Investments of Operating Entities and Consolidated Funds


a.	Operating Entities

Securities owned, at fair value

Securities owned are held by the Company and considered held for trading and carried at fair value. Substantially all equity securities and options are pledged to the clearing broker under terms which permit the clearing broker to sell or re-pledge the securities to others subject to certain limitations.

As of December 31, 2011 and December 31, 2010, securities owned, at fair value consisted of the following:



	As of December 31,
	2011		2010
	(dollars in thousands)
U.S. Government securities(a)	$	182,868	$	143,247
Common stocks	250,380		116,215
Restricted common stock	—		5,000
Convertible bonds (b)	18,130		—
Corporate bonds (c)	231,864		191,702
Options	55,768		14,349
Warrants and rights	2,690		2,334
Mutual funds	3,214		1,248
	$	744,914	$	474,095


(a)	As of December 31, 2011, maturities ranged from November 2013 to November 2021 and interest rates ranged between 0.25% and 8%. As of December 31, 2010, maturities ranged from November 2019 to February 2026 and interest rates ranged between 3.38% and 8%.


(b)	As of December 31, 2011, the maturity was August 2027 with an interest rate of 2.75%.


(c)	As of December 31, 2011, maturities ranged from January 2012 to February 2041 and interest rates ranged between 3.13% and 13.50%. As of December 31, 2010, maturities ranged from May 2011 to August 2039 and interest rates ranged between 1.4% and 13%.

The Company's direct involvement with derivative financial instruments includes credit default swaps, futures, equity swaps, options and warrants and rights. Open equity positions in futures transactions are recorded as receivables from and payables to broker‑dealers or clearing brokers as applicable. The Company's derivatives trading activities exposes the Company to certain risks, such as price and interest rate fluctuations, volatility risk, credit risk, counterparty risk, foreign currency movements and changes in the liquidity of markets. The Company's long exposure to futures, equity swap and credit default swap derivative contracts, at fair value, as of December 31, 2011 and 2010 of $0.8 million and $0.4 million, respectively, is included in other assets in the accompanying consolidated statements of financial condition. The Company's short exposure to futures and equity swap derivative contracts, at fair value, as of December 31, 2011 and 2010 of $0.8 million and $0.6 million, respectively, is included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated statements of financial condition. The realized and unrealized gains/(losses) related to derivatives trading activities for the twelve months ended December 31, 2011, 2010 and 2009 were not significant and are included in other income in the consolidated statements of operations.

Pursuant to the various derivatives transactions discussed above, the Company is required to post collateral for its obligations or potential obligations. As of December 31, 2011 and 2010, collateral consisting of $8.1 million and $3.2 million of cash, respectively, is included in receivable from brokers on the consolidated statements of financial condition. As of December 31, 2011 and 2010 all derivative contracts were with multiple major financial institutions.

Other investments

As of December 31, 2011 and 2010, other investments consisted of the following:

Other investments



	As of December 31,
	2011		2010
	(dollars in thousands)
(1) Portfolio Funds, at fair value	$	42,336	$	29,391
(2) Real estate investments, at fair value	2,353		1,882
(3) Equity method investments	16,687		8,734
(4) Lehman claims, at fair value	553		313
	$	61,929	$	40,320


(1)	Portfolio Funds, at fair value

The Portfolio Funds, at fair value as of December 31, 2011 and 2010, included the following:

Portfolio Funds, at fair value



	As of December 31,
	2011		2010
	(dollars in thousands)
Cowen Healthcare Royalty Partners (a)(*)	$	6,297	$	14,769
Cowen Healthcare Royalty Partners II (a)(*)	1,521		143
Ramius Global Credit Fund LP (b)(*)	11,790		11,733
Ramius Alternative Replication Ltd (c)(*)	837		866
Tapestry Investment Co PCC Ltd (d)	185		565
Ramius Enhanced Replication Fund LLC (e)(*)	337		—
Starboard Value and Opportunity Fund LP (f)(*)	11,123		—
Other private investment (g)	7,415		—
Vreeland Partners II, L.P. (h)	1,986		—
Other affiliated funds (i)(*)	845		1,315
	$	42,336	$	29,391


*	These portfolio funds are affiliates of the Company

The Company has no unfunded commitments regarding the portfolio funds held by the Company except as noted for Cowen Healthcare Royalty Partners, Cowen Healthcare Royalty Partners II and Starboard Value and Opportunity Fund LP in Note 19.


(a)	Cowen Healthcare Royalty Partners and Cowen Healthcare Royalty Partners II are private equity funds and therefore redemptions will be made when the underlying investments are liquidated.


(b)	Ramius Global Credit Fund LP has a quarterly redemption policy with 60 day notice period and a 4% penalty on redemptions of investments of less than a year in duration.


(c)	Ramius Alternative Replication Ltd has monthly redemption policy with a seven day notice period.


(d)	Tapestry Investment Company PCC Ltd is in the process of liquidation and redemptions will be made periodically by the investment managers' decision as the underlying investments are liquidated.


(e)	Ramius Enhanced Replication Fund LLC has monthly redemption policy with a seven day notice period.


(f)	Starboard Value and Opportunity Fund LP permits quarterly withdrawals upon ninety days notice.


(g)	Other private investment represents the Company's closed end investment in an investment company, which was formed to make an investment in a wireless broadband communication provider in Italy.


(h)	Vreeland Partners II, L.P. is a wholly owned externally managed fund that seeks to provide financing to public companies for short term duration. The Company can redeem from this fund as positions are sold on an average of 30 days or less notice.


(i)	The majority of these funds are real estate fund affiliates of the Company or are managed by the Company and the investors can redeem from these funds as investments are liquidated.


(2)	Real estate investments, at fair value

Real estate investments as of December 31, 2011 and December 31, 2010 are carried at fair value and include real estate equity investments held by RCG RE Manager, LLC (“RE Manager”), a real estate operating subsidiary of the Company, of $1.6 million and $1.1 million, respectively, and real estate debt investments held by the Company of $0.8 million and $0.8 million, respectively.


(3)	Equity method investments

Equity method investments include investments held by the Company in several operating companies whose operations primarily include the day to day management of a number of real estate funds, including the portfolio management and administrative services related to the acquisition, disposition, and active monitoring of the real estate funds' underlying debt and equity investments. The Company's ownership interests in these equity method investments range from 30% to 55%. The Company holds a majority of the outstanding ownership interest (i.e., more than 50%) in three of these entities: RCG Longview Debt Fund IV Management, LLC, RCG Longview Debt Fund IV Partners, LLC and RCG Longview Partners II, LLC. The operating agreements that govern the management of day-to-day operations and affairs of each of these three entities stipulate that certain decisions require support and approval from other members in addition to the support and approval of the Company. As a result, all operating decisions made in these three entities require the support of both the Company and an affirmative vote of a majority of the other managing members who are not affiliates of the Company that is not protective in nature. As the Company does not possess control over any of these entities, the presumption of consolidation has been overcome pursuant to current accounting standards and the Company accounts for these investments under the equity method of accounting. Also included in equity method investments is the investment in (a) CHRP GP (see Note 3), (b) an investment in the CBOE (Chicago Board Options Exchange) Stock Exchange LLC representing a 9.7% stake in the exchange service provider for which the Company exercises significant influence over through representation on the Board of Directors, and (c) Starboard Value LP (and certain related parties) which serves as an operating company whose operations primarily include the day to day management (including portfolio management) of a deep value small cap hedge fund and related managed accounts. The following table summarizes equity method investments held by the Company:



	As of December 31,
	2011		2010
	(dollars in thousands)
RCG Longview Debt Fund IV Management, LLC	$	1,980	$	2,009
Cowen Healthcare Royalty GP, LLC	513		1,176
Cowen Healthcare Royalty GP II, LLC	258		8
Chicago Board Options Exchange	2,423		0
Starboard Value LP	3,693		0
RCG Longview Partners, LLC	1,569		2,203
RCG Longview Louisiana Manager, LLC	1,140		186
RCG Urban American, LLC	1,258		889
RCG Urban American Management, LLC	1,096		359
RCG Longview Equity Management, LLC	557		499
Urban American Real Estate Fund II, L.P.	1,541		833
RCG Kennedy House, LLC	323		259
Other	336		313
	$	16,687	$	8,734

As of December 31, 2011 and 2010, the Company's share of losses in its equity method investment in RCG Longview Partners II, LLC has exceeded the carrying amount recorded in this investee. RCG Longview Partners II, LLC, as general partner to a real estate fund, has reversed previously recorded incentive income allocations and has recorded a current clawback obligation to the limited partners in the fund. This obligation is due to a change in unrealized value of the fund on which there have previously been distributed carried interest realizations; however, the settlement of a potential obligation is not due until the end of the life of the respective fund. As the Company is obligated to return previous distributions it received from RCG Longview Partners II, LLC, it has continued to record its share of gains/losses in the investee including reflecting its share of the clawback obligation in the amount of $6.2 million. All such amounts are included in accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition.

The Company's income (loss) from equity method investments was $5.4 million, $3.4 million, and ($3.3) million, for the years ended December 31, 2011, 2010 and 2009, respectively, and is included in net gains (losses) on securities, derivatives and other investments on the accompanying consolidated statements of operations. In addition, the Company recorded no impairment charges in relation to its equity method investments for the years ended December 31, 2011, 2010 and 2009, respectively.


(4)	Lehman Claims, at fair value

Lehman Brothers International (Europe) (“LBIE”), through certain affiliates, was a prime broker to the Company, and the Company held cash and cash equivalent balances with LBIE. On September 15, 2008, LBIE was placed into administration (the “Administration”) in the United Kingdom and, as a result, the assets held by the Company in its LBIE accounts were frozen at LBIE. The status and ultimate resolution of the assets under LBIE's Administration proceedings is uncertain. The assets of the Company at LBIE at the time of Administration (the “Total Net Equity Claim”) consist of $1.0 million, which the Company believes will represent an unsecured claim against LBIE. This does not include claims held by the Company against LBIE through its investment in Enterprise Master discussed in Note 6b. There can be no assurance that the Total Net Equity Claim value, as determined by the Company, will be accepted by the Administrators, nor does the Company know the manner and timing in which such claim will be satisfied and the ultimate value that will be received.

Given the great degree of uncertainty as to the status of the assets held at LBIE and the process and prospects of the return of those assets, the Company has decided to record the estimated fair value of the Total Net Equity Claim at an approximately 47% discount as of December 31, 2011 and a 70% discount as of December 31, 2010, which represents management's best estimate at the respective dates of the value that ultimately may be recovered with respect to the Total Net Equity Claim (the “Estimated Recoverable Lehman Claim”). The Estimated Recoverable Lehman Claim was recorded at estimated fair value considering a number of factors including the status of the assets under U.K. insolvency laws and the trading levels of LBIE unsecured debt. In determining the estimated value of the Total Net Equity Claim, the Company was required to use considerable judgment and is based on the facts currently available. As additional information on the LBIE proceeding becomes available, the Company may need to adjust the valuation of the Estimated Recoverable Lehman Claim. The actual loss that may ultimately be incurred by the Company with respect to the pending LBIE claim is not known and could be materially different from the estimated value assigned by the Company.

Securities sold, not yet purchased, at fair value

Securities sold, not yet purchased, at fair value represent obligations of the Company to deliver a specified security at a contracted price and, thereby, create a liability to purchase that security at prevailing prices. The Company's liability for securities to be delivered is measured at their fair value as of the date of the consolidated financial statements. However, these transactions result in off-balance sheet risk, as the Company's ultimate cost to satisfy the delivery of securities sold, not yet purchased, at fair value may exceed the amount reflected in the consolidated statements of financial condition. Substantially all equity securities and options are pledged to the clearing broker under terms which permit the clearing broker to sell or re-pledge the securities to others subject to certain limitations. As of December 31, 2011 and December 31, 2010 securities sold, not yet purchased, at fair value consisted of the following:



	As of December 31,
	2011		2010
	(dollars in thousands)
U.S. Government securities(a)	$	165,197	$	100,559
Common stocks	123,877		88,580
Corporate bonds(b)	1,529		2,615
Options	43,648		6,162
	$	334,251	$	197,916


(a)	As of December 31, 2011, maturities ranged from September 2013 to January 2040 and interest rates ranged between 0.13% and 7.41%. As of December 31, 2010, maturities ranged from December 2015 to August 2026 and interest rates ranged between 2.13% and 6.75%.


(b)	As of December 31, 2011, maturities ranged from December 2016 to January 2026 and interest rates ranged between 5.55% and 9.50%. As of December 31, 2010, maturities ranged from June 2013 to December 2025 and interest rates ranged between 2.25% and 3.75%.

Securities purchased under agreements to resell and securities sold under agreements to repurchase

The following table represents the Company's securities purchased under agreements to resell and securities sold under agreements to repurchase as of December 31, 2011 and December 31, 2010:



	As of December 31, 2011
	(dollars in thousands)
Securities purchased under agreements to resell
Agreements with Barclays Capital Inc bearing interest of (0.38%) - 0.25% due on January 3, 2012	$	166,260
Securities sold under agreements to repurchase
Agreements with Royal Bank of Canada bearing interest of 1.53% - 1.58% due on January 3, 2012 to June 25, 2012	49,450
Agreements with Barclays Capital Inc bearing interest of 0.03% - 0.08% due on January 3, 2012	179,333
	$	228,783



	As of December 31, 2010
	(dollars in thousands)
Securities purchased under agreements to resell
Agreements with Barclays Capital Inc bearing interest of 0.07% - 0.14% due on January 3, 2011	$	97,755
Securities sold under agreements to repurchase
Agreements with Royal Bank of Canada bearing interest of 1.42% due on February 22, 2011 to September 1, 2011	48,532
Agreements with Barclays Capital Inc bearing interest of 0.18% - 1.50% due on January 7, 2011 to June 6, 2011	143,633
	$	192,165

For all of the Company's holdings of Repurchase Agreements as of December 31, 2011, the repurchase dates are open and the agreement can be terminated by either party at any time. The agreements continue on a day-to-day basis.

Transactions involving purchases of securities under agreements to resell are carried at their contract value which approximates fair value. As of December 31, 2011 and December 31, 2010, the fair value of the collateral received by the Company, consisting of government and corporate bonds, was $166.7 million and $95.5 million, respectively.

Transactions involving the sale of securities under Repurchase Agreements are carried at their contract value and are accounted for as collateralized financings. In connection with these financings, as of December 31, 2011 and December 31, 2010, the Company had pledged collateral, consisting of government and corporate bonds, in the amount of $243.1 million and $207.4 million, respectively, which is included in securities owned, at fair value in the consolidated statements of financial condition.

Other

During the second and fourth quarters of 2011, the Company acquired two Luxembourg reinsurance companies from third parties through a wholly-owned local subsidiary, which, upon acquisition, recorded deferred assets and subsequently deferred tax benefits. The purchase price of the reinsurance companies totaled EUR 234.8 million (USD $331.8 million). The acquisitions were not accounted for as business combinations as after separation from the transferor, the reinsurance companies do not meet the definition of a business and did not continue any normal revenue producing or core generating activities. This is discussed in more detail in the Income Taxes footnote.


b.	Consolidated Funds

Securities owned, at fair value

As of December 31, 2011 and December 31, 2010 securities owned, at fair value, held by the Consolidated Funds are comprised of:



	As of December 31,
	2011		2010
	(dollars in thousands)
Government sponsored securities (a)	$	2,006	$	7,682
Commercial paper (b)	3,927		—
Corporate bond (c)	401		1,040
	$	6,334	$	8,722


(a)	As of December 31, 2011, maturities ranged from October 2012 to October 2013 and interest rates ranged between 0.32% and 1.74%. As of December 31, 2010, maturities ranged from January 2011 to December 2012 and interest rates ranged between 0.35% and 4.88%.


(b)	Commercial paper was purchased at a discount and matures on January 3, 2012.


(c)	As of December 31, 2011, the maturity was April 2012 with an interest rate of 0.58%. As of December 31, 2010, the maturity was January 2011 with an interest rate of 0.42%.

Other investments, at fair value

As of December 31, 2011 and December 31, 2010 other investments, at fair value, held by the Consolidated Funds are comprised of:



	As of December 31,
	2011		2010
	(dollars in thousands)
(1) Portfolio Funds	$	221,480	$	327,131
(2) Lehman claims	7,340		6,243
	$	228,820	$	333,374


(1)	Investments in Portfolio Funds, at fair value

As of December 31, 2011 and December 31, 2010, investments in Portfolio Funds, at fair value, included the following:



	As of December 31,
Description	2011		2010
	(dollars in thousands)
Investments of Enterprise LP	$	193,012	$	257,246
Investments of consolidated fund of funds	28,468		69,885
	$	221,480	$	327,131

Consolidated investments of Enterprise LP

Enterprise LP operates under a “master‑feeder” structure with Enterprise Master, whereby Enterprise Master's shareholders are Enterprise LP and RCG II Intermediate Fund, L.P. The consolidated investments in Portfolio Funds recorded in other investments on the consolidated statements of financial condition include Enterprise LP's investment of $193.0 million and $257.2 million in Enterprise Master as of December 31, 2011 and December 31, 2010, respectively. On May 12, 2010, the Company announced its intention to close Enterprise Master. Prior to this announcement, strategies utilized by Enterprise Master included merger arbitrage and activist investing, investments in distressed securities, convertible hedging, capital structure arbitrage, equity market neutral, investments in private placements of convertible securities, proprietary mortgages, structured credit investments, investments in mortgage backed securities and other structured finance products, investments in real estate and real property interests, structured private placements and other relative value strategies. Enterprise Master had broad investment powers and maximum flexibility in seeking to achieve its investment objective. Enterprise Master was permitted to invest in equity securities, debt instruments, options, futures, swaps, credit default swaps and other derivatives. Enterprise Master has been selling, and will continue to sell, its positions and return capital to its investors. There are no unfunded commitments at Enterprise LP.

Investments of consolidated fund of funds investment companies

The investments of consolidated fund of funds investment companies of $28.5 million and $69.9 million as of December 31, 2011 and December 31, 2010, respectively, include the investments of Levered FOF, Multi‑Strat FOF and Vintage FOF, all of which are investment companies managed by Ramius Alternative Solutions LLC, as well as RTS Global 3X, which is managed by Ramius Trading Strategies LLC. Multi‑Strat FOF's investment objectives is to invest discrete pools of their capital among portfolio managers that invest through Portfolio Funds, forming a multi‑strategy, diversified investment portfolio designed to achieve returns with low to moderate volatility. Levered FOF had a similar strategy, but on a levered basis, prior to the fund winding down. Levered FOF is no longer levered. Vintage FOF's investment objective is to allocate its capital among portfolio managers that invest through investment pools or managed accounts thereby forming concentrated investments in high conviction managers designed to achieve attractive risk adjusted returns with moderate relative volatility. RTS Global 3X's investment objective is to achieve attractive investment returns on a risk-adjusted basis that are non-correlated with the traditional equity and bond markets by investing substantially all of its capital in managed futures and global macro‑based investment strategies. RTS Global 3X seeks to achieve its objective through a multi‑advisor investment approach by allocating its capital among third‑party trading advisors that are unaffiliated with RTS Global 3X. However, unlike a traditional “fund of funds” that invests with advisors through entities controlled by third‑parties, RTS Global 3X will allocate its capital among a number of different trading accounts organized and managed by the general partner.

The following is a summary of the investments held by the four consolidated fund of funds, at fair value, as of December 31, 2011 and December 31, 2010:



		As of December 31, 2011
		Ramius Levered Multi-Strategy FOF LP		Ramius Multi-Strategy FOF LP		Ramius Vintage Multi-Strategy FOF LP		RTS Global 3X Fund LP		Total
Description	Strategy	Fair Value		Fair Value		Fair Value		Fair Value		Fair Value
				(dollars in thousands)
Ramius Multi-Strategy Master FOF LP*	Multi-Strategy	$	—	$	8,269	$	—	$	—	$	8,269	(a)
Ramius Vintage Multi-Strategy Master FOF LP*	Multi-Strategy	—		—		8,883		—		8,883		(a)
Tapestry Pooled Account V LLC*	Credit-Based	438		—		—		—		438		(b)
Independently Advised Portfolio Funds*	Futures & Global Macro	—		—		—		8,078		8,078		(c)
Externally Managed Portfolio Funds	Credit-Based	260		—		—				260		(b)
Externally Managed Portfolio Funds	Event Driven	1,992		—		—		—		1,992		(d)
Externally Managed Portfolio Funds	Hedged Equity	35		—		—		—		35		(e)
Externally Managed Portfolio Funds	Multi-Strategy	459		—		—		—		459		(f)
Externally Managed Portfolio Funds	Fixed Income Arbitrage	54		—		—		—		54		(g)
		$	3,238	$	8,269	$	8,883	$	8,078	$	28,468



		As of December 31, 2010
		Ramius Levered Multi-Strategy FOF LP		Ramius Multi-Strategy FOF LP		Ramius Vintage Multi-Strategy FOF LP		RTS Global 3X Fund LP		Total
Description	Strategy	Fair Value		Fair Value		Fair Value		Fair Value		Fair Value
				(dollars in thousands)
Ramius Multi-Strategy Master FOF LP*	Multi-Strategy	$	—	$	28,633	$	—	$	—	$	28,633	(a)
Ramius Vintage Multi-Strategy Master FOF LP*	Multi-Strategy	—		—		20,722		—		20,722		(a)
Tapestry Pooled Account V LLC*	Credit-Based	687		—		—		—		687		(b)
Independently Advised Portfolio Funds*	Futures & Global Macro	—		—		—		15,889		15,889		(c)
Externally Managed Portfolio Funds	Credit-Based	522		—		—		—		522		(b)
Externally Managed Portfolio Funds	Event Driven	2,800		—		—		—		2,800		(d)
Externally Managed Portfolio Funds	Hedged Equity	39		—		—		—		39		(e)
Externally Managed Portfolio Funds	Multi-Strategy	535		—		—		—		535		(f)
Externally Managed Portfolio Funds	Fixed Income Arbitrage	58		—		—		—		58		(g)
		$	4,641	$	28,633	$	20,722	$	15,889	$	69,885

* These Portfolio Funds are affiliates of the Company.

The Company has no unfunded commitments regarding investments held by the four consolidated funds.


(a)	Investments held in affiliated master funds can be redeemed on a monthly basis with no advance notice.

(b)

The Credit‑Based strategy aims to generate returns via positions in the credit sensitive sphere of the fixed income markets. The strategy generally involves the purchase of corporate bonds with hedging of the interest exposure. The investments held in Tapestry Pooled Account V LLC, a related fund, are held solely in a credit based fund which the fund's manager has placed in a side-pocket. The remaining amount of the investments within this category represents an investment in a fund that is in the process of liquidating. Distributions from this fund will be received as underlying investments are liquidated.

(c)

The Futures and Global Macro strategy is comprised of several portfolio accounts, each of which will be advised independently by a commodity trading advisor implementing primarily managed futures or global macro‑based investment strategies. The trading advisors (through their respective portfolio accounts) will trade independently of each other and, as a group, will employ a wide variety of systematic, relative value and discretionary trading programs in the global currency, fixed income, commodities and equity futures markets. In implementing their trading programs, the trading advisors will trade primarily in the futures and forward markets (as well as in related options). Although certain trading advisors may be permitted to use total return swaps and trade other financial instruments from time to time on an interim basis, the primary focus will be on the futures and forward markets. Redemption frequency of these portfolio accounts are monthly (and intra‑monthly for a $10,000 fee) and the notification period for redemptions is 5 business days (or 3 business days for intra‑month).

(d)

The Event Driven strategy is generally implemented through various combinations and permutations of merger arbitrage, restructuring and distressed instruments. Approximately 0.6% (as of December 31, 2011) and 3% (as of December 31, 2010) of the investments in this category represent investments in a fund that is in the process of liquidating. Distributions from this fund will be received as underlying investments are liquidated. The remaining amount of the investments in this category is in a side pocket or suspended with undetermined payout dates.


(e)	The Hedged Equity strategy focuses on equity strategies with some directional market exposure. The strategy attempts to profit from market efficiencies and direction. The investee fund manager has side-pocketed investments.

(f)

The Multi‑Strategy investment objective is to invest discrete pools of its capital among portfolio managers that invest through investment funds, forming multi‑strategy, diversified investment portfolios designed to achieve non-market directional returns with low relative volatility. The investments in this category represent investments in a fund that is in the process of liquidating. Distributions from this fund will be received as underlying investments are liquidated.


(g)	The Fixed Income Arbitrage strategy seeks to achieve long term capital appreciation by employing a variety of strategies to generate returns without significant exposure to credit spread, interest rate changes or duration. As of December 31, 2011, the investment manager has gated investments.


(2)	Lehman Claims, at fair value

With respect to the aforementioned Lehman claims, the Total Net Equity Claim of Enterprise Master consists of $24.3 million. Included in this claim were assets with a value of $9.5 million at the time LBIE entered Administration, that were returned to Enterprise Master and its affiliated funds in June 2010. Enterprise Master and its affiliated funds sold the returned assets for an aggregate $10.7 million, and distributed this amount to Enterprise Master's investors in July 2010. In December 2011, Enterprise Master received an aggregate of approximately $2.4 million relating to securities, interest and dividends earned with respect to securities held by LBIE on behalf of Enterprise Master. Another distribution is expected to occur in February of 2012. Pre-distribution, the remaining Net Equity Claim for Enterprise Master is $15 million. Enterprise Master is valuing this claim at $9.2 million as of December 31, 2011. Of this amount, $7.3 million was attributable to Enterprise LP based on its ownership percentage in Enterprise Master at the time of the Administration. As discussed in Note 6a, the Company has an additional $1.0 million claim against LBIE as a result of certain cash and cash equivalent balances held at LBIE. LBIE claims consist of several components, valued as follows: (a) the trust assets that the Company was informed were within the control of LBIE and were expected to be returned in the relatively near term were valued at market less a 1% discount that corresponds to the fee to be charged under the Claim Resolution Agreement (“CRA”), (b) the trust assets that are not within the control of LBIE and are not believed to be held through Lehman Brothers, Inc. (“LBI”) were valued at 55% with respect to US denominated Assets and 53% with respect to foreign denominated Assets, which represented the Company's estimate of potential recovery rates and (c) the remaining unsecured claims against LBIE were valued at 53%, which represented the Company's estimate of potential recovery rates with respect to this exposure using available market quotes. The estimated final recoverable amount by Enterprise Master may differ from the actual recoverable amount of the pending LBIE and LBI claims, and the differences may be significant.

As a result of Enterprise Master and certain of the funds managed by the Company having assets held at LBIE frozen in their LBIE prime brokerage account and the degree of uncertainty as to the status of those assets and the process and prospects of the return of those assets, Enterprise Master and the funds managed by the Company decided that only the investors who were invested at the time of the Administration should participate in any profit or loss relating to the Estimated Recoverable Lehman Claim. As a result, Enterprise Master and certain of the funds managed by the Company with assets held at LBIE granted a 100% participation in the Estimated Recoverable Lehman Claims to Special Purpose Vehicles (the “SPVs” or “Lehman Segregated Funds”) incorporated under the laws of the Cayman Islands on September 29, 2008, whose shares were distributed to each of their investor funds. Fully redeeming investors of Enterprise LP will not be paid out on the balance invested in the SPV until the claim with LBIE is settled and assets are returned by LBIE.

In addition to Enterprise Master's claims against LBIE, LBI was a prime broker to Enterprise Master and Enterprise Master holds cash balances of $5.3 million at LBI. On September 19, 2008, LBI was placed in a Securities Investor Protection Corporation (“SIPC”) liquidation proceeding after the filing for bankruptcy of its parent Lehman Brothers Holdings, Inc. The status of the assets under LBI's bankruptcy proceedings has not been determined. The amount that will ultimately be recovered from LBI will depend on the amount of assets available in the fund of customer property to be established by the trustee appointed under the Securities Investor Protection Act (the “SIPA Trustee”) as approved by the bankruptcy court as well as the total amount of customer claims that seek recovery from the fund of customer property. Based on court filings by the SIPA Trustee, the total amount of customer claims exceeds the assets that are likely to be in the fund of customer property. In addition, while there has been an initial ruling with respect to the claims asserted by Barclays plc against LBI relating to an asset purchase agreement entered into by Barclays plc with LBIE near the time of the SIPC liquidation proceeding, there is still uncertainty regarding the ultimate resolution of these claims that could affect the amount of assets that are included in the fund of customer property. As a result of these uncertainties and the timing of any distributions from LBI in respect of the Company's customer claims, management has estimated recovery with respect to the Company's exposure to LBI at 55% or $2.9 million as of December 31, 2011, which represents the present value of the mid point between what management believes are reasonable estimates of the low side and high side potential recovery rates with respect to the Company's exposure. The estimated recoverable amount by the Company may differ from the actual recoverable amount of the pending LBI claim, and the differences may be significant.

Indirect Concentration of the Underlying Investments Held by Consolidated Funds

From time to time, through its investments in the Consolidated Funds, the Company may indirectly maintain exposure to a particular issue or issuer (both long and/or short) which may account for 5% or more of the Consolidated Funds' net assets (on an aggregated basis). Based on information that is available to the Company as of December 31, 2011 and 2010, the Company assessed whether or not its Consolidated Funds had interests in an issuer for which the Company's pro-rata share exceeds 5% of the Consolidated Funds' net assets (on an aggregated basis). There were no indirect concentrations that exceed 5% of the Consolidated Funds' net assets held by the Company as of December 31, 2011 or 2010.

Net realized and unrealized gains (losses)

Net realized gains (losses) and net unrealized gains (losses) on investments and other transactions and on derivatives for Consolidated Funds for the years ended December 31, 2011, 2010 and 2009 were as follows:



	Year Ended December 31,
	2011			2010			2009
	(dollars in thousands)
Consolidated Funds net gains (losses) on investments and other transactions:
Net realized gains (losses) on investments and other transactions	$	4,959		$	16,696		$	(8,561	)
Net unrealized gains (losses) on investments and other transactions	(34		)	16,420			64,469
Consolidated Funds net gains (losses) on derivatives:
Net realized gains (losses) on derivatives	$	(651	)	$	(1,892	)	$	(26,517	)
Net unrealized gains (losses) on derivatives	68			1,131			(5,233		)

Underlying Investments of Unconsolidated Funds Held by Consolidated Funds

Enterprise Master

Enterprise LP's investment in Enterprise Master represents Enterprise LP's proportionate share of Enterprise Master's net assets; as a result, the investment balances of Enterprise Master reflected below may exceed the net investment which Enterprise LP has recorded. The following tables present summarized investment information for the underlying investments and derivatives held by Enterprise Master as of December 31, 2011 and 2010:

Securities owned and securities sold, but not yet purchased by Enterprise Master, at fair value



	December 31, 2011				December 31, 2010
Description	Securities owned		Securities sold, but not yet purchased		Securities owned		Securities sold, but not yet purchased
	(dollars in thousands)
Common stock	$	2,173	$	—	$	10,123	$	—
Corporate bonds	—		—		1,997		—
Over-the-counter foreign currency call option	—		—		—		(63		)
Preferred stock	1,027		—		410		—
Private debt	—		—		59		—
Private equity	276		—		173		—
Restricted stock	47		—		3,148		—
Rights	2,173		—		2,115		—
Trade claims	128		—		128		—
Warrants	3		—		55		—
	$	5,827	$	—	$	18,208	$	(63	)

Derivative contracts, at fair value, owned by Enterprise Master, net



	As of December 31,
Description	2011		2010
	(dollars in thousands)
Asset swaps	$	—	$	5
Currency forwards	53		(36		)
	$	53	$	(31	)

Portfolio Funds, owned by Enterprise Master, at fair value



		As of December 31,
		2011		2010
Description	Strategy	Fair Value
		(dollars in thousands)
624 Art Holdings, LLC*	Artwork	$	38	$	98
Q Capital Strategies, LLC*	Life Settlements	—		111
RCG Longview Equity Fund, LP*	Real Estate	14,460		10,120
RCG Longview II, LP*	Real Estate	1,592		1,835
RCG Longview Debt Fund IV, LP*	Real Estate	23,594		12,628
RCG Longview, LP*	Real Estate	271		383
RCG Soundview, LLC*	Real Estate	2,748		2,542
RCG Urban American Real Estate Fund, L.P.*	Real Estate	3,142		3,207
RCG International Sarl*	Multi-Strategy	870		9,463
Ramius Navigation Fund Ltd*	Multi-Strategy	1,106		24,972
RCG Special Opportunities Fund, Ltd*	Multi-Strategy	97,144		97,845
Ramius Credit Opportunities Fund Ltd*	Distressed	121		300
RCG Endeavour, LLC*	Multi-Strategy	47		87
RCG Energy, LLC *	Energy	16,560		18,850
RCG Renergys, LLC*	Energy	2		2
Other Private Investments	Various	16,580		15,189
Real Estate Investments	Real Estate	15,795		25,662
		$	194,070	$	223,294


*	These Portfolio Funds are affiliates of the Company.

Ramius Multi-Strategy Master FOF LP and Ramius Vintage Multi-Strategy Master FOF LP

Multi‑Strat FOF's and Vintage FOF's investments in their respective master funds represent their proportionate share of their master fund's net assets; as a result, the master funds investments in Portfolio Funds reflected below may exceed the net investments which Multi‑Strat FOF and Vintage FOF have recorded. The following table presents summarized investment information for the underlying Portfolio Funds held by Ramius Multi‑Strategy Master FOF LP and Ramius Vintage Multi‑Strategy Master FOF LP, at estimated fair value, as of December 31, 2011 and 2010:



		December 31, 2011				December 31, 2010
Description	Strategy	Ramius Multi-Strategy Master FOF LP		Ramius Vintage Multi-Strategy Master FOF LP		Ramius Multi-Strategy Master FOF LP		Ramius Vintage Multi-Strategy Master FOF LP
		(dollars in thousands)
Ramius Vintage Multi-Strategy Master FOF LP*	Multi Strategy	$	552	$	—	$	1,354	$	—
Tapestry Pooled Account II, LLC*	Hedged Equity	—		—		—		3,544
Tapestry Pooled Account V, LLC*	Credit-Based	901		962		1,416		1,512
Externally Managed Funds	Credit-Based	40		399		6,653		803
Externally Managed Funds	Event Driven	3,015		5,044		6,491		6,802
Externally Managed Funds	Fixed Income Arbitrage	79		—		83		—
Externally Managed Funds	Hedged Equity	1,272		1,753		4,386		3,055
Externally Managed Funds	Multi Strategy	1,319		1,442		7,785		4,292
Externally Managed Funds	Global Macro	—		—		2,053		679
Externally Managed Funds	Opportunistic Equity	—		—		—		1,677
Externally Managed Funds	Managed Futures	—		—		2,430		—
		$	7,178	$	9,600	$	32,651	$	22,364


*	These Portfolio Funds are affiliates of the Company.

RTS Global 3X Fund LP's Portfolio Fund investments

RTS Global 3X, which commenced operations in March 2010, invests over half of its equity in six externally managed portfolio funds which primarily concentrate on futures and global macro strategies. RTS Global 3X's investments in the portfolio funds represent its proportionate share of the portfolio funds net assets; as a result, the portfolio funds' investments reflected below may exceed the net investment which RTS Global 3X has recorded. The following table presents the summarized investment information, which primarily consists of receivables/(payables) on derivatives, for the underlying Portfolio Funds held by RTS Global 3X, at fair value, as of December 31, 2011 and 2010:



	As of December 31,
	2011			2010
	(dollars in thousands)
Bond futures	$	(2	)	$	(2	)
Commodity options	181			(39		)
Currency options	487			347
Commodity forwards	51			32
Commodity futures	756			970
Currency forwards	157			(63		)
Currency futures	418			1,073
Energy futures	2			(2		)
Foreign currency option	358			1
Index options	80			86
Index futures	80			45
Interest rate futures	20			(10		)
Interest rate options	(25		)	5
	$	2,563		$	2,443