UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2009

or

o	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 001-33761

PZENA INVESTMENT MANAGEMENT, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware		20-8999751
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

120 West 45th Street
New York, New York 10036
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (212) 355-1600

Not Applicable

(Former name, former address, and former fiscal year if changed since last report)

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. Yes x No o

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

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 o	Accelerated Filer x

Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

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

As of May 8, 2009, there were 8,633,041 outstanding shares of the registrant’s Class A common stock, par value $0.01 per share.

As of May 8 2009, there were 55,559,751 outstanding shares of the registrant’s Class B common stock, par value $0.000001 per share.

PZENA INVESTMENT MANAGEMENT, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
	PART I — FINANCIAL INFORMATION
Item 1.	Consolidated Statements of Financial Condition of Pzena Investment Management, Inc. as of March 31, 2009 (unaudited) and December 31, 2008	1
	Consolidated Statements of Operations (unaudited) of Pzena Investment Management, Inc. for the Three Months Ended March 31, 2009 and 2008	2
	Consolidated Statements of Cash Flows (unaudited) of Pzena Investment Management, Inc. for the Three Months Ended March 31, 2009 and 2008	3
	Consolidated Statements of Changes in Equity (unaudited) of Pzena Investment Management, Inc. for the Three Months Ended March 31, 2009 and 2008	4
	Notes to the Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35

	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Submission of Matters to a Vote of Security Holders	36
Item 5.	Other Information	36
Item 6.	Exhibits	36

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking statements provide our current expectations, or forecasts, of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “ongoing,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking.

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Our actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in Item 1A, “Risk Factors” in Part I of our Annual Report on Form 10-K for our fiscal year ended December 31, 2008. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly revise any forward-looking statements to reflect circumstances or events after the date of this Quarterly Report on Form 10-Q, or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission, or SEC, after the date of this Quarterly Report on Form 10-Q.

Forward-looking statements include, but are not limited to, statements about:

· our anticipated future results of operations and operating cash flows;

· our business strategies and investment policies;

· our financing plans and the availability of short- or long-term borrowing, or equity financing;

· our competitive position and the effects of competition on our business;

· potential growth opportunities available to us;

· the recruitment and retention of our employees;

· our expected levels of compensation for our employees;

· our potential operating performance, achievements, efficiency and cost reduction efforts;

· our expected tax rate;

· changes in interest rates;

· our expectation with respect to the economy, capital markets, the market for asset management services and other industry trends; and

· the impact of future legislation and regulation, and changes in existing legislation and regulation, on our business.

The reports that we file with the SEC, accessible on the SEC’s website at www.sec.gov, identify additional factors that can affect forward-looking statements.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

PZENA INVESTMENT MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except share and per-share amounts)

	As of
	March 31, 2009			December 31, 2008
	(unaudited)

ASSETS
Cash and Cash Equivalents	$	26,705		$	27,421
Due from Broker	37			41
Advisory Fees Receivable	10,316			13,606
Investments in Marketable Securities, at Fair Value	11,369			14,045
Receivable from Related Parties	189			191
Other Receivables	89			74
Prepaid Expenses and Other Assets	801			949
Deferred Tax Assets	4,208			3,444
Property and Equipment, Net of Accumulated Depreciation of $2,034 and $1,913, respectively	2,627			2,748
TOTAL ASSETS	$	56,341		$	62,519

LIABILITIES AND EQUITY
Liabilities:
Accounts Payable and Accrued Expenses	$	5,149		$	4,338
Due to Broker	41			47
Term Loan	14,000			22,000
Senior Subordinated Debt to Related Parties	16,000			16,000
Liability to Selling and Converting Shareholders	2,519			1,787
Other Liabilities	1,939			2,007
TOTAL LIABILITIES	39,648			46,179

Equity:
Preferred Stock (Par Value $0.01; 200,000,000 Shares Authorized; None Outstanding)	—			—
Class A Common Stock (Par Value $0.01; 750,000,000 Shares Authorized; 8,633,041 and 6,111,118 Shares Issued and Outstanding in 2009 and 2008, respectively)	86			61
Class B Common Stock (Par Value $0.000001; 750,000,000 Shares Authorized; 55,529,751 and 57,975,724 Shares Issued and Outstanding in 2009 and 2008, respectively)	—			—
Additional Paid-In Capital	9,866			9,749
Accumulated Deficit	(4,807		)	(5,289		)
Total Pzena Investment Management, Inc.’s Equity	5,145			4,521
Non-Controlling Interests	11,548			11,819
TOTAL EQUITY	16,693			16,340
TOTAL LIABILITIES AND EQUITY	$	56,341		$	62,519

See accompanying notes to consolidated financial statements

PZENA INVESTMENT MANAGEMENT, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per-share amounts)

	For the Three Months Ended March 31,
	2009			2008

REVENUE	$	13,671		$	30,012

EXPENSES
Compensation and Benefits Expense	6,040			8,951
General and Administrative Expenses	2,453			3,043
TOTAL OPERATING EXPENSES	8,493			11,994
Operating Income	5,178			18,018

OTHER INCOME/(EXPENSE)
Interest and Dividend Income	120			478
Interest Expense	(450		)	(963		)
Realized and Unrealized Loss, Net on Marketable Securities	(1,820		)	(3,580		)
Other Expense	(580		)	(14		)
Total Other Expense	(2,730		)	(4,079		)
Income Before Income Taxes	2,448			13,939
Provision/(Benefit) for Income Taxes	(274		)	1,542
Consolidated Net Income	2,722			12,397
Less: Net Income Attributable to Non-Controlling Interests	2,240			11,577
Net Income Attributable to Pzena Investment Management, Inc.	$	482		$	820

Earnings Per Share — Basic and Diluted Attributable to Pzena Investment Management, Inc. Common Stockholders:

Net Income for Basic Earnings per Share	$	482		$	820
Basic Earnings per Share	$	0.07		$	0.13
Basic Weighted Average Shares Outstanding	6,948,037			6,119,686

Net Income for Diluted Earnings per Share	$	2,776		$	8,597
Diluted Earnings per Share	$	0.04		$	0.13
Diluted Weighted Average Shares Outstanding	64,192,792			64,070,596

See accompanying notes to consolidated financial statements

PZENA INVESTMENT MANAGEMENT, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the Three Months Ended March 31,
	2009			2008

OPERATING ACTIVITIES
Consolidated Net Income	$	2,722		$	12,397
Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:
Depreciation	121			115
Non-Cash Compensation	251			344
Director Share Grant	280			140
Realized and Unrealized Loss, Net on Marketable Securities	1,820			3,580
Increase in Liability to Selling and Converting Shareholders	602			—
Deferred Income Taxes	(667		)	547
Changes in Operating Assets and Liabilities:
Advisory Fees Receivable	3,290			4,436
Due from Broker	4			191
Prepaid Expenses and Other Assets	(147		)	1,111
Due to Broker	(6		)	(3,795		)
Accounts Payable, Accrued Expenses and Other Liabilities	727			1,508
Purchases of Marketable Securities	(2,572		)	(16,836		)
Proceeds from Sale of Marketable Securities	3,431			6,667
Net Cash Provided by Operating Activities	9,856			10,225

INVESTING ACTIVITIES
Receivable from Related Parties	2			(67		)
Purchases of Property and Equipment	—			(50		)
Net Cash Provided by/(Used in) Investing Activities	2			(117		)

FINANCING ACTIVITIES
Contributions from Non-Controlling Interests	—			6,833
Distributions to Non-Controlling Interests	—			(1,080		)
Capital Distribution	(9		)	—
Debt Repayment	(8,000		)	—
Dividends	—			(672		)
Distributions to Members	(2,565		)	(6,373		)
Net Cash Used in Financing Activities	(10,574		)	(1,292		)
NET CHANGE IN CASH	$	(716	)	$	8,816

CASH AND CASH EQUIVALENTS—Beginning of Period	$	27,421		$	27,184
Net Change in Cash	(716		)	8,816
CASH AND CASH EQUIVALENTS—End of Period	$	26,705		$	36,000

Supplementary Cash Flow Information:
Interest Paid	$	467		$	982
Income Taxes Paid	$	619		$	—

See accompanying notes to consolidated financial statements

PZENA INVESTMENT MANAGEMENT, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands, except share and per-share amounts)

	Shares of Class A Common Stock	Shares of Class B Common Stock		Class A Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings/ (Accumulated Deficit)			Non- Controlling Interests			Total

Balance at December 31, 2008	6,187,068	57,975,724		$	61	$	9,749		$	—		$	(5,289	)	$	11,819		$	16,340
Unit Conversion	2,445,973	(2,445,973	)	25		107			—			—			(108		)	24
Amortization of Non-Cash Compensation	—	—		—		19			—			—			162			181
Net Income	—	—		—		—			—			482			2,240			2,722
Capital Distribution	—	—		—		(9		)	—			—			(2,565		)	(2,574		)
Balance at March 31, 2009	8,633,041	55,529,751		$	86	$	9,866		$	—		$	(4,807	)	$	11,548		$	16,693

Balance at December 31, 2007	6,111,118	57,937,910		$	61	$	(2,043	)	$	—		$	61		$	16,355		$	14,434
Issuance of Class A Common Stock	12,376	—		—		11			—			—			118			129
Issuance of Class B Common Stock and Amortization of Non-Cash Compensation	—	13,000		—		16			—			—			131			147
Net Income	—	—		—		—			—			820			11,577			12,397
Accumulated Other Comprehensive Income	—	—		—		—			(46		)	—			(430		)	(476		)
Equity Effect of Operating Company Net Deficit on Non-Controlling Interests	—	—		—		6,923			—			—			(6,923		)	—
Class A Cash Dividends Declared ($0.11 per share)	—	—		—		—			—			(674		)	(620		)	(1,294		)
Balance at March 31, 2008	6,123,494	57,950,910		$	61	$	4,907		$	(46	)	$	207		$	20,208		$	25,337

See accompanying notes to consolidated financial statements

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements

Note 1—Organization

Pzena Investment Management, Inc. (the “Company”) functions as the holding company through which the business of its operating company, Pzena Investment Management, LLC, is conducted. The Company was incorporated in the State of Delaware on May 8, 2007. Concurrently with the consummation of the Company’s initial public offering, on October 30, 2007, the Operating Agreement of Pzena Investment Management, LLC (the “Operating Agreement”) was amended and restated such that, among other things, the Company became the sole managing member of Pzena Investment Management, LLC. The acquisition of the operating company’s membership interests by the Company was treated as a reorganization of entities under common control pursuant to the guidance set forth in Financial Accounting Standards Board Technical Bulletin No. 85-5, Issues Relating to Accounting for Business Combinations (“FTB 85-5”). As a result of these transactions, as of and subsequent to October 30, 2007, (i) the Company has consolidated the financial results of Pzena Investment Management, LLC with its own and reflected the membership interest in it that it does not own as a non-controlling interest in its consolidated financial statements, and (ii) the Company recognizes income generated from its economic interest in Pzena Investment Management, LLC’s net income.

Pzena Investment Management, LLC is an investment adviser which is registered under the Investment Advisers Act of 1940 and is headquartered in New York, New York. As of March 31, 2009, the Company managed assets in a variety of value-oriented investment strategies across a wide range of market capitalizations in both U.S. and international capital markets.

The Company, through its investment in its operating company, has consolidated the results of operations and financial condition of the following private investment partnerships as of March 31, 2009:

Entity	Type of Entity (Date of Formation)	Ownership at March 31, 2009

Pzena Large Cap Value Fund	Massachusetts Trust (11/1/2002)	99.6%
Pzena International Value Service	Delaware Limited Liability Company (12/22/2003)	17.5%
Pzena Global Value Service	Delaware Limited Liability Company (12/22/2003)	0.6%
Pzena Emerging Markets Country Value Service	Delaware Limited Liability Company (12/28/2007)	99.9%
Pzena Emerging Markets Focused Value Service	Delaware Limited Liability Company (12/28/2007)	99.9%

Pursuant to its Operating Agreement, the operating company will continue until December 31, 2026, unless a terminating event, as defined in the Operating Agreement, occurs prior to this date. Operating company members are not liable for repayment, satisfaction or discharge of any debts, liabilities or obligations of the operating company, except to the extent of their capital accounts.

Note 2—Significant Accounting Policies

Basis of Presentation:

The consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles and related Securities and Exchange Commission rules and regulations. The Company’s policy is to consolidate all majority-owned subsidiaries in which it has a controlling financial interest and variable interest entities where the Company is deemed to be the primary beneficiary (“Consolidated Subsidiaries”). Pursuant to the guidance of Emerging Issues Task Force Issue No. 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (“EITF 04-5”), the Company also consolidates non-variable-interest entities in which it acts as the general partner or managing member. All of these entities represent private investment partnerships over which the Company exercises or exercised control. Non-controlling interests recorded on the consolidated financial statements of the Company include the non-controlling interests of the outside investors in each of these entities, as well as those of the operating company. All significant inter-company transactions and balances have been eliminated.

The Pzena International Value Service and the Pzena Global Value Service are limited liability companies whose managing members are or were members of the executive committee of the operating company or the operating company itself. Neither of these entities are considered variable-interest entities, as the managing members have substantive interests in the partnerships. Each of these limited liability companies are considered entities “similar” to limited partnerships and thus subject to the guidance of EITF 04-5. Under each of their respective operating agreements, none of these entities’ non-managing members have the ability to remove the managing member under any circumstance, nor do they have any participating rights. As a result, nothing substantive exists to overcome the presumption of control by the managing member

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 2—Significant Accounting Policies (continued)

laid out by EITF 04-5. As the managing members of these entities are, or were, either the operating company or one of the controlling persons of the operating company, their results of operations and financial position have been consolidated.

During 2008, the decision was made to close the Pzena Large Cap Value Fund II, the Pzena Emerging Markets Value Service, the Pzena Mega Cap Value Fund and Pzena Value Partners. The results of operations and financial position of each of these entities were consolidated until the dates of their respective liquidations.

All of the consolidated investment partnerships are, or were, investment companies under the American Institute of Certified Public Accountants Audit and Accounting Guide for Investment Companies (the “AICPA Guide”). The Company has retained the specialized accounting for these partnerships pursuant to Emerging Issues Task Force Issue No. 85-12, Retention of Specialized Accounting for Investments in Consolidation (“EITF 85-12”). Thus, the Company reports the investment partnerships’ investments in marketable securities at fair value, with net realized and unrealized gains and losses reported in earnings in the consolidated statements of operations.

The Company records in its own equity its pro rata share of transactions that impact the operating company’s net equity, including equity and option issuances and adjustments to accumulated other comprehensive income. The operating company’s pro rata share of such transactions are recorded as adjustments to additional paid-in capital or non-controlling interests, as applicable, on the consolidated statements of financial position. As discussed further in Note 13, the Company did not initially record a non-controlling interest associated with the acquisition of its operating company, as the post offering net equity of the operating company was less than zero. Pursuant to the guidance in Emerging Issues Task Force Issue No. 95-7, Implementation Issues Related to the Treatment of Minority Interest in Certain Real Estate Trusts (“EITF 95-7”), an operating company non-controlling interest was recorded after the initial deficit that existed at acquisition was extinguished in 2008.

The Company acts as the investment manager for four trusts and one offshore investment company, each of which are considered variable-interest entities. All of these entities are vehicles through which the Company offers its Global Value and/or International Value strategies. The Company is not considered the primary beneficiary of any of these entities. Correspondingly, their results of operations and financial condition are not consolidated by the Company. The total net assets of these variable-interest entities were approximately $351.1 million and $446.0 million at March 31, 2009 and December 31, 2008, respectively. The Company is not exposed to losses as a result of its involvement with these entities because it has no direct investment in them.

Management’s Use of Estimates:

The preparation of financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the period. Actual results could differ from those estimates.

Fair Values of Financial Instruments:

The carrying amount of all financial instruments in the consolidated statements of financial condition, including investments in marketable securities, approximates their fair values.

Revenue Recognition:

Revenue, comprised of advisory fee income, is recognized over the period in which investment management services are provided. Advisory fee income includes management fees that are calculated based on percentages of assets under management, generally billed quarterly, either in arrears or advance, depending on their contractual terms. Advisory fee income also includes incentive fees that may be earned by the Company depending on the investment return of the assets under management. Incentive fee arrangements generally entitle the Company to participate, on a fixed-percentage basis, in any returns generated in excess of an agreed-upon benchmark. The Company’s participation percentage in such return differentials is then multiplied by assets under management to determine the incentive fees earned. Returns are calculated on an annualized basis over the contract’s measurement period, which may extend up to three years. Incentive fees are generally payable annually. Pursuant to the preferred accounting method under Emerging Issues Task Force Issue D-96, Accounting

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 2—Significant Accounting Policies (continued)

for Management Fees Based on a Formula (“EITF D-96”), such incentive fee income is recorded at the conclusion of the contractual performance period, when all contingencies are resolved. The Company recognized no such incentive fees for the three months ended March 31, 2009 and 2008.

Earnings per Share:

Basic earnings per share is computed by dividing the Company’s net income or loss attributable to the Company’s common stockholders by the weighted-average number of shares outstanding during the reporting period. Diluted earnings per share adjusts this calculation to reflect the impact of all outstanding operating company membership units, as well as outstanding operating company options and phantom units, to the extent that they would have a dilutive effect on net income per share for the reporting period. Net income for diluted earnings per share generally assumes all operating company membership units are converted into Company stock at the beginning of the reporting period and the resulting change to Company net income associated with its increased interest in the operating company is taxed at the Company’s effective tax rate. For the three months ended March 31, 2009, 3,153,122 options to purchase operating company units and 153,829 phantom operating company units were excluded from the calculation of diluted net income per share, as their inclusion would have had an antidilutive effect for the period. For the three months ended March 31, 2008, 954,310 options to purchase operating company units and 89,826 phantom units were excluded from the calculation of diluted net income per share, as their inclusion would have had an antidilutive effect.

For the three months ended March 31, 2009 and 2008, the Company’s basic and diluted earnings per share attributable to the Company’s common stockholders were determined as follows (in thousands, except for share and per-share amounts):

	For the Three Months Ended March 31, 2009

Net Income for Basic Earnings per Share	$	482
Basic Weighted Average Shares Outstanding	6,948,037
Basic Earnings per Share	$	0.07

Net Income for Diluted Earnings per Share	$	2,776
Dilutive Effect of Operating Company Units	57,244,755
Diluted Weighted Average Shares Outstanding	64,192,792
Diluted Earnings per Share	$	0.04

	For the Three Months Ended March 31, 2008

Net Income for Basic Earnings per Share	$	820
Basic Weighted Average Shares Outstanding	6,119,686
Basic Earnings per Share	$	0.13

Net Income for Diluted Earnings per Share	$	8,597
Dilutive Effect of Operating Company Units	57,950,910
Diluted Weighted Average Shares Outstanding	64,070,596
Diluted Earnings per Share	$	0.13

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 2—Significant Accounting Policies (continued)

Cash and Cash Equivalents:

The Company considers all highly-liquid debt instruments with an original maturity of three months or less at the time of purchase to be cash equivalents. The Company maintains its cash in bank deposits and other accounts, the majority of which are held at two financial institutions. These balances, at times, exceed federally insured limits.

Interest on cash and cash equivalents is recorded as interest income on an accrual basis on the consolidated statements of operations.

Due to/from Broker:

Due to/from broker consists primarily of cash balances and amounts receivable/payable for unsettled securities transactions held/initiated at the clearing brokers of the Company’s consolidated investment partnerships.

Investments in Securities:

Investments in marketable securities represent primarily the securities held by the Company’s consolidated investment partnerships. All such securities are recorded at fair value, with net realized and unrealized gains and losses reported in earnings in the consolidated statements of operations.

The Company adopted the provisions of Statement of Financial Accounting Standard No.157, Fair Value Measurements (“FAS 157”), on January 1, 2008. FAS 157 defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value and a valuation hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation hierarchy contains three levels: (i) valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets (Level 1); (ii) valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets and other observable inputs directly or indirectly related to the asset or liability being measured (Level 2); and (iii) valuation inputs are unobservable and significant to the fair value measurement (Level 3).

The Company’s fair value measurements relate to its interest rate swap, as well as its investments in marketable securities, which are primarily exchange-traded securities with quoted prices in active markets. The fair value measurement of the interest rate swap has been determined primarily based upon the market prices for interest rate swaps with similar provisions and the use of forward interest rate curves. The interest rate swap has been classified as Level 2 and recorded in other liabilities on the consolidated statement of financial condition. The fair value measurements of the securities have been classified as Level 1.

The following table presents these instruments’ fair value at March 31, 2009 (in thousands):

	Level 1		Level 2			Level 3

Assets:
Marketable Securities	$	11,369	$	—		$	—
Liabilities:
Interest Rate Swap	—		(372		)	—
Total Fair Value	$	11,369	$	(372	)	$	—

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 2—Significant Accounting Policies (continued)

The following table presents these instruments’ fair value at December 31, 2008 (in thousands):

	Level 1		Level 2			Level 3

Assets:
Marketable Securities	$	14,045	$	—		$	—
Liabilities:
Interest Rate Swap	—		(628		)	—
Total Fair Value	$	14,045	$	(628	)	$	—

Securities Valuation:

Investments in marketable equity securities which are traded on a national securities exchange are carried at fair value based on the last reported sales price on the valuation date. If no reported sales occurred on the valuation date, investments in securities are valued at the bid price. Securities transactions are recorded on the trade date.

The net realized gain or loss on sales of securities is determined on a specific identification basis and is included in realized and unrealized loss, net on marketable securities in the consolidated statements of operations.

Concentrations of Credit Risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, amounts due from brokers and advisory fees receivable. The Company maintains its cash and temporary cash investments in bank deposits and other accounts whose balances, at times, exceed federally insured limits.

The concentration of credit risk with respect to advisory fees receivable is generally limited due to the short payment terms extended to clients by the Company. On a periodic basis, the Company evaluates its advisory fees receivable and establishes an allowance for doubtful accounts, if necessary, based on a history of past write-offs and collections and current credit conditions. For the three months ended March 31, 2009 and 2008, approximately 12.2% and 15.7%, respectively, of the Company’s advisory fees were generated from an advisory agreement with one client. At March 31, 2009 and December 31, 2008, no allowance for doubtful accounts has been deemed necessary.

Financial Instruments:

On February 28, 2008, the operating company entered into an interest rate swap agreement to manage its exposure to changes in interest rates associated with the credit agreement (the “Credit Agreement”) discussed in Note 9. The counterparty to this agreement is a major financial institution. The Company designated the interest rate swap agreement as a cash flow hedge of the Credit Agreement effective February 28, 2008. Pursuant to Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Certain Hedging Activities (“FAS 133”), the Company recorded the cash flow hedge at fair value on the consolidated statement of financial condition. Additionally, the Company’s pro rata share of the changes in the fair value of this agreement were recorded as a component of accumulated other comprehensive income.

During the quarter ended September 30, 2008, the Company changed the designation of its swap agreement from a cash flow hedge to a trading derivative, as a significant portion of the cash flows associated with the original forecasted transaction were probable to not occur due to amortization payments required be made pursuant to the terms of its amended Credit Agreement. Accordingly, the Company reclassified the cumulative changes in fair value related to this swap from accumulated other comprehensive income to other expense. The Company records all subsequent changes to the swap’s fair value as a component of other expense. For the three months ended March 31, 2009, the Company recognized less than $0.1 million in other income related to such changes. For the three months ended March 31, 2008, the Company recognized approximately $0.0 million in other accumulated comprehensive loss associated with the change in fair value of this swap agreement.

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 2—Significant Accounting Policies (continued)

At March 31, 2009 and December 31, 2008, the approximate fair value of the liability associated with the swap agreement was $0.4 million and $0.6 million, respectively, and has been included in other liabilities on the statements of financial condition.

The following table summarizes the impact of the Company’s derivative financial instruments on its results of operations for the three months ended March 31, 2009 and 2008 (in thousands):

Derivatives Not Accounted For As Hedging	Statement of	Amount of Gain Recognized In Income on Derivative
Instruments Under FAS 133	Operations Account	2009		2008

Interest Rate Contracts	Other Income/(Expense)	$	25	$	—
Total		$	25	$	—

The following table summarizes the impact of the Company’s derivative financial instruments on its financial position as of March 31, 2009 (in thousands):

Derivatives Not Accounted	Asset Derivatives			Liability Derivatives
For As Hedging Instruments Under FAS 133	Statement of Financial Condition Account	Fair Value		Statement of Financial Condition Account	Fair Value

Interest Rate Contracts	—	$	—	Other Liabilities	$	372
Total		$	—		$	372

The following table summarizes the impact of the Company’s derivative financial instruments on its financial position as of December 31, 2008 (in thousands):

Derivatives Not Accounted	Asset Derivatives			Liability Derivatives
For As Hedging Instruments Under FAS 133	Statement of Financial Condition Account	Fair Value		Statement of Financial Condition Account	Fair Value

Interest Rate Contracts	—	$	—	Other Liabilities	$	628
Total		$	—		$	628

Property and Equipment:

Property and equipment is carried at cost, less accumulated depreciation and amortization. Depreciation is provided on a straight-line basis over the estimated useful lives of the respective assets, which range from three to seven years. Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvements or the remaining lease term.

Business Segments:

The Company views its operations as comprising one operating segment.

Income Taxes:

The Company is a “C” corporation under the Internal Revenue Code, and thus liable for federal, state and local taxes on the income derived from its economic interest in its operating company. The operating company is a limited liability company that has elected to be treated as a partnership for tax purposes. It has not made a provision for federal or state income taxes because it is the responsibility of each of the operating company’s members (including the Company) to separately report their proportionate share of the operating company’s taxable income or loss. Similarly, the income of the Company’s consolidated investment partnerships is not subject to income taxes, as it is allocated to each partnership’s

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 2—Significant Accounting Policies (continued)

individual partners. The operating company has made a provision for New York City Unincorporated Business Tax, (“UBT”).

The Company and its consolidated subsidiaries account for all state, local and federal taxation pursuant to the asset and liability method, which requires deferred income tax assets and liabilities to be recorded for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the temporary differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount more likely than not to be realized. At March 31, 2009 and December 31, 2008, the Company had a $64.3 million and a $62.7 million valuation allowance, respectively, against the deferred tax asset recorded as part of the Company’s acquisition of operating company membership units in conjunction with the offering and the March 3, 2009 unit conversions. These valuation allowances represent approximately 94% and 95% of the total value of such deferred tax assets as of March 31, 2009 and December 31, 2008, respectively. The income tax provision, or credit, is the tax payable or refundable for the period, plus or minus the change during the period in deferred tax assets and liabilities. The Company records its deferred tax liabilities as a component of other liabilities on the consolidated statements of financial condition.

Foreign Currency:

Investment securities and other assets and liabilities denominated in foreign currencies are remeasured into U. S. dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are remeasured into U. S. dollar amounts on the respective dates of such transactions.

The Company does not isolate that portion of the results of its operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included in the net realized and unrealized loss, net on marketable securities in the consolidated statements of operations.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Company’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net realized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities resulting from changes in exchange rates.

New Accounting Pronouncements:

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (“FAS 160”). FAS 160 amends ARB No. 51 and establishes accounting and reporting standards that require non-controlling interests (previously referred to as minority interest) to be reported as a component of equity, changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions, and upon a loss of control, retained ownership interest will be remeasured at fair value, with any gain or loss recognized in earnings. FAS 160 was adopted by the Company on January 1, 2009. The adoption of FAS 160 only impacted the Company’s presentation of its consolidated financial statements.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”). FAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. As FAS 161 only affects financial statement disclosure, the impact of adoption and January 1, 2009 was limited to additional financial statement disclosure.

In June 2008, the FASB issued EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“EITF 03-6-1”). The EITF release states that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 2—Significant Accounting Policies (continued)

years. The adoption of EITF 03-6-1 on January 1, 2009 did not have a material impact on the Company’s consolidated financial statements.

On January 1, 2009, the Company adopted the remaining provisions of Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS No. 157”), as permitted by the FASB Staff Position 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”), which delayed the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). These nonfinancial items include, for example, reporting units required to be measured at fair value for annual goodwill impairment testing purposes and nonfinancial assets acquired and liabilities assumed in a business combination. The Company did not have any impairments or business combinations during the first quarter of 2009, therefore the adoption of FAS 157 for nonfinancial assets did not impact the Company’s consolidated financial statements.

Note 3—Property and Equipment

Property and equipment, net, is comprised of the following:

	As of
	March 31, 2009			December 31, 2008
	(in thousands)

Computer Hardware	$	921		$	921
Computer Software	191			191
Furniture and Fixtures	1,161			1,161
Office Equipment	243			243
Leasehold Improvements	2,145			2,145
Total	4,661			4,661
Less: Accumulated Depreciation and Amortization	(2,034		)	(1,913		)
Total	$	2,627		$	2,748

Depreciation is included in general and administrative expenses and totaled $0.1 million for each of the three months ended March 31, 2009 and 2008.

Note 4—Related Party Transactions

For the three months ended March 31, 2009 and 2008, the Company earned $0.9 million and $1.8 million, respectively, in investment advisory fees from unconsolidated entities for which it acts as the investment manager.

At March 31, 2009 and December 31, 2008, the Company had advanced $0.1 million and $0.1 million, respectively, to an international investment company for organization and start-up costs, which are included in receivable from related parties on the consolidated statements of financial condition. The Company is the sponsor and investment manager of this entity.

At March 31, 2009 and December 31, 2008, receivable from related parties included $0.1 million and $0.1 million of loans to employees. These loans are in the form of forgivable promissory notes which are amortized through compensation expense pursuant to their terms.

Employees of the Company who are considered accredited investors have the ability to open separately-managed accounts, or invest in certain of the Company’s consolidated investment partnerships, without being assessed advisory fees. Investments by employees in separately-managed accounts are permitted only at the discretion of the Executive Committee of the Company, but are generally not subject to the same minimum investment levels that are required of outside investors. Some of the investment advisory fees that are waived on separately managed accounts for employees are for strategies that typically have account fee minimums, which vary by strategy, but typically average approximately $50,000 per account per year.

During the quarter ended June 30, 2008, an unaffiliated shareholder who held more than 10% of the Company’s outstanding shares sold shares in transactions deemed to be short-swing sales. Under Section 16(b) of the Securities Exchange Act of 1934, the shareholder was required to disgorge to the Company the $0.2 million in profits realized from these stock sales. The Company recognized these proceeds as a capital contribution from a shareholder and reflected a corresponding increase to additional paid-in capital in its consolidated statements of changes in equity. Proceeds from these transactions did not affect the Company’s consolidated statements of operations.

As discussed in Note 9, on October 28, 2008, the operating company issued an aggregate of $16.0 million principal amount of Senior Subordinated Notes to entities established by Richard S. Pzena, the Company’s Chief Executive Officer, for the benefit of certain of his family members, an entity controlled by a Company Director, and a former employee.

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 5—Commitments and Contingencies

In the normal course of business, the Company enters into agreements that include indemnities in favor of third parties, such as engagement letters with advisors and consultants. In certain cases, the Company may have recourse against third parties with respect to these indemnities. The Company maintains insurance policies that may provide coverage against certain claims under these indemnities. FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN 45”), providing accounting and disclosure requirements for certain guarantees. The Company has had no claims or payments pursuant to these agreements, and it believes the likelihood of a claim being made is remote. Utilizing the methodology in FIN 45, the Company’s estimate of the value of such guarantees is de minimis, and, therefore, an accrual has not been made in the consolidated financial statements.

The Company may be subject to various legal and administrative proceedings in the normal course of business. On November 21, 2007 and January 16, 2008, substantively identical putative class action lawsuits were commenced in the United States District Court for the Southern District of New York against the Company and Richard S. Pzena, the Company’s chief executive officer, seeking remedies under Section 11 of the Securities Act of 1933, as amended. The Court consolidated the lawsuits and appointed co-lead plaintiffs, who filed a consolidated amended complaint. The consolidated amended complaint named as defendants the Company, Richard S. Pzena, and two of the underwriters of the Company’s initial public offering, Goldman Sachs & Co, Inc. and UBS Securities LLC. Plaintiffs sought to represent a class of all persons who purchased or otherwise acquired Class A common stock issued pursuant or traceable to the Company’s initial public offering. The consolidated amended complaint alleged that the registration statement and prospectus relating to the initial public offering of the Company’s Class A common stock contained material misstatements and omissions and wrongfully failed to disclose net redemptions in the John Hancock Classic Value Fund, for which the Company acts as sub-investment advisor. The consolidated amended complaint sought damages in an unspecified amount including rescission or rescissory damages. The Court granted Company’s motion to dismiss the consolidated amended complaint and, on September 4, 2008, the Court entered a judgment in favor of the Company. Plaintiffs have filed a Notice of Appeal of the Court’s judgment to the United States Court of Appeals for the Second Circuit. The Company believes that the allegations and claims are without merit and will continue to contest these claims vigorously.

The Company leases office space under two non-cancelable operating lease agreements which expire on October 31, 2015. The Company reflects lease expense on a straight-line basis over the lease term. Lease expenses totaled $0.6 million for each of the three months ended March 31, 2009 and 2008.

Note 6—Retirement Plan

The Company maintains a defined contribution pension plan which covers substantially all members and employees. The Company may make contributions to the plan at the discretion of management. Under the terms of the plan, all such contributions vest immediately. The Company recognized $0.5 million in expense associated with this plan for the three months ended March 31, 2008. These expenses are included in compensation and benefits expense in the consolidated statements of operations. No such expenses were incurred during the three months ended March 31, 2009

Note 7—Compensation and Benefits

Compensation and benefits expense to employees and members is comprised of the following:

	For the Three Months Ended March 31,
	2009		2008
	(in thousands)

Cash Compensation and Other Benefits	$	5,789	$	8,607
Other Non-Cash Compensation	251		344
Total Compensation and Benefits Expense	$	6,040	$	8,951

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 7—Compensation and Benefits (continued)

For the three months ended March 31, 2008, the operating company granted 446,000 options to purchase units pursuant to the Pzena Investment Management, LLC 2006 Equity Incentive Plan. For the three months ended March 31, 2009, the operating company granted no options to purchase such units. The options had varying vesting schedules and were issued at strike prices equal to the assessed fair market value per unit at the time of award issuance. The Company determined that the total grant-date fair value of the options awarded during the three months ended March 31, 2008 was approximately $1.2 million. For the three months ended March 31, 2009 and 2008, the Company recognized approximately $0.1 million and $0.1 million, respectively, in compensation and benefits expense associated with the amortization of these awards.

For the three months ended March 31, 2009 and 2008, the Company granted 30,000 and 13,000 restricted Class B units to certain members pursuant to the Pzena Investment Management, LLC 2006 Equity Incentive Plan. These unit grants each vest ratably over a four-year period commencing January 1, 2009 and 2008, respectively. The amortization of these awards was not material for the three months ended March 31, 2009 and 2008.

Pursuant to the operating company’s bonus plan, which became effective January 1, 2007, eligible employees whose cash compensation is in excess of certain thresholds have a portion of that excess mandatorily deferred. Amounts deferred may be credited to an investment account or take the form of phantom Class B units, at the employee’s discretion, and vest ratably over four years. At March 31, 2009 and December 31, 2008, no such compensation was deferred. At March 31, 2009 and December 31, 2008, the liability associated with such investment accounts was approximately $0.1 million and $0.3 million, respectively, and has been included as a component of other liabilities on the consolidated statements of financial condition. For the three months ended March 31, 2009 and 2008, the Company recognized approximately $0.2 million and $0.3 million, respectively, in compensation and benefits expense associated with the amortization of all deferred compensation awards.

Note 8—Short Term Borrowings

Simultaneously with the Credit Agreement described below, on July 23, 2007, the operating company obtained a $20.0 million revolving credit facility, expiring on July 23, 2010, in order to finance its short term working capital needs. This facility carries a commitment fee of 0.2% on any unused amounts, and the Company’s approximately $1.8 million letter of credit reduces the amounts otherwise available to be used. On February 11, 2008, the operating company entered into Amendment No. 1 to its Credit Agreement. The amendment changed a number of Credit Agreement provisions, including reducing the capacity of the revolving credit facility from $20.0 million to $5.0 million. On September 19, 2008, the operating company entered into Amendment No. 2 to its Credit Agreement. The amendment reduced the capacity of the revolving credit facility from $5.0 million to $3.0 million and extended its maturity to July 23, 2011. On October 28, 2008, the operating company entered into Amendment No. 3 to its Credit Agreement, which reduced the capacity of the revolving credit facility to the value of its letter of credit, approximately $1.8 million. As of and for the periods ended March 31, 2009 and December 31, 2008, no balance was outstanding against the facility.

Note 9—Debt

On July 23, 2007, the operating company entered into a $60.0 million, three-year Credit Agreement, the proceeds of which were used to finance a one-time distribution to its members. The principal amount borrowed bore interest at a variable rate based, at the Company’s option, on (i) the one, two, three, nine or twelve-month LIBOR rate plus 1.00%, or (ii) the higher of the lender’s prime rate and the Federal Funds Rate. The principal amount was payable in full at the end of the three-year term, with no penalty for prepayment. Approximately $0.1 million in debt issuance costs were incurred in association with this loan. Such costs have been recorded in prepaid expenses and other assets on the consolidated statements of financial condition and are being amortized over the term of the loan.

On February 11, 2008, the operating company entered into Amendment No. 1 to the Credit Agreement. The agreement, as amended, required the operating company to maintain assets under management of at least $15.0 billion and generate consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined, of at least $40.0 million in any consecutive four fiscal quarterly periods. Pursuant to the terms of the amended agreement, term loan amortization was required beginning in any period when assets under management were less than $20.0 billion and ending when assets under management was greater than $21.5 billion. Further, a 50% excess cash flow sweep was required if assets

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 9—Debt (continued)

under management were below $17.5 billion. Additionally, the LIBOR interest rate option was increased to LIBOR plus 1.50%. For the period from February 11, 2008 through July 23, 2008, the interest rate in effect was 6.91%, which was equal to the twelve-month LIBOR rate in effect at the time of the closing of the agreement of 5.41%, plus 1.50%. During the quarter ended June 30, 2008, the Company’s assets under management fell below $20 billion. On June 30, 2008, the Company made a required amortization payment of $3.0 million.

On September 19, 2008, the operating company entered into Amendment No. 2 to its Credit Agreement. The agreement, as amended, required the operating company to maintain assets under management of at least $12.0 billion and to make minimum quarterly amortization payments of $2.0 million until maturity, which was extended to July 23, 2011. Additionally, the LIBOR interest rate option was increased to LIBOR plus 1.75% and the EBITDA financial covenant stipulated in Amendment No. 1 was eliminated. The excess cash flow sweep was also increased to 75% of excess cash flow. On September 22, 2008, the Company made a required amortization payment of $5.0 million as a condition precedent to the effectiveness of this amendment. On September 30, 2008, the Company made a quarterly amortization payment of $5.0 million.

On October 28, 2008, the operating company entered into Amendment No. 3 to its Credit Agreement. This amendment provided for the following changes to the Credit Agreement, among others:

(i)	the minimum assets under management financial covenant was eliminated;

(ii)	the excess cash flow mandatory repayment was eliminated;

(iii)	the commitments under the revolving credit facility were reduced from $3. 0 million to approximately $1.8 million;

(iv)	with respect to loans borrowed at base rate, the margin added to base rate was increased from 0.00% to 0.75%; with respect to loans borrowed at LIBOR, the margin was not modified;

(v)	certain additional restrictions were placed on the operating company’s ability to make Restricted Payments (as defined in the Credit Agreement), including dividends; and

(vi)	amendments to certain covenants in order to permit the incurrence of subordinated debt by the operating company.

Conditions precedent to the execution of Amendment No. 3 included, among others, (i) the repayment by the operating company of $25.0 million of the $47.0 million principal amount outstanding under the Credit Agreement as of October 28, 2008, and (ii) the grant by the operating company and one of its subsidiaries of a security interest in their accounts receivable.

In order to fund the $25.0 million repayment by the operating company, the Company used $9.0 million in cash reserves and the proceeds from the issuance by the operating company of an aggregate of $16.0 million principal amount of Senior Subordinated Notes (collectively, the “Notes”) to entities established by Richard S. Pzena, the Company’s Chief Executive Officer, for the benefit of certain of his family members, an entity controlled by a Company director, and a former employee. The issuance of these Notes was approved by the three independent members of the Company’s Board of Directors.

The Notes were issued on October 28, 2008. Each of these Notes is unsecured, has a ten-year maturity and bears interest at 6.30% per annum. The provisions of the Notes include a restricted payments covenant (including dividends), a prohibition on incurring indebtedness which is not subordinated to the Notes, and events of default based on failure to make payments, bankruptcy, change of control and acceleration of material indebtedness. In addition, the Notes are subordinated to the repayment in full of the loans under the Credit Agreement.

As discussed above, subsequent to Amendment No. 2 and Amendment No. 3 to the Company’s Credit Agreement in 2008, the minimum EBITDA and minimum AUM covenants were eliminated. The Company was in compliance with these covenants as of and for all 2008 periods in which they were in effect.

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 9—Debt (continued)

Pursuant to the Credit Agreement and the Senior Subordinated Notes, the operating company would be in default if it ever failed to pay required interest and amortization payments in a timely fashion. Further, the Credit Agreement stipulates that the operating company would be in default thereunder if it defaults on its Senior Subordinated Notes. Such events of default would permit the lender under the applicable debt agreement to accelerate the debt thereunder. No such occurrence of acceleration occurred during the three months ended March 31, 2009 and 2008.

On January 23, 2009, the Company repaid $8.0 million of the principal amount outstanding under the Credit Agreement.

Note 10—Interest Rate Swap

The Company manages its exposure to changes in market rates of interest. The Company’s use of derivative instruments is limited to an interest rate swap used to manage the interest rate exposure related to its Credit Agreement. The Company monitors its position and the credit rating of the counterparty and does not anticipate non-performance by such counterparty.

On February 28, 2008, the operating company entered into a $60.0 million notional amount interest rate swap agreement that commenced on July 23, 2008. The swap, which expires July 23, 2010, obligates the operating company to pay a 2.825% fixed rate of interest on the notional amount and requires the counterparty to pay the operating company a floating interest rate based on the monthly LIBOR interest rate. The spread on the Credit Agreement is in addition to these amounts. As discussed in Note 9, on September 19, 2008, the maturity of amounts outstanding under the Company’s Credit Agreement was extended to July 23, 2011. The Company has not entered into any agreements to manage its exposure to fluctuations in interest rates from July 23, 2010 through July 23, 2011.

During the quarter ended September 30, 2008, the Company changed the designation of its swap agreement from a cash flow hedge to a trading derivative, as a significant portion of the cash flows associated with the original forecasted transaction were probable to not occur due to the amortization payments required to be made pursuant to the terms of its amended agreement. Accordingly, the Company reclassified the cumulative changes in fair value related to this swap from accumulated other comprehensive income to other expense. The Company records all changes to the swap’s fair value as a component of other expense. For the three months ended March 31, 2009, the Company recognized approximately $0.1 million in other expense related to such changes. For the three months ended March 31, 2008, the Company recognized approximately $0.5 million in other accumulated comprehensive loss associated with the change in fair value of this swap agreement.

Concurrently with the reductions in principal outstanding under the Credit Agreement in 2008, the Company reduced the notional amount of its interest rate swap to $22.0 million. The amounts paid to the counterparty in exchange for these 2008 reductions were approximately $0.1 million. During the three months ended March 31, 2009, the Company reduced the notional amount of its interest rate swap to $14.0 million. The amounts paid to the counterparty in exchange for this reduction was approximately $0.2 million.

Note 11—Income Taxes

The operating company is a limited liability company that has elected to be treated as a partnership for tax purposes. Neither it nor the Company’s other consolidated subsidiaries has made a provision for federal or state income taxes because it is the personal responsibility of each of these entities’ members (including the Company) to separately report their proportionate share of the respective entity’s taxable income or loss. The operating company has made a provision for New York City UBT. Subsequent to the offering and reorganization on October 30, 2007, the Company, as a “C” corporation under the Internal Revenue Code, is liable for federal, state and local taxes on the income derived from its economic interest in its operating company, which is net of UBT. Correspondingly, in its consolidated financial statements, the Company reports both the operating company’s provision for UBT as well as its provision for federal, state and local corporate taxes.

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 11—Income Taxes (continued)

For the three months ended March 31, 2009 and 2008, the Company’s taxable income was determined as follows:

	For the Three Months
	Ended March 31,
	2009			2008
	(in thousands)

Income Before Taxes	$	2,448		$	13,939
Unincorporated Business Taxes	(338		)	(940		)
Non-Controlling Interests	(2,240		)	(11,577		)
Income Before Corporate Income Taxes	$	(130	)	$	1,422

In September 2006, the Financial Accounting Standards Board issued Interpretation No.48, Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 establishes the minimum threshold for recognizing, and a system for measuring, the benefits of tax return positions in financial statements. It is the Company’s policy to recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. For the three months ended March 31, 2009 and 2008, no such expenses were recognized. As of March 31, 2009 and December 31, 2008, no accruals were recorded.

The Company and the operating company are generally no longer subject to U. S federal, or state and local income tax examinations by tax authorities for any year prior to 2005. All tax years subsequent to this date are considered open and subject to examination by tax authorities.

The components of the provision for income taxes are as follows (in thousands):

	For the Three Months
	Ended March 31,
	2009			2008

Current Provision:
Unincorporated Business Taxes	$	393		$	995
Local Corporate Tax	—			—
State Corporate Tax	—			—
Federal Corporate Tax	—			—
Total Current Provision	$	393		$	995
Deferred Provision:
Unincorporated Business Taxes	$	(55	)	$	(55	)
Local Corporate Tax	21			64
State Corporate Tax	41			115
Federal Corporate Tax	140			423
Total Deferred Provision	$	147		$	547
Change in Deferred Tax Asset Valuation Allowance	(814		)	—
Total Provision for Income Taxes	$	(274	)	$	1,542

Prior to October 30, 2007, the operating company was a cash basis taxpayer. As the result of the Company’s acquisition of membership units in conjunction with the offering, the operating company was required to become an accrual basis taxpayer. Pursuant to Section 481 of the Internal Revenue Code, the cumulative difference between the two methods of taxpaying are amortizable over four years. These differences generated approximately $0.4 million and $0.4 million in deferred tax liabilities as of March 31, 2009 and December 31, 2008, respectively. Such amounts are recorded in other liabilities in the consolidated statements of financial condition.

The acquisition of the operating company membership units noted above has allowed the Company to make an election under Section 754 of the Internal Revenue Code (“Section 754”) to step up its tax basis in the net assets acquired.

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 11—Income Taxes (continued)

This step up is deductible for tax purposes over a 15-year period. Based on the net proceeds of the offering and tax basis of the operating company as of October 30, 2007, this election gave rise to a deferred tax asset of approximately $68.7 million.

Pursuant to a Tax Receivable Agreement signed between the members of the operating company and the Company, 85% of the cash savings generated by this election will be distributed to the selling shareholders upon this benefit’s realization.

In September 2008, the Company evaluated the asset associated with this election after the decline in its AUM brought, for the first time, revenue projections below the point at which the Company would generate sufficient full-year taxable income to fully utilize this deferred tax asset. Other negative evidence it reviewed included (i) the general uncertain economic environment, which has been reflected in declining stock markets and had a corresponding impact on AUM and revenue levels; (ii) the accelerating negative trends affecting the asset management industry in particular; and (iii) the difficulty of projecting AUM in the current volatile environment. These factors were moderated by (i) the Company’s ability to control its compensation costs, which is its single largest expense; (ii) management’s experience in the asset management industry and minimal turnover of key personnel; and (iii) the ability of the Company to utilize tax losses generated by this asset over a longer time horizon. In conducting its analysis, the Company believed that the inherent difficulty in projecting future income was exacerbated by the economic environment. It correspondingly limited its projections to three years. Over this time period, the Company projected taxable income assuming no AUM growth and modest reductions in its cost structure.

The Company determined that, after weighing both the positive and negative evidence discussed above, a portion of benefits associated with this deferred tax asset were more likely than not to go unrealized due to estimates of future taxable income. As a result, the Company established a $62.7 million valuation allowance to reduce the net deferred tax asset to an amount more likely than not to be realized on September 30, 2008. This deferred tax asset remains available to the Company and can be used to reduce taxable income in future years. The Company similarly reduced the associated liability to selling and converting shareholders to reflect this change in the estimated realization of the asset. The Company recorded an approximate $53.3 million increase to other income associated with this reduction in the liability to selling and converting shareholders on September 30, 2008.

In October 2008, the selling unitholders agreed to waive any payments that the Company is or will be required to make to them for the 2008 and 2009 tax years pursuant to the Tax Receivable Agreement. During the quarter ended December 31, 2008, the Company recognized approximately $2.9 million in other income associated with this waiver.

As discussed further in Note 15 below, on March 3, 2009 certain of the operating company’s members exchanged an aggregate of 2,445,973 of their Class B units for an equivalent number of shares of Company Class A common stock. The Company elected to step up its tax basis in the incremental assets acquired in accordance with Section 754. Based on the exchange-date fair value of the Company’s common stock and the tax basis of the operating company, this election gave rise to a $2.5 million deferred tax asset and a corresponding $2.2 million liability to selling and converting shareholders under the Tax Receivable Agreement. Using the methodology described above, the Company assessed the realizability of the deferred tax asset associated with this exchange and determined that a portion of its benefits would go unutilized. Consequently, the Company established a $2.4 million valuation allowance to reduce the incremental deferred tax asset to an amount more likely than not to be realized. This deferred tax asset remains available to the Company and can be used to reduce taxable income in future years. The Company similarly reduced the associated liability to selling and converting shareholders to reflect this change in the estimated realization of the asset. Pursuant to the guidance of Emerging Issues Task Force Issue No. 94-10, Accounting by a Company for the Income Tax Effects of Transactions among or with Its Shareholders under FASB Statement No.109 (“EITF 94-10”), the Company recorded the effects of these transactions in equity.

During the first quarter of 2009, the Company reduced its valuation allowance by approximately $0.8 million due to revised estimates of future taxable income, primarily related to lower expense projections. The Company correspondingly increased its liability to selling and converting shareholders by $0.6 million to reflect this change in the estimated realization of the asset. The effects of these changes to the deferred tax asset and liability to selling and converting shareholders were recorded as a component of the provision for income taxes and other expense, respectively, on the consolidated statements of operations. As of March 31, 2009 and December 31, 2008, the net value of all deferred tax assets was approximately $4.2 million and $3.4 million, respectively. As of March 31, 2009 and December 31, 2008, the liability to selling and converting shareholders was approximately $2.5 million and $1.8 million, respectively.

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 11—Income Taxes (continued)

The change in the Company’s net deferred tax assets for the three months ended March 31, 2009 is summarized as follows (in thousands):

	Section 754			Other		Valuation Allowance			Total

Balance at December 31, 2008	$	65,368		$	785	$	(62,709	)	$	3,444
Deferred Tax Expense	(714		)	512		—			(202		)
Unit Conversion	2,532			—		(2,380		)	152
Change in Valuation Allowance	—			—		814			814
Balance at March 31, 2009	$	67,186		$	1,297	$	(64,275	)	$	4,208

Note 12—Investments in Marketable Securities

Investments in marketable securities consisted of the following at March 31, 2009:

	Cost		Unrealized Gain/(Loss)			Fair Value
	(in thousands)

Equities	$	20,978	$	(9,609	)	$	11,369

Investments in marketable securities consisted of the following at December 31, 2008:

	Cost		Unrealized Gain/(Loss)			Fair Value
	(in thousands)

Equities	$	24,097	$	(10,052	)	$	14,045

Note 13—Non-Controlling Interests

The Company did not initially record a non-controlling interest associated with the acquisition of its operating company, as the post-offering net equity of the operating company was less than zero. Pursuant to the guidance of EITF 95-7, no operating company non-controlling interest was recorded until the deficit attributable to non-controlling interest, approximately $10.8 million as of the date of the initial public offering, was extinguished. As of December 31, 2008, this deficit was extinguished.

Non-controlling interests in the operations of the Company’s operating company and consolidated subsidiaries are comprised of the following:

	For the Three Months Ended March 31,
	2009			2008
	(in thousands)

Non-Controlling Interest of Pzena Investment Management, LLC	$	3,566		$	13,477
Non-Controlling Interest in Consolidated Subsidiaries	(1,326		)	(1,900		)
Non-Controlling Interests	$	2,240		$	11,577

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 13—Non-Controlling Interests (continued)

Non-controlling interests in the equity of the Company’s operating company and consolidated subsidiaries are summarized as follows:

	As of
	March 31, 2009		December 31, 2008
	(in thousands)

Non-Controlling Interest of Pzena Investment Management, LLC	$	4,453	$	3,397
Non-Controlling Interest in Consolidated Subsidiaries	7,095		8,422
Non-Controlling Interests	$	11,548	$	11,819

Note 14—Members’ Equity Interests of Operating Company

For the three months ended March 31, 2008, the operating company granted 446,000 options to purchase units pursuant to the Pzena Investment Management, LLC 2006 Equity Incentive Plan. The Company granted no such options for the three months ended March 31, 2009. The options had varying vesting schedules and were issued at strike prices equal to the assessed fair market value per unit at the time of award issuance. The Company determined that the total grant-date fair value of the options awarded was $1.2 million, using the Black-Scholes option pricing model. The weighted-average grant date fair value of options issued for the three months ended March 31, 2008 was $2.64.

On January 1, 2009 and 2008, the operating company granted 30,000 and 13,000, respectively, restricted Class B units to certain members pursuant to the Pzena Investment Management, LLC 2006 Equity Incentive Plan. On January 1, 2008, the operating company also issued 86,458 phantom Class B units as part of its Bonus Plan. In December, 2008, participants in the Company’s deferred compensation program converted a portion of their holdings in investment accounts into an aggregate of 89,826 phantom Class B units. No such phantom units were granted for the three months ended March 31, 2009. All outstanding phantom units vest ratably over a four-year period that commenced January 1, 2008.

Except as otherwise provided by law, the liability of a member of the operating company is limited to the amount of its capital account. A member may transfer or assign all, or any part of, its membership interest to any other party (a “Transferee”). A Transferee of such membership interest shall not become a member unless its membership in the operating company is unanimously approved by the then existing member(s) in writing. Any Transferee admitted as a member shall succeed to the capital account or portion thereof transferred or assigned, as if no such transfer or assignment had occurred.

Note 15—Shareholders’ Equity

The Company was incorporated in the State of Delaware on May 8, 2007. On May 10, 2007, the Company issued 100 shares of its common stock, par value $0.01 per share (the “Old Common Stock”), for $100 to Richard S. Pzena, the sole director of the Company as of that date. On October 5, 2007, the Company effected a 100-for-6 reverse stock split of all shares of its Old Common Stock then outstanding. All share amounts have been adjusted to reflect this split. As of the effectiveness of the amendment and restatement of the Company’s certificate of incorporation on October 30, 2007, each share of the Old Common Stock outstanding immediately prior to effectiveness was reclassified as one share of the Company’s Class A common stock, par value $0.01 per share.

On October 30, 2007, the Company consummated an initial public offering of 6,100,000 shares of its Class A common stock, par value $0.01 per share, for net proceeds of approximately $98.9 million, after payment of underwriting discounts and estimated offering expenses. These net proceeds were used to purchase 6,100,000 membership units of the operating company, representing 9.5% of its then outstanding membership units, from its two outside investors and one former employee. Concurrently with the consummation of the Company’s initial public offering, the Operating Agreement of the operating company was amended and restated such that, among other things, (i) the Company became the sole managing member of the operating company, (ii) the 6,100,000 membership units of the operating company that the Company acquired were reclassified as Class A units of the operating company, (iii) an additional 11,118 Class A units were issued to the Company in respect of its issuance of 11,112 shares of Class A common stock to certain directors of the Company on October 30, 2007, and contribution of the $100 initial investment the Company received in exchange for issuance of six shares of Class A common stock on May 10, 2007, and (iv) the holders of the remaining 90. 5% of the

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 15—Shareholders’ Equity (continued)

outstanding membership units of the operating company were reclassified as Class B units of the operating company. Class A and Class B units of the operating company have the same economic rights per unit. Accordingly, immediately following the consummation of the offering and reorganization, the holders of Class A common stock (through the Company) and the holders of Class B units of the operating company held approximately 9.5% and 90.5%, respectively, of the economic interests in the operations of the business. As of March 31, 2009, the holders of Class A common stock (through the Company) and the holders of Class B units of the operating company held approximately 13.4% and 86.6%, respectively, of the economic interests in the operations of the business.

For each membership unit of the operating company that was reclassified as a Class B unit in the reorganization, the Company issued the holder one share of its Class B common stock, par value $0.000001 per share, in exchange for the payment of this par value. Each share of the Company’s Class B common stock entitles its holder to five votes, until the first time that the number of shares of Class B common stock outstanding constitutes less than 20% of the number of all shares of our common stock outstanding. From this time and thereafter, each share of the Company’s Class B common stock entitles its holder to one vote. When a Class B unit is exchanged for a share of the Company’s Class A common stock or forfeited, a corresponding share of the Company’s Class B common stock will automatically be redeemed and cancelled. Conversely, to the extent that the Company causes Pzena Investment Management, LLC to issue additional Class B units to employees pursuant to its equity incentive plan, these additional holders of Class B units would be entitled to receive a corresponding number of shares of the Company’s Class B common stock (including if the Class B units awarded are subject to vesting).

Simultaneously with the consummation of the offering and reorganization, all holders of the Company’s Class B common stock entered into a stockholders’ agreement, pursuant to which they agreed to vote all shares of Class B common stock then held by them, and acquired in the future, together on all matters submitted to a vote of the common stockholders.

The outstanding shares of the Company’s Class A common stock represent 100% of the rights of the holders of all classes of the Company’s capital stock to receive distributions, except that holders of Class B common stock will have the right to receive the class’s par value upon the Company’s liquidation, dissolution or winding up.

Pursuant to the amended and restated Operating Agreement of the operating company, each vested Class B unit is exchangeable for a share of the Company’s Class A common stock, subject to certain exchange timing and volume limitations.

The acquisition of the operating company’s membership interests by the Company has been treated as a reorganization of entities under common control pursuant to the guidance set forth in FTB 85-5. Accordingly, the net assets assumed by the Company through the offering have been reported at the operating company’s historical cost basis. As a result of these transactions, as of and subsequent to October 30, 2007, (i) the Company has consolidated the financial results of the operating company with its own and reflected the membership interest in it that it does not own as a non-controlling interest in its consolidated financial statements, and (ii) the Company’s income will be generated by its economic interest in the operating company’s net income.

This acquisition of membership units in the operating company has allowed the Company to make an election to step up its tax basis in the net assets acquired. This step up is deductible for tax purposes over a 15-year period. Pursuant to a tax receivable agreement between the Company and the operating company, 85% of the benefits of this election, less amounts waived, will be returned to the selling unitholders of the operating company as they are realized.

On February 17, 2009, the Company’s form S-3 registration statement, filed in order to register the Company’s issuance to Class B unitholders the total number of shares of Class A common stock issuable upon exchange of all Class B units outstanding immediately after the consummation of the operating company’s reorganization, was declared effective.

On March 3, 2009 certain of the operating company’s members exchanged an aggregate of 2,445,973 of their Class B units for an equivalent number of shares of Company Class A common stock. The incremental acquisition of additional operating company membership interests was similarly treated as a reorganization of entities under common control pursuant to the guidance set forth in FTB 85-5. Subsequent to the exchange, the holders of Class A common stock (through the Company) and the holders of Class B units of the operating company held approximately 13.4% and 86.6%, respectively, of the economic interest in the operations of the business.

Pzena Investment Management, Inc.

Unaudited Notes to the Consolidated Financial Statements (Continued)

Note 15—Shareholders’ Equity (continued)

The Company elected to step up its tax basis in the incremental assets acquired in accordance with Section 754. Based on the exchange-date fair value of the Company’s common stock and the tax basis of the operating company, this election gave rise to a $2.5 million deferred tax asset and a corresponding $2.3 million liability to selling and converting shareholders under the Tax Receivable Agreement. Consequently, the Company established a $2.4 million valuation allowance to reduce the incremental deferred tax asset to an amount more likely than not to be realized. This deferred tax asset remains available to the Company and can be used to reduce taxable income in future years. The Company similarly reduced the associated liability to selling and converting shareholders to reflect this change in the estimated realization of the asset. Pursuant to the guidance of Emerging Issues Task Force Issue No. 94-10, Accounting by a Company for the Income Tax Effects of Transactions among or with Its Shareholders under FASB Statement No.109 (“EITF 94-10”), the Company recorded the effects of these transactions in equity.

The incremental assets and liabilities assumed in the exchange were recorded on March 3, 2009 as follows:

	(in thousands)

Pzena Investment Management, LLC Members’ Capital	$	33,788
Pzena Investment Management, LLC Retained Deficit	(33,679		)
Realizable Deferred Tax Asset	152
Net Tax Receivable Liability to Converting Unitholders	(129		)
Total	$	132

Common Stock, at Par	$	25
Additional Paid-in Capital	107
Total	$	132

Note 16—Subsequent Events

On April 23, 2009, the Company repaid $2.0 million of the principal amount outstanding under the Credit Agreement.

On April 30, 2009, the Company’s assets under management were approximately $10.1 billion.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

We are an investment management firm that utilizes a classic value investment approach in each of our investment strategies. We currently manage assets in a variety of value-oriented investment strategies across a wide range of market capitalizations in both U. S. and international capital markets. At March 31, 2009, our assets under management, or AUM, were $8.6 billion. We manage separate accounts on behalf of institutions and high net worth individuals and act as sub-investment adviser for a variety of SEC-registered mutual funds and offshore funds.

We function as the holding company through which the business of our operating company, Pzena Investment Management, LLC, is conducted. Following our initial public offering and reorganization on October 30, 2007, we became the sole managing member of Pzena Investment Management, LLC. As such, we now control its business and affairs and, therefore, consolidate its financial results with ours. In light of our employees’ and other investors’ collective membership interest in our operating company, we reflect their ownership as a non-controlling interest in our consolidated financial statements. As a result, subsequent to October 30, 2007, our income is generated by our economic interest in our operating company’s net income. As of March 31, 2009, the holders of Class A common stock (through the Company) and the holders of Class B units of the operating company held approximately 13.4% and 86.6%, respectively, of the economic interests in the operations of the business.

Revenue

We generate revenue from management fees and incentive fees, which we collectively refer to as our advisory fees, by managing assets on behalf of separate accounts and acting as a sub-investment adviser for mutual funds and certain other investment funds. Our advisory fee income is recognized over the period in which investment management services are provided. Pursuant to the preferred accounting method under Emerging Issues Task Force Issue D-96, Accounting for Management Fees Based on a Formula (“EITF D-96”), income from incentive fees is recorded at the conclusion of the contractual performance period, when all contingencies are resolved.

Our advisory fees are primarily driven by the level of our AUM. Our AUM increases or decreases with the net inflows or outflows of funds into our various investment strategies and with the investment performance thereof. In order to increase our AUM and expand our business, we must develop and market investment strategies that suit the investment needs of our target clients and provide attractive returns over the long term. The value and composition of our AUM, and our ability to continue to attract clients, will depend on a variety of factors including, among other things:

·	our ability to educate our target clients about our classic value investment strategies and provide them with exceptional client service;

·	the relative investment performance of our investment strategies, as compared to competing products and market indices;

·	competitive conditions in the investment management and broader financial services sectors;

·	general economic conditions;

·	investor sentiment and confidence; and

·	our decision to close strategies when we deem it to be in the best interests of our clients.

For our separately-managed accounts, we are paid fees according to a schedule, which varies by investment strategy. The substantial majority of these accounts pay us management fees pursuant to a schedule in which the rate we earn on the AUM declines as the amount of AUM increases, subject to a minimum fee to manage each account. Certain of these clients pay us fees according to the performance of their accounts relative to certain agreed-upon benchmarks, which results in a slightly lower base fee, but allow us to earn higher fees if the relevant investment strategy outperforms the agreed-upon benchmark.

Pursuant to our sub-investment advisory agreements, we are generally paid a management fee according to a schedule, in which the rate we earn on the AUM declines as the amount of AUM increases. Certain of these funds pay us fixed rate management fees. Due to the substantially larger account size of certain of these accounts, the average advisory fees we earn on them, as a percentage of AUM, are lower than the advisory fees we earn on our separately-managed accounts.

The majority of advisory fees we earn on separately-managed accounts are based on the value of AUM at a specific date on a quarterly basis, either in arrears or advance. Advisory fees on certain of our separately-managed accounts, and with respect to most of the mutual funds that we sub-advise, are calculated based on the average of the monthly or daily market value. Advisory fees are also adjusted for any cash flows into or out of a portfolio, where the cash flow represents greater than 10% of the value of the portfolio. While a specific group of accounts may use the same fee rate, the method used to calculate the fee according to the fee rate schedule may differ as described above.

Our advisory fees may fluctuate based on a number of factors, including the following:

· changes in AUM due to appreciation or depreciation of our investment portfolios, and the levels of the contribution and withdrawal of assets by new and existing clients;

· distribution of AUM among our investment strategies, which have different fee schedules;

· distribution of AUM between separately-managed accounts and sub-advised funds, for which we generally earn lower overall advisory fees; and

· the level of our performance with respect to accounts on which we are paid incentive fees.

Expenses

Our expenses consist primarily of compensation and benefits expenses, as well as general and administrative expenses. These expenses may fluctuate due to a number of factors, including the following:

· variations in the level of total compensation expense due to, among other things, bonuses, awards of equity to our employees and members of our operating company, changes in our employee count and mix, and competitive factors; and

· expenses, such as rent, professional service fees and data-related costs, incurred, as necessary, to run our business.

Compensation and Benefits Expense

Our largest expense is compensation and benefits, which includes the salaries, bonuses, equity-based compensation and related benefits and payroll costs attributable to our members and employees. Compensation and benefits packages are benchmarked against relevant industry and geographic peer groups in order to attract and retain qualified personnel. Cash compensation has also declined due to lower revenue-based variable compensation costs and a decline in headcount. The table included in the section below describes the components of our compensation expense for the three months ended March 31, 2009 and 2008:

	For the Three Months Ended March 31,
	2009		2008
	(in thousands)

Cash Compensation and Other Benefits	$	5,789	$	8,607
Other Non-Cash Compensation	251		344
Total Compensation and Benefits Expense	$	6,040	$	8,951

On January 1, 2007, we adopted the PIM LLC 2006 Equity Incentive Plan, pursuant to which we have issued restricted units, and options to acquire units, in our operating company, both of which vest ratably over a four-year period. We used a fair-value method in recording the compensation expense associated with the granting of these restricted units, and options to acquire units, to new and existing members under the PIM LLC 2006 Equity Incentive Plan. Under this method, compensation expense is measured at the grant date based on the estimated fair value of the award and is recognized over the award’s vesting period. The fair value of the units is to be determined by reference to the market price of our Class A common stock on the date of grant, since these units are exchangeable for shares of our Class A common stock on a one-for-one basis. The fair value of the options to acquire units will be determined by using an appropriate option pricing model on the grant date.

On January 1, 2007, we instituted a deferred compensation plan, in which employees who earn in excess of $600,000 per year are required to defer a portion of their compensation in excess of this amount. These deferred amounts may be invested, at the employee’s discretion, in certain of our investment strategies, restricted phantom units of our operating company, or money market funds. Amounts deferred in any period reduce that period’s cash compensation expense and vest ratably over a four-year period beginning on January 1 of the next year. Therefore, the amortization of a ratable portion of 2007 deferred amounts has been reflected in our expenses for the three months ended March 31, 2009 and 2008. At March 31, 2009 and December 31, 2008, no such compensation was deferred. Should additional amounts be deferred in future periods, we would expect the non-cash portion of our compensation expense to increase as the existing and subsequently deferred amounts are amortized through income.

As of March 31, 2009, we had approximately $1.9 million in unrecorded compensation expense related to phantom operating company units issued pursuant to our deferred compensation plan and operating company unit and option grants issued under our PIM LLC 2006 Equity Incentive Plan. We expect that the amortization of these amounts will be approximately $0.7 million for each of the next three years, with a negligible amount amortized thereafter.

General and Administrative Expenses

General and administrative expenses include professional and outside services fees, office expenses, depreciation and the costs associated with operating and maintaining our research, trading and portfolio accounting systems. Our occupancy-related costs and professional services expenses, in particular, generally increase or decrease in relative proportion to the overall size and scale of our business operations.

As a result of our offering on October 30, 2007, we have incurred and expect to incur, additional expenses associated with being a public company for, among other things, director and officer insurance, director fees, SEC reporting and compliance (including Sarbanes-Oxley compliance), transfer agent fees, professional fees and other similar expenses. These additional expenses have and will reduce our net income.

Other Income/(Expense)

Other income/(expense) is derived primarily from interest income generated on our excess cash balances, investment income or loss arising from our investments in various private investment vehicles that we employ to incubate new strategies, interest expense on our amended credit agreement and senior subordinated notes, and mark-to-market movements on our swap agreement. Other income/(expense) is also affected by changes in our estimates of the liability due to our selling and converting shareholders associated with payments owed to them under the tax receivable agreement which was implemented subsequent to our reorganization and offering on October 30, 2007. As discussed further below, this liability represents 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we realize as a result of the amortization of the increases in tax basis generated from company’s acquisition of operating company units from its selling shareholders. Amounts waived by our selling shareholders reduce this liability. We expect the interest and investment components of other income, in the aggregate, to fluctuate based on market conditions and the performance of our investment strategies.

Non-Controlling Interests

Our operating company has historically consolidated the results of operations of the private investment partnerships over which we exercise a controlling influence. After our reorganization, we became the sole managing member of our operating company and now control its business and affairs and, therefore, consolidate its financial results with ours. In light of our employees’ and outside investors’ interest in our operating company, we have reflected their membership interests as a non-controlling interest in our consolidated financial statements. As a result, subsequent to October 30, 2007, our income is generated by our economic interest in our operating company’s net income. As of March 31, 2009, the holders of Class A common stock (through the Company) and the holders of Class B units of the operating company held approximately 13.4% and 86.6%, respectively, of the economic interests in the operations of the business.

Provision/(Benefit) for Income Tax

While our operating company has historically not been subject to U.S. federal and certain state income taxes, it has been subject to New York City Unincorporated Business Tax. As a result of our reorganization, we are now subject to taxes applicable to C-corporations. As such, our effective tax rate has increased as a result of our reorganization. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of March 31, 2009 and December 31, 2008, the Company recorded a $64.3 million and a $62.7 million valuation allowance, respectively, against the deferred tax asset associated with our acquisition of operating company units in conjunction with the offering and unit conversion.

Operating Results

General

Our earnings and cash flows are heavily dependent upon prevailing financial market conditions. Significant increases or decreases in the various securities markets, particularly the equities markets, can have a material impact on our results of operations, financial condition, and cash flows.

Beginning in the second half of 2007 and continuing through the quarter ended March 31, 2009, performance of our investment strategies was negatively impacted by significant volatility in the equity markets. Performance prior to 2009 was influenced by our overweight investment exposure to the financial services sector in particular. As a result, our assets under management declined by $11.8 billion, or 57.8% from $20.4 billion at March 31, 2008 to $8.6 billion at March 31, 2009, due to negative performance of $9.5 billion and net outflows of $2.3 billion.

During the three months ended March 31, 2009, we experienced gross outflows of $1.2 billion, which were partially offset by gross inflows of $0.8 billion. Our sub-advised accounts experienced gross outflows of $0.7 billion, which were offset by $0.3 billion in gross inflows. The $0.4 billion in net outflows were mainly attributable to the weaker performance of our sub-advised funds compared to that of their peers. Our separately-managed accounts experienced $0.5 billion in gross outflows, offset entirely by $0.5 billion in gross inflows.

During the three months ended March 31, 2008, we experienced gross outflows of $2.3 billion, which were offset by gross inflows of $1.3 billion. Our sub-advised accounts experienced $1.3 billion in gross outflows of AUM, which were offset by $0.5 billion in gross inflows. As noted above, the $0.8 billion in net outflows were mainly attributable to the weaker performance of our sub-advised funds compared to that of their peers. Our separately-managed accounts experienced $1.0 billion in gross outflows and $0.8 billion in gross inflows.

Our average AUM fluctuates based on changes in the market value of accounts advised and sub-advised by us and on fund flows. Accordingly, our revenues during 2009 are expected to decline from the comparable 2008 periods to the extent that the markets continue to be unfavorable to our value investment strategy. A decrease in revenue results in lower operating income and net income.

We expect that we will experience continued pressure on our operating margins in the future if AUM continues to decline. We expect our operating expenses to decline modestly in 2009 from the comparable 2008 periods, as we identify and implement potential cost savings opportunities.

Assets Under Management and Flows

The change in AUM in our separately-managed accounts and our sub-advised accounts for the three months ended March 31, 2009 and 2008 is described below:

	Three Months Ended March, 31,
Assets Under Management	2009			2008
	(in billions)

Separately-Managed Accounts
Beginning of Period Assets	$	6.4		$	14.0
Inflows	0.5			0.8
Outflows	(0.5		)	(1.0		)
Net Flows	—			(0.2		)
Performance	(1.1		)	(1.3		)
End of Period Assets	$	5.3		$	12.5

Sub-Advised Accounts
Beginning of Period Assets	$	4.3		$	9.6
Inflows	0.3			0.5
Outflows	(0.7		)	(1.3		)
Net Flows	(0.4		)	(0.8		)
Performance	(0.6		)	(0.9		)
End of Period Assets	$	3.3		$	7.9

Total
Beginning of Period Assets	$	10.7		$	23.6
Inflows	0.8			1.3
Outflows	(1.2		)	(2.3		)
Net Flows	(0.4		)	(1.0		)
Performance	(1.7		)	(2.2		)
End of Period Assets	$	8.6		$	20.4

At March 31, 2009, our $8.6 billion of AUM were invested in twelve value-oriented investment strategies which represent distinct capitalization segments of the U.S and international markets. The following table describes the allocation of our AUM as of March 31, 2009 among our seven largest investment strategies and the aggregate of our other investment strategies:

Investment Strategy	AUM at March 31, 2009
	(in billions)

Large Cap Value	$	4.4
Value Service	1.4
Global Value	1.5
Small Cap Value	0.4
International Value	0.2
Mid Cap Value	0.2
Other Strategies(1)	0.5
Total	$	8.6

(1) Our six other investment strategies are: All Cap Value, Financial Opportunities Service, Diversified Value, European Value, Mega Cap Value, and International Diversified Value.

Three Months Ended March 31, 2009 versus March 31, 2008

At March 31, 2009, the Company managed $8.6 billion in total assets, a decrease of $11.8 billion, or 57.8%, from $20.4 billion at March 31, 2008. The decrease year-over-year in AUM was due primarily to $9.5 billion in market depreciation, and, to a lesser extent, net outflows of $2.3 billion. Generally negative economic conditions and our 2008 overweight investment exposure to the financial services sector in particular contributed to the performance-related decline in our AUM. Our sub-advised accounts experienced net outflows of $0.4 billion for the three months ended March 31, 2009. These net outflows were driven in part by our investment strategies’ underperformance relative to their respective benchmarks and client asset re-balancing in response to the volatile economic environment.

The Company managed $5.3 billion in separately-managed accounts and $3.3 billion in sub-advised accounts, for a total of $8.6 billion in assets at March 31, 2009. Assets in separately-managed accounts decreased by $1.1 billion, or 17.2%, during the three months ended March 31, 2009, due to $1.1 billion in market depreciation. Assets in sub-advised funds decreased by $1.0 billion, or 23.3%, during the three months ended March 31, 2009, as a result of $0.6 billion in market depreciation and $0.7 billion in gross outflows, offset by $0.3 billion in gross inflows.

The Company managed $12.5 billion in separately-managed accounts and $7.9 billion in sub-advised accounts, for a total of $20.4 billion in assets at March 31, 2008. Assets in separately-managed accounts decreased by $1.5 billion, or 10.7%, during the three months ended March 31, 2008, due to $1.3 billion in market depreciation and $1.0 billion in gross outflows, offset by $0.8 billion in gross inflows. Assets in sub-advised funds decreased by $1.7 billion, or 17.7%, during the three months ended March 31, 2008, as a result of $0.9 billion in market depreciation and $1.3 billion in gross outflows, offset by $0.5 billion in gross inflows.

At March 31, 2009, separately-managed accounts represented 61.6% of our total AUM, as compared to 61.3% at March 31, 2008. AUM in our International Value and Global Value strategies decreased by a total of $1.3 billion, or 43.3%, to $1.7 billion, at March 31, 2009 from $3.0 billion at March 31, 2008. At March 31, 2009, our International Value and Global Value investment strategies accounted for 19.8% of our AUM, as compared to 14.7% at March 31, 2008.

Revenues

Our revenues from advisory fees earned on our separately-managed accounts and our sub-advised accounts for the three months ended March 31, 2009 and 2008 is described below:

	Three Months Ended March 31,
Revenue	2009		2008
	(in millions)

Separately-Managed Accounts	$	10.0	$	21.6
Sub-Advised Accounts	3.7		8.4
Total	$	13.7	$	30.0

Three Months Ended March 31, 2009 versus March 31, 2008

Our total revenue decreased $16.3 million, or 54.3%, to $13.7 million for the three months ended March 31, 2009, from $30.0 million for the three months ended March 31, 2008. This change was driven primarily by a reduction in weighted-average AUM, which decreased $12.8 billion, or 58.2%, to $9.2 billion for the three months ended March 31, 2009 from $22.0 billion for the three months ended March 31, 2008.

Our weighted average fees were 0.594% and 0.545% for the three months ended March 31, 2009 and 2008, respectively. The increase in weighted average fees was primarily due to a higher mix of assets in our International Value and Global Value strategies, which generally carry higher fees than our domestic strategies. Weighted-average assets in separately-managed accounts decreased $7.8 billion, or 58.2%, to $5.6 billion, for the three months ended March 31, 2009 from $13.4 billion at March 31, 2008, and had weighted average fees of 0.715% and 0.646% for the three months ended March 31, 2009 and 2008, respectively. Weighted-average assets in sub-advised accounts decreased $5.0 billion, or 58.1%, to $3.6 billion for the three months ended March 31, 2009 from $8.6 billion for the three months ended March 31, 2008, and had weighted average fees of 0.406% and 0.389% for the three months ended March 31, 2008, respectively. This increase in weighted average fees were generated by the timing of asset flows in our sub-advised accounts.

Expenses

Our operating expenses are driven primarily by our compensation costs. The table below describes the components of our compensation expense for the three months ended March 31, 2009 and 2008.

	For the Three Months Ended March 31,
	2009		2008
	(in thousands)

Cash Compensation and Other Benefits	$	5,789	$	8,607
Other Non-Cash Compensation	251		344
Total Compensation and Benefits Expense	$	6,040	$	8,951

Three Months Ended March 31, 2009 versus March 31, 2008

Total operating expenses decreased by $3.5 million, or 29.2%, to $8.5 million for the three months ended March 31, 2009, from $12.0 million for the three months ended March 31, 2008. This decline was primarily the result of overall reductions in bonus-related and variable compensation costs as well as decreases in professional services and data systems expenses.

Compensation and benefits expense decreased by $3.0 million, or 33.3%, to $6.0 million for the three months ended March 31, 2009 from $9.0 million for the three months ended March 31, 2008. This decline was primarily the result of lower cash compensation arising from reduced staffing levels and firmwide decreases in bonus-related and AUM-based variable compensation expense. Our employee count decreased from 78 at March 31, 2008 to 67 at March 31, 2009. The year-over-year decrease in headcount was primarily the result of staff reductions in back office operations undertaken in the fourth quarter of 2008, as well as natural attrition throughout the year.

General and administrative expenses decreased by $0.5 million, or 20.0%, to $2.5 million for the three months ended March 31, 2009 from $3.0 million for the three months ended March 31, 2008. This decrease was mainly attributable to decreases in professional services fees and data systems costs arising from ongoing efforts to contain costs.

Other Expense

Three Months Ended March 31, 2009 versus March 31, 2008

Other expense was $2.7 million for the three months ended March 31, 2009, and consisted primarily of $1.8 million in charges related to the negative performance of the Company’s investments in its own products and $0.6 million in other expense associated with an increase in the Company’s liability to its selling and converting shareholders associated with changes in the realizability of its related deferred tax asset. The remaining $0.3 million consisted of interest expense of $0.5 million, offset partially by dividends, interest income, and other income. Other expense was $4.1 million for the three months ended March 31, 2008, and consisted of $3.6 million in charges related to the negative performance of the Company’s investments in its own products and $1.0 million in interest expense, partially offset by $0.5 million in interest and dividend income. The $1.4 million annual decline in first quarter 2009 other expense arose primarily as a result of smaller losses incurred by the Company’s investments in its own products and reduced interest expense, partially offset by the adjustments to the Company’s liability to its selling and converting shareholders.

Provision / (Benefit) for Income Taxes

Three Months Ended March 31, 2009 versus March 31, 2008

The provision for income taxes was a benefit of $0.3 million for the three months ended March 31, 2009, compared to an expense of $1.5 million for the three months ended March 31, 2008. The $1.8 million decline was mainly attributable to a decline in taxable income and an approximately $0.8 million benefit recorded in 2009 related to adjustments to the valuation allowance recorded in 2008 against the deferred tax asset associated with the tax receivable agreement. A comparison of the effective tax rate for the three months ended March 31, 2009 to the effective tax rate for the three months ended March 31, 2008 is not meaningful due to the valuation allowance adjustments recorded in 2009.

Non-Controlling Interests

Three Months Ended March 31, 2009 versus March 31, 2008

Non-controlling interests were $2.2 million for the three months ended March 31, 2009 and consisted of $3.5 million associated with our employees’ and outside investors’ interest in the income of the operating company, offset by the $1.3 million effect of the absorption, by our consolidated subsidiaries, of their share of the losses of our consolidated investment partnerships. For the three months ended March 31, 2008, non-controlling interests were $11.6 million and consisted of $13.5 million associated with our employees’ and outside investors’ interest in the income of the operating company, offset by the $1.9 million effect of the absorption, by our consolidated subsidiaries, of their share of the losses of our consolidated investment partnerships. The change in non-controlling interests reflects primarily the decline in our weighted-average AUM, which had a corresponding negative impact on revenues and income.

Liquidity and Capital Resources

Historically, the working capital needs of our business have primarily been met through cash generated by our operations. Distributions to members of our operating company and loan amortization payments have been our largest use of cash from financing activities. Investing activities have historically been investments in our own investment strategies and, to a lesser extent, capital expenditures.

At March 31, 2009, our cash and cash equivalents were $26.7 million, inclusive of $0.3 million in cash held by our consolidated investment partnerships. Advisory fees receivable were $10.3 million. We also had approximately $3.7 million in marketable equity securities, net of $6.9 million in non-controlling interests, and exclusive of approximately $0.8 million in investments set aside to satisfy our obligations under our deferred compensation program.

We expect to fund the liquidity needs of our business in the next twelve months, and over the long term, primarily through cash generated from operations. As an investment management firm, our business has been materially affected by conditions in the global financial markets and economic conditions throughout the world. Our liquidity is highly dependent on the revenue and income from our operations, which is directly related to our levels of AUM. As of, and for, the three months ended March 31, 2009, our AUM and revenues declined by 57.8% and 54.3%, respectively, compared to the three months ended March 31, 2008. These reductions contributed to a 2.9% decline in our cash provided by operating activities during the comparable periods. To the extent that our AUM continues to decline, the cash provided by operating activities may be negatively impacted.

In determining the sufficiency of liquidity and capital resources to fund our business, we regularly monitor our liquidity position, including, among other things, cash, working capital, investments, long-term liabilities, lease commitments, debt obligations (including required amortization payments), and operating company distributions. Further, we consider compensation, one of our largest expenses, as sufficiently variable such that it can be adjusted to mitigate the decline in revenue we have experienced, and may continue to experience in the next twelve months. We continuously evaluate our staffing requirements and compensation levels with reference to our own liquidity position and external peer benchmarking data. The result of this review directly influences management’s recommendations to our board of directors with respect to such staffing and compensation levels.

We anticipate that tax allocations to the members of our operating company, which consisted of 36 of our employees as of March 31, 2009, two outside investors, one former employee and us, will continue to be a material financing activity. Under the terms and conditions of our amended credit agreement and senior subordinated notes, we have suspended our dividend payment to shareholders. Cash distributions to operating company members for partnership tax allocations are expected to decline if the taxable income of the operating company decreases.

As discussed further below, on October 28, 2008, our operating company entered into a third amendment to its credit agreement and issued $16.0 million in Senior Subordinated Notes to entities established by Richard S. Pzena, the Company’s CEO, for the benefit of certain of his family members, an entity controlled by a company director and a former employee. The proceeds of the notes and $9.0 million of cash reserves were used to reduce the principal amounts outstanding under the credit agreement. The amendment to the credit agreement, among other things, eliminated all financial covenants and the excess cash flow sweep, and reduced availability under the revolving credit facility from $3.0 million to $1.8 million. It also requires us to make mandatory quarterly principal repayments of $2.0 million and precludes us from paying dividends to shareholders. As of March 31, 2009, we had $14.0 million and $16.0 million outstanding under the credit agreement and the Senior Subordinated Notes, respectively. Although we are comfortable with our current capital structure, in the current economic environment, it is uncertain whether additional or alternative sources of debt or equity financing would be available on acceptable terms. We have never drawn on our current revolving credit facility for liquidity needs and do not anticipate needing to draw on such a facility in the future.

We do not anticipate meaningful outlays for internal investment or capital expenditures over the next nine months.

We believe that the amendment of our credit agreement, elimination of the dividend, reductions in headcount and ability to vary cash compensation levels have provided us with an appropriate degree of flexibility in providing for our liquidity needs.

Dividend Policy

We are a holding company and have no material assets other than our ownership of membership interests in our operating company. As a result, we depend upon distributions from our operating company to pay any dividends that our board of directors may declare to be paid to our Class A common stockhoders, if any. When and if our board of directors declares any such dividends, we then cause our operating company to make distributions to us in an amount sufficient to cover the amount of the dividends declared. We may not pay dividends to our Class A common stockholders in amounts that have been paid to them in the past, or at all, if, among other things, we do not have the cash necessary to pay our intended dividends or any of our financing facilities or other agreements restrict us from doing so. Pursuant to restrictions set forth in our amended credit agreement and the Senior Subordinated Notes as of October 28, 2008, we have suspended previous quarterly cash dividend payments to our Class A common stockholders. In the future, our board of directors may, in its discretion and subject to the Company’s operating results, debt agreements and applicable law, reinstate the dividend at an amount to be determined by it. To the extent we do not have cash on hand sufficient to pay dividends in the future, we may decide not to pay dividends. By paying cash dividends rather than investing that cash in our future growth, we risk slowing the pace of our growth, or not having a sufficient amount of cash to fund our operations or unanticipated capital expenditures, should the need arise.

Credit Agreement

On July 23, 2007, our operating company borrowed $60.0 million pursuant to a three-year term loan facility, the proceeds of which were used to finance a special one-time distribution to the members of our operating company as of that date. Concurrently, our operating company also obtained a $20.0 million revolving Credit facility to finance our short-term working capital needs. We refer to the term loan and revolving loan facilities as our Credit Agreement. On February 11, 2008, our operating company entered into the first amendment to the Credit Agreement. The amendment changed a number of Credit Agreement provisions, including: (i) the minimum AUM financial covenant was reduced from $20.0 billion to $15.0 billion; (ii) the minimum Earnings Before Interest, Taxes, Depreciation and Amortization, or EBITDA, financial covenant for each four quarter period was reduced from $60.0 million to $40.0 million; (iii) the capacity of the revolving credit facility was reduced from $20.0 million to $5.0 million; and (iv) the interest rate was increased from LIBOR plus 1.0% to LIBOR plus 1.5%. In addition, two mandatory prepayment provisions were added: (a) term loan amortization was required beginning in any period when AUM was less than $20 billion and ending when AUM was greater than $21.5 billion, and (b) a 50% excess cash flow sweep was required if AUM was below $17.5 billion. During the three months ended June 30, 2008, our assets under management fell below $20 billion. Pursuant to the provisions of the term loan, as amended, our operating company was required to make an amortization payment of $3.0 million on June 30, 2008.

On September 19, 2008, our operating company entered into Amendment No. 2 to its Credit Agreement. The agreement, as amended, required the operating company to maintain assets under management of at least $12.0 billion and to make minimum quarterly amortization payments of $2.0 million until maturity, which was extended to July 23, 2011. Additionally, the LIBOR interest rate option was increased to LIBOR plus 1.75% and the EBITDA financial covenant stipulated in Amendment No.1 was eliminated. The excess cash flow sweep was also increased to 75% of excess cash flow. On September 22, 2008, our operating company made a required amortization payment of $5.0 million as a condition precedent to the effectiveness of this amendment. On September 30, 2008, our operating company made a quarterly amortization payment of $5.0 million.

On October 28, 2008, our operating company entered into Amendment No. 3 to its Credit Agreement. This amendment provided for the following changes to the Credit Agreement, among others:

(i)	the minimum assets under management financial covenant was eliminated;

(ii)	the excess cash flow mandatory repayment was eliminated;

(iii)	the commitments under the revolving credit facility were reduced from $3.0 million to approximately $1.8 million;

(iv)	with respect to loans borrowed at base rate, the margin added to base rate was increased from 0.00% to 0.75%; with respect to loans borrowed at LIBOR, the margin was not modified;

(v)	certain additional restrictions were placed on the operating company’s ability to make Restricted Payments (as defined in the Credit Agreement), including dividends; and

(vi)	amendments to certain covenants in order to permit the incurrence of subordinated debt by the operating company.

Conditions precedent to the execution of Amendment No.3 included, among others, (i) the repayment by the operating company of $25.0 million of the $47.0 million principal amount outstanding under the Credit Agreement as of October 28, 2008, and (ii) the grant by the operating company and one of its subsidiaries of a security interest in their accounts receivable.

In order to fund the $25.0 million repayment by our operating company, we used $9.0 million in cash reserves and the proceeds from the issuance on October 28, 2008 of an aggregate of $16.0 million principal amount of Senior Subordinated Notes (collectively, the “Notes”) to entities established by Richard Pzena, our Company’s Chief Executive Officer, for the benefit of certain of his family members, an entity controlled by a Company director, and a former employee of our operating company. Each of these Notes is unsecured, has a ten-year maturity and bears interest at 6.30% per annum. The provisions of the Notes include a restricted payments covenant (including dividend payments), a prohibition on incurring indebtedness which is not subordinated to the Notes, and events of default based on failure to make payments, bankruptcy, change of control and acceleration of material indebtedness. In addition, the Notes are subordinated to the repayment in full of the loans under the Credit Agreement.

On January 23, 2008, the Company used cash generated from operations to repay $8.0 million of the principal amount outstanding under the Credit Agreement.

Tax Receivable Agreement

Our purchase of membership units of our operating company concurrently with our initial public offering, and the future exchanges by holders of Class B units of our operating company for shares of our Class A common stock (pursuant to the exchange rights provided for in the Operating Company’s operating agreement), has resulted in, and are expected to continue to result in, increases in our share of the tax basis of the tangible and intangible assets of our operating company at the time of our acquisition and these future exchanges, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to us. These increases in tax basis and tax depreciation and amortization deductions have reduced and are expected to continue to reduce, the amount of tax that we would otherwise be required to pay in the future. We have entered into a tax receivable agreement with the current members of our operating company, the one member of our operating company immediately prior to our initial public offering who sold all of its membership units to us in connection with our initial public offering, and any future holders of Class B units, that requires us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control, as described in the tax receivable agreement) as a result of the increases in tax basis described above and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement.

In October 2008, the selling unitholders agreed to waive any payments that we are or will be required to make to them for the 2008 and 2009 tax years pursuant to the tax receivable agreement.

Cash Flows

Operating activities provided $9.9 million and $10.2 million for the three months ended March 31, 2009 and 2008, respectively. This decline in cash flows from operating activities was driven primarily by a decrease in average AUM from $22.0 billion for the three months ended March 31, 2008, to $9.2 billion for the three months ended March 31, 2009, which had a corresponding negative impact on total revenues.

Investing activities consist primarily of investments in affiliates and other investment partnerships, as well as capital expenditures. Investing activities provided less than $0.1 million for the three months ended March 31, 2009 and used $0.1 million for the three months ended March 31, 2008.

Financing activities consist primarily of borrowing arrangements and contributions from, and distributions to, non-controlling interests. Financing activities used $10.6 million and $1.3 million for the three months ended March 31, 2009 and 2008, respectively. The increase in cash used in financing activities is due primarily to $8.0 million in repayments on our term debt and reductions in contributions from non-controlling interests and distributions to members.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2009.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. We evaluate our estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.

Accounting policies are an integral part of our financial statements. A thorough understanding of these accounting policies is essential when reviewing our reported results of operations and our financial condition. Management believes that the critical accounting policies discussed below involve additional management judgment due to the sensitivity of the methods and assumptions used.

Consolidation

Our policy is to consolidate all majority-owned subsidiaries in which we have a controlling financial interest and variable-interest entities where we are deemed to be the primary beneficiary. We also consolidate non-variable-interest entities which we control as the general partner or managing member. We assess our consolidation practices regularly, as circumstances dictate. All significant inter-company transactions and balances have been eliminated.

Income Taxes

We are a “C” corporation under the Internal Revenue Code, and thus liable for federal, state and local taxes on the income derived from our economic interest in our operating company. The operating company is a limited liability company that has elected to be treated as a partnership for tax purposes. Our operating company has not made a provision for federal or state income taxes because it is the responsibility of each of the operating company’s members (including us) to separately report their proportionate share of the operating company’s taxable income or loss. Similarly, the income of our consolidated investment partnerships is not subject to income taxes, as such income is allocated to each partnership’s individual partners. The operating company has made a provision for New York City UBT.

We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating loss carryforwards and tax credits. A valuation allowance is maintained for deferred tax assets that we estimate are more likely than not to be unrealizable based on available evidence at the time the estimate is made. Determining the valuation allowance requires significant management judgments and assumptions. In determining the valuation allowance, we use historical and forecasted future operating results, based upon approved business plans, including a review of the eligible carryforward periods, tax planning opportunities and other relevant considerations. Each quarter, we reevaluate our estimate related to the valuation allowance, including our assumptions about future profitability.

We believe that the accounting estimate related to the $64.3 million valuation allowance, assessed as of March 31, 2009 against the deferred tax asset associated with our acquisitions of operating company membership units, is a critical accounting estimate because the underlying assumptions can change from period to period. For example, tax law changes or variances in future projected operating performance could result in a change in the valuation allowance. If we were not able to realize all or part of our net deferred tax assets in the future, an adjustment to our deferred tax assets valuation allowance would be charged to income tax expense in the period such determination was made.

Management judgment is required in determining our provision for income taxes, evaluating our tax positions and establishing deferred tax assets and liabilities. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. If our estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to earnings would result.

Recently Issued Accounting Pronouncements

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”). FAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. As FAS 161 only affects financial statement disclosure, the impact of adoption on January 1, 2009 was limited to additional financial statement disclosure.

effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. The adoption of EITF 03-6-1 on January 1, 2009 did not have a material impact on our Company’s consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

Our exposure to market risk is directly related to our role as investment adviser for the separate accounts we manage and the funds for which we act as a sub-investment adviser. Global markets have continued to experience unprecedented volatility, and a challenging business climate is forecast for the foreseeable future. Market conditions have resulted in a significant reduction in our assets under management, which directly impacts our revenues and net income. A continued economic downturn and volatility in the global financial markets could also significantly affect the estimates, judgments, and assumptions used in the valuation of our financial instruments.

All of our revenue for the three months ended months March 31, 2009 and 2008 was derived from advisory fees, which are typically based on the market value of AUM, which can be affected by adverse changes in interest rates, foreign currency exchange and equity prices. Accordingly, a decline in the prices of securities would cause our revenue and income to decline due to a decrease in the value of the assets we manage. In addition, such a decline could cause our clients to withdraw their funds in favor of investments offering higher returns or lower risk, which would cause our revenue and income to decline further.

We are also subject to market risk due to a decline in the value of the holdings of our consolidated subsidiaries, which consist primarily of marketable securities. At March 31, 2009, the fair value of these assets was $11.4 million. Assuming a 10% increase or decrease, the fair value would have increased or decreased by $1.1 million at March 31, 2009.

Interest Rate Risk

The amount that our operating company borrowed pursuant to the Credit Agreement, and any amounts our operating company borrows under the related revolving credit facility, will accrue interest at variable rates. The operating company entered into an interest rate swap agreement that commenced on July 23, 2008. The swap, which expires on July 23, 2010, obligates us to pay a 2.825% fixed rate of interest on the notional amount and requires the counterparty to pay us a floating interest rate based on the monthly LIBOR interest rate. The spread on the Credit Agreement is in addition to these amounts. Interest rate changes may, therefore, affect the amount of our interest payments related to any potential differential between the notional amount of the interest rate swap and amounts outstanding under the Credit Agreement, as well as any amounts borrowed under the revolving credit facility. Such changes would correspondingly affect our future earnings and cash flows. In addition, we have not entered any arrangement to hedge our exposure to interest rates from July 23, 2010 to July 23, 2011. For this one year period, interest rate changes would affect our future earnings and cash flows. Based on the consolidated debt obligations that we have as of March 31, 2009, we believe that our hedge would be unaffected in the event that interest rates were to increase by one percentage point.

Item 4. Controls and Procedures.

During the course of their review of our consolidated financial statements as of March 31, 2009, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of March 31, 2009. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2009, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the first quarter of 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

In the normal course of business, we may be subject to various legal and administrative proceedings. On November 21, 2007 and January 16, 2008, substantively identical putative class action lawsuits were commenced in the United States District Court for the Southern District of New York against us and Richard S. Pzena, our chief executive officer, seeking remedies under Section 11 of the Securities Act of 1933, as amended (the “Securities Act”). The Court consolidated the lawsuits and appointed co-lead plaintiffs, who filed a consolidated amended complaint. The consolidated amended complaint named as defendants us, Richard S. Pzena, and two of the underwriters of our initial public offering, Goldman Sachs & Co., Inc. and UBS Securities LLC. Plaintiffs sought to represent a class of all persons who purchased or otherwise acquired Class A common stock issued pursuant or traceable to our initial public offering. The consolidated amended complaint alleged that the registration statement and prospectus relating to the initial public offering of our Class A common stock contained material misstatements and omissions and wrongfully failed to disclose net redemptions in the John Hancock Classic Value Fund, for which we act as sub-investment advisor. The consolidated amended complaint sought damages in an unspecified amount, including rescission or rescissory damages. The Court granted defendants’ motion to dismiss the consolidated amended complaint and, on September 4, 2008, the Court entered a judgment in favor of defendants. Plaintiffs have appealed the Court’s judgment to the United States Court of Appeals for the Second Circuit, and that appeal is pending. We believe that the allegations and claims are without merit and we will continue to contest these claims vigorously.

Item 1A. Risk Factors.

There are no material changes from the risk factors set forth in Part 1, Item 1A of the Company’s 2008 Form 10-K.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None

Item 6. Exhibits.

Exhibit		Description of Exhibit
14.1		Code of Business Conduct and Ethics (effective as of October 25, 2007) (revised as of January 16, 2009)
31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15(d)-14(a)
31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15(d)-14(a)
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

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

Dated: May 11, 2009

	PZENA INVESTMENT MANAGEMENT, INC.

	By:	/s/ RICHARD S. PZENA

		Name: Richard S. Pzena
		Title: Chief Executive Officer

	By:	/s/ GREGORY S. MARTIN

		Name: Gregory S. Martin
		Title: Chief Financial Officer

Dear Colleagues/Associates:

The good name and reputation of Pzena Investment Management, Inc., Pzena Investment Management, LLC and their subsidiaries (collectively, the “Company”) are a result of the dedication and hard work of all of us. Together, we are responsible for preserving and enhancing this reputation, a task that is fundamental to our continued well-being. Our goal is not just to comply with the laws and regulations that apply to our business; we also strive to abide by the highest standards of business conduct.

Set forth in the succeeding pages is the Company’s Code of Business Conduct and Ethics (“the Code”). The purpose of the Code is to reinforce and enhance the Company’s ethical way of doing business and, in particular, to provide regulations and procedures consistent with the Investment Company Act of 1940 and the Investment Advisers Act of 1940. The contents of the Code are not new, however. The policies set forth here are part of the Company’s long-standing tradition of ethical business standards.

All employees, officers and directors are expected to comply with the policies set forth in the Code. Read the Code carefully and make sure that you understand it, the consequences of non-compliance, and the Code’s importance to the success of the Company. If you have any questions, speak to the Chief Compliance Officer or any of the alternate Compliance Officers identified in the Code.

The Code should be viewed as the minimum requirements for conduct. The Code cannot and is not intended to cover every applicable law or provide answers to all questions that might arise; for that we must ultimately rely on each person’s good sense of what is right, including a sense of when it is proper to seek guidance from others on the appropriate course of conduct. When in doubt about the advisability or propriety of a particular practice or matter, please confer with the Legal and Compliance group.

We at the Company are committed to providing the best and most competitive services to our clients. Adherence to the policies set forth in the Code will help us achieve that goal.

	Sincerely,

	Richard S. Pzena

Table of Contents

		Page

PUTTING THIS CODE OF BUSINESS CONDUCT AND ETHICS TO WORK		1
About this Code of Business Conduct and Ethics		1
Purpose		1
Employee Provisions		2
Implementation		2
Definitions		4
RESPONSIBILITY TO OUR ORGANIZATION		5
Conflicts of Interest		5
Prohibited Transactions with Respect to Non-Company Securities		6
Employee Trading Exceptions with Respect to Non-Company Securities		7
Exempt Transactions		8
Pre-Clearance Requirement		8
Reporting Requirements		9
Company Disclosures		10
Review		11
Reporting Violations		11
Background Checks		11
Sanctions		11
Required Records		12
Record Retention		12
Waivers of this Code		13
Corporate Opportunities		13
Protection and Proper Use of Company Assets		13
Client Information		13
Portfolio Company Information		13
Company Information		14
INSIDER TRADING		14
FAIR DEALING		14
Antitrust Laws		14
Conspiracies and Collaborations Among Competitors		15
Distribution Issues		15
Penalties		16
Gathering Information About the Company’s Competitors		16
RESPONSIBILITY TO OUR PEOPLE		17
Equal Employment Opportunity		17
Non-Discrimination Policy		17
Anti-Harassment Policy		17
Individuals and Conduct Covered		17
Retaliation		17
Reporting an Incident of Harassment, Discrimination or Retaliation		18
LEAVE POLICIES		18
Bereavement Leave		18
Jury Duty		18
Family and Medical Leave Act		18

Disability		18
Maternity Leave Program		19
Parenting Leave		19
Coordination with FMLA Leave		19
Coordination with Vacation		19
Approval		19
Job Security		19
Safety in the Workplace		20
Weapons and Workplace Violence		20
Drugs and Alcohol		20
INTERACTING WITH GOVERNMENT		20
Prohibition on Gifts to Government Officials and Employees		20
Political Contributions and Activities		20
Lobbying Activities		21
Bribery of Foreign Officials		21
Amendments and Modifications		21
Form ADV Disclosure		21
Employee Certification		21

PUTTING THIS CODE OF BUSINESS CONDUCT AND ETHICS TO WORK

About this Code of Business Conduct and Ethics

We at the Company are committed to the highest standards of business conduct in our relationships with each other and with our clients, suppliers, shareholders and others. This requires that we conduct our business in accordance with all applicable laws and regulations and in accordance with the highest standards of business conduct. The Company’s Code of Business Conduct and Ethics (this “Code”) helps each of us in this endeavor by providing a statement of the fundamental principles and key policies and procedures that govern the conduct of our business. Furthermore, this Code sets out procedures for compliance by the Company, a registered investment adviser to separately managed advisory accounts including the registered investment companies from time to time identified on Schedule A hereto (the “Funds”) as well as unregistered funds and other private accounts, with Rule 17j-1 under the Investment Company Act of 1940, as amended, Rule 204A-1 and Rule 204-2 under the Investment Advisers Act of 1940, as amended (hereinafter, the Investment Company Act of 1940 and the Investment Advisers Act of 1940 shall collectively be referred to as the “1940 Acts” and Rule 17j-1, Rule 204A-1 and Rule 204-2 shall be collectively referred to as the “Rules”). This Code is designed to establish standards and procedures for the detection and prevention of activities by which persons having knowledge of the investments and investment intentions of the Company’s advisory accounts may breach their fiduciary duties, and to avoid and regulate situations that may give rise to conflicts of interest that the Rules address.

This Code is based on the principle that the Company owes a fiduciary duty to clients, to ensure that its employees conduct their Personal Security Transactions (as defined below) in a manner that does not interfere with clients’ transactions or otherwise take unfair advantage of the Company’s relationship to its clients. The fiduciary principles that govern personal investment activities reflect, at a minimum, the following: (1) the duty at all times to place the interests of the client first; (2) the requirement that all Personal Security Transactions be conducted consistent with this Code and in such a manner as to avoid any actual or potential conflict of interest or any abuse of an individual’s position of trust and responsibility; (3) the fundamental standard that investment personnel should not take inappropriate advantage of their positions; and (4) the requirement that investment personnel comply with applicable Federal securities laws. Our business depends on the reputation of all of us for integrity and principled business conduct. Thus, in many instances, the policies referenced in this Code go beyond the requirements of the law.

Honesty and integrity are required of the Company and its employees, officers and directors at all times. The standards herein should be viewed as the minimum requirements for conduct. All employees, officers and directors of the Company are encouraged and expected to go above and beyond the standards outlined in this Code in order to provide clients with top level service while adhering to the highest ethical standards.

This Code is a statement of policies for individual and business conduct and does not, in any way, constitute an employment contract or an assurance of continued employment. Employees of the Company are employed at-will, except when covered by an express, written employment agreement. This means that employees may choose to resign their employment at any time, for any reason or for no reason at all. Similarly, the Company may choose to terminate employees’ employment at any time, for any legal reason or for no reason at all, but not for an unlawful reason.

Purpose

The purpose of this Code is to reinforce and enhance the Company’s ethical way of doing business and, in particular, to provide regulations and procedures consistent with the 1940 Acts and the Rules. As required by Rule 204A-1, this Code sets forth standards of conduct, requires compliance with the Federal securities laws and addresses personal trading. In addition, this Code is designed to give effect to the general prohibitions set forth in Rule 17j-1(b), to wit:

“It is unlawful for any affiliated person of or principal underwriter for a Fund, or any affiliated person of an investment adviser of or principal underwriter for a Fund, in connection with the purchase or sale, directly or indirectly, by the person of a security held or to be acquired by the Fund:

(i) To employ any device, scheme or artifice to defraud the Fund;

(ii) To make any untrue statement of a material fact to the Fund or omit to state a material fact necessary in order to make the statements made to the Fund, in light of the circumstances under which they are made, not misleading;

(iii) To engage in any act, practice, or course of business that operates or would operate as a fraud or deceit on the Fund; or

(iv) To engage in any manipulative practice with respect to the Fund.”

Employee Provisions

All Access Persons are required to file reports of their Personal Security Transactions (as defined below), excluding exempted securities, as provided in the “Pre-Clearance Requirement” and “Reporting Requirements” sections below and, if they wish to trade in the Company’s stock or in the same securities as any of the Company’s advisory accounts, must comply with the specific procedures in effect for such transactions.

The reports of employees will be reviewed and compared with the activities of the Company’s advisory accounts and, if a pattern emerges that indicates abusive trading or noncompliance with applicable procedures, the matter will be referred to the Company’s Chief Compliance Officer (the “CCO”), who will make appropriate inquiries and decide what action, if any, is then appropriate, including escalation to the Company’s management as needed.

Implementation

In order to implement this Code, a CCO and one or more alternate Compliance Officers (each, an “Alternate”) shall be designated from time to time for the Company. The current CCO is Joan F. Berger and the current Alternates are Steven M. Coffey, Michelle C. Houck, and Jacques Pompy.

The duties of the CCO and each Alternate shall include:

(i) Continuous maintenance of a current list of the names of all employees with a description of their title or employment and updating Schedule B of this Code;

(ii) Furnishing all employees with a copy of this Code, and initially and periodically informing them of their duties and obligations thereunder;

(iii) Training and educating employees regarding this Code and their responsibilities hereunder;

(iv) Maintaining, or supervising the maintenance of, all records required by this Code;

(v) Maintaining a list of the Funds that the Company advises or subadvises and updating Schedule A of this Code;

(vi) Determining with the assistance of an Approving Officer (as defined below) whether any particular Personal Security Transaction should be exempted pursuant to the provisions of the sections titled “Conflicts of Interest” or “Prohibited Transactions” of this Code;

(vii) Determining with the assistance of an Approving Officer whether special circumstances warrant that any particular security or Personal Security Transaction be temporarily or permanently restricted or prohibited;

(viii) Maintaining, from time to time as appropriate, a current list of the securities that are restricted or prohibited pursuant to (vii) above;

(ix) Issuing any interpretation of this Code that may appear consistent with the objectives of the Rules and this Code;

(x) Conducting such inspections or investigations as shall reasonably be required to detect and report violations of this Code, as described in paragraphs (xi) and (xii) below, to the Company’s management and the Board of Directors of Pzena Investment Management, Inc. (the “Board”);

(xi) Submitting periodic reports to the Company’s management containing: (A) a description of any material violation by any non-executive employee of the Company and the sanction imposed; (B) a description of any violation by any director or executive officer of the Company and the sanction imposed; (C) interpretations issued by and any material exemptions or waivers found appropriate by the CCO; and (D) any other significant information concerning the appropriateness of this Code; and

(xii) Submitting a report at least annually to the Board and the Executive Committee of Pzena Investment Management, LLC (the “Executive Committee”) that: (A) summarizes existing procedures concerning personal investing and any changes in the procedures made during the past year; (B) identifies the violations described in clauses (A) and (B) of the preceding paragraph (xi); (C) identifies any recommended changes in existing restrictions or procedures based upon experience under this Code, evolving industry practices or developments in applicable laws or regulations; and (D) reports of efforts made with respect to the implementation of this Code through orientation and training programs and ongoing reminders.

Each of us is responsible for knowing and understanding the policies and guidelines contained in the following pages. If persons have questions, please ask them; if they have ethical concerns, please raise them. The CCO, who is responsible for overseeing and monitoring compliance with this Code, and the other resources set forth in this Code are available to answer questions and provide guidance and for persons to report suspected misconduct. Our conduct should reflect the Company’s values, demonstrate ethical leadership, and promote a work environment that upholds the Company’s reputation for integrity, ethical conduct and trust.

Copies of this Code are available from the CCO, the General Counsel and on the Company’s website. A statement of compliance with this Code must be signed by all officers, directors and employees on an annual basis.

This Code cannot provide definitive answers to all questions. If employees have questions regarding any of the policies discussed in this Code or if employees are in doubt about the best course of action in a particular situation, employees should seek guidance from a supervisor, the CCO or the other resources identified in this Code.

This Code is a statement of the fundamental principles and key policies and procedures that govern the conduct of the Company’s business. It is not intended to and does not create any obligations to or rights in any employee, director, client, supplier, competitor, shareholder or any other person or entity.

Definitions

For purposes of this Code:

(i) “Access Person(s)” means any employee, officer, or director (provided that directors may rebut the presumption of access established under Rule 17j-1(a)(1) by way of certification) of the Company.

(ii) “Approving Officer” means Richard S. Pzena, John P. Goetz, A. Rama Krishna, or Michael Peterson.

(iii) A security is “being considered for purchase or sale” when, subject to the Company’s systematic buy/sell discipline as described in its Form ADV and client and prospect presentations, (i) a recommendation to purchase or sell that security has been made by the Company to an advisory account (e.g., the Portfolio Manager has instructed Portfolio Administration to begin preparing orders) or (ii) the Portfolio Manager is seriously considering making such a recommendation.

(iv) “Beneficial Ownership” means any interest by which an employee or officer or any member of such person’s “immediate family” (which, for purposes of this Code includes a spouse or civil partner (wherever they may live), dependent child or stepchild (wherever they may live), or parent, sibling or other relative by blood or marriage living in the same household as the employee) can directly or indirectly derive a monetary benefit from the purchase, sale or ownership of a Security. Thus, a person may be deemed to have Beneficial Ownership of Securities held in accounts in such person’s own name, such person’s spouse’s name, and in all other accounts over which such person does or could be presumed to exercise investment decision-making powers, or other influence or control(1), including trust accounts, partnership accounts, corporate accounts or other joint ownership or pooling arrangements; provided however, that with respect to spouses, a person shall no longer be deemed to have Beneficial Ownership of any accounts not held jointly with his or her spouse if the person and the spouse are legally separated or divorced and are not living in the same household.

(v) “Exempt Transactions” means the transactions described in the section hereof titled “Exempt Transactions.”

(vi) “Personal Security Transaction” means, for any employee or officer, a purchase, sale, gifting or donation of a Security in which such person has, had, or will acquire a Beneficial Ownership.

(1) In accordance with foreign regulations, this would include, without limitation, any Security with which the Access Person is linked as a result of: (i) directly or indirectly controlling the Security (in particular, but without limitation, by way of (i) having a majority of the voting rights in that Security; or (ii) by being a shareholder in that Security and having rights to appoint or remove a majority of the relevant Board, or to exercise a dominant influence over it under a shareholders’ agreement); or (ii) having a participating interest in the Security, by holding, directly or indirectly, at least 20% or more of the voting rights or capital.

(vii) “Purchase and Sale of a Security” includes, inter alia, the writing of an option to purchase or sell a Security. In addition, the “sale of a Security” also includes the disposition by a person of that security by donation or gift. On the other hand, the acquisition by a person of a security by inheritance or gift is not treated as a “purchase” of that Security under this Code as it is an involuntary purchase that is an Exempt Transaction under clause (iii) of the section titled “Exempt Transactions” below.

(viii) “Security” shall mean any common stock, preferred stock, treasury stock, single stock future, exchange traded fund or note, hedge fund, mutual fund, private placement, limited partnership interest, note, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, transferable share, voting-trust certificate, certificate of deposit for a Security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any Security (including a certificate of deposit) or on any group of Securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “Security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

RESPONSIBILITY TO OUR ORGANIZATION

Company employees, officers and directors are expected to dedicate their best efforts to advancing the Company’s interests and to make decisions that affect the Company based on the Company’s best interests, independent of outside influences.

Conflicts of Interest

A conflict of interest occurs when employees’ private interests interfere, or even appear to interfere, with the interests of the Company. A conflict situation may arise when employees take actions or have interests that make it difficult for employees to perform Company work objectively and effectively. Each employee’s obligation to conduct the Company’s business in an honest and ethical manner includes the ethical handling of actual, apparent and potential conflicts of interest between personal and business relationships. This includes full disclosure of any actual, apparent or potential conflicts of interest as set forth below.

As a fiduciary, the Company has an affirmative duty of care, loyalty, honesty, and good faith to act in the best interest of its clients. Compliance with this duty can be achieved by avoiding conflicts of interest or, when impracticable to do so, by fully disclosing all material facts concerning any conflict that does arise with respect to any client and following appropriate procedures designed to minimize any such conflict. Employees must try to avoid situations that have even the appearance of conflict or impropriety.

(i) Conflicts of interest may arise where the Company or its employees have reason to favor the interests of one client over another client. Favoritism of one client over another client constitutes a breach of fiduciary duty.

(ii) Employees are prohibited from using knowledge about pending or currently considered securities transactions for clients to profit personally, directly or indirectly, as a result of such transactions, including by purchasing or selling such securities. Conflicts raised by Personal Security Transactions also are addressed more specifically below.

(iii) If the Company determines that an employee’s Beneficial Ownership of a Security presents a material conflict, the employee may be restricted from participating in any decision-making process regarding the Security. This may be particularly true in the case of proxy voting, and employees are expected to refer to and strictly adhere to the Company’s proxy voting policies and procedures in this regard.

(iv) Employees are required to act in the best interests of the Company’s clients regarding execution and other costs paid by clients for brokerage services. Employees are expected to refer to and strictly adhere to the Company’s Best Execution policies and procedures.

(v) Access Persons are not permitted to knowingly sell to or purchase from a client any security or other property, except Securities issued by the client.

Employees, officers and directors are prohibited from trading, either personally or on behalf of others, while in possession of material, nonpublic information. The Company’s Insider Trading Policy is hereby incorporated by reference and employees, officers and directors are required to comply with the provisions therein.

Prohibited Transactions with Respect to Non-Company Securities*

(i) No Access Person or any member of such Access Person’s immediate family may enter into a Personal Security Transaction with actual knowledge that, at the same time, such Security is “being considered for purchase or sale” by advisory accounts of the Company, or that such Security is the subject of an outstanding purchase or sale order by advisory accounts of the Company except as provided below in the section titled “Employee Trading Exceptions with Respect to Non-Company Securities”;

(ii) Except under the circumstances described in the section below titled “Employee Trading Exceptions with Respect to Non-Company Securities,” no Access Person or any member of such Access Person’s immediate family shall purchase or sell any Security within one business day before or after the purchase or sale of that Security by advisory accounts of the Company;

(iii) No Access Person or any member of such Access Person’s immediate family shall be permitted to effect a short-term trade (i.e., to purchase and subsequently sell within 60 calendar days, or to sell and subsequently purchase within 60 calendar days) involving the same or equivalent Securities;

(iv) No Access Person or any member of such Access Person’s immediate family is permitted to enter into a Personal Security Transaction for any Security that is named on a restricted list;

(v) No Access Person or any member of such Access Person’s immediate family shall purchase any Security in an Initial Public Offering (other than a Security issued by the Company);

(vi) No Access Person or any member of such Access Person’s immediate family shall, without the express prior approval of the CCO, acquire any Security in a private placement, and if a private placement Security is acquired, such employee must disclose that investment when he/she becomes aware of the Company’s subsequent consideration of any investment in that issuer, and in such circumstances, an independent review shall be conducted by the CCO;

(vii) No Access Person shall accept any gifts or anything else of more than a de minimis value from any person or entity that does business with or on behalf of the Company or any of the advisory accounts of the Company. For purposes hereof, “de minimis value” shall mean a value of less than $100, or such higher amount as may be set forth in FINRA Conduct Rule 3220 from time to time. Furthermore, all gifts to consultants and other decision-makers for client accounts must be reasonable in value and must be pre-approved by the Managing Principal, Marketing and Client Services and the CCO before distribution;

(viii) No Access Person may make political or charitable contributions for the purpose of obtaining or retaining advisory contracts with government entities. In addition, no Access Person may consider the Company’s current or anticipated business relationships as a factor in soliciting political or charitable contributions; and

(ix) No director or executive officer of the Company may serve on the board of directors (or similar governing body) of any corporation or business entity without the prior written approval of the Company’s management. Non-executive employees of the Company may only serve on the board of directors (or similar governing body) of a corporation or business entity with the prior written approval of the CCO, in consultation with the Company’s management, and if necessary the Board. Prior written approval of the CCO is also required in the following two (2) additional scenarios:

(1) Advisory Committee positions of any business, government or charitable entity where the members of the committee have the ability or authority to affect or influence the selection of investment managers or the selection of the investment of the entity’s operating, endowment, pension or other funds.

(2) Positions on the board of directors, trustees or any advisory committee of a Company client or any potential client who is actively considering engaging the Company’s investment advisory services.

(x) Access Persons, subject to prior written supervisory approval and departmental restrictions, are permitted to engage in outside employment if it is free of any actions that could be considered a conflict of interest. Outside employment must not adversely affect an Access Person’s job performance at the Company, and outside employment must not result in absenteeism, tardiness or an Access Person’s inability to work overtime when requested or required. Access Persons may not engage in outside employment that requires or involves using Company time, materials or resources.

*For any transactions by employees, directors and certain related persons in the Company’s Securities, please refer to the separate policy titled “Restrictions on Transactions in the Company’s Securities.”

Employee Trading Exceptions with Respect to Non-Company Securities*

Notwithstanding the prohibitions of the above section titled “Conflicts of Interest,” an employee is permitted to purchase or sell any Security other than the Company’s Securities within one business day of the purchase or sale of that Security by advisory accounts of the Company if the purchase or sale of the Security is approved or allocated only after the Company’s advisory accounts have each received their full allocation of the Security purchased or sold on that day.

Exempt Transactions

Neither the prohibitions nor the transaction reporting requirements of this Code shall apply to:

(i) Purchases or sales of Securities of an open-end mutual fund, index fund, money market fund or other registered investment company that is not advised or subadvised by the Company (provided however, that this exemption does not apply to exchange traded funds or notes);

(ii) Purchases or sales of Securities for an account over which an employee has no direct control and does not exercise indirect control (e.g., an account managed on a fully discretionary basis by a third party);

(iii) Involuntary purchases or sales made by an employee;

(iv) Purchases that are part of an automatic dividend reinvestment plan;

(v) Purchases that are part of an automatic investment plan, except that any transactions that override the preset schedule of allocations of the automatic investment plan must be reported in a quarterly transaction report;

(vi) Purchases or sales of U.S. Treasury Securities (including purchases directly from the Treasury or a Federal Reserve Bank) and other direct obligations of the U.S. Government, as well as unsecured obligations of U.S. Government sponsored enterprises;

(vii) Purchases or sales of money market instruments, such as bankers acceptances, bank certificates of deposit, commercial paper, repurchase agreements and other high quality short-term debt instruments;

(viii) Purchases or sales of units in a unit investment trust if the unit investment trust is invested exclusively in unaffiliated mutual funds;

(ix) Purchases resulting from the exercise of rights acquired from an issuer as part of a pro rata distribution to all holders of a class of securities of such issuer and the sale of such rights.

(x) Purchases or sales of futures (except individual stock futures contracts) and commodity contracts; and

(xi) Purchases or sales of municipal securities (no pre-clearance is required, but transactions must be reported).

Pre-Clearance Requirement

(i) Unless an exception is granted by the CCO after consultation with and approval by the Company’s management, each Access Person and each member of their immediate family must obtain pre-clearance of any Personal Security Transaction from an Approving Officer. Pre-clearance must be obtained by completing, signing and submitting to the CCO a Securities Transaction Pre-clearance Request Form (a copy of which is attached to this Code) that includes the signature of an Approving Officer (and the relevant portfolio manager, if applicable);

(ii) All pre-cleared Personal Security Transactions must take place on the same day that the clearance is obtained. If the transaction is not completed on the date of

clearance, a new clearance must be obtained, including one for any uncompleted portion. Post-approval is not permitted under this Code. If it is determined that a trade was completed before approval was obtained, it will be considered a violation of this Code; and

(iii) In addition to the restrictions contained in the “Conflicts of Interest” section hereof, an Approving Officer or the CCO may refuse to grant clearance of a Personal Security Transaction in his or her sole discretion without being required to specify any reason for the refusal. Generally, an Approving Officer or the CCO will consider the following factors in determining whether or not to clear a proposed transaction:

(1) whether the amount or the nature of the transaction or person making it is likely to affect the price or market of the security; and

(2) whether the individual making the proposed purchase or sale is likely to receive a disproportionate benefit from purchases or sales being made or considered on behalf of any of the advisory clients of the Company.

The preclearance requirement does not apply to Exempt Transactions. In case of doubt, the employee may present a Securities Transaction Pre-clearance Request Form to the CCO, indicating thereon that he or she disclaims any Beneficial Ownership in the securities included.

Reporting Requirements

No later than 10 days after becoming an employee, each individual shall provide a listing of all securities Beneficially Owned by the employee on the form provided as Attachment A (an “Initial Holdings Report”). The information in the Initial Holdings Report must be current as of a date no more than 45 days prior to the date the person became an employee. The Initial Holdings Report should be furnished to the CCO, Alternate or any other person whom the Company designates. Thereafter:

(i) All employees must direct their brokers and/or affiliated mutual fund custodians to supply the CCO on a timely basis with duplicate copies of monthly or quarterly statements for all personal securities accounts as are customarily provided by the firms maintaining such accounts;

(ii) Such duplicate statements must contain the following information (as applicable):

(1) The date and nature of each transaction (purchase, sale or any other type of acquisition or disposition), if any;

(2) Title, and as applicable the exchange ticker symbol or CUSIP number (if any), interest rate and maturity date, number of shares and, principal amount of each security and the price at which the transaction was effected;

(3) The name of the broker, dealer or bank with or through whom the transaction was effected; and

(4) The date of issuance of the duplicate statements.

(iii) No later than 30 days after each calendar quarter, all employees covered by this Code shall provide quarterly transaction reports in the form attached as Attachment C confirming that they have disclosed or reported all Personal

Security Transactions and holdings required to be disclosed or reported pursuant hereto for the previous quarter.

(iv) On a date to be selected by the CCO, all employees shall provide annual holdings reports listing all securities Beneficially Owned on the form provided as Attachment B by the employee (the “Annual Holdings Report”). The information contained in the Annual Holdings Report shall be current as of a date no more than 45 days prior to the date the report is submitted.

(v) Any statement or report submitted in accordance with this section may, at the request of the employee submitting the report, contain a statement that it is not to be construed as an admission that the person making it has or had any direct or indirect Beneficial Ownership in any Security to which the report relates.

(vi) All employees shall certify in writing, annually, that they have read and understand this Code and have complied with the requirements hereof and that they have disclosed or reported all Personal Security Transactions and holdings required to be disclosed or reported pursuant hereto.

(vii) The CCO shall retain a separate file for each employee that shall contain the monthly/quarterly account statements, quarterly and annual reports listed above and all Securities Transaction Pre-clearance Forms.

(viii) With respect to the receipt of gifts and entertainment, all employees shall promptly report on a form designated by the CCO the nature of such gift or entertainment, the date received, its approximate value, the giver and the giver’s relationship to the Company.

(ix) With respect to reports regarding accounting matters, the Company is committed to compliance with applicable securities laws, rules, and regulations, accounting standards and internal accounting controls. Employees are expected to report any complaints or concerns regarding accounting, internal accounting controls and auditing matters (“Accounting Matters”) promptly. Reports may be made to the General Counsel or the CCO in person, or by calling the Helpline at 1-888-475-8376. Reports may be made anonymously to the Helpline; or in writing to the General Counsel or the CCO at their offices by inter-office or regular mail. All reports will be treated confidentially to the extent reasonably possible. No one will be subject to retaliation because of a good faith report of a complaint or concern regarding Accounting Matters.

Company Disclosures

It is Company policy to make full, fair, accurate, timely and understandable disclosure in compliance with all applicable laws and regulations in all reports and documents that the Company files with, or submits to, the SEC and in all other public communications made by the Company.

Employees must complete all Company documents accurately, truthfully, and in a timely manner, including all travel and expense reports. When applicable, documents must be properly authorized. Employees must record the Company’s financial activities in compliance with all applicable laws and accounting practices. The making of false or misleading entries, records or documentation is strictly prohibited. Employees must never create a false or misleading report or make a payment or establish an account on behalf of the Company with the understanding that any part of the payment or account is to be used for a purpose other than as described by the supporting documents.

Review

All pre-clearance requests, statements and reports of Personal Security Transactions and completed portfolio transactions of each of the Company’s advisory clients shall be compared by or under the supervision of the CCO to determine whether a possible violation of this Code and/or other applicable trading procedures may have occurred. Before making any final determination that a violation has been committed by any person, the CCO shall give such person an opportunity to supply additional explanatory information.

If the CCO or Alternate determines that a material violation of this Code has or may have occurred, he or she shall, following consultation with counsel to the Company if needed, submit a written determination and any additional explanatory material provided by the individual to the Company’s management, the Board and the Executive Committee as necessary.

No person shall review his or her own report. If a Personal Security Transaction of the CCO or the CCO’s spouse is under consideration, an Alternate shall act in all respects in the manner prescribed herein for the CCO.

Reporting Violations

Any violations of this Code including violations of applicable Federal securities laws, whether actual, known, apparent or suspected, should be reported promptly to the CCO or to any other person the Company may designate (as long as the CCO periodically receives reports of all violations). It is imperative that reporting persons not conduct their own preliminary investigations. Investigations of alleged violations may involve complex legal issues, and an employee acting on his own may compromise the integrity of an investigation and adversely affect both employees and the Company.

Any reports of violations will be treated confidentially to the extent permitted by law and reasonably possible, and investigated promptly and appropriately. Any such reports may also be submitted anonymously. Employees are encouraged to consult the CCO with respect to any transaction that may violate this Code and to refrain from any action or transaction that might lead to the appearance of a violation. Any retaliation against an individual who reports a violation is prohibited and constitutes a further violation of this Code.

The Company has a 24-hour Helpline, 1-888-475-8376, which employees can use to report violations of the Company’s policies or to seek guidance on those policies. Employees may report suspected violations to or ask questions of the Helpline anonymously; however, providing such employee’s name may expedite the time it takes the Company to respond to such employee’s call, and it also allows the Company to contact an employee if necessary during any investigation. Either way, the Company should treat the information that employees provide as confidential.

Background Checks

Employees are required to promptly report any criminal, regulatory or governmental investigations or convictions to which they become subject. Each employee is required to promptly complete and return any background questionnaires that the Company’s Legal and Compliance group may circulate.

Sanctions

The Company intends to use every reasonable effort to prevent the occurrence of conduct not in compliance with this Code and to halt any such conduct that may occur as soon as reasonably possible after its discovery. Any violation of this Code shall be subject to the imposition of such sanctions by the CCO as may be deemed appropriate under the circumstances to achieve the purposes of the Rules and this Code, and may include suspension or termination of employment or of trading privileges, the rescission of trades, a written censure, imposition of fines or of restrictions on the number or type of providers of personal accounts; and/or requiring equitable restitution.

Required Records

Required Records (as listed in this section) must be kept in an easily accessible place. In addition, no records should be selectively destroyed and all records must be retained if they are connected with any litigation/government investigation. The CCO shall maintain and cause to be maintained in an easily accessible place, the following records:

(a) A copy of any Code that has been in effect at any time during the past five years;

(b) A record of any violation of this Code and any action taken as a result of such violation for five years from the end of the fiscal year in which the violation occurred;

(c) A copy of each report made by the CCO within two years from the end of the fiscal year of the Company in which such report or interpretation is made or issued (and for an additional three years in a place that need not be easily accessible);

(d) A list of the names of persons who are currently, or within the past five years were, employees;

(e) A record of all written acknowledgements of receipt of this Code for each person who is currently, or within the past five years was, subject to this Code;

(f) Holdings and transactions reports made pursuant to this Code, including any brokerage account statements made in lieu of these reports;

(g) All pre-clearance forms shall be maintained for at least five years after the end of the fiscal year in which the approval was granted;

(h) A record of any decision approving the acquisition of securities by employees in limited offerings for at least five years after the end of the fiscal year in which approval was granted;

(i) Any exceptions reports prepared by Approving Officers or the Compliance Officer;

(j) A record of persons responsible for reviewing employees’ reports currently or during the last five years; and

(k) A copy of reports provided to a Fund’s board of directors regarding this Code.

For the first two years, the required records shall be maintained in the Company’s New York offices.

Record Retention

In the course of its business, the Company produces and receives large numbers of records. Numerous laws require the retention of certain Company records for various periods of time. The Company is committed to compliance with all applicable laws and regulations relating to the preservation of records. The Company’s policy is to identify, maintain, safeguard and destroy or retain all records in the Company’s possession on a systematic and regular basis. Under no circumstances are Company records to be destroyed selectively or to be maintained outside Company premises or designated storage facilities, except in those instances where Company records may be temporarily brought home by employees working from home in accordance with approvals from their supervisors or applicable policies about working from home or other remote locations.

If employees learn of a subpoena or a pending or contemplated litigation or government investigation, employees should immediately contact the General Counsel. Employees must retain and preserve ALL records that may be responsive to the subpoena or relevant to the litigation or that may pertain to the

investigation until employees are advised by the Legal and Compliance group as to how to proceed. Employees must also affirmatively preserve from destruction all relevant records that without intervention would automatically be destroyed or erased (such as e-mails and voicemail messages). Destruction of such records, even if inadvertent, could seriously prejudice the Company. If employees have any questions regarding whether a particular record pertains to a pending or contemplated investigation or litigation or may be responsive to a subpoena or regarding how to preserve particular types of records, employees should preserve the records in question and ask the Legal and Compliance group for advice.

Waivers of this Code

Waivers for directors and executive officers may be made by either the Board or the Audit Committee of the Board and must be promptly disclosed as required by law. Waivers for non-executive officers and employees may be made by the CCO.

Corporate Opportunities

Employees and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. If employees learn of a business or investment opportunity through the use of corporate property or information or an employee’s position at the Company, such as from a competitor or actual or potential client, supplier or business associate of the Company, employees may not participate in the opportunity or make the investment without the prior written approval of the CCO. Directors must obtain the prior approval of the Board. Such an opportunity should be considered an investment opportunity for the Company in the first instance. Employees may not use corporate property or information or an employee’s position at the Company for improper personal gain, and employees may not compete with the Company.

Protection and Proper Use of Company Assets

We each have a duty to protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability. We should take measures to prevent damage to and theft or misuse of Company property. When employees leave the Company, all Company property must be returned to the Company. Except as specifically authorized, Company assets, including Company time, equipment, materials, resources and proprietary information, must be used for business purposes only.

Client Information

Current Federal regulations are designed to protect the privacy of customers of financial institutions and financial services providers. In this regard, the Company has adopted privacy policies (the “Privacy Policies”) by which each employee of the Company must agree to abide. The CCO will ensure that each employee of the Company acknowledges their adherence to the Privacy Policies. A copy of the Privacy Policies is found in the Company’s Compliance Manual. The Company will keep a copy of the Privacy Policies and will make them available upon request.

Portfolio Company Information

Certain limitations on trading and other activities may result from employees of the Company receiving access to material, nonpublic information regarding the plans, earnings, operations or financial condition of issuers (“Portfolio Companies”). If, in employee conversations, meetings or written communications with Portfolio Company management, employees are told (or have reason to believe) that the information employees have received is not public, employees should notify the CCO immediately. If employees are forewarned that the information employees are about to receive is confidential/not public, employees should ask the person not to disclose the information to employees until employees have a chance to check with the Legal and Compliance group. The Company’s Insider Trading Policy more fully discusses material, nonpublic information.

Company Information

Unless employees are doing so in connection with Company duties and responsibilities, employees should not discuss specific details about the Company’s business with unauthorized persons, including family members. Even when representing the Company, employees need to be careful about disclosing certain information. Engaging in discussions with outside parties (who are not custodians and brokers or dealers implementing such strategies and transactions for us) about specific strategies or transactions in Portfolio Companies that the Company is or is considering implementing for clients may present a conflict of interest for the Company and may even subject the recipient of such information to this Code (including its personal trading policies). It is very important to remember this when having discussions with personal friends, social acquaintances and former business associates or colleagues who are active investment management professionals (e.g., hedge fund managers, other investment advisers). It is equally important to remember this when employees are discussing the Company’s business or clients with colleagues in public places (e.g., elevators, lunch lines). Employees should be particularly careful not to use actual company or client names in any public settings.

Information that is proprietary to the Company should not be shared with others. With regard to what might constitute material that is proprietary and/or should not be shared, employees may use a simple guideline that if we paid for it or if we created it, it is likely proprietary and should not be shared. For example, the Company’s proprietary stock analysis software should not be shared with others.

INSIDER TRADING

Various Federal and state securities laws and the Investment Advisers Act of 1940 (Section 204A) require every investment adviser to establish, maintain and enforce written policies and procedures reasonably designed, taking into consideration the nature of such adviser’s business, to prevent the misuse of material, nonpublic information in violation of the Investment Advisers Act of 1940 or other securities laws by the investment adviser or any person associated with the investment adviser.

The CCO has the primary responsibility for the implementation and monitoring of the Company’s Insider Trading Policy, practices, disclosures and recordkeeping. The Company’s Insider Trading Policy is designed to detect and prevent illegal insider trading. The Insider Trading Policy covers: (i) the Company, (ii) all persons controlled by, controlling or under common control with the Company (iii) consultants, subtenants, office occupants or other persons who are deemed to be Access Persons under this Code; and (iv) each and every employee, officer, director, general partner and member of the Company and any person described in clause (ii) (all persons described in this paragraph are referred to collectively as the “Covered Persons”). The Insider Trading Policy extends to activities both within and outside each Covered Person’s relationship with the Company. The CCO will ensure that each employee of the Company acknowledges their adherence to the Insider Trading Policy. The Company will keep a copy of the Insider Trading Policy and will make it available upon request.

FAIR DEALING

The Company depends on its reputation for quality, service and integrity. The way we deal with our clients, competitors and suppliers molds our reputation, builds long-term trust and ultimately determines our success. Employees should endeavor to deal fairly with the Company’s clients, suppliers, competitors and other employees. We must never take unfair advantage of others through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice.

Antitrust Laws

While the Company competes vigorously in all of its business activities, its efforts in the marketplace must be conducted in accordance with all applicable antitrust and competition laws. While it is impossible to describe antitrust and competition laws fully in any code of business conduct, this Code gives an overview of the types of conduct that are particularly likely to raise antitrust concerns. If

employees are or become engaged in activities similar to those identified in this Code, employees should consult the Legal and Compliance group for further guidance.

Conspiracies and Collaborations Among Competitors

One of the primary goals of the antitrust laws is to promote and preserve each competitor’s independence when making decisions on price, output, and other competitively sensitive factors. Some of the most serious antitrust offenses are agreements between competitors that limit independent judgment and restrain trade, such as agreements to fix prices, restrict output or control the quality of products, or to divide a market for clients, territories, products or purchases. Employees should not agree with any competitor on any of these topics, as these agreements are virtually always unlawful. (In other words, no excuse will absolve employees or the Company of liability.)

Unlawful agreements need not take the form of a written contract or even express commitments or mutual assurances. Courts can — and do — infer agreements based on “loose talk,” informal discussions, or the mere exchange between competitors of information from which pricing or other collusion could result. Any communication with a competitor’s representative, no matter how innocuous it may seem at the time, may later be subject to legal scrutiny and form the basis for accusations of improper or illegal conduct. Employees should take care to avoid involving themselves in situations from which an unlawful agreement could be inferred.

By bringing competitors together, trade associations and standard-setting organizations may raise antitrust concerns, even though such groups serve many legitimate goals. The exchange of sensitive information with competitors regarding topics such as prices, profit margins, output levels, or billing or advertising practices may potentially violate antitrust and competition laws, as may creating a standard with the purpose and effect of harming competition. Employees must notify the Legal and Compliance group before joining any trade associations or standard-setting organizations. Further, if employees are attending a meeting at which potentially competitively sensitive topics are discussed without oversight by an antitrust lawyer, employees should object, leave the meeting, and notify the Legal and Compliance group immediately.

Joint ventures with competitors are not illegal under applicable antitrust and competition laws. However, like trade associations, joint ventures present potential antitrust concerns. The Legal and Compliance group should therefore be consulted before negotiating or entering into such a venture.

Distribution Issues

Relationships with clients and suppliers may also be subject to a number of antitrust prohibitions if these relationships harm competition. For example, it may be illegal for a company to affect competition by agreeing with a supplier to limit that supplier’s sales to any of the Company’s competitors. Collective refusals to deal with a competitor, supplier or client may be unlawful as well. While the Company generally is allowed to decide independently that it does not wish to buy from or sell to a particular person, when such a decision is reached jointly with others, it may be unlawful, regardless of whether it seems commercially reasonable.

Other activities that may raise antitrust concerns are:

(i) discriminating in terms and services offered to clients, where the Company treats one client or group of clients differently than another;

(ii) exclusive dealing agreements, where the Company requires a client to buy only from a particular supplier, or the supplier to sell only to the Company or the client;

(iii) tying arrangements, where a client or supplier is required, as a condition of purchasing or selling one product or service, also to purchase or sell a second, distinct product or service;

(iv) “bundled discounts,” in which discount or rebate programs link the level of discounts available on one product or service to purchases of separate but related products or services; and

(v) “predatory pricing,” where the Company offers a discount that results in the sales price of a product or service being below the product’s or service’s cost (the definition of cost varies depending on the court), with the intention of sustaining that price long enough to drive competitors out of the market.

Because these activities are prohibited under many circumstances, employees should consult the Legal and Compliance group before implementing any of them.

Penalties

Failure to comply with the antitrust laws could result in jail terms for individuals and large criminal fines and other monetary penalties for both the Company and individuals. In addition, private parties may bring civil suits to recover three times their actual damages, plus attorney’s fees and court costs.

The antitrust laws are extremely complex. Because antitrust lawsuits can be very costly (even when a company has not violated the antitrust laws and is cleared in the end), it is important to consult with the Legal and Compliance group before engaging in any conduct that even appears to create the basis for an allegation of wrongdoing. It is far easier to structure employee conduct to avoid erroneous impressions than to explain their conduct in the future when an antitrust investigation or action is in progress. For that reason, when in doubt, consult the Legal and Compliance group with any concerns.

Gathering Information About the Company’s Competitors

It is entirely proper for us to gather information about our marketplace, including information about our competitors and their products and services. However, there are limits to the ways that information should be acquired and used, especially information about competitors. In gathering competitive information, employees should abide by the following guidelines:

1. We may gather information about our competitors from sources such as published articles, advertisements, brochures, other non-proprietary materials, surveys by consultants and conversations with our clients, as long as those conversations are not likely to suggest that we are attempting to (a) conspire with our competitors, using the client as a messenger, or (b) gather information in breach of a client’s nondisclosure agreement with a competitor or through other wrongful means. Employees should be able to identify the source of any information about competitors.

2. We must never attempt to acquire a competitor’s trade secrets or other proprietary information through unlawful means, such as theft, spying, bribery or breach of a competitor’s nondisclosure agreement.

3. If there is any indication that information that employees obtain was not lawfully received by the party in possession, employees should refuse to accept it. If employees receive any competitive information anonymously or that is marked confidential, employees should not review it and should contact the Legal and Compliance group immediately.

The improper gathering or use of competitive information could subject employees and the Company to criminal and civil liability. When in doubt as to whether a source of information is proper, employees should contact the Legal and Compliance group.

RESPONSIBILITY TO OUR PEOPLE

Equal Employment Opportunity

It is the policy of the Company to ensure equal employment opportunity without discrimination or harassment on the basis of race, color, national origin, religion, age, sexual orientation, gender, marital status, disability or any other characteristic protected by applicable Federal, state, or local law. Our employment practices and decisions adhere to the principles of non-discrimination and equal employment opportunity. All personnel involved in hiring, promotion, transfers, compensation, benefits, termination and all other terms and conditions of employment are made aware of their responsibilities in support of these corporate goals.

Non-Discrimination Policy

The Company is committed to a work environment in which all individuals are treated with respect and dignity. Each employee has the right to work in a professional atmosphere that promotes equal employment opportunities and prohibits discriminatory practices, including harassment. Therefore, the Company expects that all relationships among persons in the office will be free of bias, prejudice and harassment.

Anti-Harassment Policy

The Company is committed to maintaining a work environment that is free of discrimination. In keeping with this commitment, we will not tolerate unlawful harassment of our employees by anyone, including any supervisor, co-worker or third party. Harassment consists of unwelcome conduct, whether verbal, physical or visual, that is based on a person’s race, color, national origin, religion, age, sexual orientation, gender, marital status, disability or other protected characteristic, that (1) has the purpose or effect of creating an intimidating, hostile or offensive work environment; (2) has the purpose or effect of unreasonably interfering with an individual’s work performance; or (3) otherwise adversely affects an individual’s employment opportunities. Harassment will not be tolerated.

Harassment may include derogatory remarks, epithets, offensive jokes, intimidating or hostile acts, the display of offensive printed, visual or electronic material, or offensive physical actions. Sexual harassment deserves special mention. Unwelcome sexual advances, requests for sexual favors, or other physical, verbal or visual conduct based on sex constitutes harassment when (1) submission to the conduct is required as a term or condition of employment or is the basis for employment action, or (2) the conduct unreasonably interferes with an individual’s work performance or creates an intimidating, hostile or offensive workplace. Sexual harassment may include propositions, innuendo, suggestive comments or unwelcome physical contact.

Individuals and Conduct Covered

These policies apply to all applicants and employees, and prohibit harassment, discrimination and retaliation whether engaged in by fellow employees, by a supervisor or manager or by someone not directly connected to the Company (e.g., an outside vendor, consultant or client).

Conduct prohibited by these policies is unacceptable in the workplace and in any work-related setting outside the workplace, such as during business trips, business meetings and business related social events.

Retaliation

The Company prohibits retaliation against any individual who reports discrimination or harassment or participates in an investigation of such reports. Retaliation against an employee for reporting discrimination or harassment or for participating in an investigation of a claim of harassment or discrimination is a serious violation of this policy and, like harassment or discrimination itself, will be subject to disciplinary action.

Reporting an Incident of Harassment, Discrimination or Retaliation

The Company strongly urges the timely reporting of all incidents of harassment, discrimination or retaliation regardless of the offender’s identity or position. Individuals should file their complaints with their immediate supervisor, the General Counsel or any member of senior management before the conduct becomes severe or pervasive. Individuals should not feel obligated to file their complaints with their immediate supervisor first before bringing the matter to the attention of one of the other designated representatives identified above. To the fullest extent practicable, the Company will maintain the confidentiality of those involved, consistent with the need to investigate alleged harassment and take appropriate action. Misconduct constituting harassment, discrimination or retaliation will be dealt with promptly and appropriately.

Employees who have experienced conduct they believe is contrary to this policy have an obligation to take advantage of this complaint procedure.

LEAVE POLICIES

Bereavement Leave

In the unfortunate event of a death in an employee’s immediate family, such employee will be able to take five days of bereavement leave with pay. Depending on the circumstances, extended pay or unpaid leave may be permitted, after discussion with such employee’s manager. Immediate family for this purpose means an employee’s spouse or domestic partner, an employee’s parents or stepparents, grandparents, children or stepchildren, siblings, domestic partner’s or spouse’s parents, or domestic partner’s or spouse’s siblings.

Jury Duty

If employees are summoned to serve on a jury, notice will be given to such employee’s manager and Human Resources. Employees will earn full base salary while such employee is on jury duty up to ten business days. When practical, on any day that an employee is dismissed early from the proceedings he or she is expected to come into the office. Upon returning from jury duty, employees must submit to Human Resources validated documentation of such employee’s time on jury duty.

Family and Medical Leave Act

The Family and Medical Leave Act (“FMLA”) provides eligible employees with up to 12 workweeks of unpaid leave for certain family and medical reasons during a 12 month period. During this leave, an eligible employee is entitled to group health plan coverage as if the employee had continued to work. At the conclusion of the leave, subject to some exceptions, an employee generally has a right to return to the same or to an equivalent position. Please see Human Resources for a copy of the Company’s FMLA policy.

Disability

Regular full-time/part-time employees are eligible for coverage under the short-term disability insurance plan. Short-term disability insurance provides income replacement during a period of temporary disability that lasts for more than a week.

Under the short-term disability program, benefits are payable for non-work related injuries or illnesses. Benefits normally begin after seven days of disability and generally are payable up to a maximum of 26 weeks. Please see Human Resources for further details regarding short-term disability benefits or please review employee disability rights, which shall be made available by the Company upon request.

Maternity Leave Program

Employees who have at least 12 months of service and have worked at least 1,250 hours in the last consecutive 12 months are eligible for maternity leave. The Company offers up to 12 weeks of paid leave in connection with the birth of a child. Maternity leave will not affect employees’ participation in the Company’s benefit plans. Applicable benefit deductions will continue to be taken during an employee’s leave. The time employees are on paid maternity leave is counted as time worked when calculating accrued vacation and retirement plan benefits. Medical certification may be required prior to maternity leave.

Parenting Leave

Employees who have at least 12 months of service and have worked at least 1,250 hours in the last consecutive 12 months are eligible for parenting leave. The Company offers up to 2 weeks of paid leave in connection with the birth of a child for the non-primary caregiver. Parenting leave may be taken in one-week increments or as otherwise approved by an employee’s manager. Consistent with other FMLA leaves, employees will be required to use any other paid time available (for example, vacation days) concurrently with any portion of an employee’s leave that exceeds the two-week paid leave under the firm’s parenting leave policy. Parenting leave must be taken within 12 months of the birth of the child. The time employees are on paid parenting leave is counted as time worked when calculating accrued vacation and retirement plan benefits.

Coordination with FMLA Leave

Both maternity leave and parenting leave run concurrently with any leave under the FMLA to which employees may be entitled.

Coordination with Vacation

Employees may not add vacation onto the end of their twelve-week maternity leave or any leave under the FMLA to which employees may be entitled.

Approval

Both the immediate supervisor and Human Resources should be notified of all leave requests in a timely manner. Human Resources will provide any and all required paperwork to be completed and will notify the employee if leave has been approved.

Any leave requests falling outside of the enumerated policies will be considered on an individual basis.

Job Security

At the conclusion of an approved leave, employees ordinarily will return to their previous position unless the position has been eliminated as a result of job reductions or a reorganization of the area. In such a case, the Company will make an attempt to place employees in an equivalent position with equivalent pay, benefits and other employment terms. Employees’ eligibility to be considered for such a position will be evaluated on the same basis as other employees.

The Company may require that an employee provide initial and periodic documentation of the basis for such employee’s leave. To aid the Company in its planning, the employee is expected to notify the employee’s manager and Human Resources immediately. If the employee’s anticipated return to work date changes and it becomes necessary for the employee to take more or less leave than originally anticipated, the employee must provide the Company with reasonable notice (within 2 business days) of the employee’s changed circumstances and new return to work date. If an employee does not return to work following the conclusion of any of the above named leaves, the employee will be considered to have voluntarily resigned. The Company may recover health insurance premiums that the Company has paid

on behalf of the employee during any leave except that the Company’s share of such premiums may not be recovered if the employee fails to return to work because of the employee’s or a family member’s serious health condition or because of other circumstances beyond the employee’s control.

Safety in the Workplace

The safety and security of employees is of primary importance. Employees are responsible for maintaining our facilities free from recognized hazards and obeying all Company safety rules. Working conditions should be maintained in a clean and orderly state to encourage efficient operations and promote good safety practices.

Weapons and Workplace Violence

No employee may bring firearms, explosives, incendiary devices or any other weapons into the workplace or any work-related setting, regardless of whether or not employees are licensed to carry such weapons. Similarly, the Company will not tolerate any level of violence in the workplace or in any work-related setting. Violations of this policy must be referred to an employee’s supervisor and the CCO immediately. Threats or assaults that require immediate attention should be reported to the police by calling 911.

Drugs and Alcohol

The Company intends to maintain a drug-free work environment. Except at approved Company functions, employees may not use, possess or be under the influence of alcohol on Company premises.

Employees cannot use, sell, attempt to use or sell, purchase, possess or be under the influence of any illegal drug on Company premises or while performing Company business on or off the premises.

INTERACTING WITH GOVERNMENT

Prohibition on Gifts to Government Officials and Employees

The various branches and levels of government have different laws restricting gifts, including meals, entertainment, transportation and lodging, which may be provided to government officials and government employees. Employees are prohibited from providing gifts, meals or anything of value to government officials or employees or members of their families without prior written approval from the CCO.

Political Contributions and Activities

Laws of certain jurisdictions prohibit the use of Company funds, assets, services, or facilities on behalf of a political party or candidate. Payments of corporate funds to any political party, candidate or campaign may be made only if permitted under applicable law and approved in writing and in advance by the CCO.

This policy does not prohibit the Company from establishing and maintaining political action committees (“PACs”), such as the Company’s PAC, which are permitted under applicable law, nor does this policy prohibit the Company’s eligible employees from giving to such PACs. Employee participation in any of these activities is strictly voluntary and employees have the right to refuse to contribute without reprisal.

Employees’ work time may be considered the equivalent of a contribution by the Company. Therefore, employees will not be paid by the Company for any time spent running for public office, serving as an elected official, or campaigning for a political candidate. The Company will not compensate or reimburse employees, in any form, for a political contribution that employees intend to make or have made.

Lobbying Activities

Laws of some jurisdictions require registration and reporting by anyone who engages in a lobbying activity. Generally, lobbying includes: (1) communicating with any member or employee of a legislative branch of government for the purpose of influencing legislation; (2) communicating with certain government officials for the purpose of influencing government action; or (3) engaging in research or other activities to support or prepare for such communication.

So that the Company may comply with lobbying laws, employees must notify the Legal and Compliance group before engaging in any activity on behalf of the Company that might be considered “lobbying” as described above.

Bribery of Foreign Officials

Company policy, the U.S. Foreign Corrupt Practices Act (the “FCPA”), and the laws of many other countries prohibit the Company and its officers, employees and agents from giving or offering to give money or anything of value to a foreign official, a foreign political party, a party official or a candidate for political office in order to influence official acts or decisions of that person or entity, to obtain or retain business, or to secure any improper advantage. A foreign official is an officer or employee of a government or any department, agency, or instrumentality thereof, or of certain international agencies, such as the World Bank or the United Nations, or any person acting in an official capacity on behalf of one of those entities. Officials of government-owned corporations are considered to be foreign officials.

Payments need not be in cash to be illegal. The FCPA prohibits giving or offering to give “anything of value.” Over the years, many non-cash items have been the basis of bribery prosecutions, including travel expenses, golf outings, automobiles, and loans with favorable interest rates or repayment terms. Indirect payments made through agents, contractors, or other third parties are also prohibited. Employees may not avoid liability by “turning a blind eye” when circumstances indicate a potential violation of the FCPA.

The FCPA does allow for certain permissible payments to foreign officials. Specifically, the law permits “facilitating” payments, which are payments of small value to effect routine government actions such as obtaining permits, licenses, visas, mail, utilities hook-ups and the like. However, determining what is a permissible “facilitating” payment involves difficult legal judgments. Therefore, employees must obtain permission from the Legal and Compliance group before making any payment or gift thought to be exempt from the FCPA.

Amendments and Modifications.

The CCO will periodically review the adequacy of this Code and the effectiveness of its implementation and shall make amendments or modifications as necessary. All material amendments and modifications shall be subject to the final approval of the Company’s management, the Board and the Executive Committee as necessary.

Form ADV Disclosure.

In connection with making amendments to this Code, the CCO will review and update disclosure relating to this Code set forth in the Company’s Schedule F of Form ADV, Part II.

Employee Certification.

Ultimate responsibility to ensure that we as a Company comply with the many laws, regulations and ethical standards affecting our business rests with each of us. Employees must become familiar with and conduct themselves strictly in compliance with those laws, regulations and standards and the Company’s policies and guidelines pertaining to them. By signing the attached acknowledgment form, employees acknowledge that they have received and read the terms of this Code. Employees also certify that they

recognize and understand the responsibilities and obligations incurred by them as a result of being subject to this Code and they hereby agree to abide by the terms hereof.

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

I, Richard S. Pzena, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pzena Investment Management, 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 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:

(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.

Dated: May 11, 2009	/s/ RICHARD S. PZENA

	Name: Richard S. Pzena
	Title: Chief Executive Officer

Exhibit 32.1

Certification of Chief Executive Officer 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 Pzena Investment Management, Inc. (the “Company”) for the quarter ending March 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Richard S. Pzena, as Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 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.

Dated: May 11, 2009	/s/ RICHARD S. PZENA

	Name: Richard S. Pzena
	Title: Chief Executive Officer

Exhibit 32.2

Certification of Chief Financial Officer 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 Pzena Investment Management, Inc. (the “Company”) for the quarter ending March 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Gregory S. Martin, as Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 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.

Dated: May 11, 2009	/s/ GREGORY S. MARTIN

	Name: Gregory S. Martin
	Title: Chief Financial Officer