Fair Value Measurements

ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”) establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily-available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Investments measured and reported at fair value are classified and disclosed in one of the following categories:

Level I – Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I include listed equities and listed derivatives. As required by ASC 820, the Company does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

Level II – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. The estimated fair values of the Corporate Bonds, Municipal Bonds, Other Debt Securities and Securities Investments held at September 30, 2015 and December 31, 2014 are based on quoted market prices provided by external pricing services.

Level III – Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation.

The following table presents the categorization of investments and certain other financial assets measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014:



	September 30, 2015
	Level I		Level II		Level III		Total
Corporate Bonds, Municipal Bonds and Other Debt Securities (1)	$	—	$	43,917	$	—	$	43,917
Securities Investments (1)	4,849		1,665		—		6,514
Mutual Funds	2,275		—		—		2,275
Financial Instruments Owned and Pledged as Collateral at Fair Value	51,655		—		—		51,655
Total Assets Measured At Fair Value	$	58,779	$	45,582	$	—	$	104,361

	December 31, 2014
	Level I		Level II		Level III		Total
Corporate Bonds, Municipal Bonds and Other Debt Securities (1)	$	—	$	34,343	$	—	$	34,343
Securities Investments (1)	5,550		1,642		—		7,192
Mutual Funds	5,702		—		—		5,702
Financial Instruments Owned and Pledged as Collateral at Fair Value	98,688		—		—		98,688
Total Assets Measured At Fair Value	$	109,940	$	35,985	$	—	$	145,925


(1)	Includes $10,303 and $9,252 of treasury bills, municipal bonds and commercial paper classified within Cash and Cash Equivalents on the Unaudited Condensed Consolidated Statements of Financial Condition as of September 30, 2015 and December 31, 2014, respectively.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. 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 investment.

The Company had no transfers between fair value levels during the nine months ended September 30, 2015 or the year ended December 31, 2014.

During the third quarter of 2015, the Company determined that the fair value of the goodwill in its Institutional Asset Management reporting unit was $66,700. The fair value of the reporting unit was estimated by utilizing both a market multiple approach and a discounted cash flow methodology based on the adjusted cash flows from operations. Goodwill is measured at fair value on a non-recurring basis as a Level III asset. See Note 4 for further information.

The carrying amount and estimated fair value of the Company’s financial instrument assets and liabilities, which are not measured at fair value on the Unaudited Condensed Consolidated Statements of Financial Condition, are listed in the tables below.



			September 30, 2015
	Carrying		Estimated Fair Value
	Amount		Level I		Level II		Level III		Total
Financial Assets:
Cash and Cash Equivalents	$	267,842	$	267,842	$	—	$	—	$	267,842
Securities Purchased Under Agreements to Resell	351		—		351		—		351
Accounts Receivable	162,691		—		162,691		—		162,691
Receivable from Employees and Related Parties	18,814		—		18,814		—		18,814
Assets Segregated for Bank Regulatory Requirements	10,200		10,200		—		—		10,200
Closely-held Equity Security	1,079		—		—		1,079		1,079
Loans Receivable	3,500		—		3,653		—		3,653

Financial Liabilities:
Accounts Payable and Accrued Expenses	$	37,809	$	—	$	37,809	$	—	$	37,809
Securities Sold Under Agreements to Repurchase	52,025		—		52,025		—		52,025
Payable to Employees and Related Parties	29,041		—		29,041		—		29,041
Notes Payable	106,829		—		127,418		—		127,418
Subordinated Borrowings	22,550		—		23,421		—		23,421

			December 31, 2014
	Carrying		Estimated Fair Value
	Amount		Level I		Level II		Level III		Total
Financial Assets:
Cash and Cash Equivalents	$	342,908	$	342,908	$	—	$	—	$	342,908
Securities Purchased Under Agreements to Resell	7,669		—		7,669		—		7,669
Accounts Receivable	136,280		—		136,280		—		136,280
Receivable from Employees and Related Parties	17,327		—		17,327		—		17,327
Assets Segregated for Bank Regulatory Requirements	10,200		10,200		—		—		10,200
Financial Liabilities:
Accounts Payable and Accrued Expenses	$	37,104	$	—	$	37,104	$	—	$	37,104
Securities Sold Under Agreements to Repurchase	106,499		—		106,499		—		106,499
Payable to Employees and Related Parties	18,875		—		18,875		—		18,875
Notes Payable	105,226		—		131,340		—		131,340
Subordinated Borrowings	22,550		—		22,550		—		22,550

The following methods and assumptions were used to estimate the fair value of these financial assets and liabilities:

The fair value of the Company’s Closely-held Equity Security is based on recent comparable market transactions executed by the issuer.

The fair value of the Company’s Loans Receivable is estimated based on a present value analysis utilizing aggregate market yields obtained from independent pricing sources for similar financial instruments.

The fair value of the Company’s Notes Payable is estimated based on a present value analysis utilizing aggregate market yields obtained from independent pricing sources for similar financial instruments.

The fair value of the Company’s Subordinated Borrowings as of September 30, 2015 is estimated based on a present value analysis utilizing aggregate market yields obtained from independent pricing sources for similar financial instruments. The carrying amount reported on the Unaudited Condensed Consolidated Statement of Financial Condition for Subordinated Borrowings approximated fair value as of December 31, 2014.

The carrying amounts reported on the Unaudited Condensed Consolidated Statements of Financial Condition for Cash and Cash Equivalents, Securities Purchased Under Agreements to Resell, Securities Sold Under Agreements to Repurchase, Accounts Receivable, Receivable from Employees and Related Parties, Accounts Payable and Accrued Expenses, Payable to Employees and Related Parties and Assets Segregated for Bank Regulatory Requirements approximate fair value due to the short-term nature of these items.