estate Investments (*)
|
Real Estate
|
|
5,045
|
|
|
5,753
|
|
||
|
|
|
$
|
112,863
|
|
|
$
|
111,676
|
|
*
|
Affiliates of the Company.
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
|
(dollars in thousands)
|
||||||
Common stocks
|
$
|
814,309
|
|
|
$
|
157,429
|
|
Corporate bonds (a)
|
—
|
|
|
492
|
|
||
|
$
|
814,309
|
|
|
$
|
157,921
|
|
(a)
|
As of
December 31, 2015
, the maturity was June 2024 with an interest rate of
5.25%
.
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
Description
|
(dollars in thousands)
|
||||||
Options
|
$
|
16,582
|
|
|
$
|
1,275
|
|
Currency forwards
|
24
|
|
|
235
|
|
||
Equity swaps
|
1,289
|
|
|
1,001
|
|
||
|
$
|
17,895
|
|
|
$
|
2,511
|
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
Description
|
(dollars in thousands)
|
||||||
Options
|
$
|
1,293
|
|
|
$
|
563
|
|
Currency forwards
|
21
|
|
|
—
|
|
||
Equity swaps
|
283
|
|
|
30
|
|
||
|
$
|
1,597
|
|
|
$
|
593
|
|
|
Assets at Fair Value as of March 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Operating Entities
|
|
|
|
|
|
|
|
||||||||
Securities owned
|
|
|
|
|
|
|
|
||||||||
US Government securities
|
$
|
3,774
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,774
|
|
Preferred stock
|
6,669
|
|
|
3,381
|
|
|
13,646
|
|
|
23,696
|
|
||||
Common stocks
|
580,184
|
|
|
2,910
|
|
|
6,265
|
|
|
589,359
|
|
||||
Convertible bonds
|
—
|
|
|
—
|
|
|
250
|
|
|
250
|
|
||||
Corporate bonds
|
—
|
|
|
6,853
|
|
|
—
|
|
|
6,853
|
|
||||
Warrants and rights
|
226
|
|
|
—
|
|
|
2,505
|
|
|
2,731
|
|
||||
Mutual funds
|
1,104
|
|
|
—
|
|
|
—
|
|
|
1,104
|
|
||||
Receivable on derivative contracts, at fair value
|
|
|
|
|
|
|
|
|
|||||||
Futures
|
1,289
|
|
|
—
|
|
|
—
|
|
|
1,289
|
|
||||
Currency forwards
|
—
|
|
|
154
|
|
|
—
|
|
|
154
|
|
||||
Equity swaps
|
—
|
|
|
811
|
|
|
—
|
|
|
811
|
|
||||
Options
|
16,238
|
|
|
6,341
|
|
|
20,892
|
|
|
43,471
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Lehman claim
|
—
|
|
|
—
|
|
|
293
|
|
|
293
|
|
||||
Consolidated funds
|
|
|
|
|
|
|
|
||||||||
Securities owned
|
|
|
|
|
|
|
|
||||||||
Preferred stock
|
—
|
|
|
—
|
|
|
28,000
|
|
|
28,000
|
|
||||
Common stocks
|
806
|
|
|
6,294
|
|
|
—
|
|
|
7,100
|
|
||||
Corporate Bonds
|
—
|
|
|
4,218
|
|
|
—
|
|
|
4,218
|
|
||||
Term Loan
|
—
|
|
|
1,205
|
|
|
—
|
|
|
1,205
|
|
||||
Receivable on derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Currency forwards
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Equity swaps
|
—
|
|
|
61
|
|
|
—
|
|
|
61
|
|
||||
Options
|
46
|
|
|
16
|
|
|
—
|
|
|
62
|
|
||||
|
$
|
610,336
|
|
|
$
|
32,246
|
|
|
$
|
71,851
|
|
|
$
|
714,433
|
|
Percentage of total assets measured at fair value
|
85.4
|
%
|
|
4.5
|
%
|
|
10.1
|
%
|
|
|
|||||
Portfolio funds measured at net asset value (a)
|
|
|
|
|
|
|
118,599
|
|
|||||||
Consolidated funds' portfolio funds measured at net asset value (a)
|
|
|
|
|
|
|
394,478
|
|
|||||||
Equity method investments
|
|
|
|
|
|
|
47,893
|
|
|||||||
Total investments
|
|
|
|
|
|
|
$
|
1,275,403
|
|
|
Liabilities at Fair Value as of March 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
||||||||
Securities sold, not yet purchased
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
$
|
412,750
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
412,750
|
|
Corporate bonds
|
—
|
|
|
60
|
|
|
—
|
|
|
60
|
|
||||
Payable for derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Futures
|
1,834
|
|
|
—
|
|
|
—
|
|
|
1,834
|
|
||||
Currency forwards
|
—
|
|
|
426
|
|
|
—
|
|
|
426
|
|
||||
Equity and credit default swaps
|
—
|
|
|
156
|
|
|
—
|
|
|
156
|
|
||||
Options
|
1,826
|
|
|
—
|
|
|
20,892
|
|
|
22,718
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
|
|
|
|
|
|
|
|
|
|
|||||
Contingent consideration liability (b)
|
—
|
|
|
—
|
|
|
8,293
|
|
|
8,293
|
|
||||
Consolidated funds
|
|
|
|
|
|
|
|
||||||||
Securities sold, not yet purchased
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
352
|
|
|
—
|
|
|
—
|
|
|
352
|
|
||||
Corporate bonds
|
—
|
|
|
1,015
|
|
|
—
|
|
|
1,015
|
|
||||
Payable for derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Currency forwards
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
|
$
|
416,762
|
|
|
$
|
1,659
|
|
|
$
|
29,185
|
|
|
$
|
447,606
|
|
Percentage of total liabilities measured at fair value
|
93.1
|
%
|
|
0.4
|
%
|
|
6.5
|
%
|
|
|
|
Assets at Fair Value as of December 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Operating Entities
|
|
|
|
|
|
|
|
||||||||
Securities owned
|
|
|
|
|
|
|
|
||||||||
US Government securities
|
$
|
3,016
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,016
|
|
Preferred stock
|
7,891
|
|
|
4,800
|
|
|
12,872
|
|
|
25,563
|
|
||||
Common stocks
|
505,303
|
|
|
7,527
|
|
|
3,278
|
|
|
516,108
|
|
||||
Convertible bonds
|
—
|
|
|
—
|
|
|
819
|
|
|
819
|
|
||||
Corporate bonds
|
—
|
|
|
47,192
|
|
|
—
|
|
|
47,192
|
|
||||
Warrants and rights
|
487
|
|
|
—
|
|
|
2,572
|
|
|
3,059
|
|
||||
Mutual funds
|
14,477
|
|
|
—
|
|
|
—
|
|
|
14,477
|
|
||||
Receivable on derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Futures
|
189
|
|
|
—
|
|
|
—
|
|
|
189
|
|
||||
Currency forwards
|
—
|
|
|
659
|
|
|
—
|
|
|
659
|
|
||||
Equity swaps
|
—
|
|
|
2,327
|
|
|
—
|
|
|
2,327
|
|
||||
Options
|
11,895
|
|
|
6,354
|
|
|
18,194
|
|
|
36,443
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Lehman claim
|
—
|
|
|
—
|
|
|
299
|
|
|
299
|
|
||||
Consolidated funds
|
|
|
|
|
|
|
|
||||||||
Preferred stock
|
—
|
|
|
—
|
|
|
32,000
|
|
|
32,000
|
|
||||
|
$
|
543,258
|
|
|
$
|
68,859
|
|
|
$
|
70,034
|
|
|
$
|
682,151
|
|
Percentage of total assets measured at fair value
|
79.6
|
%
|
|
10.1
|
%
|
|
10.3
|
%
|
|
|
|||||
Portfolio funds measured at net asset value (a)
|
|
|
|
|
|
|
113,281
|
|
|||||||
Consolidated funds' portfolio funds measured at net asset value (a)
|
|
|
|
|
|
|
263,818
|
|
|||||||
Equity method investments
|
|
|
|
|
|
|
27,067
|
|
|||||||
Total investments
|
|
|
|
|
|
|
$
|
1,086,317
|
|
|
Liabilities at Fair Value as of December 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Securities sold, not yet purchased
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
$
|
257,101
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
257,101
|
|
Corporate bonds
|
—
|
|
|
58
|
|
|
—
|
|
|
58
|
|
||||
Payable for derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Futures
|
101
|
|
|
—
|
|
|
—
|
|
|
101
|
|
||||
Currency forwards
|
—
|
|
|
463
|
|
|
—
|
|
|
463
|
|
||||
Equity and credit default swaps
|
—
|
|
|
71
|
|
|
—
|
|
|
71
|
|
||||
Options
|
2,354
|
|
|
—
|
|
|
18,194
|
|
|
20,548
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability (b)
|
—
|
|
|
—
|
|
|
6,158
|
|
|
6,158
|
|
||||
|
$
|
259,556
|
|
|
$
|
592
|
|
|
$
|
24,352
|
|
|
$
|
284,500
|
|
Percentage of total liabilities measured at fair value
|
91.2
|
%
|
|
0.2
|
%
|
|
8.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2016
|
||||||||||||||||||||||||||||||
|
Balance at December 31, 2015
|
|
Transfers in
|
|
Transfers out
|
|
Purchases/(covers)
|
|
(Sales)/shorts
|
|
Realized and Unrealized gains/losses
|
|
Balance at March 31, 2016
|
|
Change in unrealized gains/losses relating to instruments still held (1)
|
||||||||||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
$
|
12,872
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(218
|
)
|
|
$
|
992
|
|
|
$
|
13,646
|
|
|
$
|
566
|
|
Common stocks
|
3,278
|
|
|
—
|
|
|
—
|
|
|
1,069
|
|
|
—
|
|
|
1,918
|
|
|
6,265
|
|
|
2,054
|
|
||||||||
Convertible bonds
|
819
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(569
|
)
|
|
—
|
|
|
250
|
|
|
—
|
|
||||||||
Options, asset
|
18,194
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,698
|
|
|
20,892
|
|
|
2,698
|
|
||||||||
Options, liability
|
18,194
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,698
|
|
|
20,892
|
|
|
2,698
|
|
||||||||
Warrants and Rights
|
2,572
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
2,505
|
|
|
150
|
|
||||||||
Lehman claim
|
299
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
293
|
|
|
(6
|
)
|
||||||||
Contingent consideration liability
|
6,158
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
2,135
|
|
|
8,293
|
|
|
2,135
|
|
||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
32,000
|
|
|
|
|
|
(4,000
|
)
|
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
28,000
|
|
|
—
|
|
|
Three Months Ended March 31, 2015
|
||||||||||||||||||||||||||||||
|
Balance at December 31, 2014
|
|
Transfers in
|
|
Transfers out
|
|
Purchases/(covers)
|
|
(Sales)/shorts
|
|
Realized and Unrealized gains/losses
|
|
Balance at March 31, 2015
|
|
Change in unrealized gains/losses relating to instruments still held (1)
|
||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
$
|
12,517
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,375
|
|
|
$
|
—
|
|
|
$
|
(412
|
)
|
|
$
|
19,480
|
|
|
$
|
(412
|
)
|
Common stocks
|
412
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
2
|
|
|
411
|
|
|
5
|
|
||||||||
Convertible bonds
|
900
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
|
879
|
|
|
(21
|
)
|
||||||||
Options, asset
|
36,807
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,835
|
|
|
41,642
|
|
|
4,835
|
|
||||||||
Options, liability
|
36,807
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,835
|
|
|
41,642
|
|
|
4,835
|
|
||||||||
Warrants and Rights, asset
|
1,322
|
|
|
—
|
|
|
(14
|
)
|
(a)
|
26
|
|
|
—
|
|
|
1,225
|
|
|
2,559
|
|
|
1,224
|
|
||||||||
Lehman claim
|
380
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
361
|
|
|
(19
|
)
|
||||||||
Contingent consideration liability
|
4,083
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(109
|
)
|
|
—
|
|
|
3,974
|
|
|
—
|
|
||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Lehman claim
|
493
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
494
|
|
|
1
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||
|
Fair Value at March 31, 2016
|
|
Valuation techniques
|
|
Unobservable Inputs
|
|
Range
|
||
Level 3 Assets
|
(dollars in thousands)
|
|
|
|
|
|
|
||
Common and preferred stocks
|
$
|
2,551
|
|
|
Market/transaction multiples and option pricing method Illiquidity discount
|
|
Volatility Market multiples Discount
|
|
35% 1x to 5x 90%
|
Warrants and rights, net
|
2,505
|
|
|
Model based
|
|
Volatility
|
|
18% to 61% (weighted average 46%)
|
|
Options
|
20,892
|
|
|
Option pricing models
|
|
Volatility
|
|
45%
|
|
Other level 3 assets (a)
|
45,903
|
|
|
|
|
|
|
|
|
Total level 3 assets
|
71,851
|
|
|
|
|
|
|
|
|
Level 3 Liabilities
|
|
|
|
|
|
|
|
||
Options
|
20,892
|
|
|
Option pricing models
|
|
Volatility
|
|
45%
|
|
Contingent consideration
|
8,293
|
|
|
Discounted cash flows
|
|
Projected cash flow and discount rate
|
|
0% - 24.5%
(weighted average 9.58%)
|
|
Total level 3 liabilities
|
$
|
29,185
|
|
|
|
|
|
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||
|
Fair Value at December 31, 2015
|
|
Valuation techniques
|
|
Unobservable Inputs
|
|
Range
|
||
Level 3 Assets
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
Common and preferred stocks
|
$
|
2,569
|
|
|
Market multiples and option pricing method
|
|
Volatility Market multiples
|
|
34% 1x to 4.75x
|
Convertible bonds
|
819
|
|
|
Recovery analysis
|
|
Recovery rate
|
|
50%
|
|
Warrants and rights, net
|
2,572
|
|
|
Model based
|
|
Volatility
|
|
18% to 61% (weighted average 43%)
|
|
Options
|
18,194
|
|
|
Option pricing models
|
|
Volatility Credit spreads
|
|
38%
|
|
Other level 3 assets (a)
|
45,880
|
|
|
|
|
|
|
|
|
Total level 3 assets
|
70,034
|
|
|
|
|
|
|
|
|
Level 3 Liabilities
|
|
|
|
|
|
|
|
||
Options
|
18,194
|
|
|
Option pricing models
|
|
Volatility Credit spreads
|
|
38%
|
|
Contingent consideration
|
6,158
|
|
|
Discounted cash flows
|
|
Projected cash flow and discount rate
|
|
6.6% - 24.5%
(weighted average 16.4%) |
|
Total level 3 liabilities
|
$
|
24,352
|
|
|
|
|
|
|
|
(a)
|
The quantitative disclosures exclude financial instruments for which the determination of fair value is based on prices from prior transactions.
|
|
March 31, 2016
|
|
December 31, 2015
|
|
Fair Value Hierarchy
|
||||||||||||
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
|
|||||||||
|
|
|
(dollars in thousands)
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Operating companies
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
67,046
|
|
|
$
|
67,046
|
|
|
$
|
158,485
|
|
|
$
|
158,485
|
|
|
Level 1
|
Cash collateral pledged
|
10,157
|
|
|
10,157
|
|
|
10,085
|
|
|
10,085
|
|
|
Level 2
|
||||
Consolidated funds
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
12,348
|
|
|
12,348
|
|
|
13,934
|
|
|
13,934
|
|
|
Level 1
|
||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|||||||
Convertible debt
|
124,251
|
|
(a)
|
139,546
|
|
(b)
|
122,401
|
|
(a)
|
144,946
|
|
(b)
|
Level 2
|
||||
Notes payable and other debt
|
90,081
|
|
|
72,375
|
|
|
68,565
|
|
|
71,945
|
|
|
Level 2
|
(a)
|
The carrying amount of the convertible debt includes an unamortized discount of
$23.1 million
and
$24.7 million
as of
March 31, 2016
and
December 31, 2015
.
|
(b)
|
The convertible debt include the conversion option and is based on the last broker quote available.
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
|
(dollars in thousands)
|
||||||
Redeemable non-controlling interests in consolidated subsidiaries and funds
|
|
|
|
||||
Operating companies
|
$
|
8,561
|
|
|
$
|
10,906
|
|
Consolidated funds
|
316,377
|
|
|
176,005
|
|
||
|
$
|
324,938
|
|
|
$
|
186,911
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(dollars in thousands)
|
||||||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
|
|
|
||||
Operating companies
|
$
|
(78
|
)
|
|
$
|
918
|
|
Consolidated funds
|
(4,219
|
)
|
|
1,802
|
|
||
|
$
|
(4,297
|
)
|
|
$
|
2,720
|
|
|
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, 2015
|
16,667
|
|
|
$
|
4.89
|
|
|
1.10
|
|
|
$
|
—
|
|
Options granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Options exercised
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Options expired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Balance outstanding at March 31, 2016
|
16,667
|
|
|
$
|
4.89
|
|
|
0.85
|
|
|
$
|
—
|
|
Options exercisable at March 31, 2016
|
16,667
|
|
|
$
|
4.89
|
|
|
0.85
|
|
|
$
|
—
|
|
(1)
|
Based on the Company's closing stock price of
$3.81
on
March 31, 2016
and
$3.83
on
December 31, 2015
.
|
(1)
|
Based on the Company's closing stock price of
$3.81
on
March 31, 2016
and
$3.83
on
December 31, 2015
.
|
|
Nonvested Restricted Shares and Restricted Stock Units
|
|
Weighted-Average
Grant Date Fair Value |
|||
Balance outstanding at December 31, 2015
|
21,480,364
|
|
|
$
|
4.17
|
|
Granted
|
7,410,814
|
|
|
3.47
|
|
|
Vested
|
(2,851,670
|
)
|
|
4.00
|
|
|
Canceled
|
—
|
|
|
—
|
|
|
Forfeited
|
(79,182
|
)
|
|
3.85
|
|
|
Balance outstanding at March 31, 2016 (1)
|
25,960,326
|
|
|
$
|
3.99
|
|
|
Equipment Leases (a)
|
|
Service Payments
|
|
Facility Leases (b)
|
||||||
|
(dollars in thousands)
|
||||||||||
2016
|
$
|
1,810
|
|
|
$
|
13,198
|
|
|
$
|
13,971
|
|
2017
|
2,301
|
|
|
9,238
|
|
|
15,648
|
|
|||
2018
|
2,221
|
|
|
4,653
|
|
|
15,656
|
|
|||
2019
|
813
|
|
|
1,414
|
|
|
14,820
|
|
|||
2020
|
—
|
|
|
—
|
|
|
14,814
|
|
|||
Thereafter
|
—
|
|
|
—
|
|
|
32,250
|
|
|||
|
$
|
7,145
|
|
|
$
|
28,503
|
|
|
$
|
107,159
|
|
(a)
|
Equipment Leases include the Company's commitments relating to operating and capital leases. See Note
12
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
$0.8 million
and
$0.5 million
and for the
three months ended
March 31, 2016
and
2015
, respectively.
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||
|
(dollars in thousands)
|
||||||
Convertible debt
|
$
|
124,251
|
|
|
$
|
122,401
|
|
Note payable
|
60,936
|
|
|
60,831
|
|
||
Other note payable
|
1,695
|
|
|
—
|
|
||
Revolver
|
25,000
|
|
|
5,000
|
|
||
Capital lease obligations
|
2,450
|
|
|
2,734
|
|
||
|
$
|
214,332
|
|
|
$
|
190,966
|
|
|
Convertible Debt
|
|
Note Payable
|
|
Revolver
|
|
Other Note Payable
|
|
Capital Lease
Obligation |
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
2016
|
$
|
2,243
|
|
|
$
|
3,914
|
|
|
$
|
25,000
|
|
|
$
|
1,718
|
|
|
$
|
704
|
|
2017
|
4,485
|
|
|
5,218
|
|
|
—
|
|
|
—
|
|
|
938
|
|
|||||
2018
|
4,485
|
|
|
5,218
|
|
|
—
|
|
|
—
|
|
|
938
|
|
|||||
2019
|
151,743
|
|
|
5,218
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|||||
2020
|
—
|
|
|
5,218
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Thereafter
|
—
|
|
|
68,468
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Subtotal
|
162,956
|
|
|
93,254
|
|
|
25,000
|
|
|
1,718
|
|
|
2,658
|
|
|||||
Less: Amount representing interest (a)
|
(38,705
|
)
|
|
(32,318
|
)
|
|
—
|
|
|
(23
|
)
|
|
(208
|
)
|
|||||
Total
|
$
|
124,251
|
|
|
$
|
60,936
|
|
|
$
|
25,000
|
|
|
$
|
1,695
|
|
|
$
|
2,450
|
|
(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)
|
|
|
||
New York
|
|
$
|
355
|
|
|
May 2016
|
New York
|
|
$
|
1,861
|
|
|
May 2016
|
New York
|
|
$
|
794
|
|
|
October 2016
|
New York
|
|
$
|
3,373
|
|
|
October 2016
|
New York
|
|
$
|
1,600
|
|
|
November 2016
|
San Francisco
|
|
$
|
710
|
|
|
January 2017
|
New York
|
|
$
|
65
|
|
|
January 2017
|
New York
|
|
$
|
1,000
|
|
|
February 2017
|
Boston
|
|
$
|
382
|
|
|
March 2017
|
|
Treasury stock shares
|
|
Cost
(dollars in thousands) |
|
Average cost
per share |
|||||
Balance outstanding at December 31, 2015
|
34,515,734
|
|
|
$
|
137,356
|
|
|
$
|
3.98
|
|
Shares purchased for minimum tax withholding under the Equity Plan or other similar transactions
|
1,124,676
|
|
|
4,012
|
|
|
3.57
|
|
||
Purchase of treasury stock
|
998,119
|
|
|
3,570
|
|
|
3.58
|
|
||
Balance outstanding at March 31, 2016
|
36,638,529
|
|
|
$
|
144,938
|
|
|
$
|
3.96
|
|
|
Foreign currency translation (a)
|
|
Defined benefit plans (a)
|
|
Total
|
||||||
|
(dollars in thousands)
|
||||||||||
Balance at December 31, 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net change
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||
Balance at March 31, 2016
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
|
|
|
|
|
||||||
|
Foreign currency translation (a)
|
|
Defined benefit plans (a)
|
|
Total
|
||||||
|
(dollars in thousands)
|
||||||||||
Balance at December 31, 2014
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
17
|
|
Net change
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Balance at March 31, 2015
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
|
|
||||||
Net income (loss)
|
$
|
(7,995
|
)
|
|
$
|
19,418
|
|
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
(4,297
|
)
|
|
2,720
|
|
||
Net income (loss) attributable to Cowen Group, Inc.
|
(3,698
|
)
|
|
16,698
|
|
||
Preferred stock dividends
|
1,698
|
|
|
—
|
|
||
Net income (loss) attributable to Cowen Group, Inc. common stockholders
|
$
|
(5,396
|
)
|
|
$
|
16,698
|
|
|
|
|
|
||||
Shares for basic and diluted calculations:
|
|
|
|
||||
Weighted average shares used in basic computation
|
106,364
|
|
|
112,053
|
|
||
Stock options
|
—
|
|
|
—
|
|
||
Performance based restricted stock
|
—
|
|
|
411
|
|
||
Stock appreciation rights
|
—
|
|
|
119
|
|
||
Restricted stock
|
—
|
|
|
6,007
|
|
||
Weighted average shares used in diluted computation
|
106,364
|
|
|
118,590
|
|
||
Earnings (loss) per share:
|
|
|
|
||||
Basic
|
$
|
(0.05
|
)
|
|
$
|
0.15
|
|
Diluted
|
$
|
(0.05
|
)
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2016
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Alternative
Investment
|
|
Broker-Dealer
|
|
Total Economic Income/(Loss)
|
|
Funds
Consolidation
|
|
Other
Adjustments
|
|
|
|
US GAAP
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
26,147
|
|
|
$
|
26,147
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
26,147
|
|
Brokerage
|
—
|
|
|
52,867
|
|
|
52,867
|
|
|
—
|
|
|
(1,932
|
)
|
|
|
|
50,935
|
|
||||||
Management fees
|
16,128
|
|
|
775
|
|
|
16,903
|
|
|
(370
|
)
|
|
(5,503
|
)
|
|
(a)
|
|
11,030
|
|
||||||
Incentive income
|
6,920
|
|
|
—
|
|
|
6,920
|
|
|
(157
|
)
|
|
(5,652
|
)
|
|
(a)
|
|
1,111
|
|
||||||
Investment Income
|
1,395
|
|
|
455
|
|
|
1,850
|
|
|
—
|
|
|
(1,850
|
)
|
|
(c)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,653
|
|
|
(c)
|
|
3,653
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
3,901
|
|
|
(e)
|
|
3,887
|
|
||||||
Other revenue
|
682
|
|
|
271
|
|
|
953
|
|
|
—
|
|
|
1,772
|
|
|
(c)
|
|
2,725
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
1,551
|
|
|
—
|
|
|
|
|
1,551
|
|
||||||
Total revenues
|
25,125
|
|
|
80,515
|
|
|
105,640
|
|
|
1,010
|
|
|
(5,611
|
)
|
|
|
|
101,039
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non interest expense
|
20,261
|
|
|
83,761
|
|
|
104,022
|
|
|
—
|
|
|
2,791
|
|
|
(c)(d)(b)
|
|
106,813
|
|
||||||
Interest and dividends
|
3,183
|
|
|
1,090
|
|
|
4,273
|
|
|
—
|
|
|
3,037
|
|
|
(c)
|
|
7,310
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
1,816
|
|
|
—
|
|
|
|
|
1,816
|
|
||||||
Total expenses
|
23,444
|
|
|
84,851
|
|
|
108,295
|
|
|
1,816
|
|
|
5,828
|
|
|
|
|
115,939
|
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,413
|
)
|
|
6,998
|
|
|
(c)
|
|
3,585
|
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,320
|
)
|
|
(b)
|
|
(3,320
|
)
|
||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
(2,227
|
)
|
|
—
|
|
|
(2,227
|
)
|
|
4,219
|
|
|
2,305
|
|
|
|
|
4,297
|
|
||||||
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc.
|
$
|
(546
|
)
|
|
$
|
(4,336
|
)
|
|
$
|
(4,882
|
)
|
|
$
|
—
|
|
|
$
|
1,184
|
|
|
|
|
$
|
(3,698
|
)
|
|
Three Months March 31, 2015
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Alternative
Investment
|
|
Broker-Dealer
|
|
Total Economic Income/(Loss)
|
|
Funds
Consolidation
|
|
Other
Adjustments
|
|
|
|
US GAAP
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
65,233
|
|
|
$
|
65,233
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
65,233
|
|
Brokerage
|
18
|
|
|
35,505
|
|
|
35,523
|
|
|
—
|
|
|
(69
|
)
|
|
|
|
35,454
|
|
||||||
Management fees
|
16,607
|
|
|
—
|
|
|
16,607
|
|
|
(238
|
)
|
|
(5,985
|
)
|
|
(a)
|
|
10,384
|
|
||||||
Incentive income
|
15,363
|
|
|
—
|
|
|
15,363
|
|
|
(183
|
)
|
|
(12,808
|
)
|
|
(a)
|
|
2,372
|
|
||||||
Investment Income
|
21,830
|
|
|
7,050
|
|
|
28,880
|
|
|
—
|
|
|
(28,880
|
)
|
|
(c)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,083
|
|
|
(c)
|
|
3,083
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(85
|
)
|
|
3,727
|
|
|
(e)
|
|
3,642
|
|
||||||
Other revenue
|
21
|
|
|
48
|
|
|
69
|
|
|
—
|
|
|
599
|
|
|
(c)
|
|
668
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
258
|
|
|
—
|
|
|
|
|
258
|
|
||||||
Total revenues
|
53,839
|
|
|
107,836
|
|
|
161,675
|
|
|
(248
|
)
|
|
(40,333
|
)
|
|
|
|
121,094
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non interest expense
|
34,834
|
|
|
96,329
|
|
|
131,163
|
|
|
—
|
|
|
1,506
|
|
|
(c)(d)
|
|
132,669
|
|
||||||
Interest and dividends
|
3,044
|
|
|
978
|
|
|
4,022
|
|
|
—
|
|
|
1,757
|
|
|
(c)
|
|
5,779
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
358
|
|
|
—
|
|
|
|
|
358
|
|
||||||
Total expenses
|
37,878
|
|
|
97,307
|
|
|
135,185
|
|
|
358
|
|
|
3,263
|
|
|
|
|
138,806
|
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,407
|
|
|
41,670
|
|
|
(c)
|
|
44,077
|
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,947
|
|
|
(b)
|
|
6,947
|
|
||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
(2,845
|
)
|
|
—
|
|
|
(2,845
|
)
|
|
(1,801
|
)
|
|
1,926
|
|
|
|
|
(2,720
|
)
|
||||||
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc.
|
$
|
13,116
|
|
|
$
|
10,529
|
|
|
$
|
23,645
|
|
|
$
|
—
|
|
|
$
|
(6,947
|
)
|
|
|
|
$
|
16,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
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.
|
•
|
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.
|
•
|
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-
|
•
|
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.
|
•
|
Investment performance of our own capital.
Investment income in the broker-dealer business includes gains and losses generated by the capital the Company invests in private capital raising transactions of its investment banking clients. Our revenues from investment income are linked to the performance of the underlying investments.
|
•
|
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.
|
•
|
Our alternative investment business can be adversely affected by unanticipated levels of requested redemptions. We experienced significant levels of requested redemptions during the 2008 financial crisis and, while the environment for investing in alternative investment products has since improved, it is possible that we could intermittently experience redemptions above historical levels, regardless of fund performance.
|
•
|
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 or notional trading level. Management fees are generally calculated monthly based on assets under management at the end of each month before incentive income
.
|
•
|
Registered Funds.
Management fees for the Company’s registered funds (State Street/Ramius Managed Futures Strategy Fund and Ramius Archview Credit and Distressed Fund) are generally charged at an annual rate of up to
1.50%
of assets under management
.
|
•
|
Alternative Solutions.
Management fees for the Alternative Solutions business are generally charged at an annual rate of up to
2%
of assets under management or notional trading level. 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
0.25%
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 accompanying 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 and managed accounts 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 the net asset value of the funds or managed accounts or the aggregate cost basis of the unrealized investments held by the funds. 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
0.5%
.
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 fees 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. 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 restructuring 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
(which may be in cash and/or securities)
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 transactions 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. In certain cases, the Company provides liquidity to clients by 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 and interest expense on debt issued during March and October 2014.
|
•
|
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 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) (g) (m)
|
|
Alternative Solutions (a) (h)
|
|
Ramius Trading Strategies
(i) |
|
Real Estate (a) (j)
|
|
Healthcare Royalty Partners (c) (d) (k)
|
|
Other (l)
|
|
Total
|
||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||
January 1, 2014
|
|
$
|
3,168
|
|
|
$
|
2,936
|
|
|
$
|
94
|
|
|
$
|
1,639
|
|
|
$
|
1,523
|
|
|
$
|
67
|
|
|
$
|
9,427
|
|
Subscriptions
|
|
1,132
|
|
|
1,326
|
|
|
35
|
|
|
249
|
|
|
1,059
|
|
|
—
|
|
|
3,801
|
|
|||||||
Redemptions
|
|
(935
|
)
|
|
(272
|
)
|
|
—
|
|
|
(181
|
)
|
|
—
|
|
|
(19
|
)
|
|
(1,407
|
)
|
|||||||
Performance (e)
|
|
853
|
|
|
(206
|
)
|
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
665
|
|
|||||||
Net Return (f)
|
|
26.93
|
%
|
|
(7.02
|
)%
|
|
19.15
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
7.05
|
%
|
|||||||
January 1, 2015
|
|
4,218
|
|
|
3,784
|
|
|
147
|
|
|
1,707
|
|
|
2,582
|
|
|
48
|
|
|
12,486
|
|
|||||||
Subscriptions
|
|
2,725
|
|
|
997
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,722
|
|
|||||||
Redemptions
|
|
(572
|
)
|
|
(810
|
)
|
|
(49
|
)
|
|
(65
|
)
|
|
(178
|
)
|
|
(14
|
)
|
|
(1,688
|
)
|
|||||||
Performance (e)
|
|
(781
|
)
|
|
(419
|
)
|
|
(3
|
)
|
|
—
|
|
|
5
|
|
|
—
|
|
|
(1,198
|
)
|
|||||||
Net Return (f)
|
|
(18.52
|
)%
|
|
(11.07
|
)%
|
|
(2.04
|
)%
|
|
—
|
%
|
|
0.19
|
%
|
|
—
|
%
|
|
(9.59
|
)%
|
|||||||
January 1, 2016
|
|
5,590
|
|
|
3,552
|
|
|
95
|
|
|
1,642
|
|
|
2,409
|
|
|
34
|
|
|
13,322
|
|
|||||||
Subscriptions
|
|
443
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
443
|
|
|||||||
Redemptions
|
|
(174
|
)
|
|
(90
|
)
|
|
(2
|
)
|
|
(44
|
)
|
|
(21
|
)
|
|
(2
|
)
|
|
(333
|
)
|
|||||||
Performance (e)
|
|
165
|
|
|
95
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
263
|
|
|||||||
Net Return (f)
|
|
2.95
|
%
|
|
2.67
|
%
|
|
3.16
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.97
|
%
|
|||||||
April 1, 2016
|
|
$
|
6,024
|
|
|
$
|
3,557
|
|
|
$
|
96
|
|
|
$
|
1,598
|
|
|
$
|
2,388
|
|
|
$
|
32
|
|
|
$
|
13,695
|
|
(a)
|
The Company owns between 20% and 55% of the general partners or managing members of the real estate business, the activist business, the global macro strategy business (the single strategy hedge funds) and the alternative solutions business (starting as of September 2013).
|
(b)
|
These amounts include the Ramius Event Driven Equity Fund (which was liquidated in January 2016) and the Company's invested capital of approximately $163.4 million, $173.6 million and $172.2 million as of
April 1, 2016
, January 1, 2016 and January 1, 2015, respectively.
|
(c)
|
These amounts include the Company's invested capital of approximately $21.7 million, $20.2 million and $20.7 million as of
April 1, 2016
, January 1, 2016 and January 1, 2015, respectively.
|
(d)
|
This amount reflects committed capital.
|
(e)
|
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.
|
(f)
|
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.
|
(g)
|
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 4.94% of the total hedge fund assets under management.
|
(h)
|
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 0.11% of the total alternative solutions assets under management.
|
(i)
|
The Ramius Trading Strategies products offer investors daily liquidity.
|
(j)
|
The real estate business does not provide investors with redemption rights. Investors receive distributions upon dispositions of the underlying real estate investments of which a portion reflects committed capital.
|
(k)
|
The Healthcare Royalty funds do not provide investors with redemption rights. Investors receive distributions upon realizations of the funds’ investments.
|
(l)
|
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.
|
(m)
|
Due to the sale of its interest in Orchard Square Partners, effective December 31, 2014, redemptions during the 2014 year include $420.8 million of assets under management related to this business.
|
Strategy
|
Net Value
|
|
% of Stockholders' Equity
|
||
|
(dollars in millions)
|
|
|
||
Trading
|
$
|
434.0
|
|
|
55%
|
Merchant Banking
|
172.5
|
|
|
22%
|
|
Real Estate
|
59.7
|
|
|
8%
|
|
Total
|
666.2
|
|
|
85%
|
|
Stockholders' Equity
|
$
|
782.9
|
|
|
100%
|
|
Condensed Consolidated Statements of Operations
|
|||||||||||||
|
Three Months Ended March 31,
|
|
Period to Period
|
|||||||||||
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
Investment banking
|
$
|
26,147
|
|
|
$
|
65,233
|
|
|
$
|
(39,086
|
)
|
|
(60
|
)%
|
Brokerage
|
50,935
|
|
|
35,454
|
|
|
15,481
|
|
|
44
|
%
|
|||
Management fees
|
11,030
|
|
|
10,384
|
|
|
646
|
|
|
6
|
%
|
|||
Incentive income
|
1,111
|
|
|
2,372
|
|
|
(1,261
|
)
|
|
(53
|
)%
|
|||
Interest and dividends
|
3,653
|
|
|
3,083
|
|
|
570
|
|
|
18
|
%
|
|||
Reimbursement from affiliates
|
3,887
|
|
|
3,642
|
|
|
245
|
|
|
7
|
%
|
|||
Other revenues
|
2,725
|
|
|
668
|
|
|
2,057
|
|
|
308
|
%
|
|||
Consolidated Funds revenues
|
1,551
|
|
|
258
|
|
|
1,293
|
|
|
501
|
%
|
|||
Total revenues
|
101,039
|
|
|
121,094
|
|
|
(20,055
|
)
|
|
(17
|
)%
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Employee compensation and benefits
|
63,181
|
|
|
95,864
|
|
|
(32,683
|
)
|
|
(34
|
)%
|
|||
Interest and dividends
|
7,310
|
|
|
5,779
|
|
|
1,531
|
|
|
26
|
%
|
|||
General, administrative and other expenses
|
43,632
|
|
|
36,805
|
|
|
6,827
|
|
|
19
|
%
|
|||
Consolidated Funds expenses
|
1,816
|
|
|
358
|
|
|
1,458
|
|
|
407
|
%
|
|||
Total expenses
|
115,939
|
|
|
138,806
|
|
|
(22,867
|
)
|
|
(16
|
)%
|
|||
Other income (loss)
|
|
|
|
|
|
|
|
|||||||
Net gain (loss) on securities, derivatives and other investments
|
3,188
|
|
|
38,991
|
|
|
(35,803
|
)
|
|
(92
|
)%
|
|||
Consolidated Funds net gains (losses)
|
397
|
|
|
5,086
|
|
|
(4,689
|
)
|
|
(92
|
)%
|
|||
Total other income (loss)
|
3,585
|
|
|
44,077
|
|
|
(40,492
|
)
|
|
(92
|
)%
|
|||
Income (loss) before income taxes
|
(11,315
|
)
|
|
26,365
|
|
|
(37,680
|
)
|
|
(143
|
)%
|
|||
Income taxes expense (benefit)
|
(3,320
|
)
|
|
6,947
|
|
|
(10,267
|
)
|
|
(148
|
)%
|
|||
Net income (loss)
|
(7,995
|
)
|
|
19,418
|
|
|
(27,413
|
)
|
|
(141
|
)%
|
|||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
(4,297
|
)
|
|
2,720
|
|
|
(7,017
|
)
|
|
(258
|
)%
|
|||
Net income (loss) attributable to Cowen Group, Inc.
|
(3,698
|
)
|
|
16,698
|
|
|
(20,396
|
)
|
|
(122
|
)%
|
|||
Preferred stock dividends
|
1,698
|
|
|
—
|
|
|
1,698
|
|
|
NM
|
|
|||
Net income (loss) attributable to Cowen Group, Inc. common stockholders
|
$
|
(5,396
|
)
|
|
$
|
16,698
|
|
|
$
|
(22,094
|
)
|
|
(132
|
)%
|
|
Economic Income (Loss)
|
|||||||||||||||||||||||||||||
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||||||||||||||||||
|
2016
|
|
2015
|
|
Total
Period-to-Period
|
|||||||||||||||||||||||||
|
Alternative
Investment
|
|
|
|
Total
|
|
Alternative
Investment
|
|
|
|
Total
|
|
||||||||||||||||||
|
Broker-Dealer
|
|
Broker-Dealer
|
|
$ Change
|
|
% Change
|
|||||||||||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||||||||
Economic Income Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Investment banking
|
$
|
—
|
|
|
$
|
26,147
|
|
|
$
|
26,147
|
|
|
$
|
—
|
|
|
$
|
65,233
|
|
|
$
|
65,233
|
|
|
$
|
(39,086
|
)
|
|
(60
|
)%
|
Brokerage
|
—
|
|
|
52,867
|
|
|
52,867
|
|
|
18
|
|
|
35,505
|
|
|
35,523
|
|
|
17,344
|
|
|
49
|
%
|
|||||||
Management fees
|
16,128
|
|
|
775
|
|
|
16,903
|
|
|
16,607
|
|
|
—
|
|
|
16,607
|
|
|
296
|
|
|
2
|
%
|
|||||||
Incentive income (loss)
|
6,920
|
|
|
—
|
|
|
6,920
|
|
|
15,363
|
|
|
—
|
|
|
15,363
|
|
|
(8,443
|
)
|
|
(55
|
)%
|
|||||||
Investment income (loss)
|
1,395
|
|
|
455
|
|
|
1,850
|
|
|
21,830
|
|
|
7,050
|
|
|
28,880
|
|
|
(27,030
|
)
|
|
(94
|
)%
|
|||||||
Other income (loss)
|
682
|
|
|
271
|
|
|
953
|
|
|
21
|
|
|
48
|
|
|
69
|
|
|
884
|
|
|
1,281
|
%
|
|||||||
Total economic income revenues
|
25,125
|
|
|
80,515
|
|
|
105,640
|
|
|
53,839
|
|
|
107,836
|
|
|
161,675
|
|
|
(56,035
|
)
|
|
(35
|
)%
|
|||||||
Non-interest expenses
|
20,261
|
|
|
83,761
|
|
|
104,022
|
|
|
34,834
|
|
|
96,329
|
|
|
131,163
|
|
|
(27,141
|
)
|
|
(21
|
)%
|
|||||||
Interest expense
|
3,183
|
|
|
1,090
|
|
|
4,273
|
|
|
3,044
|
|
|
978
|
|
|
4,022
|
|
|
251
|
|
|
6
|
%
|
|||||||
Non-controlling interest
|
(2,227
|
)
|
|
—
|
|
|
(2,227
|
)
|
|
(2,845
|
)
|
|
—
|
|
|
(2,845
|
)
|
|
618
|
|
|
(22
|
)%
|
|||||||
Economic income (loss)
|
$
|
(546
|
)
|
|
$
|
(4,336
|
)
|
|
$
|
(4,882
|
)
|
|
$
|
13,116
|
|
|
$
|
10,529
|
|
|
$
|
23,645
|
|
|
$
|
(28,527
|
)
|
|
(121
|
)%
|
|
Three Months Ended March 31,
|
|
Period-to-Period
|
|||||||||||
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Non-compensation expenses—fixed:
|
|
|
|
|
|
|
|
|||||||
Communications
|
$
|
4,137
|
|
|
$
|
3,641
|
|
|
$
|
496
|
|
|
14
|
%
|
Professional, advisory and other fees
|
4,324
|
|
|
3,986
|
|
|
338
|
|
|
8
|
%
|
|||
Occupancy and equipment
|
7,220
|
|
|
6,359
|
|
|
861
|
|
|
14
|
%
|
|||
Depreciation and amortization
|
2,838
|
|
|
2,135
|
|
|
703
|
|
|
33
|
%
|
|||
Service fees
|
2,160
|
|
|
1,878
|
|
|
282
|
|
|
15
|
%
|
|||
Expenses from equity investments
|
3,719
|
|
|
4,130
|
|
|
(411
|
)
|
|
(10
|
)%
|
|||
Other
|
2,850
|
|
|
2,900
|
|
|
(50
|
)
|
|
(2
|
)%
|
|||
Total
|
$
|
27,248
|
|
|
$
|
25,029
|
|
|
$
|
2,219
|
|
|
9
|
%
|
•
|
pay our operating expenses, primarily consisting of compensation and benefits, interest on debt and other general and administrative expenses; and
|
•
|
provide capital to facilitate the growth of our existing business.
|
Location
|
|
Amount
|
|
Maturity
|
||
|
|
(dollars in thousands)
|
|
|
||
New York
|
|
$
|
355
|
|
|
May 2016
|
New York
|
|
$
|
1,861
|
|
|
May 2016
|
New York
|
|
$
|
794
|
|
|
October 2016
|
New York
|
|
$
|
3,373
|
|
|
October 2016
|
New York
|
|
$
|
1,600
|
|
|
November 2016
|
San Francisco
|
|
$
|
710
|
|
|
January 2017
|
New York
|
|
$
|
65
|
|
|
January 2017
|
New York
|
|
$
|
1,000
|
|
|
February 2017
|
Boston
|
|
$
|
382
|
|
|
March 2017
|
|
Total
|
|
< 1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years |
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Equipment Leases, Service Payments and Facility Leases
|
|
|
|
|
|
|
|
|
|
||||||||||
Real Estate
|
$
|
107,159
|
|
|
$
|
13,971
|
|
|
$
|
46,124
|
|
|
$
|
29,913
|
|
|
$
|
17,151
|
|
Service Payments
|
28,503
|
|
|
13,198
|
|
|
15,305
|
|
|
—
|
|
|
—
|
|
|||||
Equipment leases
|
2,945
|
|
|
865
|
|
|
2,080
|
|
|
—
|
|
|
|
|
|||||
Aircraft
|
4,200
|
|
|
945
|
|
|
3,255
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
142,807
|
|
|
28,979
|
|
|
66,764
|
|
|
29,913
|
|
|
17,151
|
|
|||||
Debt
|
|
|
|
|
|
|
|
|
|
||||||||||
Convertible Debt
|
162,956
|
|
|
2,243
|
|
|
160,713
|
|
|
—
|
|
|
—
|
|
|||||
Note Payable
|
93,254
|
|
|
3,914
|
|
|
15,654
|
|
|
10,436
|
|
|
63,250
|
|
|||||
Other Notes Payable
|
1,718
|
|
|
1,718
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Revolver
|
25,000
|
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
282,928
|
|
|
$
|
32,875
|
|
|
$
|
176,367
|
|
|
$
|
10,436
|
|
|
$
|
63,250
|
|
|
Convertible Debt
|
|
Note Payable
|
|
Revolver
|
|
Other Note Payable
|
|
Capital Lease
Obligation |
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
2016
|
$
|
2,243
|
|
|
$
|
3,914
|
|
|
$
|
25,000
|
|
|
$
|
1,718
|
|
|
$
|
704
|
|
2017
|
4,485
|
|
|
5,218
|
|
|
—
|
|
|
—
|
|
|
938
|
|
|||||
2018
|
4,485
|
|
|
5,218
|
|
|
—
|
|
|
—
|
|
|
938
|
|
|||||
2019
|
151,743
|
|
|
5,218
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|||||
2020
|
—
|
|
|
5,218
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Thereafter
|
—
|
|
|
68,468
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Subtotal
|
162,956
|
|
|
93,254
|
|
|
25,000
|
|
|
1,718
|
|
|
2,658
|
|
|||||
Less: Amount representing interest (a)
|
(38,705
|
)
|
|
(32,318
|
)
|
|
—
|
|
|
(23
|
)
|
|
(208
|
)
|
|||||
Total
|
$
|
124,251
|
|
|
$
|
60,936
|
|
|
$
|
25,000
|
|
|
$
|
1,695
|
|
|
$
|
2,450
|
|
(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.
|
i.
|
Portfolio funds
—
Portfolio funds (“Portfolio Funds”) include interests in funds and investment companies which may be 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.
In accordance with US GAAP, investments which are valued using NAV per share as a practical expedient are not categorized within the fair value hierarchy.
|
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 or notional trading level. Management fees are generally calculated monthly based on assets under management at the end of each month before incentive income
.
|
•
|
Registered Funds.
Management fees for the Company’s registered funds (State Street/Ramius Managed Futures Strategy Fund and Ramius Archview Credit and Distressed Fund) are generally charged at an annual rate of up to
1.50%
of assets under management
.
|
•
|
Alternative Solutions.
Management fees for the Alternative Solutions business are generally charged at an annual rate of up to
2%
of assets under management or notional trading level. 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
0.25%
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 accompanying 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 and managed accounts 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 the net asset value of the funds or managed accounts or the aggregate cost basis of the unrealized investments held by the funds. 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
0.5%
.
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 fees 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. 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 restructuring 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
(which may be in cash and/or securities)
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.
|
•
|
Principal Transactions.
Principal transactions 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. In certain cases, the Company provides liquidity to clients by 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.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||||
|
|
|
|
|
|
|
|
|
|||||
Month 1 (January 1, 2016 – January 31, 2016)
|
|
|
|
|
|
|
|
|
|||||
Common stock repurchases(1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
18,019,322
|
|
Employee transactions(2)
|
|
3,551
|
|
|
$
|
4.57
|
|
|
—
|
|
|
—
|
|
Total
|
|
3,551
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|||||
Month 2 (February 1, 2016 – February 29, 2016)
|
|
|
|
|
|
|
|
|
|||||
Common stock repurchases(1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
25,000,000
|
|
Employee transactions(2)
|
|
23,664
|
|
|
$
|
3.23
|
|
|
—
|
|
|
—
|
|
Total
|
|
23,664
|
|
|
$
|
3.23
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|||||
Month 3 (March 1, 2016 – March 31, 2016)
|
|
|
|
|
|
|
|
|
|||||
Common stock repurchases(1)
|
|
998,119
|
|
|
$
|
3.58
|
|
|
—
|
|
|
21,429,975
|
|
Employee transactions(2)
|
|
1,097,461
|
|
|
$
|
3.57
|
|
|
—
|
|
|
—
|
|
Total
|
|
2,095,580
|
|
|
$
|
3.57
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|||||
Total (January 1, 2016 – March 31, 2016)
|
|
|
|
|
|
|
|
|
|||||
Common stock repurchases(1)
|
|
998,119
|
|
|
$
|
3.58
|
|
|
—
|
|
|
21,429,975
|
|
Employee transactions(2)
|
|
1,124,676
|
|
|
$
|
3.57
|
|
|
—
|
|
|
—
|
|
Total
|
|
2,122,795
|
|
|
$
|
3.57
|
|
|
—
|
|
|
|
(1)
|
The Company's Board of Directors have authorized the repurchase, subject to market conditions, of up to
$138.3 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 (principal executive officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ STEPHEN A. LASOTA
|
|
|
|
|
|
Name:
|
Stephen A. Lasota
|
|
|
Date:
|
May 2, 2016
|
|
Title:
|
Chief Financial Officer (principal financial officer and principal accounting officer)
|
|
Exhibit No.
|
|
Description
|
|
10.1
|
|
|
Form of Performance Shares Award Agreement (filed herewith).*
|
31.1
|
|
|
Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (filed herewith).
|
31.2
|
|
|
Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (filed herewith).
|
32
|
|
|
Certification of CEO and CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (furnished herewith).
|
101.INS
|
|
|
XBRL INSTANCE DOCUMENT
|
101.SCH
|
|
|
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
|
101.CAL
|
|
|
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT
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101.DEF
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XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT
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101.LAB
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XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT
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101.PRE
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XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT
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*
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Signifies management contract or compensatory plan or arrangement.
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(i)
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With respect to each Performance Period, as of the applicable Vesting Date, the Target RSUs shall be multiplied by an applicable percentage (the “
Payout Rate
”) based on the Company’s AROE (as defined in Section 2.1) with respect to such Performance Period (such number, the “
Preliminary RSUs
”).
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Performance Level*
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AROE
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Payout Rate
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Below Threshold
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Below 5%
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0% payout
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Threshold
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5%
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50% payout
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Above Threshold
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7.5%
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75% payout
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Target
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10%
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100% payout
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Maximum (capped)
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12%
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150% payout
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(ii)
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The number of Attained RSUs shall be equal to the product of (A) the Preliminary RSUs and (B) the applicable Modifier indicated in the table below determined based on the Company’s TSR (as defined in Section 2.1) during such Performance Period versus the TSR of the companies comprising the S&P SmallCap 600 Financial Sector Index (the “Index”) as of the first day of each Performance Period for the same period:
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Relative TSR Position
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Modifier
*
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25
th
percentile and below
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0.8
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50
th
percentile
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1.0
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75
th
percentile and above
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1.2
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(iii)
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The companies comprising the Index may be changed with respect to any Performance Period as follows:
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(1)
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In the event of a merger, acquisition or business combination transaction of a company included in the Index (an “Index Company”) with or by another Index Company, the surviving entity shall remain a company included in the Index and the company that did not survive will be excluded from the Index.
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(2)
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In the event of a merger of an Index Company with an entity that is not a company included in the Index (a “Non-Index Company”), or the acquisition or business combination transaction by or with an Index Company, or with a Non-Index Company, in each case where the Index Company is the surviving entity and remains publicly traded, the surviving entity shall remain a company included in the Index.
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(3)
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In the event of a merger or acquisition or business combination transaction of an Index Company, by or with a Non-Index Company, a “going private” transaction involving an Index Company or the liquidation of an Index Company, where the Index Company is not the surviving entity or is otherwise no longer publicly traded, the company will be excluded from the Index.
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(4)
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In the event of a bankruptcy of an Index Company, such company shall remain included in the Index and will have an assigned TSR of -100%.
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(5)
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In the event of a stock distribution from an Index Company consisting of the shares of a new publicly-traded company (a “spin-off”), if, following such stock distribution, the company making the distribution remains in the Index, then such company shall remain included in the Index and the stock distribution shall be treated as a dividend from the Index Company based on the closing price of the shares of the spun-off company on its first day of trading. The performance of the shares of the spun-off company shall not thereafter be tracked for purposes of calculating TSR. If, following such stock distribution, the company making the distribution is no longer included in the Index, then such company and the related stock distribution shall not thereafter be tracked for purposes of calculating TSR.
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(6)
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Companies that are added to the Index after the beginning of the applicable Performance Period will not be tracked for purposes of calculating TSR for the Index. Companies that are removed from the Index after the beginning of the applicable Performance Period will nonetheless continue to be considered companies included in the Index for purposes of calculating TSR.
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1.
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I have reviewed this
Quarterly
Report on Form
10-Q
of Cowen Group, Inc:
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2.
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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;
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3.
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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;
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4.
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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.
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Date:
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May 2, 2016
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/s/ PETER A. COHEN
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Name: Peter A. Cohen
Title:
Chief Executive Officer
(principal executive officer)
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1.
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I have reviewed this
Quarterly
Report on Form
10-Q
of Cowen Group, Inc:
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2.
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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;
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3.
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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;
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4.
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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a)
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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
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b)
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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.
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Date:
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May 2, 2016
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/s/ STEPHEN A. LASOTA
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Name: Stephen A. Lasota
Title: Chief Financial Officer (principal financial officer and principal accounting officer) |
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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May 2, 2016
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/s/ PETER A. COHEN
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Name: Peter A. Cohen
Title: Chief Executive Officer (principal executive officer) |
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/s/ STEPHEN A. LASOTA
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Name: Stephen A. Lasota
Title: Chief Financial Officer (principal financial officer and principal accounting officer) |
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