10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,  D.C.20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2013

OR

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-32026

INSTITUTIONAL FINANCIAL MARKETS, INC.

(Exact name of registrant as specified in its charter)

Maryland	16-1685692
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
Cira Centre 2929 Arch Street, 17th Floor Philadelphia,  Pennsylvania	19104
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (215) 701-9555

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x    Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

As of October 29, 2013, there were 14,959,809 shares of common stock ($0.001 par value per share) of Institutional Financial Markets, Inc. outstanding.

INSTITUTIONAL FINANCIAL MARKETS, INC.

FORM 10-Q

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2013

		Page
PARTI. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	5
	Consolidated Balance Sheets—September 30, 2013 and December 31, 2012	5
	Consolidated Statements of Operations and Comprehensive Income (Loss)—Three and Nine Months Ended September 30, 2013 and 2012	6
	Consolidated Statements of Changes in Equity—Nine Months Ended September 30, 2013	7
	Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2013 and 2012	8
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	81
Item 4.	Controls and Procedures	83
Part II. OTHER INFORMATION
Item 1.	Legal Proceedings	84
Item 1A.	Risk Factors	84
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	84
Item 6.	Exhibits	86
Signatures		87

2

Forward Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

While we cannot predict all of the risks and uncertainties, they include, but are not limited to, those described in “Item 1A—Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Quarterly Report on Form 10-Q and include information concerning possible or assumed future results of our operations, including statements about the following subjects:

•benefits, results, cost reductions and synergies resulting from the Company’s business combinations;

•  integration of operations;

•business strategies;

•  growth opportunities;

•competitive position;

•  market outlook;

•expected financial position;

•  expected results of operations;

•future cash flows;

•  financing plans;

•plans and objectives of management;

•  tax treatment of business combinations;

•the Company’s planned consolidation of two of its broker-dealer subsidiaries;

•fair value of assets; and

•  any other statements regarding future growth, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You should consider the areas of risk and uncertainty described above and discussed under “Item 1A—Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

3

Certain Terms Used in this Quarterly Report on Form 10-Q

In this Quarterly Report on Form 10-Q, unless otherwise noted or as the context otherwise requires: “IFMI” refers to Institutional Financial Markets, Inc., a Maryland corporation. The “Company,” “we,” “us,” and “our” refer to IFMI and its subsidiaries on a consolidated basis; “IFMI, LLC” (formerly Cohen Brothers, LLC) or the “Operating LLC” refer to IFMI, LLC, the main operating subsidiary of the Company; “Cohen Brothers” refers to the pre-merger Cohen Brothers, LLC and its subsidiaries; “AFN” refers to the pre-merger Alesco Financial Inc. and its subsidiaries; “Merger Agreement” refers to the Agreement and Plan of Merger among AFN Alesco Financial Holdings, LLC, a wholly owned subsidiary of AFN, which we refer to as the “Merger Sub,” and Cohen Brothers, dated as of February 20, 2009 and amended on June 1, 2009, August 20, 2009, and September 30, 2009; “Merger” refers to the December 16, 2009 closing of the merger of Merger Sub with and into Cohen Brothers pursuant to the terms of the Merger Agreement, which resulted in Cohen Brothers becoming a majority owned subsidiary of the Company. When the term, “IFMI” is used, it is referring to the parent company itself, Institutional Financial Markets, Inc. “JVB Holdings” refers to JVB Holdings, L.L.C.; “JVB” refers to JVB Financial Group, LLC, a broker dealer subsidiary; “CCFL” refers to Cohen & Company Financial Limited (formerly known as EuroDekania Management LTD), a subsidiary regulated by the Financial Conduct Authority (formerly known as the Financial Services Authority) in the United Kingdom; “CCPRH” refers to C&Co/PrinceRidge Holdings LP (formerly known as PrinceRidge Holdings LP) and its subsidiaries; “PrinceRidge GP” refers to C&Co/PrinceRidge Partners LLC (formerly known as PrinceRidge Partners LLC); “PrinceRidge” refers to CCPRH together with PrinceRidge GP; and “CCPR” refers to C&Co/PrinceRidge LLC (formerly known as The PrinceRidge Group LLC), a broker dealer subsidiary.

“Securities Act” refers to the Securities Act of 1933, as amended; and “Exchange Act” refers to the Securities Exchange Act of 1934, as amended. In accordance with accounting principles generally accepted in the United States of America, or “U.S. GAAP,” the Merger was accounted for as a reverse acquisition, Cohen Brothers was deemed to be the accounting acquirer and all of AFN’s assets and liabilities were required to be revalued at fair value as of the acquisition date. Therefore, any financial information reported herein prior to the Merger is the historical financial information of Cohen Brothers. As used throughout this filing, the terms, the “Company,” “we,” “us,” and “our” refer to the operations of Cohen Brothers and its consolidated subsidiaries prior to December 17, 2009 and the combined operations of the merged company and its consolidated subsidiaries from December 17, 2009 forward. AFN refers to the historical operations of Alesco Financial Inc. through to December 16, 2009, the date of the Merger, or the “Merger Date.”

4

PART I. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

INSTITUTIONAL FINANCIAL MARKETS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

	September 30, 2013
	(unaudited)		December 31, 2012
Assets
Cash and cash equivalents	$	22,313	$	14,500
Receivables from brokers, dealers and clearing agencies		15,481		12,253
Due from related parties		923		452
Other receivables		3,561		8,488
Investments-trading		85,582		176,139
Other investments, at fair value		29,008		38,323
Receivables under resale agreements		94,867		70,110
Goodwill		11,113		11,113
Other assets		11,098		9,623
Total assets	$	273,946	$	341,001
Liabilities
Payables to brokers, dealers and clearing agencies	$	5,406	$	96,211
Accounts payable and other liabilities		6,201		13,080
Accrued compensation		5,117		8,203
Trading securities sold, not yet purchased		53,332		44,167
Securities sold under agreement to repurchase		94,856		70,273
Deferred income taxes		6,306		6,603
Debt		34,590		25,847
Total liabilities		205,808		264,384
Commitments and contingencies (See Note 17)
Temporary Equity:
Redeemable non-controlling interest		535		829
Permanent Equity:
Preferred Stock, $0.001 par value per share, 50,000,000 shares authorized: Voting Non-Convertible Preferred Stock, $0.001 par value per share, 4,983,557 shares authorized, 4,983,557 shares issued and outstanding		5		5
Common Stock, $0.001 par value per share, 100,000,000 shares authorized, 14,961,637 and 11,552,551 shares issued and outstanding, respectively, including 669,304 and 757,826 unvested restricted share awards, respectively		14		11
Additional paid-in capital		73,749		64,829
Accumulated other comprehensive loss		(675)		(495)
Accumulated deficit		(17,433)		(7,370)
Total stockholders' equity		55,660		56,980
Non-controlling interest		11,943		18,808
Total permanent equity		67,603		75,788
Total liabilities and equity	$	273,946	$	341,001

                                              See accompanying notes to unaudited consolidated financial statements.

5

INSTITUTIONAL FINANCIAL MARKETS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS)

(Dollars in Thousands, except share or per share information)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Revenues
Net trading	$	7,824	$	13,669	$	32,513	$	51,311
Asset management		4,644		8,465		13,561		18,010
New issue and advisory		3,692		1,758		5,259		3,024
Principal transactions and other income		1,926		4,174		(5,487)		(482)
Total revenues		18,086		28,066		45,846		71,863
Operating expenses
Compensation and benefits		11,529		16,484		37,547		49,811
Business development, occupancy, equipment		1,429		1,520		4,271		3,970
Subscriptions, clearing, and execution		2,495		2,602		7,161		8,574
Professional fee and other operating		3,436		4,015		9,971		9,702
Depreciation and amortization		367		289		1,036		1,023
Total operating expenses		19,256		24,910		59,986		73,080
Operating income / (loss)		(1,170)		3,156		(14,140)		(1,217)
Non-operating income / (expense)
Interest expense, net		(1,047)		(868)		(3,111)		(3,187)
Other income / (expense)		-		83		-		(4,271)
Income / (loss) from equity method affiliates		101		647		1,715		2,689
Income / (loss) before income tax expense / (benefit)		(2,116)		3,018		(15,536)		(5,986)
Income tax expense / (benefit)		(1,807)		54		(1,761)		108
Net income / (loss)		(309)		2,964		(13,775)		(6,094)
Less: Net / (loss) income attributable to the non-controlling interest		(205)		956		(4,469)		(2,165)
Net income / (loss) attributable to IFMI	$	(104)	$	2,008	$	(9,306)	$	(3,929)
Income / (loss) per share data (see Note 16):
Basic Income / (loss) per common share	$	(0.01)	$	0.19	$	(0.80)	$	(0.37)
Weighted average shares outstanding-basic		11,875,950		10,849,220		11,628,392		10,683,076
Income / (loss) per common share-diluted:
Diluted Income / (loss) per common share	$	(0.01)	$	0.18	$	(0.80)	$	(0.37)
Weighted average shares outstanding-diluted		17,200,040		16,176,898		16,952,482		15,935,078
Dividends declared per common share	$	0.02	$	0.02	$	0.06	$	0.06
Comprehensive income / (loss):
Net income / (loss) (from above)	$	(309)	$	2,964	$	(13,775)	$	(6,094)
Other comprehensive income / (loss) item:
Foreign currency translation adjustments, net of tax of $0		273		237		(87)		197
Other comprehensive income / (loss), net of tax of $0		273		237		(87)		197
Comprehensive income / (loss)		(36)		3,201		(13,862)		(5,897)
Less: comprehensive income / (loss) attributable to the non-controlling interest		(121)		1,033		(4,500)		(2,118)
Comprehensive income / (loss) attributable to IFMI	$	85	$	2,168	$	(9,362)	$	(3,779)

                                          See accompanying notes to unaudited consolidated financial statements.

6

INSTITUTIONAL FINANCIAL MARKETS, INC.

Consolidated Statement of Changes in Equity

(Dollars in Thousands)

(Unaudited)

	Institutional Financial Markets, Inc.
			Preferred Stock $ Amount		Common Stock $ Amount	Additional Paid-In Capital			Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive Income / (Loss)		Total Stockholders' Equity		Non-controlling Interest		Total Permanent Equity		Redeemable Non-controlling Interest (Temporary Equity)
December 31, 2012		$	5	$	11	$	64,829	$	(7,370)	$	(495)	$	56,980	$	18,808	$	75,788	$	829
Net loss			-		-		-		(9,306)		-		(9,306)		(4,461)		(13,767)		(8)
Other comprehensive income/ (loss) (1)			-		-		-		-		(56)		(56)		(31)		(87)		-
Acquisition / (surrender) of additional units of consolidated subsidiary, net			-		-		2,705		-		(124)		2,581		(2,581)		-		-
Shares issued in connection with private placement, net			-		2		5,071		-		-		5,073		-		5,073		-
Equity-based compensation and vesting of shares			-		1		1,186		-		-		1,187		544		1,731		31
Shares withheld for employee taxes			-		-		(42)		-		-		(42)		(18)		(60)		-
Purchase of non-controlling interest			-		-		-		-		-		-		-		-		(317)
Dividends/Distributions			-		-		-		(757)		-		(757)		(318)		(1,075)		-
September 30, 2013		$	5	$	14	$	73,749	$	(17,433)	$	(675)	$	55,660	$	11,943	$	67,603	$	535

(1) Represents foreign currency translation adjustment. There were no amounts reclassified from accumulated other comprehensive income / (loss).

See accompanying notes to unaudited consolidated financial statements.

7

INSTITUTIONAL FINANCIAL MARKETS, INC.

Consolidated Statements of Cash Flows

(Dollars in Thousands)

(Unaudited)

	Nine Months Ended September 30,
	2013		2012
Operating activities
Net income (loss)	$	(13,775)	$	(6,094)
Adjustments to reconcile net income / (loss) to net cash provided by (used in) operating activities:
Other (income) / expense		-		(86)
Equity-based compensation		1,761		434
Realized loss / (gain) on other investments		(602)		(1,407)
Change in unrealized (gain) loss on other investments, at fair value		9,316		3,245
Depreciation and amortization		1,036		1,023
(Income) / loss from equity method affiliates		(1,715)		(2,689)
Change in operating assets and liabilities, net:
(Increase) decrease in other receivables		3,675		(1,310)
(Increase) decrease in investments-trading		90,557		(80,308)
(Increase) decrease in other assets		(1,216)		142
(Increase) decrease in receivables under resale agreement		(24,757)		(23,061)
Change in receivables from / payables to related parties, net		(213)		(18)
Increase (decrease) in accrued compensation		(3,091)		1,396
Increase (decrease) in accounts payable and other liabilities		(6,181)		(2,251)
Increase (decrease) in trading securities sold, not yet purchased, net		9,165		(43,813)
Change in receivables from/ payables to brokers, dealers, and clearing agencies, net		(94,032)		145,756
Increase (decrease) in securities sold under agreement to repurchase		24,583		18,303
Increase (decrease) in deferred income taxes		(297)		414
Net cash provided by (used in) operating activities		(5,786)		9,676
Investing activities
Cash acquired from acquisition of Star Asia Manager, net		679		-
Purchase of other investments, at fair value		(1,064)		(290)
Sales and returns of principal of other investments, at fair value		1,666		48
Sales of cost method investment		-		1,937
Investment in equity method affiliates		(10)		(4,706)
Return from equity method affiliates		2,888		7,325
Purchase of furniture, equipment, and leasehold improvements		(726)		(101)
Net cash provided by (used in) investing activities		3,433		4,213
Financing activities
Proceeds from issuance of convertible debt		8,248		-
Repayment and repurchase of debt		(907)		(11,446)
Payments for deferred issuance and financing costs		(638)		-
Proceeds from private placement, net of offering costs of $425		5,073		-
Cash used to net share settle equity awards		(60)		(3)
PrinceRidge non-controlling interest redemptions, net		(317)		(6,152)
PrinceRidge mandatorily redeemable equity interest repayments		(86)		(790)
IFMI non-controlling interest distributions		(318)		(315)
IFMI dividends		(737)		(646)
Net cash provided by (used in) financing activities		10,258		(19,352)
Effect of exchange rate on cash		(92)		118
Net increase (decrease) in cash and cash equivalents		7,813		(5,345)
Cash and cash equivalents, beginning of period		14,500		18,221
Cash and cash equivalents, end of period	$	22,313	$	12,876

See accompanying notes to unaudited consolidated financial statements.

8

INSTITUTIONAL FINANCIAL MARKETS, INC.

Notes to Consolidated Financial Statements

(Dollars in Thousands, except share or per share information)

(Unaudited)

1. ORGANIZATION AND NATURE OF OPERATIONS

The Formation Transaction

Cohen Brothers was formed on October 7, 2004 by Cohen Bros. Financial, LLC (“CBF”). Cohen Brothers was established to acquire the net assets of CBF’s subsidiaries (the “Formation Transaction”): Cohen Bros. & Company, Inc.; Cohen Frères SAS; Dekania Investors, LLC; Emporia Capital Management, LLC; and the majority interest in Cohen Bros. & Tororian Investment Management, Inc. The Formation Transaction was accomplished through a series of transactions occurring between March 4, 2005 and May 31, 2005.

The Company

From its formation until December 16, 2009, Cohen Brothers operated as a privately owned limited liability company. On December 16, 2009, Cohen Brothers completed its merger (the “Merger”) with a subsidiary of Alesco Financial Inc. (“AFN”) a publicly traded real estate investment trust.

As a result of the Merger, AFN contributed substantially all of its assets into Cohen Brothers in exchange for newly issued membership units directly from Cohen Brothers. In addition, AFN received additional Cohen Brothers membership interests directly from its members in exchange for AFN common stock. In accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), the Merger was accounted for as a reverse acquisition, and Cohen Brothers was deemed to be the accounting acquirer. As a result, all of AFN’s assets and liabilities were required to be revalued at fair value as of the acquisition date. The remaining membership interests of Cohen Brothers that are not held by AFN are included as a component of non-controlling interest in the consolidated balance sheet.

Subsequent to the Merger, AFN was renamed Cohen & Company Inc. In January 2011, it was renamed again as Institutional Financial Markets, Inc. (“IFMI”). Effective January 1, 2010, the Company ceased to qualify as a real estate investment trust, or a REIT. The Company trades on the NYSE MKT LLC (formerly known as the NYSE Amex LLC) under the ticker symbol “IFMI.” The Company is a financial services company specializing in credit related fixed income investments. As of September 30, 2013, the Company had $5.7 billion in assets under management (“AUM”) of which 94% or $5.4 billion, was in collateralized debt obligations (“CDOs”).

In these financial statements, the “Company” refers to IFMI and its subsidiaries on a consolidated basis; “IFMI, LLC” (formerly Cohen Brothers, LLC) or the “Operating LLC” refers to the main operating subsidiary of the Company; “Cohen Brothers” refers to the pre-Merger Cohen Brothers, LLC and its subsidiaries; “AFN” refers to the pre-merger Alesco Financial Inc. and its subsidiaries. When the term “IFMI” is used, it is referring to the parent company itself, Institutional Financial Markets, Inc. “JVB Holdings” refers to JVB Financial Holdings, L.L.C.; “JVB” refers to JVB Financial Group LLC, a broker dealer subsidiary; “CCFL” refers to Cohen & Company Financial Limited (formerly known as EuroDekania Management LTD), a subsidiary regulated by the Financial Conduct Authority (formerly known as Financial Services Authority) in the United Kingdom; “CCPRH” refers to C&Co/PrinceRidge Holdings LP (formerly known as PrinceRidge Holdings LP) and its subsidiaries; “PrinceRidge GP” refers to C&Co/PrinceRidge Partners LLC, (formerly known as PrinceRidge Partners LLC). “PrinceRidge” refers to CCPRH together with PrinceRidge GP; and “CCPR” refers to C&Co/PrinceRidge LLC (formerly known as The PrinceRidge Group LLC), a broker dealer subsidiary.

The Company’s business is organized into the following three business segments:

Capital Markets: The Company’s Capital Markets business segment consists primarily of credit-related fixed income securities sales, trading, and financing, as well as new issue placements in corporate and securitized products and advisory services. The Company’s fixed income sales and trading group provides trade execution to corporate investors, institutional investors and other smaller broker-dealers. The Company specializes in a variety of products, including but not limited to: corporate bonds and loans, asset backed securities (“ABS”), mortgage backed securities (“MBS”), commercial mortgage backed securities (“CMBS”), residential mortgage backed securities (“RMBS”), CDOs, collateralized loan obligations (“CLOs”), collateralized bond obligations (“CBOs”), collateralized mortgage obligations (“CMOs”), municipal securities, to-be-announced securities (“TBAs”) contracts, Small Business Administration (“SBA”) loans, U.S. government bonds, U.S. government agency securities, brokered deposits and CDs for small banks, hybrid capital of financial institutions including trust preferred securities (“TruPS”), whole loans, and other structured financial instruments. The Company also offers execution and brokerage services for equity products. The Company had offered execution and brokerage services for equity derivative products until December 31, 2012 when the Company sold its equity derivatives brokerage business to a new entity owned by two of the Company’s former employees. See note 5 to the Company’s consolidated financial

9

statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended. The Company carries out its capital market activities primarily through its subsidiaries: JVB and PrinceRidge in the United States, and CCFL in Europe.  

Asset Management: The Company’s Asset Management business segment manages assets within CDOs, permanent capital vehicles, managed accounts, and investment funds (collectively referred to as “Investment Vehicles”). A CDO is a form of secured borrowing. The borrowing is secured by different types of fixed income assets such as corporate or mortgage loans or bonds. The borrowing is in the form of a securitization, which means that the lenders are actually investing in notes backed by the assets. In the event of default, the lenders will have recourse only to the assets securing the loan. The Company’s Asset Management business segment includes its fee-based asset management operations which include ongoing base and incentive management fees.

Principal Investing: The Company’s Principal Investing business segment is comprised primarily of its investments in certain Investment Vehicles it manages, as well as investments in structured products, and the related gains and losses that they generate.

The Company generates its revenue by business segment primarily through the following activities:

Capital Markets:

•  trading activities of the Company, which include execution and brokerage services, securities lending activities, riskless trading activities as well as gains and losses (unrealized and realized) and income and expense earned on securities classified as trading;

•new issue and advisory revenue comprised primarily of (i) origination fees for corporate debt issues originated by the Company; (ii) revenue from advisory services; and (iii) new issue revenue associated with arranging and placing the issuance of newly created debt, equity, and hybrid financial instruments;

Asset Management:

•  asset management fees for the Company’s on-going asset management services provided to certain Investment Vehicles, which may include fees both senior and subordinate to the securities in the Investment Vehicle; and incentive management fees earned based on the performance of the various Investment Vehicles;

•  income or loss from equity method affiliates;

Principal Investing:

•gains and losses (unrealized and realized) and income and expense earned on securities (primarily on investments in Investment Vehicles the Company manages) classified as other investments, at fair value; and

•  income or loss from equity method affiliates.

2. BASIS OF PRESENTATION

The financial statements of the Company included herein were prepared in conformity with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim months periods. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2013 and 2012 are not necessarily indicative of the results for the entire year or any subsequent interim period. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended.  

Capitalized terms used herein without definition have the meanings ascribed to them in the Annual Report on Form 10-K for the year ended December 31, 2012, as amended.  

Certain prior period amounts have been reclassified to conform to the current period presentation.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Adoption of New Accounting Standards

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”), which requires companies to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on a company’s financial position. The amendments require enhanced disclosures by requiring improved information about financial statements and derivative instruments that are either (1) offset in accordance with current literature, or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with current literature. ASU 2011-11 is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013, and interim periods within those annual periods. In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (“ASU 2013-01”),  which clarifies that the scope of the intended disclosures required by ASU 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. ASU 2013-01 is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. An entity is required to provide the disclosures retrospectively for all comparative periods presented. The Company’s adoption of the provisions of ASU 2011-11 and ASU 2013-01 effective January 1, 2013 did not have an effect on the Company’s consolidated financial position, results of operations, or cash flows since the repurchase agreements, receivables under resale agreements and derivatives that it holds are not subject to an enforceable master netting arrangement or similar agreement.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles — Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”), which provides an option for companies to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If a company concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the company is not required to take further action. However, if a company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Subtopic 350-30. A company also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative assessment in any subsequent period. The Company’s adoption of the provisions of ASU 2012-02 effective January 1, 2013 did not have an effect on the Company’s consolidated financial position, results of operations, or cash flows.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”), which includes amendments that require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. Early adoption was permitted. Since ASU 2013-02 only impacts disclosures, the Company’s adoption of the provisions of ASU 2013-02 effective January 1, 2013 did not have an effect on the Company’s consolidated financial position, results of operations, or cash flows.

B. Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments. These determinations were based on available market information and appropriate valuation methodologies. Considerable judgment is required to interpret market data to develop the estimates and, therefore, these estimates may not necessarily be indicative of the amount the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Refer to note 7 for a discussion of the fair value hierarchy with respect to investments-trading, other investments, at fair value and the derivatives held by the Company.

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Cash and cash equivalents: Cash is carried at historical cost, which is assumed to approximate fair value. The estimated fair value measurement of cash and cash equivalents is classified within level 1 of the valuation hierarchy.

Investments-trading: These amounts are carried at fair value. The fair value is based on either quoted market prices of an active exchange, independent broker market quotations, market price quotations from third party pricing services, or valuation models when quotations are not available. See note 7 for disclosures about the categorization of the fair value measurements of investments-trading within the three level fair value hierarchy.

Other investments, at fair value: These amounts are carried at fair value. The fair value is based on quoted market prices of an active exchange, independent broker market quotations, or valuation models when quotations are not available. In the case of investments in alternative investment funds, fair value is generally based on the reported net asset value of the underlying fund. See note 7 for disclosures concerning the categorization of the fair value measurements of other investments, at fair value within the three level fair value hierarchy.

Receivables under resale agreements: Receivables under resale agreements are carried at their contracted resale price, have short-term maturities, and are repriced frequently or bear market interest rates and, accordingly, these contracts are at amounts that approximate fair value. The estimated fair value measurements of receivables under resale agreements are based on observations of actual market activity and are generally classified within level 2 of the fair value hierarchy.

Trading securities sold, not yet purchased: These amounts are carried at fair value. The fair value is based on quoted market prices of an active exchange, independent market quotations, market price quotations from third party pricing services, or valuation models when quotations are not available. See note 7 for disclosures concerning the categorization of the fair value measurements of trading securities sold, not yet purchased within the three level fair value hierarchy.

Securities sold under agreement to repurchase: The liabilities for securities sold under agreement to repurchase are carried at their contracted repurchase price, have short-term maturities, and are repriced frequently with amounts normally due in one month or less and, accordingly, these contracts are at amounts that approximate fair value. The estimated fair value measurements of securities sold under agreement to repurchase are based on observations of actual market activity and are generally classified within level 2 of the fair value hierarchy.

Debt: These amounts are carried at outstanding principal less unamortized discount. However, a substantial portion of the debt was assumed in the Merger and recorded at fair value as of that date. As of September 30, 2013 and December 31, 2012, the fair value of the Company’s debt was estimated to be $45.1 million and $34.6 million, respectively. The estimated fair value measurements of the debt are generally based on discounted cash flow models prepared by the Company’s management primarily using discount rates for similar instruments issued to companies with similar credit risks to the Company and are generally classified within level 3 of the fair value hierarchy.

Derivatives: These amounts are carried at fair value. Derivatives may be included as a component of investments-trading; trading securities sold, not yet purchased; and other investments, at fair value. See notes 7 and 8. The fair value is generally based on quoted market prices on an exchange that is deemed to be active for derivative instruments such as foreign currency forward contracts and Eurodollar futures. For derivative instruments, such as TBAs, the fair value is generally based on market price quotations from third party pricing services. See note 7 for disclosures concerning the categorization of the fair value measurements within the three level fair value hierarchy.

C. Recent Accounting Developments

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date, which requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date, as the sum of the following: (a) the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors; and (b) any additional amount the reporting entity expects to pay on behalf of its co-obligors. Examples of obligations within the scope of this ASU include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The guidance in this ASU also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments in this ASU should be applied retrospectively to all prior periods presented for those obligations resulting from joint and several liability arrangements within the ASU’s scope that exist at the beginning of the entity’s fiscal year of adoption. An entity may elect to use hindsight for the comparative periods presented in the initial year of adoption (if it changed its accounting as a result of adopting the guidance) and shall disclose that fact. The use of hindsight would allow an entity to recognize, measure, and disclose obligations resulting from joint and several liability arrangements within the scope of this ASU in comparative periods using information available at adoption rather than requiring an entity to make judgments about what information it had in each of the prior periods to measure the obligation. Early adoption is permitted. The Company will adopt the provisions of

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ASU 2013-04 effective January 1, 2014 and is currently evaluating the effect of the adoption on the Company’s consolidated financial position and results of operations.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, which addresses the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. When a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. For an equity method investment that is a foreign entity, the partial sale guidance in Section 830-30-40 still applies, specifically, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. However, this treatment does not apply to an equity method investment that is not a foreign entity. In those instances, the cumulative translation adjustment is released into net income only if the partial sale represents a complete or substantially complete liquidation of the foreign entity that contains the equity method investment. Additionally, the amendments in this ASU clarify that the sale of an investment in a foreign entity includes both (1) events that result in the loss of a controlling financial interest in a foreign entity (that is, irrespective of any retained investment) and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (sometimes referred to as a step acquisition). Accordingly, the cumulative translation adjustment should be released into net income upon the occurrence of those events. For public entities, the ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The Company will adopt the provisions of ASU 2013-05 effective January 1, 2014, and the Company does not expect that the adoption of the provisions will have a material impact on the Company’s consolidated financial statements or financial statement disclosures.

In June 2013, the FASB issued ASU No. 2013-08, Financial Services-Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements, which changes the approach to the investment company assessment in Topic 946, clarifies the characteristics of an investment company, and provides comprehensive guidance for assessing whether an entity is an investment company. The amendments require an investment company to measure non-controlling ownership interests in other investment companies at fair value rather than using the equity method of accounting.  The amendments also require the following additional disclosures: (a) the fact that the entity is an investment company and is applying the guidance in Topic 946, (b) information about changes, if any, in an entity’s status as an investment company, and (c) information about financial support provided or contractually required to be provided by an investment company to any of its investees.  The amendments in this ASU are effective for an entity’s interim and annual reporting periods in fiscal years that begin after December 15, 2013. Earlier application is prohibited. The Company has investments in the equity securities of investment funds and other non-publicly traded entities that have the attributes of investment companies as currently described in FASB ASC 946-15-2.  The Company will adopt the provisions of this ASU effective January 1, 2014, and is currently evaluating the effect of the adoption on the Company’s consolidated financial position and results of operations.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on the presentation of unrecognized tax benefits.  This ASU applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date.  An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets.  This ASU is effective prospectively for reporting periods beginning after December 15, 2013, with early adoption permitted.  The Company will adopt the ASU on January 1, 2014, and is currently evaluating the effect of the adoption on the Company’s consolidated statements.

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4. ACQUISITION AND PRIVATE INVESTMENT IN IFMI

Acquisition of Star Asia Manager

Effective March 1, 2013, Star Asia Manager repurchased its outstanding equity units held by Star Asia Mercury LLC (formerly, Mercury Partners, LLC) (“Mercury”). Star Asia Manager repurchased the units from Mercury for $425 and a note payable of $725. Under the note payable, interest accrues at a variable rate and there is no stated maturity date. See note 12. This agreement between Star Asia Manager and Mercury is referred to herein as the “Star Asia Manager Repurchase Transaction.”

Prior to the Star Asia Manager Repurchase Transaction, the Company owned 50% of the voting interests in Star Asia Manager and Mercury owned 50%. The Company accounted for its investment under the equity method of accounting. As a result of the Star Asia Manager Repurchase Transaction, the Company obtained 100% voting control of Star Asia Manager. Because the transaction resulted in the Company obtaining control, the Company accounted for the transaction as a business combination as called for under Accounting Standards Codification (“ASC”) 805, Business Combinations. Subsequent to the Star Asia Manager Repurchase Transaction, the Company included Star Asia Manager in its consolidated financial statements.

Under ASC 805, if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report provisional amounts. For a period of up to one year subsequent to the acquisition date (the measurement period), the Company can adjust the provisional amounts as it obtains new information regarding the facts and circumstances that existed at the acquisition date. The following table summarizes the provisional amounts of the identified assets acquired and liabilities assumed at the acquisition date as of March 1, 2013 (dollars in thousands):

	Total Estimated Fair Value as of Acquisition Date
Assets acquired:
Cash and cash equivalents	$	1,104
Due from related parties		253
Other assets		150
Liabilities assumed:
Accounts payable and other liabilities		(55)
Fair value of net assets acquired		1,452
Purchase price (1)		1,855
Intangible Asset (2)	$	403

As provisional amounts, the amounts in the table above are subject to changes during the measurement period. See notes 11 and 19.

(1)The purchase price represents the cash paid to Mercury of $425; the note payable to Mercury of $725; and the Company’s equity method investment immediately prior to the Star Asia Manager Repurchase Transaction. For purposes of the provisional amounts, the Company has assumed the carrying value of the Company’s equity method investment immediately prior to the Star Asia Manager Repurchase Transaction approximated fair value. As with all provisional purchase accounting amounts, this is subject to adjustment during the measurement period.

(2)For purposes of the provisional purchase accounting, the Company determined that the excess of the purchase price over the net fair value of tangible assets acquired should entirely be allocated to an intangible asset representing the value of Star Asia Manager’s investment management contract with Star Asia. The Company treated the estimated value as an intangible asset with a finite life. The Company will amortize the intangible asset using the straight-line method over the estimated economic life of the asset of 1.3 years. The intangible asset was allocated to the Asset Management business segment. See note 18. As with all provisional purchase accounting amounts, this is subject to adjustment during the measurement period.

For the nine months ended September 30, 2013, Star Asia Manager (since its acquisition on March 1, 2013) has contributed $1,812 in revenue and $1,019 in net income to the Company.  The following unaudited pro forma summary presents consolidated information of the Company as if the acquisition had occurred on January 1, 2012:

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	Pro Forma
	Nine Months Ended
	September 30,
	2013		2012
	(dollars in thousands)
Revenue	$	46,426	$	74,772
Earnings (loss) attributable to IFMI	$	(9,326)	$	(3,512)

Investments by Mead Park Capital and EBC 2013 Family Trust (“EBC”)

On May 9, 2013, the Company entered into definitive agreements (the “definitive agreements” with Mead Park Capital Partners LLC (“Mead Park Capital”) and CBF (an entity owned solely by Daniel G. Cohen), the Vice Chairman of the Company’s Board of Directors and of the board of managers of the Operating LLC, President and Chief Executive of the Company’s European Business, and President of CCFL), pursuant to which each committed to make investments in the Company, totaling $13,746 in the aggregate. Mead Park Capital is a vehicle advised by Mead Park Advisors LLC (“Mead Park”) (a registered investment advisor) and is controlled by Jack J. DiMaio, Jr., Chief Executive Officer and founder of Mead Park and Chairman of the Company’s Board of Directors. The investment and related actions were unanimously approved by the Company’s Board of Directors (with Daniel G. Cohen abstaining) following the recommendation of the Board’s Special Committee of the Board of Directors, which was formed in connection with the transaction and was comprised of three of the Company’s independent directors. The Company obtained shareholder approval of the share issuances contemplated by the definitive agreements at the Company’s 2013 Annual Meeting of Stockholders on September 24, 2013.

In connection with the closing of the transactions contemplated by the definitive agreements, on September 25, 2013, Mead Park Capital purchased 1,949,167 shares of the Company’s common stock and EBC, as assignee of CBF, purchased 800,000 shares of the Company’s common stock, in each case, at $2.00 per share for a combined investment of $5,498. Mead Park Capital also purchased convertible senior promissory notes in the aggregate principal amount of $5,848, which are convertible in accordance with the terms of the note into 1,949,167 shares at $3.00 per share. In addition, EBC, as assignee of CBF, purchased a convertible senior promissory note in the aggregate principal amount of $2,400, which is convertible into 800,000 shares at $3.00 per share.  Daniel G. Cohen is a trustee of EBC. The convertible notes issued under the definitive agreements and described above (the “8.0% Convertible Notes”) have an 8.0% annual interest rate and will mature on September 25, 2018.   See note 12 for a discussion about the 8.0% Convertible Notes.

In connection with the transactions contemplated by the definitive agreements, on May 9, 2013, the Company’s Board of Directors adopted a Section 382 Rights Agreement (the “Rights Agreement”) in an effort to protect stockholder value by attempting to protect against a possible limitation on the Company’s ability to use its net operating loss and net capital loss carry forwards (the “deferred tax assets”) to reduce potential future federal income tax obligations. The Company’s Board of Directors authorized and declared a dividend distribution of one right for each share of the Company’s common stock outstanding at the close of business on May 20, 2013.  Each right entitles the registered holder to purchase from the Company one ten-thousandth of a share of the Company’s Series C Junior Participating Preferred Stock at an exercise price of $100.00 per one ten-thousandth of a share of the Company’s Series C Junior Participating Preferred Stock, subject to adjustment.

The rights will become exercisable following (i) the 10th day after a public announcement that a person or group of affiliated or associated persons has acquired beneficial ownership of 4.95% or more of the Company’s common stock or (ii) the 10th business day following the commencement of a tender offer or exchange offer that would result in a person or group having ownership of 4.95% or more of the Company’s common stock.  

The Rights Agreement has no voting privileges and will expire on the earliest of (i) the close of business on October 1, 2016, (ii) the time at which the rights are redeemed pursuant to the Rights Agreement, (iii) the time at which the Rights are exchanged pursuant to the Rights Agreement, (iv) the repeal of Section 382 of the Internal Revenue Code or any successor statute if the Company’s Board of Directors determines that the Rights Agreement is no longer necessary or desirable for the preservation of certain tax benefits, and (v) the beginning of the taxable year of the Company to which the Company’s Board of Directors determines that certain tax benefits may not be carried forward.

No rights were exercisable at September 30, 2013. There was no impact to the Company’s financial results as a result of the adoption of the Rights Agreements. The terms and the conditions of the rights are set forth in the Section 382 Rights Agreement attached as Exhibit 4.1 to the IFMI’s Form 8-K filed with the Securities and Exchange Commission on May 13, 2013.

In connection with the September 25, 2013 closing of the transactions contemplated by the definitive agreements, Mr. DiMaio and Christopher Ricciardi, a partner in Mead Park and the former President of the Company, were elected to the Company’s Board of

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Directors. Mr. DiMaio was also named Chairman of the Company’s Board of Directors and Mr. Cohen was named Vice Chairman of the Company’s Board of Directors. In addition, the Company’s Board of Directors was reduced from ten to eight members. 

In June 2013, the Company appointed Lester Brafman as President of the Company. In September 2013, the Company appointed Mr. Brafman as the Chief Executive Officer of the Company. In September 2013, Mr. Cohen transitioned his role as Chief Executive Officer and Chief Investment Officer of the Company, to serve as President and Chief Executive Officer of the Company’s European Business and President of CCFL. 

5. RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS, AND CLEARING AGENCIES

Amounts receivable from brokers, dealers, and clearing agencies consisted of the following at September 30, 2013 and December 31, 2012, respectively.

RECEIVABLES FROM BROKERS, DEALERS AND CLEARING AGENCIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Deposits with clearing organizations	$	1,417	$	1,516
Unsettled regular way trades, net		13,111		9,653
Receivable from clearing organizations		953		1,084
Receivables from brokers, dealers, and clearing agencies	$	15,481	$	12,253

Receivable from clearing organizations represents un-invested cash held by the clearing organization, which includes cash proceeds from short sales.

Amounts payable to brokers, dealers, and clearing agencies consisted of the following at September 30, 2013 and December 31, 2012, respectively.

PAYABLES TO BROKERS, DEALERS AND CLEARING AGENCIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Margin payable	$	5,406	$	96,211
Payables to brokers, dealers, and clearing agencies	$	5,406	$	96,211

Securities transactions are recorded on the trade date, as if they had settled. The related amounts receivable and payable for unsettled securities transactions are recorded net in receivables from or payables to brokers, dealers, and clearing agencies on the Company’s consolidated balance sheets. The Company incurred interest on margin payable of $752 and $1,128 for the nine months ended September 30, 2013 and 2012, respectively, and $233 and $297 for the three months ended September 30, 2013 and 2012, respectively. 

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6. FINANCIAL INSTRUMENTS

Investments—Trading

The following table provides detail of the investments classified as investments-trading as of the periods indicated:

INVESTMENTS - TRADING
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
U.S. government agency MBS and CMOs (1)	$	9,063	$	34,592
U.S. government agency debt securities		3,517		21,066
RMBS		2,935		583
CMBS		300		12
U.S. Treasury securities		182		147
Interests in securitizations (2)		344		352
SBA loans		29,272		15,705
Corporate bonds and redeemable preferred stock		27,241		56,022
Foreign government bonds		111		448
Municipal bonds		9,169		37,745
Exchange traded funds		6		-
Certificates of deposit		3,192		8,934
Equity securities		250		533
Investments-trading	$	85,582	$	176,139

(1)Includes TBAs. See note 8.

(2)Primarily comprised of CDOs, CLOs, and ABS.

Trading Securities Sold, Not Yet Purchased

The following table provides detail of the trading securities sold, not yet purchased as of the periods indicated:

TRADING SECURITIES SOLD, NOT YET PURCHASED
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
U.S. government agency MBS (1)	$	740	$	13
U.S. Treasury securities		33,265		19,722
RMBS		35		-
SBA loans		437		-
Corporate bonds and redeemable preferred stock		12,361		21,976
Foreign government bonds		8		-
Municipal bonds		120		128
Certificates of deposit		6,366		2,325
Equity securities		-		3
Trading securities sold, not yet purchased	$	53,332	$	44,167

(1)Represents TBAs. See note 8.

The Company tries to manage its exposure to changes in interest rates for the interest rate sensitive securities it holds by entering into offsetting short positions for similar fixed rate securities.

The Company included the change in unrealized gains (losses) in the amount of $1,141 and $  (611) for the nine months ended September 30, 2013 and 2012, respectively, in net trading revenue in the Company’s consolidated statements of operations.

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Other Investments, at fair value

The following table provides detail of the investments included within other investments, at fair value:

OTHER INVESTMENTS, AT FAIR VALUE
(Dollars in Thousands)
	September 30, 2013
	Cost		Carrying Value		Unrealized Gain(Loss)
Interests in securitizations (1)	$	217	$	37	$	(180)
Equity Securities:
EuroDekania		7,807		2,275		(5,532)
Star Asia		23,304		21,118		(2,186)
Star Asia Special Situations Fund		1,964		3,203		1,239
Tiptree		5,561		2,317		(3,244)
Other securities		176		37		(139)
Total equity securities		38,812		28,950		(9,862)
Residential loans		163		292		129
Foreign currency forward contracts		-		(271)		(271)
Other investments, at fair value	$	39,192	$	29,008	$	(10,184)

	December 31, 2012
	Cost		Carrying Value		Unrealized Gain(Loss)
Interests in securitizations (1)	$	217	$	77	$	(140)
Equity Securities:
EuroDekania		7,807		2,054		(5,753)
Star Asia		23,304		30,169		6,865
Star Asia Special Situations Fund		1,841		2,503		662
Tiptree		5,561		2,834		(2,727)
Other securities		232		431		199
Total equity securities		38,745		37,991		(754)
Residential loans		230		255		25
Other investments, at fair value	$	39,192	$	38,323	$	(869)

(1)Represents an interest in a CDO.

7. FAIR VALUE DISCLOSURES

Fair Value Option

The Company has elected to account for certain of its other financial assets at fair value under the fair value option provisions of FASB ASC 825, Financial Instruments (“FASB ASC 825”). The primary reason for electing the fair value option when it first became available in 2008, was to reduce the burden of monitoring the differences between the cost and the fair value of the Company’s investments, previously classified as available for sale securities, including the assessment as to whether the declines are temporary in nature and to further remove an element of management judgment. In addition, the election was made for certain investments that were previously required to be accounted for under the equity method because their fair value measurements were readily obtainable.

Such financial assets accounted for at fair value include:

•in general, securities that would otherwise qualify for available for sale treatment;

•  in general, investments in equity method affiliates where the affiliate has all of the attributes in FASB ASC 946-10-15-2 (commonly referred to as investment companies); and

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•  in general, investments in residential loans.

The changes in fair value (realized and unrealized gains and losses) of these instruments for which the Company has elected the fair value option are recorded in principal transactions and other income in the consolidated statements of operations. All of the investments for which the Company has elected the fair value option are included as a component of other investments, at fair value in the consolidated balance sheets. The Company recognized net losses of $8,714 and $3,525 related to changes in fair value of investments that are included as a component of other investments, at fair value during the nine months ended September 30, 2013 and 2012, respectively. The Company recognized net gains of $1,279 and $1,683 related to changes in fair value of investments that are included as a component of other investments, at fair value during the three months ended September 30, 2013 and 2012, respectively.

Fair Value Measurements

In accordance with FASB ASC 820, Fair Value Measurements and Disclosures (“FASB ASC 820”), the Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a three level fair value hierarchy. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the hierarchy under FASB ASC 820 are described below:

Level  1Financial assets and liabilities whose values are based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level  2Financial assets and liabilities whose values are based on one or more of the following:

1.  Quoted prices for similar assets or liabilities in active markets;

2.  Quoted prices for identical or similar assets or liabilities in non-active markets;

3.  Pricing models whose inputs, other than quoted prices, are observable for substantially the full term of the asset or      liability; or

4.  Pricing models whose inputs are derived principally from or corroborated by observable market data through      correlation or other means for substantially the full term of the asset or liability.

Level  3Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the level 3 category. As a result, the unrealized gains and losses for assets and liabilities within the level 3 category presented in the tables below may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain financial assets or liabilities. There were no transfers between level 1 and level 2 of the fair value hierarchy during the three and nine months ended September 30, 2013 and 2012. Reclassifications impacting level 3 of the fair value hierarchy are reported as transfers in or transfers out of the level 3 category as of the beginning of the quarter in which reclassifications occur.

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The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2013 and December 31, 2012, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

FAIR VALUE MEASUREMENTS ON A RECURRING BASIS
September 30, 2013
(Dollars in Thousands)
					Significant		Significant
			Quoted Prices in		Other Observable		Unobservable
			Active Markets		Inputs		Inputs
Assets:	Fair Value		(Level 1)		(Level 2)		(Level 3)
Investments-trading:
U.S. government agency MBS and CMOs	$	9,063	$	-	$	9,063	$	-
U.S. government agency debt securities		3,517		3		3,514		-
RMBS		2,935		-		2,935		-
CMBS		300		-		300		-
U.S. Treasury securities		182		182		-		-
Interests in securitizations (1)		344		-		140		204
SBA loans		29,272		-		28,996		276
Corporate bonds and redeemable preferred stock		27,241		2,623		24,618		-
Foreign government bonds		111		-		111		-
Municipal bonds		9,169		-		9,169		-
Exchange traded funds		6		6		-		-
Certificates of deposit		3,192		-		3,192		-
Equity securities		250		143		107		-
Total investments - trading	$	85,582	$	2,957	$	82,145	$	480
Other investments, at fair value
EuroDekania (2)	$	2,275	$	-	$	-	$	2,275
Star Asia (3)		21,118		-		-		21,118
Tiptree (4)		2,317		-		2,317		-
Star Asia Special Situations Fund (3)		3,203		-		-		3,203
Other equity securities		37		24		13		-
Interests in securitizations (1)		37		-		-		37
Residential loans		292		-		292		-
Foreign currency forward contracts		(271)		(271)		-		-
Total other investments, at fair value	$	29,008	$	(247)	$	2,622	$	26,633
Liabilities
Trading securities sold, not yet purchased:
U.S. government agency MBS	$	740	$	-	$	740	$	-
U.S. Treasury securities		33,265		33,265		-		-
RMBS		35		-		35		-
SBA loans		437		-		437		-
Corporate bonds and redeemable preferred stock		12,361		247		12,114		-
Foreign government bonds		8		-		8		-
Municipal bonds		120		-		120		-
Certificates of deposit		6,366		-		6,366		-
Total trading securities sold, not yet purchased	$	53,332	$	33,512	$	19,820	$	-

(1)Primarily comprised of CDOs, CLOs, and ABS.

(2)Hybrid Securities Fund—European.

(3)Real Estate Fund—Asian.

(4)Diversified Fund.

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FAIR VALUE MEASUREMENTS ON A RECURRING BASIS
December 31, 2012
(Dollars in Thousands)
					Significant		Significant
			Quoted Prices in		Other Observable		Unobservable
			Active Markets		Inputs		Inputs
Assets:	Fair Value		(Level 1)		(Level 2)		(Level 3)
Investments-trading:
U.S. government agency MBS and CMOs	$	34,592	$	-	$	34,592	$	-
U.S. government agency debt securities		21,066		-		21,066		-
RMBS		583		-		583		-
CMBS		12		-		12		-
U.S. Treasury securities		147		147		-		-
Interests in securitizations (1)		352		-		57		295
SBA loans		15,705		-		15,705		-
Corporate bonds and redeemable preferred stock		56,022		5,643		50,379		-
Foreign government bonds		448		-		448		-
Municipal bonds		37,745		-		37,745		-
Certificates of deposit		8,934		-		8,934		-
Equity securities		533		395		138		-
Total investments - trading	$	176,139	$	6,185	$	169,659	$	295
Other investments, at fair value
EuroDekania (2)	$	2,054	$	-	$	-	$	2,054
Star Asia (3)		30,169		-		-		30,169
Tiptree (4)		2,834		-		-		2,834
Star Asia Special Situations Fund (3)		2,503		-		-		2,503
Other equity securities		431		24		407		-
Interests in securitizations (1)		77		-		-		77
Residential loans		255		-		255		-
Total other investments, at fair value	$	38,323	$	24	$	662	$	37,637
Liabilities
Trading securities sold, not yet purchased:
U.S. government agency MBS	$	13	$	-	$	13	$	-
U.S. Treasury securities		19,722		19,722		-		-
Corporate bonds and redeemable preferred stock		21,976		152		21,824		-
Municipal bonds		128		-		128		-
Certificates of deposit		2,325		-		2,325		-
Equity securities		3		3		-		-
Total trading securities sold, not yet purchased	$	44,167	$	19,877	$	24,290	$	-

(1)Primarily comprised of CDOs, CLOs, and ABS.

(2)Hybrid Securities Fund—European.

(3)Real Estate Fund—Asian.

(4)Diversified Fund.

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The following provides a brief description of the types of financial instruments the Company holds, the methodology for estimating fair value, and the level within the hierarchy of the estimate. The discussion that follows applies regardless of whether the instrument is included in investments-trading; other investments, at fair value; or trading securities sold, not yet purchased.

U.S. Government Agency MBS and CMOs: These are securities that are generally traded over-the-counter. The Company generally values these securities using third party quotations such as unadjusted broker-dealer quoted prices or market price quotations from third party pricing services. These valuations are based on a market approach. This is considered a level 2 valuation in the hierarchy.

U.S. Government Agency Debt Securities: Callable and non-callable U.S. government agency debt securities are measured primarily based on quoted market prices obtained from third party pricing services. Non-callableU.S. government agency debt securities are generally classified within level 1 and callable U.S. government agency debt securities are classified within level 2 of the valuation hierarchy.

RMBS and CMBS: The Company generally values these securities using third party quotations such as unadjusted broker-dealer quoted prices or market price quotations from third party pricing services. These valuations are based on a market approach. The Company generally classifies the fair value of these securities based on third party quotations within level 2 of the valuation hierarchy.

U.S. Treasury Securities:  U.S. Treasury securities include U.S. Treasury bonds and notes and the fair values of the U.S. Treasury securities are based on quoted prices in active markets. Valuation adjustments are not applied. The Company classifies the fair value of these securities within level 1 of the valuation hierarchy.

Interests in Securitizations: Interests in securitizations may be comprised of CDOs, CLOs, and ABS, which may include, but are not limited to, securities backed by auto loans, credit card receivables, or student loans. Where the Company is able to obtain independent market quotations from at least two broker-dealers and where a price within the range of at least two broker-dealers is used or market price quotations from third party pricing services is used, interests in securitizations will generally be classified as level 2 of the valuation hierarchy. These valuations are based on a market approach. The independent market quotations from broker-dealers are generally nonbinding. The Company seeks quotations from broker-dealers that historically have actively traded, monitored, issued, and been knowledgeable about interests in securitizations. The Company generally believes that to the extent that (1) it receives two quotations in a similar range from broker-dealers knowledgeable about interests in securitizations, and (2) the Company believes the broker-dealers gather and utilize observable market information such as new issue activity in the primary market, trading activity in the secondary market, credit spreads versus historical levels, bid-ask spreads, and price consensus among market participants and sources, then classification as level 2 of the valuation hierarchy is appropriate. In the absence of two broker-dealer market quotations, a single broker-dealer market quotation may be used without corroboration of the quote in which case the Company generally classifies the fair value within level 3 of the valuation hierarchy.

If quotations are unavailable, prices observed by the Company for recently executed market transactions may be used or valuation models prepared by the Company’s management may be used, which are based on an income approach. These models prepared by the Company’s management include estimates and the valuations derived from them could differ materially from amounts realizable in an open market exchange. Fair values based on internal valuation models prepared by the Company’s management are generally classified within level 3 of the valuation hierarchy.

Establishing fair value is inherently subjective given the volatile and sometimes illiquid markets for certain interests in securitizations and requires management to make a number of assumptions, including assumptions about the future of interest rates, discount rates; and the timing of cash flows. The assumptions the Company applies are specific to each security. Although the Company may rely on internal calculations to compute the fair value of certain interest in securitizations, the Company requests and considers indications of fair value from third party pricing services to assist in the valuation process.

SBA Loans: SBA loans include loans and SBA interest only strips.  In the case of loans, the Company generally values these securities using third party quotations such as unadjusted broker-dealer quoted prices, internal valuation models using observable inputs, or market price quotations from third party pricing services. The Company generally classifies these investments within level 2 of the valuation hierarchy. These valuations are based on a market approach. SBA interest only strips do not trade in an active market with readily available prices. Accordingly, the Company generally uses valuation models to determine fair value and classifies the fair value of the SBA interest only strips within level 3 of the valuation hierarchy. 

Corporate Bonds, Redeemable Preferred Stock, and Foreign Government Bonds: The Company uses recently executed transactions or third party quotations from independent pricing services to arrive at the fair value of its investments in corporate bonds, redeemable preferred stock, and foreign government bonds. These valuations are based on a market approach. The Company generally classifies the fair value of these bonds within level 2 of the valuation hierarchy. In instances where the fair values of securities are

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based on quoted prices in active markets (for example with redeemable preferred stock), the Company classifies the fair value of these securities within level 1 of the valuation hierarchy.

Municipal Bonds: Municipal bonds, which include obligations of U.S. states, municipalities, and political subdivisions, primarily include bonds or notes issued by U.S. municipalities. The Company generally values these securities using third party quotations such as market price quotations from third party pricing services. The Company generally classifies the fair value of these bonds within level 2 of the valuation hierarchy. The valuations are based on a market approach. In instances where the Company is unable to obtain reliable market price quotations from third party pricing services, the Company will use its own internal valuation models. In these cases, the Company will classify such securities as level 3 within the hierarchy until it is able to obtain third party pricing.

Exchange Traded Funds: Exchange traded funds are investment funds that trade in active markets, similar to public company stocks. The fair values of exchange traded funds are based on quoted prices in active markets. Valuation adjustments are not applied. The Company classifies the fair value of these securities within level 1 of the valuation hierarchy.

Equity Securities : The fair value of equity securities that represent investments in publicly traded companies (common or preferred shares, options, warrants, and other equity investments) are determined using the closing price of the security as of the reporting date. These are securities which are traded on a recognized liquid exchange. This is considered a level 1 value in the valuation hierarchy.

In some cases, the Company has owned options or warrants in newly publicly traded companies when the option or warrant itself is not publicly traded. In those cases, the Company used an internal valuation model and classified the investment within level 3 of the valuation hierarchy. The non-exchange traded equity options and warrants were measured using the Black-Scholes model with key inputs impacting the valuation including the underlying security price, implied volatility, dividend yield, interest rate curve, strike price, and maturity date. Once the securities underlying the options or warrants (not the options or warrants themselves) have quoted prices available in an active market, the Company attributes a value to the warrants using the Black-Scholes model based on the respective price of the options or warrants and the quoted prices of the securities underlying the options or warrants and key observable inputs. In this case, the Company will generally classify the options or warrants as level 2 within the valuation hierarchy because the inputs to the valuation model are now observable. If the option or warrant itself begins to trade on a liquid exchange, the Company will discontinue using a valuation model and will begin to use the public exchange price at which point it will be classified as level 1 in the valuation hierarchy.

Other equity securities represent investments in investment funds and other non-publicly traded entities. Substantially all of these other entities have the attributes of investment companies as described in FASB ASC 946-15-2. The Company estimates the fair value of these entities using the reported net asset value per share as of the reporting date in accordance with the “practical expedient” provisions related to investments in certain entities that calculate net asset value per share (or its equivalent) included in FASB ASC 820 for all entities except Star Asia. The Company generally classifies these estimates within either level 2 of the valuation hierarchy if its investment in the entity is currently redeemable or level 3 if its investment is not currently redeemable.

Prior to the second quarter of 2013, the Company carried its investment in Tiptree based on the underlying net asset value per share of the fund in accordance with the “practical expedient” provisions discussed above and the Company classified the fair value estimate within level 3 of the valuation hierarchy.  Beginning with the second quarter of 2013, the Company changed the way it calculates the fair value of its investment in Tiptree.  During the second quarter of 2013, Tiptree completed a reorganization. As a result of that reorganization, the Company’s investment in Tiptree can be exchanged into shares of Tiptree Financial, Inc. based on a stated exchange ratio (which is generally fixed, but can be adjusted for certain events, such as stock dividends or stock splits).  Tiptree Financial, Inc. is publicly traded over the counter.  Therefore, beginning with the second quarter of 2013, the Company has calculated the fair value of its investment in Tiptree by using the closing over the counter price for Tiptree Financial, Inc. and adjusting for the exchange ratio.  Based on this pricing methodology, the Company began classifying the fair value of its investment in Tiptree as level 2 within the valuation hierarchy during the second quarter of 2013.

In the case of Star Asia, the Company utilizes a valuation model to determine fair value, which uses a market approach and generally classifies its investment within level 3 of the valuation hierarchy. Star Asia accounts for itself as an investment company as described in ASC 946, Financial Services—Investment Companies. As an investment company, Star Asia carries its assets at fair value and reports net asset value (“NAV”) per share to its investors. However, Star Asia issued subordinated debt securities in 2009 at a significant discount to par. Upon issuance, Star Asia did not elect the fair value option for these liabilities and was not required to do so under ASC 946. Over time, it is the Company’s assessment that the fair value of the subordinated debt securities has diverged from its carrying value. Because Star Asia’s published NAV is calculated using the amortized cost of these subordinated debt securities, the Company has concluded it would be appropriate to adjust Star Asia’s reported NAV to recalculate it as if Star Asia’s subordinated debt were recorded at fair value as opposed to its historical amortized cost. The Company estimates the fair value of Star Asia’s subordinated debt securities by projecting the remaining debt cash outflows and discounting them at an estimated market rate as of the reporting date, which is derived from similar non-investment grade long term subordinated debt issuances.

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The Company used discount rates of7.26% and6.82% as ofSeptember 30, 2013 andDecember 31, 2012, respectively, in determining the fair value of Star Asia’s subordinated debt securities. If the Company had used Star Asia’s unadjusted NAV, rather than the Company’s financial model described above in determining the fair value of the Company’s investment in Star Asia, the Company would have recorded its investment in Star Asia at a value of $39,998 and $31,907 as of December 31, 2012 and September 30, 2013, respectively, as compared to the fair value as determined by the Company’s internal valuation model of $30,169, and $21,118 as of December 31, 2012 and September 30, 2013, respectively.

Residential Loans: Management utilizes home price indices to value the residential loans. Previously, management had considered adjustments to these indices but elected at the beginning of 2012 not to adjust the indices. Adjustments to the index implied a level 3 valuation. The methodology using an unadjusted index, which is considered an observable input, implies a level 2 valuation.

Certificates of Deposit: The fair value of certificates of deposit is estimated using valuations provided by third party pricing services. Certificates of deposit are generally categorized in level 2 of the valuation hierarchy.

Derivatives:

Foreign currency Forward Contracts

Foreign currency forward contracts are exchange-traded derivatives which transact on an exchange that is deemed to be active.  The fair value of the foreign currency forward contracts is based on current quoted market prices.  Valuation adjustments are not applied.  These are considered a level 1 value in the hierarchy. See note 8.

TBAs

The Company generally values these securities using third party quotations such as unadjusted broker-dealer quoted prices or market price quotations from third party pricing services. TBAs are generally classified within level 2 of the fair value hierarchy. If there is limited transaction activity or less transparency to observe market based inputs to valuation models, TBAs are classified in level 3 of the fair value hierarchy. U.S. government agency MBS and CMOs include TBAs. Unrealized gains on TBAs are included in investments-trading on the Company’s consolidated balance sheets and unrealized losses on TBAs are included in trading securities sold, not yet purchased on the Company’s consolidated balance sheets. See note 8.

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Level 3 Financial Assets and Liabilities

Financial Instruments Measured at Fair Value on a Recurring Basis

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which the Company has utilized level 3 inputs to determine fair value.

LEVEL 3 INPUTS
Nine Months Ended September 30, 2013
(Dollars in Thousands)
	December 31, 2012		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2013		Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
Interests in securitizations (2)	$	295	$	62	$	-	$	-	$	-	$	(153)	$	204	$	(92)
SBA loans		-		239		-		-		37		-		276		239
Total investments-trading	$	295	$	301	$	-	$	-	$	37	$	(153)	$	480	$	147
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,054	$	-	$	221	$	-	$	-	$	-	$	2,275	$	221
Star Asia (4)		30,169		-		(9,051)		-		-		-		21,118		(9,051)
Tiptree (5)		2,834		-		-		(2,834)		-		-		-		-
Star Asia Japan Special Situations Fund (4)		2,503		-		577		-		302		(179)		3,203		577
Total equity securities		37,560		-		(8,253)		(2,834)		302		(179)		26,596		(8,253)
Interest in securitizations (2)		77		-		(40)		-		-		-		37		(40)
Total other investments, fair value	$	37,637	$	-	$	(8,293)	$	(2,834)	$	302	$	(179)	$	26,633	$	(8,293)

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

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LEVEL 3 INPUTS
Nine Months Ended September 30, 2012
(Dollars in Thousands)
		December 31, 2011		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2012	Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
RMBS	$	4,932	$	17	$	-	$	-	$	171	$	(5,120)	$	-	$	-
Interests in securitizations (2)		221		53		-		-		2,861		(2,203)		932		74
Equity securities		35		(104)		-		-		126		-		57		(104)
Total investments-trading	$	5,188	$	(34)	$	-	$	-	$	3,158	$	(7,323)	$	989	$	(30)
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,370	$	-	$	1	$	-	$	-	$	-	$	2,371	$	1
Star Asia (4)		37,358		-		(3,433)		-		-		-		33,925		(3,433)
Tiptree (5)		2,533		-		222		-		-		-		2,755		222
Other		132		-		(41)		-		-		-		91		(41)
Total equity securities		42,393		-		(3,251)		-		-		-		39,142		(3,251)
Interest in securitizations (2)		88		-		6		-		-		-		94		6
Residential loans		267		-		-		(267)		-		-		-		-
Total other investments, fair value	$	42,748	$	-	$	(3,245)	$	(267)	$	-	$	-	$	39,236	$	(3,245)

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

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LEVEL 3 INPUTS
Three Months Ended September 30, 2013
(Dollars in Thousands)
		June 30, 2013		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2013	Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
Interests in securitizations (2)	$	221	$	26	$	-	$	-	$	-	$	(43)	$	204	$	(18)
SBA loans		-		239		-		-		37		-		276		239
Total investments-trading	$	221	$	265	$	-	$	-	$	37	$	(43)	$	480	$	221
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,040	$	-	$	235	$	-	$	-	$	-	$	2,275	$	235
Star Asia (4)		20,935		-		183		-		-		-		21,118		183
Star Asia Japan Special Situations Fund (4)		2,775		-		607		-		-		(179)		3,203		607
Total equity securities		25,750		-		1,025		-		-		(179)		26,596		1,025
Interest in securitizations (2)		58		-		(21)		-		-		-		37		(21)
Total other investments, fair value	$	25,808	$	-	$	1,004	$	-	$	-	$	(179)	$	26,633	$	1,004

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

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LEVEL 3 INPUTS
Three Months Ended September 30, 2012
(Dollars in Thousands)
		June 30, 2012		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2012	Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
Interests in securitizations (2)	$	185	$	111	$	-	$	-	$	636	$	-	$	932	$	111
Equity securities		63		(6)		-		-		-		-		57		(6)
Total investments-trading	$	248	$	105	$	-	$	-	$	636	$	-	$	989	$	105
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,103	$	-	$	268	$	-	$	-	$	-	$	2,371	$	268
Star Asia (4)		32,299		-		1,626		-		-		-		33,925		1,626
Tiptree (5)		2,703		-		52		-		-		-		2,755		52
Other		88		-		3		-		-		-		91		3
Total equity securities		37,193		-		1,949		-		-		-		39,142		1,949
Interest in securitizations (2)		97		-		(3)		-		-		-		94		(3)
Total other investments, fair value	$	37,290	$	-	$	1,946	$	-	$	-	$	-	$	39,236	$	1,946

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

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The circumstances that would result in transferring certain financial instruments from level 2 to level 3 of the valuation hierarchy would typically include what the Company believes to be a decrease in the availability, utility, and reliability of observable market information such as new issue activity in the primary market, trading activity in the secondary market, credit spreads versus historical levels, bid-ask spreads, and price consensus among market participants and sources.

Investments-trading: During the nine and three months ended September 30, 2013, there were no transfers into or out of level 3 of the valuation hierarchy.  During the nine and three months ended September 30, 2012, there were no transfers into or out of level 3 of the valuation hierarchy. 

Other investments, at fair value: During the nine months ended September 30, 2013, the Company transferred $2,834 of its investment in Tiptree from level 3 to level 2 of the valuation hierarchy. During the nine months ended September 30, 2012, the Company transferred $267 of residential loans from level 3 to level 2 of the valuation hierarchy.  During the three months ended September 30, 2013 and 2012, there were no transfers into or out of level 3 of the valuation hierarchy. 

The following table provides the quantitative information about level 3 fair value measurements as of September 30, 2013 and December 31, 2012, respectively:

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS
(Dollars in Thousands)
				Significant		Range of
		Fair Value	Valuation	Unobservable	Weighted	Significant
		September 30, 2013	Technique	Inputs	Average	Inputs
Assets
Other investments, at fair value
Star Asia	$	21,118	Adjusted NAV	Discount rate	7.26%	7.26%
				on debt

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS
(Dollars in Thousands)
				Significant		Range of
		Fair Value	Valuation	Unobservable	Weighted	Significant
		December 31, 2012	Technique	Inputs	Average	Inputs
Assets
Other investments, at fair value
Star Asia	$	30,169	Adjusted NAV	Discount rate	6.82%	6.82%
				on debt

Sensitivity of Fair Value to Changes in Significant Unobservable Inputs

For recurring fair value measurements categorized within level 3 of the fair value hierarchy, the sensitivity of the fair value measurement to changes in significant unobservable inputs and interrelationships between those unobservable inputs (if any) are described below:

•Equity investments in investment funds and other non-publicly traded entities.

With respect to the fair value measurement of investment funds and other non-publicly traded entities for which the Company uses the underlying net asset value per share to determine the fair value of the Company’s respective investment, a significant increase (decrease) in the net asset value per share, which is linked to the underlying financial performance of the respective entity, would result in a significantly higher (lower) fair value measurement.

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•  Equity investment in Star Asia

With respect to the Company’s investment in Star Asia for which the Company has concluded it would be appropriate to adjust Star Asia’s reported NAV to recalculate it as if Star Asia’s subordinated debt were recorded at fair value as opposed to its historical cost. The Company estimates the fair value of Star Asia’s subordinated debt securities by projecting the remaining debt cash outflows and discounting them at an estimated market discount rate. Any change in the discount rate used in this calculation, which is linked to market yields for similar non-investment grade long term subordinated debt issuances, may result in a significant higher (lower) fair value measurement.

Investments in Certain Entities That Calculate Net Asset Value Per Share (Or Its Equivalent)

The following table presents additional information about investments in certain entities that calculate net asset value per share (regardless of whether the “practical expedient” provisions of FASB ASC 820 have been applied) which are measured at fair value on a recurring basis at September 30, 2013 and December 31, 2012:  

FAIR VALUE MEASUREMENTS OF INVESTMENTS IN CERTAIN ENTITIES
THAT CALCULATE NET ASSET VALUE PER SHARE (OR ITS EQUIVALENT)
		Fair Value
		September 30, 2013
		(dollars in thousands)		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
Other investments, at fair value
EuroDekania (a)	$	2,275		N/A	N/A	N/A
Star Asia (b)		21,118		N/A	N/A	N/A
Tiptree (c)		2,317		N/A	N/A	N/A
Star Asia Special Situations Fund (d)		3,203		N/A	N/A	N/A
	$	28,913
		Fair Value
		December 31, 2012
		(dollars in thousands)		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
Other investments, at fair value
EuroDekania (a)	$	2,054		N/A	N/A	N/A
Star Asia (b)		30,169		N/A	N/A	N/A
Tiptree (c)		2,834		N/A	N/A	N/A
Star Asia Special Situations Fund (d)		2,503	$	321	N/A	N/A
	$	37,560

N/A – Not applicable.

(a)EuroDekania’s investment strategy is to make investments in hybrid capital securities that have attributes of debt and equity, primarily in the form of subordinated debt issued by insurance companies, banks and bank holding companies based primarily in Western Europe; widely syndicated leveraged loans issued by European corporations; CMBS, including subordinated interests in first mortgage real estate loans; and RMBS and other ABS backed by consumer and commercial receivables. The majority of the assets are denominated in Euros and U.K. Pounds Sterling. The fair value of the investment in this category has been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820.

(b)Star Asia’s investment strategy is to make investments in Asian real estate structured finance investments, including CMBS, corporate debt of REITs and real estate operating companies, whole loans, mezzanine loans, and other commercial real estate fixed income investments. The fair value of the investment in this category has been estimated using an internal valuation model that uses a market approach. If the Company had used Star Asia’s unadjusted reported net asset value to determine its fair value, the carrying value of its investment in Star Asia would have been $31,907 as of September 30, 2013 and $39,998 as of December 31, 2012.

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(c)The investment strategy of Tiptree is focused on investing in (a) specialty finance companies; (b) alternative asset management companies; and (c) diversified credit assets and related equity interests. Tiptree primarily seeks to acquire majority ownership interests in its investees. Prior to June 30, 2013, the fair value of this investment had been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820. Beginning with the second quarter of 2013, the Company calculates the fair value of its investment in Tiptree by using the closing over the counter price for Tiptree Financial, Inc. and adjusting for the exchange ratio.  As of September 30, 2013 and December 31, 2012, the Company owned approximately 1% of Tiptree.

(d)    The Star Asia Special Situations Fund’s investment strategy is to make investments in real estate and securities backed by real estate in Japan. The Star Asia Special Situations Fund is a closed end fund that does not allow investor redemptions. It has an initial life of three years which can be extended under certain circumstances for up to two years. The fair value of the investment in this category has been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820. The Company’s unfunded commitment was denominated in Japanese Yen and fluctuated based on the foreign exchange spot rate used at any particular period. See note 20.

8. DERIVATIVE FINANCIAL INSTRUMENTS

FASB ASC 815, Derivatives and Hedging (“FASB ASC 815”), provides for optional hedge accounting. When a derivative is deemed to be a hedge and certain documentation and effectiveness testing requirements are met, reporting entities are allowed to record all or a portion of the change in the fair value of a designated hedge as an adjustment to other comprehensive income (“OCI”) rather than as a gain or loss in the statements of operations. To date, the Company has not designated any derivatives as hedges under the provisions included in FASB ASC 815.

Derivative financial instruments are recorded at fair value. If the derivative was entered into as part of the Company’s broker-dealer operations, it will be included as a component of investments-trading or trading securities sold, not yet purchased. If it is entered into as an economic hedge for another financial instrument included in other investments, at fair value then the derivative will be included as a component of other investments, at fair value. The Company may, from time to time, enter into derivatives to manage its risk exposures (i) arising from fluctuations in foreign currency rates with respect to the Company’s investments in foreign currency denominated investments; (ii) arising from the Company’s investments in interest rate sensitive investments; and (iii) arising from the Company’s facilitation of mortgage-backed trading. Derivatives entered into by the Company, from time to time, may include (i) foreign currency forward contracts; (ii) Eurodollar futures; and (iii) purchase and sale agreements of TBAs. TBAs are forward mortgage-backed securities whose collateral remain “to be announced” until just prior to the trade settlement. TBAs are accounted for as derivatives under FASB ASC 815 when either of the following conditions exists: (i) when settlement of the TBA trade is not expected to occur at the next regular settlement date (which is typically the next month) or (ii) a mechanism exists to settle the contract on a net basis. Otherwise, TBAs are recorded as a standard security trade. The settlement of these transactions is not expected to have a material effect on the Company’s consolidated financial statements.

Derivatives involve varying degrees of off-balance sheet risk, whereby changes in the level or volatility of interest rates or market values of the underlying financial instruments may result in changes in the value of a particular financial instrument in excess of its carrying amount. Depending on the Company’s investment strategy, realized and unrealized gains and losses are recognized in principal transactions and other income or in net trading in the Company’s consolidated statements of operations on a trade date basis.

The Company may, from time to time, enter into the following derivative instruments:

Foreign Currency Forward Contracts

The Company invests in foreign currency denominated investments that expose it to fluctuations in foreign currency rates, and, therefore, the Company may, from time to time, hedge such exposure by using foreign currency forward contracts.  The Company carries the foreign currency forward contracts at fair value and includes them as a component of other investments, at fair value in the Company’s consolidated balance sheets.  As of September 30, 2013, the Company had outstanding foreign currency forward contracts with a notional amount of 1.25 billion Japanese Yen. As of December 31, 2012, the Company had no outstanding foreign currency forward contracts.

TBAs

The Company trades U.S. government agency obligations. In connection with these activities, the Company may be required to maintain inventory in order to facilitate customer transactions. In order to mitigate exposure to market risk, the Company enters in to the purchase and sale of TBAs. The Company carries the TBAs at fair value and includes them as a component of investments—trading or trading securities sold, not yet purchased in the Company’s consolidated balance sheets. At September 30, 2013, the Company had open TBA sale agreements in the notional amount of $60,736 and open TBA purchase agreements in the notional

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amount of $55,692. At December 31, 2012, the Company had open TBA sale agreements in the notional amount of $40,125 and open TBA purchase agreements in the notional amount of $32,794.

The following table presents the Company’s derivative financial instruments and the amount and location of the fair value (unrealized gain / (loss)) recognized in the consolidated balance sheets as of September 30, 2013 and December 31, 2012, respectively.

DERIVATIVE FINANCIAL INSTRUMENTS-BALANCE SHEET INFORMATION
(Dollars in Thousands)
Derivative Financial Instruments Not Designated as Hedging Instruments Under FASB ASC 815	Balance Sheet Classification		September 30, 2013		December 31, 2012
TBAs	Investments-trading	$	429	$	35
Foreign currency forward contracts	Other investments, at fair value		(271)		-
TBAs	Trading securities sold, not yet purchased		(663)		(13)
		$	(505)	$	22

The following table presents the Company’s derivative financial instruments and the amount and location of the net gain (loss) recognized in the consolidated statement of operations:

DERIVATIVE FINANCIAL INSTRUMENTS-STATEMENT OF OPERATIONS INFORMATION
(Dollars in Thousands)
Derivative Financial Instruments Not Designated as Hedging Instruments Under FASB ASC 815	Income Statement Classification		Nine Months Ended September 30, 2013		Nine Months Ended September 30, 2012
Foreign currency forward contracts	Revenues-principal transactions and other income	$	(481)	$	(323)
TBAs	Revenues-net trading		2,608		680
		$	2,127	$	357

DERIVATIVE FINANCIAL INSTRUMENTS-STATEMENT OF OPERATIONS INFORMATION
(Dollars in Thousands)
Derivative Financial Instruments Not Designated as Hedging Instruments Under FASB ASC 815	Income Statement Classification		Three Months Ended September 30, 2013		Three Months Ended September 30, 2012
Foreign currency forward contracts	Revenues-principal transactions and other income	$	(119)	$	(288)
TBAs	Revenues-net trading		591		426
		$	472	$	138

In addition to the above activities related to TBAs, the Company also enters into TBAs in order to assist clients (generally small to mid-size mortgage loan originators) in hedging the interest rate risk associated with the mortgages owned by the clients. In general, the Company will enter into a TBA purchase agreement with the client. Then, the Company will immediately enter into a TBA sale agreement with identical terms and settlement date with a separate counterparty. The Company seeks to profit through a small mark-up in the price of the transaction. The TBAs will match underlying terms and settlement dates. Because the Company has purchased and sold the same security, it is no longer exposed to market movements of the underlying TBA. The gain or loss on the transaction is recorded as a component of net trading in the consolidated statement of operations and is included in due to or due from broker in the

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consolidated balance sheet until it settles. As of September 30, 2013, the Company had unsettled TBA purchase contracts and offsetting TBA sale agreements in the notional amount of $292,350. The net profit on these transactions is recorded as a component of net trading revenue and is included as a component of TBA revenue in the table above. Any revenue on trades that have not yet settled is included as a component of due to or due from brokers, dealers, and clearing agencies.

9. COLLATERALIZED SECURITIES TRANSACTIONS

Securities purchased under agreements to resell (“reverse repurchase agreements” or “receivables under resale agreements”) or sales of securities under agreements to repurchase (“repurchase agreements”), principally U.S. government and federal agency obligations and MBS, are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts plus accrued interest. The resulting interest income and expense are included in net trading in the consolidated statements of operations.

In the case of reverse repurchase agreements, the Company generally takes possession of securities as collateral. Likewise, in the case of repurchase agreements, the Company is required to provide the counterparty with securities.

In certain cases a repurchase agreement and a reverse repurchase agreement may be entered into with the same counterparty. If certain requirements are met, the offsetting provisions included in FASB ASC 210, Balance Sheet (“FASB ASC 210”), allow (but do not require) the reporting entity to net the asset and liability on the balance sheet. It is the Company’s policy to present the assets and liabilities on a gross basis even if the conditions described in offsetting provisions included in FASB ASC 210 are met. The primary requirement to present assets and liabilities on a net basis is to have a master netting agreement with the counterparty. Because the Company does not generally enter into repurchase agreements and reverse repurchase agreements with the same counterparties, it does not have master netting agreements in place.

The Company classifies reverse repurchase agreements as a separate line item within the assets section of the Company’s consolidated balance sheets. The Company classifies repurchase agreements as a separate line item within the liabilities section of the Company’s consolidated balance sheets.

In the case of reverse repurchase agreements, if the counterparty does not meet its contractual obligation to return securities used as collateral, or does not deposit additional securities or cash for margin when required, the Company may be exposed to the risk of reacquiring the securities or selling the securities at unfavorable market prices in order to satisfy its obligations to its customers or counterparties. The Company’s policy to control this risk is monitoring the market value of securities pledged or used as collateral on a daily basis and requiring adjustments in the event of excess market exposure.

In the case of repurchase agreements, if the counterparty makes a margin call and the Company is unable or unwilling to meet the margin call, the counterparty can sell the securities to repay the obligation. The Company is at risk that the counterparty may sell the securities at unfavorable market prices and the Company may sustain significant loss. The Company controls this risk by monitoring its liquidity position to ensure it has sufficient cash or liquid securities to meet margin calls.

In the normal course of doing business, the Company enters into reverse repurchase agreements that permit it to re-pledge or resell the securities to others.

The Company enters into reverse repurchase agreements to acquire securities to cover short positions or as an investment. The Company enters into repurchase agreements to finance the Company’s securities positions held in inventory or to finance reverse repurchase agreements entered into as an investment.

At September 30, 2013 and December 31, 2012, the Company held reverse repurchase agreements of $94,867 and $70,110, respectively, and the fair value of securities received as collateral under reverse repurchase agreements was $95,807 and $73,382, respectively.

At September 30, 2013 and December 31, 2012, the Company had repurchase agreements of $94,856 and $70,273, respectively, and the fair value of securities pledged as collateral under repurchase agreements was $94,602 and $73,382, respectively. These amounts include collateral for reverse repurchase agreements that were re-pledged as collateral for repurchase agreements.

As of September 30, 2013 and December 31, 2012, the Company’s reverse repurchase agreements and repurchase agreements were predominantly collateralized securities in the following asset classes: Agency Specified Pools, Agency Hybrid Arms, and Fixed Rate Agency CMOs.

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10. OTHER ASSETS AND ACCOUNTS PAYABLE AND OTHER LIABILITIES

Other assets included:

OTHER ASSETS
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Deferred costs	$	638	$	-
Note receivable		1,565		-
Prepaid expenses		2,423		2,329
Prepaid income taxes		181		-
Security deposits		2,625		2,755
Miscellaneous other assets		612		24
Cost method investment		235		-
Furniture, equipment, and leasehold improvements, net		2,218		2,273
Intangible assets		559		332
Equity method affiliates		42		1,910
Other assets	$	11,098	$	9,623

Accounts payable and other liabilities included:

ACCOUNTS PAYABLE AND OTHER LIABILITIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Accounts payable	$	1,399	$	1,143
Rent payable		1,092		1,032
Accrued interest payable		510		308
Payroll taxes payable		786		1,577
Accrued income taxes		-		1,434
Guarantee liability		-		1,084
Settlement payable		-		4,467
Deferred income		60		498
Mandatorily redeemable equity interests		-		86
Other general accrued expenses		2,354		1,451
Accounts payable and other liabilities	$	6,201	$	13,080

See note 13 regarding mandatorily redeemable equity interests. See note 26 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 regarding the settlement payable.

11. INVESTMENTS IN EQUITY METHOD AFFILIATES

The Company has several investments that are accounted for under the equity method. Equity method accounting requires that the Company record its investment on the consolidated balance sheets and recognize its share of the affiliate’s net income as earnings each year. Investment in equity method affiliates is included as a component of other assets on the Company’s consolidated balance sheets.

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The Company has certain equity method affiliates for which it has elected the fair value option. Those investees are excluded from the table below. Those investees are included as a component of other investments, at fair value in the consolidated balance sheets. All gains and losses (unrealized and realized) from securities classified as other investments, at fair value in the consolidated balance sheets are recorded as a component of principal transactions and other income in the consolidated statements of operations.

Effective in March 2013, the Company acquired 100% control of Star Asia Manager as a result of the Star Asia Manager Repurchase Transaction. See note 4. Prior to March 1, 2013, the Company accounted for its investment in Star Asia Manager under the equity method. Since March 1, 2013, the Company has included Star Asia Manager in its consolidated financial statements.

As of September 30, 2013, the Company had the following equity method investees (excluding equity method affiliates for which it had adopted the fair value option): (i) Deep Value GP II; (ii) Star Asia Opportunity; (iii) Star Asia Capital Management; (iv) SAA Manager; and (v) SAP GP. During the nine months ended September 30, 2013, the Company did not make an investment in SAP GP or recognize any income or loss under the equity method related to SAP GP. During the second quarter of 2013, the Company received its investment return up to an agreed upon maximum from Star Asia SPV and the Company no longer has an ownership interest in Star Asia SPV. During the third quarter of 2013, the Company received its final liquidating distribution from Deep Value GP.  The following table summarizes the activity and the earnings of the Company’s equity method affiliates and includes the activity for Star Asia Manager during the period that the Company accounted for its investment in Star Asia Manager under the equity method.

INVESTMENTS IN EQUITY METHOD AFFILIATES
(Dollars in Thousands)
	Star		Deep		Deep		Star		Star		Star Asia
	Asia		Value		Value		Asia		Asia		Capital		SAA
	Manager		GP		GP II		SPV		Opportunity		Management		Manager		Total
January 1, 2013	$	547	$	7	$	39	$	1,395	$	22	$	(92)	$	(8)	$	1,910
Investments / advances		-		-		-		-		-		-		10		10
Distributions / repayments		-		(7)		-		(2,682)		-		(99)		(100)		(2,888)
Acquisition (1)		(705)		-		-		-		-		-		-		(705)
Earnings / (loss) realized		158		-		(6)		1,287		(5)		108		173		1,715
September 30, 2013	$	-	$	-	$	33	$	-	$	17	$	(83)	$	75	$	42

(1)See note 4.

The following table summarizes the combined financial information for all equity method investees, including equity method investees for which the fair value option was elected. This aggregated summarized financial data does not represent the Company’s proportionate share of equity method investees’ assets or earnings.

SUMMARY DATA OF EQUITY METHOD INVESTEES
(Dollars in Thousands)
		September 30, 2013		December 31, 2012
Total Assets	$	388,316	$	279,874
Liabilities	$	153,899	$	96,981
Equity attributable to the investees		234,317		182,277
Non-controlling interest		100		616
Total Liabilities & Equity	$	388,316	$	279,874

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		Three Months Ended September 30,				Nine Months Ended September 30,
		2013		2012		2013		2012
Net income / (loss)	$	17,496	$	9,313	$	26,431	$	(419)
Net income / (loss) attributable to the investees	$	17,456	$	9,201	$	26,947	$	(253)

See note 20 for information regarding transactions with the Company’s equity method investees.

12. DEBT

The Company had the following debt outstanding:

DETAIL OF DEBT
(Dollars in Thousands)
Description	Current Outstanding Par			September 30, 2013		December 31, 2012		Interest Rate Terms		Interest (6)		Maturity
Contingent convertible senior notes:
10.50% contingent convertible senior notes (the "New Notes")	$	8,121		$	8,096	$	8,068	10.50%		10.50	%	May 2014 (1)
8.00% contingent convertible senior notes (the "8.0% Convertible Notes")		8,248			8,248		-	8.00%		8.00	%	September 2018 (2)
	$	16,369		$	16,344		8,068
Junior subordinated notes:
Alesco Capital Trust I	$	28,125	(3)		10,563		10,189	4.25%		4.25	%	July 2037
Sunset Financial Statutory Trust I		20,000	(3)		7,518		7,248	4.40%		4.40	%	March 2035
	$	48,125			18,081		17,437
Subordinated notes payable	$	-			-		342	12.00%	(4)	12.00	%	June 2013
Star Asia Manager note payable	$	165			165		-	3.00%		3.00	%	(5)
Total				$	34,590	$	25,847

(1)Represents the holder’s earliest put date and the Company’s earliest redemption date. The contractual maturity for the New Notes is May 2027.

The Company may redeem all or part of the $8,121 aggregate principal amount of the New Notes for cash on or after May 20, 2014, at a redemption price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. The holders of the New Notes may require the Company to repurchase all or a portion of the New Notes for cash on May 15, 2014; May 15, 2017; and May 15, 2022 for a repurchase price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the

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repurchase date. The holders of the New Notes are required to provide notice to the Company of their plan to redeem the New Notes at any time during the 30 days prior to May 15, 2014; May 15, 2017; and May 15, 2022.

(2)The holders of the 8.0% Convertible Notes may convert all or any part of the outstanding principal amount of the 8.0% Convertible Notes at any time prior to maturity into shares of the Company’s common stock at a conversion price of $3.00 per share, subject to customary anti-dilution adjustments.

(3)The outstanding par represents the total par amount of the junior subordinated notes held by two separate trusts. The Company does not consolidate these trusts. The Company holds $1,489 par value of these junior subordinated notes, comprised of $870 par value of junior subordinated notes related to Alesco Capital Trust I and $619 par value of junior subordinated notes related to Sunset Financial Statutory Trust I. These notes have a carrying value of $0. Therefore, the net par value held by third parties is $48,125.

(4)Comprised of 9% paid currently and 3% paid in kind.  The subordinated note payable was fully repaid in June 2013. 

(5)The Star Asia Manager note payable has no stated maturity date. See description of payment terms below.

(6)Represents the interest rate as of the last day of the reporting period. 

Refer to note 17 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended, for a discussion of the Company’s debt.

Star Asia Manager Note Payable

In connection with the Star Asia Manager Repurchase Transaction in March 2013, Star Asia Manager had paid cash of $425 and issued to Mercury a note payable in the principal amount of $725. See notes 4 and 11. Under the note payable, interest accrues on the unpaid balance of the principal amount at a floating rate equal to three-month LIBOR plus 2.75% per annum. Payments will be made quarterly in an amount equal to 50% of cash available for distribution as defined in the note payable agreement. The Star Asia Manager note payable is pre-payable without penalty and has no stated maturity date.

Subordinated Notes Payable

In June 2013, the Company repaid in full the subordinated notes payable to an unrelated third party for a total of $352, including principal of $347 and cash and accrued paid in kind interest of $5.

8.0% Convertible Notes

In connection with the investments by Mead Park Capital and EBC, as assignee of CBF, in September 2013, the Company issued $8,248 in aggregate principal amount of convertible senior promissory notes.  The 8.0% Convertible Notes accrue 8% interest per year, payable quarterly. The 8.0% Convertible Notes mature on September 25, 2018.

The holders of the notes may convert all or any part of the outstanding principal amount of the 8.0% Convertible Notes at any time into shares of the Company’s common stock at $3.00 per share conversion price, subject to customary anti-dilution adjustments. Accordingly, based on the current principal balance, the notes will be convertible into up to an aggregate of 2,749,167 shares of common stock. However, the 8.0% Convertible Notes have certain provisions that allow for the deferral of interest payments:  (i) if dividends of less than $0.02 per share are paid on the Company’s common stock, then the Company may pay one-half of the interest payable on such date in cash, and the remaining one-half of the interest otherwise payable will be added to the principal amount of the convertible note then outstanding; and (ii) if no dividends are paid on the Company’s common stock, then the Company may make no payment in cash of the interest payable on such date, and all of the interest otherwise payable on such date will be added to the principal amount of the note then outstanding.

13. REDEEMABLE NON-CONTROLLING INTEREST (TEMPORARY EQUITY) AND MANDATORILY REDEEMABLE EQUITY INTERESTS

Redeemable Non-Controlling Interest

The redeemable non-controlling interest represents the equity interests of PrinceRidge that are not owned by the Company. The members of PrinceRidge have the right to withdraw from PrinceRidge and require PrinceRidge to redeem the interests for cash over a contractual payment period. The Company accounts for these interests as temporary equity under Accounting Series Release 268 (“ASR 268”). These interests are shown outside of the permanent equity of IFMI in its consolidated balance sheet as redeemable non-controlling interests.

During the nine months ended September 30, 2012, the Company reclassified $6,446 from redeemable non-controlling interest to mandatorily redeemable equity interests on its consolidated balance sheets due to partnership withdrawals from PrinceRidge. In addition, PrinceRidge purchased $6,172 of non-controlling interests for cash during the nine months ended September 30, 2012 from

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existing partners, including the former chief executive officer of PrinceRidge and member of the board of managers of PrinceRidge GP, Michael T. Hutchins, and the former chairman of the board of managers of PrinceRidge GP, John P. Costas, and received $20 in cash related to capital contributions made to PrinceRidge during the nine months ended September 30, 2012.

During the nine months ended September 30, 2013, the Company purchased $317 of non-controlling interest for cash from existing partners. As of September 30, 2013 and December 31, 2012, the redeemable non-controlling interests totaled $535 and $829, respectively.

Mandatorily Redeemable Equity Interests

Per the terms of the operating agreement, PrinceRidge must redeem a withdrawing partner’s equity interests over a period of time of up to two to five years. The amount actually due to a withdrawing partner will fluctuate over time based on the operating results of PrinceRidge. The carrying value of the liability owed to a withdrawing partner will be recorded at the amount owed as of each balance sheet date. Any increases or decreases in the amount owed will be recorded as interest income or expense and will be included in the non-operating section of the consolidated statement of operations.

During the nine months ended September 30, 2013 and 2012, the Company distributed cash of $86 and $790, respectively, to the holders of mandatorily redeemable equity interests.  As of September 30, 2013 and December 31, 2012, the mandatorily redeemable equity interests totaled $0 and $86, respectively. See note 10.

14. PERMANENT EQUITY

Stockholders’ Equity

Common Equity: The following table reflects the activity for the nine months ended September 30, 2013 related to the number of shares of unrestricted common stock that the Company had issued as of September 30, 2013:  

	Common Stock
	Shares
December 31, 2012	10,794,725
Shares issued in connection with the redemption of Operating LLC units	186,339
Shares issued in connection with private placement	2,749,167
Vesting of shares	586,736
Shares withheld for employee taxes	(24,634)
September 30, 2013	14,292,333

In connection with the acquisition of JVB Holdings in January 2011, the Company issued 559,020 restricted units of the Operating LLC to certain of the former owners of JVB Holdings who remained employees of JVB Holdings. As of December 31, 2012, there were 372,681 restricted units outstanding. These units vest over a three year period (of which two of the three years have elapsed) and are treated as compensation for future service. In January 2013, 186,339 restricted units of the Operating LLC vested, and the holders of these vested Operating LLC membership units elected to redeem these units. The Company, at its discretion, issued 186,339 shares of IFMI common stock to the JVB Holdings sellers in exchange for these vested membership units. As of September 30, 2013, there were 186,342 restricted units outstanding.

In connection with the private placement investment under the definitive agreements in September 2013, the Company issued 2,749,167 shares of the IFMI’s common stock. See notes 4 and 12.

Acquisition and Surrender of Additional Units of the Operating LLC, net: Effective January 1, 2011, IFMI and the Operating LLC entered into a Unit Issuance and Surrender Agreement (the “UIS Agreement”) which was approved by IFMI’s Board of Directors and the board of managers of the Operating LLC. In an effort to maintain a 1:1 ratio of IFMI’s common stock to the number of membership units IFMI holds in the Operating LLC, the UIS Agreement calls for the issuance of additional membership units of the Operating LLC to IFMI when IFMI issues its common stock to employees under existing equity compensation plans. In certain cases, the UIS Agreement calls for IFMI to surrender units to the Operating LLC when certain restricted shares are forfeited by the employee or repurchased.

During the nine months ended September 30, 2013, IFMI received units of the Operating LLC. The following table displays the amount of units received (net of surrenders) by IFMI pursuant to the UIS Agreement, as a result of the vesting and redemption of membership units of the Operating LLC by certain former owners of JVB Holdings for IFMI common stock, and as a result of the issuance of shares in connection with the private placement as discussed above.

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	Operating LLC
	Membership Units
Units related to UIS Agreement	396,368
Units received from certain former owners of JVB Holdings	186,339
Units received from issuance of shares in connection with private placement	2,749,167
Total	3,331,874

The Company recognized a net increase in additional paid in capital of $2,705 and a net decrease in accumulated other comprehensive income of $124 with an offsetting decrease in non-controlling interest of $2,581 in connection with the acquisition and surrender of additional units of the Operating LLC. The following schedule presents the effects of changes in IFMI’s ownership interest in the Operating LLC on the equity attributable to IFMI for the nine months ended:

	September 30, 2013		September 30, 2012
Net income / (loss) attributable to IFMI	$	(9,306)	$	(3,929)
Transfers (to) from the non-controlling interest:
Increase / (decrease) in IFMI's paid in capital for the
acquisition / (surrender) of additional units in consolidated
subsidiary, net		2,705		804
Changes from net income / (loss) attributable to IFMI and transfers (to) from the non-controlling interest:	$	(6,601)	$	(3,125)

15 . NET CAPITAL REQUIREMENTS

The U.S. broker-dealer subsidiaries of the Company are subject to the net capital provision of Rule 15c3-1 under the Exchange Act, which requires the maintenance of minimum net capital, as defined therein. As of September 30, 2013, the Company had the following two U.S. broker-dealers: JVB and CCPR.

As of September 30, 2013, JVB’s adjusted net capital was $10,506, which exceeded the minimum requirements by $10,400. As of September 30, 2013, CCPR had net capital of $16,431, which exceeded the minimum requirements by $16,181.  

CCFL, a subsidiary of the Company regulated by the Financial Conduct Authority (formerly known as the Financial Services Authority) in the United Kingdom, is subject to the net liquid capital provision of the Financial Services and Markets Act 2000, GENPRU 2.140R to 2.1.57R, relating to financial prudence with regards to the European Investment Services Directive and the European Capital Adequacy Directive, which requires the maintenance of minimum liquid capital, as defined therein. As of September 30, 2013, the total minimum required net liquid capital was $1,916, and net liquid capital in CCFL was $3,258, which exceeded the minimum requirements by $1,342 and was in compliance with the net liquid capital provisions.

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16 . EARNINGS / (Loss) PER COMMON SHARE

The following table presents a reconciliation of basic and diluted earnings / (loss) per common share for the periods indicated.

EARNINGS / (LOSS) PER COMMON SHARE
(Dollars in Thousands, except share or per share information)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Net income / (loss) attributable to IFMI	$	(104)	$	2,008	$	(9,306)	$	(3,929)
Add/ (deduct): Income / (loss) attributable to non-controlling interest attributable to Operating LLC membership units exchangeable into IFMI shares (1)		(212)		967		(4,461)		(1,916)
Add / (deduct): Adjustment (2)		154		(5)		176		(93)
Net income / (loss) on a fully converted basis	$	(162)	$	2,970	$	(13,591)	$	(5,938)
Weighted average common shares outstanding - Basic		11,875,950		10,849,220		11,628,392		10,683,076
Unrestricted Operating LLC membership units exchangeable into IFMI shares (1)		5,324,090		5,252,002		5,324,090		5,252,002
Dilutive impact of restricted equity instruments		-		75,676		-		-
Weighted average common shares outstanding - Diluted (3)		17,200,040		16,176,898		16,952,482		15,935,078
Net income / (loss) per common share - Basic	$	(0.01)	$	0.19	$	(0.80)	$	(0.37)
Net income / (loss) per common share - Diluted	$	(0.01)	$	0.18	$	(0.80)	$	(0.37)

(1)The Operating LLC membership units not held by IFMI (that is, those held by the non-controlling interest for the nine and three months ended September 30, 2013 and 2012) may be redeemed and exchanged into shares of the Company on a one-to-one basis. The 4,983,557 Operating LLC membership units held by Daniel G. Cohen are redeemable at Mr. Cohen’s option, at any time, for (i) cash in an amount equal to the average of the per share closing prices of the Company’s common stock for the ten consecutive trading days immediately preceding the date the Company receives Mr. Cohen’s redemption notice, or (ii) at the Company’s option, one share of the Company’s common stock, subject, in each case, to appropriate adjustment upon the occurrence of an issuance of additional shares of the Company’ Common Stock as a dividend or other distribution on the Company’s outstanding Common Stock, or a further subdivision or combination of the outstanding shares of the Company’s common stock. The Operating LLC membership units held by other members of the Operating LLC have the same redemption rights as described above.  These units are not included in the computation of basic earnings per share. These units enter into the computation of diluted net income / (loss) per common share when the effect is dilutive using the if-converted method.

(2)An adjustment is included for the following: (i) if the Operating LLC membership units had been converted at the beginning of the period, the Company would have incurred a higher income tax expense or realized a higher income tax benefit, as applicable; and (ii) to adjust the non-controlling interest amount to be consistent with the weighted average share calculation.

(3)For the nine months ended September 30, 2013 and 2012, weighted average common shares outstanding excludes a total of 360,559 and 46,288 shares, respectively, representing restricted Operating LLC units, restricted IFMI common stock, and restricted units of IFMI common stock.  For the three months ended September 30, 2013, weighted average common shares outstanding excludes a total of  392,010 shares representing restricted Operating LLC units, restricted IFMI common stock, and restricted units of IFMI common stock.  For the nine and three months ended September 30, 2013, weighted average common shares outstanding also excludes 59,765 and 179,294 shares, respectively, from the assumed conversion of the 8% Convertibles Notes because the inclusion of the converted shares would be anti-dilutive.

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17. COMMITMENTS AND CONTINGENCIES

Legal and Regulatory Proceedings

The Company was named in litigation commenced in the United States District Court for the Southern District of New York on June 29, 2012, under the caption U.S. Bank National Association v. Institutional Financial Markets, Inc. The plaintiff, U.S. Bank, alleges breach of contract respecting certain fees allegedly owing to U.S. Bank, as Trustee, in connection with the issuance of trust preferred securities, seeking damages and a declaration that the Company must make certain future fee payments. The Company filed a motion to dismiss the complaint in lieu of an answer on October 26, 2012. U.S. Bank filed its response to the motion on November 26, 2012. On July 19, 2013, the court entered a Memorandum and Order denying the Company’s motion to dismiss.  The Company filedits answer to the Complaint on August 19, 2013.  The Company intends to defend the action vigorously. The ultimate amount of any loss incurred by the Company in this matter is uncertain. The Company cannot currently estimate the likelihood it will suffer a loss greater than the amounts accrued for as of September 30, 2013. 

On October 3, 2013, a summons with notice was served on the Company in connection with litigation commenced in the Supreme Court of the State of New York, captioned Northern Rock (Asset Management) PLC v. Société Générale Corporate and Investment Banking, Cohen & Company Securities, et al.  The plaintiff has not yet filed a complaint.  If a complaint is filed, the Company intends to vigorously defend the claims.

In addition to the matters set forth above, the Company is a party to various routine legal proceedings and regulatory inquiries arising out of the ordinary course of the Company’s business. Management believes that the results of these routine legal proceedings and regulatory matters will not have a material adverse effect on the Company’s financial condition, or on the Company’s operations and cash flows. However, the Company cannot estimate the legal fees and expenses to be incurred in connection with these routine matters and, therefore, is unable to determine whether these future legal fees and expenses will have a material impact on the Company’s operations and cash flows. It is the Company’s policy to expense legal and other fees as incurred.

Alesco XIV Guarantee

AFN invested in a CDO (Alesco XIV) in which Assured Guaranty (“Assured”) was providing credit support to the senior interests in securitizations. Alesco XIV made a loan (the “Guaranteed Loan”) to a particular borrower and AFN entered into an arrangement with Assured whereby AFN agreed to make payments to Assured upon the occurrence of both (i) a loss on the Guaranteed Loan and (ii) a loss suffered by Assured on its overall credit support arrangement to Alesco XIV security holders. This arrangement was accounted for as a guarantee by the Company. As of December 31, 2012, the Company had a liability of $1,084 related to this arrangement that was included in accounts payable and other liabilities in the Company’s consolidated balance sheets. In May 2013, the underlying loan was paid off in full by the borrower. As a result, the Company’s guarantee with Assured was extinguished. For the nine months ended September 30, 2013, the Company recognized other income of $1,084, which was included as a component of principal transactions and other income in the Company’s consolidated statements of operations, and wrote off the liability.

Pennsylvania Income Tax Assessment

In October, 2013, the Company received an assessment from the Pennsylvania Department of Revenue in the amount of $4,683(including penalties) related to a subsidiary of AFN for the 2009 tax year.  The assessment denied this subsidiary’s Keystone Opportunity Zone (“KOZ”) credit for that year.  The Company is currently preparing an administrative appeal of this assessment with the Pennsylvania Department of Revenue.  If the assessment were to be upheld in administrative appeal, the Company can then file an appeal with the Pennsylvania Board of Finance and Revenue.  Finally, if the Pennsylvania Board of Finance and Revenue were to uphold the assessment, the Company would then seek relief in Pennsylvania Commonwealth Court.  The Company has evaluated the assessment in accordance with the provisions of ASC 740 and determined not to record any reserve for this assessment. 

Accumulated Dividends and Dividend Equivalents on Restricted Stock and Restricted Units

From time to time, the Company has granted restricted stock and restricted units that are entitled to receive dividends or dividend equivalents as and when such dividends or dividend equivalents are declared and paid by the Company; provided, however, that the cash dividends or dividend equivalents on such restricted stock or restricted units are held by the Company until the period of forfeiture lapses and forfeited if the underlying restricted shares or restricted units are forfeited. The Company’s potential liability, assuming the restricted stock or restricted units were to vest as of September 30, 2013, is approximately $112.

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18. SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

The Company operates within three business segments: Capital Markets, Asset Management, and Principal Investing. See note 1.

The Company’s business segment information for the nine and three months ended September 30, 2013 and 2012 was prepared using the following methodologies and generally represents the information that is relied upon by management in its decision making processes:

(a) Revenues and expenses directly associated with each business segment are included in determining net income / (loss) by segment.

(b) Indirect expenses (such as general and administrative expenses including executive and indirect overhead costs) not directly associated with specific business segments are not allocated to the business segments’ statements of operations. Accordingly, the Company presents segment information consistent with internal management reporting. See note (1) in the table below for more detail on unallocated items. The following tables present the financial information for the Company’s segments for the periods indicated.

Beginning with the fourth quarter of 2012, the Company reclassified the investment in certain equity method affiliates as well as the income / (loss) from these equity method affiliates from the Principal Investing business segment to the Asset Management business segment. Relevant prior period amounts have been reclassified to conform to the current period presentation.

SEGMENT INFORMATION
Statement of Operations Information
Nine Months Ended September 30, 2013
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	32,513	$	-	$	-	$	32,513	$	-	$	32,513
Asset management		-		13,561		-		13,561		-		13,561
New issue and advisory		5,259		-		-		5,259		-		5,259
Principal transactions and other income		176		1,134		(6,797)		(5,487)		-		(5,487)
Total revenues		37,948		14,695		(6,797)		45,846		-		45,846
Total operating expenses		41,784		8,084		239		50,107		9,879		59,986
Operating income / (loss)		(3,836)		6,611		(7,036)		(4,261)		(9,879)		(14,140)
Income / (loss) from equity method affiliates		-		433		1,282		1,715		-		1,715
Other non-operating income / (expense)		(164)		(8)		-		(172)		(2,939)		(3,111)
Income / (loss) before income taxes		(4,000)		7,036		(5,754)		(2,718)		(12,818)		(15,536)
Income tax expense / (benefit)		(78)		-		-		(78)		(1,683)		(1,761)
Net income / (loss)		(3,922)		7,036		(5,754)		(2,640)		(11,135)		(13,775)
Less: Net income / (loss) attributable to the
non-controlling interest		(8)		-		-		(8)		(4,461)		(4,469)
Net income / (loss) attributable to IFMI	$	(3,914)	$	7,036	$	(5,754)	$	(2,632)	$	(6,674)	$	(9,306)
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	592	$	225	$	-	$	817	$	219	$	1,036

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SEGMENT INFORMATION
Statement of Operations Information
Nine Months Ended September 30, 2012
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	51,311	$	-	$	-	$	51,311	$	-	$	51,311
Asset management		-		18,010		-		18,010		-		18,010
New issue and advisory		4,024		-		-		4,024		(1,000)		3,024
Principal transactions and other income		68		728		(1,278)		(482)		-		(482)
Total revenues		55,403		18,738		(1,278)		72,863		(1,000)		71,863
Total operating expenses		56,793		6,995		592		64,380		8,700		73,080
Operating income / (loss)		(1,390)		11,743		(1,870)		8,483		(9,700)		(1,217)
Income / (loss) from equity method affiliates		-		1,173		1,516		2,689		-		2,689
Other non-operating income / (expense)		(3,974)		-		-		(3,974)		(3,484)		(7,458)
Income / (loss) before income taxes		(5,364)		12,916		(354)		7,198		(13,184)		(5,986)
Income tax expense / (benefit)		-		-		-		-		108		108
Net income / (loss)		(5,364)		12,916		(354)		7,198		(13,292)		(6,094)
Less: Net income / (loss) attributable to the
non-controlling interest		(249)		-		-		(249)		(1,916)		(2,165)
Net income / (loss) attributable to IFMI	$	(5,115)	$	12,916	$	(354)	$	7,447	$	(11,376)	$	(3,929)
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	658	$	10	$	-	$	668	$	355	$	1,023

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SEGMENT INFORMATION
Statement of Operations Information
Three Months Ended September 30, 2013
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	7,824	$	-	$	-	$	7,824	$	-	$	7,824
Asset management		-		4,644		-		4,644		-		4,644
New issue and advisory		3,692		-		-		3,692		-		3,692
Principal transactions and other income		32		236		1,658		1,926		-		1,926
Total revenues		11,548		4,880		1,658		18,086		-		18,086
Total operating expenses		13,248		2,471		77		15,796		3,460		19,256
Operating income / (loss)		(1,700)		2,409		1,581		2,290		(3,460)		(1,170)
Income / (loss) from equity method affiliates		-		101		-		101		-		101
Other non-operating income / (expense)		(55)		(1)		-		(56)		(991)		(1,047)
Income / (loss) before income taxes		(1,755)		2,509		1,581		2,335		(4,451)		(2,116)
Income tax expense / (benefit)		(37)		-		-		(37)		(1,770)		(1,807)
Net income / (loss)		(1,718)		2,509		1,581		2,372		(2,681)		(309)
Less: Net income / (loss) attributable to the
non-controlling interest		7		-		-		7		(212)		(205)
Net income / (loss) attributable to IFMI	$	(1,725)	$	2,509	$	1,581	$	2,365	$	(2,469)	$	(104)
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	202	$	93	$	-	$	295	$	72	$	367

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SEGMENT INFORMATION
Statement of Operations Information
Three Months Ended September 30, 2012
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	13,669	$	-	$	-	$	13,669	$	-	$	13,669
Asset management		-		8,465		-		8,465		-		8,465
New issue and advisory		2,758		-		-		2,758		(1,000)		1,758
Principal transactions and other income		102		335		3,737		4,174		-		4,174
Total revenues		16,529		8,800		3,737		29,066		(1,000)		28,066
Total operating expenses		19,117		4,153		436		23,706		1,204		24,910
Operating income / (loss)		(2,588)		4,647		3,301		5,360		(2,204)		3,156
Income / (loss) from equity method affiliates		-		475		172		647		-		647
Other non-operating income / (expense)		250		-		-		250		(1,035)		(785)
Income / (loss) before income taxes		(2,338)		5,122		3,473		6,257		(3,239)		3,018
Income tax expense / (benefit)		-		-		-		-		54		54
Net income / (loss)		(2,338)		5,122		3,473		6,257		(3,293)		2,964
Less: Net income / (loss) attributable to the
non-controlling interest		(11)		-		-		(11)		967		956
Net income / (loss) attributable to IFMI	$	(2,327)	$	5,122	$	3,473	$	6,268	$	(4,260)	$	2,008
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	206	$	3	$	-	$	209	$	80	$	289

(1)Unallocated includes certain expenses incurred by indirect overhead and support departments (such as the executive, finance, legal, information technology, human resources, risk, compliance, and other similar overhead and support departments). Some of the items not allocated include: (1) operating expenses (such as cash compensation and benefits, equity-based compensation expense, professional fees, travel and entertainment, consulting fees, and rent) related to support departments excluding certain departments that directly support the Capital Markets business segment; (2) interest expense on corporate debt; and (3) income taxes. Management does not consider these items necessary for an understanding of the operating results of these business segments and such amounts are excluded in business segment reporting to the Chief Operating Decision Maker. During the third quarter of 2012, PrinceRidge (capital markets segment) entered into an intercompany engagement with CCFL (asset management segment). This intercompany transaction was eliminated in the unallocated segment.

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Balance Sheet Data
As of September 30, 2013
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Total Assets	$	226,490	$	7,839	$	29,026	$	263,355	$	10,591	$	273,946
Included within total assets:
Investment in equity method affiliates	$	-	$	25	$	17	$	42	$	-	$	42
Goodwill (2)	$	7,937	$	3,176	$	-	$	11,113	$	-	$	11,113
Intangible assets (2)	$	332	$	227	$	-	$	559	$	-	$	559

Balance Sheet Data
As of September 30, 2012
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Total Assets	$	383,283	$	6,597	$	44,966	$	434,846	$	12,756	$	447,602
Included within total assets:
Investment in equity method affiliates	$	-	$	513	$	5,497	$	6,010	$	-	$	6,010
Goodwill (2)	$	7,937	$	3,176	$	-	$	11,113	$	-	$	11,113
Intangible assets (2)	$	372	$	-	$	-	$	372	$	-	$	372

(1)Unallocated assets primarily include (1) amounts due from related parties; (2) furniture and equipment, net; and (3) other assets that are not considered necessary for an understanding of business segment assets and such amounts are excluded in business segment reporting to the Chief Operating Decision Maker.

(2)Goodwill and intangible assets as of September 30, 2013 and 2012 are allocated to the Capital Markets and Asset Management business segments as indicated in the table from above.

Geographic Information

The Company conducts its business activities through offices in the following locations: (1) United States; (2) United Kingdom and other; and (3) Asia. Total revenues by geographic area are summarized as follows:

GEOGRAPHIC DATA
(Dollars in Thousands)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Total Revenues:
United States	$	15,670	$	22,750	$	36,879	$	60,253
United Kingdom & Other		1,659		5,316		7,155		11,610
Asia		757		-		1,812		-
Total	$	18,086	$	28,066	$	45,846	$	71,863

Long-lived assets attributable to an individual country, other than the United States, are not material.

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19. SUPPLEMENTAL CASH FLOW DISCLOSURE

Interest paid by the Company on its debt was $2,055 and $3,655 for the nine months ended September 30, 2013 and 2012, respectively.

The Company paid income taxes of $331 and $134 for the nine months ended September 30, 2013 and 2012, respectively. The Company received $46 and$0 income tax refunds for the nine months ended September 30, 2013 and 2012, respectively.

For the nine months ended September 30, 2013, the Company had the following significant non-cash transactions that are not reflected on the statement of cash flows:

•  The Company acquired additional units of the Operating LLC pursuant to the UIS Agreement and in connection with the redemption of vested Operating LLC units by IFMI and the issuance of shares from the private placement. The Company recognized a net increase in additional paid-in capital of $2,705, a net decrease of $124 in accumulated other comprehensive income, and a decrease of $2,581 in non-controlling interest. See note 14.

•  In connection with the Star Asia Manager Repurchase Transaction, the Company reclassified $705 from investment in equity method affiliates and re-allocated it to certain balance sheet accounts to reflect Star Asia Manager becoming a consolidated subsidiary of the Company. See note 4.

For the nine months ended September 30, 2012, the Company had the following significant non-cash transactions that are not reflected on the statement of cash flows:

•  The Company recognized a net increase in additional paid-in capital of $804, a net decrease of $27 in accumulated other comprehensive income, and a decrease of $777 in non-controlling interest as a result of additional units of the Operating LLC issued to IFMI as a result of the UIS agreement and redemption of vested Operating LLC units by IFMI and the surrender of Operating LLC units by IFMI in connection with the retirement of the Company’s common stock.

•  The Company reclassified $6,446 from redeemable non-controlling interest to mandatorily redeemable equity interests in its consolidated balance sheets due to partnership withdrawals from PrinceRidge.

" The Company retired 50,400 shares of the Company’s common stock it held in treasury. The Company recognized an increase of $328 in accumulated deficit and a decrease of $328 in treasury stock.

20 . RELATED PARTY TRANSACTIONS

The Company has identified the following related party transactions for the nine and three months ended September 30, 2013 and 2012. The transactions are listed by related party and, unless otherwise noted in the text of the description, the amounts are disclosed in the tables at the end of this section.

A. Transactions between Star Asia Manager and the Company

Star Asia Manager serves as external manager of Star Asia and Star Asia SPV (see D-1 and D-4 listed below) and the Company owned 50% of Star Asia Manager prior to March 1, 2013. Following the Star Asia Manager Repurchase Transaction, the Company acquired 100% control of Star Asia Manager and included Star Asia Manager in its consolidated financial statements. See note 4 for a description of the Star Asia Manager Repurchase Transaction. Prior to March 1, 2013, Star Asia Manager had been identified as a related party because it was an equity method investee of the Company. The Company had recognized its share of the income or loss of Star Asia Manager as income or loss from equity method affiliates in the consolidated statements of operations during the pre-acquisition period. Income or loss recognized under the equity method is disclosed in the table at the end of this section.

B. Cohen Bros. Financial, LLC (“CBF”) and EBC

CBF has been identified as a related party because (i) CBF is a non-controlling interest of the Company and (ii) CBF is wholly owned by Daniel G. Cohen, Vice Chairman of the Company’s Board of Directors and the board of managers of the Operating LLC, President and Chief Executive of the Company’s European Business, and President of CCFL (formerly the Chairman and Chief Executive Officer of the Company).

Beginning in October 2008, the Company began receiving a monthly advisory fee for consulting services provided by the Company to CBF. The Company stopped providing these services and stopped receiving this fee as of March 31, 2012. The fee was recognized as a component of asset management revenue in the consolidated statements of operations. This fee is disclosed as management fee revenue in the tables at the end of this section.

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In September 2013, EBC, as an assignee of CBF, made a $4,000 investment in the Company. Mr. Cohen is a trustee of the EBC. See note F listed below and notes 4 and 12.

C. The Bancorp, Inc.

The Bancorp, Inc. (“TBBK”) is identified as a related party because TBBK’s Chairman is the Vice Chairman of the Company’s Board of Directors and of the board of managers of the Operating LLC, President and Chief Executive of the Company’s European Business, and President of CCFL (formerly the Chairman and Chief Executive Officer).

TBBK maintained deposits for the Company in the amount of $80 and $36 as of September 30, 2013 and December 31, 2012, respectively. These amounts are not disclosed in the tables at the end of this section.

As part of the Company’s broker-dealer operations, the Company from time to time purchases securities from third parties and sells those securities to TBBK. The Company may purchase securities from TBBK and ultimately sell those securities to third parties. In either of the cases listed above, the Company includes the trading revenue earned (i.e. the gain or loss realized, or commission earned) by the Company for the entire transaction in the amounts disclosed as part of net trading in the table at the end of this section.

From time to time, the Company will enter into repurchase agreements with TBBK as its counterparty.  As of September 30, 2013, the Company had a repurchase agreement in the amount of $40,824 with TBBK as its counterparty. This is included as a component of securities sold under agreement to repurchase in the consolidated balance sheet.  The Company incurred interest expense related to repurchase agreements with TBBK as its counterparty in the amount of $250 and $157 for the nine and three months ended September 30, 2013, respectively, which was included as a component of net trading revenue in the Company’s consolidated statements of operations.  These amounts are not disclosed in the tables at the end this section.

In September 2013, the Company sold an SBA loan to TBBK which had not settled as of the end of the quarter. The SBA loan had a principal amount of $406 and a cost basis and carrying value of $437 and the Company included it as a component of trading securities sold, not yet purchased in the Company’s consolidated balance sheets as of September 30, 2013.

D. Investment Vehicles and Other

The following are identified as related parties. Amounts with respect to the transactions identified below are summarized in a table at the end of this section.

1. Star Asia invests primarily in Asian commercial real estate structured finance products, including CMBS, corporate debt of REITs and real estate operating companies, B notes, mezzanine loans and other commercial real estate fixed income investments. As of September 30, 2013 and December 31, 2012, the Company directly owned approximately 28% of Star Asia’s outstanding shares. Star Asia has been identified as a related party because in the absence of the fair value option of FASB ASC 825, Star Asia would be treated as an equity method affiliate, and because the Vice Chairman of the Company (formerly the Chairman and Chief Executive Officer of the Company) is a member of Star Asia’s board of directors. The Company has an investment in Star Asia. The Company, through Star Asia Manager, has an asset management contract with Star Asia. Dividends received from the Company’s investment in Star Asia are disclosed as part of dividend income in the tables at the end of this section. Gains or losses recognized from its investment are disclosed as part of gain / (loss) in the tables at the end of this section. Amounts earned from the management contract are disclosed as part of management fee revenue in the tables at the end of this section.

2. EuroDekania invests primarily in hybrid capital securities of European bank and insurance companies, CMBS, RMBS and widely syndicated leverage loans. EuroDekania’s investments are denominated in Euros or British Pounds Sterling. As of September 30, 2013 and December 31, 2012, the Company directly owned approximately 10% of EuroDekania’s outstanding shares. EuroDekania has been identified as a related party because the Vice Chairman of the Company (formerly the Chairman and Chief Executive Officer of the Company) is a member of EuroDekania’s board of directors. The Company has a management contract with and an investment in EuroDekania. Dividends received from that investment are disclosed as part of dividend income in the tables at the end of this section. Gains or losses recognized from its investment are disclosed as part of the gain / (loss) in the tables at the end of this section. Amounts earned from its management contract are disclosed as part of management fee revenue in the tables at the end of this section.

3. The Deep Value GP and Deep Value GP II served as the general partners for the Deep Value funds. The Deep Value GP and the Deep Value GP II are collectively referred to as the “Deep Value GPs.” The Company owns 50% of the Deep Value GP and 40% of the Deep Value GP II. The Deep Value GP and the Deep Value GP II have been identified as related parties because the Deep Value GPs are equity method affiliates of the Company. During the third quarter of 2013, the Company received its final liquidating distribution from the Deep Value GP.  Income or loss recognized under the equity method is disclosed in the table at the end of this section.

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4. Star Asia SPV is a Delaware limited liability company formed in 2010. It was formed to create a pool of assets that would provide collateral to investors who participated in Star Asia’s 2010 rights offering. The investors in Star Asia’s rights offering also received equity interests in Star Asia SPV. Star Asia SPV purchased certain assets from Star Asia and the equity interest holders of Star Asia SPV receive investment returns on the assets held in the Star Asia SPV up to an agreed upon maximum. Returns above that agreed upon maximum are remitted back to Star Asia. The Company directly owned approximately 31% of Star Asia SPV’s outstanding shares as of December 31, 2012. During the second quarter of 2013, the Company received its investment return up to an agreed upon maximum from Star Asia SPV and the Company no longer has an ownership interest in the entity. Star Asia SPV has been identified as a related party because it was an equity method investee of the Company. Income or loss recognized under the equity method is disclosed in the table at the end of this section.

5. Star Asia Opportunity is a Delaware limited liability company formed in July 2011 to partially finance the acquisition of seven real estate properties in Japan. As of September 30, 2013 and December 31, 2012, the Company directly owned approximately 28% of Star Asia Opportunity’s outstanding equity interests. Star Asia Opportunity has been identified as a related party because it is an equity method investee of the Company. The Company recognizes its share of the income or loss of Star Asia Opportunity as income or loss from equity method affiliates in the consolidated statements of operations. Income or loss recognized under the equity method is disclosed in the table at the end of this section.

6. Star Asia Capital Management serves as the external manager of Star Asia Opportunity (see D-5 listed above) and the Company owned 33% of Star Asia Capital Management as of September 30, 2013 and December 31, 2012. Star Asia Capital Management has been identified as a related party because it is an equity method investee of the Company. The Company recognizes its share of the income or loss of Star Asia Capital Management as income or loss from equity method affiliates in the consolidated statements of operations. Income or loss recognized under the equity method is disclosed in the table at the end of this section.

7. The Star Asia Special Situations Fund is a closed-end investment fund that primarily invests in real estate and securities backed by real estate in Japan and does not offer investor redemptions. As of September 30, 2013 and December 31, 2012, the Company owned approximately 2% and 6%, respectively, of the Star Asia Special Situations Fund. The Star Asia Special Situations Fund has been identified as a related party because in the absence of the fair value option of FASB ASC 825, the Company’s investment in the Star Asia Special Situations Fund would be treated as an equity method affiliate of the Company. Dividends received from that investment are disclosed as part of dividend income in the tables at the end of this section. Gains and losses recognized from its investment are disclosed as part of gain / (loss) in the tables at the end of this section.

8. SAA Manager serves as the external manager of the Star Asia Special Situations Fund and the Company owned 33% of SAA Manager as of September 30, 2013 and December 31, 2012. SAA Manager has been identified as a related party because it is an equity method investee of the Company. The Company did not elect the fair value option for its investment in SAA Manager. Income or loss recognized under the equity method is disclosed in the table at the end of this section.

9. SAP GP serves as the general partner for the Star Asia Special Situations Fund and the Company owned 33% of SAP GP as of September 30, 2013 and December 31, 2012. SAP GP has been identified as a related party because it is an equity method investee of the Company. The Company did not elect the fair value option for its investment in SAP GP. Income or loss recognized under the equity method is disclosed in the table at the end of this section. Since its inception during the fourth quarter of 2012 and for the nine and three months ended September 30, 2013, the Company had not made an investment or recognized any income or loss under the equity method.

The following tables display the routine intercompany transactions recognized in the statements of operations from the identified related parties that are described above.

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RELATED PARTY TRANSACTIONS
Nine Months Ended September 30, 2013
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (loss)		Income / (loss) from equity method affiliates
TBBK	$	-	$	436	$	-	$	-	$	-
Star Asia		1,833		-		-		(9,051)		-
Star Asia Manager (1)		-		-		-		-		158
Star Asia SPV		-		-		-		-		1,287
Star Asia Opportunity		-		-		-		-		(5)
Star Asia Capital Management		-		-		-		-		108
Star Asia Special Situations Fund		-		-		-		577		-
SAA Manager		-		-		-		-		173
EuroDekania		-		-		805		221		-
Deep Value GPs		-		-		-		-		(6)
	$	1,833	$	436	$	805	$	(8,253)	$	1,715

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment.  See note A above.

RELATED PARTY TRANSACTIONS
Nine Months Ended September 30, 2012
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (Loss)		Income / (loss) from equity method affiliates
CBF	$	64	$	-	$	-	$	-	$	-
TBBK		-		76		-		-		-
Star Asia		-		-		-		(3,433)		-
Star Asia Manager (1)		-		-		-		-		859
Star Asia SPV		-		-		-		-		1,000
Star Asia Opportunity		-		-		-		-		544
Star Asia Opportunity II										(28)
Star Asia Capital Management		-		-		-		-		328
EuroDekania		139		-		569		1		-
Deep Value GPs		-		-		-		-		(14)
	$	203	$	76	$	569	$	(3,432)	$	2,689

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment.  See note A above.

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RELATED PARTY TRANSACTIONS
Three Months Ended September 30, 2013
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (loss)		Income / (loss) from equity method affiliates
TBBK	$	-	$	35	$	-	$	-	$	-
Star Asia		764		-		-		183		-
Star Asia Capital Management		-		-		-		-		37
Star Asia Special Situations Fund		-		-		-		607		-
SAA Manager		-		-		-		-		64
EuroDekania		-		-		410		235		-
	$	764	$	35	$	410	$	1,025	$	101

RELATED PARTY TRANSACTIONS
Three Months Ended September 30, 2012
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (loss)		Income / (loss) from equity method affiliates
TBBK	$	-	$	5	$	-	$	-	$	-
Star Asia		-		-		-		1,626		-
Star Asia Manager (1)		-		-		-		-		279
Star Asia SPV		-		-		-		-		276
Star Asia Opportunity		-		-		-		-		(75)
Star Asia Opportunity II		-		-		-		-		(28)
Star Asia Capital Management		-		-		-		-		198
EuroDekania		-		-		386		268		-
Deep Value GPs		-		-		-		-		(3)
	$	-	$	5	$	386	$	1,894	$	647

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment.  See note A above.

The following related party transactions are non-routine and are not included in the tables above.

E. Additional Investment in the Star Asia Special Situations Fund

During the three months ended March 31, 2013, the Company made an additional investment of $302 in the Star Asia Special Situations Fund. This investment extinguished the Company’s unfunded commitment as of December 31, 2012. See notes 6 and 7.

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F. Investment in IFMI by Mead Park Capital

In September 2013, Mead Park Capital made a $9,746 investment in the Company.  Mead Park Capital is a vehicle advised by Mead Park and controlled by Jack J. DiMaio Jr., Chief Executive Officer and founder of Mead Park.  In connection with the September 25, 2013 closing of the transactions contemplated by the definitive agreements, Messrs. DiMaio and Ricciardi were elected to the Company’s Board of Directors. Mr. DiMaio was also named the Chairman of the Company’s Board of Directors. See note B from above and notes 4 and 12.

G.  Resource Securities, Inc. (formerly known as Chadwick Securities, Inc.), a registered broker-dealer subsidiary of Resource America, Inc. (“REXI”) 

REXI is a publicly traded specialized asset management company in the commercial finance, real estate and financial fund management sectors.  It has been identified as a related party because (i) the Chairman of the board of REXI is the father of the Company’s Vice Chairman (formerly the Company’s Chairman and Chief Executive Officer). In September 2012, the Company paid a fee of $6 to REXI for its services as the introducing agent for a transaction in which the Company bought back  $1,177 principal amount of subordinated notes payable from an unrelated third party.  The $6 fee was treated as a reduction to the gain recognized on the repurchase of debt, which was included as a component of non-operating income / (expense) in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2012.

H.  Directors and Employees

In addition to the employment agreements the Company has entered into with its Vice Chairman, its Chief Executive Officer and its Chief Financial Officer, the Company has entered into its standard indemnification agreement with each of its directors and executive officers.

21. DUE FROM / DUE TO RELATED PARTIES

The following table summarizes the outstanding due from / to related parties. These amounts may result from normal operating advances or from timing differences between the transactions disclosed in note 20 and final settlement of those transactions in cash. All amounts are primarily non-interest bearing.

DUE FROM/DUE TO RELATED PARTIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
EuroDekania	$	105	$	-
Star Asia Manager (1)		-		98
Star Asia and related entities (2)		496		-
CBF		93		90
Employees		229		264
Due from Related Parties	$	923	$	452

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment. 

(2)   Related entities include Star Asia Capital Management and SAA Manager.

22. subsequent events

In October 2013, the Company repurchased $5,000 aggregate principal amount of the New Notes from an unrelated third party for $5,238, including accrued interest of $238.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of the consolidated financial condition and results of operations of Institutional Financial Markets, Inc. and its majority owned subsidiaries (collectively, “we,” “us,” “our,” or the “Company”) should be read in conjunction with the unaudited consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On a regular basis, we evaluate these estimates, including fair value of financial instruments. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

All amounts in this disclosure are in thousands (except share and per share data) unless otherwise noted.

Overview

We are a financial services company specializing in credit-related fixed income investments. We were founded in 1999 as an investment firm focused on small-cap banking institutions, but have grown to provide an expanding range of capital markets, investment banking, and asset management solutions to institutional investors, corporations, and other small broker dealers. We are organized into three business segments: Capital Markets, Asset Management, and Principal Investing.

•  Capital Markets: Our Capital Markets business segment consists primarily of credit-related fixed income sales, trading, and financing, as well as new issue placements in corporate and securitized products, and advisory services. Our fixed income sales and trading group provides trade execution to corporate investors, institutional investors, and other smaller broker-dealers. We specialize in a variety of products, including but not limited to: corporate bonds, ABS, MBS, CMBS, RMBS, CDOs, CLOs, CBOs, CMOs, municipal securities, TBAs, SBA loans, U.S. government bonds, U.S. government agency securities, brokered deposits and CDs for small banks, and hybrid capital of financial institutions including TruPS, whole loans, and other structured financial instruments. We also offer execution and brokerage services for equity products. We had offered execution and brokerage services for equity derivative products until December 31, 2012, when we sold our equity derivatives brokerage business to a newly formed entity owned by two of our former employees. See note 5 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended. We carry out our capital market activities primarily through our subsidiaries: JVB and PrinceRidge in the United States, and CCFL in Europe.  

•Asset Management: Our Asset Management business segment manages assets within CDOs, permanent capital vehicles, managed accounts, and investment funds (collectively, “Investment Vehicles”). A CDO is a form of secured borrowing. The borrowing is secured by different types of fixed income assets such as corporate or mortgage loans or bonds. The borrowing is in the form of a securitization, which means that the lenders are actually investing in notes backed by the assets. In the event of default, the lenders will have recourse only to the assets securing the loan. Our Asset Management business segment includes our fee-based asset management operations, which include on-going base and incentive management fees. As of September 30, 2013, we had approximately $5.7 billion in AUM of which 94%, or $5.4 billion, was in CDOs.

•  Principal Investing: Our Principal Investing business segment is comprised primarily of our investments in Investment Vehicles we manage, as well as investments in structured products, and the related gains and losses that they generate.

We generate our revenue by business segment primarily through:

Capital Markets:

•our trading activities, which include execution and brokerage services, securities lending activities, riskless trading activities, as well as gains and losses (unrealized and realized) and income and expense earned on securities classified as trading;

•new issue and advisory revenue comprised of (a) origination fees for corporate debt issues originated by us; (b) revenue from advisory services; and (c) new issue revenue associated with arranging and placing the issuance of newly created debt, equity, and hybrid financial instruments;

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Asset Management:

•  asset management fees for our on-going asset manager services provided to various Investment Vehicles, which may include fees both senior and subordinate to the securities issued by the Investment Vehicle;

•incentive management fees earned based on the performance of the various Investment Vehicles; and

•  income or loss from equity method affiliates

Principal Investing:

•gains and losses (unrealized and realized) and income and expense earned on securities, primarily in investments in Investment Vehicles we manage, classified as other investments, at fair value; and

•  income or loss from equity method affiliates.

Business Environment

Our business is materially affected by economic conditions in the financial markets, political conditions, broad trends in business and finance, changes in volume and price levels of securities transactions, and changes in interest rates, all of which can affect our profitability and are unpredictable and beyond our control. These factors may affect the financial decisions made by investors and companies, including their level of participation in the financial markets and their willingness to participate in corporate transactions. Severe market fluctuations or weak economic conditions could continue to reduce our trading volume and revenues, could negatively affect our ability to generate new issue and advisory revenue, and adversely affect our profitability.

The markets remain uneven and vulnerable to changes in investor sentiment. We believe the general business environment will continue to be challenging for the remainder of 2013.  

A portion of our revenues is generated from net trading activity. We engage in proprietary trading for our own account, provide securities financing for our customers, as well as execute “riskless” trades with a customer order in hand resulting in limited market risk to us. The inventory of securities held for our own account, as well as held to facilitate customer trades, and our market making activities are sensitive to market movements.

A portion of our revenues is generated from new issue and advisory engagements. The fees charged and volume of these engagements are sensitive to the overall business environment.

A portion of our revenues is generated from management fees. Our ability to charge management fees and the amount of those fees is dependent upon the underlying investment performance and stability of the Investment Vehicles. If these types of investments do not provide attractive returns to investors, the demand for such instruments will likely fall, thereby reducing our opportunity to earn new management fees or maintain existing management fees.  As of September 30, 2013,  94% of our existing AUM are CDOs. The creation of CDOs and permanent capital vehicles has depended upon a vibrant securitization market. Since 2008, volumes within the securitization market have dropped significantly and have not recovered since that time. Consequently, we have been unable to complete a new securitization since 2008.

A portion of our revenues is generated from our principal investing activities. Therefore, our revenues are impacted by the underlying operating results of these investments. As of September 30, 2013, we had $29,008 of other investments, at fair value representing our principal investment portfolio. Of this amount, $28,913, or 99.7%, was comprised of investments in 4 separate investment funds and permanent capital vehicles: Star Asia, EuroDekania, Tiptree, and the Star Asia Special Situations Fund. Furthermore, the investment in Star Asia is our largest single principal investment and, as of September 30, 2013, had a fair value of $21,118, representing 73% of the total amount of other investments, at fair value. Star Asia seeks to invest in Asian commercial real estate structured finance products, including CMBS, corporate debt of REITs and real estate operating companies, whole loans, mezzanine loans, and other commercial real estate fixed income investments, and in real property located in Japan. Therefore, our results of operations and financial condition will be significantly impacted by the financial results of these investments and, in the case of Star Asia, the Japanese real estate market in general.

Margin Pressures in Corporate Bond Brokerage Business

Performance in the financial services industry in which we operate is highly correlated to the overall strength of the economy and financial market activity. Overall market conditions are a product of many factors beyond our control and can be unpredictable. These factors may affect the financial decisions made by investors, including the level of participation in the financial markets. In turn, these decisions may affect our business results. With respect to financial market activity, our profitability is sensitive to a variety of factors including the volatility of the equity and fixed income markets, the level and shape of the various yield curves, and the volume and value of trading in securities.

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Since 2010, both margins and volumes in certain products and markets within the corporate bond brokerage business have decreased materially as competition has increased and general market activity has declined. Further, we continue to expect that competition will increase over time, resulting in continued margin pressure.

Our response to this margin compression has included: (i) building a diversified securitized product trading platform; (ii) expanding our European capital markets business; (iii) acquiring new product lines; and (iv) monitoring our fixed costs. During the second half of 2012, we undertook cost-cutting initiatives by merging support functionality among and across many of our subsidiaries and business lines. However, there can be no certainty that these efforts will be sufficient. If insufficient, we will likely see a decline in profitability.

During 2013, the Company experienced a reduction in the value of its trading inventory.  The mark to market losses in the trading inventory related to rising interest rates.  The timing coincided with the Federal Reserve’s announcement that it may begin to taper its quantitative easing programs.  In addition, beginning in June 2013, the Company experienced a reduction in trading volumes as well.  The volume reduction was broad based but was most evident in the Company’s agency new issue and trading businesses and its TBA origination business.  The Company may experience reduced trading volumes in the future as a result of market uncertainty surrounding Federal Reserve quantitative easing programs. 

Legislation Affecting the Financial Services Industry

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law. The Dodd-Frank Act contains a variety of provisions designed to regulate financial markets, including credit and derivative transactions. Many aspects of the Dodd-Frank Act are subject to rulemaking that will take effect over the next several years, thus making it difficult to assess the impact on the financial industry, including us, at this time. The Dodd-Frank Act establishes enhanced compensation and corporate governance oversight for the financial services industry, provides a specific framework for payment, clearing and settlement regulation, and empowers the SEC to adopt regulations requiring new fiduciary duties and other more stringent regulation of broker-dealers, investment companies, and investment advisers. We will continue to monitor all applicable developments in the implementation of the Dodd-Frank Act and expect to adapt successfully to any new applicable legislative and regulatory requirements.

Recent Events

Investment by Mead Park Capital and CBF

On September 25, 2013, the Company issued shares and convertible notes to Mead Park Capital Partners LLC (“Mead Park Capital”) and EBC, as assignee of CBF, and raised a total of $13,746 in the aggregate. See notes 4 and 12 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

Repurchase of New Notes

As previously disclosed, on October 28, 2013, the Company repurchased $5,000 aggregate principal amount of the New Notes from an unrelated third party for $5,238, including accrued interest of $238.  Holders of the New Notes have the right to require us to repurchase those notes on May 15, 2014.  As a result of this, the outstanding principal amount of New Notes has been reduced from $8,121 to $3,121. 

Planned Consolidation of CCPR and JVB

On October 2, 2013, the Company announced that it had begun the process of consolidating two of its registered broker-dealer subsidiaries, CCPR and JVB, into a single broker-dealer subsidiary.  See Liquidity and Capital Resources –Planned Consolidation of CCPR and JVB below for additional details relating to the planned consolidation of CCPR and JVB.

Consolidated Results of Operations

The following section provides a comparative discussion of our consolidated results of operations for the specified periods. The period-to-period comparisons of financial results are not necessarily indicative of future results.

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Nine Months Ended September 30, 2013 Compared to the Nine Months Ended September 30, 2012

The following table sets forth information regarding our consolidated results of operations for the nine months ended September 30, 2013 and 2012.  

INSTITUTIONAL FINANCIAL MARKETS, INC.
CONSOLIDATED  STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
	Nine Months Ended September 30,				Favorable / (Unfavorable)
	2013		2012		$ Change		% Change
Revenues
Net trading	$	32,513	$	51,311	$	(18,798)		(37)%
Asset management		13,561		18,010		(4,449)		(25)%
New issue and advisory		5,259		3,024		2,235		74%
Principal transactions and other income		(5,487)		(482)		(5,005)		(1038)%
Total revenues		45,846		71,863		(26,017)		(36)%
Operating expenses
Compensation and benefits		37,547		49,811		12,264		25%
Business development, occupancy,  equipment		4,271		3,970		(301)		(8)%
Subscriptions, clearing, and execution		7,161		8,574		1,413		16%
Professional fee and other operating		9,971		9,702		(269)		(3)%
Depreciation and amortization		1,036		1,023		(13)		(1)%
Total operating expenses		59,986		73,080		13,094		18%
Operating income / (loss)		(14,140)		(1,217)		(12,923)		(1062)%
Non-operating income / (expense)
Interest expense, net		(3,111)		(3,187)		76		2%
Other income / (expense)		-		(4,271)		4,271		100%
Income / (loss) from equity method affiliates		1,715		2,689		(974)		(36)%
Income / (loss) before income taxes		(15,536)		(5,986)		(9,550)		(160)%
Income taxes		(1,761)		108		1,869		1731%
Net income / (loss)		(13,775)		(6,094)		(7,681)		(126)%
Less: Net (loss) income attributable to the non-controlling interest		(4,469)		(2,165)		2,304		106%
Net income / (loss) attributable to IFMI	$	(9,306)	$	(3,929)	$	(5,377)		(137)%

Revenues

Revenues decreased by $26,017, or 36%, to $45,846 for the nine months ended September 30, 2013 from $71,863 for the nine months ended September 30, 2012. As discussed in more detail below, the change was comprised of (i) a decrease of $18,798 in net trading; (ii)  a decrease of $4,449 in asset management revenue; (iii)  an increase of $2,235 in new issue and advisory revenue; and (iv) a decrease of $5,005 in principal transactions and other income.

Net Trading

Net trading revenue decreased by $18,798, or 37%, to $32,513 for the nine months ended September 30, 2013 from $51,311 for the nine months ended September 30, 2012.The following table provides detail on net trading revenue by operation:

NET TRADING
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
JVB	$	11,205	$	17,901	$	(6,696)
PrinceRidge and other capital markets		18,567		28,472		(9,905)
CCFL		2,741		4,938		(2,197)
Total	$	32,513	$	51,311	$	(18,798)

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The decline in revenue in JVB was primarily due to the decline in trading revenue earned in the following asset classes: agency securities, treasury securities, and municipal bonds. The decline in PrinceRidge and other capital markets was primarily due to lower trading revenue earned in the equity derivatives product trading of $6,082 as a result of the sale of that business in December 2012. The remaining decline was primarily due to the decline in trading revenue in agency securities, treasury securities, municipal bonds, high yield corporate bonds, and structured products.  The decrease in revenue in CCFL was primarily due to a decrease in overall volumes. 

Our net trading revenue includes unrealized gains on our trading investments, as of the applicable measurement date, that may never be realized due to changes in market or other conditions not in our control.  This may adversely affect the ultimate value realized from these investments. In addition, our net trading revenue also includes realized gains on certain proprietary trading positions. Our ability to derive trading gains from such trading positions is subject to overall market conditions. Due to volatility and uncertainty in the capital markets, the net trading revenue recognized during the nine months ended September 30, 2013 may not be indicative of future results. Furthermore, some of the assets included in the Investments-trading line of our consolidated balance sheets represent level 3 valuations within the FASB fair value hierarchy. Level 3 assets are carried at fair value based on estimates derived using internal valuation models and other estimates. See notes 6 and 7 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q. The fair value estimates made by the Company may not be indicative of the final sale price at which these assets may be sold.

Asset Management

Assets Under Management

Our assets under management (“AUM”) equals the sum of: (1) the gross assets included in CDOs that we have sponsored and manage; plus (2) the NAV of the permanent capital vehicles and investment funds we manage; plus (3) the NAV of other accounts we manage.

Our calculation of AUM may differ from the calculations used by other asset managers and, as a result, this measure may not be comparable to similar measures presented by other asset managers. This definition of AUM is not necessarily identical to a definition of AUM that may be used in our management agreements.

ASSETS UNDER MANAGEMENT
(dollars in thousands)
	September 30,				December 31,
		2013		2012		2012		2011
Company sponsored CDOs (1)	$	5,367,346	$	6,042,098	$	6,051,678	$	7,859,755
Permanent capital vehicles (2)		115,578		173,938		145,326		169,237
Investment funds (3)		174,703		-		84,659		-
Managed accounts (4)		47,093		44,869		43,924		33,644
Assets under management (5)	$	5,704,720	$	6,260,905	$	6,325,587	$	8,062,636

(1) Management fee income earned from Company Sponsored CDOs is recorded as a component of asset management revenue.

(2) Management fee income earned from funds managed in permanent capital vehicles is recorded as a component of asset management revenue.

(3) Management fee income earned from investment funds is primarily comprised of fees earned by entities in which the Company has an equity method investment.  Accordingly, the resulting revenue is accounted for within income from equity method affiliates. 

(4) Management fee income earned on managed accounts is recorded as a component of asset management revenue. 

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(5) AUM for company sponsored CDOs, permanent capital vehicles, investment funds, and other managed accounts represents total AUM at the end of the period indicated.

(6)

Asset management fees decreased by $4,449, or 25%, to $13,561 for the nine months ended September 30, 2013 from $18,010 for the nine months ended September 30, 2012, as discussed in more detail below. The following table provides a more detailed comparison of the two periods:

ASSET MANAGEMENT
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
CDO and related service agreements	$	10,762	$	17,136	$	(6,374)
Other		2,799		874		1,925
Total	$	13,561	$	18,010	$	(4,449)

CDOs

Asset management revenue from company-sponsored CDOs decreased by $6,374 to $10,762 for the nine months ended September 30, 2013 from $17,136 for the nine months ended September 30, 2012. The following table summarizes the periods presented by asset class:

FEES EARNED BY ASSET CLASS
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
TruPS and insurance company debt - U.S.	$	5,280	$	8,632	$	(3,352)
High grade and mezzanine ABS		1,158		1,230		(72)
TruPS and insurance company debt - Europe		1,917		5,857		(3,940)
Broadly syndicated loans - Europe		2,407		1,417		990
Total	$	10,762	$	17,136	$	(6,374)

Asset management fees for TruPS and insurance company debt – U.S. declined primarily because effective as of February 23, 2013, we no longer provide any services related to the Alesco X through XVII securitizations.  On July 29, 2010, we entered into an agreement with a third party whereby we sold the management rights and responsibilities related to the Alesco X through XVII securitizations.  In connection with this agreement, we entered into a services agreement under which we provided certain services to the third party purchaser.  This services agreement expired on February 23, 2013.  We will continue to receive certain incentive payments through February 23, 2017 if the management fees earned by the third party exceed certain thresholds.  We will continue to recognize these incentive payments, if any, as earned.  

Asset management fees for high grade and mezzanine ABS declined by $672 primarily because the average AUM in the deals in this asset class declined due to defaults of the underlying assets, repayments of the underlying assets, and liquidations of certain CDOs.This decrease was partially offset by an increaseof $600 related to a final fee earned in conjunction with our resignation as manager of one securitization. 

Asset management fees for TruPS and insurance company debt – Europe declined primarily because we received a final CDO asset management fee for one of our European deals during the third quarter of 2012.  The total revenue recorded during the period related to this one European CDO was $3,906. 

Asset management fees for broadly syndicated loans –Europe represent revenue from a single CLO.  Prior to August 2012, we served as the junior manager of this CLO and we shared management fees evenly with the lead manager.  In August 2012, we became the lead manager (and remained junior manager).  Subsequent to becoming lead manager, we earn all of the management fees related to this CLO which has caused the increase in asset management fees from broadly syndicated loans – Europe.

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Other

Other asset management revenue increased by $1,925 to $2,799 for the nine months ended September 30, 2013 from $874 for the nine months ended September 30, 2012.

Of the increase in other asset management revenue, $1,833 was due to the acquisition of Star Asia Manager which was effective March 1, 2013.  Prior to the acquisition, we owned 50% of Star Asia Manager and treated the investment as an equity method investment.  See note 4 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

New Issue and Advisory Revenue

New issue and advisory revenue increased by $2,235, or 74%, to $5,259 for the nine months ended September 30, 2013 from $3,024 for the nine months ended September 30, 2012.

Our revenue earned from new issue and advisory has been, and we expect will continue to be, volatile. We earn revenue from a limited number of engagements. Therefore, a small change in the number of engagements can result in large fluctuations in the revenue recognized. Further, even if the number of engagements stays consistent, the average revenue per engagement can fluctuate considerably. Finally, our revenue is generally earned when an underlying transaction closes (rather than on a monthly or quarterly basis). Therefore, the timing of underlying transactions increases the volatility of our revenue recognition.

Principal Transactions and Other Income

Principal transactions and other income decreased by $5,005 to ($5,487) for the nine months ended September 30, 2013, as compared to ($482) for the nine months ended September 30, 2012.  

PRINCIPAL TRANSACTIONS & OTHER INCOME
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
Change in fair value of other investments, at fair value	$	(8,714)	$	(3,525)	$	(5,189)
Gain on sale of cost method investment		-		1,687		(1,687)
Dividends, interest, and other income		3,227		1,356		1,871
Total	$	(5,487)	$	(482)	$	(5,005)

Change in fair value of other investments, at fair value

Change in fair value of other investments, at fair valuedecreased by $5,189 to ($8,714) for the nine months ended September 30, 2013, as compared to ($3,525) for the nine months ended September 30, 2012.

CHANGE IN FAIR VALUE OF OTHER INVESTMENTS, AT FAIR VALUE
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
EuroDekania	$	221	$	1	$	220
Star Asia		(9,051)		(3,433)		(5,618)
Tiptree		(517)		222		(739)
Star Asia Special Situations Fund		577		-		577
Other		56		(315)		371
Total	$	(8,714)	$	(3,525)	$	(5,189)

For the periods presented above, the change in fair value of our investment in EuroDekania was primarily the result of the change in the underlying NAV of EuroDekania. 

Star Asia is an investment fund that is exposed to changes in its value due to the performance of its underlying investments. The value of our investment in Star Asia has also been impacted by the fact that Star Asia’s investments are primarily denominated in

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Japanese Yen and Star Asia itself does not hedge against currency fluctuations. The following table shows the change in the value of our investment in Star Asia and how it was impacted by these items:

CHANGE IN FAIR VALUE OF STAR ASIA
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
Foreign exchange	$	(5,381)	$	(235)	$	(5,146)
Underlying investment values, net		(3,670)		(3,198)		(472)
Total	$	(9,051)	$	(3,433)	$	(5,618)

Foreign exchange: This line item represents the impact to fair value of our investment in Star Asia from currency fluctuations. This is because Star Asia’s investments are primarily denominated in Japanese Yen and Star Asia itself does not hedge against currency fluctuations. Accordingly, we are exposed to increases and decreases in the value of our investment in Star Asia that result from fluctuations of the Japanese Yen as compared to the U.S. Dollar. From time to time, we may seek to minimize this risk by entering into a Japanese Yen hedge. However, our hedging activities could negatively impact our liquidity. That is, the hedge itself settles in cash on a periodic basis while our investment in Star Asia is comparatively illiquid. Therefore, we continuously consider the appropriate level for the Japanese Yen hedge, especially considering our overall corporate liquidity position. We may or may not enter into hedges in the future based on our corporate liquidity. Any un-hedged portion of our investment in Star Asia will continue to be exposed to currency fluctuations.

As of September 30, 2013, our long exposure to the Japanese Yen was 3.4 billion Japanese Yen. Our Japanese Yen hedge was 1.25 billion Japanese Yen.  The spot rate of the U.S. Dollar to Japanese Yen was $98.27 as of September 30, 2013, which means our un-hedged portion of Star Asia was $21.6 million. As of September 30, 2012, our long exposure to the Japanese Yen was 3.8 billion Japanese Yen. Our Japanese Yen hedge was 1.0 billion Japanese Yen.  The spot rate of U.S. Dollar to Japanese Yen was $77.96 as of September 30, 2012, which means our un-hedged portion of Star Asia was $35.3 million.

Underlying investment values: This line item represents the impact to the fair value of our investment in Star Asia from changes in the underlying net investment values of Star Asia’s investments, net of debt, exclusive of the impact of foreign currency changes.

Effective June 30, 2013, we changed the way we calculate the fair value of our investment in Tiptree.  Previously, we carried our investment at the underlying NAV of the fund.  However, Tiptree recently completed a reorganization.  As a result of the reorganization, our investment in Tiptree can be exchanged into shares of Tiptree Financial, Inc. based on a stated exchange ratio (which is generally fixed, but can be adjusted for certain events like stock dividends or stock splits).  Tiptree Financial Inc. is publicly traded over the counter.  Therefore, beginning June 30, 2013, we calculate the fair value of our investment in Tiptree by using the closing over the counter price for Tiptree Financial Inc. and adjusting for the exchange ratio.  The decline in the fair value of our investment was primarily due to this change in method of calculating the fair value of our investment.

In December 2012, we made an investment in the Star Asia Special Situations Fund. We carry our investment in the Star Asia Special Situations Fund at the NAV of the underlying fund.

Dividends, interest, and other

Dividends, interest, and other increased by $1,871 to $3,227 for the nine months ended September 30, 2013, as compared to $1,356 for the nine months ended September 30, 2012.Prior the Merger, AFN had entered into an arrangement whereby it guaranteed a portion of a particular loan that was owned by the Alesco XIV securitization.  This arrangement was accounted for as a guarantee and we recorded a liability of $1,084 at the Merger Date.  In May 2013, the underlying loan was paid off in full by the borrower.  As a result our guarantee was extinguished.  We recorded other revenue of $1,084 in the second quarter of 2013 and wrote off the liability.    See note 17 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q. The remaining increase in dividends interest and other was primarily comprised of: (i) $567 increase from our revenue share arrangement with Strategos Capital Management LLC; and (ii) $242 increase in dividend income related to EuroDekania and Tiptree. 

Operating Expenses

Operating expenses decreased by $13,094, or 18%, to $59,986 for the nine months ended September 30, 2013 from $73,080 for the nine months ended September 30, 2012. As discussed in more detail below, the change was comprised of (i) a decrease of $12,264 in compensation and benefits; (ii) an increase of $301 in business development, occupancy, and equipment; (iii) a decrease of $1,413 in subscriptions, clearing, and execution; (iv) an increase of $269 of professional fee and other operating; and (v) an increase of $13 of depreciation and amortization. 

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Compensation and Benefits

Compensation and benefits decreased by $12,264, or 25%, to $37,547 for the nine months ended September 30, 2013 from $49,811 for the nine months ended September 30, 2012.  

COMPENSATION AND BENEFITS
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
Cash compensation and benefits	$	35,786	$	49,377	$	(13,591)
Equity-based compensation		1,761		434		1,327
Total	$	37,547	$	49,811	$	(12,264)

Cash compensation and benefits in the table above is primarily comprised of salary, incentive compensation, and benefits.  Cash compensation and benefits decreased by $13,591 to $35,786 for the nine months ended September 30, 2013, from $49,377 for the nine months ended September 30, 2012. This decrease was primarily a result of a decrease in incentive compensation which is tied to revenue and operating profitability.  Our total headcount decreased from 204 at September 30, 2012 to 189 at September 30, 2013.  From time to time, the Company pays employees severance when they are terminated without cause. These severance payments are included within cash compensation in the table above.

Equity-based compensation increased by $1,327 to $1,761 for the nine months ended September 30, 2013 from $434 for the nine months ended September 30, 2012.  There were three major components of this change:

EQUITY BASED COMPENSATION
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
Michael T. Hutchins and John P. Costas	$	-	$	(1,158)	$	1,158
Reversals of previously recognized expense		(160)		(1,955)		1,795
Other equity compensation, net		1,921		3,547		(1,626)
Total	$	1,761	$	434	$	1,327

First, in the nine months ended September 30, 2012, we recognized a reduction in equity based compensation of $1,158 related to the forfeiture of equity based grants to Michael T. Hutchins and John P. Costas (the former chief executive officer and former chairman of PrinceRidge) in July 2012. Second, we recognized $1,795 more in reversals of equity compensation expense in the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2013 due to forfeitures and employees not meeting their performance targets.  Finally, we recognized a reduction in other equity compensation expense of $1,626 primarily as a result of employee grants becoming fully vested or forfeited after September 30, 2012, net of new grants after September 30, 2012. 

Business Development, Occupancy, and Equipment

Business development, occupancy, and equipment increased by $301, or 8%, to $4,271 for the nine months ended September 30, 2013 from $3,970 for the nine months ended September 30, 2012. The increase was primarily due to an increase in technology support expenditures of $501 partially offset by a decrease in travel and entertainment of $242.  As part of our cost savings measures, we terminated a significant portion of our in house information technology staff and outsourced those services to third party providers. 

Subscriptions, Clearing, and Execution

Subscriptions, clearing, and execution decreased by $1,413, or 16%, to $7,161 for the nine months ended September 30, 2013 from $8,574 for the nine months ended September 30, 2012.   The decrease was due to a reduction in clearing and execution costs of $704 primarily as a result of lower trading volume and a decrease in subscriptions of $709 as a result of the cost savings measures implemented. 

Professional Fees and Other Operating Expenses

Professional fees and other operating expenses increased by $269, or 3%, to $9,971 for the nine months ended September 30, 2013 from $9,702 for the nine months ended September 30, 2012. The increase was primarily the result of $900 of expense incurred

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because we deemed an investment banking fee receivable as uncollectable.  This increase was partially offset by decreases other expenses as a result of cost savings measures.   

Depreciation and Amortization

Depreciation and amortization increased by $13, or 1%, to $1,036 for the nine months ended September 30, 2013 from $1,023 for the nine months ended September 30, 2012.

Non-Operating Income and Expense

Interest Expense, net

Interest expense decreased by $76, or 2%, to $3,111 for the nine months ended September 30, 2013 from $3,187 for the nine months ended September 30, 2012. The decrease was comprised of:  (i) a decrease of $368 of interest incurred on the convertible senior notes (comprised of our 7.625% Contingent Convertible Senior Notes due 2027 (“Old Notes”) and New Notes) due to repurchases and redemptions of the Old Notes during the nine months ended September 30, 2012; (ii) a reduction of $108 of interest incurred on the subordinated notes payable due to repayments and repurchases of these notes subsequent to September 30, 2012; (iii) a reduction of $161 of interest incurred on the junior subordinated notes as a result of the interest rate on one of the two issuances changing from a fixed rate to a lower variable rate beginning in July 31, 2012; partially offset by (iv) a decrease of $437 of interest income related to the reduction in the amount owed to withdrawing partners of PrinceRidge which was recorded in the nine months ended September 30, 2012; (v) and increase in interest expense of $109 relating to the amortization of the discount attributable to a payment made by the Company to Sentinel Management Group, Inc. (“Sentinel”) in connection with the settlement of certain litigation matters involving the Company’s U.S. broker-dealer, Cohen & Company Securities, LLC and Sentinel (the “Sentinel Litigation”); and (vi) $15 of other increases in interest expense.  See notes 12 and 13 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

Other Income (Expense), net

Other income (expense), net was $0 for the nine months ended September 30, 2013 as compared to ($4,271) for the nine months ended September 30, 2012. For the nine months ended September 30, 2012, other income (expense), net represented expense of $4,357 related to the settlement of the Sentinel Litigation partially offset by a gain on repurchase of debt of $86. 

Income / (Loss) from Equity Method Affiliates

Income from equity method affiliates decreased by $974, or 36% to $1,715 for the nine months ended September 30, 2013 from $2,689 for the nine months ended September 30, 2012. Income or loss from equity method affiliates represents our share of the related entities’ earnings.

INCOME / (LOSS) FROM EQUITY METHOD AFFILIATES
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
Star Asia Manager	$	157	$	859	$	(702)
Deep Value GP		-		(14)		14
Deep Value GP II		(6)		-		(6)
SAA Manager		173		-		173
Star Asia Capital Management		109		328		(219)
Star Asia Opportunity		(5)		544		(549)
Star Asia Opportunity II		-		(28)		28
Star Asia SPV		1,287		1,000		287
Total	$	1,715	$	2,689	$	(974)

See notes 4, 11, and 20 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

Income Tax Expense / (Benefit)

The income tax expense / (benefit)decreased by $1,869 to income tax expense / (benefit) of ($1,761) for the nine months ended September 30, 2013 from $108 for the nine months ended September 30, 2012. The tax benefit realized in 2013 was comprised of: (i) a benefit of $316 resulting from a reduction in our state effective tax rate; (ii) $1,402 representing the recognition of a previously unrecognized tax benefit that became effectively settled during the period; and (iii) and other miscellaneous tax benefits of $43. The

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tax expense realized by us in 2012 primarily represented tax incurred at our French subsidiary, Cohen & Compagnie SAS as well as local level taxes incurred in the United States.  See note 21 to our consolidated financial statements included in the Company’s 2012 Annual Report on Form 10-K for the year ended December 31, 2012, as amended, for a more complete description of the Company’s tax attributes and unrecognized tax benefits. Also, see note 17 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q regarding a Pennsylvania income tax assessment.  

Net Income / (Loss) Attributable to the Non-controlling Interest

Net income / (loss) attributable to the non-controlling interest for the nine months ended September 30, 2013 and 2012 was comprised of the non-controlling interest related to member interests in the Operating LLC other than interests held by us for the relevant periods. In addition, net income / (loss) attributable to the non-controlling interest also included non-controlling interest related to entities that were consolidated by the Operating LLC but not wholly owned.

SUMMARY CALCULATION OF NON-CONTROLLING INTEREST
Nine Months Ended September 30, 2013
			Majority				Total
	Wholly owned		owned		IFMI		Operating				Consolidated
	subsidiaries		subsidiaries		LLC		LLC		IFMI		IFMI
Net income / (loss) before tax	$	(14,724)	$	(812)	$	-	$	(15,536)	$	-	$	(15,536)
Income tax expense / (benefit)		-		(78)		(1,367)		(1,445)		(316)		(1,761)
Net income / (loss) after tax		(14,724)		(734)		1,367		(14,091)		316		(13,775)
Majority owned subsidiary non-controlling interest		-		(8)		-		(8)
Net loss attributable to Operating LLC		(14,724)		(726)		1,367		(14,083)
Average effective Operating LLC non-controlling interest (1)%								31.68%
Operating LLC non-controlling interest								(4,461)
Majority owned subsidiary non-controlling interest								(8)
Total non-controlling interest							$	(4,469)

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SUMMARY CALCULATION OF NON-CONTROLLING INTEREST
Nine Months Ended September 30, 2012
			Majority				Total
	Wholly owned		owned		IFMI		Operating				Consolidated
	subsidiaries		subsidiaries		LLC		LLC		IFMI		IFMI
Net income / (loss) before tax	$	(3,520)	$	(2,466)	$	-	$	(5,986)	$	-	$	(5,986)
Income tax expense / (benefit)		-		-		108		108		-		108
Net income / (loss) after tax		(3,520)		(2,466)		(108)		(6,094)		-		(6,094)
Majority owned subsidiary non-controlling interest		-		(249)		-		(249)
Net loss attributable to Operating LLC		(3,520)		(2,217)		(108)		(5,845)
Average effective Operating LLC non-controlling interest (1)%								32.78%
Operating LLC non-controlling interest								(1,916)
Majority owned subsidiary non-controlling interest								(249)
Total non-controlling interest							$	(2,165)

(1)Non-controlling interest is recorded on a monthly basis. Because earnings are recognized unevenly throughout the year and the non-controlling interest percentage may change during the period, the average effective non-controlling interest percentage may not equal the percentage at the end of any period or the simple average of the beginning and ending percentages.

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Three Months Ended September 30, 2013 Compared to the Three Months Ended September 30, 2012

The following table sets forth information regarding our consolidated results of operations for the three months ended September 30, 2013 and 2012.  

INSTITUTIONAL FINANCIAL MARKETS, INC.
CONSOLIDATED  STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
	Three Months Ended September 30,				Favorable / (Unfavorable)
	2013		2012		$ Change		% Change
Revenues
Net trading	$	7,824	$	13,669	$	(5,845)		(43)%
Asset management		4,644		8,465		(3,821)		(45)%
New issue and advisory		3,692		1,758		1,934		110%
Principal transactions and other income		1,926		4,174		(2,248)		(54)%
Total revenues		18,086		28,066		(9,980)		(36)%
Operating expenses
Compensation and benefits		11,529		16,484		4,955		30%
Business development, occupancy,  equipment		1,429		1,520		91		6%
Subscriptions, clearing, and execution		2,495		2,602		107		4%
Professional fee and other operating		3,436		4,015		579		14%
Depreciation and amortization		367		289		(78)		(27)%
Total operating expenses		19,256		24,910		5,654		23%
Operating income / (loss)		(1,170)		3,156		(4,326)		(137)%
Non-operating income / (expense)
Interest expense, net		(1,047)		(868)		(179)		(21)%
Other income / (expense)		-		83		(83)		(100)%
Income / (loss) from equity method affiliates		101		647		(546)		(84)%
Income / (loss) before income taxes		(2,116)		3,018		(5,134)		(170)%
Income taxes		(1,807)		54		1,861		3446%
Net income / (loss)		(309)		2,964		(3,273)		(110)%
Less: Net (loss) income attributable to the non-controlling interest		(205)		956		1,161		121%
Net income / (loss) attributable to IFMI	$	(104)	$	2,008	$	(2,112)		(105)%

Revenues

Revenues decreased by $9,980, or 36%, to $18,086 for the three months ended September 30, 2013 from $28,066 for the three months ended September 30, 2012. As discussed in more detail below, the change was comprised of (i) a decrease of $5,845 in net trading; (ii)  a decrease of $3,821 in asset management revenue; (iii) an increase of $1,934 in new issue and advisory revenue; and (iv) a decrease of $2,248 in principal transactions and other income.

Net Trading

Net trading revenue decreased by $5,845, or 43%, to $7,824 for the three months ended September 30, 2013 from $13,669 for the three months ended September 30, 2012.The following table provides detail on net trading revenue by operation.

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NET TRADING
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
JVB	$	2,427	$	5,425	$	(2,998)
PrinceRidge and other capital markets		5,127		7,676		(2,549)
CCFL		270		568		(298)
Total	$	7,824	$	13,669	$	(5,845)

Trading revenue is down in all three groups due to lower trading volumes and margins. The decline in revenue in JVB was primarily due to the decline in trading revenue earned in the following asset classes: agency securities, treasury securities, structured products, and municipal bonds. The decline in PrinceRidge and other capital markets was primarily due to lower trading revenue earned in the equity derivatives product trading of $1,656 as a result of the sale of that business in December 2012. The remaining decline was primarily due to the decline in trading revenue in municipal bonds and structured products.  The decrease in revenue in CCFL was primarily due to a decrease in overall volumes.

Our net trading revenue includes unrealized gains on our trading investments, as of the applicable measurement date, that may never be realized due to changes in market or other conditions not in our control.  This may adversely affect the ultimate value realized from these investments. In addition, our net trading revenue also includes realized gains on certain proprietary trading positions. Our ability to derive trading gains from such trading positions is subject to overall market conditions. Due to volatility and uncertainty in the capital markets, the net trading revenue recognized during the three months ended September 30, 2013, may not be indicative of future results. Furthermore, some of the assets included in the Investments-trading line of our consolidated balance sheets represent level 3 valuations within the FASB fair value hierarchy. Level 3 assets are carried at fair value based on estimates derived using internal valuation models and other estimates. See notes 6 and 7 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q. The fair value estimates made by the Company may not be indicative of the final sale price at which these assets may be sold.

Asset Management

Asset management fees decreased by $3,821, or 45%, to $4,644 for the three months ended September 30, 2013 from $8,465 for the three months ended September 30, 2012, as discussed in more detail below. The following table provides a more detailed comparison of the two periods:

ASSET MANAGEMENT
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
CDO and related service agreements	$	3,540	$	8,254	$	(4,714)
Other		1,104		211		893
Total	$	4,644	$	8,465	$	(3,821)

CDOs

Asset management revenue from company-sponsored CDOs decreased by $4,714 to $3,540 for the three months ended September 30, 2013 from $8,254 for the three months ended September 30, 2012. The following table summarizes the periods presented by asset class:

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FEES EARNED BY ASSET CLASS
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
TruPS and insurance company debt - U.S.	$	1,436	$	2,871	$	(1,435)
High grade and mezzanine ABS		671		371		300
TruPS and insurance company debt - Europe		628		4,455		(3,827)
Broadly syndicated loans - Europe		805		557		248
Total	$	3,540	$	8,254	$	(4,714)

Asset management fees for TruPS and insurance company debt – U.S. declined primarily because effective as of February 23, 2013, we no longer provide any services related to the Alesco X through XVII securitizations.  On July 29, 2010, we entered into an agreement with a third party pursuant to which we sold the management rights and responsibilities related to the Alesco X through XVII securitizations.  In connection with this agreement, we entered into a services agreement under which we provided certain services to the third party purchaser.  This services agreement expired on February 23, 2013.  We will continue to receive certain incentive payments through February 23, 2017 if the management fees earned by the third party exceed certain thresholds.  We will continue to recognize these incentive payments, if any, as earned.  

Asset management fees for high grade and mezzanine ABS increased by $600 related to a final fee earned in conjunction with our resignation as manager of one securitization.  This increase was offset by a decrease of $300 primarily because the average AUM in the remaining deals in this asset class declined due to defaults of the underlying assets, repayments of the underlying assets, and liquidations of certain CDOs.

Asset management fees for TruPS and insurance company debt – Europe declined primarily because we received a final CDO asset management fee for one of our European deals during the third quarter of 2012.  The total revenue recorded during the period related to this one European CDO was $3,824. 

Asset management fees for broadly syndicated loans –Europe represent revenue from a single CLO.  Prior to August 2012, we served as the junior manager of this CLO and we shared management fees evenly with the lead manager.  In August 2012, we became the lead manager (and remained junior manager).  Subsequent to becoming lead manager, we earn all of the management fees related to this CLO which caused the increase in asset management fees for broadly syndicated loans - Europe. 

Other

Other asset management revenue increased by $893 to $1,104 for the three months ended September 30, 2013 from $211 for the three months ended September 30, 2012.

Of the increase in management revenue, $764 was due to the acquisition of Star Asia Manager which was effective March 1, 2013.  Prior to such acquisition, we owned 50% of Star Asia Manager and treated the investment as an equity method investment.  See note 4 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

New Issue and Advisory Revenue

New issue and advisory revenue increased by $1,934 to $3,692 for the three months ended September 30, 2013 from $1,758 for the three months ended September 30, 2012.

Our revenue earned from new issue and advisory has been, and we expect will continue to be, volatile. We earn revenue from a limited number of engagements. Therefore, a small change in the number of engagements can result in large fluctuations in the revenue recognized. Further, even if the number of engagements stays consistent, the average revenue per engagement can fluctuate considerably. Finally, our revenue is generally earned when an underlying transaction closes (rather than on a monthly or quarterly basis). Therefore, the timing of underlying transactions increases the volatility of our revenue recognition.

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Principal Transactions and Other Income

Principal transactions and other income decreased by $2,248 to $1,926 for the three months ended September 30, 2013, as compared to $4,174 for the three months ended September 30, 2012.  

PRINCIPAL TRANSACTIONS & OTHER INCOME
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
Change in fair value of other investments, at fair value	$	1,279	$	1,683	$	(404)
Gain on sale of cost method investment		-		1,687		(1,687)
Dividends, interest, and other income		647		804		(157)
Total	$	1,926	$	4,174	$	(2,248)

Change in fair value of other investments, at fair value

Change in fair value of other investments, at fair valuedecreased by $404 to $1,279 for the three months ended September 30, 2013, as compared to $1,683 for the three months ended September 30, 2012.

CHANGE IN FAIR VALUE OF OTHER INVESTMENTS, AT FAIR VALUE
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
EuroDekania	$	235		268	$	(33)
Star Asia		183		1,626		(1,443)
Tiptree		140		52		88
Star Asia Special Situations Fund		607		-		607
Other		114		(263)		377
Total	$	1,279	$	1,683	$	(404)

For the periods presented above, the change in fair value of our investment in EuroDekania was primarily the result of the change in the underlying NAV of EuroDekania. 

Star Asia is an investment fund that is exposed to changes in its value due to the performance of its underlying investments. The value of our investment in Star Asia has also been impacted by the fact that Star Asia’s investments are primarily denominated in Japanese Yen and Star Asia itself does not hedge against currency fluctuations. The following table shows the change in the value of our investment in Star Asia and how it was impacted by these items:

CHANGE IN FAIR VALUE OF STAR ASIA
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
Foreign exchange	$	316	$	1,056	$	(740)
Underlying investment values, net		(133)		570		(703)
Total	$	183	$	1,626	$	(1,443)

Foreign exchange: This line item represents the impact to fair value of our investment in Star Asia from currency fluctuations. This is because Star Asia’s investments are primarily denominated in Japanese Yen and Star Asia itself does not hedge against currency fluctuations. Accordingly, we are exposed to increases and decreases in the value of our investment in Star Asia that result

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from fluctuations of the Japanese Yen as compared to the U.S. Dollar. From time to time, we may seek to minimize this risk by entering into a Japanese Yen hedge. However, our hedging activities could negatively impact our liquidity. That is, the hedge itself settles in cash on a periodic basis while our investment in Star Asia is comparatively illiquid. Therefore, we continuously consider the appropriate level for the Japanese Yen hedge, especially considering our overall corporate liquidity position. We may or may not enter into hedges in the future based on our corporate liquidity. Any un-hedged portion of our investment in Star Asia will continue to be exposed to currency fluctuations.

As of September 30, 2013, our long exposure to the Japanese Yen was 3.4 billion Japanese Yen. Our Japanese Yen hedge was 1.25 billion Japanese Yen.  The spot rate of the U.S. Dollar to Japanese Yen was $98.27 as of September 30, 2013, which means our un-hedged portion of Star Asia was $21.6 million. As of September 30, 2012, our long exposure to the Japanese Yen was 3.8 billion Japanese Yen. Our Japanese Yen hedge was 1.0 billion Japanese Yen.  The spot rate of U.S. Dollar to Japanese Yen was $77.96 as of September 30, 2012, which means our un-hedged portion of Star Asia was $35.3 million.

Underlying investment values: This line item represents the impact to the fair value of our investment in Star Asia from changes in the underlying net investment values of Star Asia’s investments, net of debt, exclusive of the impact of foreign currency changes.

Effective June 30, 2013, we changed the way we calculate the fair value of our investment in Tiptree.  Previously, we carried our investment at the underlying NAV of the fund.  However, Tiptree recently completed a reorganization.  As a result of the reorganization, our investment in Tiptree can be exchanged into shares of Tiptree Financial, Inc. based on a stated exchange ratio (which is generally fixed, but can be adjusted for certain events like stock dividends or stock splits).  Tiptree Financial Inc. is publicly traded over the counter.  Therefore, beginning June 30, 2013, we calculate the fair value of our investment in Tiptree by using the closing over the counter price for Tiptree Financial Inc. and adjusting for the exchange ratio.  The decline in the fair value of our investment was primarily due to this change in method of calculating the fair value of our investment.

In December 2012, we made an investment in the Star Asia Special Situations Fund. We carry our investment in the Star Asia Special Situations Fund at the NAV of the underlying fund.

Dividends, interest, and other

Dividends, interest, and other decreased by $157 to $647 for the three months ended September 30, 2013, as compared to $804 for the three months ended September 30, 2012. The decrease in dividends interest and other was comprised of $188 decrease in other income; partially offset by an increase of $31 in dividend income related to EuroDekania and Tiptree. 

Operating Expenses

Operating expenses decreased by $5,654, or 23%, to $19,256 for the three months ended September 30, 2013 from $24,910 for the three months ended September 30, 2012. As discussed in more detail below, the change was comprised of (i) a decrease of $4,955 in compensation and benefits; (ii) a decrease of $91 in business development, occupancy, and equipment; (iii) a decrease of $107 in subscriptions, clearing, and execution; (iv) a decrease of $579 of professional fee and other operating; and (v) an increase of $78 of depreciation and amortization. 

Compensation and Benefits

Compensation and benefits decreased by $4,955, or 30%, to $11,529 for the three months ended September 30, 2013 from $16,484 for the three months ended September 30, 2012.  

COMPENSATION AND BENEFITS
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
Cash compensation and benefits	$	11,322	$	18,018	$	(6,696)
Equity-based compensation		207		(1,534)		1,741
Total	$	11,529	$	16,484	$	(4,955)

Cash compensation and benefits in the table above is primarily comprised of salary, incentive compensation, and benefits. Cash compensation and benefits decreased by $6,696 to $11,322 for the three months ended September 30, 2013, from $18,018 for the three months ended September 30, 2012.  This decrease was primarily a result of a decrease in incentive compensation which is tied to revenue

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and operating profitability. Our total headcount decreased from 204 at September 30, 2012 to 189 at September 30, 2013.  From time to time, the Company pays employees severance when they are terminated without cause. These severance payments are included within cash compensation in the table above.

Equity-based compensation increased by $1,741 to $207 for the three months ended September 30, 2013 from ($1,534) for the three months ended September 30, 2012.  There were three major components of this change:

EQUITY BASED COMPENSATION
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
Michael T. Hutchins and John P. Costas	$	-	$	(2,151)	$	2,151
Reversals of previously recognized expense		(188)		(223)		35
Other equity compensation, net		395		840		(445)
Total	$	207	$	(1,534)	$	1,741

First, in the three months ended September 30, 2012, we recognized a reversal of equity based compensation of $2,151 related to equity based grants to Michael T. Hutchins and John P. Costas (the former chief executive officer and former chairman of PrinceRidge) that were forfeited in July 2012. Second, we recognized $35 less in reversals of equity compensation expense in the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 due to forfeitures and employees not meeting their performance targets.  Finally, we recognized a reduction in other equity compensation expense of $445 primarily as a result of employee grants becoming fully vested or forfeited after September 30, 2012, net of new grants after September 30, 2012. 

Business Development, Occupancy, and Equipment

Business development, occupancy, and equipment decreased by $91, or 6%, to $1,429 for the three months ended September 30, 2013 from $1,520 for the three months ended September 30, 2012. The decrease was comprised of a decrease in business development expenses of $150,a decrease in other occupancy and equipment of $80; partially offset by an increase in technology support expenditures of $139.  As part of our cost savings measures, we terminated a significant portion of our in house information technology staff and outsourced those services to third party providers. 

Subscriptions, Clearing, and Execution

Subscriptions, clearing, and execution decreased by $107, or 4%, to $2,495 for the three months ended September 30, 2013 from $2,602 for the three months ended September 30, 2012. The decrease was due to a reduction in clearing and execution costs of $191 primarily as a result of lower trading volume partially offset by an increase in subscriptions of $84. 

Professional Fees and Other Operating Expenses

Professional fees and other operating expenses decreased by $579, or 14%, to $3,436 for the three months ended September 30, 2013 from $4,015 for the three months ended September 30, 2012. The decrease was the result of (i) a decrease in professional fees of $1,350; (ii) a decrease in other operating expenses of $126; partially offset by $900 of expense incurred because we deemed an investment banking fee receivable as uncollectable. 

Depreciation and Amortization

Depreciation and amortization increased by $78, or 27%, to $367 for the three months ended September 30, 2013 from $289 for the three months ended September 30, 2012.

Non-Operating Income and Expense

Interest Expense, net

Interest expense increased by $179, or 21%, to $1,047 for the three months ended September 30, 2013 from $868 for the three months ended September 30, 2012. The increase was comprised of (i) a decrease of $305 of interest income related to the reduction in the amount owed to withdrawing partners of PrinceRidge which was recorded in the nine months ended September 30, 2012; partially offset by (ii) a decrease of $100 of interest incurred on the junior subordinated notes as a result of the interest rate on one of the two issuances changing from a fixed rate to a lower variable rate beginning in July 31, 2012; and (iii) a decrease in other interest expense of $26.  See notes 12 and 13 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q

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Other Income (Expense), net

Other income (expense), net was $0 for the three months ended September 30, 2013 as compared to $83 for the three months ended September 30, 2012. For the three months ended September 30, 2012, other income (expense), net represented a gain on the repurchase of debt. 

Income / (Loss) from Equity Method Affiliates

Income from equity method affiliates decreased  by $546, or 84% to $101 for the three months ended September 30, 2013 from $647 for the three months ended September 30, 2012. Income or loss from equity method affiliates represents our share of the related entities’ earnings.

INCOME / (LOSS) FROM EQUITY METHOD AFFILIATES
(dollars in thousands)
	September 30, 2013		September 30, 2012		Change
Star Asia Manager	$	-	$	279	$	(279)
Deep Value GP II		-		(3)		3
SAA Manager		64		-		64
Star Asia Capital Management		37		198		(161)
Star Asia Opportunity		-		(75)		75
Star Asia Opportunity II		-		(28)		28
Star Asia SPV		-		276		(276)
Total	$	101	$	647	$	(546)

See notes 4, 11, and 20 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

Income Tax Expense / (Benefit)

The income tax expense / (benefit)decreased by $1,861 to income tax expense / (benefit) of ($1,807) for the three months ended September 30, 2013 from income tax expense / (benefit) of $54 for the three months ended September 30, 2012. The tax benefit realized in 2013 was comprised of: (i) a benefit of $316 resulting from a reduction in our state effective tax rate; (ii) $1,402 representing the recognition of a previously unrecognized tax benefit that became effectively settled during the period; and (iii) and other miscellaneous tax benefits of $89. The tax expense realized by us in 2012 primarily represented tax incurred at our French subsidiary, Cohen & Compagnie SAS as well as local level taxes incurred in the United States. 

See note 21 to our consolidated financial statements included in the Company’s 2012 Annual Report on Form 10-K for the year ended December 31, 2012, as amended, for a more complete description of the Company’s tax attributes and unrecognized tax benefits. Also, see note 17 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q regarding a Pennsylvania income tax assessment.  

Net Income / (Loss) Attributable to the Non-controlling Interest

Net income / (loss) attributable to the non-controlling interest for the three months ended September 30, 2013 and 2012 was comprised of the non-controlling interest related to member interests in the Operating LLC other than interests held by us for the relevant periods. In addition, net income / (loss) attributable to the non-controlling interest also included non-controlling interest related to entities that were consolidated by the Operating LLC but not wholly owned.

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SUMMARY CALCULATION OF NON-CONTROLLING INTEREST
Three Months Ended September 30, 2013
			Majority				Total
	Wholly owned		owned		IFMI		Operating				Consolidated
	subsidiaries		subsidiaries		LLC		LLC		IFMI		IFMI
Net income / (loss) before tax	$	(2,661)	$	545	$	-	$	(2,116)	$	-	$	(2,116)
Income tax expense / (benefit)		-		(37)		(1,454)		(1,491)		(316)		(1,807)
Net income / (loss) after tax		(2,661)		582		1,454		(625)		316		(309)
Majority owned subsidiary non-controlling interest		-		7		-		7
Net loss attributable to Operating LLC		(2,661)		575		1,454		(632)
Average effective Operating LLC non-controlling interest (1)%								33.54%
Operating LLC non-controlling interest								(212)
Majority owned subsidiary non-controlling interest								7
Total non-controlling interest							$	(205)

SUMMARY CALCULATION OF NON-CONTROLLING INTEREST
Three Months Ended September 30, 2012
			Majority				Total
	Wholly owned		owned		IFMI		Operating				Consolidated
	subsidiaries		subsidiaries		LLC		LLC		IFMI		IFMI
Net income / (loss) before tax	$	4,452	$	(1,434)	$	-	$	3,018	$	-	$	3,018
Income tax expense / (benefit)		-		-		54		54		-		54
Net income / (loss) after tax		4,452		(1,434)		(54)		2,964		-		2,964
Majority owned subsidiary non-controlling interest		-		(11)		-		(11)
Net loss attributable to Operating LLC		4,452		(1,423)		(54)		2,975
Average effective Operating LLC non-controlling interest (1)%								32.50%
Operating LLC non-controlling interest								967
Majority owned subsidiary non-controlling interest								(11)
Total non-controlling interest							$	956

(1)Non-controlling interest is recorded on a monthly basis. Because earnings are recognized unevenly throughout the year and the non-controlling interest percentage may change during the period, the average effective non-controlling interest percentage may not equal the percentage at the end of any period or the simple average of the beginning and ending percentages.

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Liquidity and Capital Resources

Liquidity is a measurement of our ability to meet potential cash requirements including ongoing commitments to repay debt borrowings, make interest payments on outstanding borrowings, fund investments, and support other general business purposes. In addition, our United States and United Kingdom broker-dealer subsidiaries are subject to certain regulatory requirements to maintain minimum levels of net capital. Historically, our primary sources of funds have been our operating activities and general corporate borrowings. In addition, our trading operations have generally been financed by use of collateralized securities financing arrangements as well as margin loans. Since January 2010, we have significantly expanded our trading operations leading to a greater amount of securities owned as well as larger balances of securities purchased under agreements to resell and securities sold under agreements to repurchase.

Certain subsidiaries of the Operating LLC have restrictions on the withdrawal of capital and otherwise in making distributions and loans. CCPR and JVB are subject to net capital restrictions imposed by the SEC and FINRA that require certain minimum levels of net capital to remain in these subsidiaries. In addition, these restrictions could potentially impose notice requirements or limit our ability to withdraw capital above the required minimum amounts (excess capital) whether through a distribution or a loan. CCFL is regulated by the Financial Conduct Authority (formerly known as the Financial Services Authority) in the United Kingdom (“FCA”) and must maintain certain minimum levels of capital. See note 15 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

See Liquidity and Capital Resources – Debt Financing and Liquidity and Capital Resources – Contractual Obligations below.

During the third quarter of 2010, our Board of Directors initiated a dividend of $0.05 per quarter, which was paid regularly through December 31, 2011. Beginning in 2012, the Company declared a dividend of $0.02 per quarter, which was paid regularly through the third quarter of 2013. The Company’s Board of Directors has the power to decide to increase, reduce, or eliminate dividends in the future. The Company’s Board of Director’s decision will depend on a variety of factors, including business, financial, and regulatory considerations as well as any limitations under Maryland law or imposed by any agreements governing indebtedness of the Company. There can be no assurances that such dividends will be maintained or increased and, if maintained or increased, will not subsequently be discontinued.

Each time a cash dividend was declared by our Board of Directors, a pro rata distribution was made to the other members of the Operating LLC upon the payment of dividends to stockholders of the Company.

On October 31, 2013, our Board of Directors declared a cash dividend of $0.02 per share, which will be paid on our common stock on November 29, 2013 to stockholders of record on November 15, 2013. A pro rata distribution will be made to the other members of the Operating LLC upon the payment of the dividends to stockholders of the Company.

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Cash Flows

We have four primary uses for capital:

(1) To fund the operations of our Capital Markets business segment: Our Capital Markets business segment utilizes capital (i) to fund securities inventory to facilitate client trading activities; (ii) for risk trading on the firm’s own account; (iii) to fund our collateralized securities lending activities; (iv) for temporary capital needs associated with underwriting activities; (v) to fund business expansion into existing or new product lines; and (vi) to fund any operating losses incurred.

(2) To fund investments: Our investments take several forms, including investments in securities and “sponsor investments” in permanent capital vehicles or investment funds. We may need to raise additional debt or equity financing in order to ensure we have the capital necessary to take advantage of attractive investment opportunities.

(3) To fund mergers or acquisitions: We may opportunistically use capital to acquire other asset managers, individual asset management contracts, or financial services firms. To the extent our liquidity sources are insufficient to fund our future activities, we may need to raise additional funding through an equity or debt offering. No assurances can be given that additional financing will be available in the future, or that if available, such financing will be on favorable terms.

(4) To fund potential dividends and distributions: During the third quarter of 2010 and for each subsequent quarter through September 30, 2013, we have declared a dividend. A pro rata distribution has been paid to the other members of the Operating LLC upon the payment of any dividends to stockholders of IFMI.

If we are unable to raise sufficient capital on economically favorable terms, we may need to reduce the amount of capital invested for the uses described above, which may adversely impact earnings and our ability to pay dividends.

As of September 30, 2013 and December 31, 2012, we maintained cash and cash equivalents of $22,313 and $14,500, respectively. We generated cash from or used cash for the following activities:

SUMMARY CASH FLOW INFORMATION
(dollars in thousands)
	Nine Months Ended
	September 30, 2013		September 30, 2012
Cash flow from operating activities	$	(5,786)	$	9,676
Cash flow from investing activities		3,433		4,213
Cash flow from financing activities		10,258		(19,352)
Effect of exchange rate on cash		(92)		118
Net cash flow		7,813		(5,345)
Cash and cash equivalents, beginning		14,500		18,221
Cash and cash equivalents, ending	$	22,313	$	12,876

See the statement of cash flows in our consolidated financial statements. We believe our available cash and cash equivalents, as well as our investment in our trading portfolio and related borrowing capacity, will provide sufficient liquidity to meet the cash needs of our ongoing operations in the near term.

Nine Months Ended September 30, 2013

As of September 30, 2013, our cash and cash equivalents were $22,313, representing an increase of $7,813 from December 31, 2012. The increase was attributable to the cash used by operating activities of $5,786, the cash provided by investing activities of $3,433, the cash provided by financing activities of $10,258, and the decrease in cash caused by change in exchange rates of $92.  

The cash used by operating activities of $5,786 was comprised of (a) net cash outflows of $7,323 related to working capital fluctuations (b) net cash inflows of  $5,516 from trading activities comprised of our investments-trading, trading securities sold, not yet purchased, securities sold under agreement to repurchase, and receivables and payables from brokers, dealers, and clearing agencies, as well as the changes in unrealized gains and losses on the investments-trading and trading securities sold, but not yet purchased; and (c)  net cash outflows from other earnings items of $3,979 (which represents net income or loss adjusted for the following non-cash operating items: other income / (expense), realized and unrealized gains and losses on other investments, income or loss from equity method affiliates, equity based compensation, and depreciation and amortization).

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The cash provided by investing activities of $3,433 was comprised of (a) $679 of cash acquired due to the acquisition of Star Asia Manager; (b) $1,666 of proceeds from sales and returns of principal from other investments, at fair value; (c) $2,888 in distributions received from equity method affiliates (see note 11 to our consolidated financial statements included in Item 1 of Form 10-Q); net of (d) $1,064 of cash used to acquire other investments, at fair value which was comprised of $302 of additional investment in the Star Asia Special Situations Fund and $762 invested in a yen currency hedge; (e) $10 of investment in equity method affiliates and (f) $726 used to purchase furniture, equipment and leasehold improvements. 

The cash provided in financing activities of $10,258 was comprised of (a) $8,248 in proceeds for the issuance of convertible debt (see notes 4 and 12 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q); (b) $5,073 in net proceeds from the private placement of equity (see note 4 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q); net of (c) $907 repayment of debt which includes $560 related to the Star Asia Manager note payable and $347 related to our subordinated notes payable; (d) $638 in payment of deferred financing costs in connection with the new convertible debt issued; (e) $60 used for the payment of employee tax obligations related to restricted stock vesting; (f) $317 of net redemptions for the redeemable non-controlling interest related to PrinceRidge; (g) $86 of repayments of mandatorily redeemable equity interests related to PrinceRidge; (h) $318 of distributions to non-controlling interests related to the Operating LLC; and (i) $737 in dividends to shareholders of IFMI. 

Nine Months Ended September 30, 2012

As of September 30, 2012, our cash and cash equivalents were $12,876, representing a net decrease of $5,345 from December 31, 2011. The decrease was attributable to the cash provided by operating activities of $9,676, the cash provided by investing activities of $4,213, and the cash used by financing activities of $19,352, and the increase in cash caused by change in exchange rates of $118.  

The cash provided by operating activities of $9,676 was comprised of (a) net cash outflows of $1,627 related to working capital fluctuations; (b)  net cash inflows of $16,877 from trading activities comprised of our investments-trading, trading securities sold, not yet purchased, securities sold under agreement to repurchase, and receivables and payables from brokers, dealers, and clearing agencies, as well as the changes in unrealized gains and losses on the investments-trading and trading securities sold, but not yet purchased; and (c) a net cash outflow from other earnings items of $5,574 (which represents net income or loss adjusted for the following non-cash operating items: other income / (expense), realized and unrealized gains and losses on other investments, income or loss from equity method affiliates, equity based compensation, and depreciation and amortization).

The cash provided by investing activities of $4,213 was comprised of  (a) cash received of $7,325 from our equity method affiliates, Star Asia Manager, Star Asia SPV, Star Asia Opportunity, and Star Asia Capital Management; (b) cash proceeds from the return of principal of $30 from our investments in certain residential loans and $18 from the sale of a certain residential loan; (c) cash proceeds from the sale of a cost method investment of $1,937; partially offset by (d) the purchase of additional furniture and leasehold improvements of $101; (e) the investment of $6 in the equity method affiliate Star Asia Capital Management and the investment of $4,700 in the equity method affiliate Star Asia Opportunity II; and (f) the purchase of other investments of $290, primarily related to foreign currency forward contracts.

The cash used in financing activities of $19,352 was comprised of (a) the repurchase of $150 notional amount of Old Notes for $147; (b) the redemption of $10,210 notional amount of the Old Notes for $10,210; (c) the purchase of $1,177 principal amount of subordinated notes payable for $1,089; (d) distributions to mandatorily redeemable equity interests of $790; (e) distributions to the non-controlling interest holders of $315; (f) dividends to the Company’s stockholders of $646; (g) the net redemption of the redeemable non-controlling interest of $6,152 to withdrawing partners from PrinceRidge (see note 13 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q); and (h) the payment of $3 for employees’ tax obligations to taxing authorities related to the vesting of equity based awards. In the case of (h), the total shares withheld were determined based on the value of the restricted stock award on the applicable vesting date based on the closing price of the Company’s common stock. These net share settlements reduced and retired the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company.

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Regulatory Capital Requirements

Three of our majority owned subsidiaries are licensed securities dealers in the United States or the United Kingdom. As broker-dealers, our subsidiaries, JVB and CCPR, are subject to the Uniform Net Capital Rule in Rule 15c3-1 under the Exchange Act, and our London-based subsidiary, CCFL, is subject to the regulatory supervision and requirements of the FCA. The amount of net assets that these subsidiaries may distribute is subject to restrictions under these applicable net capital rules. These subsidiaries have historically operated in excess of minimum net capital requirements. Our minimum capital requirements at September 30, 2013 were as follows:

MINIMUM NET CAPITAL REQUIREMENTS
(dollars in thousands)
United States	$	356
United Kingdom		1,916
Total	$	2,272

We operate with more than the minimum regulatory capital requirement in our licensed broker-dealers and at September 30, 2013, total net capital, or the equivalent as defined by the relevant statutory regulations, in our licensed broker-dealers totaled $30,195. See note 15 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

In addition, our licensed broker-dealers are generally subject to capital withdrawal notification and restrictions.

Securities Financing

We maintain repurchase agreements with various third party financial institutions. There is no maximum limit as to the amount of securities that may be transferred pursuant to these agreements, and transactions are approved on a case-by-case basis. The repurchase agreements do not include substantive provisions other than those covenants and other customary provisions contained in standard master repurchase agreements. The repurchase agreements generally require us to transfer additional securities to the counterparty in the event the value of the securities then held by the counterparty in the margin account falls below specified levels and contains events of default in cases where we breach our obligations under the agreement. We receive margin calls from our repurchase agreement counterparties from time to time in the ordinary course of business. To date, we have maintained sufficient liquidity to meet margin calls, and we have never been unable to satisfy a margin call, however, no assurance can be given that we will be able to satisfy requests from our counterparties to post additional collateral in the future. See note 9 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

If there were an event of default under the repurchase agreements, we would give our counterparty the option to terminate all repurchase transactions existing with us and make any amount due from us to the counterparty payable immediately. Repurchase obligations are full recourse obligations to us. If we were to default under a repurchase obligation, the counterparty would have recourse to our other assets if the collateral was not sufficient to satisfy the obligation in full.

The Company’s clearing brokers provide securities financing arrangements including margin arrangements and securities borrowing and lending arrangements. These arrangements generally require us to transfer additional securities or cash to the clearing broker in the event the value of the securities then held by the clearing broker in the margin account falls below specified levels and contain events of default in cases where we breach our obligations under such agreements.

An event of default under the clearing agreement would give our counterparty the option to terminate our clearing arrangement. Any amounts owed to the clearing broker would be immediately due and payable. These obligations are recourse to us. Furthermore, a termination of our clearing arrangements would result in a significant disruption to our business and would have a significant negative impact on our dealings and relationship with our customers.

The following table presents our period end balance, average monthly balance, and maximum balance at any month end during the nine months ended September 30, 2013 and the twelve months ended December 31, 2012 for receivables under resale agreements and securities sold under agreements to repurchase.

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		Nine Months Ended September 30, 2013		Twelve Months Ended December 31, 2012
Receivables under resale agreements
Period end	$	94,867	$	70,110
Monthly average		93,704		168,184
Maximum month end		101,444		262,789
Securities sold under agreements to repurchase
Period end	$	94,856	$	70,273
Monthly average		94,552		168,277
Maximum month end		103,806		260,084

Fluctuations in the balance of our repurchase agreements from period to period and intraperiod are dependent on business activity in those periods. The general growth in outstanding repurchase activity in 2013 and 2012 is reflective of supporting our overall business growth, particularly the continued expansion of our sales and trading platform. The fluctuations in the balances of our receivables under resale agreements over the periods presented were impacted by our clients’ desires to execute collateralized financing arrangements through the repurchase market or other financing products.

Average balances and period end balances will fluctuate based on market and liquidity conditions and we consider such intraperiod fluctuations as typical for the repurchase market. Month-end balances may be higher or lower than average period balances.

Debt Financing

As of September 30, 2013, we had five sources of debt financing other than securities financing arrangements: (1) contingent convertible senior notes, comprised of the New Notes and the 8.0% Convertible Notes; (2)junior subordinated notes payable to the following two special purpose trusts: (a) Alesco Capital Trust I and (b) Sunset Financial Statutory Trust I; and (3) the Star Asia Manager note payable.  

See note 12 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q for a discussion of the Company’s outstanding debt.

The following table summarizes the Company’s long-term indebtedness and other financing outstanding:

DETAIL OF DEBT
(Dollars in Thousands)
Description	Current Outstanding Par			September 30, 2013		December 31, 2012		Interest Rate Terms		Interest (6)		Maturity
Contingent convertible senior notes:
10.50% contingent convertible senior notes (the "New Notes")	$	8,121		$	8,096	$	8,068	10.50%		10.50	%	May 2014 (1)
8.00% contingent convertible senior notes (the "8.0% Convertible Notes")		8,248			8,248		-	8.00%		8.00	%	September 2018 (2)
	$	16,369		$	16,344		8,068
Junior subordinated notes:
Alesco Capital Trust I	$	28,125	(3)		10,563		10,189	4.25%		4.25	%	July 2037
Sunset Financial Statutory Trust I		20,000	(3)		7,518		7,248	4.40%		4.40	%	March 2035
	$	48,125			18,081		17,437
Subordinated notes payable	$	-			-		342	12.00%	(4)	12.00	%	June 2013
Star Asia Manager note payable	$	165			165		-	3.00%		3.00	%	(5)
Total				$	34,590	$	25,847

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(1)Represents the holder’s earliest put date and the Company’s earliest redemption date. The contractual maturity for the New Notes is May 2027.

The Company may redeem all or part of the $8,121 aggregate principal amount of the New Notes for cash on or after May 20, 2014, at a redemption price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. The holders of the New Notes may require the Company to repurchase all or a portion of the New Notes for cash on May 15, 2014; May 15, 2017; and May 15, 2022 for a repurchase price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. The holders of the New Notes are required to provide notice to the Company of their plan to redeem the New Notes at any time during the 30 days prior to May 15, 2014; May 15, 2017; and May 15, 2022.

(2) The holders of the 8.0% Convertible Notes may convert all or any part of the outstanding principal amount of the 8.0% Convertible Notes at anytime prior to maturity into shares of the Company's company stock at a conversion price of $3.00 per share, subject to customary anti-dilution adjustments.

(3)The outstanding par represents the total par amount of the junior subordinated notes held by two separate VIE trusts. The Company does not consolidate these trusts. The Company holds $1,489 par value of these junior subordinated notes, comprised of $870 par value of junior subordinated notes related to Alesco Capital Trust I and $619 par value of junior subordinated notes related to Sunset Financial Statutory Trust I. These notes have a carrying value of $0. Therefore, the net par value held by third parties is $48,125.

(4)Comprised of 9% paid currently and 3% paid in kind. The subordinated note payable was fully repaid in June 2013. 

(5)The Star Asia Manager note payable has no stated maturity date.

(6)Represents the interest rate as of the last day of the reporting period. 

As previously disclosed, on October 28, 2013, the Company repurchased $5,000 aggregate principal amount of the New Notes from an unrelated third party for $5,238, including accrued interest of $238.  Holders of the New Notes have the right to require us to repurchase those notes on May 15, 2014.  As a result of this, the outstanding principal amount of New Notes has been reduced from $8,121 to $3,121. 

Off-Balance Sheet Arrangements

There were no material off balance sheet arrangements as of September 30, 2013. 

Contractual Obligations

The table below summarizes our significant contractual obligations as of September 30, 2013 and the future periods in which such obligations are expected to be settled in cash. Our junior subordinated notes and subordinated notes payable are assumed to be repaid on their respective maturity dates. The New Notes are assumed to be repaid on May 15, 2014, which represents the earliest day that the holders of the New Notes may require us to repurchase the New Notes for cash. The Star Asia Manager note payable is assumed to be repaid on March 31, 2014. Excluded from the table are obligations that are short-term in nature, including trading liabilities and repurchase agreements.

CONTRACTUAL OBLIGATIONS
As of September 30, 2013
(Dollars in Thousands)
		Payment Due by Period
		Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
Operating lease arrangements	$	6,269	$	2,425	$	2,783	$	844	$	217
Maturity of New Notes (1)		8,121		8,121		-		-		-
Interest on New Notes (1)		853		853		-		-		-
Maturity of 8.0% Convertible Notes (2)		8,248		-		-		8,248		-
Interest on 8.0% Convertible Notes (2)		3,344		680		1,338		1,326		-
Maturities on junior subordinated notes		48,125		-		-		-		48,125
Interest on junior subordinated notes (3)		47,596		2,075		4,150		4,150		37,221
Star Asia Manager note payable (4)		165		165		-		-		-
Interest on Star Asia Manager note payable (4)		3		3		-		-		-
	$	122,724	$	14,322	$	8,271	$	14,568	$	85,563

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(1)Assumes the New Notes are repurchased on May 15, 2014. Interest includes amounts payable during the period the New Notes are outstanding at an annual rate of 10.50%.

(2)Assumes the 8.0% Convertible Notes are not converted prior to maturity. 

(3)The interest on the junior subordinated notes related to Alesco Capital Trust I is variable. The interest rate of 4.2489% (based on a 90-day LIBOR rate as of September 30, 2013 plus 4.00%) was used to compute the contractual interest payment in each period noted. The interest on the junior subordinated notes related to Sunset Financial Statutory Trust I is variable. The interest rate of 4.3989% (based on a 90-day LIBOR rate as of September 30, 2013 plus 4.15%) was used to compute the contractual interest payment in each period noted.

(4)The interest on the Star Asia Manager note payable is variable.  The interest rate of 2.9989% (based on 90-day LIBOR rate as of September 30, 2013 plus 2.75%) was used to compute the contractual interest payment in each period noted.

We believe that we will be able to continue to fund our current operations and meet our contractual obligations through a combination of existing cash resources and other sources of credit. Due to the uncertainties that exist in the economy, we cannot be certain that we will be able to replace existing financing or find sources of additional financing in the future.

Planned Consolidation of CCPR and JVB

On October 2, 2013, the Company announced that, in an effort to reduce its operating costs, it had begun the process of consolidating two of its registered broker-dealer subsidiaries, CCPR and JVB, into a single broker-dealer subsidiary.  In connection with the planned consolidation of CCPR and JVB, the Company reduced the size of its workforce by approximately 20%.  The Company expects to incur pre-tax charges in the fourth quarter of 2013 for employee separation and vendor contract termination expenses of approximately $2,000 to $2,500.

Recent Accounting Pronouncements

The following is a list of recent accounting pronouncements that we believe will have a continuing impact on our financial statements going forward.

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date, which requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date, as the sum of the following: (a) the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors; and (b) any additional amount the reporting entity expects to pay on behalf of its co-obligors. Examples of obligations within the scope of this ASU include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The guidance in this ASU also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments in this ASU should be applied retrospectively to all prior periods presented for those obligations resulting from joint and several liability arrangements within the ASU’s scope that exist at the beginning of the entity’s fiscal year of adoption. An entity may elect to use hindsight for the comparative periods presented in the initial year of adoption (if it changed its accounting as a result of adopting the guidance) and shall disclose that fact. The use of hindsight would allow an entity to recognize, measure, and disclose obligations resulting from joint and several liability arrangements within the scope of this ASU in comparative periods using information available at adoption rather than requiring an entity to make judgments about what information it had in each of the prior periods to measure the obligation. Early adoption is permitted. We will adopt the provisions of ASU 2013-04 effective January 1, 2014 and are currently evaluating the effect of the adoption on the Company’s consolidated financial position and results of operations.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, which addresses the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. When a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. For an equity method investment that is a foreign entity, the partial sale guidance in Section 830-30-40 still applies, specifically, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. However, this treatment does not apply to an equity method

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investment that is not a foreign entity. In those instances, the cumulative translation adjustment is released into net income only if the partial sale represents a complete or substantially complete liquidation of the foreign entity that contains the equity method investment. Additionally, the amendments in this ASU clarify that the sale of an investment in a foreign entity includes both (1) events that result in the loss of a controlling financial interest in a foreign entity (that is, irrespective of any retained investment) and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (sometimes referred to as a step acquisition). Accordingly, the cumulative translation adjustment should be released into net income upon the occurrence of those events. For public entities, the ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. We will adopt the provisions of ASU 2013-05 effective January 1, 2014 and we do not expect that the adoption of the ASU will have a material impact on the Company’s consolidated financial statements or financial statement disclosures.

In June 2013, the FASB issued ASU No. 2013-08, Financial Services-Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements, which changes the approach to the investment company assessment in Topic 946, clarifies the characteristics of an investment company, and provides comprehensive guidance for assessing whether an entity is an investment company. The amendments require an investment company to measure non-controlling ownership interests in other investment companies at fair value rather than using the equity method of accounting.  The amendments also require the following additional disclosures: (a) the fact that the entity is an investment company and is applying the guidance in Topic 946, (b) information about changes, if any, in an entity’s status as an investment company, and (c) information about financial support provided or contractually required to be provided by an investment company to any of its investees.  The amendments in this ASU are effective for an entity’s interim and annual reporting periods in fiscal years that begin after December 15, 2013. Earlier application is prohibited. We have investments in the equity securities of investment funds and other non-publicly traded entities that have the attributes of investment companies as currently described in FASB ASC 946-15-2.  We will adopt the provisions of this ASU effective January 1, 2014, and are currently evaluating the effect of the adoption on our consolidated financial position and results of operations.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on the presentation of unrecognized tax benefits.  This ASU applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date.  An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets.  This ASU is effective prospectively for reporting periods beginning after December 15, 2013, with early adoption permitted.  We will adopt the ASU on January 1, 2014, and are currently evaluating the effect of the adoption on the Company’s consolidated statements.

Critical Accounting Policies and Estimates

Our accounting policies are essential to understanding and interpreting the financial results reported in our condensed consolidated financial statements. The significant accounting policies used in the preparation of our condensed consolidated financial statements are summarized in note 3 to the Company’s consolidated financial statements and notes thereto found in our Annual Report on Form 10-K for the year ended December 31, 2012, as amended. Certain of those policies are considered to be particularly important to the presentation of our financial results because they require us to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures. We base our assumptions, estimates, and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates, and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. During the nine months ended September 30, 2013, there were no material changes to matters discussed under the heading “Critical Accounting Policies and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended.

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ITEM  3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

All amounts in this section are in thousands unless otherwise noted.

Market Risk

Market risk is the risk of economic loss arising from the adverse impact of market changes to the market value of our trading and investment positions. Market risk is inherent to both derivative and non-derivative financial instruments, and accordingly, the scope of our market risk management procedures extends beyond derivatives to include all market risk sensitive financial instruments. For purposes of analyzing the components of market risk, we have broken out our investment portfolio into three broad categories, plus debt:

Fixed Income Securities: We hold, from time to time, the following securities: U.S. Treasury securities, U.S. government agency MBS, U.S government agency debt securities, CMOs, non-government MBS, corporate bonds, non-redeemable and redeemable preferred stock, municipal bonds, certificates of deposits, SBA loans, residential loans, whole loans, and unconsolidated investments in the middle and senior tiers of securitization entities and TruPS. We attempt to mitigate our exposure to market risk by entering into economic hedging transactions, which may include TBAs. The fixed income category can be broadly broken down into two subcategories: fixed rate and floating rate.

Floating rate securities are not in themselves particularly sensitive to interest rate risk. Because they generally accrue income at a variable rate, the movement in interest rates typically does not impact their fair value. Fluctuations in their current income due to variations in interest rates are generally not material to us. Floating rate fixed income securities are subject to other market risks such as: default risk of the underlying issuer, changes in issuer’s credit spreads, prepayment rates, investor demand and supply of securities within a particular asset class or industry class of the ultimate obligor. The sensitivity to any individual market risk can be difficult to quantify.

The fair value of fixed rate securities is sensitive to changes in interest rates. However, fixed rate securities that have low credit ratings or represent junior interests in securitizations are not particularly interest rate sensitive. In general, when we acquire interest rate sensitive securities, we enter into an offsetting short position for a similar fixed rate security. Alternatively, we may enter into other interest rate hedging arrangements such as interest rate swaps or Eurodollar futures. We measure our net interest rate sensitivity by determining how the fair value of our net interest rate sensitive assets would change as a result of a 100 basis points (“bps”) adverse shift across the entire yield curve. Based on this analysis, as of September 30, 2013, we would incur a loss of $2,140 if the yield curve rises 100 bps across all maturities and a gain of $2,141 if the yield curve falls 100 bps across all maturities.

Equity Securities: We hold equity interests in the form of investments in investment funds, permanent capital vehicles, and equity instruments of publicly traded companies. These investments are subject to equity price risk. Equity price risk results from changes in the level or volatility of underlying equity prices, which affect the value of equity securities or instruments that in turn derive their value from a particular stock. We attempt to reduce the risk of loss inherent in our inventory of equity securities by closely monitoring those security positions. However, since we generally make investments in our investment funds and permanent capital vehicles in order to facilitate third party capital raising (and hence increase our AUM and asset management fees), we may be unwilling to sell these positions as compared to investments in unaffiliated third parties. We have one permanent capital vehicle investment that is denominated in Euros, an investment fund that is denominated in Japanese Yen, and another permanent capital vehicle that is denominated in U.S. Dollars, but for which the underlying net assets are primarily based in Japanese Yen. The fair values of these investments are subject to change as the spot foreign exchange rate between these currencies and the U.S. Dollar (our functional currency) fluctuates. We may, from time to time, enter into foreign exchange rate derivatives to hedge all or a portion of this risk. We measure our net equity price sensitivity and foreign currency sensitivity by determining how the net fair value of our equity price sensitive and foreign exchange sensitive assets would change as a result of a 10% adverse change in equity prices or foreign exchange rates. Based on this analysis, as of September 30, 2013, our equity price sensitivity was $2,895 and our foreign exchange currency sensitivity was $2,486.  

Other Securities: These investments are primarily made up of residual interests in securitization entities. The fair value of these investments will fluctuate over time based on a number of factors including, but not limited to: liquidity of the investment type, the credit performance of the individual assets and issuers within the securitization entity, the asset class of the securitization entity and the relative supply of and demand for investments within that asset class, credit spreads in general, the transparency of valuation of the assets and liabilities of the securitization entity, and investors’ view of the accuracy of ratings prepared by the independent rating agencies. The sensitivity to any individual market risk cannot be quantified.

Debt: In addition to the risks noted above, we incur interest rate risk related to our debt obligations. We have debt that accrues interest at either variable rates or fixed rates. As of September 30, 2013, a 100 bps change in the three month LIBOR would result in a change in our annual cash paid for interest in the amount of $481. A 100 bps adverse change in the market yield to maturity would result in an increase in the fair value of the debt in the amount of $2,928 as of September 30, 2013.  

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Counterparty Risk and Settlement Risk:

We are subject to counterparty risk primarily in two areas: our collateralized securities transactions described in note 9 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q, and our TBA activities (where we enter into offsetting TBA trades in order to assist clients in hedging their mortgage portfolios) described in note 8 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q. With respect to the matched book repo financing activities, our risk is that the counterparty does not fulfill its obligation to repurchase the underlying security when it is due. In this case, we would typically liquidate the underlying security, which may result in a loss if the security has declined in value in relation to the balance due from the counterparty under the reverse repurchase agreement.

With respect to our TBA hedging activities, our risk is that the counterparty does not settle the TBA trade on the scheduled settlement date. In this case, we would have to execute the trade, which may result in a loss based on market movement in the value of the underlying trade between its initial trade date and its settlement date (which in the case of TBAs can be as long as 90 days). If we were to incur a loss under either of these activities, we have recourse to the counterparty pursuant to the underlying agreements.

Finally, we have general settlement risk in all of our regular way fixed income and equity trading activities. If a counterparty fails to settle a trade, we may incur a loss in closing out the position and would be forced to try to recover this loss from the counterparty. If the counterparty has become insolvent or does not have sufficient liquid assets to reimburse us for the loss, we may not get reimbursed.

How we manage these risks

Market Risk

We seek to manage our market risk by utilizing our underwriting and credit analysis processes that are performed in advance of acquiring any investment. In addition, we continually monitor our investments—trading and our trading securities sold, not yet purchased on a daily basis and our other investments on a monthly basis. We perform an in-depth monthly analysis on all our investments and our risk committee meets on a monthly basis to review specific issues within our portfolio and to make recommendations for dealing with these issues. In addition, each of our broker-dealers has an assigned chief risk officer that reviews the firm’s positions and trading activities on a daily basis.

Counterparty Risk

We seek to manage our counterparty risk through two major tools. First, we perform a credit assessment of each counterparty to ensure the counterparty has sufficient equity, liquidity, and profitability to support the level of trading or lending we plan to do with them. Second, we require counterparties to post cash or other liquid collateral (“margin”) in the case of changes in the market value of the underlying securities or trades on an ongoing basis.

In the case of collateralized securities financing transactions, we will generally lend less than the market value of the underlying security initially. The difference between the amount lent and the value of the security is referred to as the haircut. We will seek to maintain this haircut while the loan is outstanding. If the value of the security declines, we will require the counterparty to post margin to offset this decline. If the counterparty fails to post margin, we will sell the underlying security. The haircut serves as a buffer against market movements to prevent or minimize a loss.

In the case of TBA hedging, we also require counterparties to post margin with us in the case of the market value of the underlying TBA trade declining. If the counterparty fails to post margin, we will close out the underlying trade. In the case of TBA hedging, we will sometimes obtain initial margin or a cash deposit from the counterparty which serves a purpose similar to the haircut as an additional buffer against losses. However, some of our TBA hedging activities are done without initial margin or cash deposits.

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ITEM  4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have established and maintain disclosure controls and procedures that are designed to ensure that material information relating to the Company (and its consolidated subsidiaries) required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, who certify our financial reports and to other members of senior management and the Company’s Board of Directors.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of September 30, 2013. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective at September 30, 2013.  

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.Legal Proceedings

Incorporated by reference to the headings titled “Legal and Regulatory Proceedings” in note 17 to the consolidated financial statements include in Item 1 in this Quarterly Report on Form 10-Q.

Item  1A.Risk Factors

In addition to the information set forth in this Quarterly Report on Form 10-Q, you should also carefully review and consider the risk factors contained in our other reports and periodic filings with the SEC, including without limitation the risk factors contained under the caption “Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, as amended, which could materially and adversely affect our business, financial condition, and results of operations. The risk factors discussed in that Form 10-K do not identify all risks that we face because our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations. Other than as set forth below, there have been no material changes in the significant factors that may affect our business and operations as described in “Item 1A—Risk Factors” of the Annual Report on 10-K for the year ended December 31, 2012, as amended.

The issuance of the shares of the Company’s common stock upon the conversion, if any, of the notes purchased by Mead Park Capital and EBC, as assignee of CBF, may cause substantial dilution to our existing stockholders and may cause the price of our common stock to decline.

In connection with the investments by Mead Park Capital and EBC, as assignee of CBF, in September 2013 pursuant to the definitive agreements, the Company issued $8,247,501 in aggregate principal amount of the 8.0% Convertible Notes.  The 8.0% Convertible Notes are convertible into a maximum aggregate amount of 4,086,308 shares of the Company’s common stock assuming none of the interest under the 8.0% Convertible Notes is paid to the holders thereof in cash.  If the holders of the 8.0% Convertible Notes elect to convert such notes into shares of our common stock, our existing stockholders may be substantially diluted and the price of our common stock may decline.

The resale of the shares of our common stock by Mead Park Capital and/or EBC could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

In connection the registration rights agreement, dated May 9, 2013, which the Company entered into with Mead Park Capital and CBF, the Company filed a Form S-3 with the Securities and Exchange Commission seeking to register the resale of all of the shares of our common stock issued or issuable to Mead Park Capital and EBC, as assignee of CBF, under the definitive agreements and the 8.0% Convertible Notes, respectively.  The resale of such shares of our common stock by Mead Park Capital and/or EBC could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

The planned consolidation of CCPR and JVB may not result in improved profitability.

On October 2, 2013, the Company announced that it had begun the process of consolidating two of its registered broker-dealer subsidiaries, CCPR and JVB, into a single broker-dealer subsidiary.  The Company may not receive the regulatory approvals necessary to consolidate CCPR and JVB or the planned consolidation may not otherwise occur.  Further, the measures which we have adopted may not result in the improved profitability which we are seeking to achieve. 

In connection with the planned consolidation of CCPR and JVB, the Company reduced the size of its workforce by approximately 20%.  The planned consolidation has placed and will continue to place a burden on our management, systems and resources, and will generally increase our dependence on key persons and reduce functional back-ups.  Many of the employees who were terminated possessed specific knowledge or expertise, and we may be unable to transfer that knowledge or expertise to our remaining employees.  In that case, the absence of such employees will create significant operational difficulties.  Further, the reduction in workforce may reduce employee morale and create concern among potential and existing employees about job security, which may lead to difficulty in hiring and increased turnover in our current workforce, and place undue strain upon our operational resources.  In addition, we may experience further reductions in our workforce, which would compound the risks we face.  As a result, our ability to respond to unexpected challenges may be impaired, and we may be unable to take advantage of new opportunities.

84

In response to changes in industry and market conditions, the Company may be required to further strategically realign its resources and consider restructuring, disposing of, or otherwise exiting businesses. We cannot assure you that we will be able to:

· Expand our capabilities or systems effectively;

· Successfully develop new products or services;

· Allocate our human resources optimally;

· Identify, hire or retain qualified employees; or

· Incorporate effectively the components of any business that we may acquire in our effort to achieve growth.

Item  2.Unregistered Sales of Equity Securities and Use of Proceeds

					Maximum Dollar
					Value
					of Shares
	Total			Total Number of	that May Yet be
	Number of	Average		Shares Purchased	Purchased Under
	Shares	Price		as Part of	the
	Purchased	Paid Per		Publicly Announced	Plans or
Period	(1)	Share		Plans or Programs	Program (2)
July 1, 2013 to July 30, 2013	-	$	-	-	$	45,815,766
August 1, 2013 to August 31, 2013	-		-	-		45,815,766
September 1, 2013 to September 30, 2013	10,196		2.32	-		45,815,766
Total	10,196	$	2.32	-

1) We repurchased an aggregate of 10,196 shares other than as part of a publicly announced plan or program.  We repurchased these securities in connection with our stock compensation plans which allow participants to use shares to satisfy certain tax liabilities arising from the vesting of restricted stock.

2) On August 3, 2007, our Board of Directors authorized us to repurchase up to $50 million of our common stock from time to time in open market purchases or privately negotiated transactions.  The repurchase plan was publicly announced on August 7, 2007.

Effective January 1, 2010, the Company ceased to qualify as a REIT and, therefore, is not required to make any dividends or other distributions to its stockholders. However, the Company’s Board of Directors has the power to decide to increase, reduce, or eliminate dividends in the future. The Company’s Board of Director’s decision will depend on a variety of factors, including business, financial and regulatory considerations as well as any limitations under Maryland law or imposed by any agreements governing indebtedness of the Company. There can be no assurances that such dividends will be maintained or increased and, if maintained or increased, will not subsequently be discontinued.

Certain subsidiaries of the Operating LLC have restrictions on the withdrawal of capital and otherwise in making distributions and loans. CCPR and JVB are subject to net capital restrictions imposed by the SEC and FINRA that require certain minimum levels of net capital to remain in these subsidiaries. In addition, these restrictions could potentially impose notice requirements or limit our ability to withdraw capital above the required minimum amounts (excess capital) whether through distribution or loan. CCFL is regulated by the FCA in the United Kingdom and must maintain certain minimum levels of capital. See note 15 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

85

Item  6.Exhibits

Exhibit No.	Description
10.1	Employment Agreement, dated September 16, 2013, by and among Institutional Financial Markets, Inc., IFMI, LLC and Lester R. Brafman (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Institutional Financial Markets, Inc., filed with the Securities and Exchange Commission on September 18, 2013).
11.1	Statement Regarding Computation of Per Share Earnings.*
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.**
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.**
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.***
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.***
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at September 30, 2013 and December 31, 2012, (ii) the Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2013 and 2012, (iii) the Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2013, (iv) the Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012, and (v) Notes to Consolidated Financial Statements.**
*Data required by FASB Accounting Standards Codification 260, “Earnings per Share,” is provided in note 16 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q. **Filed herewith. ***Furnished herewith.

86

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Institutional Financial Markets, Inc.
	By:	/s/ LESTER R. BRAFMAN
		Lester R. Brafman
Date: November 4, 2013		Chief Executive Officer
	Institutional Financial Markets, Inc.
	By:	/s/ JOSEPH W. POOLER, JR.
		Joseph W. Pooler, Jr.
Date: November 4, 2013		Executive Vice President, Chief Financial Officer and Treasurer

87

EX-31.1

Exhibit 31.1

SECTION 302 CEO CERTIFICATION

I, Lester R. Brafman, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Institutional Financial Markets, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Ovember
November 4, 2013	Signed:	/s/ LESTER R. BRAFMAN
	Name:	Lester R. Brafman
	Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

SECTION 302 CFO CERTIFICATION

I, Joseph W. Pooler, Jr., certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Institutional Financial Markets, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit

committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

o
November 4, 2013	Signed:	/s/ JOSEPH W. POOLER, JR.
	Name:	Joseph W. Pooler, Jr.
	Title:	Executive Vice President, Chief
		Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Institutional Financial Markets, Inc. (the “Company”) for the three months ended September 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lester R. Brafman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

ov
November 4, 2013	Signed:	/s/ LESTER R. BRAFMAN
	Name:	Lester R. Brafman
	Title:	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Institutional Financial Markets, Inc. (the “Company”) for the three months ended September 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph W. Pooler, Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

o
November 4, 2013	Signed:	/s/ JOSEPH W. POOLER, JR.
	Name:	Joseph W. Pooler, Jr.
	Title:	Executive Vice President, Chief Financial Officer and Treasurer

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Related Party Transactions (Schedule Of Related Party Transactions) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Related Party Transaction [Line Items]
Net trading	$ 7,824	$ 13,669		$ 32,513		$ 51,311
Income / (loss) from equity method affiliates	101	647		1,715		2,689
Cohen Brothers Financial, L.L.C. [Member]
Related Party Transaction [Line Items]
Management fee revenue						64
TBBK [Member]
Related Party Transaction [Line Items]
Net trading	35	5		436		76
Star Asia [Member]
Related Party Transaction [Line Items]
Management fee revenue	764			1,833
Principal transactions and other income, Gain/(Loss)	183	1,626		(9,051)		(3,433)
Star Asia Manager [Member]
Related Party Transaction [Line Items]
Income / (loss) from equity method affiliates		279	[1]	158	[1]	859	[1]
Star Asia SPV [Member]
Related Party Transaction [Line Items]
Income / (loss) from equity method affiliates		276		1,287		1,000
Star Asia Opportunity [Member]
Related Party Transaction [Line Items]
Income / (loss) from equity method affiliates		(75)		(5)		544
Star Asia Opportunity II [Member]
Related Party Transaction [Line Items]
Income / (loss) from equity method affiliates		(28)				(28)
Star Asia Capital Management [Member]
Related Party Transaction [Line Items]
Income / (loss) from equity method affiliates	37	198		108		328
Star Asia Special Situations Fund [Member]
Related Party Transaction [Line Items]
Principal transactions and other income, Gain/(Loss)	607			577
S.A.A. Manager [Member]
Related Party Transaction [Line Items]
Income / (loss) from equity method affiliates	64			173
EuroDekania Limited [Member]
Related Party Transaction [Line Items]
Management fee revenue						139
Principal transactions and other income, Dividend income and other	410	386		805		569
Principal transactions and other income, Gain/(Loss)	235	268		221		1
Deep Value [Member]
Related Party Transaction [Line Items]
Income / (loss) from equity method affiliates		(3)		(6)		(14)
Affiliated Entity [Member]
Related Party Transaction [Line Items]
Management fee revenue	764			1,833		203
Net trading	35	5		436		76
Principal transactions and other income, Dividend income and other	410	386		805		569
Principal transactions and other income, Gain/(Loss)	1,025	1,894		(8,253)		(3,432)
Income / (loss) from equity method affiliates	$ 101	$ 647		$ 1,715		$ 2,689

[1] Beginning March 1, 2013, Star Asia Manager was consolidated by the Company. Prior to that, it was treated as an equity method investment. See note A above.

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Permanent Equity Schedule Of Effects Of Changes In Ownership Interest Subsidiary) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Permanent Equity [Abstract]
Net income / (loss) attributable to IFMI	$ (104)	$ 2,008	$ (9,306)	$ (3,929)
Increase in IFMI's paid in capital for the acquisition / (surrender) of additional units of consolidated subsidiary, net			2,705	804
Changes from net income / (loss) attributable to IFMI and transfers (to) from non-controlling interest			$ (6,601)	$ (3,125)

XML

Earnings / (Loss) Per Common Share (Narrative) (Details)	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Earnings Per Share [Line Items]
Unrestricted Units Exchangeable into Shares	5,324,090	[1]	5,252,002	[1]	5,324,090	[1]	5,252,002	[1]
Stock Compensation Plan [Member]
Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	392,010				360,559		46,288
Convertible Debt Securities [Member]
Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	179,294				59,765
Board of Directors, Vice Chairman [Member]
Earnings Per Share [Line Items]
Unrestricted Units Exchangeable into Shares	4,983,557		4,983,557		4,983,557		4,983,557

[1] The Operating LLC membership units not held by IFMI (that is, those held by the non-controlling interest for the nine and three months ended September 30, 2013 and 2012) may be redeemed and exchanged into shares of the Company on a one-to-one basis. The 4,983,557 Operating LLC membership units held by Daniel G. Cohen are redeemable at Mr. Cohen’s option, at any time, for (i) cash in an amount equal to the average of the per share closing prices of the Company’s common stock for the ten consecutive trading days immediately preceding the date the Company receives Mr. Cohen’s redemption notice, or (ii) at the Company’s option, one share of the Company’s common stock, subject, in each case, to appropriate adjustment upon the occurrence of an issuance of additional shares of the Company’ Common Stock as a dividend or other distribution on the Company’s outstanding Common Stock, or a further subdivision or combination of the outstanding shares of the Company’s common stock. The Operating LLC membership units held by other members of the Operating LLC have the same redemption rights as described above. These units are not included in the computation of basic earnings per share. These units enter into the computation of diluted net income / (loss) per common share when the effect is dilutive using the if-converted method.

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Collateralized Securities Transactions

9 Months Ended

Sep. 30, 2013

Brokers and Dealers [Abstract]

Collateralized Securities Transactions

9. COLLATERALIZED SECURITIES TRANSACTIONS

Securities purchased under agreements to resell (“reverse repurchase agreements” or “receivables under resale agreements”) or sales of securities under agreements to repurchase (“repurchase agreements”), principally U.S. government and federal agency obligations and MBS, are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts plus accrued interest. The resulting interest income and expense are included in net trading in the consolidated statements of operations.

In the case of reverse repurchase agreements, the Company generally takes possession of securities as collateral. Likewise, in the case of repurchase agreements, the Company is required to provide the counterparty with securities.

In certain cases a repurchase agreement and a reverse repurchase agreement may be entered into with the same counterparty. If certain requirements are met, the offsetting provisions included in FASB ASC 210, Balance Sheet (“FASB ASC 210”), allow (but do not require) the reporting entity to net the asset and liability on the balance sheet. It is the Company’s policy to present the assets and liabilities on a gross basis even if the conditions described in offsetting provisions included in FASB ASC 210 are met. The primary requirement to present assets and liabilities on a net basis is to have a master netting agreement with the counterparty. Because the Company does not generally enter into repurchase agreements and reverse repurchase agreements with the same counterparties, it does not have master netting agreements in place.

The Company classifies reverse repurchase agreements as a separate line item within the assets section of the Company’s consolidated balance sheets. The Company classifies repurchase agreements as a separate line item within the liabilities section of the Company’s consolidated balance sheets.

In the case of reverse repurchase agreements, if the counterparty does not meet its contractual obligation to return securities used as collateral, or does not deposit additional securities or cash for margin when required, the Company may be exposed to the risk of reacquiring the securities or selling the securities at unfavorable market prices in order to satisfy its obligations to its customers or counterparties. The Company’s policy to control this risk is monitoring the market value of securities pledged or used as collateral on a daily basis and requiring adjustments in the event of excess market exposure.

In the case of repurchase agreements, if the counterparty makes a margin call and the Company is unable or unwilling to meet the margin call, the counterparty can sell the securities to repay the obligation. The Company is at risk that the counterparty may sell the securities at unfavorable market prices and the Company may sustain significant loss. The Company controls this risk by monitoring its liquidity position to ensure it has sufficient cash or liquid securities to meet margin calls.

In the normal course of doing business, the Company enters into reverse repurchase agreements that permit it to re-pledge or resell the securities to others.

The Company enters into reverse repurchase agreements to acquire securities to cover short positions or as an investment. The Company enters into repurchase agreements to finance the Company’s securities positions held in inventory or to finance reverse repurchase agreements entered into as an investment.

At September 30, 2013 and December 31, 2012, the Company held reverse repurchase agreements of $94,867 and $70,110, respectively, and the fair value of securities received as collateral under reverse repurchase agreements was $95,807 and $73,382, respectively.

At September 30, 2013 and December 31, 2012, the Company had repurchase agreements of $94,856 and $70,273, respectively, and the fair value of securities pledged as collateral under repurchase agreements was $94,602 and $73,382, respectively. These amounts include collateral for reverse repurchase agreements that were re-pledged as collateral for repurchase agreements.

As of September 30, 2013 and December 31, 2012, the Company’s reverse repurchase agreements and repurchase agreements were predominantly collateralized securities in the following asset classes: Agency Specified Pools, Agency Hybrid Arms, and Fixed Rate Agency CMOs.

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Financial Instruments (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Financial Instruments [Abstract]
Unrealized gain (losses) in net trading revenue	$ 1,141	$ (611)

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Consolidated Statements Of Operations And Comprehensive Income / (Loss) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenues
Net trading	$ 7,824	$ 13,669	$ 32,513	$ 51,311
Asset management	4,644	8,465	13,561	18,010
New issue and advisory	3,692	1,758	5,259	3,024
Principal transactions and other income	1,926	4,174	(5,487)	(482)
Total revenues	18,086	28,066	45,846	71,863
Operating expenses
Compensation and benefits	11,529	16,484	37,547	49,811
Business development, occupancy, equipment	1,429	1,520	4,271	3,970
Subscriptions, clearing, and execution	2,495	2,602	7,161	8,574
Professional fees and other operating	3,436	4,015	9,971	9,702
Depreciation and amortization	367	289	1,036	1,023
Total operating expenses	19,256	24,910	59,986	73,080
Operating income / (loss)	(1,170)	3,156	(14,140)	(1,217)
Non-operating income / (expense)
Interest expense, net	(1,047)	(868)	(3,111)	(3,187)
Other income / (expense)		83		(4,271)
Income / (loss) from equity method affiliates	101	647	1,715	2,689
Income/ (loss) before income tax expense / (benefit)	(2,116)	3,018	(15,536)	(5,986)
Income tax expense / (benefit)	(1,807)	54	(1,761)	108
Net income / (loss)	(309)	2,964	(13,775)	(6,094)
Less: Net income / (loss) attributable to the non-controlling interest	(205)	956	(4,469)	(2,165)
Net income / (loss) attributable to IFMI	(104)	2,008	(9,306)	(3,929)
Income / (loss) per common share-basic:
Basic Income / (loss) per common share	$ (0.01)	$ 0.19	$ (0.80)	$ (0.37)
Weighted average shares outstanding-basic	11,875,950	10,849,220	11,628,392	10,683,076
Income / (loss) per common share-diluted:
Diluted Income / (loss) per common share	$ (0.01)	$ 0.18	$ (0.80)	$ (0.37)
Weighted average shares outstanding-diluted	17,200,040	16,176,898	16,952,482	15,935,078
Dividends declared per common share	$ 0.02	$ 0.02	$ 0.06	$ 0.06
Comprehensive income / (loss):
Net income / (loss)	(309)	2,964	(13,775)	(6,094)
Other comprehensive income / (loss) item:
Foreign currency translation adjustments, net of tax of $0	273	237	(87)	197
Other comprehensive income / (loss), net of tax of $0	273	237	(87)	197
Comprehensive income / (loss)	(36)	3,201	(13,862)	(5,897)
Less: comprehensive income / (loss) attributable to the non-controlling interest	(121)	1,033	(4,500)	(2,118)
Comprehensive income / (loss) attributable to IFMI	$ 85	$ 2,168	$ (9,362)	$ (3,779)

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Basis Of Presentation

9 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis Of Presentation

2. BASIS OF PRESENTATION

The financial statements of the Company included herein were prepared in conformity with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim months periods. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2013 and 2012 are not necessarily indicative of the results for the entire year or any subsequent interim period. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended.  

Capitalized terms used herein without definition have the meanings ascribed to them in the Annual Report on Form 10-K for the year ended December 31, 2012, as amended.  

Certain prior period amounts have been reclassified to conform to the current period presentation.

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Earnings / (Loss) Per Common Share

9 Months Ended

Sep. 30, 2013

Earnings / (Loss) Per Common Share [Abstract]

Earnings / (Loss) Per Common Share

16 . EARNINGS / (Loss) PER COMMON SHARE

The following table presents a reconciliation of basic and diluted earnings / (loss) per common share for the periods indicated.

EARNINGS / (LOSS) PER COMMON SHARE
(Dollars in Thousands, except share or per share information)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Net income / (loss) attributable to IFMI	$	(104)	$	2,008	$	(9,306)	$	(3,929)
Add/ (deduct): Income / (loss) attributable to non-controlling interest attributable to Operating LLC membership units exchangeable into IFMI shares (1)		(212)		967		(4,461)		(1,916)
Add / (deduct): Adjustment (2)		154		(5)		176		(93)
Net income / (loss) on a fully converted basis	$	(162)	$	2,970	$	(13,591)	$	(5,938)
Weighted average common shares outstanding - Basic		11,875,950		10,849,220		11,628,392		10,683,076
Unrestricted Operating LLC membership units exchangeable into IFMI shares (1)		5,324,090		5,252,002		5,324,090		5,252,002
Dilutive impact of restricted equity instruments		-		75,676		-		-
Weighted average common shares outstanding - Diluted (3)		17,200,040		16,176,898		16,952,482		15,935,078
Net income / (loss) per common share - Basic	$	(0.01)	$	0.19	$	(0.80)	$	(0.37)
Net income / (loss) per common share - Diluted	$	(0.01)	$	0.18	$	(0.80)	$	(0.37)

(1)The Operating LLC membership units not held by IFMI (that is, those held by the non-controlling interest for the nine and three months ended September 30, 2013 and 2012) may be redeemed and exchanged into shares of the Company on a one-to-one basis. The 4,983,557 Operating LLC membership units held by Daniel G. Cohen are redeemable at Mr. Cohen’s option, at any time, for (i) cash in an amount equal to the average of the per share closing prices of the Company’s common stock for the ten consecutive trading days immediately preceding the date the Company receives Mr. Cohen’s redemption notice, or (ii) at the Company’s option, one share of the Company’s common stock, subject, in each case, to appropriate adjustment upon the occurrence of an issuance of additional shares of the Company’ Common Stock as a dividend or other distribution on the Company’s outstanding Common Stock, or a further subdivision or combination of the outstanding shares of the Company’s common stock. The Operating LLC membership units held by other members of the Operating LLC have the same redemption rights as described above.  These units are not included in the computation of basic earnings per share. These units enter into the computation of diluted net income / (loss) per common share when the effect is dilutive using the if-converted method.

(2)An adjustment is included for the following: (i) if the Operating LLC membership units had been converted at the beginning of the period, the Company would have incurred a higher income tax expense or realized a higher income tax benefit, as applicable; and (ii) to adjust the non-controlling interest amount to be consistent with the weighted average share calculation.

(3)For the nine months ended September 30, 2013 and 2012, weighted average common shares outstanding excludes a total of 360,559 and 46,288 shares, respectively, representing restricted Operating LLC units, restricted IFMI common stock, and restricted units of IFMI common stock.  For the three months ended September 30, 2013, weighted average common shares outstanding excludes a total of 392,010 shares representing restricted Operating LLC units, restricted IFMI common stock, and restricted units of IFMI common stock.  For the nine and three months ended September 30, 2013, weighted average common shares outstanding also excludes 59,765 and 179,294 shares, respectively, from the assumed conversion of the 8% Convertibles Notes because the inclusion of the converted shares would be anti-dilutive.

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Other Assets and Accounts Payable and Other Liabilities (Schedule Of Accounts Payable And Other Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Schedule of accounts payable and other liabilities
Accounts payable	$ 1,399	$ 1,143
Rent payable	1,092	1,032
Accrued interest payable	510	308
Payroll taxes payable	786	1,577
Accrued income taxes		1,434
Guarantee liability		1,084
Settlement payable		4,467
Deferred income	60	498
Mandatorily redeemable equity interests	0	86
Other accrued expense	2,354	1,451
Accounts payable and other liabilities	$ 6,201	$ 13,080

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Financial Instruments (Schedule Of Other Investments) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Schedule of Investments [Line Items]
Other investments, Cost	$ 39,192		$ 39,192
Other investments, Carrying Value	29,008		38,323
Other investments, Unrealized Gain /(Loss)	(10,184)		(869)
EuroDekania Limited [Member]
Schedule of Investments [Line Items]
Other investments, Carrying Value	2,275	[1]	2,054	[1]
Star Asia [Member]
Schedule of Investments [Line Items]
Other investments, Carrying Value	21,118	[2]	30,169	[2]
Star Asia Special Situations Fund [Member]
Schedule of Investments [Line Items]
Other investments, Carrying Value	3,203	[2]	2,503	[2]
Tiptree Financial Partners L.P. [Member]
Schedule of Investments [Line Items]
Other investments, Carrying Value	2,317	[3]	2,834	[3]
Other Equity Securities [Member]
Schedule of Investments [Line Items]
Other investments, Carrying Value	37		431
Interests in securitizations [Member]
Schedule of Investments [Line Items]
Other investments, Cost	217	[4]	217	[4]
Other investments, Carrying Value	37	[4]	77	[4]
Other investments, Unrealized Gain /(Loss)	(180)	[4]	(140)	[4]
Equity securities [Member]
Schedule of Investments [Line Items]
Other investments, Cost	38,812		38,745
Other investments, Carrying Value	28,950		37,991
Other investments, Unrealized Gain /(Loss)	(9,862)		(754)
Equity securities [Member] | EuroDekania Limited [Member]
Schedule of Investments [Line Items]
Other investments, Cost	7,807		7,807
Other investments, Carrying Value	2,275		2,054
Other investments, Unrealized Gain /(Loss)	(5,532)		(5,753)
Equity securities [Member] | Star Asia [Member]
Schedule of Investments [Line Items]
Other investments, Cost	23,304		23,304
Other investments, Carrying Value	21,118		30,169
Other investments, Unrealized Gain /(Loss)	(2,186)		6,865
Equity securities [Member] | Star Asia Special Situations Fund [Member]
Schedule of Investments [Line Items]
Other investments, Cost	1,964		1,841
Other investments, Carrying Value	3,203		2,503
Other investments, Unrealized Gain /(Loss)	1,239		662
Equity securities [Member] | Tiptree Financial Partners L.P. [Member]
Schedule of Investments [Line Items]
Other investments, Cost	5,561		5,561
Other investments, Carrying Value	2,317		2,834
Other investments, Unrealized Gain /(Loss)	(3,244)		(2,727)
Equity securities [Member] | Other Equity Securities [Member]
Schedule of Investments [Line Items]
Other investments, Cost	176		232
Other investments, Carrying Value	37		431
Other investments, Unrealized Gain /(Loss)	(139)		199
Residential Mortgage [Member]
Schedule of Investments [Line Items]
Other investments, Cost	163		230
Other investments, Carrying Value	292		255
Other investments, Unrealized Gain /(Loss)	129		25
Foreign currency forward contracts [Member]
Schedule of Investments [Line Items]
Other investments, Carrying Value	(271)
Other investments, Unrealized Gain /(Loss)	$ (271)

[1] Hybrid Securities Fund—European.

[2] Real Estate Fund—Asian.

[3] Diversified Fund.

[4] Represents an interest in a CDO.

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Other Assets and Accounts Payable and Other Liabilities

9 Months Ended

Sep. 30, 2013

Other Assets and Accounts Payable and Other Liabilities [Abstract]

Other Assets And Accounts Payable And Other Liabilities

10. OTHER ASSETS AND ACCOUNTS PAYABLE AND OTHER LIABILITIES

Other assets included:

OTHER ASSETS
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Deferred costs	$	638	$	-
Note receivable		1,565		-
Prepaid expenses		2,423		2,329
Prepaid income taxes		181		-
Security deposits		2,625		2,755
Miscellaneous other assets		612		24
Cost method investment		235		-
Furniture, equipment, and leasehold improvements, net		2,218		2,273
Intangible assets		559		332
Equity method affiliates		42		1,910
Other assets	$	11,098	$	9,623

Accounts payable and other liabilities included:

ACCOUNTS PAYABLE AND OTHER LIABILITIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Accounts payable	$	1,399	$	1,143
Rent payable		1,092		1,032
Accrued interest payable		510		308
Payroll taxes payable		786		1,577
Accrued income taxes		-		1,434
Guarantee liability		-		1,084
Settlement payable		-		4,467
Deferred income		60		498
Mandatorily redeemable equity interests		-		86
Other general accrued expenses		2,354		1,451
Accounts payable and other liabilities	$	6,201	$	13,080

See note 13 regarding mandatorily redeemable equity interests. See note 26 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 regarding the settlement payable.

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Due from / Due to Related Parties (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Related Party Transaction [Line Items]
Total Due from Related Parties	$ 923		$ 452
EuroDekania Limited [Member]
Related Party Transaction [Line Items]
Total Due from Related Parties	105
Star Asia Manager [Member]
Related Party Transaction [Line Items]
Total Due from Related Parties			98	[1]
Star Asia And Related Entities [Member]
Related Party Transaction [Line Items]
Total Due from Related Parties	496	[2]
Cohen Brothers Financial, LLC [Member]
Related Party Transaction [Line Items]
Total Due from Related Parties	93		90
Employees [Member]
Related Party Transaction [Line Items]
Total Due from Related Parties	$ 229		$ 264

[1] Beginning March 1, 2013, Star Asia Manager was consolidated by the Company. Prior to that, it was treated as an equity method investment.

[2] Related entities include Star Asia Capital Management and SAA Manager.

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Acquisition And Private Investment In IFMI (Narrative, Part II) (Details) (USD $)	9 Months Ended		9 Months Ended		9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2013 item	Dec. 31, 2012 item	Sep. 30, 2013 Series C Junior Participating Preferred Stock	Sep. 30, 2013 Contingent convertible senior notes [Member]	Sep. 30, 2013 Mead Park Capital Partners And Cohen Brothers Financial [Member]	Sep. 30, 2013 Mead Park Capital Partners L.L.C. [Member]	Sep. 30, 2013 Mead Park Capital Partners L.L.C. [Member] Contingent convertible senior notes [Member] security	Sep. 30, 2013 Cohen Brothers Financial, L.L.C. [Member]	Sep. 30, 2013 Cohen Brothers Financial, L.L.C. [Member] Contingent convertible senior notes [Member] security
Private Placement [Line Items]
Stock Issued During Period, Shares, New Issues	2,749,167					1,949,167		800,000
Shares Issued, Price Per Share	$ 2.00
Proceeds from Issuance of Private Placement	$ 5,073,000				$ 13,746,000
Stock Issued During Period, Value, New Issues	5,498,000
Debt Instrument, Face Amount				$ 16,369,000			$ 5,848,000		$ 2,400,000
Debt Instrument, Convertible, Number of Equity Instruments							1,949,167		800,000
Debt Instrument, Convertible, Conversion Price							$ 3.00		$ 3.00
Debt Instrument, Interest Rate, Stated Percentage				8.00%
Number of Directors	8	10
Class of Warrant or Right, Exercise Price of Warrants or Rights			100.00
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right			0.0001
Class of Warrant or Right, Exercise Trigger, Percentage of Common Stock Owned by Individual or Affiliates			4.95%
Class of Warrant or Right, Warrants or Rights Exercisable	0

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Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Loss Contingencies [Line Items]
Guarantee liability					$ 1,084
Principal transactions and other income	1,926	4,174	(5,487)	(482)
Potential liability, assuming the restricted stock or restricted units to vest	112		112
Loss Contingency, Range of Possible Loss, Maximum	4,683		4,683
Guarantee Obligations [Member]
Loss Contingencies [Line Items]
Guarantee liability					1,084
Principal transactions and other income			$ 1,084

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Fair Value Disclosures (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended			9 Months Ended		12 Months Ended						3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013 Star Asia [Member]		Dec. 31, 2012 Star Asia [Member]		Sep. 30, 2013 Tiptree Financial Partners L.P. [Member]		Dec. 31, 2012 Tiptree Financial Partners L.P. [Member]		Sep. 30, 2013 Trading Securities [Member]	Sep. 30, 2012 Trading Securities [Member]	Sep. 30, 2013 Trading Securities [Member]	Sep. 30, 2012 Trading Securities [Member]	Sep. 30, 2012 Alternative Investments [Member]	Sep. 30, 2013 Alternative Investments [Member]	Sep. 30, 2012 Alternative Investments [Member]	Sep. 30, 2013 Alternative Investments [Member] Tiptree Financial Partners L.P. [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets transfers out of level 3				$ 267										$ 0	$ 0	$ 0	$ 0	$ 0	$ 2,834	$ 267	$ 2,834	[1]
Fair value of assets transfers into level 3														0	0	0	0	0
Fair value, option, changes in fair value, gains (losses)	1,279	1,683	(8,714)	(3,525)
Other investments, Carrying Value	29,008		29,008		38,323	21,118	[2]	30,169	[2]	2,317	[1]	2,834	[1]
Alternative Investments, Fair Value Disclosure, Unadjusted Net Asset Value						$ 31,907		$ 39,998
Fair Value Inputs, Discount Rate						7.26%		6.82%

[1] Diversified Fund.

[2] Real Estate Fund—Asian.

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Investments In Equity Method Affiliates (Tables)

9 Months Ended

Sep. 30, 2013

Investments in Equity Method Affiliates [Abstract]

Schedule Of Investments In Equity Method Affiliates

INVESTMENTS IN EQUITY METHOD AFFILIATES
(Dollars in Thousands)
	Star		Deep		Deep		Star		Star		Star Asia
	Asia		Value		Value		Asia		Asia		Capital		SAA
	Manager		GP		GP II		SPV		Opportunity		Management		Manager		Total
January 1, 2013	$	547	$	7	$	39	$	1,395	$	22	$	(92)	$	(8)	$	1,910
Investments / advances		-		-		-		-		-		-		10		10
Distributions / repayments		-		(7)		-		(2,682)		-		(99)		(100)		(2,888)
Acquisition (1)		(705)		-		-		-		-		-		-		(705)
Earnings / (loss) realized		158		-		(6)		1,287		(5)		108		173		1,715
September 30, 2013	$	-	$	-	$	33	$	-	$	17	$	(83)	$	75	$	42

(1)See note 4.

Summarized Data Of Equity Method Investees

SUMMARY DATA OF EQUITY METHOD INVESTEES
(Dollars in Thousands)
		September 30, 2013		December 31, 2012
Total Assets	$	388,316	$	279,874
Liabilities	$	153,899	$	96,981
Equity attributable to the investees		234,317		182,277
Non-controlling interest		100		616
Total Liabilities & Equity	$	388,316	$	279,874

		Three Months Ended September 30,				Nine Months Ended September 30,
		2013		2012		2013		2012
Net income / (loss)	$	17,496	$	9,313	$	26,431	$	(419)
Net income / (loss) attributable to the investees	$	17,456	$	9,201	$	26,947	$	(253)

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Supplemental Cash Flow Disclosure

9 Months Ended

Sep. 30, 2013

Supplemental Cash Flow Disclosure [Abstract]

Supplemental Cash Flow Disclosure

19. SUPPLEMENTAL CASH FLOW DISCLOSURE

Interest paid by the Company on its debt was $2,055 and $3,655 for the nine months ended September 30, 2013 and 2012, respectively.

The Company paid income taxes of $331 and $134 for the nine months ended September 30, 2013 and 2012, respectively. The Company received $46 and$0 income tax refunds for the nine months ended September 30, 2013 and 2012, respectively.

For the nine months ended September 30, 2013, the Company had the following significant non-cash transactions that are not reflected on the statement of cash flows:

•  The Company acquired additional units of the Operating LLC pursuant to the UIS Agreement and in connection with the redemption of vested Operating LLC units by IFMI and the issuance of shares from the private placement. The Company recognized a net increase in additional paid-in capital of $2,705, a net decrease of $124 in accumulated other comprehensive income, and a decrease of $2,581 in non-controlling interest. See note 14.  

•  In connection with the Star Asia Manager Repurchase Transaction, the Company reclassified $705 from investment in equity method affiliates and re-allocated it to certain balance sheet accounts to reflect Star Asia Manager becoming a consolidated subsidiary of the Company. See note 4.

For the nine months ended September 30, 2012, the Company had the following significant non-cash transactions that are not reflected on the statement of cash flows:

•  The Company recognized a net increase in additional paid-in capital of $804, a net decrease of $27 in accumulated other comprehensive income, and a decrease of $777 in non-controlling interest as a result of additional units of the Operating LLC issued to IFMI as a result of the UIS agreement and redemption of vested Operating LLC units by IFMI and the surrender of Operating LLC units by IFMI in connection with the retirement of the Company’s common stock.

•  The Company reclassified $6,446 from redeemable non-controlling interest to mandatorily redeemable equity interests in its consolidated balance sheets due to partnership withdrawals from PrinceRidge.

" The Company retired 50,400 shares of the Company’s common stock it held in treasury. The Company recognized an increase of $328 in accumulated deficit and a decrease of $328 in treasury stock.

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Segment And Geographic Information

9 Months Ended

Sep. 30, 2013

Segment and Geographic Information [Abstract]

Segment And Geographic Information

18. SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

The Company operates within three business segments: Capital Markets, Asset Management, and Principal Investing. See note 1.

The Company’s business segment information for the nine and three months ended September 30, 2013 and 2012 was prepared using the following methodologies and generally represents the information that is relied upon by management in its decision making processes:

(a) Revenues and expenses directly associated with each business segment are included in determining net income / (loss) by segment.

(b) Indirect expenses (such as general and administrative expenses including executive and indirect overhead costs) not directly associated with specific business segments are not allocated to the business segments’ statements of operations. Accordingly, the Company presents segment information consistent with internal management reporting. See note (1) in the table below for more detail on unallocated items. The following tables present the financial information for the Company’s segments for the periods indicated.

Beginning with the fourth quarter of 2012, the Company reclassified the investment in certain equity method affiliates as well as the income / (loss) from these equity method affiliates from the Principal Investing business segment to the Asset Management business segment. Relevant prior period amounts have been reclassified to conform to the current period presentation.

SEGMENT INFORMATION
Statement of Operations Information
Nine Months Ended September 30, 2013
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	32,513	$	-	$	-	$	32,513	$	-	$	32,513
Asset management		-		13,561		-		13,561		-		13,561
New issue and advisory		5,259		-		-		5,259		-		5,259
Principal transactions and other income		176		1,134		(6,797)		(5,487)		-		(5,487)
Total revenues		37,948		14,695		(6,797)		45,846		-		45,846
Total operating expenses		41,784		8,084		239		50,107		9,879		59,986
Operating income / (loss)		(3,836)		6,611		(7,036)		(4,261)		(9,879)		(14,140)
Income / (loss) from equity method affiliates		-		433		1,282		1,715		-		1,715
Other non-operating income / (expense)		(164)		(8)		-		(172)		(2,939)		(3,111)
Income / (loss) before income taxes		(4,000)		7,036		(5,754)		(2,718)		(12,818)		(15,536)
Income tax expense / (benefit)		(78)		-		-		(78)		(1,683)		(1,761)
Net income / (loss)		(3,922)		7,036		(5,754)		(2,640)		(11,135)		(13,775)
Less: Net income / (loss) attributable to the
non-controlling interest		(8)		-		-		(8)		(4,461)		(4,469)
Net income / (loss) attributable to IFMI	$	(3,914)	$	7,036	$	(5,754)	$	(2,632)	$	(6,674)	$	(9,306)
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	592	$	225	$	-	$	817	$	219	$	1,036

SEGMENT INFORMATION
Statement of Operations Information
Nine Months Ended September 30, 2012
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	51,311	$	-	$	-	$	51,311	$	-	$	51,311
Asset management		-		18,010		-		18,010		-		18,010
New issue and advisory		4,024		-		-		4,024		(1,000)		3,024
Principal transactions and other income		68		728		(1,278)		(482)		-		(482)
Total revenues		55,403		18,738		(1,278)		72,863		(1,000)		71,863
Total operating expenses		56,793		6,995		592		64,380		8,700		73,080
Operating income / (loss)		(1,390)		11,743		(1,870)		8,483		(9,700)		(1,217)
Income / (loss) from equity method affiliates		-		1,173		1,516		2,689		-		2,689
Other non-operating income / (expense)		(3,974)		-		-		(3,974)		(3,484)		(7,458)
Income / (loss) before income taxes		(5,364)		12,916		(354)		7,198		(13,184)		(5,986)
Income tax expense / (benefit)		-		-		-		-		108		108
Net income / (loss)		(5,364)		12,916		(354)		7,198		(13,292)		(6,094)
Less: Net income / (loss) attributable to the
non-controlling interest		(249)		-		-		(249)		(1,916)		(2,165)
Net income / (loss) attributable to IFMI	$	(5,115)	$	12,916	$	(354)	$	7,447	$	(11,376)	$	(3,929)
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	658	$	10	$	-	$	668	$	355	$	1,023

SEGMENT INFORMATION
Statement of Operations Information
Three Months Ended September 30, 2013
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	7,824	$	-	$	-	$	7,824	$	-	$	7,824
Asset management		-		4,644		-		4,644		-		4,644
New issue and advisory		3,692		-		-		3,692		-		3,692
Principal transactions and other income		32		236		1,658		1,926		-		1,926
Total revenues		11,548		4,880		1,658		18,086		-		18,086
Total operating expenses		13,248		2,471		77		15,796		3,460		19,256
Operating income / (loss)		(1,700)		2,409		1,581		2,290		(3,460)		(1,170)
Income / (loss) from equity method affiliates		-		101		-		101		-		101
Other non-operating income / (expense)		(55)		(1)		-		(56)		(991)		(1,047)
Income / (loss) before income taxes		(1,755)		2,509		1,581		2,335		(4,451)		(2,116)
Income tax expense / (benefit)		(37)		-		-		(37)		(1,770)		(1,807)
Net income / (loss)		(1,718)		2,509		1,581		2,372		(2,681)		(309)
Less: Net income / (loss) attributable to the
non-controlling interest		7		-		-		7		(212)		(205)
Net income / (loss) attributable to IFMI	$	(1,725)	$	2,509	$	1,581	$	2,365	$	(2,469)	$	(104)
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	202	$	93	$	-	$	295	$	72	$	367

SEGMENT INFORMATION
Statement of Operations Information
Three Months Ended September 30, 2012
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	13,669	$	-	$	-	$	13,669	$	-	$	13,669
Asset management		-		8,465		-		8,465		-		8,465
New issue and advisory		2,758		-		-		2,758		(1,000)		1,758
Principal transactions and other income		102		335		3,737		4,174		-		4,174
Total revenues		16,529		8,800		3,737		29,066		(1,000)		28,066
Total operating expenses		19,117		4,153		436		23,706		1,204		24,910
Operating income / (loss)		(2,588)		4,647		3,301		5,360		(2,204)		3,156
Income / (loss) from equity method affiliates		-		475		172		647		-		647
Other non-operating income / (expense)		250		-		-		250		(1,035)		(785)
Income / (loss) before income taxes		(2,338)		5,122		3,473		6,257		(3,239)		3,018
Income tax expense / (benefit)		-		-		-		-		54		54
Net income / (loss)		(2,338)		5,122		3,473		6,257		(3,293)		2,964
Less: Net income / (loss) attributable to the
non-controlling interest		(11)		-		-		(11)		967		956
Net income / (loss) attributable to IFMI	$	(2,327)	$	5,122	$	3,473	$	6,268	$	(4,260)	$	2,008
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	206	$	3	$	-	$	209	$	80	$	289

(1)Unallocated includes certain expenses incurred by indirect overhead and support departments (such as the executive, finance, legal, information technology, human resources, risk, compliance, and other similar overhead and support departments). Some of the items not allocated include: (1) operating expenses (such as cash compensation and benefits, equity-based compensation expense, professional fees, travel and entertainment, consulting fees, and rent) related to support departments excluding certain departments that directly support the Capital Markets business segment; (2) interest expense on corporate debt; and (3) income taxes. Management does not consider these items necessary for an understanding of the operating results of these business segments and such amounts are excluded in business segment reporting to the Chief Operating Decision Maker. During the third quarter of 2012, PrinceRidge (capital markets segment) entered into an intercompany engagement with CCFL (asset management segment). This intercompany transaction was eliminated in the unallocated segment.

Balance Sheet Data
As of September 30, 2013
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Total Assets	$	226,490	$	7,839	$	29,026	$	263,355	$	10,591	$	273,946
Included within total assets:
Investment in equity method affiliates	$	-	$	25	$	17	$	42	$	-	$	42
Goodwill (2)	$	7,937	$	3,176	$	-	$	11,113	$	-	$	11,113
Intangible assets (2)	$	332	$	227	$	-	$	559	$	-	$	559

Balance Sheet Data
As of September 30, 2012
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Total Assets	$	383,283	$	6,597	$	44,966	$	434,846	$	12,756	$	447,602
Included within total assets:
Investment in equity method affiliates	$	-	$	513	$	5,497	$	6,010	$	-	$	6,010
Goodwill (2)	$	7,937	$	3,176	$	-	$	11,113	$	-	$	11,113
Intangible assets (2)	$	372	$	-	$	-	$	372	$	-	$	372

(1)Unallocated assets primarily include (1) amounts due from related parties; (2) furniture and equipment, net; and (3) other assets that are not considered necessary for an understanding of business segment assets and such amounts are excluded in business segment reporting to the Chief Operating Decision Maker.

(2)Goodwill and intangible assets as of September 30, 2013 and 2012 are allocated to the Capital Markets and Asset Management business segments as indicated in the table from above.

Geographic Information

The Company conducts its business activities through offices in the following locations: (1) United States; (2) United Kingdom and other; and (3) Asia. Total revenues by geographic area are summarized as follows:

GEOGRAPHIC DATA
(Dollars in Thousands)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Total Revenues:
United States	$	15,670	$	22,750	$	36,879	$	60,253
United Kingdom & Other		1,659		5,316		7,155		11,610
Asia		757		-		1,812		-
Total	$	18,086	$	28,066	$	45,846	$	71,863

Long-lived assets attributable to an individual country, other than the United States, are not material.

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Summary of Significant Accounting Policies (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Summary of Significant Accounting Policies [Abstract]
Estimated debt in fair value	$ 45.1	$ 34.6

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Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2013

Financial Instruments [Abstract]

Schedule Of Trading Securities

INVESTMENTS - TRADING
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
U.S. government agency MBS and CMOs (1)	$	9,063	$	34,592
U.S. government agency debt securities		3,517		21,066
RMBS		2,935		583
CMBS		300		12
U.S. Treasury securities		182		147
Interests in securitizations (2)		344		352
SBA loans		29,272		15,705
Corporate bonds and redeemable preferred stock		27,241		56,022
Foreign government bonds		111		448
Municipal bonds		9,169		37,745
Exchange traded funds		6		-
Certificates of deposit		3,192		8,934
Equity securities		250		533
Investments-trading	$	85,582	$	176,139

(1)Includes TBAs. See note 8.

(2)Primarily comprised of CDOs, CLOs, and ABS.

Schedule Of Trading Securities Sold, Not Yet Purchased

TRADING SECURITIES SOLD, NOT YET PURCHASED
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
U.S. government agency MBS (1)	$	740	$	13
U.S. Treasury securities		33,265		19,722
RMBS		35		-
SBA loans		437		-
Corporate bonds and redeemable preferred stock		12,361		21,976
Foreign government bonds		8		-
Municipal bonds		120		128
Certificates of deposit		6,366		2,325
Equity securities		-		3
Trading securities sold, not yet purchased	$	53,332	$	44,167

(1)Represents TBAs. See note 8.

Schedule Of Other Investments

OTHER INVESTMENTS, AT FAIR VALUE
(Dollars in Thousands)
	September 30, 2013
	Cost		Carrying Value		Unrealized Gain(Loss)
Interests in securitizations (1)	$	217	$	37	$	(180)
Equity Securities:
EuroDekania		7,807		2,275		(5,532)
Star Asia		23,304		21,118		(2,186)
Star Asia Special Situations Fund		1,964		3,203		1,239
Tiptree		5,561		2,317		(3,244)
Other securities		176		37		(139)
Total equity securities		38,812		28,950		(9,862)
Residential loans		163		292		129
Foreign currency forward contracts		-		(271)		(271)
Other investments, at fair value	$	39,192	$	29,008	$	(10,184)

	December 31, 2012
	Cost		Carrying Value		Unrealized Gain(Loss)
Interests in securitizations (1)	$	217	$	77	$	(140)
Equity Securities:
EuroDekania		7,807		2,054		(5,753)
Star Asia		23,304		30,169		6,865
Star Asia Special Situations Fund		1,841		2,503		662
Tiptree		5,561		2,834		(2,727)
Other securities		232		431		199
Total equity securities		38,745		37,991		(754)
Residential loans		230		255		25
Other investments, at fair value	$	39,192	$	38,323	$	(869)

(1)Represents an interest in a CDO.

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Permanent Equity (Tables)

9 Months Ended

Sep. 30, 2013

Permanent Equity [Abstract]

Schedule Of Unrestricted Common Stock Activity

	Common Stock
	Shares
December 31, 2012	10,794,725
Shares issued in connection with the redemption of Operating LLC units	186,339
Shares issued in connection with private placement	2,749,167
Vesting of shares	586,736
Shares withheld for employee taxes	(24,634)
September 30, 2013	14,292,333

Operating LLC Membership Units

	Operating LLC
	Membership Units
Units related to UIS Agreement	396,368
Units received from certain former owners of JVB Holdings	186,339
Units received from issuance of shares in connection with private placement	2,749,167
Total	3,331,874

Schedule Of Effects Of Changes In Ownership Interest Subsidiary

	September 30, 2013		September 30, 2012
Net income / (loss) attributable to IFMI	$	(9,306)	$	(3,929)
Transfers (to) from the non-controlling interest:
Increase / (decrease) in IFMI's paid in capital for the
acquisition / (surrender) of additional units in consolidated
subsidiary, net		2,705		804
Changes from net income / (loss) attributable to IFMI and transfers (to) from the non-controlling interest:	$	(6,601)	$	(3,125)

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Acquisition And Private Investment In IFMI (Schedule Of Business Acquisitions) (Details) (Star Asia Manager [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Star Asia Manager [Member]
Business Acquisition [Line Items]
Cash and cash equivalents	$ 1,104
Due from related parties	253
Other assets	150
Accounts payable and other liabilities	(55)
Fair value of net assets acquired	1,452
Purchase price	1,855	[1]
Intangible Asset	$ 403	[2]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	1 year 3 months 18 days

[1] The purchase price represents the cash paid to Mercury of $425; the note payable to Mercury of $725; and the Company’s equity method investment immediately prior to the Star Asia Manager Repurchase Transaction. For purposes of the provisional amounts, the Company has assumed the carrying value of the Company’s equity method investment immediately prior to the Star Asia Manager Repurchase Transaction approximated fair value. As with all provisional purchase accounting amounts, this is subject to adjustment during the measurement period.

[2] For purposes of the provisional purchase accounting, the Company determined that the excess of the purchase price over the net fair value of tangible assets acquired should entirely be allocated to an intangible asset representing the value of Star Asia Manager’s investment management contract with Star Asia. The Company treated the estimated value as an intangible asset with a finite life. The Company will amortize the intangible asset using the straight-line method over the estimated economic life of the asset of 1.3 years. The intangible asset was allocated to the Asset Management business segment. See note 18. As with all provisional purchase accounting amounts, this is subject to adjustment during the measurement period.

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Summary Of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2013

Summary of Significant Accounting Policies [Abstract]

Adoption Of New Accounting Standards

A. Adoption of New Accounting Standards

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”), which requires companies to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on a company’s financial position. The amendments require enhanced disclosures by requiring improved information about financial statements and derivative instruments that are either (1) offset in accordance with current literature, or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with current literature. ASU 2011-11 is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013, and interim periods within those annual periods. In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (“ASU 2013-01”),  which clarifies that the scope of the intended disclosures required by ASU 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. ASU 2013-01 is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. An entity is required to provide the disclosures retrospectively for all comparative periods presented. The Company’s adoption of the provisions of ASU 2011-11 and ASU 2013-01 effective January 1, 2013 did not have an effect on the Company’s consolidated financial position, results of operations, or cash flows since the repurchase agreements, receivables under resale agreements and derivatives that it holds are not subject to an enforceable master netting arrangement or similar agreement.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles — Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”), which provides an option for companies to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If a company concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the company is not required to take further action. However, if a company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Subtopic 350-30. A company also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative assessment in any subsequent period. The Company’s adoption of the provisions of ASU 2012-02 effective January 1, 2013 did not have an effect on the Company’s consolidated financial position, results of operations, or cash flows.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”), which includes amendments that require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. Early adoption was permitted. Since ASU 2013-02 only impacts disclosures, the Company’s adoption of the provisions of ASU 2013-02 effective January 1, 2013 did not have an effect on the Company’s consolidated financial position, results of operations, or cash flows.

Fair Value of Financial Instruments

B. Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments. These determinations were based on available market information and appropriate valuation methodologies. Considerable judgment is required to interpret market data to develop the estimates and, therefore, these estimates may not necessarily be indicative of the amount the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Refer to note 7 for a discussion of the fair value hierarchy with respect to investments-trading, other investments, at fair value and the derivatives held by the Company.

Cash and cash equivalents: Cash is carried at historical cost, which is assumed to approximate fair value. The estimated fair value measurement of cash and cash equivalents is classified within level 1 of the valuation hierarchy.

Investments-trading: These amounts are carried at fair value. The fair value is based on either quoted market prices of an active exchange, independent broker market quotations, market price quotations from third party pricing services, or valuation models when quotations are not available. See note 7 for disclosures about the categorization of the fair value measurements of investments-trading within the three level fair value hierarchy.

Other investments, at fair value: These amounts are carried at fair value. The fair value is based on quoted market prices of an active exchange, independent broker market quotations, or valuation models when quotations are not available. In the case of investments in alternative investment funds, fair value is generally based on the reported net asset value of the underlying fund. See note 7 for disclosures concerning the categorization of the fair value measurements of other investments, at fair value within the three level fair value hierarchy.  

Receivables under resale agreements: Receivables under resale agreements are carried at their contracted resale price, have short-term maturities, and are repriced frequently or bear market interest rates and, accordingly, these contracts are at amounts that approximate fair value. The estimated fair value measurements of receivables under resale agreements are based on observations of actual market activity and are generally classified within level 2 of the fair value hierarchy.  

Trading securities sold, not yet purchased: These amounts are carried at fair value. The fair value is based on quoted market prices of an active exchange, independent market quotations, market price quotations from third party pricing services, or valuation models when quotations are not available. See note 7 for disclosures concerning the categorization of the fair value measurements of trading securities sold, not yet purchased within the three level fair value hierarchy.

Securities sold under agreement to repurchase: The liabilities for securities sold under agreement to repurchase are carried at their contracted repurchase price, have short-term maturities, and are repriced frequently with amounts normally due in one month or less and, accordingly, these contracts are at amounts that approximate fair value. The estimated fair value measurements of securities sold under agreement to repurchase are based on observations of actual market activity and are generally classified within level 2 of the fair value hierarchy.

Debt: These amounts are carried at outstanding principal less unamortized discount. However, a substantial portion of the debt was assumed in the Merger and recorded at fair value as of that date. As of September 30, 2013 and December 31, 2012, the fair value of the Company’s debt was estimated to be $45.1million and $34.6million, respectively. The estimated fair value measurements of the debt are generally based on discounted cash flow models prepared by the Company’s management primarily using discount rates for similar instruments issued to companies with similar credit risks to the Company and are generally classified within level 3 of the fair value hierarchy.

Derivatives: These amounts are carried at fair value. Derivatives may be included as a component of investments-trading; trading securities sold, not yet purchased; and other investments, at fair value. See notes 7 and 8. The fair value is generally based on quoted market prices on an exchange that is deemed to be active for derivative instruments such as foreign currency forward contracts and Eurodollar futures. For derivative instruments, such as TBAs, the fair value is generally based on market price quotations from third party pricing services. See note 7 for disclosures concerning the categorization of the fair value measurements within the three level fair value hierarchy.

Recent Accounting Developments

C. Recent Accounting Developments

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date, which requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date, as the sum of the following: (a) the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors; and (b) any additional amount the reporting entity expects to pay on behalf of its co-obligors. Examples of obligations within the scope of this ASU include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The guidance in this ASU also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments in this ASU should be applied retrospectively to all prior periods presented for those obligations resulting from joint and several liability arrangements within the ASU’s scope that exist at the beginning of the entity’s fiscal year of adoption. An entity may elect to use hindsight for the comparative periods presented in the initial year of adoption (if it changed its accounting as a result of adopting the guidance) and shall disclose that fact. The use of hindsight would allow an entity to recognize, measure, and disclose obligations resulting from joint and several liability arrangements within the scope of this ASU in comparative periods using information available at adoption rather than requiring an entity to make judgments about what information it had in each of the prior periods to measure the obligation. Early adoption is permitted. The Company will adopt the provisions of ASU 2013-04 effective January 1, 2014 and is currently evaluating the effect of the adoption on the Company’s consolidated financial position and results of operations.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, which addresses the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. When a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. For an equity method investment that is a foreign entity, the partial sale guidance in Section 830-30-40 still applies, specifically, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. However, this treatment does not apply to an equity method investment that is not a foreign entity. In those instances, the cumulative translation adjustment is released into net income only if the partial sale represents a complete or substantially complete liquidation of the foreign entity that contains the equity method investment. Additionally, the amendments in this ASU clarify that the sale of an investment in a foreign entity includes both (1) events that result in the loss of a controlling financial interest in a foreign entity (that is, irrespective of any retained investment) and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (sometimes referred to as a step acquisition). Accordingly, the cumulative translation adjustment should be released into net income upon the occurrence of those events. For public entities, the ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The Company will adopt the provisions of ASU 2013-05 effective January 1, 2014, and the Company does not expect that the adoption of the provisions will have a material impact on the Company’s consolidated financial statements or financial statement disclosures.

In June 2013, the FASB issued ASU No. 2013-08, Financial Services-Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements, which changes the approach to the investment company assessment in Topic 946, clarifies the characteristics of an investment company, and provides comprehensive guidance for assessing whether an entity is an investment company. The amendments require an investment company to measure non-controlling ownership interests in other investment companies at fair value rather than using the equity method of accounting.  The amendments also require the following additional disclosures: (a) the fact that the entity is an investment company and is applying the guidance in Topic 946, (b) information about changes, if any, in an entity’s status as an investment company, and (c) information about financial support provided or contractually required to be provided by an investment company to any of its investees.  The amendments in this ASU are effective for an entity’s interim and annual reporting periods in fiscal years that begin after December 15, 2013. Earlier application is prohibited. The Company has investments in the equity securities of investment funds and other non-publicly traded entities that have the attributes of investment companies as currently described in FASB ASC 946-15-2.  The Company will adopt the provisions of this ASU effective January 1, 2014, and is currently evaluating the effect of the adoption on the Company’s consolidated financial position and results of operations.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on the presentation of unrecognized tax benefits.  This ASU applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date.  An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets.  This ASU is effective prospectively for reporting periods beginning after December 15, 2013, with early adoption permitted.  The Company will adopt the ASU on January 1, 2014, and is currently evaluating the effect of the adoption on the Company’s consolidated statements.

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Derivative Financial Instruments ( Statement Of Operations Information) (Details) (Not Designated as Hedging Instruments [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Derivative [Line Items]
Derivative financial instruments, net gain (loss) recognized	$ 472	$ 138	$ 2,127	$ 357
Foreign currency forward contracts [Member]
Derivative [Line Items]
Derivative financial instruments, net gain (loss) recognized	(119)	(288)	(481)	(323)
TBAs [Member]
Derivative [Line Items]
Derivative financial instruments, net gain (loss) recognized	$ 591	$ 426	$ 2,608	$ 680

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Redeemable Non-Controlling Interest (Temporary Equity) And Mandatorily Redeemable Equity Interests (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Redeemable Noncontrolling Interest [Line Items]
Payments for Repurchase of Redeemable Noncontrolling Interest	$ 317	$ 6,152
Distributions Mandatorily Redeemable Equity Interests	86	790
Reclassification to Mandatorily Redeemable Equity Interests		6,446
Mandatorily redeemable equity interests	0		86
Redeemable equity interests	535		829
PrinceRidge [Member]
Redeemable Noncontrolling Interest [Line Items]
Payments for Repurchase of Redeemable Noncontrolling Interest		6,172
Proceeds from Noncontrolling Interests		$ 20

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Derivative Financial Instruments (Balance Sheet Information) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Derivatives, Fair Value [Line Items]
Derivative, Fair Value, Net	$ (505)	$ 22
Other Investment at Fair Value [Member] | Foreign currency forward contracts [Member]
Derivatives, Fair Value [Line Items]
Derivative, Fair Value, Net	(271)
Investments-trading [Member] | TBAs [Member]
Derivatives, Fair Value [Line Items]
Derivative, Fair Value, Net	429	35
Trading securities sold, not yet purchased [Member] | TBAs [Member]
Derivatives, Fair Value [Line Items]
Derivative, Fair Value, Net	$ (663)	$ (13)

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2013

Related Party Transactions [Abstract]

Schedule Of Related Party Transactions

RELATED PARTY TRANSACTIONS
Nine Months Ended September 30, 2013
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (loss)		Income / (loss) from equity method affiliates
TBBK	$	-	$	436	$	-	$	-	$	-
Star Asia		1,833		-		-		(9,051)		-
Star Asia Manager (1)		-		-		-		-		158
Star Asia SPV		-		-		-		-		1,287
Star Asia Opportunity		-		-		-		-		(5)
Star Asia Capital Management		-		-		-		-		108
Star Asia Special Situations Fund		-		-		-		577		-
SAA Manager		-		-		-		-		173
EuroDekania		-		-		805		221		-
Deep Value GPs		-		-		-		-		(6)
	$	1,833	$	436	$	805	$	(8,253)	$	1,715

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment.  See note A above.

RELATED PARTY TRANSACTIONS
Nine Months Ended September 30, 2012
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (Loss)		Income / (loss) from equity method affiliates
CBF	$	64	$	-	$	-	$	-	$	-
TBBK		-		76		-		-		-
Star Asia		-		-		-		(3,433)		-
Star Asia Manager (1)		-		-		-		-		859
Star Asia SPV		-		-		-		-		1,000
Star Asia Opportunity		-		-		-		-		544
Star Asia Opportunity II										(28)
Star Asia Capital Management		-		-		-		-		328
EuroDekania		139		-		569		1		-
Deep Value GPs		-		-		-		-		(14)
	$	203	$	76	$	569	$	(3,432)	$	2,689

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment.  See note A above.

RELATED PARTY TRANSACTIONS
Three Months Ended September 30, 2013
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (loss)		Income / (loss) from equity method affiliates
TBBK	$	-	$	35	$	-	$	-	$	-
Star Asia		764		-		-		183		-
Star Asia Capital Management		-		-		-		-		37
Star Asia Special Situations Fund		-		-		-		607		-
SAA Manager		-		-		-		-		64
EuroDekania		-		-		410		235		-
	$	764	$	35	$	410	$	1,025	$	101

RELATED PARTY TRANSACTIONS
Three Months Ended September 30, 2012
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (loss)		Income / (loss) from equity method affiliates
TBBK	$	-	$	5	$	-	$	-	$	-
Star Asia		-		-		-		1,626		-
Star Asia Manager (1)		-		-		-		-		279
Star Asia SPV		-		-		-		-		276
Star Asia Opportunity		-		-		-		-		(75)
Star Asia Opportunity II		-		-		-		-		(28)
Star Asia Capital Management		-		-		-		-		198
EuroDekania		-		-		386		268		-
Deep Value GPs		-		-		-		-		(3)
	$	-	$	5	$	386	$	1,894	$	647

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment.  See note A above.

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Investments in Equity Method Affiliates (Summarized Data Of Equity Method Investees) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Investments in Equity Method Affiliates [Abstract]
Total Assets	$ 388,316		$ 388,316		$ 279,874
Liabilities	153,899		153,899		96,981
Equity attributable to the investees	234,317		234,317		182,277
Non-controlling interest	100		100		616
Liabilities & Equity	388,316		388,316		279,874
Net income / (loss)	17,496	9,313	26,431	(419)
Net income / (loss) attributable to the investees	$ 17,456	$ 9,201	$ 26,947	$ (253)

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2013

Commitments And Contingencies [Abstract]

Commitments And Contingencies

17. COMMITMENTS AND CONTINGENCIES

Legal and Regulatory Proceedings

The Company was named in litigation commenced in the United States District Court for the Southern District of New York on June 29, 2012, under the caption U.S. Bank National Association v. Institutional Financial Markets, Inc. The plaintiff, U.S. Bank, alleges breach of contract respecting certain fees allegedly owing to U.S. Bank, as Trustee, in connection with the issuance of trust preferred securities, seeking damages and a declaration that the Company must make certain future fee payments. The Company filed a motion to dismiss the complaint in lieu of an answer on October 26, 2012. U.S. Bank filed its response to the motion on November 26, 2012. On July 19, 2013, the court entered a Memorandum and Order denying the Company’s motion to dismiss.  The Company filedits answer to the Complaint on August 19, 2013.  The Company intends to defend the action vigorously. The ultimate amount of any loss incurred by the Company in this matter is uncertain. The Company cannot currently estimate the likelihood it will suffer a loss greater than the amounts accrued for as of September 30, 2013. 

On October 3, 2013, a summons with notice was served on the Company in connection with litigation commenced in the Supreme Court of the State of New York, captioned Northern Rock (Asset Management) PLC v. Société Générale Corporate and Investment Banking, Cohen & Company Securities, et al.  The plaintiff has not yet filed a complaint.  If a complaint is filed, the Company intends to vigorously defend the claims.

In addition to the matters set forth above, the Company is a party to various routine legal proceedings and regulatory inquiries arising out of the ordinary course of the Company’s business. Management believes that the results of these routine legal proceedings and regulatory matters will not have a material adverse effect on the Company’s financial condition, or on the Company’s operations and cash flows. However, the Company cannot estimate the legal fees and expenses to be incurred in connection with these routine matters and, therefore, is unable to determine whether these future legal fees and expenses will have a material impact on the Company’s operations and cash flows. It is the Company’s policy to expense legal and other fees as incurred.

Alesco XIV Guarantee

AFN invested in a CDO (Alesco XIV) in which Assured Guaranty (“Assured”) was providing credit support to the senior interests in securitizations. Alesco XIV made a loan (the “Guaranteed Loan”) to a particular borrower and AFN entered into an arrangement with Assured whereby AFN agreed to make payments to Assured upon the occurrence of both (i) a loss on the Guaranteed Loan and (ii) a loss suffered by Assured on its overall credit support arrangement to Alesco XIV security holders. This arrangement was accounted for as a guarantee by the Company. As of December 31, 2012, the Company had a liability of $1,084 related to this arrangement that was included in accounts payable and other liabilities in the Company’s consolidated balance sheets. In May 2013, the underlying loan was paid off in full by the borrower. As a result, the Company’s guarantee with Assured was extinguished. For the nine months ended September 30, 2013, the Company recognized other income of $1,084, which was included as a component of principal transactions and other income in the Company’s consolidated statements of operations, and wrote off the liability.

Pennsylvania Income Tax Assessment

In October, 2013, the Company received an assessment from the Pennsylvania Department of Revenue in the amount of $4,683(including penalties) related to a subsidiary of AFN for the 2009 tax year.  The assessment denied this subsidiary’s Keystone Opportunity Zone (“KOZ”) credit for that year.  The Company is currently preparing an administrative appeal of this assessment with the Pennsylvania Department of Revenue.  If the assessment were to be upheld in administrative appeal, the Company can then file an appeal with the Pennsylvania Board of Finance and Revenue.  Finally, if the Pennsylvania Board of Finance and Revenue were to uphold the assessment, the Company would then seek relief in Pennsylvania Commonwealth Court.  The Company has evaluated the assessment in accordance with the provisions of ASC 740 and determined not to record any reserve for this assessment. 

Accumulated Dividends and Dividend Equivalents on Restricted Stock and Restricted Units

From time to time, the Company has granted restricted stock and restricted units that are entitled to receive dividends or dividend equivalents as and when such dividends or dividend equivalents are declared and paid by the Company; provided, however, that the cash dividends or dividend equivalents on such restricted stock or restricted units are held by the Company until the period of forfeiture lapses and forfeited if the underlying restricted shares or restricted units are forfeited. The Company’s potential liability, assuming the restricted stock or restricted units were to vest as of September 30, 2013, is approximately $112.

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Consolidated Statement Of Changes In Equity (USD $) In Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional paid-in capital [Member]	Retained Earnings/ (Accumulated Deficit) [Member]	Accumulated Other Comprehensive Income (Loss) [Member]		Total Stockholders' Equity [Member]		Non-controlling Interest [Member]		Total Permanent Equity [Member]		Redeemable non-controlling interest (Temporary Equity) [Member]	Total
Balance at Dec. 31, 2012	$ 5	$ 11	$ 64,829	$ (7,370)	$ (495)		$ 56,980		$ 18,808		$ 75,788		$ 829	$ 75,788
Net loss				(9,306)			(9,306)		(4,461)		(13,767)		(8)	(13,775)
Other comprehensive income / (loss)					(56)	[1]	(56)	[1]	(31)	[1]	(87)	[1]		(87)
Acquisition / (surrender) of additional units of consolidated subsidiary, net			2,705		(124)		2,581		(2,581)
Shares issued in connection with private placement, net		2	5,071				5,073				5,073			5,498
Equity-based compensation and vesting of shares		1	1,186				1,187		544		1,731		31
Shares withheld for employee taxes			(42)				(42)		(18)		(60)
Purchase of non-controlling interest													(317)
Dividends/Distributions				(757)			(757)		(318)		(1,075)
Balance at Sep. 30, 2013	$ 5	$ 14	$ 73,749	$ (17,433)	$ (675)		$ 55,660		$ 11,943		$ 67,603		$ 535	$ 67,603

[1] Represents foreign currency translation adjustment. There were no amounts reclassified from accumulated other comprehensive income / (loss).

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Consolidated Statements Of Cash Flows (Parenthetical) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Consolidated Statements of Cash Flows [Abstract]
Payments of Stock Issuance Costs	$ 425

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Summary Of Significant Accounting Policies

9 Months Ended

Sep. 30, 2013

Summary of Significant Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Adoption of New Accounting Standards

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”), which requires companies to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on a company’s financial position. The amendments require enhanced disclosures by requiring improved information about financial statements and derivative instruments that are either (1) offset in accordance with current literature, or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with current literature. ASU 2011-11 is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013, and interim periods within those annual periods. In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (“ASU 2013-01”),  which clarifies that the scope of the intended disclosures required by ASU 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. ASU 2013-01 is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. An entity is required to provide the disclosures retrospectively for all comparative periods presented. The Company’s adoption of the provisions of ASU 2011-11 and ASU 2013-01 effective January 1, 2013 did not have an effect on the Company’s consolidated financial position, results of operations, or cash flows since the repurchase agreements, receivables under resale agreements and derivatives that it holds are not subject to an enforceable master netting arrangement or similar agreement.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles — Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”), which provides an option for companies to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If a company concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the company is not required to take further action. However, if a company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Subtopic 350-30. A company also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative assessment in any subsequent period. The Company’s adoption of the provisions of ASU 2012-02 effective January 1, 2013 did not have an effect on the Company’s consolidated financial position, results of operations, or cash flows.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”), which includes amendments that require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. Early adoption was permitted. Since ASU 2013-02 only impacts disclosures, the Company’s adoption of the provisions of ASU 2013-02 effective January 1, 2013 did not have an effect on the Company’s consolidated financial position, results of operations, or cash flows.

B. Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments. These determinations were based on available market information and appropriate valuation methodologies. Considerable judgment is required to interpret market data to develop the estimates and, therefore, these estimates may not necessarily be indicative of the amount the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Refer to note 7 for a discussion of the fair value hierarchy with respect to investments-trading, other investments, at fair value and the derivatives held by the Company.

Cash and cash equivalents: Cash is carried at historical cost, which is assumed to approximate fair value. The estimated fair value measurement of cash and cash equivalents is classified within level 1 of the valuation hierarchy.

Investments-trading: These amounts are carried at fair value. The fair value is based on either quoted market prices of an active exchange, independent broker market quotations, market price quotations from third party pricing services, or valuation models when quotations are not available. See note 7 for disclosures about the categorization of the fair value measurements of investments-trading within the three level fair value hierarchy.

Other investments, at fair value: These amounts are carried at fair value. The fair value is based on quoted market prices of an active exchange, independent broker market quotations, or valuation models when quotations are not available. In the case of investments in alternative investment funds, fair value is generally based on the reported net asset value of the underlying fund. See note 7 for disclosures concerning the categorization of the fair value measurements of other investments, at fair value within the three level fair value hierarchy.  

Receivables under resale agreements: Receivables under resale agreements are carried at their contracted resale price, have short-term maturities, and are repriced frequently or bear market interest rates and, accordingly, these contracts are at amounts that approximate fair value. The estimated fair value measurements of receivables under resale agreements are based on observations of actual market activity and are generally classified within level 2 of the fair value hierarchy.  

Trading securities sold, not yet purchased: These amounts are carried at fair value. The fair value is based on quoted market prices of an active exchange, independent market quotations, market price quotations from third party pricing services, or valuation models when quotations are not available. See note 7 for disclosures concerning the categorization of the fair value measurements of trading securities sold, not yet purchased within the three level fair value hierarchy.

Securities sold under agreement to repurchase: The liabilities for securities sold under agreement to repurchase are carried at their contracted repurchase price, have short-term maturities, and are repriced frequently with amounts normally due in one month or less and, accordingly, these contracts are at amounts that approximate fair value. The estimated fair value measurements of securities sold under agreement to repurchase are based on observations of actual market activity and are generally classified within level 2 of the fair value hierarchy.

Debt: These amounts are carried at outstanding principal less unamortized discount. However, a substantial portion of the debt was assumed in the Merger and recorded at fair value as of that date. As of September 30, 2013 and December 31, 2012, the fair value of the Company’s debt was estimated to be $45.1million and $34.6million, respectively. The estimated fair value measurements of the debt are generally based on discounted cash flow models prepared by the Company’s management primarily using discount rates for similar instruments issued to companies with similar credit risks to the Company and are generally classified within level 3 of the fair value hierarchy.

Derivatives: These amounts are carried at fair value. Derivatives may be included as a component of investments-trading; trading securities sold, not yet purchased; and other investments, at fair value. See notes 7 and 8. The fair value is generally based on quoted market prices on an exchange that is deemed to be active for derivative instruments such as foreign currency forward contracts and Eurodollar futures. For derivative instruments, such as TBAs, the fair value is generally based on market price quotations from third party pricing services. See note 7 for disclosures concerning the categorization of the fair value measurements within the three level fair value hierarchy.

C. Recent Accounting Developments

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date, which requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date, as the sum of the following: (a) the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors; and (b) any additional amount the reporting entity expects to pay on behalf of its co-obligors. Examples of obligations within the scope of this ASU include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The guidance in this ASU also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments in this ASU should be applied retrospectively to all prior periods presented for those obligations resulting from joint and several liability arrangements within the ASU’s scope that exist at the beginning of the entity’s fiscal year of adoption. An entity may elect to use hindsight for the comparative periods presented in the initial year of adoption (if it changed its accounting as a result of adopting the guidance) and shall disclose that fact. The use of hindsight would allow an entity to recognize, measure, and disclose obligations resulting from joint and several liability arrangements within the scope of this ASU in comparative periods using information available at adoption rather than requiring an entity to make judgments about what information it had in each of the prior periods to measure the obligation. Early adoption is permitted. The Company will adopt the provisions of ASU 2013-04 effective January 1, 2014 and is currently evaluating the effect of the adoption on the Company’s consolidated financial position and results of operations.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, which addresses the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. When a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. For an equity method investment that is a foreign entity, the partial sale guidance in Section 830-30-40 still applies, specifically, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. However, this treatment does not apply to an equity method investment that is not a foreign entity. In those instances, the cumulative translation adjustment is released into net income only if the partial sale represents a complete or substantially complete liquidation of the foreign entity that contains the equity method investment. Additionally, the amendments in this ASU clarify that the sale of an investment in a foreign entity includes both (1) events that result in the loss of a controlling financial interest in a foreign entity (that is, irrespective of any retained investment) and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (sometimes referred to as a step acquisition). Accordingly, the cumulative translation adjustment should be released into net income upon the occurrence of those events. For public entities, the ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The Company will adopt the provisions of ASU 2013-05 effective January 1, 2014, and the Company does not expect that the adoption of the provisions will have a material impact on the Company’s consolidated financial statements or financial statement disclosures.

In June 2013, the FASB issued ASU No. 2013-08, Financial Services-Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements, which changes the approach to the investment company assessment in Topic 946, clarifies the characteristics of an investment company, and provides comprehensive guidance for assessing whether an entity is an investment company. The amendments require an investment company to measure non-controlling ownership interests in other investment companies at fair value rather than using the equity method of accounting.  The amendments also require the following additional disclosures: (a) the fact that the entity is an investment company and is applying the guidance in Topic 946, (b) information about changes, if any, in an entity’s status as an investment company, and (c) information about financial support provided or contractually required to be provided by an investment company to any of its investees.  The amendments in this ASU are effective for an entity’s interim and annual reporting periods in fiscal years that begin after December 15, 2013. Earlier application is prohibited. The Company has investments in the equity securities of investment funds and other non-publicly traded entities that have the attributes of investment companies as currently described in FASB ASC 946-15-2.  The Company will adopt the provisions of this ASU effective January 1, 2014, and is currently evaluating the effect of the adoption on the Company’s consolidated financial position and results of operations.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on the presentation of unrecognized tax benefits.  This ASU applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date.  An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets.  This ASU is effective prospectively for reporting periods beginning after December 15, 2013, with early adoption permitted.  The Company will adopt the ASU on January 1, 2014, and is currently evaluating the effect of the adoption on the Company’s consolidated statements.

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Permanent Equity (Narrative) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended			9 Months Ended							12 Months Ended
	Sep. 30, 2013	Sep. 30, 2013 Restricted Stock [Member]	Dec. 31, 2012 Restricted Stock [Member]	Sep. 30, 2013 Accumulated Other Comprehensive Income (Loss) [Member]	Sep. 30, 2012 Accumulated Other Comprehensive Income (Loss) [Member]	Sep. 30, 2013 Additional paid-in capital [Member]	Sep. 30, 2012 Additional paid-in capital [Member]	Sep. 30, 2013 Non-controlling Interest [Member]	Sep. 30, 2012 Non-controlling Interest [Member]	Sep. 30, 2013 JVB [Member] Restricted Stock [Member]	Dec. 31, 2011 JVB [Member] Restricted Stock [Member]
Permanent Equity [Line Items]
Acquisition / (surrender) of additional units of consolidated subsidiary, net				$ (124)	$ (27)	$ 2,705	$ 804	$ (2,581)	$ (777)
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number		186,342	372,681
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period											559,020
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period										186,339
Shares issued in connection with the redemption of Operating LLC units	186,339
Issuance of common stock	2,749,167									186,339

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Organization And Nature Of Operations

9 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization And Nature Of Operations

1. ORGANIZATION AND NATURE OF OPERATIONS

The Formation Transaction

Cohen Brothers was formed on October 7, 2004 by Cohen Bros. Financial, LLC (“CBF”). Cohen Brothers was established to acquire the net assets of CBF’s subsidiaries (the “Formation Transaction”): Cohen Bros. & Company, Inc.; Cohen Frères SAS; Dekania Investors, LLC; Emporia Capital Management, LLC; and the majority interest in Cohen Bros. & Tororian Investment Management, Inc. The Formation Transaction was accomplished through a series of transactions occurring between March 4, 2005 and May 31, 2005.

The Company

From its formation until December 16, 2009, Cohen Brothers operated as a privately owned limited liability company. On December 16, 2009, Cohen Brothers completed its merger (the “Merger”) with a subsidiary of Alesco Financial Inc. (“AFN”) a publicly traded real estate investment trust.

As a result of the Merger, AFN contributed substantially all of its assets into Cohen Brothers in exchange for newly issued membership units directly from Cohen Brothers. In addition, AFN received additional Cohen Brothers membership interests directly from its members in exchange for AFN common stock. In accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), the Merger was accounted for as a reverse acquisition, and Cohen Brothers was deemed to be the accounting acquirer. As a result, all of AFN’s assets and liabilities were required to be revalued at fair value as of the acquisition date. The remaining membership interests of Cohen Brothers that are not held by AFN are included as a component of non-controlling interest in the consolidated balance sheet.

Subsequent to the Merger, AFN was renamed Cohen & Company Inc. In January 2011, it was renamed again as Institutional Financial Markets, Inc. (“IFMI”). Effective January 1, 2010, the Company ceased to qualify as a real estate investment trust, or a REIT. The Company trades on the NYSE MKT LLC (formerly known as the NYSE Amex LLC) under the ticker symbol “IFMI.” The Company is a financial services company specializing in credit related fixed income investments. As of September 30, 2013, the Company had $5.7 billion in assets under management (“AUM”) of which 94% or $5.4 billion, was in collateralized debt obligations (“CDOs”).

In these financial statements, the “Company” refers to IFMI and its subsidiaries on a consolidated basis; “IFMI, LLC” (formerly Cohen Brothers, LLC) or the “Operating LLC” refers to the main operating subsidiary of the Company; “Cohen Brothers” refers to the pre-Merger Cohen Brothers, LLC and its subsidiaries; “AFN” refers to the pre-merger Alesco Financial Inc. and its subsidiaries. When the term “IFMI” is used, it is referring to the parent company itself, Institutional Financial Markets, Inc. “JVB Holdings” refers to JVB Financial Holdings, L.L.C.; “JVB” refers to JVB Financial Group LLC, a broker dealer subsidiary; “CCFL” refers to Cohen & Company Financial Limited (formerly known as EuroDekania Management LTD), a subsidiary regulated by the Financial Conduct Authority (formerly known as Financial Services Authority) in the United Kingdom; “CCPRH” refers to C&Co/PrinceRidge Holdings LP (formerly known as PrinceRidge Holdings LP) and its subsidiaries; “PrinceRidge GP” refers to C&Co/PrinceRidge Partners LLC, (formerly known as PrinceRidge Partners LLC). “PrinceRidge” refers to CCPRH together with PrinceRidge GP; and “CCPR” refers to C&Co/PrinceRidge LLC (formerly known as The PrinceRidge Group LLC), a broker dealer subsidiary.

The Company’s business is organized into the following three business segments:

Capital Markets: The Company’s Capital Markets business segment consists primarily of credit-related fixed income securities sales, trading, and financing, as well as new issue placements in corporate and securitized products and advisory services. The Company’s fixed income sales and trading group provides trade execution to corporate investors, institutional investors and other smaller broker-dealers. The Company specializes in a variety of products, including but not limited to: corporate bonds and loans, asset backed securities (“ABS”), mortgage backed securities (“MBS”), commercial mortgage backed securities (“CMBS”), residential mortgage backed securities (“RMBS”), CDOs, collateralized loan obligations (“CLOs”), collateralized bond obligations (“CBOs”), collateralized mortgage obligations (“CMOs”), municipal securities, to-be-announced securities (“TBAs”) contracts, Small Business Administration (“SBA”) loans, U.S. government bonds, U.S. government agency securities, brokered deposits and CDs for small banks, hybrid capital of financial institutions including trust preferred securities (“TruPS”), whole loans, and other structured financial instruments. The Company also offers execution and brokerage services for equity products. The Company had offered execution and brokerage services for equity derivative products until December 31, 2012 when the Company sold its equity derivatives brokerage business to a new entity owned by two of the Company’s former employees. See note 5 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended. The Company carries out its capital market activities primarily through its subsidiaries: JVB and PrinceRidge in the United States, and CCFL in Europe.  

Asset Management: The Company’s Asset Management business segment manages assets within CDOs, permanent capital vehicles, managed accounts, and investment funds (collectively referred to as “Investment Vehicles”). A CDO is a form of secured borrowing. The borrowing is secured by different types of fixed income assets such as corporate or mortgage loans or bonds. The borrowing is in the form of a securitization, which means that the lenders are actually investing in notes backed by the assets. In the event of default, the lenders will have recourse only to the assets securing the loan. The Company’s Asset Management business segment includes its fee-based asset management operations which include ongoing base and incentive management fees.

Principal Investing: The Company’s Principal Investing business segment is comprised primarily of its investments in certain Investment Vehicles it manages, as well as investments in structured products, and the related gains and losses that they generate.

The Company generates its revenue by business segment primarily through the following activities:

Capital Markets:

•  trading activities of the Company, which include execution and brokerage services, securities lending activities, riskless trading activities as well as gains and losses (unrealized and realized) and income and expense earned on securities classified as trading;

•new issue and advisory revenue comprised primarily of (i) origination fees for corporate debt issues originated by the Company; (ii) revenue from advisory services; and (iii) new issue revenue associated with arranging and placing the issuance of newly created debt, equity, and hybrid financial instruments;

Asset Management:

•  asset management fees for the Company’s on-going asset management services provided to certain Investment Vehicles, which may include fees both senior and subordinate to the securities in the Investment Vehicle; and incentive management fees earned based on the performance of the various Investment Vehicles;

•  income or loss from equity method affiliates;

Principal Investing:

•gains and losses (unrealized and realized) and income and expense earned on securities (primarily on investments in Investment Vehicles the Company manages) classified as other investments, at fair value; and

•  income or loss from equity method affiliates.

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Earnings / (Loss) Per Common Share (Tables)

9 Months Ended

Sep. 30, 2013

Earnings / (Loss) Per Common Share [Abstract]

Schedule of Earnings / (Loss) Per Common Share

EARNINGS / (LOSS) PER COMMON SHARE
(Dollars in Thousands, except share or per share information)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Net income / (loss) attributable to IFMI	$	(104)	$	2,008	$	(9,306)	$	(3,929)
Add/ (deduct): Income / (loss) attributable to non-controlling interest attributable to Operating LLC membership units exchangeable into IFMI shares (1)		(212)		967		(4,461)		(1,916)
Add / (deduct): Adjustment (2)		154		(5)		176		(93)
Net income / (loss) on a fully converted basis	$	(162)	$	2,970	$	(13,591)	$	(5,938)
Weighted average common shares outstanding - Basic		11,875,950		10,849,220		11,628,392		10,683,076
Unrestricted Operating LLC membership units exchangeable into IFMI shares (1)		5,324,090		5,252,002		5,324,090		5,252,002
Dilutive impact of restricted equity instruments		-		75,676		-		-
Weighted average common shares outstanding - Diluted (3)		17,200,040		16,176,898		16,952,482		15,935,078
Net income / (loss) per common share - Basic	$	(0.01)	$	0.19	$	(0.80)	$	(0.37)
Net income / (loss) per common share - Diluted	$	(0.01)	$	0.18	$	(0.80)	$	(0.37)

(1)The Operating LLC membership units not held by IFMI (that is, those held by the non-controlling interest for the nine and three months ended September 30, 2013 and 2012) may be redeemed and exchanged into shares of the Company on a one-to-one basis. The 4,983,557 Operating LLC membership units held by Daniel G. Cohen are redeemable at Mr. Cohen’s option, at any time, for (i) cash in an amount equal to the average of the per share closing prices of the Company’s common stock for the ten consecutive trading days immediately preceding the date the Company receives Mr. Cohen’s redemption notice, or (ii) at the Company’s option, one share of the Company’s common stock, subject, in each case, to appropriate adjustment upon the occurrence of an issuance of additional shares of the Company’ Common Stock as a dividend or other distribution on the Company’s outstanding Common Stock, or a further subdivision or combination of the outstanding shares of the Company’s common stock. The Operating LLC membership units held by other members of the Operating LLC have the same redemption rights as described above.  These units are not included in the computation of basic earnings per share. These units enter into the computation of diluted net income / (loss) per common share when the effect is dilutive using the if-converted method.

(2)An adjustment is included for the following: (i) if the Operating LLC membership units had been converted at the beginning of the period, the Company would have incurred a higher income tax expense or realized a higher income tax benefit, as applicable; and (ii) to adjust the non-controlling interest amount to be consistent with the weighted average share calculation.

(3)For the nine months ended September 30, 2013 and 2012, weighted average common shares outstanding excludes a total of 360,559 and 46,288 shares, respectively, representing restricted Operating LLC units, restricted IFMI common stock, and restricted units of IFMI common stock.  For the three months ended September 30, 2013, weighted average common shares outstanding excludes a total of 392,010 shares representing restricted Operating LLC units, restricted IFMI common stock, and restricted units of IFMI common stock.  For the nine and three months ended September 30, 2013, weighted average common shares outstanding also excludes 59,765 and 179,294 shares, respectively, from the assumed conversion of the 8% Convertibles Notes because the inclusion of the converted shares would be anti-dilutive.

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Related Party Transactions

9 Months Ended

Sep. 30, 2013

Related Party Transactions [Abstract]

Related Party Transactions

20 . RELATED PARTY TRANSACTIONS

The Company has identified the following related party transactions for the nine and three months ended September 30, 2013 and 2012. The transactions are listed by related party and, unless otherwise noted in the text of the description, the amounts are disclosed in the tables at the end of this section.

A. Transactions between Star Asia Manager and the Company

Star Asia Manager serves as external manager of Star Asia and Star Asia SPV (see D-1 and D-4 listed below) and the Company owned 50% of Star Asia Manager prior to March 1, 2013. Following the Star Asia Manager Repurchase Transaction, the Company acquired 100% control of Star Asia Manager and included Star Asia Manager in its consolidated financial statements. See note 4 for a description of the Star Asia Manager Repurchase Transaction. Prior to March 1, 2013, Star Asia Manager had been identified as a related party because it was an equity method investee of the Company. The Company had recognized its share of the income or loss of Star Asia Manager as income or loss from equity method affiliates in the consolidated statements of operations during the pre-acquisition period. Income or loss recognized under the equity method is disclosed in the table at the end of this section.

B. Cohen Bros. Financial, LLC (“CBF”) and EBC

CBF has been identified as a related party because (i) CBF is a non-controlling interest of the Company and (ii) CBF is wholly owned by Daniel G. Cohen, Vice Chairman of the Company’s Board of Directors and the board of managers of the Operating LLC, President and Chief Executive of the Company’s European Business, and President of CCFL (formerly the Chairman and Chief Executive Officer of the Company).

Beginning in October 2008, the Company began receiving a monthly advisory fee for consulting services provided by the Company to CBF. The Company stopped providing these services and stopped receiving this fee as of March 31, 2012. The fee was recognized as a component of asset management revenue in the consolidated statements of operations. This fee is disclosed as management fee revenue in the tables at the end of this section.

In September 2013, EBC, as an assignee of CBF, made a $4,000 investment in the Company. Mr. Cohen is a trustee of the EBC. See note F listed below and notes 4 and 12.

C. The Bancorp, Inc.

The Bancorp, Inc. (“TBBK”) is identified as a related party because TBBK’s Chairman is the Vice Chairman of the Company’s Board of Directors and of the board of managers of the Operating LLC, President and Chief Executive of the Company’s European Business, and President of CCFL (formerly the Chairman and Chief Executive Officer).

TBBK maintained deposits for the Company in the amount of $80 and $36 as of September 30, 2013 and December 31, 2012, respectively. These amounts are not disclosed in the tables at the end of this section.

As part of the Company’s broker-dealer operations, the Company from time to time purchases securities from third parties and sells those securities to TBBK. The Company may purchase securities from TBBK and ultimately sell those securities to third parties. In either of the cases listed above, the Company includes the trading revenue earned (i.e. the gain or loss realized, or commission earned) by the Company for the entire transaction in the amounts disclosed as part of net trading in the table at the end of this section.

From time to time, the Company will enter into repurchase agreements with TBBK as its counterparty.  As of September 30, 2013, the Company had a repurchase agreement in the amount of $40,824 with TBBK as its counterparty. This is included as a component of securities sold under agreement to repurchase in the consolidated balance sheet.  The Company incurred interest expense related to repurchase agreements with TBBK as its counterparty in the amount of $250 and $157 for the nine and three months ended September 30, 2013, respectively, which was included as a component of net trading revenue in the Company’s consolidated statements of operations.  These amounts are not disclosed in the tables at the end this section.

In September 2013, the Company sold an SBA loan to TBBK which had not settled as of the end of the quarter. The SBA loan had a principal amount of $406 and a cost basis and carrying value of $437 and the Company included it as a component of trading securities sold, not yet purchased in the Company’s consolidated balance sheets as of September 30, 2013.

D. Investment Vehicles and Other

The following are identified as related parties. Amounts with respect to the transactions identified below are summarized in a table at the end of this section.

1. Star Asia invests primarily in Asian commercial real estate structured finance products, including CMBS, corporate debt of REITs and real estate operating companies, B notes, mezzanine loans and other commercial real estate fixed income investments. As of September 30, 2013 and December 31, 2012, the Company directly owned approximately 28% of Star Asia’s outstanding shares. Star Asia has been identified as a related party because in the absence of the fair value option of FASB ASC 825, Star Asia would be treated as an equity method affiliate, and because the Vice Chairman of the Company (formerly the Chairman and Chief Executive Officer of the Company) is a member of Star Asia’s board of directors. The Company has an investment in Star Asia. The Company, through Star Asia Manager, has an asset management contract with Star Asia. Dividends received from the Company’s investment in Star Asia are disclosed as part of dividend income in the tables at the end of this section. Gains or losses recognized from its investment are disclosed as part of gain / (loss) in the tables at the end of this section. Amounts earned from the management contract are disclosed as part of management fee revenue in the tables at the end of this section.

2. EuroDekania invests primarily in hybrid capital securities of European bank and insurance companies, CMBS, RMBS and widely syndicated leverage loans. EuroDekania’s investments are denominated in Euros or British Pounds Sterling. As of September 30, 2013 and December 31, 2012, the Company directly owned approximately 10% of EuroDekania’s outstanding shares. EuroDekania has been identified as a related party because the Vice Chairman of the Company (formerly the Chairman and Chief Executive Officer of the Company) is a member of EuroDekania’s board of directors. The Company has a management contract with and an investment in EuroDekania. Dividends received from that investment are disclosed as part of dividend income in the tables at the end of this section. Gains or losses recognized from its investment are disclosed as part of the gain / (loss) in the tables at the end of this section. Amounts earned from its management contract are disclosed as part of management fee revenue in the tables at the end of this section.

3. The Deep Value GP and Deep Value GP II served as the general partners for the Deep Value funds. The Deep Value GP and the Deep Value GP II are collectively referred to as the “Deep Value GPs.” The Company owns 50% of the Deep Value GP and 40% of the Deep Value GP II. The Deep Value GP and the Deep Value GP II have been identified as related parties because the Deep Value GPs are equity method affiliates of the Company. During the third quarter of 2013, the Company received its final liquidating distribution from the Deep Value GP.  Income or loss recognized under the equity method is disclosed in the table at the end of this section.

4. Star Asia SPV is a Delaware limited liability company formed in 2010. It was formed to create a pool of assets that would provide collateral to investors who participated in Star Asia’s 2010 rights offering. The investors in Star Asia’s rights offering also received equity interests in Star Asia SPV. Star Asia SPV purchased certain assets from Star Asia and the equity interest holders of Star Asia SPV receive investment returns on the assets held in the Star Asia SPV up to an agreed upon maximum. Returns above that agreed upon maximum are remitted back to Star Asia. The Company directly owned approximately 31% of Star Asia SPV’s outstanding shares as of December 31, 2012. During the second quarter of 2013, the Company received its investment return up to an agreed upon maximum from Star Asia SPV and the Company no longer has an ownership interest in the entity. Star Asia SPV has been identified as a related party because it was an equity method investee of the Company. Income or loss recognized under the equity method is disclosed in the table at the end of this section.

5. Star Asia Opportunity is a Delaware limited liability company formed in July 2011 to partially finance the acquisition of seven real estate properties in Japan. As of September 30, 2013 and December 31, 2012, the Company directly owned approximately 28% of Star Asia Opportunity’s outstanding equity interests. Star Asia Opportunity has been identified as a related party because it is an equity method investee of the Company. The Company recognizes its share of the income or loss of Star Asia Opportunity as income or loss from equity method affiliates in the consolidated statements of operations. Income or loss recognized under the equity method is disclosed in the table at the end of this section.

6. Star Asia Capital Management serves as the external manager of Star Asia Opportunity (see D-5 listed above) and the Company owned 33% of Star Asia Capital Management as of September 30, 2013 and December 31, 2012. Star Asia Capital Management has been identified as a related party because it is an equity method investee of the Company. The Company recognizes its share of the income or loss of Star Asia Capital Management as income or loss from equity method affiliates in the consolidated statements of operations. Income or loss recognized under the equity method is disclosed in the table at the end of this section.

7. The Star Asia Special Situations Fund is a closed-end investment fund that primarily invests in real estate and securities backed by real estate in Japan and does not offer investor redemptions. As of September 30, 2013 and December 31, 2012, the Company owned approximately 2% and 6%, respectively, of the Star Asia Special Situations Fund. The Star Asia Special Situations Fund has been identified as a related party because in the absence of the fair value option of FASB ASC 825, the Company’s investment in the Star Asia Special Situations Fund would be treated as an equity method affiliate of the Company. Dividends received from that investment are disclosed as part of dividend income in the tables at the end of this section. Gains and losses recognized from its investment are disclosed as part of gain / (loss) in the tables at the end of this section.

8. SAA Manager serves as the external manager of the Star Asia Special Situations Fund and the Company owned 33% of SAA Manager as of September 30, 2013 and December 31, 2012. SAA Manager has been identified as a related party because it is an equity method investee of the Company. The Company did not elect the fair value option for its investment in SAA Manager. Income or loss recognized under the equity method is disclosed in the table at the end of this section.

9. SAP GP serves as the general partner for the Star Asia Special Situations Fund and the Company owned 33% of SAP GP as of September 30, 2013 and December 31, 2012. SAP GP has been identified as a related party because it is an equity method investee of the Company. The Company did not elect the fair value option for its investment in SAP GP. Income or loss recognized under the equity method is disclosed in the table at the end of this section. Since its inception during the fourth quarter of 2012 and for the nine and three months ended September 30, 2013, the Company had not made an investment or recognized any income or loss under the equity method.

The following tables display the routine intercompany transactions recognized in the statements of operations from the identified related parties that are described above.

RELATED PARTY TRANSACTIONS
Nine Months Ended September 30, 2013
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (loss)		Income / (loss) from equity method affiliates
TBBK	$	-	$	436	$	-	$	-	$	-
Star Asia		1,833		-		-		(9,051)		-
Star Asia Manager (1)		-		-		-		-		158
Star Asia SPV		-		-		-		-		1,287
Star Asia Opportunity		-		-		-		-		(5)
Star Asia Capital Management		-		-		-		-		108
Star Asia Special Situations Fund		-		-		-		577		-
SAA Manager		-		-		-		-		173
EuroDekania		-		-		805		221		-
Deep Value GPs		-		-		-		-		(6)
	$	1,833	$	436	$	805	$	(8,253)	$	1,715

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment.  See note A above.

RELATED PARTY TRANSACTIONS
Nine Months Ended September 30, 2012
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (Loss)		Income / (loss) from equity method affiliates
CBF	$	64	$	-	$	-	$	-	$	-
TBBK		-		76		-		-		-
Star Asia		-		-		-		(3,433)		-
Star Asia Manager (1)		-		-		-		-		859
Star Asia SPV		-		-		-		-		1,000
Star Asia Opportunity		-		-		-		-		544
Star Asia Opportunity II										(28)
Star Asia Capital Management		-		-		-		-		328
EuroDekania		139		-		569		1		-
Deep Value GPs		-		-		-		-		(14)
	$	203	$	76	$	569	$	(3,432)	$	2,689

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment.  See note A above.

RELATED PARTY TRANSACTIONS
Three Months Ended September 30, 2013
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (loss)		Income / (loss) from equity method affiliates
TBBK	$	-	$	35	$	-	$	-	$	-
Star Asia		764		-		-		183		-
Star Asia Capital Management		-		-		-		-		37
Star Asia Special Situations Fund		-		-		-		607		-
SAA Manager		-		-		-		-		64
EuroDekania		-		-		410		235		-
	$	764	$	35	$	410	$	1,025	$	101

RELATED PARTY TRANSACTIONS
Three Months Ended September 30, 2012
(Dollars in Thousands)
					Principal transaction and other income
		Management fee revenue		Net trading		Dividend income and other		Gain / (loss)		Income / (loss) from equity method affiliates
TBBK	$	-	$	5	$	-	$	-	$	-
Star Asia		-		-		-		1,626		-
Star Asia Manager (1)		-		-		-		-		279
Star Asia SPV		-		-		-		-		276
Star Asia Opportunity		-		-		-		-		(75)
Star Asia Opportunity II		-		-		-		-		(28)
Star Asia Capital Management		-		-		-		-		198
EuroDekania		-		-		386		268		-
Deep Value GPs		-		-		-		-		(3)
	$	-	$	5	$	386	$	1,894	$	647

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment.  See note A above.

The following related party transactions are non-routine and are not included in the tables above.

E. Additional Investment in the Star Asia Special Situations Fund

During the three months ended March 31, 2013, the Company made an additional investment of $302 in the Star Asia Special Situations Fund. This investment extinguished the Company’s unfunded commitment as of December 31, 2012. See notes 6 and 7.

F. Investment in IFMI by Mead Park Capital

In September 2013, Mead Park Capital made a $9,746 investment in the Company.  Mead Park Capital is a vehicle advised by Mead Park and controlled by Jack J. DiMaio Jr., Chief Executive Officer and founder of Mead Park.  In connection with the September 25, 2013 closing of the transactions contemplated by the definitive agreements, Messrs. DiMaio and Ricciardi were elected to the Company’s Board of Directors. Mr. DiMaio was also named the Chairman of the Company’s Board of Directors. See note B from above and notes 4 and 12.

G.  Resource Securities, Inc. (formerly known as Chadwick Securities, Inc.), a registered broker-dealer subsidiary of Resource America, Inc. (“REXI”) 

REXI is a publicly traded specialized asset management company in the commercial finance, real estate and financial fund management sectors.  It has been identified as a related party because (i) the Chairman of the board of REXI is the father of the Company’s Vice Chairman (formerly the Company’s Chairman and Chief Executive Officer). In September 2012, the Company paid a fee of $6 to REXI for its services as the introducing agent for a transaction in which the Company bought back  $1,177 principal amount of subordinated notes payable from an unrelated third party.  The $6 fee was treated as a reduction to the gain recognized on the repurchase of debt, which was included as a component of non-operating income / (expense) in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2012.

H.  Directors and Employees

In addition to the employment agreements the Company has entered into with its Vice Chairman, its Chief Executive Officer and its Chief Financial Officer, the Company has entered into its standard indemnification agreement with each of its directors and executive officers.

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Acquisition And Private Investment In IFMI (Tables)

9 Months Ended

Sep. 30, 2013

Acquisition And Private Investment In IFMI [Abstract]

Schedule Of Business Acquisitions

	Total Estimated Fair Value as of Acquisition Date
Assets acquired:
Cash and cash equivalents	$	1,104
Due from related parties		253
Other assets		150
Liabilities assumed:
Accounts payable and other liabilities		(55)
Fair value of net assets acquired		1,452
Purchase price (1)		1,855
Intangible Asset (2)	$	403

As provisional amounts, the amounts in the table above are subject to changes during the measurement period. See notes 11 and 19.

(1)The purchase price represents the cash paid to Mercury of $425; the note payable to Mercury of $725; and the Company’s equity method investment immediately prior to the Star Asia Manager Repurchase Transaction. For purposes of the provisional amounts, the Company has assumed the carrying value of the Company’s equity method investment immediately prior to the Star Asia Manager Repurchase Transaction approximated fair value. As with all provisional purchase accounting amounts, this is subject to adjustment during the measurement period.

(2)For purposes of the provisional purchase accounting, the Company determined that the excess of the purchase price over the net fair value of tangible assets acquired should entirely be allocated to an intangible asset representing the value of Star Asia Manager’s investment management contract with Star Asia. The Company treated the estimated value as an intangible asset with a finite life. The Company will amortize the intangible asset using the straight-line method over the estimated economic life of the asset of 1.3 years. The intangible asset was allocated to the Asset Management business segment. See note 18. As with all provisional purchase accounting amounts, this is subject to adjustment during the measurement period.

Business Acquisition, Pro Forma Information

	Pro Forma
	Nine Months Ended
	September 30,
	2013		2012
	(dollars in thousands)
Revenue	$	46,426	$	74,772
Earnings (loss) attributable to IFMI	$	(9,326)	$	(3,512)

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Debt (Debt Outstanding) (Details) (USD $)							9 Months Ended			9 Months Ended			9 Months Ended					9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 Contingent convertible senior notes [Member]	Dec. 31, 2012 Contingent convertible senior notes [Member]	Sep. 30, 2013 Junior subordinated debt [Member]	Dec. 31, 2012 Junior subordinated debt [Member]	Sep. 30, 2013 Subordinated Debt [Member]		Dec. 31, 2012 Subordinated Debt [Member]	Sep. 30, 2013 10.50% Contingent convertible senior notes due 2027 [Member]		Dec. 31, 2012 10.50% Contingent convertible senior notes due 2027 [Member]	Sep. 30, 2013 8.00% Contingent Convertible Senior Notes Due 2018 [Member]		Sep. 30, 2013 Alesco Capital Trust I [Member] Junior subordinated debt [Member]		Dec. 31, 2012 Alesco Capital Trust I [Member] Junior subordinated debt [Member]	Sep. 30, 2013 Sunset Financial Statutory Trust I [Member] Junior subordinated debt [Member]		Dec. 31, 2012 Sunset Financial Statutory Trust I [Member] Junior subordinated debt [Member]	Sep. 30, 2013 Star Asia Manager Note Payable [Member]		Mar. 31, 2013 Star Asia Manager Note Payable [Member]
Debt Instrument [Line Items]
Current Outstanding Par			$ 16,369,000		$ 1,489,000					$ 8,121,000			$ 8,248,000		$ 870,000			$ 619,000			$ 165,000		$ 725,000
Junior subordinated notes					48,125,000										28,125,000	[1]		20,000,000	[1]
Long-term Debt	$ 34,590,000	$ 25,847,000	$ 16,344,000	$ 8,068,000	$ 18,081,000	$ 17,437,000			$ 342,000	$ 8,096,000		$ 8,068,000	$ 8,248,000		$ 10,563,000		$ 10,189,000	$ 7,518,000		$ 7,248,000	$ 165,000
Interest Rate Terms			8.00%				12.00%	[2]		10.50%			8.00%		4.25%			4.40%			3.00%
Debt Instrument, Interest Rate at Period End							12.00%	[3]		10.50%	[3],[4]		8.00%	[3],[5]	4.25%	[3]		4.40%	[3]		3.00%	[3],[6]
Maturity							Jun. 01, 2013			May 20, 2014			Sep. 25, 2018		Jul. 30, 2037			Mar. 30, 2035

[1] The outstanding par represents the total par amount of the junior subordinated notes held by two separate trusts. The Company does not consolidate these trusts. The Company holds $1,489 par value of these junior subordinated notes, comprised of $870 par value of junior subordinated notes related to Alesco Capital Trust I and $619 par value of junior subordinated notes related to Sunset Financial Statutory Trust I. These notes have a carrying value of $0. Therefore, the net par value held by third parties is $48,125.

[2] Comprised of 9% paid currently and 3% paid in kind. The subordinated note payable was fully repaid in June 2013.

[3] Represents the interest rate as of the last day of the reporting period.

[4] Represents the holder’s earliest put date and the Company’s earliest redemption date. The contractual maturity for the New Notes is May 2027. The Company may redeem all or part of the $8,121 aggregate principal amount of the New Notes for cash on or after May 20, 2014, at a redemption price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. The holders of the New Notes may require the Company to repurchase all or a portion of the New Notes for cash on May 15, 2014; May 15, 2017; and May 15, 2022 for a repurchase price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. The holders of the New Notes are required to provide notice to the Company of their plan to redeem the New Notes at any time during the 30 days prior to May 15, 2014; May 15, 2017; and May 15, 2022.

[5] The holders of the 8.0% Convertible Notes may convert all or any part of the outstanding principal amount of the 8.0% Convertible Notes at any time prior to maturity into shares of the Company’s common stock at a conversion price of $3.00 per share, subject to customary anti-dilution adjustments.

[6] The Star Asia Manager note payable has no stated maturity date. See description of payment terms below.

XML

Other Assets and Accounts Payable and Other Liabilities (Tables)

9 Months Ended

Sep. 30, 2013

Other Assets and Accounts Payable and Other Liabilities [Abstract]

Schedule Of Other Assets

OTHER ASSETS
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Deferred costs	$	638	$	-
Note receivable		1,565		-
Prepaid expenses		2,423		2,329
Prepaid income taxes		181		-
Security deposits		2,625		2,755
Miscellaneous other assets		612		24
Cost method investment		235		-
Furniture, equipment, and leasehold improvements, net		2,218		2,273
Intangible assets		559		332
Equity method affiliates		42		1,910
Other assets	$	11,098	$	9,623

Schedule Of Accounts Payable And Other Liabilities

ACCOUNTS PAYABLE AND OTHER LIABILITIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Accounts payable	$	1,399	$	1,143
Rent payable		1,092		1,032
Accrued interest payable		510		308
Payroll taxes payable		786		1,577
Accrued income taxes		-		1,434
Guarantee liability		-		1,084
Settlement payable		-		4,467
Deferred income		60		498
Mandatorily redeemable equity interests		-		86
Other general accrued expenses		2,354		1,451
Accounts payable and other liabilities	$	6,201	$	13,080

XML

Debt (Narrative) (Details) (USD $)	9 Months Ended		3 Months Ended	9 Months Ended								9 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2012 Subordinated Debt [Member]	Sep. 30, 2013 Subordinated Debt [Member]	Sep. 30, 2013 Junior subordinated debt [Member]	Sep. 30, 2013 Junior subordinated debt [Member] VIE trusts [Member]	Sep. 30, 2013 10.50% Contingent convertible senior notes due 2027 [Member]	Sep. 30, 2013 Alesco Capital Trust I [Member] Junior subordinated debt [Member]		Sep. 30, 2013 Sunset Financial Statutory Trust I [Member] Junior subordinated debt [Member]		Sep. 30, 2013 Star Asia Manager Note Payable [Member]	Mar. 31, 2013 Star Asia Manager Note Payable [Member]	Sep. 30, 2013 8.00% Contingent Convertible Senior Notes Due 2018 [Member] security	Sep. 30, 2013 Star Asia Manager [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount					$ 1,489,000		$ 8,121,000	$ 870,000		$ 619,000		$ 165,000	$ 725,000	$ 8,248,000
Interest paid currently, percentage				9.00%
Interest paid in kind, percentage				3.00%
Cash available for distribution percent distributed.	50.00%
Junior Subordinated Debenture Owed to Unconsolidated Subsidiary Trust					48,125,000	48,125,000		28,125,000	[1]	20,000,000	[1]
Debt Instrument, Basis Spread on Variable Rate												2.75%
Repayments of Debt	907,000	11,446,000	1,177,000	352,000
Cash consideration															425,000
Debt Instrument, Repurchased Face Amount				347,000
Interest Paid	2,055,000	3,655,000		5,000
Debt Instrument, Convertible, Conversion Price														$ 3.00
Debt Instrument, Convertible, Number of Equity Instruments														2,749,167
Debt Instrument, Dividend Threshold for Interest to be Payable In-Kind														$ 0.02
Long-term Debt, Gross					$ 0

[1] The outstanding par represents the total par amount of the junior subordinated notes held by two separate trusts. The Company does not consolidate these trusts. The Company holds $1,489 par value of these junior subordinated notes, comprised of $870 par value of junior subordinated notes related to Alesco Capital Trust I and $619 par value of junior subordinated notes related to Sunset Financial Statutory Trust I. These notes have a carrying value of $0. Therefore, the net par value held by third parties is $48,125.

XML

Financial Instruments (Schedule Of Trading Securities Sold, Not Yet Purchased) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Trading securities sold, not yet purchased	$ 53,332		$ 44,167
U.S. government agency MBS [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Trading securities sold, not yet purchased	740	[1]	13	[1]
U.S. Treasury securities [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Trading securities sold, not yet purchased	33,265		19,722
Corporate bonds and redeemable preferred stock [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Trading securities sold, not yet purchased	12,361		21,976
RMBS [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Trading securities sold, not yet purchased	35
SBA loans [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Trading securities sold, not yet purchased	437
Foreign government bonds [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Trading securities sold, not yet purchased	8
Municipal bonds [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Trading securities sold, not yet purchased	120		128
Certificates of deposit [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Trading securities sold, not yet purchased	6,366		2,325
Equity securities [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Trading securities sold, not yet purchased			$ 3

[1] Represents TBAs. See note 8.

XML

Acquisition And Private Investment In IFMI (Business Acquisition, Pro Forma Information) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Acquisition And Private Investment In IFMI [Abstract]
Revenue	$ 46,426	$ 74,772
Earnings (loss) attributable to IFMI	$ (9,326)	$ (3,512)

XML

Organization and Nature of Operations (Details) (USD $) In Billions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Securities [Line Items]
Assets under Management	$ 5.7
Collateralized Debt Obligations [Member]
Securities [Line Items]
Assets under Management	$ 5.4
Assets under management which are collateralized debt obligations percentage	94.00%

XML

Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	100,000,000	100,000,000
Common Stock, shares issued	14,961,637	11,552,551
Common Stock, shares outstanding	14,961,637	11,552,551
Common Stock, unvested restricted share awards	669,304	757,826
Voting Non-Convertible Preferred Stock [Member]
Preferred Stock, par value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	50,000,000	50,000,000
Preferred Stock, shares issued	4,983,557	4,983,557
Preferred Stock, shares outstanding	4,983,557	4,983,557

XML

Financial Instruments

9 Months Ended

Sep. 30, 2013

Financial Instruments [Abstract]

Financial Instruments

6. FINANCIAL INSTRUMENTS

Investments—Trading

The following table provides detail of the investments classified as investments-trading as of the periods indicated:

INVESTMENTS - TRADING
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
U.S. government agency MBS and CMOs (1)	$	9,063	$	34,592
U.S. government agency debt securities		3,517		21,066
RMBS		2,935		583
CMBS		300		12
U.S. Treasury securities		182		147
Interests in securitizations (2)		344		352
SBA loans		29,272		15,705
Corporate bonds and redeemable preferred stock		27,241		56,022
Foreign government bonds		111		448
Municipal bonds		9,169		37,745
Exchange traded funds		6		-
Certificates of deposit		3,192		8,934
Equity securities		250		533
Investments-trading	$	85,582	$	176,139

(1)Includes TBAs. See note 8.

(2)Primarily comprised of CDOs, CLOs, and ABS.

Trading Securities Sold, Not Yet Purchased

The following table provides detail of the trading securities sold, not yet purchased as of the periods indicated:

TRADING SECURITIES SOLD, NOT YET PURCHASED
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
U.S. government agency MBS (1)	$	740	$	13
U.S. Treasury securities		33,265		19,722
RMBS		35		-
SBA loans		437		-
Corporate bonds and redeemable preferred stock		12,361		21,976
Foreign government bonds		8		-
Municipal bonds		120		128
Certificates of deposit		6,366		2,325
Equity securities		-		3
Trading securities sold, not yet purchased	$	53,332	$	44,167

(1)Represents TBAs. See note 8.

The Company tries to manage its exposure to changes in interest rates for the interest rate sensitive securities it holds by entering into offsetting short positions for similar fixed rate securities.

The Company included the change in unrealized gains (losses) in the amount of $1,141 and $  (611) for the nine months ended September 30, 2013 and 2012, respectively, in net trading revenue in the Company’s consolidated statements of operations.

Other Investments, at fair value

The following table provides detail of the investments included within other investments, at fair value:

OTHER INVESTMENTS, AT FAIR VALUE
(Dollars in Thousands)
	September 30, 2013
	Cost		Carrying Value		Unrealized Gain(Loss)
Interests in securitizations (1)	$	217	$	37	$	(180)
Equity Securities:
EuroDekania		7,807		2,275		(5,532)
Star Asia		23,304		21,118		(2,186)
Star Asia Special Situations Fund		1,964		3,203		1,239
Tiptree		5,561		2,317		(3,244)
Other securities		176		37		(139)
Total equity securities		38,812		28,950		(9,862)
Residential loans		163		292		129
Foreign currency forward contracts		-		(271)		(271)
Other investments, at fair value	$	39,192	$	29,008	$	(10,184)

	December 31, 2012
	Cost		Carrying Value		Unrealized Gain(Loss)
Interests in securitizations (1)	$	217	$	77	$	(140)
Equity Securities:
EuroDekania		7,807		2,054		(5,753)
Star Asia		23,304		30,169		6,865
Star Asia Special Situations Fund		1,841		2,503		662
Tiptree		5,561		2,834		(2,727)
Other securities		232		431		199
Total equity securities		38,745		37,991		(754)
Residential loans		230		255		25
Other investments, at fair value	$	39,192	$	38,323	$	(869)

(1)Represents an interest in a CDO.

XML

Consolidated Statements Of Operations And Comprehensive / Income (Loss) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Consolidated Statements of Operations [Abstract]
Foreign currency translation adjustments, tax	$ 0	$ 0	$ 0	$ 0
Other comprehensive income / (loss), tax	$ 0	$ 0	$ 0	$ 0

XML

Fair Value Disclosures (Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	$ 85,582		$ 176,139
Other investments, Carrying Value	29,008		38,323
Trading securities sold, not yet purchased	53,332		44,167
Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	2,957		6,185
Other investments, Carrying Value	(247)		24
Trading securities sold, not yet purchased	33,512		19,877
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	82,145		169,659
Other investments, Carrying Value	2,622		662
Trading securities sold, not yet purchased	19,820		24,290
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	480		295
Other investments, Carrying Value	26,633		37,637
U.S. government agency MBS and CMOs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	9,063	[1]	34,592	[1]
Trading securities sold, not yet purchased	740		13
U.S. government agency MBS and CMOs [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	9,063		34,592
Trading securities sold, not yet purchased	740		13
U.S. government agency debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	3,517		21,066
U.S. government agency debt securities [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	3
U.S. government agency debt securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	3,514		21,066
RMBS [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	2,935		583
Trading securities sold, not yet purchased	35
RMBS [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	2,935		583
Trading securities sold, not yet purchased	35
CMBS [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	300		12
CMBS [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	300		12
U.S. Treasury securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	182		147
Trading securities sold, not yet purchased	33,265		19,722
U.S. Treasury securities [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	182		147
Trading securities sold, not yet purchased	33,265		19,722
Interests in securitizations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	344	[2]	352	[2]
Other investments, Carrying Value	37	[3]	77	[3]
Interests in securitizations [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	140	[2]	57	[2]
Interests in securitizations [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	204	[2]	295	[2]
SBA loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	29,272		15,705
Trading securities sold, not yet purchased	437
SBA loans [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	28,996		15,705
Trading securities sold, not yet purchased	437
SBA loans [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	276
Corporate bonds and redeemable preferred stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	27,241		56,022
Trading securities sold, not yet purchased	12,361		21,976
Corporate bonds and redeemable preferred stock [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	2,623		5,643
Trading securities sold, not yet purchased	247		152
Corporate bonds and redeemable preferred stock [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	24,618		50,379
Trading securities sold, not yet purchased	12,114		21,824
Foreign government bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	111		448
Trading securities sold, not yet purchased	8
Foreign government bonds [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	111		448
Trading securities sold, not yet purchased	8
Municipal bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	9,169		37,745
Trading securities sold, not yet purchased	120		128
Municipal bonds [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	9,169		37,745
Trading securities sold, not yet purchased	120		128
Exchange Traded Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	6
Exchange Traded Funds [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	6
Certificates of deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	3,192		8,934
Trading securities sold, not yet purchased	6,366		2,325
Certificates of deposit [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	3,192		8,934
Trading securities sold, not yet purchased	6,366		2,325
Equity securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	250		533
Other investments, Carrying Value	28,950		37,991
Trading securities sold, not yet purchased			3
Equity securities [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	143		395
Trading securities sold, not yet purchased			3
Equity securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments-trading	107		138
Foreign currency forward contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	(271)
Foreign currency forward contracts [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	(271)
EuroDekania Limited [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	2,275	[4]	2,054	[4]
EuroDekania Limited [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	2,275	[4]	2,054	[4]
EuroDekania Limited [Member] | Equity securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	2,275		2,054
Star Asia [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	21,118	[5]	30,169	[5]
Star Asia [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	21,118	[5]	30,169	[5]
Star Asia [Member] | Equity securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	21,118		30,169
Tiptree Financial Partners L.P. [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	2,317	[6]	2,834	[6]
Tiptree Financial Partners L.P. [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	2,317	[6]
Tiptree Financial Partners L.P. [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value			2,834	[6]
Tiptree Financial Partners L.P. [Member] | Equity securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	2,317		2,834
Star Asia Special Situations Fund [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	3,203	[5]	2,503	[5]
Star Asia Special Situations Fund [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	3,203	[5]	2,503	[5]
Star Asia Special Situations Fund [Member] | Equity securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	3,203		2,503
Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	37		431
Other Equity Securities [Member] | Quoted Prices In Active Markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	24		24
Other Equity Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	13		407
Other Equity Securities [Member] | Equity securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	37		431
Interests in securitizations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	37	[2]	77	[2]
Interests in securitizations [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	37	[2]	77	[2]
Residential Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	292		255
Residential Loans [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, Carrying Value	$ 292		$ 255

[1] Includes TBAs. See note 8.

[2] Primarily comprised of CDOs, CLOs, and ABS.

[3] Represents an interest in a CDO.

[4] Hybrid Securities Fund—European.

[5] Real Estate Fund—Asian.

[6] Diversified Fund.

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Assets
Cash and cash equivalents	$ 22,313	$ 14,500
Receivables from brokers, dealers, and clearing agencies	15,481	12,253
Due from related parties	923	452
Other receivables	3,561	8,488
Investments-trading	85,582	176,139
Other investments, at fair value	29,008	38,323
Receivables under resale agreements	94,867	70,110
Goodwill	11,113	11,113
Other assets	11,098	9,623
Total assets	273,946	341,001
Liabilities
Payables to brokers, dealers, and clearing agencies	5,406	96,211
Accounts payable and other liabilities	6,201	13,080
Accrued compensation	5,117	8,203
Trading securities sold, not yet purchased	53,332	44,167
Securities sold under agreements to repurchase	94,856	70,273
Deferred income taxes	6,306	6,603
Debt	34,590	25,847
Total liabilities	205,808	264,384
Commitments and contingencies
Temporary Equity:
Redeemable non-controlling interest	535	829
Stockholders' Equity:
Preferred Stock, $0.001 par value per share, 50,000,000 shares authorized: Voting Non-Convertible Preferred Stock, $0.001 par value per share, 4,983,557 shares authorized, 4,983,557 shares issued and outstanding	5	5
Common Stock, $0.001 par value per share, 100,000,000 shares authorized, 14,961,637 and 11,552,551 shares issued and outstanding, respectively, including 669,304 and 757,826 unvested restricted share awards, respectively	14	11
Additional paid-in capital	73,749	64,829
Accumulated other comprehensive loss	(675)	(495)
Accumulated deficit	(17,433)	(7,370)
Total stockholders' equity	55,660	56,980
Non-controlling interest	11,943	18,808
Total permanent equity	67,603	75,788
Total liabilities and equity	$ 273,946	$ 341,001

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Receivables From And Payables To Brokers, Dealers, And Clearing Agencies (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Receivables from and Payables to Brokers, Dealers, and Clearing Agencies [Abstract]
Interest On Margin Payable	$ 233	$ 297	$ 752	$ 1,128

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Earnings / (Loss) Per Common Share (Schedule of Earnings / (Loss) Per Common Share) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Earnings / (Loss) Per Common Share [Abstract]
Net income / (loss) attributable to IFMI	$ (104)		$ 2,008		$ (9,306)		$ (3,929)
Add/ (deduct): Income / (loss) attributable to non-controlling interest attributable to Operating LLC membership units exchangeable into IFMI shares	(212)	[1]	967	[1]	(4,461)	[1]	(1,916)	[1]
Add / (deduct): Adjustment	154	[2]	(5)	[2]	176	[2]	(93)	[2]
Net income / (loss) on a fully converted basis	$ (162)		$ 2,970		$ (13,591)		$ (5,938)
Weighted average common shares outstanding - Basic	11,875,950		10,849,220		11,628,392		10,683,076
Unrestricted Operating LLC membership units exchangeable into IFMI shares	5,324,090	[1]	5,252,002	[1]	5,324,090	[1]	5,252,002	[1]
Dilutive impact of restricted equity instruments			75,676	[3]
Weighted average common shares outstanding - Diluted	17,200,040		16,176,898		16,952,482		15,935,078
Net income / (loss) per common share - Basic	$ (0.01)		$ 0.19		$ (0.80)		$ (0.37)
Net income / (loss) per common share - Diluted	$ (0.01)		$ 0.18		$ (0.80)		$ (0.37)

[1] The Operating LLC membership units not held by IFMI (that is, those held by the non-controlling interest for the nine and three months ended September 30, 2013 and 2012) may be redeemed and exchanged into shares of the Company on a one-to-one basis. The 4,983,557 Operating LLC membership units held by Daniel G. Cohen are redeemable at Mr. Cohen’s option, at any time, for (i) cash in an amount equal to the average of the per share closing prices of the Company’s common stock for the ten consecutive trading days immediately preceding the date the Company receives Mr. Cohen’s redemption notice, or (ii) at the Company’s option, one share of the Company’s common stock, subject, in each case, to appropriate adjustment upon the occurrence of an issuance of additional shares of the Company’ Common Stock as a dividend or other distribution on the Company’s outstanding Common Stock, or a further subdivision or combination of the outstanding shares of the Company’s common stock. The Operating LLC membership units held by other members of the Operating LLC have the same redemption rights as described above. These units are not included in the computation of basic earnings per share. These units enter into the computation of diluted net income / (loss) per common share when the effect is dilutive using the if-converted method.

[2] An adjustment is included for the following: (i) if the Operating LLC membership units had been converted at the beginning of the period, the Company would have incurred a higher income tax expense or realized a higher income tax benefit, as applicable; and (ii) to adjust the non-controlling interest amount to be consistent with the weighted average share calculation.

[3] For the nine months ended September 30, 2013 and 2012, weighted average common shares outstanding excludes a total of 360,559 and 46,288 shares, respectively, representing restricted Operating LLC units, restricted IFMI common stock, and restricted units of IFMI common stock. For the three months ended September 30, 2013, weighted average common shares outstanding excludes a total of 392,010 shares representing restricted Operating LLC units, restricted IFMI common stock, and restricted units of IFMI common stock. For the nine and three months ended September 30, 2013, weighted average common shares outstanding also excludes 59,765 and 179,294 shares, respectively, from the assumed conversion of the 8% Convertibles Notes because the inclusion of the converted shares would be anti-dilutive.

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Permanent Equity Operating LLC Membership Units) (Details)	9 Months Ended
	Sep. 30, 2013
Permanent Equity [Line Items]
Membership Units Received Net Of Surrenders	3,331,874
Unit Issuance And Surrender Agreement [Member]
Permanent Equity [Line Items]
Membership Units Received Net Of Surrenders	396,368
JVB Holdings Agreement [Member]
Permanent Equity [Line Items]
Membership Units Received Net Of Surrenders	186,339
Private Placement [Member]
Permanent Equity [Line Items]
Membership Units Received Net Of Surrenders	2,749,167

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Due From / Due To Related Parties

9 Months Ended

Sep. 30, 2013

Due From / Due To Related Parties [Abstract]

Due From / Due To Related Parties

21. DUE FROM / DUE TO RELATED PARTIES

The following table summarizes the outstanding due from / to related parties. These amounts may result from normal operating advances or from timing differences between the transactions disclosed in note 20 and final settlement of those transactions in cash. All amounts are primarily non-interest bearing.

DUE FROM/DUE TO RELATED PARTIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
EuroDekania	$	105	$	-
Star Asia Manager (1)		-		98
Star Asia and related entities (2)		496		-
CBF		93		90
Employees		229		264
Due from Related Parties	$	923	$	452

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment. 

(2)   Related entities include Star Asia Capital Management and SAA Manager.

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Net Capital Requirements

9 Months Ended

Sep. 30, 2013

Net Capital Requirements [Abstract]

Net Capital Requirements

15 . NET CAPITAL REQUIREMENTS

The U.S. broker-dealer subsidiaries of the Company are subject to the net capital provision of Rule 15c3-1 under the Exchange Act, which requires the maintenance of minimum net capital, as defined therein. As of September 30, 2013, the Company had the following two U.S. broker-dealers: JVB and CCPR.

As of September 30, 2013, JVB’s adjusted net capital was $10,506, which exceeded the minimum requirements by $10,400. As of September 30, 2013, CCPR had net capital of $16,431, which exceeded the minimum requirements by $16,181.  

CCFL, a subsidiary of the Company regulated by the Financial Conduct Authority (formerly known as the Financial Services Authority) in the United Kingdom, is subject to the net liquid capital provision of the Financial Services and Markets Act 2000, GENPRU 2.140R to 2.1.57R, relating to financial prudence with regards to the European Investment Services Directive and the European Capital Adequacy Directive, which requires the maintenance of minimum liquid capital, as defined therein. As of September 30, 2013, the total minimum required net liquid capital was $1,916, and net liquid capital in CCFL was $3,258, which exceeded the minimum requirements by $1,342 and was in compliance with the net liquid capital provisions.

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Due from / Due to Related Parties (Tables)

9 Months Ended

Sep. 30, 2013

Due From / Due To Related Parties [Abstract]

Schedule of Due From / Due To Related Parties

DUE FROM/DUE TO RELATED PARTIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
EuroDekania	$	105	$	-
Star Asia Manager (1)		-		98
Star Asia and related entities (2)		496		-
CBF		93		90
Employees		229		264
Due from Related Parties	$	923	$	452

(1) Beginning March 1, 2013, Star Asia Manager was consolidated by the Company.  Prior to that, it was treated as an equity method investment. 

(2)   Related entities include Star Asia Capital Management and SAA Manager.

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Net Capital Requirements (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Cohen And Company And PrinceRidge L.L.C. [Member]
Net Capital Requirements [Line Items]
Adjusted net capital	$ 16,431
Amount in excess of minimum capital requirement	16,181
JVB [Member]
Net Capital Requirements [Line Items]
Adjusted net capital	10,506
Amount in excess of minimum capital requirement	10,400
Cohen and Company Financial Limited [Member]
Net Capital Requirements [Line Items]
Adjusted net capital	3,258
Amount in excess of minimum capital requirement	1,342
Minimum net liquid capital required	$ 1,916

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Financial Instruments (Schedule Of Trading Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	$ 85,582		$ 176,139
U.S. government agency MBS and CMOs [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	9,063	[1]	34,592	[1]
U.S. government agency debt securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	3,517		21,066
RMBS [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	2,935		583
CMBS [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	300		12
U.S. Treasury securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	182		147
Interests in securitizations [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	344	[2]	352	[2]
SBA loans [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	29,272		15,705
Corporate bonds and redeemable preferred stock [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	27,241		56,022
Foreign government bonds [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	111		448
Municipal bonds [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	9,169		37,745
Exchange Traded Funds [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	6
Certificates of deposit [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	3,192		8,934
Equity securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investments-trading	$ 250		$ 533

[1] Includes TBAs. See note 8.

[2] Primarily comprised of CDOs, CLOs, and ABS.

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Collateralized Securities Transactions (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Brokers and Dealers [Abstract]
Securities reverse repurchase agreements	$ 94,867	$ 70,110
Fair value of securities received as collateral under reverse repurchase agreements	95,807	73,382
Securities sold under agreements to repurchase	94,856	70,273
Fair value of securities pledged as collateral under repurchase agreements	$ 94,602	$ 73,382

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Debt (Tables)

9 Months Ended

Sep. 30, 2013

Debt [Abstract]

Debt Outstanding

DETAIL OF DEBT
(Dollars in Thousands)
Description	Current Outstanding Par			September 30, 2013		December 31, 2012		Interest Rate Terms		Interest (6)		Maturity
Contingent convertible senior notes:
10.50% contingent convertible senior notes (the "New Notes")	$	8,121		$	8,096	$	8,068	10.50%		10.50	%	May 2014 (1)
8.00% contingent convertible senior notes (the "8.0% Convertible Notes")		8,248			8,248		-	8.00%		8.00	%	September 2018 (2)
	$	16,369		$	16,344		8,068
Junior subordinated notes:
Alesco Capital Trust I	$	28,125	(3)		10,563		10,189	4.25%		4.25	%	July 2037
Sunset Financial Statutory Trust I		20,000	(3)		7,518		7,248	4.40%		4.40	%	March 2035
	$	48,125			18,081		17,437
Subordinated notes payable	$	-			-		342	12.00%	(4)	12.00	%	June 2013
Star Asia Manager note payable	$	165			165		-	3.00%		3.00	%	(5)
Total				$	34,590	$	25,847

(1)Represents the holder’s earliest put date and the Company’s earliest redemption date. The contractual maturity for the New Notes is May 2027.

The Company may redeem all or part of the $8,121aggregate principal amount of the New Notes for cash on or after May 20, 2014, at a redemption price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. The holders of the New Notes may require the Company to repurchase all or a portion of the New Notes for cash on May 15, 2014; May 15, 2017; and May 15, 2022 for a repurchase price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. The holders of the New Notes are required to provide notice to the Company of their plan to redeem the New Notes at any time during the 30 days prior to May 15, 2014; May 15, 2017; and May 15, 2022.

(2)The holders of the 8.0% Convertible Notes may convert all or any part of the outstanding principal amount of the 8.0% Convertible Notes at any time prior to maturity into shares of the Company’s common stock at a conversion price of $3.00 per share, subject to customary anti-dilution adjustments.

(3)The outstanding par represents the total par amount of the junior subordinated notes held by two separate trusts. The Company does not consolidate these trusts. The Company holds $1,489 par value of these junior subordinated notes, comprised of $870 par value of junior subordinated notes related to Alesco Capital Trust I and $619 par value of junior subordinated notes related to Sunset Financial Statutory Trust I. These notes have a carrying value of $0. Therefore, the net par value held by third parties is $48,125.  

(4)Comprised of 9% paid currently and 3% paid in kind.  The subordinated note payable was fully repaid in June 2013. 

(5)The Star Asia Manager note payable has no stated maturity date. See description of payment terms below.

(6)Represents the interest rate as of the last day of the reporting period. 

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Fair Value Disclosures (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring Basis

FAIR VALUE MEASUREMENTS ON A RECURRING BASIS
September 30, 2013
(Dollars in Thousands)
					Significant		Significant
			Quoted Prices in		Other Observable		Unobservable
			Active Markets		Inputs		Inputs
Assets:	Fair Value		(Level 1)		(Level 2)		(Level 3)
Investments-trading:
U.S. government agency MBS and CMOs	$	9,063	$	-	$	9,063	$	-
U.S. government agency debt securities		3,517		3		3,514		-
RMBS		2,935		-		2,935		-
CMBS		300		-		300		-
U.S. Treasury securities		182		182		-		-
Interests in securitizations (1)		344		-		140		204
SBA loans		29,272		-		28,996		276
Corporate bonds and redeemable preferred stock		27,241		2,623		24,618		-
Foreign government bonds		111		-		111		-
Municipal bonds		9,169		-		9,169		-
Exchange traded funds		6		6		-		-
Certificates of deposit		3,192		-		3,192		-
Equity securities		250		143		107		-
Total investments - trading	$	85,582	$	2,957	$	82,145	$	480
Other investments, at fair value
EuroDekania (2)	$	2,275	$	-	$	-	$	2,275
Star Asia (3)		21,118		-		-		21,118
Tiptree (4)		2,317		-		2,317		-
Star Asia Special Situations Fund (3)		3,203		-		-		3,203
Other equity securities		37		24		13		-
Interests in securitizations (1)		37		-		-		37
Residential loans		292		-		292		-
Foreign currency forward contracts		(271)		(271)		-		-
Total other investments, at fair value	$	29,008	$	(247)	$	2,622	$	26,633
Liabilities
Trading securities sold, not yet purchased:
U.S. government agency MBS	$	740	$	-	$	740	$	-
U.S. Treasury securities		33,265		33,265		-		-
RMBS		35		-		35		-
SBA loans		437		-		437		-
Corporate bonds and redeemable preferred stock		12,361		247		12,114		-
Foreign government bonds		8		-		8		-
Municipal bonds		120		-		120		-
Certificates of deposit		6,366		-		6,366		-
Total trading securities sold, not yet purchased	$	53,332	$	33,512	$	19,820	$	-

(1)Primarily comprised of CDOs, CLOs, and ABS.

(2)Hybrid Securities Fund—European.

(3)Real Estate Fund—Asian.

(4)Diversified Fund.

FAIR VALUE MEASUREMENTS ON A RECURRING BASIS
December 31, 2012
(Dollars in Thousands)
					Significant		Significant
			Quoted Prices in		Other Observable		Unobservable
			Active Markets		Inputs		Inputs
Assets:	Fair Value		(Level 1)		(Level 2)		(Level 3)
Investments-trading:
U.S. government agency MBS and CMOs	$	34,592	$	-	$	34,592	$	-
U.S. government agency debt securities		21,066		-		21,066		-
RMBS		583		-		583		-
CMBS		12		-		12		-
U.S. Treasury securities		147		147		-		-
Interests in securitizations (1)		352		-		57		295
SBA loans		15,705		-		15,705		-
Corporate bonds and redeemable preferred stock		56,022		5,643		50,379		-
Foreign government bonds		448		-		448		-
Municipal bonds		37,745		-		37,745		-
Certificates of deposit		8,934		-		8,934		-
Equity securities		533		395		138		-
Total investments - trading	$	176,139	$	6,185	$	169,659	$	295
Other investments, at fair value
EuroDekania (2)	$	2,054	$	-	$	-	$	2,054
Star Asia (3)		30,169		-		-		30,169
Tiptree (4)		2,834		-		-		2,834
Star Asia Special Situations Fund (3)		2,503		-		-		2,503
Other equity securities		431		24		407		-
Interests in securitizations (1)		77		-		-		77
Residential loans		255		-		255		-
Total other investments, at fair value	$	38,323	$	24	$	662	$	37,637
Liabilities
Trading securities sold, not yet purchased:
U.S. government agency MBS	$	13	$	-	$	13	$	-
U.S. Treasury securities		19,722		19,722		-		-
Corporate bonds and redeemable preferred stock		21,976		152		21,824		-
Municipal bonds		128		-		128		-
Certificates of deposit		2,325		-		2,325		-
Equity securities		3		3		-		-
Total trading securities sold, not yet purchased	$	44,167	$	19,877	$	24,290	$	-

(1)Primarily comprised of CDOs, CLOs, and ABS.

(2)Hybrid Securities Fund—European.

(3)Real Estate Fund—Asian.

(4)Diversified Fund.

Schedule Of Assets And Liabilities Measured With Level 3 Inputs

LEVEL 3 INPUTS
Nine Months Ended September 30, 2013
(Dollars in Thousands)
	December 31, 2012		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2013		Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
Interests in securitizations (2)	$	295	$	62	$	-	$	-	$	-	$	(153)	$	204	$	(92)
SBA loans		-		239		-		-		37		-		276		239
Total investments-trading	$	295	$	301	$	-	$	-	$	37	$	(153)	$	480	$	147
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,054	$	-	$	221	$	-	$	-	$	-	$	2,275	$	221
Star Asia (4)		30,169		-		(9,051)		-		-		-		21,118		(9,051)
Tiptree (5)		2,834		-		-		(2,834)		-		-		-		-
Star Asia Japan Special Situations Fund (4)		2,503		-		577		-		302		(179)		3,203		577
Total equity securities		37,560		-		(8,253)		(2,834)		302		(179)		26,596		(8,253)
Interest in securitizations (2)		77		-		(40)		-		-		-		37		(40)
Total other investments, fair value	$	37,637	$	-	$	(8,293)	$	(2,834)	$	302	$	(179)	$	26,633	$	(8,293)

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

LEVEL 3 INPUTS
Nine Months Ended September 30, 2012
(Dollars in Thousands)
		December 31, 2011		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2012	Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
RMBS	$	4,932	$	17	$	-	$	-	$	171	$	(5,120)	$	-	$	-
Interests in securitizations (2)		221		53		-		-		2,861		(2,203)		932		74
Equity securities		35		(104)		-		-		126		-		57		(104)
Total investments-trading	$	5,188	$	(34)	$	-	$	-	$	3,158	$	(7,323)	$	989	$	(30)
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,370	$	-	$	1	$	-	$	-	$	-	$	2,371	$	1
Star Asia (4)		37,358		-		(3,433)		-		-		-		33,925		(3,433)
Tiptree (5)		2,533		-		222		-		-		-		2,755		222
Other		132		-		(41)		-		-		-		91		(41)
Total equity securities		42,393		-		(3,251)		-		-		-		39,142		(3,251)
Interest in securitizations (2)		88		-		6		-		-		-		94		6
Residential loans		267		-		-		(267)		-		-		-		-
Total other investments, fair value	$	42,748	$	-	$	(3,245)	$	(267)	$	-	$	-	$	39,236	$	(3,245)

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

LEVEL 3 INPUTS
Three Months Ended September 30, 2013
(Dollars in Thousands)
		June 30, 2013		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2013	Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
Interests in securitizations (2)	$	221	$	26	$	-	$	-	$	-	$	(43)	$	204	$	(18)
SBA loans		-		239		-		-		37		-		276		239
Total investments-trading	$	221	$	265	$	-	$	-	$	37	$	(43)	$	480	$	221
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,040	$	-	$	235	$	-	$	-	$	-	$	2,275	$	235
Star Asia (4)		20,935		-		183		-		-		-		21,118		183
Star Asia Japan Special Situations Fund (4)		2,775		-		607		-		-		(179)		3,203		607
Total equity securities		25,750		-		1,025		-		-		(179)		26,596		1,025
Interest in securitizations (2)		58		-		(21)		-		-		-		37		(21)
Total other investments, fair value	$	25,808	$	-	$	1,004	$	-	$	-	$	(179)	$	26,633	$	1,004

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

LEVEL 3 INPUTS
Three Months Ended September 30, 2012
(Dollars in Thousands)
		June 30, 2012		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2012	Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
Interests in securitizations (2)	$	185	$	111	$	-	$	-	$	636	$	-	$	932	$	111
Equity securities		63		(6)		-		-		-		-		57		(6)
Total investments-trading	$	248	$	105	$	-	$	-	$	636	$	-	$	989	$	105
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,103	$	-	$	268	$	-	$	-	$	-	$	2,371	$	268
Star Asia (4)		32,299		-		1,626		-		-		-		33,925		1,626
Tiptree (5)		2,703		-		52		-		-		-		2,755		52
Other		88		-		3		-		-		-		91		3
Total equity securities		37,193		-		1,949		-		-		-		39,142		1,949
Interest in securitizations (2)		97		-		(3)		-		-		-		94		(3)
Total other investments, fair value	$	37,290	$	-	$	1,946	$	-	$	-	$	-	$	39,236	$	1,946

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

Quantitative Information About Level 3 Fair Value Measurements

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS
(Dollars in Thousands)
				Significant		Range of
		Fair Value	Valuation	Unobservable	Weighted	Significant
		September 30, 2013	Technique	Inputs	Average	Inputs
Assets
Other investments, at fair value
Star Asia	$	21,118	Adjusted NAV	Discount rate	7.26%	7.26%
				on debt

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS
(Dollars in Thousands)
				Significant		Range of
		Fair Value	Valuation	Unobservable	Weighted	Significant
		December 31, 2012	Technique	Inputs	Average	Inputs
Assets
Other investments, at fair value
Star Asia	$	30,169	Adjusted NAV	Discount rate	6.82%	6.82%
				on debt

Fair Value, Investments, Entities That Calculate Net Asset Value Per Share

FAIR VALUE MEASUREMENTS OF INVESTMENTS IN CERTAIN ENTITIES
THAT CALCULATE NET ASSET VALUE PER SHARE (OR ITS EQUIVALENT)
		Fair Value
		September 30, 2013
		(dollars in thousands)		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
Other investments, at fair value
EuroDekania (a)	$	2,275		N/A	N/A	N/A
Star Asia (b)		21,118		N/A	N/A	N/A
Tiptree (c)		2,317		N/A	N/A	N/A
Star Asia Special Situations Fund (d)		3,203		N/A	N/A	N/A
	$	28,913
		Fair Value
		December 31, 2012
		(dollars in thousands)		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
Other investments, at fair value
EuroDekania (a)	$	2,054		N/A	N/A	N/A
Star Asia (b)		30,169		N/A	N/A	N/A
Tiptree (c)		2,834		N/A	N/A	N/A
Star Asia Special Situations Fund (d)		2,503	$	321	N/A	N/A
	$	37,560

N/A – Not applicable.

(a)EuroDekania’s investment strategy is to make investments in hybrid capital securities that have attributes of debt and equity, primarily in the form of subordinated debt issued by insurance companies, banks and bank holding companies based primarily in Western Europe; widely syndicated leveraged loans issued by European corporations; CMBS, including subordinated interests in first mortgage real estate loans; and RMBS and other ABS backed by consumer and commercial receivables. The majority of the assets are denominated in Euros and U.K. Pounds Sterling. The fair value of the investment in this category has been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820.

(b)Star Asia’s investment strategy is to make investments in Asian real estate structured finance investments, including CMBS, corporate debt of REITs and real estate operating companies, whole loans, mezzanine loans, and other commercial real estate fixed income investments. The fair value of the investment in this category has been estimated using an internal valuation model that uses a market approach. If the Company had used Star Asia’s unadjusted reported net asset value to determine its fair value, the carrying value of its investment in Star Asia would have been $31,907 as of September 30, 2013 and $39,998 as of December 31, 2012.  

(c)The investment strategy of Tiptree is focused on investing in (a) specialty finance companies; (b) alternative asset management companies; and (c) diversified credit assets and related equity interests. Tiptree primarily seeks to acquire majority ownership interests in its investees. Prior to June 30, 2013, the fair value of this investment had been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820. Beginning with the second quarter of 2013, the Company calculates the fair value of its investment in Tiptree by using the closing over the counter price for Tiptree Financial, Inc. and adjusting for the exchange ratio.  As of September 30, 2013 and December 31, 2012, the Company owned approximately 1% of Tiptree.

(d)    The Star Asia Special Situations Fund’s investment strategy is to make investments in real estate and securities backed by real estate in Japan. The Star Asia Special Situations Fund is a closed end fund that does not allow investor redemptions. It has an initial life of three years which can be extended under certain circumstances for up to two years. The fair value of the investment in this category has been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820. The Company’s unfunded commitment was denominated in Japanese Yen and fluctuated based on the foreign exchange spot rate used at any particular period. See note 20.

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2013

Derivative Financial Instruments [Abstract]

Balance Sheet Information

DERIVATIVE FINANCIAL INSTRUMENTS-BALANCE SHEET INFORMATION
(Dollars in Thousands)
Derivative Financial Instruments Not Designated as Hedging Instruments Under FASB ASC 815	Balance Sheet Classification		September 30, 2013		December 31, 2012
TBAs	Investments-trading	$	429	$	35
Foreign currency forward contracts	Other investments, at fair value		(271)		-
TBAs	Trading securities sold, not yet purchased		(663)		(13)
		$	(505)	$	22

Statement Of Operations Information

DERIVATIVE FINANCIAL INSTRUMENTS-STATEMENT OF OPERATIONS INFORMATION
(Dollars in Thousands)
Derivative Financial Instruments Not Designated as Hedging Instruments Under FASB ASC 815	Income Statement Classification		Nine Months Ended September 30, 2013		Nine Months Ended September 30, 2012
Foreign currency forward contracts	Revenues-principal transactions and other income	$	(481)	$	(323)
TBAs	Revenues-net trading		2,608		680
		$	2,127	$	357

DERIVATIVE FINANCIAL INSTRUMENTS-STATEMENT OF OPERATIONS INFORMATION
(Dollars in Thousands)
Derivative Financial Instruments Not Designated as Hedging Instruments Under FASB ASC 815	Income Statement Classification		Three Months Ended September 30, 2013		Three Months Ended September 30, 2012
Foreign currency forward contracts	Revenues-principal transactions and other income	$	(119)	$	(288)
TBAs	Revenues-net trading		591		426
		$	472	$	138

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Receivables From And Payables To Brokers, Dealers, And Clearing Agencies

9 Months Ended

Sep. 30, 2013

Receivables from and Payables to Brokers, Dealers, and Clearing Agencies [Abstract]

Receivables from and Payables to Brokers, Dealers, and Clearing Agencies

5. RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS, AND CLEARING AGENCIES

Amounts receivable from brokers, dealers, and clearing agencies consisted of the following at September 30, 2013 and December 31, 2012, respectively.

RECEIVABLES FROM BROKERS, DEALERS AND CLEARING AGENCIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Deposits with clearing organizations	$	1,417	$	1,516
Unsettled regular way trades, net		13,111		9,653
Receivable from clearing organizations		953		1,084
Receivables from brokers, dealers, and clearing agencies	$	15,481	$	12,253

Receivable from clearing organizations represents un-invested cash held by the clearing organization, which includes cash proceeds from short sales.

Amounts payable to brokers, dealers, and clearing agencies consisted of the following at September 30, 2013 and December 31, 2012, respectively.

PAYABLES TO BROKERS, DEALERS AND CLEARING AGENCIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Margin payable	$	5,406	$	96,211
Payables to brokers, dealers, and clearing agencies	$	5,406	$	96,211

Securities transactions are recorded on the trade date, as if they had settled. The related amounts receivable and payable for unsettled securities transactions are recorded net in receivables from or payables to brokers, dealers, and clearing agencies on the Company’s consolidated balance sheets. The Company incurred interest on margin payable of $752 and $1,128 for the nine months ended September 30, 2013 and 2012, respectively, and $233 and $297 for the three months ended September 30, 2013 and 2012, respectively. 

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Derivative Financial Instruments (Narrative) (Details) In Thousands, unless otherwise specified	Sep. 30, 2013 Short [Member] USD ($)	Dec. 31, 2012 Short [Member] USD ($)	Sep. 30, 2013 Long [Member] USD ($)	Dec. 31, 2012 Long [Member] USD ($)	Sep. 30, 2013 TBAs [Member] USD ($)	Sep. 30, 2013 Foreign currency forward contracts [Member] JPY (¥)	Dec. 31, 2012 Foreign currency forward contracts [Member] JPY (¥)
Derivative [Line Items]
Derivative, Notional Amount	$ 60,736	$ 40,125	$ 55,692	$ 32,794	$ 292,350	¥ 1,250,000	¥ 0

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Subsequent Events

9 Months Ended

Sep. 30, 2013

Subsequent Events [Abstract]

Subsequent Events

22. subsequent events

In October 2013, the Company repurchased $5,000 aggregate principal amount of the New Notes from an unrelated third party for $5,238, including accrued interest of $238.

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Segment and Geographic Information (Tables)

9 Months Ended

Sep. 30, 2013

Segment and Geographic Information [Abstract]

Schedule Of Segment Reporting Information

SEGMENT INFORMATION
Statement of Operations Information
Nine Months Ended September 30, 2013
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	32,513	$	-	$	-	$	32,513	$	-	$	32,513
Asset management		-		13,561		-		13,561		-		13,561
New issue and advisory		5,259		-		-		5,259		-		5,259
Principal transactions and other income		176		1,134		(6,797)		(5,487)		-		(5,487)
Total revenues		37,948		14,695		(6,797)		45,846		-		45,846
Total operating expenses		41,784		8,084		239		50,107		9,879		59,986
Operating income / (loss)		(3,836)		6,611		(7,036)		(4,261)		(9,879)		(14,140)
Income / (loss) from equity method affiliates		-		433		1,282		1,715		-		1,715
Other non-operating income / (expense)		(164)		(8)		-		(172)		(2,939)		(3,111)
Income / (loss) before income taxes		(4,000)		7,036		(5,754)		(2,718)		(12,818)		(15,536)
Income tax expense / (benefit)		(78)		-		-		(78)		(1,683)		(1,761)
Net income / (loss)		(3,922)		7,036		(5,754)		(2,640)		(11,135)		(13,775)
Less: Net income / (loss) attributable to the
non-controlling interest		(8)		-		-		(8)		(4,461)		(4,469)
Net income / (loss) attributable to IFMI	$	(3,914)	$	7,036	$	(5,754)	$	(2,632)	$	(6,674)	$	(9,306)
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	592	$	225	$	-	$	817	$	219	$	1,036

SEGMENT INFORMATION
Statement of Operations Information
Nine Months Ended September 30, 2012
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	51,311	$	-	$	-	$	51,311	$	-	$	51,311
Asset management		-		18,010		-		18,010		-		18,010
New issue and advisory		4,024		-		-		4,024		(1,000)		3,024
Principal transactions and other income		68		728		(1,278)		(482)		-		(482)
Total revenues		55,403		18,738		(1,278)		72,863		(1,000)		71,863
Total operating expenses		56,793		6,995		592		64,380		8,700		73,080
Operating income / (loss)		(1,390)		11,743		(1,870)		8,483		(9,700)		(1,217)
Income / (loss) from equity method affiliates		-		1,173		1,516		2,689		-		2,689
Other non-operating income / (expense)		(3,974)		-		-		(3,974)		(3,484)		(7,458)
Income / (loss) before income taxes		(5,364)		12,916		(354)		7,198		(13,184)		(5,986)
Income tax expense / (benefit)		-		-		-		-		108		108
Net income / (loss)		(5,364)		12,916		(354)		7,198		(13,292)		(6,094)
Less: Net income / (loss) attributable to the
non-controlling interest		(249)		-		-		(249)		(1,916)		(2,165)
Net income / (loss) attributable to IFMI	$	(5,115)	$	12,916	$	(354)	$	7,447	$	(11,376)	$	(3,929)
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	658	$	10	$	-	$	668	$	355	$	1,023

SEGMENT INFORMATION
Statement of Operations Information
Three Months Ended September 30, 2013
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	7,824	$	-	$	-	$	7,824	$	-	$	7,824
Asset management		-		4,644		-		4,644		-		4,644
New issue and advisory		3,692		-		-		3,692		-		3,692
Principal transactions and other income		32		236		1,658		1,926		-		1,926
Total revenues		11,548		4,880		1,658		18,086		-		18,086
Total operating expenses		13,248		2,471		77		15,796		3,460		19,256
Operating income / (loss)		(1,700)		2,409		1,581		2,290		(3,460)		(1,170)
Income / (loss) from equity method affiliates		-		101		-		101		-		101
Other non-operating income / (expense)		(55)		(1)		-		(56)		(991)		(1,047)
Income / (loss) before income taxes		(1,755)		2,509		1,581		2,335		(4,451)		(2,116)
Income tax expense / (benefit)		(37)		-		-		(37)		(1,770)		(1,807)
Net income / (loss)		(1,718)		2,509		1,581		2,372		(2,681)		(309)
Less: Net income / (loss) attributable to the
non-controlling interest		7		-		-		7		(212)		(205)
Net income / (loss) attributable to IFMI	$	(1,725)	$	2,509	$	1,581	$	2,365	$	(2,469)	$	(104)
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	202	$	93	$	-	$	295	$	72	$	367

SEGMENT INFORMATION
Statement of Operations Information
Three Months Ended September 30, 2012
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Net trading	$	13,669	$	-	$	-	$	13,669	$	-	$	13,669
Asset management		-		8,465		-		8,465		-		8,465
New issue and advisory		2,758		-		-		2,758		(1,000)		1,758
Principal transactions and other income		102		335		3,737		4,174		-		4,174
Total revenues		16,529		8,800		3,737		29,066		(1,000)		28,066
Total operating expenses		19,117		4,153		436		23,706		1,204		24,910
Operating income / (loss)		(2,588)		4,647		3,301		5,360		(2,204)		3,156
Income / (loss) from equity method affiliates		-		475		172		647		-		647
Other non-operating income / (expense)		250		-		-		250		(1,035)		(785)
Income / (loss) before income taxes		(2,338)		5,122		3,473		6,257		(3,239)		3,018
Income tax expense / (benefit)		-		-		-		-		54		54
Net income / (loss)		(2,338)		5,122		3,473		6,257		(3,293)		2,964
Less: Net income / (loss) attributable to the
non-controlling interest		(11)		-		-		(11)		967		956
Net income / (loss) attributable to IFMI	$	(2,327)	$	5,122	$	3,473	$	6,268	$	(4,260)	$	2,008
Other statement of operations data
Depreciation and amortization (included in
total operating expense)	$	206	$	3	$	-	$	209	$	80	$	289

(1)Unallocated includes certain expenses incurred by indirect overhead and support departments (such as the executive, finance, legal, information technology, human resources, risk, compliance, and other similar overhead and support departments). Some of the items not allocated include: (1) operating expenses (such as cash compensation and benefits, equity-based compensation expense, professional fees, travel and entertainment, consulting fees, and rent) related to support departments excluding certain departments that directly support the Capital Markets business segment; (2) interest expense on corporate debt; and (3) income taxes. Management does not consider these items necessary for an understanding of the operating results of these business segments and such amounts are excluded in business segment reporting to the Chief Operating Decision Maker. During the third quarter of 2012, PrinceRidge (capital markets segment) entered into an intercompany engagement with CCFL (asset management segment). This intercompany transaction was eliminated in the unallocated segment

Reconciliation Of Assets From Segment To Consolidated

Balance Sheet Data
As of September 30, 2013
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Total Assets	$	226,490	$	7,839	$	29,026	$	263,355	$	10,591	$	273,946
Included within total assets:
Investment in equity method affiliates	$	-	$	25	$	17	$	42	$	-	$	42
Goodwill (2)	$	7,937	$	3,176	$	-	$	11,113	$	-	$	11,113
Intangible assets (2)	$	332	$	227	$	-	$	559	$	-	$	559

Balance Sheet Data
As of September 30, 2012
	Capital		Asset		Principal		Segment		Unallocated
	Markets		Management		Investing		Total		(1)		Total
Total Assets	$	383,283	$	6,597	$	44,966	$	434,846	$	12,756	$	447,602
Included within total assets:
Investment in equity method affiliates	$	-	$	513	$	5,497	$	6,010	$	-	$	6,010
Goodwill (2)	$	7,937	$	3,176	$	-	$	11,113	$	-	$	11,113
Intangible assets (2)	$	372	$	-	$	-	$	372	$	-	$	372

(1)Unallocated assets primarily include (1) amounts due from related parties; (2) furniture and equipment, net; and (3) other assets that are not considered necessary for an understanding of business segment assets and such amounts are excluded in business segment reporting to the Chief Operating Decision Maker.

(2)Goodwill and intangible assets as of September 30, 2013 and 2012 are allocated to the Capital Markets and Asset Management business segments as indicated in the table from above.

Revenue By Geographic Area

GEOGRAPHIC DATA
(Dollars in Thousands)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Total Revenues:
United States	$	15,670	$	22,750	$	36,879	$	60,253
United Kingdom & Other		1,659		5,316		7,155		11,610
Asia		757		-		1,812		-
Total	$	18,086	$	28,066	$	45,846	$	71,863

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2013

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

8. DERIVATIVE FINANCIAL INSTRUMENTS

FASB ASC 815, Derivatives and Hedging (“FASB ASC 815”), provides for optional hedge accounting. When a derivative is deemed to be a hedge and certain documentation and effectiveness testing requirements are met, reporting entities are allowed to record all or a portion of the change in the fair value of a designated hedge as an adjustment to other comprehensive income (“OCI”) rather than as a gain or loss in the statements of operations. To date, the Company has not designated any derivatives as hedges under the provisions included in FASB ASC 815.

Derivative financial instruments are recorded at fair value. If the derivative was entered into as part of the Company’s broker-dealer operations, it will be included as a component of investments-trading or trading securities sold, not yet purchased. If it is entered into as an economic hedge for another financial instrument included in other investments, at fair value then the derivative will be included as a component of other investments, at fair value. The Company may, from time to time, enter into derivatives to manage its risk exposures (i) arising from fluctuations in foreign currency rates with respect to the Company’s investments in foreign currency denominated investments; (ii) arising from the Company’s investments in interest rate sensitive investments; and (iii) arising from the Company’s facilitation of mortgage-backed trading. Derivatives entered into by the Company, from time to time, may include (i) foreign currency forward contracts; (ii) Eurodollar futures; and (iii) purchase and sale agreements of TBAs. TBAs are forward mortgage-backed securities whose collateral remain “to be announced” until just prior to the trade settlement. TBAs are accounted for as derivatives under FASB ASC 815 when either of the following conditions exists: (i) when settlement of the TBA trade is not expected to occur at the next regular settlement date (which is typically the next month) or (ii) a mechanism exists to settle the contract on a net basis. Otherwise, TBAs are recorded as a standard security trade. The settlement of these transactions is not expected to have a material effect on the Company’s consolidated financial statements.

Derivatives involve varying degrees of off-balance sheet risk, whereby changes in the level or volatility of interest rates or market values of the underlying financial instruments may result in changes in the value of a particular financial instrument in excess of its carrying amount. Depending on the Company’s investment strategy, realized and unrealized gains and losses are recognized in principal transactions and other income or in net trading in the Company’s consolidated statements of operations on a trade date basis.

The Company may, from time to time, enter into the following derivative instruments:

Foreign Currency Forward Contracts

The Company invests in foreign currency denominated investments that expose it to fluctuations in foreign currency rates, and, therefore, the Company may, from time to time, hedge such exposure by using foreign currency forward contracts.  The Company carries the foreign currency forward contracts at fair value and includes them as a component of other investments, at fair value in the Company’s consolidated balance sheets.  As of September 30, 2013, the Company had outstanding foreign currency forward contracts with a notional amount of 1.25 billion Japanese Yen. As of December 31, 2012, the Company had no outstanding foreign currency forward contracts.

TBAs

The Company trades U.S. government agency obligations. In connection with these activities, the Company may be required to maintain inventory in order to facilitate customer transactions. In order to mitigate exposure to market risk, the Company enters in to the purchase and sale of TBAs. The Company carries the TBAs at fair value and includes them as a component of investments—trading or trading securities sold, not yet purchased in the Company’s consolidated balance sheets. At September 30, 2013, the Company had open TBA sale agreements in the notional amount of $60,736 and open TBA purchase agreements in the notional amount of $55,692. At December 31, 2012, the Company had open TBA sale agreements in the notional amount of $40,125 and open TBA purchase agreements in the notional amount of $32,794.

The following table presents the Company’s derivative financial instruments and the amount and location of the fair value (unrealized gain / (loss)) recognized in the consolidated balance sheets as of September 30, 2013 and December 31, 2012, respectively.

DERIVATIVE FINANCIAL INSTRUMENTS-BALANCE SHEET INFORMATION
(Dollars in Thousands)
Derivative Financial Instruments Not Designated as Hedging Instruments Under FASB ASC 815	Balance Sheet Classification		September 30, 2013		December 31, 2012
TBAs	Investments-trading	$	429	$	35
Foreign currency forward contracts	Other investments, at fair value		(271)		-
TBAs	Trading securities sold, not yet purchased		(663)		(13)
		$	(505)	$	22

The following table presents the Company’s derivative financial instruments and the amount and location of the net gain (loss) recognized in the consolidated statement of operations:

DERIVATIVE FINANCIAL INSTRUMENTS-STATEMENT OF OPERATIONS INFORMATION
(Dollars in Thousands)
Derivative Financial Instruments Not Designated as Hedging Instruments Under FASB ASC 815	Income Statement Classification		Nine Months Ended September 30, 2013		Nine Months Ended September 30, 2012
Foreign currency forward contracts	Revenues-principal transactions and other income	$	(481)	$	(323)
TBAs	Revenues-net trading		2,608		680
		$	2,127	$	357

DERIVATIVE FINANCIAL INSTRUMENTS-STATEMENT OF OPERATIONS INFORMATION
(Dollars in Thousands)
Derivative Financial Instruments Not Designated as Hedging Instruments Under FASB ASC 815	Income Statement Classification		Three Months Ended September 30, 2013		Three Months Ended September 30, 2012
Foreign currency forward contracts	Revenues-principal transactions and other income	$	(119)	$	(288)
TBAs	Revenues-net trading		591		426
		$	472	$	138

In addition to the above activities related to TBAs, the Company also enters into TBAs in order to assist clients (generally small to mid-size mortgage loan originators) in hedging the interest rate risk associated with the mortgages owned by the clients. In general, the Company will enter into a TBA purchase agreement with the client. Then, the Company will immediately enter into a TBA sale agreement with identical terms and settlement date with a separate counterparty. The Company seeks to profit through a small mark-up in the price of the transaction. The TBAs will match underlying terms and settlement dates. Because the Company has purchased and sold the same security, it is no longer exposed to market movements of the underlying TBA. The gain or loss on the transaction is recorded as a component of net trading in the consolidated statement of operations and is included in due to or due from broker in the consolidated balance sheet until it settles. As of September 30, 2013, the Company had unsettled TBA purchase contracts and offsetting TBA sale agreements in the notional amount of $292,350. The net profit on these transactions is recorded as a component of net trading revenue and is included as a component of TBA revenue in the table above. Any revenue on trades that have not yet settled is included as a component of due to or due from brokers, dealers, and clearing agencies.

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Permanent Equity (Schedule Of Unrestricted Common Stock Activity) (Details)	9 Months Ended
	Sep. 30, 2013
Permanent Equity [Abstract]
Balance, Shares	10,794,725
Shares issued in connection with the redemption of Operating LLC units	186,339
Shares issued in connection with private placement	2,749,167
Vesting of shares	586,736
Shares withheld for employee taxes	(24,634)
Balance, Shares	14,292,333

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Acquisition And Private Investment In IFMI

9 Months Ended

Sep. 30, 2013

Acquisition And Private Investment In IFMI [Abstract]

Acquisition And Private Investment In IFMI

4. ACQUISITION AND PRIVATE INVESTMENT IN IFMI

Acquisition of Star Asia Manager

Effective March 1, 2013, Star Asia Manager repurchased its outstanding equity units held by Star Asia Mercury LLC (formerly, Mercury Partners, LLC) (“Mercury”). Star Asia Manager repurchased the units from Mercury for $425 and a note payable of $725. Under the note payable, interest accrues at a variable rate and there is no stated maturity date. See note 12. This agreement between Star Asia Manager and Mercury is referred to herein as the “Star Asia Manager Repurchase Transaction.”

Prior to the Star Asia Manager Repurchase Transaction, the Company owned 50% of the voting interests in Star Asia Manager and Mercury owned 50%. The Company accounted for its investment under the equity method of accounting. As a result of the Star Asia Manager Repurchase Transaction, the Company obtained 100% voting control of Star Asia Manager. Because the transaction resulted in the Company obtaining control, the Company accounted for the transaction as a business combination as called for under Accounting Standards Codification (“ASC”) 805, Business Combinations. Subsequent to the Star Asia Manager Repurchase Transaction, the Company included Star Asia Manager in its consolidated financial statements.

Under ASC 805, if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report provisional amounts. For a period of up to one year subsequent to the acquisition date (the measurement period), the Company can adjust the provisional amounts as it obtains new information regarding the facts and circumstances that existed at the acquisition date. The following table summarizes the provisional amounts of the identified assets acquired and liabilities assumed at the acquisition date as of March 1, 2013 (dollars in thousands):

	Total Estimated Fair Value as of Acquisition Date
Assets acquired:
Cash and cash equivalents	$	1,104
Due from related parties		253
Other assets		150
Liabilities assumed:
Accounts payable and other liabilities		(55)
Fair value of net assets acquired		1,452
Purchase price (1)		1,855
Intangible Asset (2)	$	403

As provisional amounts, the amounts in the table above are subject to changes during the measurement period. See notes 11 and 19.

(1)The purchase price represents the cash paid to Mercury of $425; the note payable to Mercury of $725; and the Company’s equity method investment immediately prior to the Star Asia Manager Repurchase Transaction. For purposes of the provisional amounts, the Company has assumed the carrying value of the Company’s equity method investment immediately prior to the Star Asia Manager Repurchase Transaction approximated fair value. As with all provisional purchase accounting amounts, this is subject to adjustment during the measurement period.

(2)For purposes of the provisional purchase accounting, the Company determined that the excess of the purchase price over the net fair value of tangible assets acquired should entirely be allocated to an intangible asset representing the value of Star Asia Manager’s investment management contract with Star Asia. The Company treated the estimated value as an intangible asset with a finite life. The Company will amortize the intangible asset using the straight-line method over the estimated economic life of the asset of 1.3 years. The intangible asset was allocated to the Asset Management business segment. See note 18. As with all provisional purchase accounting amounts, this is subject to adjustment during the measurement period.

For the nine months ended September 30, 2013, Star Asia Manager (since its acquisition on March 1, 2013) has contributed $1,812 in revenue and $1,019 in net income to the Company.  The following unaudited pro forma summary presents consolidated information of the Company as if the acquisition had occurred on January 1, 2012:

	Pro Forma
	Nine Months Ended
	September 30,
	2013		2012
	(dollars in thousands)
Revenue	$	46,426	$	74,772
Earnings (loss) attributable to IFMI	$	(9,326)	$	(3,512)

Investments by Mead Park Capital and EBC 2013 Family Trust (“EBC”)

On May 9, 2013, the Company entered into definitive agreements (the “definitive agreements” with Mead Park Capital Partners LLC (“Mead Park Capital”) and CBF (an entity owned solely by Daniel G. Cohen), the Vice Chairman of the Company’s Board of Directors and of the board of managers of the Operating LLC, President and Chief Executive of the Company’s European Business, and President of CCFL), pursuant to which each committed to make investments in the Company, totaling $13,746 in the aggregate. Mead Park Capital is a vehicle advised by Mead Park Advisors LLC (“Mead Park”) (a registered investment advisor) and is controlled by Jack J. DiMaio, Jr., Chief Executive Officer and founder of Mead Park and Chairman of the Company’s Board of Directors. The investment and related actions were unanimously approved by the Company’s Board of Directors (with Daniel G. Cohen abstaining) following the recommendation of the Board’s Special Committee of the Board of Directors, which was formed in connection with the transaction and was comprised of three of the Company’s independent directors. The Company obtained shareholder approval of the share issuances contemplated by the definitive agreements at the Company’s 2013 Annual Meeting of Stockholders on September 24, 2013.

In connection with the closing of the transactions contemplated by the definitive agreements, on September 25, 2013, Mead Park Capital purchased 1,949,167 shares of the Company’s common stock and EBC, as assignee of CBF, purchased 800,000 shares of the Company’s common stock, in each case, at $2.00 per share for a combined investment of $5,498. Mead Park Capital also purchased convertible senior promissory notes in the aggregate principal amount of $5,848, which are convertible in accordance with the terms of the note into 1,949,167 shares at $3.00 per share. In addition, EBC, as assignee of CBF, purchased a convertible senior promissory note in the aggregate principal amount of $2,400, which is convertible into 800,000 shares at $3.00 per share.  Daniel G. Cohen is a trustee of EBC. The convertible notes issued under the definitive agreements and described above (the “8.0% Convertible Notes”) have an 8.0% annual interest rate and will mature on September 25, 2018.   See note 12 for a discussion about the 8.0% Convertible Notes.

In connection with the transactions contemplated by the definitive agreements, on May 9, 2013, the Company’s Board of Directors adopted a Section 382 Rights Agreement (the “Rights Agreement”) in an effort to protect stockholder value by attempting to protect against a possible limitation on the Company’s ability to use its net operating loss and net capital loss carry forwards (the “deferred tax assets”) to reduce potential future federal income tax obligations. The Company’s Board of Directors authorized and declared a dividend distribution of one right for each share of the Company’s common stock outstanding at the close of business on May 20, 2013.  Each right entitles the registered holder to purchase from the Company one ten-thousandth of a share of the Company’s Series C Junior Participating Preferred Stock at an exercise price of $100.00 per one ten-thousandth of a share of the Company’s Series C Junior Participating Preferred Stock, subject to adjustment.

The rights will become exercisable following (i) the 10th day after a public announcement that a person or group of affiliated or associated persons has acquired beneficial ownership of 4.95% or more of the Company’s common stock or (ii) the 10th business day following the commencement of a tender offer or exchange offer that would result in a person or group having ownership of 4.95% or more of the Company’s common stock.  

The Rights Agreement has no voting privileges and will expire on the earliest of (i) the close of business on October 1, 2016, (ii) the time at which the rights are redeemed pursuant to the Rights Agreement, (iii) the time at which the Rights are exchanged pursuant to the Rights Agreement, (iv) the repeal of Section 382 of the Internal Revenue Code or any successor statute if the Company’s Board of Directors determines that the Rights Agreement is no longer necessary or desirable for the preservation of certain tax benefits, and (v) the beginning of the taxable year of the Company to which the Company’s Board of Directors determines that certain tax benefits may not be carried forward.

No rights were exercisable at September 30, 2013. There was no impact to the Company’s financial results as a result of the adoption of the Rights Agreements. The terms and the conditions of the rights are set forth in the Section 382 Rights Agreement attached as Exhibit 4.1 to the IFMI’s Form 8-K filed with the Securities and Exchange Commission on May 13, 2013.

In connection with the September 25, 2013 closing of the transactions contemplated by the definitive agreements, Mr. DiMaio and Christopher Ricciardi, a partner in Mead Park and the former President of the Company, were elected to the Company’s Board of Directors. Mr. DiMaio was also named Chairman of the Company’s Board of Directors and Mr. Cohen was named Vice Chairman of the Company’s Board of Directors. In addition, the Company’s Board of Directors was reduced from ten to eightmembers. 

In June 2013, the Company appointed Lester Brafman as President of the Company. In September 2013, the Company appointed Mr. Brafman as the Chief Executive Officer of the Company. In September 2013, Mr. Cohen transitioned his role as Chief Executive Officer and Chief Investment Officer of the Company, to serve as President and Chief Executive Officer of the Company’s European Business and President of CCFL. 

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Operating activities
Net income / (loss)	$ (13,775)	$ (6,094)
Adjustments to reconcile net income / (loss) to net cash provided by (used in) operating activities:
Other (income) / expense		(86)
Equity-based compensation	1,761	434
Realized loss / (gain) on other investments	(602)	(1,407)
Change in unrealized (gain) loss on other investments, at fair value	9,316	3,245
Depreciation and amortization	1,036	1,023
(Income) / loss from equity method affiliates	(1,715)	(2,689)
Change in operating assets and liabilities, net:
(Increase) decrease in other receivables	3,675	(1,310)
(Increase) decrease in investments-trading	90,557	(80,308)
(Increase) decrease in other assets	(1,216)	142
(Increase) decrease in receivables under resale agreement	(24,757)	(23,061)
Change in receivables from / payables to related parties, net	(213)	(18)
Increase (decrease) in accrued compensation	(3,091)	1,396
Increase (decrease) in accounts payable and other liabilities	(6,181)	(2,251)
Increase (decrease) in trading securities sold, not yet purchased, net	9,165	(43,813)
Change in receivables from / payables to brokers, dealers, and clearing agencies, net	(94,032)	145,756
Increase (decrease) in securities sold under agreement to repurchase	24,583	18,303
Increase (decrease) in deferred income taxes	(297)	414
Net cash provided by (used in) operating activities	(5,786)	9,676
Investing activities
Cash acquired from acquisition of Star Asia Manager, net	679
Purchase of other investments, at fair value	(1,064)	(290)
Sales and returns of principal of other investments, at fair value	1,666	48
Sales of cost method investment		1,937
Investment in equity method affiliates	(10)	(4,706)
Return from equity method affiliates	2,888	7,325
Purchase of furniture, equipment, and leasehold improvements	(726)	(101)
Net cash provided by (used in) investing activities	3,433	4,213
Financing activities
Proceeds from issuance of convertible debt	8,248
Repayment and repurchase of debt	(907)	(11,446)
Payments for deferred issuance and financing costs	(638)
Proceeds from private placement, net of offering costs of $425	5,073
Cash used to net share settle equity awards	(60)	(3)
Redemption of redeemable non-controlling interest, net	(317)	(6,152)
Distributions to mandatorily redeemable equity interests	(86)	(790)
Distributions to non-controlling interest	(318)	(315)
Dividends	(737)	(646)
Net cash used in financing activities	10,258	(19,352)
Effect of exchange rate on cash	(92)	118
Net increase (decrease) in cash and cash equivalents	7,813	(5,345)
Cash and cash equivalents, beginning of period	14,500	18,221
Cash and cash equivalents, end of period	$ 22,313	$ 12,876

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Receivables From And Payables To Brokers, Dealers, And Clearing Agencies (Schedule Of Due To (From) Broker-Dealers And Clearing Organizations) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Receivables from Brokers-Dealers and Clearing Organizations [Abstract]
Deposits with clearing organizations	$ 1,417	$ 1,516
Unsettled regular way trades, net	13,111	9,653
Receivable from clearing organizations	953	1,084
Receivables from brokers, dealers, and clearing agencies	15,481	12,253
Payables to Broker-Dealers and Clearing Organizations [Abstract]
Margin payable	5,406	96,211
Payables to brokers, dealers, and clearing agencies	$ 5,406	$ 96,211

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Acquisition And Private Investment In IFMI (Narrative, Part I) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Business Acquisition [Line Items]
Revenues	$ 18,086	$ 28,066	$ 45,846	$ 71,863
Net income / (loss)	(309)	2,964	(13,775)	(6,094)
Star Asia Manager [Member]
Business Acquisition [Line Items]
Business Acquisition, Cost of Acquired Entity, Cash Paid			425
Business Combination, Consideration Transferred, Liabilities Incurred			725
Business Combination, Step Acquisition, Equity Interest in Acquiree, Percentage	50.00%		50.00%
Business Combination, Step Acquisition, Equity Interest in Acquiree, Including Subsequent Acquisition, Percentage	100.00%		100.00%
Revenues			1,812
Net income / (loss)			$ 1,019

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Segment and Geographic Information (Reconciliation Of Assets From Segment To Consolidated) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012	Sep. 30, 2012
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	$ 273,946		$ 341,001	$ 447,602
Investment in equity method affiliates	42			6,010
Goodwill	11,113		11,113	11,113
Intangible assets	559			372
Operating Segments [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	263,355			434,846
Investment in equity method affiliates	42			6,010
Goodwill	11,113	[1]		11,113	[1]
Intangible assets	559	[1]		372	[1]
Unallocated [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	10,591	[2]		12,756	[2]
Capital Markets [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	226,490			383,283
Goodwill	7,937	[1]		7,937	[1]
Intangible assets	332	[1]		372	[1]
Asset Management Segment [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	7,839			6,597
Investment in equity method affiliates	25			513
Goodwill	3,176	[1]		3,176	[1]
Intangible assets	227	[1]
Principal investing [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	29,026			44,966
Investment in equity method affiliates	$ 17			$ 5,497

[1] Goodwill and intangible assets as of September 30, 2013 and 2012 are allocated to the Capital Markets and Asset Management business segments as indicated in the table from above.

[2] Unallocated assets primarily include (1) amounts due from related parties; (2) furniture and equipment, net; and (3) other assets that are not considered necessary for an understanding of business segment assets and such amounts are excluded in business segment reporting to the Chief Operating Decision Maker.

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Receivables From And Payables To Brokers, Dealers, And Clearing Agencies (Tables)

9 Months Ended

Sep. 30, 2013

Receivables from and Payables to Brokers, Dealers, and Clearing Agencies [Abstract]

Schedule Of Due To (From) Broker-Dealers And Clearing Organizations

Amounts receivable from brokers, dealers, and clearing agencies consisted of the following at September 30, 2013 and December 31, 2012, respectively.

RECEIVABLES FROM BROKERS, DEALERS AND CLEARING AGENCIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Deposits with clearing organizations	$	1,417	$	1,516
Unsettled regular way trades, net		13,111		9,653
Receivable from clearing organizations		953		1,084
Receivables from brokers, dealers, and clearing agencies	$	15,481	$	12,253

Receivable from clearing organizations represents un-invested cash held by the clearing organization, which includes cash proceeds from short sales.

Amounts payable to brokers, dealers, and clearing agencies consisted of the following at September 30, 2013 and December 31, 2012, respectively.

PAYABLES TO BROKERS, DEALERS AND CLEARING AGENCIES
(Dollars in Thousands)
	September 30, 2013		December 31, 2012
Margin payable	$	5,406	$	96,211
Payables to brokers, dealers, and clearing agencies	$	5,406	$	96,211

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Segment and Geographic Information (Schedule Of Segment Reporting Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Segment Reporting Information [Line Items]
Net trading	$ 7,824		$ 13,669		$ 32,513		$ 51,311
Asset management	4,644		8,465		13,561		18,010
New issue and advisory	3,692		1,758		5,259		3,024
Principal transactions and other income	1,926		4,174		(5,487)		(482)
Total revenues	18,086		28,066		45,846		71,863
Total operating expenses	19,256		24,910		59,986		73,080
Operating income / (loss)	(1,170)		3,156		(14,140)		(1,217)
Income / (loss) from equity method affiliates	101		647		1,715		2,689
Other non operating income / (expense)	(1,047)		(785)		(3,111)		(7,458)
Income / (loss) before income taxes	(2,116)		3,018		(15,536)		(5,986)
Income tax expense / (benefit)	(1,807)		54		(1,761)		108
Net income / (loss)	(309)		2,964		(13,775)		(6,094)
Less: Net income / (loss) attributable to the non-controlling interest	(205)		956		(4,469)		(2,165)
Net income / (loss) attributable to IFMI	(104)		2,008		(9,306)		(3,929)
Depreciation and amortization (included in total operating expense)	367		289		1,036		1,023
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net trading	7,824		13,669		32,513		51,311
Asset management	4,644		8,465		13,561		18,010
New issue and advisory	3,692		2,758		5,259		4,024
Principal transactions and other income	1,926		4,174		(5,487)		(482)
Total revenues	18,086		29,066		45,846		72,863
Total operating expenses	15,796		23,706		50,107		64,380
Operating income / (loss)	2,290		5,360		(4,261)		8,483
Income / (loss) from equity method affiliates	101		647		1,715		2,689
Other non operating income / (expense)	(56)		250		(172)		(3,974)
Income / (loss) before income taxes	2,335		6,257		(2,718)		7,198
Income tax expense / (benefit)	(37)				(78)
Net income / (loss)	2,372		6,257		(2,640)		7,198
Less: Net income / (loss) attributable to the non-controlling interest	7		(11)		(8)		(249)
Net income / (loss) attributable to IFMI	2,365		6,268		(2,632)		7,447
Depreciation and amortization (included in total operating expense)	295		209		817		668
Unallocated [Member]
Segment Reporting Information [Line Items]
New issue and advisory			(1,000)	[1]			(1,000)	[1]
Total revenues			(1,000)	[1]			(1,000)	[1]
Total operating expenses	3,460	[1]	1,204	[1]	9,879	[1]	8,700	[1]
Operating income / (loss)	(3,460)	[1]	(2,204)	[1]	(9,879)	[1]	(9,700)	[1]
Other non operating income / (expense)	(991)	[1]	(1,035)	[1]	(2,939)	[1]	(3,484)	[1]
Income / (loss) before income taxes	(4,451)	[1]	(3,239)	[1]	(12,818)	[1]	(13,184)	[1]
Income tax expense / (benefit)	(1,770)	[1]	54	[1]	(1,683)	[1]	108	[1]
Net income / (loss)	(2,681)	[1]	(3,293)	[1]	(11,135)	[1]	(13,292)	[1]
Less: Net income / (loss) attributable to the non-controlling interest	(212)	[1]	967	[1]	(4,461)	[1]	(1,916)	[1]
Net income / (loss) attributable to IFMI	(2,469)	[1]	(4,260)	[1]	(6,674)	[1]	(11,376)	[1]
Depreciation and amortization (included in total operating expense)	72	[1]	80	[1]	219	[1]	355	[1]
Capital Markets [Member]
Segment Reporting Information [Line Items]
Net trading	7,824		13,669		32,513		51,311
New issue and advisory	3,692		2,758		5,259		4,024
Principal transactions and other income	32		102		176		68
Total revenues	11,548		16,529		37,948		55,403
Total operating expenses	13,248		19,117		41,784		56,793
Operating income / (loss)	(1,700)		(2,588)		(3,836)		(1,390)
Other non operating income / (expense)	(55)		250		(164)		(3,974)
Income / (loss) before income taxes	(1,755)		(2,338)		(4,000)		(5,364)
Income tax expense / (benefit)	(37)				(78)
Net income / (loss)	(1,718)		(2,338)		(3,922)		(5,364)
Less: Net income / (loss) attributable to the non-controlling interest	7		(11)		(8)		(249)
Net income / (loss) attributable to IFMI	(1,725)		(2,327)		(3,914)		(5,115)
Depreciation and amortization (included in total operating expense)	202		206		592		658
Asset Management Segment [Member]
Segment Reporting Information [Line Items]
Asset management	4,644		8,465		13,561		18,010
Principal transactions and other income	236		335		1,134		728
Total revenues	4,880		8,800		14,695		18,738
Total operating expenses	2,471		4,153		8,084		6,995
Operating income / (loss)	2,409		4,647		6,611		11,743
Income / (loss) from equity method affiliates	101		475		433		1,173
Other non operating income / (expense)	(1)				(8)
Income / (loss) before income taxes	2,509		5,122		7,036		12,916
Net income / (loss)	2,509		5,122		7,036		12,916
Net income / (loss) attributable to IFMI	2,509		5,122		7,036		12,916
Depreciation and amortization (included in total operating expense)	93		3		225		10
Principal investing [Member]
Segment Reporting Information [Line Items]
Principal transactions and other income	1,658		3,737		(6,797)		(1,278)
Total revenues	1,658		3,737		(6,797)		(1,278)
Total operating expenses	77		436		239		592
Operating income / (loss)	1,581		3,301		(7,036)		(1,870)
Income / (loss) from equity method affiliates			172		1,282		1,516
Income / (loss) before income taxes	1,581		3,473		(5,754)		(354)
Net income / (loss)	1,581		3,473		(5,754)		(354)
Net income / (loss) attributable to IFMI	$ 1,581		$ 3,473		$ (5,754)		$ (354)

[1] Unallocated includes certain expenses incurred by indirect overhead and support departments (such as the executive, finance, legal, information technology, human resources, risk, compliance, and other similar overhead and support departments). Some of the items not allocated include: (1) operating expenses (such as cash compensation and benefits, equity-based compensation expense, professional fees, travel and entertainment, consulting fees, and rent) related to support departments excluding certain departments that directly support the Capital Markets business segment; (2) interest expense on corporate debt; and (3) income taxes. Management does not consider these items necessary for an understanding of the operating results of these business segments and such amounts are excluded in business segment reporting to the Chief Operating Decision Maker. During the third quarter of 2012, PrinceRidge (capital markets segment) entered into an intercompany engagement with CCFL (asset management segment). This intercompany transaction was eliminated in the unallocated segment.

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Subsequent Events (Details) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Subsequent Event [Line Items]
Repayments of Debt	$ 907,000	$ 11,446,000
Interest Paid	2,055,000	3,655,000
Subsequent Event [Member]
Subsequent Event [Line Items]
Debt Instrument, Repurchased Face Amount	5,000,000
Repayments of Debt	5,238,000
Interest Paid	$ 238,000

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Other Assets And Accounts Payable And Other Liabilities (Schedule Of Other Assets) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Schedule of other assets
Deferred costs	$ 638
Note receivable	1,565
Prepaid expenses	2,423	2,329
Prepaid income taxes	181
Security deposits	2,625	2,755
Miscellaneous other assets	612	24
Cost method investment	235
Furniture, equipment and leasehold improvements, net	2,218	2,273
Intangible assets	559	332
Equity method affiliates	42	1,910
Other assets	$ 11,098	$ 9,623

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Fair Value Disclosures (Schedule Of Assets And Liabilities Measured With Level 3 Inputs) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance							$ 42,748
Transfers out of Level 3							(267)
Level 3 inputs, Ending balance			39,236				39,236
Change in unrealized gains /(losses) for the period included in earnings							(3,245)	[1]
Principal Investing [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income							(3,245)
Trading Securities [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance	221		248		295		5,188
Transfers into Level 3	0		0		0		0
Transfers out of Level 3	0		0		0		0
Purchases	37		636		37		3,158
Sales	(43)				(153)		(7,323)
Level 3 inputs, Ending balance	480		989		480		989
Change in unrealized gains /(losses) for the period included in earnings	221	[1]	105	[1]	147	[1]	(30)	[1]
Trading Securities [Member] | Trading Revenue [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income	265		105		301		(34)
Alternative Investments [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance	25,808		37,290		37,637
Transfers into Level 3			0
Transfers out of Level 3			0		(2,834)		(267)
Purchases					302
Sales	(179)				(179)
Level 3 inputs, Ending balance	26,633		39,236		26,633		39,236
Change in unrealized gains /(losses) for the period included in earnings	1,004	[1]	1,946	[1]	(8,293)	[1]
Alternative Investments [Member] | Principal Investing [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income	1,004		1,946		(8,293)
Other Investments, Equity Securities [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance	25,750		37,193		37,560		42,393
Transfers out of Level 3					(2,834)
Purchases					302
Sales	(179)				(179)
Level 3 inputs, Ending balance	26,596		39,142		26,596		39,142
Change in unrealized gains /(losses) for the period included in earnings	1,025	[1]	1,949	[1]	(8,253)	[1]	(3,251)	[1]
Other Investments, Equity Securities [Member] | Principal Investing [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income	1,025		1,949		(8,253)		(3,251)
EuroDekania Limited [Member] | Alternative Investments [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance	2,040	[2]	2,103	[2]	2,054	[2]	2,370	[2]
Level 3 inputs, Ending balance	2,275	[2]	2,371	[2]	2,275	[2]	2,371	[2]
Change in unrealized gains /(losses) for the period included in earnings	235	[1],[2]	268	[1],[2]	221	[1],[2]	1	[1],[2]
EuroDekania Limited [Member] | Alternative Investments [Member] | Principal Investing [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income	235	[2]	268	[2]	221	[2]	1	[2]
Star Asia [Member] | Alternative Investments [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance	20,935	[3]	32,299	[3]	30,169	[3]	37,358	[3]
Level 3 inputs, Ending balance	21,118	[3]	33,925	[3]	21,118	[3]	33,925	[3]
Change in unrealized gains /(losses) for the period included in earnings	183	[1],[3]	1,626	[1],[3]	(9,051)	[1],[3]	(3,433)	[1],[3]
Star Asia [Member] | Alternative Investments [Member] | Principal Investing [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income	183	[3]	1,626	[3]	(9,051)	[3]	(3,433)	[3]
Tiptree Financial Partners L.P. [Member] | Alternative Investments [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance			2,703	[4]	2,834	[4]	2,533	[4]
Transfers out of Level 3					(2,834)	[4]
Level 3 inputs, Ending balance			2,755	[4]			2,755	[4]
Change in unrealized gains /(losses) for the period included in earnings			52	[1],[4]			222	[1],[4]
Tiptree Financial Partners L.P. [Member] | Alternative Investments [Member] | Principal Investing [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income			52	[4]			222	[4]
Star Asia Special Situations Fund [Member] | Alternative Investments [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance	2,775	[3]			2,503	[3]
Purchases					302	[3]
Sales	(179)	[3]			(179)	[3]
Level 3 inputs, Ending balance	3,203	[3]			3,203	[3]
Change in unrealized gains /(losses) for the period included in earnings	607	[1],[3]			577	[1],[3]
Star Asia Special Situations Fund [Member] | Alternative Investments [Member] | Principal Investing [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income	607	[3]			577	[3]
Other Equity Securities [Member] | Alternative Investments [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance			88				132
Level 3 inputs, Ending balance			91				91
Change in unrealized gains /(losses) for the period included in earnings			3	[1]			(41)	[1]
Other Equity Securities [Member] | Alternative Investments [Member] | Principal Investing [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income			3				(41)
Interests in securitizations [Member] | Alternative Investments [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance	58	[5]	97	[5]	77	[5]	88	[5]
Level 3 inputs, Ending balance	37	[5]	94	[5]	37	[5]	94	[5]
Change in unrealized gains /(losses) for the period included in earnings	(21)	[1],[5]	(3)	[1],[5]	(40)	[1],[5]	6	[1],[5]
Interests in securitizations [Member] | Alternative Investments [Member] | Principal Investing [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income	(21)	[5]	(3)	[5]	(40)	[5]	6	[5]
Residential Mortgage [Member] | Alternative Investments [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance							267
Transfers out of Level 3							(267)
SBA loans [Member] | Trading Securities [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Purchases	37				37
Level 3 inputs, Ending balance	276				276
Change in unrealized gains /(losses) for the period included in earnings	239	[1]			239	[1]
SBA loans [Member] | Trading Securities [Member] | Trading Revenue [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income	239				239
RMBS [Member] | Trading Securities [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance							4,932
Purchases							171
Sales							(5,120)
RMBS [Member] | Trading Securities [Member] | Trading Revenue [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income							17
Interests in securitizations [Member] | Trading Securities [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance	221	[5]	185	[5]	295	[5]	221	[5]
Purchases			636	[5]			2,861	[5]
Sales	(43)	[5]			(153)	[5]	(2,203)	[5]
Level 3 inputs, Ending balance	204	[5]	932	[5]	204	[5]	932	[5]
Change in unrealized gains /(losses) for the period included in earnings	(18)	[1],[5]	111	[1],[5]	(92)	[1],[5]	74	[1],[5]
Interests in securitizations [Member] | Trading Securities [Member] | Trading Revenue [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income	26	[5]	111	[5]	62	[5]	53	[5]
Equity securities [Member] | Trading Securities [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Level 3 inputs, Beginning balance			63				35
Purchases							126
Level 3 inputs, Ending balance			57				57
Change in unrealized gains /(losses) for the period included in earnings			(6)	[1]			(104)	[1]
Equity securities [Member] | Trading Securities [Member] | Trading Revenue [Member]
Schedule of additional information about assets and liabilities measured at fair value on a recurring basis level 3 inputs
Transactions included in income			$ (6)				$ (104)

[1] Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

[2] Hybrid Securities Fund—European.

[3] Real Estate Fund—Asian.

[4] Diversified Fund.

[5] Primarily comprised of CDOs, CLOs, and ABS.

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Segment and Geographic Information (Revenue By Geographic Area) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenues	$ 18,086	$ 28,066	$ 45,846	$ 71,863
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenues	15,670	22,750	36,879	60,253
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenues	1,659	5,316	7,155	11,610
Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenues	$ 757		$ 1,812

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Investments In Equity Method Affiliates

9 Months Ended

Sep. 30, 2013

Investments in Equity Method Affiliates [Abstract]

Investments In Equity Method Affiliates

11. INVESTMENTS IN EQUITY METHOD AFFILIATES

The Company has several investments that are accounted for under the equity method. Equity method accounting requires that the Company record its investment on the consolidated balance sheets and recognize its share of the affiliate’s net income as earnings each year. Investment in equity method affiliates is included as a component of other assets on the Company’s consolidated balance sheets.

The Company has certain equity method affiliates for which it has elected the fair value option. Those investees are excluded from the table below. Those investees are included as a component of other investments, at fair value in the consolidated balance sheets. All gains and losses (unrealized and realized) from securities classified as other investments, at fair value in the consolidated balance sheets are recorded as a component of principal transactions and other income in the consolidated statements of operations.

Effective in March 2013, the Company acquired 100% control of Star Asia Manager as a result of the Star Asia Manager Repurchase Transaction. See note 4. Prior to March 1, 2013, the Company accounted for its investment in Star Asia Manager under the equity method. Since March 1, 2013, the Company has included Star Asia Manager in its consolidated financial statements.

As of September 30, 2013, the Company had the following equity method investees (excluding equity method affiliates for which it had adopted the fair value option): (i) Deep Value GP II; (ii) Star Asia Opportunity; (iii) Star Asia Capital Management; (iv) SAA Manager; and (v) SAP GP. During the nine months ended September 30, 2013, the Company did not make an investment in SAP GP or recognize any income or loss under the equity method related to SAP GP. During the second quarter of 2013, the Company received its investment return up to an agreed upon maximum from Star Asia SPV and the Company no longer has an ownership interest in Star Asia SPV. During the third quarter of 2013, the Company received its final liquidating distribution from Deep Value GP.  The following table summarizes the activity and the earnings of the Company’s equity method affiliates and includes the activity for Star Asia Manager during the period that the Company accounted for its investment in Star Asia Manager under the equity method.

INVESTMENTS IN EQUITY METHOD AFFILIATES
(Dollars in Thousands)
	Star		Deep		Deep		Star		Star		Star Asia
	Asia		Value		Value		Asia		Asia		Capital		SAA
	Manager		GP		GP II		SPV		Opportunity		Management		Manager		Total
January 1, 2013	$	547	$	7	$	39	$	1,395	$	22	$	(92)	$	(8)	$	1,910
Investments / advances		-		-		-		-		-		-		10		10
Distributions / repayments		-		(7)		-		(2,682)		-		(99)		(100)		(2,888)
Acquisition (1)		(705)		-		-		-		-		-		-		(705)
Earnings / (loss) realized		158		-		(6)		1,287		(5)		108		173		1,715
September 30, 2013	$	-	$	-	$	33	$	-	$	17	$	(83)	$	75	$	42

(1)See note 4.

The following table summarizes the combined financial information for all equity method investees, including equity method investees for which the fair value option was elected. This aggregated summarized financial data does not represent the Company’s proportionate share of equity method investees’ assets or earnings.

SUMMARY DATA OF EQUITY METHOD INVESTEES
(Dollars in Thousands)
		September 30, 2013		December 31, 2012
Total Assets	$	388,316	$	279,874
Liabilities	$	153,899	$	96,981
Equity attributable to the investees		234,317		182,277
Non-controlling interest		100		616
Total Liabilities & Equity	$	388,316	$	279,874

		Three Months Ended September 30,				Nine Months Ended September 30,
		2013		2012		2013		2012
Net income / (loss)	$	17,496	$	9,313	$	26,431	$	(419)
Net income / (loss) attributable to the investees	$	17,456	$	9,201	$	26,947	$	(253)

See note 20 for information regarding transactions with the Company’s equity method investees.

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Fair Value Disclosures

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures

7. FAIR VALUE DISCLOSURES

Fair Value Option

The Company has elected to account for certain of its other financial assets at fair value under the fair value option provisions of FASB ASC 825, Financial Instruments (“FASB ASC 825”). The primary reason for electing the fair value option when it first became available in 2008, was to reduce the burden of monitoring the differences between the cost and the fair value of the Company’s investments, previously classified as available for sale securities, including the assessment as to whether the declines are temporary in nature and to further remove an element of management judgment. In addition, the election was made for certain investments that were previously required to be accounted for under the equity method because their fair value measurements were readily obtainable.

Such financial assets accounted for at fair value include:

•in general, securities that would otherwise qualify for available for sale treatment;

•  in general, investments in equity method affiliates where the affiliate has all of the attributes in FASB ASC 946-10-15-2 (commonly referred to as investment companies); and

•  in general, investments in residential loans.

The changes in fair value (realized and unrealized gains and losses) of these instruments for which the Company has elected the fair value option are recorded in principal transactions and other income in the consolidated statements of operations. All of the investments for which the Company has elected the fair value option are included as a component of other investments, at fair value in the consolidated balance sheets. The Company recognized net losses of $8,714 and $3,525 related to changes in fair value of investments that are included as a component of other investments, at fair value during the nine months ended September 30, 2013 and 2012, respectively. The Company recognized net gains of $1,279 and $1,683 related to changes in fair value of investments that are included as a component of other investments, at fair value during the three months ended September 30, 2013 and 2012, respectively.

Fair Value Measurements

In accordance with FASB ASC 820, Fair Value Measurements and Disclosures (“FASB ASC 820”), the Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a three level fair value hierarchy. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the hierarchy under FASB ASC 820 are described below:

Level  1Financial assets and liabilities whose values are based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level  2Financial assets and liabilities whose values are based on one or more of the following:

1.  Quoted prices for similar assets or liabilities in active markets;

2.  Quoted prices for identical or similar assets or liabilities in non-active markets;

3.  Pricing models whose inputs, other than quoted prices, are observable for substantially the full term of the asset or      liability; or

4.  Pricing models whose inputs are derived principally from or corroborated by observable market data through      correlation or other means for substantially the full term of the asset or liability.

Level  3Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the level 3 category. As a result, the unrealized gains and losses for assets and liabilities within the level 3 category presented in the tables below may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain financial assets or liabilities. There were no transfers between level 1 and level 2 of the fair value hierarchy during the three and nine months ended September 30, 2013 and 2012. Reclassifications impacting level 3 of the fair value hierarchy are reported as transfers in or transfers out of the level 3 category as of the beginning of the quarter in which reclassifications occur.

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2013 and December 31, 2012, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

FAIR VALUE MEASUREMENTS ON A RECURRING BASIS
September 30, 2013
(Dollars in Thousands)
					Significant		Significant
			Quoted Prices in		Other Observable		Unobservable
			Active Markets		Inputs		Inputs
Assets:	Fair Value		(Level 1)		(Level 2)		(Level 3)
Investments-trading:
U.S. government agency MBS and CMOs	$	9,063	$	-	$	9,063	$	-
U.S. government agency debt securities		3,517		3		3,514		-
RMBS		2,935		-		2,935		-
CMBS		300		-		300		-
U.S. Treasury securities		182		182		-		-
Interests in securitizations (1)		344		-		140		204
SBA loans		29,272		-		28,996		276
Corporate bonds and redeemable preferred stock		27,241		2,623		24,618		-
Foreign government bonds		111		-		111		-
Municipal bonds		9,169		-		9,169		-
Exchange traded funds		6		6		-		-
Certificates of deposit		3,192		-		3,192		-
Equity securities		250		143		107		-
Total investments - trading	$	85,582	$	2,957	$	82,145	$	480
Other investments, at fair value
EuroDekania (2)	$	2,275	$	-	$	-	$	2,275
Star Asia (3)		21,118		-		-		21,118
Tiptree (4)		2,317		-		2,317		-
Star Asia Special Situations Fund (3)		3,203		-		-		3,203
Other equity securities		37		24		13		-
Interests in securitizations (1)		37		-		-		37
Residential loans		292		-		292		-
Foreign currency forward contracts		(271)		(271)		-		-
Total other investments, at fair value	$	29,008	$	(247)	$	2,622	$	26,633
Liabilities
Trading securities sold, not yet purchased:
U.S. government agency MBS	$	740	$	-	$	740	$	-
U.S. Treasury securities		33,265		33,265		-		-
RMBS		35		-		35		-
SBA loans		437		-		437		-
Corporate bonds and redeemable preferred stock		12,361		247		12,114		-
Foreign government bonds		8		-		8		-
Municipal bonds		120		-		120		-
Certificates of deposit		6,366		-		6,366		-
Total trading securities sold, not yet purchased	$	53,332	$	33,512	$	19,820	$	-

(1)Primarily comprised of CDOs, CLOs, and ABS.

(2)Hybrid Securities Fund—European.

(3)Real Estate Fund—Asian.

(4)Diversified Fund.

FAIR VALUE MEASUREMENTS ON A RECURRING BASIS
December 31, 2012
(Dollars in Thousands)
					Significant		Significant
			Quoted Prices in		Other Observable		Unobservable
			Active Markets		Inputs		Inputs
Assets:	Fair Value		(Level 1)		(Level 2)		(Level 3)
Investments-trading:
U.S. government agency MBS and CMOs	$	34,592	$	-	$	34,592	$	-
U.S. government agency debt securities		21,066		-		21,066		-
RMBS		583		-		583		-
CMBS		12		-		12		-
U.S. Treasury securities		147		147		-		-
Interests in securitizations (1)		352		-		57		295
SBA loans		15,705		-		15,705		-
Corporate bonds and redeemable preferred stock		56,022		5,643		50,379		-
Foreign government bonds		448		-		448		-
Municipal bonds		37,745		-		37,745		-
Certificates of deposit		8,934		-		8,934		-
Equity securities		533		395		138		-
Total investments - trading	$	176,139	$	6,185	$	169,659	$	295
Other investments, at fair value
EuroDekania (2)	$	2,054	$	-	$	-	$	2,054
Star Asia (3)		30,169		-		-		30,169
Tiptree (4)		2,834		-		-		2,834
Star Asia Special Situations Fund (3)		2,503		-		-		2,503
Other equity securities		431		24		407		-
Interests in securitizations (1)		77		-		-		77
Residential loans		255		-		255		-
Total other investments, at fair value	$	38,323	$	24	$	662	$	37,637
Liabilities
Trading securities sold, not yet purchased:
U.S. government agency MBS	$	13	$	-	$	13	$	-
U.S. Treasury securities		19,722		19,722		-		-
Corporate bonds and redeemable preferred stock		21,976		152		21,824		-
Municipal bonds		128		-		128		-
Certificates of deposit		2,325		-		2,325		-
Equity securities		3		3		-		-
Total trading securities sold, not yet purchased	$	44,167	$	19,877	$	24,290	$	-

(1)Primarily comprised of CDOs, CLOs, and ABS.

(2)Hybrid Securities Fund—European.

(3)Real Estate Fund—Asian.

(4)Diversified Fund.

The following provides a brief description of the types of financial instruments the Company holds, the methodology for estimating fair value, and the level within the hierarchy of the estimate. The discussion that follows applies regardless of whether the instrument is included in investments-trading; other investments, at fair value; or trading securities sold, not yet purchased.

U.S. Government Agency MBS and CMOs: These are securities that are generally traded over-the-counter. The Company generally values these securities using third party quotations such as unadjusted broker-dealer quoted prices or market price quotations from third party pricing services. These valuations are based on a market approach. This is considered a level 2 valuation in the hierarchy.

U.S. Government Agency Debt Securities: Callable and non-callable U.S. government agency debt securities are measured primarily based on quoted market prices obtained from third party pricing services. Non-callableU.S. government agency debt securities are generally classified within level 1 and callable U.S. government agency debt securities are classified within level 2 of the valuation hierarchy.

RMBS and CMBS: The Company generally values these securities using third party quotations such as unadjusted broker-dealer quoted prices or market price quotations from third party pricing services. These valuations are based on a market approach. The Company generally classifies the fair value of these securities based on third party quotations within level 2 of the valuation hierarchy.

U.S. Treasury Securities:  U.S. Treasury securities include U.S. Treasury bonds and notes and the fair values of the U.S. Treasury securities are based on quoted prices in active markets. Valuation adjustments are not applied. The Company classifies the fair value of these securities within level 1 of the valuation hierarchy.

Interests in Securitizations: Interests in securitizations may be comprised of CDOs, CLOs, and ABS, which may include, but are not limited to, securities backed by auto loans, credit card receivables, or student loans. Where the Company is able to obtain independent market quotations from at least two broker-dealers and where a price within the range of at least two broker-dealers is used or market price quotations from third party pricing services is used, interests in securitizations will generally be classified as level 2 of the valuation hierarchy. These valuations are based on a market approach. The independent market quotations from broker-dealers are generally nonbinding. The Company seeks quotations from broker-dealers that historically have actively traded, monitored, issued, and been knowledgeable about interests in securitizations. The Company generally believes that to the extent that (1) it receives two quotations in a similar range from broker-dealers knowledgeable about interests in securitizations, and (2) the Company believes the broker-dealers gather and utilize observable market information such as new issue activity in the primary market, trading activity in the secondary market, credit spreads versus historical levels, bid-ask spreads, and price consensus among market participants and sources, then classification as level 2 of the valuation hierarchy is appropriate. In the absence of two broker-dealer market quotations, a single broker-dealer market quotation may be used without corroboration of the quote in which case the Company generally classifies the fair value within level 3 of the valuation hierarchy.

If quotations are unavailable, prices observed by the Company for recently executed market transactions may be used or valuation models prepared by the Company’s management may be used, which are based on an income approach. These models prepared by the Company’s management include estimates and the valuations derived from them could differ materially from amounts realizable in an open market exchange. Fair values based on internal valuation models prepared by the Company’s management are generally classified within level 3 of the valuation hierarchy.

Establishing fair value is inherently subjective given the volatile and sometimes illiquid markets for certain interests in securitizations and requires management to make a number of assumptions, including assumptions about the future of interest rates, discount rates; and the timing of cash flows. The assumptions the Company applies are specific to each security. Although the Company may rely on internal calculations to compute the fair value of certain interest in securitizations, the Company requests and considers indications of fair value from third party pricing services to assist in the valuation process.

SBA Loans: SBA loans include loans and SBA interest only strips.  In the case of loans, the Company generally values these securities using third party quotations such as unadjusted broker-dealer quoted prices, internal valuation models using observable inputs, or market price quotations from third party pricing services. The Company generally classifies these investments within level 2 of the valuation hierarchy. These valuations are based on a market approach. SBA interest only strips do not trade in an active market with readily available prices. Accordingly, the Company generally uses valuation models to determine fair value and classifies the fair value of the SBA interest only strips within level 3 of the valuation hierarchy. 

Corporate Bonds, Redeemable Preferred Stock, and Foreign Government Bonds: The Company uses recently executed transactions or third party quotations from independent pricing services to arrive at the fair value of its investments in corporate bonds, redeemable preferred stock, and foreign government bonds. These valuations are based on a market approach. The Company generally classifies the fair value of these bonds within level 2 of the valuation hierarchy. In instances where the fair values of securities are based on quoted prices in active markets (for example with redeemable preferred stock), the Company classifies the fair value of these securities within level 1 of the valuation hierarchy.

Municipal Bonds: Municipal bonds, which include obligations of U.S. states, municipalities, and political subdivisions, primarily include bonds or notes issued by U.S. municipalities. The Company generally values these securities using third party quotations such as market price quotations from third party pricing services. The Company generally classifies the fair value of these bonds within level 2 of the valuation hierarchy. The valuations are based on a market approach. In instances where the Company is unable to obtain reliable market price quotations from third party pricing services, the Company will use its own internal valuation models. In these cases, the Company will classify such securities as level 3 within the hierarchy until it is able to obtain third party pricing.

Exchange Traded Funds: Exchange traded funds are investment funds that trade in active markets, similar to public company stocks. The fair values of exchange traded funds are based on quoted prices in active markets. Valuation adjustments are not applied. The Company classifies the fair value of these securities within level 1 of the valuation hierarchy.

Equity Securities : The fair value of equity securities that represent investments in publicly traded companies (common or preferred shares, options, warrants, and other equity investments) are determined using the closing price of the security as of the reporting date. These are securities which are traded on a recognized liquid exchange. This is considered a level 1 value in the valuation hierarchy.

In some cases, the Company has owned options or warrants in newly publicly traded companies when the option or warrant itself is not publicly traded. In those cases, the Company used an internal valuation model and classified the investment within level 3 of the valuation hierarchy. The non-exchange traded equity options and warrants were measured using the Black-Scholes model with key inputs impacting the valuation including the underlying security price, implied volatility, dividend yield, interest rate curve, strike price, and maturity date. Once the securities underlying the options or warrants (not the options or warrants themselves) have quoted prices available in an active market, the Company attributes a value to the warrants using the Black-Scholes model based on the respective price of the options or warrants and the quoted prices of the securities underlying the options or warrants and key observable inputs. In this case, the Company will generally classify the options or warrants as level 2 within the valuation hierarchy because the inputs to the valuation model are now observable. If the option or warrant itself begins to trade on a liquid exchange, the Company will discontinue using a valuation model and will begin to use the public exchange price at which point it will be classified as level 1 in the valuation hierarchy.

Other equity securities represent investments in investment funds and other non-publicly traded entities. Substantially all of these other entities have the attributes of investment companies as described in FASB ASC 946-15-2. The Company estimates the fair value of these entities using the reported net asset value per share as of the reporting date in accordance with the “practical expedient” provisions related to investments in certain entities that calculate net asset value per share (or its equivalent) included in FASB ASC 820 for all entities except Star Asia. The Company generally classifies these estimates within either level 2 of the valuation hierarchy if its investment in the entity is currently redeemable or level 3 if its investment is not currently redeemable.

Prior to the second quarter of 2013, the Company carried its investment in Tiptree based on the underlying net asset value per share of the fund in accordance with the “practical expedient” provisions discussed above and the Company classified the fair value estimate within level 3 of the valuation hierarchy.  Beginning with the second quarter of 2013, the Company changed the way it calculates the fair value of its investment in Tiptree.  During the second quarter of 2013, Tiptree completed a reorganization. As a result of that reorganization, the Company’s investment in Tiptree can be exchanged into shares of Tiptree Financial, Inc. based on a stated exchange ratio (which is generally fixed, but can be adjusted for certain events, such as stock dividends or stock splits).  Tiptree Financial, Inc. is publicly traded over the counter.  Therefore, beginning with the second quarter of 2013, the Company has calculated the fair value of its investment in Tiptree by using the closing over the counter price for Tiptree Financial, Inc. and adjusting for the exchange ratio.  Based on this pricing methodology, the Company began classifying the fair value of its investment in Tiptree as level 2 within the valuation hierarchy during the second quarter of 2013.

In the case of Star Asia, the Company utilizes a valuation model to determine fair value, which uses a market approach and generally classifies its investment within level 3 of the valuation hierarchy. Star Asia accounts for itself as an investment company as described in ASC 946, Financial Services—Investment Companies. As an investment company, Star Asia carries its assets at fair value and reports net asset value (“NAV”) per share to its investors. However, Star Asia issued subordinated debt securities in 2009 at a significant discount to par. Upon issuance, Star Asia did not elect the fair value option for these liabilities and was not required to do so under ASC 946. Over time, it is the Company’s assessment that the fair value of the subordinated debt securities has diverged from its carrying value. Because Star Asia’s published NAV is calculated using the amortized cost of these subordinated debt securities, the Company has concluded it would be appropriate to adjust Star Asia’s reported NAV to recalculate it as if Star Asia’s subordinated debt were recorded at fair value as opposed to its historical amortized cost. The Company estimates the fair value of Star Asia’s subordinated debt securities by projecting the remaining debt cash outflows and discounting them at an estimated market rate as of the reporting date, which is derived from similar non-investment grade long term subordinated debt issuances.

The Company used discount rates of7.26% and6.82% as ofSeptember 30, 2013 andDecember 31, 2012, respectively, in determining the fair value of Star Asia’s subordinated debt securities. If the Company had used Star Asia’s unadjusted NAV, rather than the Company’s financial model described above in determining the fair value of the Company’s investment in Star Asia, the Company would have recorded its investment in Star Asia at a value of $39,998 and $31,907 as of December 31, 2012 and September 30, 2013, respectively, as compared to the fair value as determined by the Company’s internal valuation model of $30,169, and $21,118 as of December 31, 2012 and September 30, 2013, respectively.

Residential Loans: Management utilizes home price indices to value the residential loans. Previously, management had considered adjustments to these indices but elected at the beginning of 2012 not to adjust the indices. Adjustments to the index implied a level 3 valuation. The methodology using an unadjusted index, which is considered an observable input, implies a level 2 valuation.

Certificates of Deposit: The fair value of certificates of deposit is estimated using valuations provided by third party pricing services. Certificates of deposit are generally categorized in level 2 of the valuation hierarchy.

Derivatives:

Foreign currency Forward Contracts

Foreign currency forward contracts are exchange-traded derivatives which transact on an exchange that is deemed to be active.  The fair value of the foreign currency forward contracts is based on current quoted market prices.  Valuation adjustments are not applied.  These are considered a level 1 value in the hierarchy. See note 8.

TBAs

The Company generally values these securities using third party quotations such as unadjusted broker-dealer quoted prices or market price quotations from third party pricing services. TBAs are generally classified within level 2 of the fair value hierarchy. If there is limited transaction activity or less transparency to observe market based inputs to valuation models, TBAs are classified in level 3 of the fair value hierarchy. U.S. government agency MBS and CMOs include TBAs. Unrealized gains on TBAs are included in investments-trading on the Company’s consolidated balance sheets and unrealized losses on TBAs are included in trading securities sold, not yet purchased on the Company’s consolidated balance sheets. See note 8.

Level 3 Financial Assets and Liabilities

Financial Instruments Measured at Fair Value on a Recurring Basis

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which the Company has utilized level 3 inputs to determine fair value.

LEVEL 3 INPUTS
Nine Months Ended September 30, 2013
(Dollars in Thousands)
	December 31, 2012		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2013		Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
Interests in securitizations (2)	$	295	$	62	$	-	$	-	$	-	$	(153)	$	204	$	(92)
SBA loans		-		239		-		-		37		-		276		239
Total investments-trading	$	295	$	301	$	-	$	-	$	37	$	(153)	$	480	$	147
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,054	$	-	$	221	$	-	$	-	$	-	$	2,275	$	221
Star Asia (4)		30,169		-		(9,051)		-		-		-		21,118		(9,051)
Tiptree (5)		2,834		-		-		(2,834)		-		-		-		-
Star Asia Japan Special Situations Fund (4)		2,503		-		577		-		302		(179)		3,203		577
Total equity securities		37,560		-		(8,253)		(2,834)		302		(179)		26,596		(8,253)
Interest in securitizations (2)		77		-		(40)		-		-		-		37		(40)
Total other investments, fair value	$	37,637	$	-	$	(8,293)	$	(2,834)	$	302	$	(179)	$	26,633	$	(8,293)

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

LEVEL 3 INPUTS
Nine Months Ended September 30, 2012
(Dollars in Thousands)
		December 31, 2011		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2012	Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
RMBS	$	4,932	$	17	$	-	$	-	$	171	$	(5,120)	$	-	$	-
Interests in securitizations (2)		221		53		-		-		2,861		(2,203)		932		74
Equity securities		35		(104)		-		-		126		-		57		(104)
Total investments-trading	$	5,188	$	(34)	$	-	$	-	$	3,158	$	(7,323)	$	989	$	(30)
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,370	$	-	$	1	$	-	$	-	$	-	$	2,371	$	1
Star Asia (4)		37,358		-		(3,433)		-		-		-		33,925		(3,433)
Tiptree (5)		2,533		-		222		-		-		-		2,755		222
Other		132		-		(41)		-		-		-		91		(41)
Total equity securities		42,393		-		(3,251)		-		-		-		39,142		(3,251)
Interest in securitizations (2)		88		-		6		-		-		-		94		6
Residential loans		267		-		-		(267)		-		-		-		-
Total other investments, fair value	$	42,748	$	-	$	(3,245)	$	(267)	$	-	$	-	$	39,236	$	(3,245)

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

LEVEL 3 INPUTS
Three Months Ended September 30, 2013
(Dollars in Thousands)
		June 30, 2013		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2013	Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
Interests in securitizations (2)	$	221	$	26	$	-	$	-	$	-	$	(43)	$	204	$	(18)
SBA loans		-		239		-		-		37		-		276		239
Total investments-trading	$	221	$	265	$	-	$	-	$	37	$	(43)	$	480	$	221
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,040	$	-	$	235	$	-	$	-	$	-	$	2,275	$	235
Star Asia (4)		20,935		-		183		-		-		-		21,118		183
Star Asia Japan Special Situations Fund (4)		2,775		-		607		-		-		(179)		3,203		607
Total equity securities		25,750		-		1,025		-		-		(179)		26,596		1,025
Interest in securitizations (2)		58		-		(21)		-		-		-		37		(21)
Total other investments, fair value	$	25,808	$	-	$	1,004	$	-	$	-	$	(179)	$	26,633	$	1,004

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

LEVEL 3 INPUTS
Three Months Ended September 30, 2012
(Dollars in Thousands)
		June 30, 2012		Net trading		Principal transactions and other income		Transfers out of Level 3		Purchases		Sales		September 30, 2012	Change in unrealized gains /(losses) for the period included in earnings  (1)
Assets:
Investments-trading
Interests in securitizations (2)	$	185	$	111	$	-	$	-	$	636	$	-	$	932	$	111
Equity securities		63		(6)		-		-		-		-		57		(6)
Total investments-trading	$	248	$	105	$	-	$	-	$	636	$	-	$	989	$	105
Other investments, at fair value:
Equity Securities:
EuroDekania (3)	$	2,103	$	-	$	268	$	-	$	-	$	-	$	2,371	$	268
Star Asia (4)		32,299		-		1,626		-		-		-		33,925		1,626
Tiptree (5)		2,703		-		52		-		-		-		2,755		52
Other		88		-		3		-		-		-		91		3
Total equity securities		37,193		-		1,949		-		-		-		39,142		1,949
Interest in securitizations (2)		97		-		(3)		-		-		-		94		(3)
Total other investments, fair value	$	37,290	$	-	$	1,946	$	-	$	-	$	-	$	39,236	$	1,946

(1)Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

(2)Primarily comprised of CDOs, CLOs, and ABS.

(3)Hybrid Securities Funds—European.

(4)Real Estate Funds—Asian.

(5)Diversified Fund.

The circumstances that would result in transferring certain financial instruments from level 2 to level 3 of the valuation hierarchy would typically include what the Company believes to be a decrease in the availability, utility, and reliability of observable market information such as new issue activity in the primary market, trading activity in the secondary market, credit spreads versus historical levels, bid-ask spreads, and price consensus among market participants and sources.

Investments-trading: During the nine and three months ended September 30, 2013, there were no transfers into or out of level 3 of the valuation hierarchy.  During the nine and three months ended September 30, 2012, there were no transfers into or out of level 3 of the valuation hierarchy. 

Other investments, at fair value: During the nine months ended September 30, 2013, the Company transferred $2,834 of its investment in Tiptree from level 3 to level 2 of the valuation hierarchy. During the nine months ended September 30, 2012, the Company transferred $267 of residential loans from level 3 to level 2 of the valuation hierarchy.  During the three months ended September 30, 2013 and 2012, there were no transfers into or out of level 3 of the valuation hierarchy. 

The following table provides the quantitative information about level 3 fair value measurements as of September 30, 2013 and December 31, 2012, respectively:

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS
(Dollars in Thousands)
				Significant		Range of
		Fair Value	Valuation	Unobservable	Weighted	Significant
		September 30, 2013	Technique	Inputs	Average	Inputs
Assets
Other investments, at fair value
Star Asia	$	21,118	Adjusted NAV	Discount rate	7.26%	7.26%
				on debt

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS
(Dollars in Thousands)
				Significant		Range of
		Fair Value	Valuation	Unobservable	Weighted	Significant
		December 31, 2012	Technique	Inputs	Average	Inputs
Assets
Other investments, at fair value
Star Asia	$	30,169	Adjusted NAV	Discount rate	6.82%	6.82%
				on debt

Sensitivity of Fair Value to Changes in Significant Unobservable Inputs

For recurring fair value measurements categorized within level 3 of the fair value hierarchy, the sensitivity of the fair value measurement to changes in significant unobservable inputs and interrelationships between those unobservable inputs (if any) are described below:

•Equity investments in investment funds and other non-publicly traded entities.

With respect to the fair value measurement of investment funds and other non-publicly traded entities for which the Company uses the underlying net asset value per share to determine the fair value of the Company’s respective investment, a significant increase (decrease) in the net asset value per share, which is linked to the underlying financial performance of the respective entity, would result in a significantly higher (lower) fair value measurement.

•  Equity investment in Star Asia

With respect to the Company’s investment in Star Asia for which the Company has concluded it would be appropriate to adjust Star Asia’s reported NAV to recalculate it as if Star Asia’s subordinated debt were recorded at fair value as opposed to its historical cost. The Company estimates the fair value of Star Asia’s subordinated debt securities by projecting the remaining debt cash outflows and discounting them at an estimated market discount rate. Any change in the discount rate used in this calculation, which is linked to market yields for similar non-investment grade long term subordinated debt issuances, may result in a significant higher (lower) fair value measurement.

Investments in Certain Entities That Calculate Net Asset Value Per Share (Or Its Equivalent)

The following table presents additional information about investments in certain entities that calculate net asset value per share (regardless of whether the “practical expedient” provisions of FASB ASC 820 have been applied) which are measured at fair value on a recurring basis at September 30, 2013 and December 31, 2012:  

FAIR VALUE MEASUREMENTS OF INVESTMENTS IN CERTAIN ENTITIES
THAT CALCULATE NET ASSET VALUE PER SHARE (OR ITS EQUIVALENT)
		Fair Value
		September 30, 2013
		(dollars in thousands)		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
Other investments, at fair value
EuroDekania (a)	$	2,275		N/A	N/A	N/A
Star Asia (b)		21,118		N/A	N/A	N/A
Tiptree (c)		2,317		N/A	N/A	N/A
Star Asia Special Situations Fund (d)		3,203		N/A	N/A	N/A
	$	28,913
		Fair Value
		December 31, 2012
		(dollars in thousands)		Unfunded Commitments	Redemption Frequency	Redemption Notice Period
Other investments, at fair value
EuroDekania (a)	$	2,054		N/A	N/A	N/A
Star Asia (b)		30,169		N/A	N/A	N/A
Tiptree (c)		2,834		N/A	N/A	N/A
Star Asia Special Situations Fund (d)		2,503	$	321	N/A	N/A
	$	37,560

N/A – Not applicable.

(a)EuroDekania’s investment strategy is to make investments in hybrid capital securities that have attributes of debt and equity, primarily in the form of subordinated debt issued by insurance companies, banks and bank holding companies based primarily in Western Europe; widely syndicated leveraged loans issued by European corporations; CMBS, including subordinated interests in first mortgage real estate loans; and RMBS and other ABS backed by consumer and commercial receivables. The majority of the assets are denominated in Euros and U.K. Pounds Sterling. The fair value of the investment in this category has been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820.

(b)Star Asia’s investment strategy is to make investments in Asian real estate structured finance investments, including CMBS, corporate debt of REITs and real estate operating companies, whole loans, mezzanine loans, and other commercial real estate fixed income investments. The fair value of the investment in this category has been estimated using an internal valuation model that uses a market approach. If the Company had used Star Asia’s unadjusted reported net asset value to determine its fair value, the carrying value of its investment in Star Asia would have been $31,907 as of September 30, 2013 and $39,998 as of December 31, 2012.  

(c)The investment strategy of Tiptree is focused on investing in (a) specialty finance companies; (b) alternative asset management companies; and (c) diversified credit assets and related equity interests. Tiptree primarily seeks to acquire majority ownership interests in its investees. Prior to June 30, 2013, the fair value of this investment had been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820. Beginning with the second quarter of 2013, the Company calculates the fair value of its investment in Tiptree by using the closing over the counter price for Tiptree Financial, Inc. and adjusting for the exchange ratio.  As of September 30, 2013 and December 31, 2012, the Company owned approximately 1% of Tiptree.

(d)    The Star Asia Special Situations Fund’s investment strategy is to make investments in real estate and securities backed by real estate in Japan. The Star Asia Special Situations Fund is a closed end fund that does not allow investor redemptions. It has an initial life of three years which can be extended under certain circumstances for up to two years. The fair value of the investment in this category has been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820. The Company’s unfunded commitment was denominated in Japanese Yen and fluctuated based on the foreign exchange spot rate used at any particular period. See note 20.

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Investments in Equity Method Affiliates (Schedule Of Investments In Equity Method Affiliates) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013		Sep. 30, 2012
Schedule of Equity Method Investments [Line Items]
Balance at January 1, 2012			$ 1,910
Investments / advances			10
Distributions/repayments			(2,888)		(7,325)
Acquisition			(705)	[1]
Earnings / (loss) realized	101	647	1,715		2,689
Balance at September 30, 2013	42		42
Star Asia Manager [Member]
Schedule of Equity Method Investments [Line Items]
Balance at January 1, 2012			547
Acquisition			(705)	[1]
Earnings / (loss) realized			158
Deep Value GP [Member]
Schedule of Equity Method Investments [Line Items]
Balance at January 1, 2012			7
Distributions/repayments			(7)
Deep Value GP II [Member]
Schedule of Equity Method Investments [Line Items]
Balance at January 1, 2012			39
Earnings / (loss) realized			(6)
Balance at September 30, 2013	33		33
Star Asia SPV [Member]
Schedule of Equity Method Investments [Line Items]
Balance at January 1, 2012			1,395
Distributions/repayments			(2,682)
Earnings / (loss) realized			1,287
Star Asia Opportunity [Member]
Schedule of Equity Method Investments [Line Items]
Balance at January 1, 2012			22
Earnings / (loss) realized			(5)
Balance at September 30, 2013	17		17
Star Asia Capital Management [Member]
Schedule of Equity Method Investments [Line Items]
Balance at January 1, 2012			(92)
Distributions/repayments			(99)
Earnings / (loss) realized			108
Balance at September 30, 2013	(83)		(83)
SAA Manager [Member]
Schedule of Equity Method Investments [Line Items]
Balance at January 1, 2012			(8)
Investments / advances			10
Distributions/repayments			(100)
Earnings / (loss) realized			173
Balance at September 30, 2013	$ 75		$ 75

[1] See note 4.

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Permanent Equity

9 Months Ended

Sep. 30, 2013

Permanent Equity [Abstract]

Permanent Equity

14. PERMANENT EQUITY

Stockholders’ Equity

Common Equity: The following table reflects the activity for the nine months ended September 30, 2013 related to the number of shares of unrestricted common stock that the Company had issued as of September 30, 2013:  

	Common Stock
	Shares
December 31, 2012	10,794,725
Shares issued in connection with the redemption of Operating LLC units	186,339
Shares issued in connection with private placement	2,749,167
Vesting of shares	586,736
Shares withheld for employee taxes	(24,634)
September 30, 2013	14,292,333

In connection with the acquisition of JVB Holdings in January 2011, the Company issued 559,020 restricted units of the Operating LLC to certain of the former owners of JVB Holdings who remained employees of JVB Holdings. As of December 31, 2012, there were 372,681 restricted units outstanding. These units vest over a three year period (of which two of the three years have elapsed) and are treated as compensation for future service. In January 2013, 186,339 restricted units of the Operating LLC vested, and the holders of these vested Operating LLC membership units elected to redeem these units. The Company, at its discretion, issued 186,339 shares of IFMI common stock to the JVB Holdings sellers in exchange for these vested membership units. As of September 30, 2013, there were 186,342 restricted units outstanding.

In connection with the private placement investment under the definitive agreements in September 2013, the Company issued 2,749,167shares of the IFMI’s common stock. See notes 4 and 12.

Acquisition and Surrender of Additional Units of the Operating LLC, net: Effective January 1, 2011, IFMI and the Operating LLC entered into a Unit Issuance and Surrender Agreement (the “UIS Agreement”) which was approved by IFMI’s Board of Directors and the board of managers of the Operating LLC. In an effort to maintain a 1:1 ratio of IFMI’s common stock to the number of membership units IFMI holds in the Operating LLC, the UIS Agreement calls for the issuance of additional membership units of the Operating LLC to IFMI when IFMI issues its common stock to employees under existing equity compensation plans. In certain cases, the UIS Agreement calls for IFMI to surrender units to the Operating LLC when certain restricted shares are forfeited by the employee or repurchased.

During the nine months ended September 30, 2013, IFMI received units of the Operating LLC. The following table displays the amount of units received (net of surrenders) by IFMI pursuant to the UIS Agreement, as a result of the vesting and redemption of membership units of the Operating LLC by certain former owners of JVB Holdings for IFMI common stock, and as a result of the issuance of shares in connection with the private placement as discussed above.

	Operating LLC
	Membership Units
Units related to UIS Agreement	396,368
Units received from certain former owners of JVB Holdings	186,339
Units received from issuance of shares in connection with private placement	2,749,167
Total	3,331,874

The Company recognized a net increase in additional paid in capital of $2,705and a net decrease in accumulated other comprehensive income of $124 with an offsetting decrease in non-controlling interest of $2,581 in connection with the acquisition and surrender of additional units of the Operating LLC. The following schedule presents the effects of changes in IFMI’s ownership interest in the Operating LLC on the equity attributable to IFMI for the nine months ended:

	September 30, 2013		September 30, 2012
Net income / (loss) attributable to IFMI	$	(9,306)	$	(3,929)
Transfers (to) from the non-controlling interest:
Increase / (decrease) in IFMI's paid in capital for the
acquisition / (surrender) of additional units in consolidated
subsidiary, net		2,705		804
Changes from net income / (loss) attributable to IFMI and transfers (to) from the non-controlling interest:	$	(6,601)	$	(3,125)

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Debt

9 Months Ended

Sep. 30, 2013

Debt [Abstract]

Debt

12. DEBT

The Company had the following debt outstanding:

DETAIL OF DEBT
(Dollars in Thousands)
Description	Current Outstanding Par			September 30, 2013		December 31, 2012		Interest Rate Terms		Interest (6)		Maturity
Contingent convertible senior notes:
10.50% contingent convertible senior notes (the "New Notes")	$	8,121		$	8,096	$	8,068	10.50%		10.50	%	May 2014 (1)
8.00% contingent convertible senior notes (the "8.0% Convertible Notes")		8,248			8,248		-	8.00%		8.00	%	September 2018 (2)
	$	16,369		$	16,344		8,068
Junior subordinated notes:
Alesco Capital Trust I	$	28,125	(3)		10,563		10,189	4.25%		4.25	%	July 2037
Sunset Financial Statutory Trust I		20,000	(3)		7,518		7,248	4.40%		4.40	%	March 2035
	$	48,125			18,081		17,437
Subordinated notes payable	$	-			-		342	12.00%	(4)	12.00	%	June 2013
Star Asia Manager note payable	$	165			165		-	3.00%		3.00	%	(5)
Total				$	34,590	$	25,847

(1)Represents the holder’s earliest put date and the Company’s earliest redemption date. The contractual maturity for the New Notes is May 2027.

The Company may redeem all or part of the $8,121aggregate principal amount of the New Notes for cash on or after May 20, 2014, at a redemption price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. The holders of the New Notes may require the Company to repurchase all or a portion of the New Notes for cash on May 15, 2014; May 15, 2017; and May 15, 2022 for a repurchase price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. The holders of the New Notes are required to provide notice to the Company of their plan to redeem the New Notes at any time during the 30 days prior to May 15, 2014; May 15, 2017; and May 15, 2022.

(2)The holders of the 8.0% Convertible Notes may convert all or any part of the outstanding principal amount of the 8.0% Convertible Notes at any time prior to maturity into shares of the Company’s common stock at a conversion price of $3.00 per share, subject to customary anti-dilution adjustments.

(3)The outstanding par represents the total par amount of the junior subordinated notes held by two separate trusts. The Company does not consolidate these trusts. The Company holds $1,489 par value of these junior subordinated notes, comprised of $870 par value of junior subordinated notes related to Alesco Capital Trust I and $619 par value of junior subordinated notes related to Sunset Financial Statutory Trust I. These notes have a carrying value of $0. Therefore, the net par value held by third parties is $48,125.  

(4)Comprised of 9% paid currently and 3% paid in kind.  The subordinated note payable was fully repaid in June 2013. 

(5)The Star Asia Manager note payable has no stated maturity date. See description of payment terms below.

(6)Represents the interest rate as of the last day of the reporting period. 

Refer to note 17 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended, for a discussion of the Company’s debt.

Star Asia Manager Note Payable

In connection with the Star Asia Manager Repurchase Transaction in March 2013, Star Asia Manager had paid cash of $425 and issued to Mercury a note payable in the principal amount of $725. See notes 4 and 11. Under the note payable, interest accrues on the unpaid balance of the principal amount at a floating rate equal to three-month LIBOR plus 2.75% per annum. Payments will be made quarterly in an amount equal to 50% of cash available for distribution as defined in the note payable agreement. The Star Asia Manager note payable is pre-payable without penalty and has no stated maturity date.

Subordinated Notes Payable

In June 2013, the Company repaid in full the subordinated notes payable to an unrelated third party for a total of $352, including principal of $347 and cash and accrued paid in kind interest of $5.

8.0% Convertible Notes

In connection with the investments by Mead Park Capital and EBC, as assignee of CBF, in September 2013, the Company issued $8,248 in aggregate principal amount of convertible senior promissory notes.  The 8.0% Convertible Notes accrue 8% interest per year, payable quarterly. The 8.0% Convertible Notes mature on September 25, 2018.

The holders of the notes may convert all or any part of the outstanding principal amount of the 8.0% Convertible Notes at any time into shares of the Company’s common stock at $3.00 per share conversion price, subject to customary anti-dilution adjustments. Accordingly, based on the current principal balance, the notes will be convertible into up to an aggregate of 2,749,167 shares of common stock. However, the 8.0% Convertible Notes have certain provisions that allow for the deferral of interest payments:  (i) if dividends of less than $0.02 per share are paid on the Company’s common stock, then the Company may pay one-half of the interest payable on such date in cash, and the remaining one-half of the interest otherwise payable will be added to the principal amount of the convertible note then outstanding; and (ii) if no dividends are paid on the Company’s common stock, then the Company may make no payment in cash of the interest payable on such date, and all of the interest otherwise payable on such date will be added to the principal amount of the note then outstanding.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 29, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	INSTITUTIONAL FINANCIAL MARKETS, INC.
Entity Central Index Key	0001270436
Document Type	10-Q
Document Period End Date	Sep. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Trading Symbol	ifmi
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		14,959,809

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Supplemental Cash Flow Disclosure (Details) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012
Debt Conversion [Line Items]
Acquisition / (surrender) of additional units of consolidated subsidiary, net	$ 2,705		$ 804
Reclassification of equity method investee	705	[1]
Interest paid	2,055		3,655
Income taxes paid	331		134
Income tax refunds	46		0
Reclassification to Mandatorily Redeemable Equity Interests			6,446
Treasury Stock, Shares, Retired			50,400
Total Stockholders' Equity [Member]
Debt Conversion [Line Items]
Acquisition / (surrender) of additional units of consolidated subsidiary, net	2,581
Additional paid-in capital [Member]
Debt Conversion [Line Items]
Acquisition / (surrender) of additional units of consolidated subsidiary, net	2,705		804
Accumulated Other Comprehensive Income (Loss) [Member]
Debt Conversion [Line Items]
Acquisition / (surrender) of additional units of consolidated subsidiary, net	(124)		(27)
Non-controlling Interest [Member]
Debt Conversion [Line Items]
Acquisition / (surrender) of additional units of consolidated subsidiary, net	(2,581)		(777)
Retained Earnings/ (Accumulated Deficit) [Member]
Debt Conversion [Line Items]
Treasury Stock, Retired, Cost Method, Amount			328
Treasury Stock
Debt Conversion [Line Items]
Treasury Stock, Retired, Cost Method, Amount			(328)
Star Asia Manager [Member]
Debt Conversion [Line Items]
Reclassification of equity method investee	$ 705	[1]

[1] See note 4.

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Redeemable Non-Controlling Interest (Temporary Equity) And Mandatorily Redeemable Equity Interests

9 Months Ended

Sep. 30, 2013

Redeemable Non-Controlling Interest (Temporary Equity) [Abstract]

Redeemable Non-Controlling Interest (Temporary Equity) And Mandatorily Redeemable Equity Interests

13. REDEEMABLE NON-CONTROLLING INTEREST (TEMPORARY EQUITY) AND MANDATORILY REDEEMABLE EQUITY INTERESTS

Redeemable Non-Controlling Interest

The redeemable non-controlling interest represents the equity interests of PrinceRidge that are not owned by the Company. The members of PrinceRidge have the right to withdraw from PrinceRidge and require PrinceRidge to redeem the interests for cash over a contractual payment period. The Company accounts for these interests as temporary equity under Accounting Series Release 268 (“ASR 268”). These interests are shown outside of the permanent equity of IFMI in its consolidated balance sheet as redeemable non-controlling interests.

During the nine months ended September 30, 2012, the Company reclassified $6,446 from redeemable non-controlling interest to mandatorily redeemable equity interests on its consolidated balance sheets due to partnership withdrawals from PrinceRidge. In addition, PrinceRidge purchased $6,172 of non-controlling interests for cash during the nine months ended September 30, 2012 from existing partners, including the former chief executive officer of PrinceRidge and member of the board of managers of PrinceRidge GP, Michael T. Hutchins, and the former chairman of the board of managers of PrinceRidge GP, John P. Costas, and received $20 in cash related to capital contributions made to PrinceRidge during the nine months ended September 30, 2012.

During the nine months ended September 30, 2013, the Company purchased $317 of non-controlling interest for cash from existing partners. As of September 30, 2013 and December 31, 2012, the redeemable non-controlling interests totaled $535 and $829, respectively.

Mandatorily Redeemable Equity Interests

Per the terms of the operating agreement, PrinceRidge must redeem a withdrawing partner’s equity interests over a period of time of up to two to five years. The amount actually due to a withdrawing partner will fluctuate over time based on the operating results of PrinceRidge. The carrying value of the liability owed to a withdrawing partner will be recorded at the amount owed as of each balance sheet date. Any increases or decreases in the amount owed will be recorded as interest income or expense and will be included in the non-operating section of the consolidated statement of operations.

During the nine months ended September 30, 2013 and 2012, the Company distributed cash of $86 and $790, respectively, to the holders of mandatorily redeemable equity interests.  As of September 30, 2013 and December 31, 2012, the mandatorily redeemable equity interests totaled $0 and $86, respectively. See note 10.

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Fair Value Disclosures (Fair Value, Investments, Entities That Calculate Net Asset Value Per Share) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2013		Dec. 31, 2012
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Other investments, at fair value	$ 29,008		$ 38,323
Other Investment Vehicles [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Other investments, at fair value	28,913		37,560
EuroDekania Limited [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Other investments, at fair value	2,275	[1]	2,054	[1]
Redemption frequency	N/A	[2]	N/A	[2]
Redemption notice period	N/A	[2]	N/A	[2]
EuroDekania Limited [Member] | Other Investment Vehicles [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Other investments, at fair value	2,275	[2]	2,054	[2]
Star Asia [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Other investments, at fair value	21,118	[3]	30,169	[3]
Redemption frequency	N/A	[4]	N/A	[4]
Redemption notice period	N/A	[4]	N/A	[4]
Star Asia [Member] | Other Investment Vehicles [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Other investments, at fair value	21,118	[4]	30,169	[4]
Tiptree Financial Partners L.P. [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Other investments, at fair value	2,317	[5]	2,834	[5]
Redemption frequency	N/A	[6]	N/A	[6]
Redemption notice period	N/A	[6]	N/A	[6]
Cost Method Investments, Ownership Percentage	1.00%
Tiptree Financial Partners L.P. [Member] | Other Investment Vehicles [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Other investments, at fair value	2,317	[6]	2,834	[6]
Star Asia Special Situations Fund [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Other investments, at fair value	3,203	[3]	2,503	[3]
Unfunded commitments			321	[7]
Redemption frequency	N/A	[7]	N/A	[7]
Redemption notice period	N/A	[7]	N/A	[7]
Star Asia Special Situations Fund [Member] | Other Investment Vehicles [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Other investments, at fair value	$ 3,203	[7]	$ 2,503	[7]

[1] Hybrid Securities Fund—European.

[2] EuroDekania’s investment strategy is to make investments in hybrid capital securities that have attributes of debt and equity, primarily in the form of subordinated debt issued by insurance companies, banks and bank holding companies based primarily in Western Europe; widely syndicated leveraged loans issued by European corporations; CMBS, including subordinated interests in first mortgage real estate loans; and RMBS and other ABS backed by consumer and commercial receivables. The majority of the assets are denominated in Euros and U.K. Pounds Sterling. The fair value of the investment in this category has been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820.

[3] Real Estate Fund—Asian.

[4] Star Asia’s investment strategy is to make investments in Asian real estate structured finance investments, including CMBS, corporate debt of REITs and real estate operating companies, whole loans, mezzanine loans, and other commercial real estate fixed income investments. The fair value of the investment in this category has been estimated using an internal valuation model that uses a market approach. If the Company had used Star Asia’s unadjusted reported net asset value to determine its fair value, the carrying value of its investment in Star Asia would have been $31,907 as of September 30, 2013 and $39,998 as of December 31, 2012.

[5] Diversified Fund.

[6] The investment strategy of Tiptree is focused on investing in (a) specialty finance companies; (b) alternative asset management companies; and (c) diversified credit assets and related equity interests. Tiptree primarily seeks to acquire majority ownership interests in its investees. Prior to June 30, 2013, the fair value of this investment had been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820. Beginning with the second quarter of 2013, the Company calculates the fair value of its investment in Tiptree by using the closing over the counter price for Tiptree Financial, Inc. and adjusting for the exchange ratio. As of September 30, 2013 and December 31, 2012, the Company owned approximately 1% of Tiptree.

[7] The Star Asia Special Situations Fund’s investment strategy is to make investments in real estate and securities backed by real estate in Japan. The Star Asia Special Situations Fund is a closed end fund that does not allow investor redemptions. It has an initial life of three years which can be extended under certain circumstances for up to two years. The fair value of the investment in this category has been estimated using the net asset value per share of the investment in accordance with the “practical expedient” provisions of FASB ASC 820. The Company’s unfunded commitment was denominated in Japanese Yen and fluctuated based on the foreign exchange spot rate used at any particular period. See note 20.

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Fair Value Disclosures (Quantitative Information About Level 3 Fair Value Measurements) (Details) (Star Asia [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate on debt	7.26%	6.82%
Significant Unobservable Inputs (Level 3) [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 21,118	$ 30,169
Discount rate on debt	7.26%	6.82%
Significant Unobservable Inputs (Level 3) [Member] | Weighted Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate on debt	7.26%	6.82%

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Related Party Transactions (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended				3 Months Ended														3 Months Ended							3 Months Ended	9 Months Ended		3 Months Ended			9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Dec. 31, 2011	Sep. 30, 2013 EBC Family Trust [Member]	Sep. 30, 2013 Star Asia Manager [Member]	Dec. 31, 2012 Star Asia Manager [Member]	Sep. 30, 2013 Star Asia [Member]	Dec. 31, 2012 Star Asia [Member]	Sep. 30, 2013 EuroDekania Limited [Member]	Dec. 31, 2012 EuroDekania Limited [Member]	Sep. 30, 2013 Deep Value GP [Member]	Sep. 30, 2013 Deep Value GP II [Member]	Dec. 31, 2012 Star Asia SPV [Member]	Sep. 30, 2013 Star Asia Opportunity [Member]	Dec. 31, 2012 Star Asia Opportunity [Member]	Sep. 30, 2013 Star Asia Capital Management [Member]	Dec. 31, 2012 Star Asia Capital Management [Member]	Mar. 31, 2013 Star Asia Special Situations Fund [Member]	Sep. 30, 2013 Star Asia Special Situations Fund [Member]	Dec. 31, 2012 Star Asia Special Situations Fund [Member]	Sep. 30, 2013 S.A.A. Manager [Member]	Dec. 31, 2012 S.A.A. Manager [Member]	Sep. 30, 2013 SAP GP [Member]	Dec. 31, 2012 SAP GP [Member]	Sep. 30, 2013 TBBK [Member]	Sep. 30, 2013 TBBK [Member]	Dec. 31, 2012 TBBK [Member]	Sep. 30, 2013 Mead Park Capital [Member]	Sep. 30, 2012 Resource Securities, Inc. [Member]	Sep. 30, 2012 Subordinated Debt [Member]	Sep. 30, 2013 Subordinated Debt [Member]
Related Party Transaction [Line Items]
Ownership percentage of equity method affiliate						100.00%	50.00%	28.00%	28.00%	10.00%	10.00%	50.00%	40.00%	31.00%	28.00%	28.00%	33.00%	33.00%		2.00%	6.00%	33.00%	33.00%	33.00%	33.00%
Securities sold under agreements to repurchase	$ 94,856		$ 70,273																							$ 40,824	$ 40,824
Investments / advances	10																		302
Interest Expense, Related Party																										157	250
Cash and cash equivalents	22,313	12,876	14,500	18,221																						80	80	36
Related Party Transaction, Expenses from Transactions with Related Party																														6
Related Party Transaction, Amounts of Transaction					4,000																								9,746
Financial Instruments Sold Not Yet Purchased, Principal Amount																										406	406
Trading securities sold, not yet purchased	53,332		44,167																							437	437
Repayments of Debt	$ 907	$ 11,446																													$ 1,177	$ 352