Investments of Operating Entities and Consolidated Funds


a.	Operating Entities

Securities owned, at fair value

Securities owned, at fair value are held by the Company and are considered held for trading. 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, 2012 and 2011, securities owned, at fair value consisted of the following:



	As of December 31,
	2012		2011
	(dollars in thousands)
U.S. Government securities (a)	$	137,478	$	182,868
Preferred stock	2,332		250
Common stocks	259,292		250,130
Convertible bonds (b)	6,202		18,130
Corporate bonds (c)	193,078		231,864
Options	20,546		55,699
Warrants and rights	2,354		2,759
Mutual funds	2,845		3,214
	$	624,127	$	744,914


(a)	As of December 31, 2012, maturities ranged from November 2013 to November 2022 and interest rates ranged between 0.25% and 5.95%. As of December 31, 2011, maturities ranged from November 2013 to November 2021 and interest rates ranged between 0.25% and 8%.


(b)	As of December 31, 2012, maturities ranged from May 2014 to July 2014 with an interest rate of 5.00%. As of December 31, 2011, the maturity was August 2027 with an interest rate of 2.75%.


(c)	As of December 31, 2012, maturities ranged from January 2013 to February 2041 and interest rates ranged between 3.09% and 12.50%. As of December 31, 2011, maturities ranged from January 2012 to February 2041 and interest rates ranged between 3.13% and 13.50%.

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 overall exposure to financial derivatives is limited. The Company's long exposure to futures, equity swaps and currency forward derivative contracts, at fair value, as of December 31, 2012 and 2011 of $0.2 million and $0.8 million, respectively, is included in other assets in the accompanying consolidated statements of financial condition. The Company's short exposure to futures, equity swap and currency forward derivative contracts, at fair value, as of December 31, 2012 and 2011 of $1.0 million and $0.8 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 years ended December 31, 2012, 2011 and 2010, were $7.8 million, $7.0 million, and $1.9 million respectively, and are included in other income in the accompanying 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, 2012 and 2011, collateral consisting of $6.7 million and $8.1 million of cash, respectively, is included in receivable from brokers on the accompanying consolidated statements of financial condition. As of December 31, 2012 and 2011 all derivative contracts were with multiple major financial institutions.

Other investments

As of December 31, 2012 and 2011, other investments consisted of the following:



	As of December 31,
	2012		2011
	(dollars in thousands)
(1) Portfolio Funds, at fair value	$	55,898	$	40,350
(2) Real estate investments, at fair value	1,864		2,353
(3) Equity method investments	26,462		16,687
(4) Lehman claims, at fair value	706		553
	$	84,930	$	59,943


(1)	Portfolio Funds, at fair value

The Portfolio Funds, at fair value as of December 31, 2012 and 2011, included the following:



	As of December 31,
	2012		2011
	(dollars in thousands)
HealthCare Royalty Partners (a)(*)	$	7,866	$	6,297
HealthCare Royalty Partners II (a)(*)	6,415		1,521
Ramius Global Credit Fund LP (b)(*)	14,196		11,790
Ramius Alternative Replication Ltd (c)(*)	—		837
Tapestry Investment Co PCC Ltd (d)	194		185
Ramius Enhanced Replication Fund LLC (e)(*)	—		337
Starboard Value and Opportunity Fund LP (f)(*)	15,706		11,123
Formation 8 Partners Fund I (g)	1,500		—
RCG LV Park Lane LLC (h)	708		—
Other private investment (i)	7,826		7,415
Other affiliated funds (j)(*)	1,487		845
	$	55,898	$	40,350

* 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 HealthCare Royalty Partners (formerly Cowen HealthCare Royalty Partners), HealthCare Royalty Partners II (formerly Cowen HealthCare Royalty Partners II) and Starboard Value and Opportunity Fund LP in Note 19.


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


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


(c)	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 at 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)	Formation 8 Partners Fund I is a private equity fund which invests in equity of early stage and growth transformational IT and energy technology companies. Distributions will be made when the underlying investments are liquidated.


(h)	RCG LV Park Lane LLC is a single purpose entity formed to participate in a joint venture which acquired, at a discount, the mortgage notes on a portfolio of multifamily real estate properties located in Birmingham, Alabama. RCG LV Park Lane LLC is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.


(i)	Other private investment represents the Company's closed end investment in a wireless broadband communication provider in Italy.


(j)	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, 2012 and 2011 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 $1.9 million and $1.6 million, respectively, and real estate debt investments held by the Company of $0 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. 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) HealthCare Royalty Partners General Partners, (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 CBOE 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,
	2012		2011
	(dollars in thousands)
RCG Longview Debt Fund IV Management, LLC	$	1,954	$	1,980
HealthCare Royalty GP, LLC (formerly Cowen HealthCare Royalty GP, LLC)	642		513
HealthCare Royalty GP II, LLC (formerly Cowen HealthCare Royalty GP II, LLC)	1,086		258
CBOE Stock Exchange, LLC	2,058		2,423
Starboard Value LP	12,757		3,693
RCG Longview Partners, LLC	1,535		1,569
RCG Longview Louisiana Manager, LLC	1,866		1,140
RCG Urban American, LLC	1,380		1,258
RCG Urban American Management, LLC	545		1,096
RCG Longview Equity Management, LLC	285		557
Urban American Real Estate Fund II, L.P.	1,636		1,541
RCG Kennedy House, LLC	377		323
Other	341		336
	$	26,462	$	16,687

As of December 31, 2012 and 2011, 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 accompanying consolidated statements of financial condition.

The Company's income (loss) from equity method investments was $15.6 million, $5.4 million, and $3.4 million for the years ended December 31, 2012, 2011 and 2010, 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, 2012, 2011 and 2010, respectively.

For the period ended December 31, 2012, certain of the Company's equity method investments have met the significance criteria as defined under SEC guidance. As such, the Company is required to present aggregated summarized financial information of its equity method investments. The aggregated summarized financial information of the Company's equity method investments is as follows:



	December 31,
	2012		2011
	(dollars in thousands)
Assets	$	498,557	$	173,259
Liabilities	20,170		26,016
Equity	$	478,387	$	147,243

	Year Ended December 31,
	2012		2011			2010
	(dollars in thousands)
Revenues	$	77,502	$	28,669		$	19,552
Less: Expenses	61,727		42,959			20,031
Net realized and unrealized gains (losses)	5,575		9,365			1,969
Net Income	$	21,350	$	(4,925	)	$	1,490


(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 which the Company believed were held at LBIE at the time of Administration (the “Total Net Equity Claim”) consisted of $1.0 million, which the Company believed would represent an unsecured claim against LBIE. On November 2, 2012, the Company executed a Claims Determination Deed with respect to this claim. By entering into this deed, the Company and LBIE reached agreement on the amount of the Company's unsecured claim, which was agreed to be approximately $0.9 million. As a result of entering into this deed, the Company is entitled to participate in dividends to unsecured creditors of LBIE and at the end of November 2012 the Company received its first dividend in an amount equal to 25.2% of its agreed claim, or approximately $0.2 million. This does not include claims held by the Company against LBIE through its investment in Enterprise Master discussed in Note 6b(2). The Company does not know the timing with respect to future dividends to unsecured creditors or the ultimate value that will be received.

Given the fact that LBIE has begun to make distributions to unsecured creditors and the increased trading levels for unsecured claims of LBIE, the Company decided to record the estimated fair value of the Total Net Equity Claim at par as of December 31, 2012 and at a 47% discount as of December 31, 2011, which represented 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 recovery that may ultimately be received by the Company with respect to the pending LBIE claim is not known and could be different from the estimated value assigned by the Company. (See Note 6b(2)).

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 accompanying 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, 2012 and 2011 securities sold, not yet purchased, at fair value consisted of the following:



	As of December 31,
	2012		2011
	(dollars in thousands)
U.S. Government securities (a)	$	—	$	165,197
Common stocks	168,797		123,877
Corporate bonds (b)	61		1,529
Options	9,076		43,648
Warrants and rights	3		—
	$	177,937	$	334,251


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


(b)	As of December 31, 2012, the maturity was January 2026 with an interest rate of 5.55%. As of December 31, 2011, maturities ranged from December 2016 to January 2026 and interest rates ranged between 5.55% and 9.50%.

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, 2012 and 2011:



	As of December 31, 2012
	(dollars in thousands)
Securities sold under agreements to repurchase
Agreements with Royal Bank of Canada bearing interest of 2.12% - 2.2% due on January 31, 2013 to June 25, 2013	29,039
Agreements with Barclays Capital Inc bearing interest of (0.05%) - 0.23% due on January 1, 2013	136,906
	$	165,945



	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

For all of the Company's holdings of Repurchase Agreements as of December 31, 2012, the repurchase dates are open and the agreement can be terminated by either party at any time. The agreements rolls over 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. These fair value measurement would be categorized as level 1 within the fair value hierarchy. As of December 31, 2012 the Company held no collateral. As of December 31, 2011, the fair value of the collateral received by the Company, consisting of government and corporate bonds, was $166.7 million.

Transactions involving the sale of securities under Repurchase Agreements are carried at their contract value, which approximates fair value, and are accounted for as collateralized financings. In connection with these financings, as of December 31, 2012 and 2011, the Company had pledged collateral, consisting of government and corporate bonds, in the amount of $173.7 million and $243.1 million, respectively, which is included in securities owned, at fair value in the accompanying consolidated statements of financial condition.

Securities lending and borrowing transactions

Securities borrowed and securities loaned are carried at the amounts of cash collateral advanced or received. Securities borrowed transactions require the Company to deposit cash collateral with the lender. With respect to securities loaned, the Company receives cash collateral from the borrower. The initial collateral advanced or received approximates or is greater than the market value of securities borrowed or loaned.The Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded, as necessary.

Fees and interest received or paid are recorded in interest and dividend income and interest expense, respectively, on an accrual basis. In the case where the fair value basis of accounting is elected, any resulting change in fair value is reported in trading revenues. Accrued interest income and expense are recorded in the same manner as under the accrual method. At December 31, 2012, the Company does not have any securities lending transactions for which fair value basis of accounting was elected.

The Company has loaned to brokers and dealers, securities having a market value of $388.4 million. In addition, the Company has borrowed from brokers and dealers, securities having a market value of $391.6 million.

Variable Interest Entities

The total assets and liabilities of the variable interest entities for which the Company has concluded that it holds a variable interest, but for which it is not the primary beneficiary, are $1.4 billion and $22.8 million as of December 31, 2012 and $0.8 billion and $66.1 million as of December 31, 2011, respectively. In addition, the maximum exposure relating to these variable interest entities as of December 31, 2012 was $220.9 million, and as of December 31, 2011 was $250.9 million, all of which is included in other investments, at fair value in the Company's consolidated statements of financial condition. The exposure to loss primarily relates to the respective 2012 or 2011 Consolidated Feeder Funds' investment in their respective 2012 or 2011 Unconsolidated Master Funds as of December 31, 2012 and 2011.

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 cost generating activities.


b.	Consolidated Funds

Securities owned, at fair value

As of December 31, 2012 and 2011 securities owned, at fair value, held by the Consolidated Funds are comprised of:



	As of December 31,
	2012		2011
	(dollars in thousands)
Government sponsored securities (a)	$	1,911	$	2,006
Commercial paper (b)	1,614		3,927
Corporate bond (c)	—		401
	$	3,525	$	6,334


(a)	As of December 31, 2012, maturities ranged from August 2013 to December 2014 and interest rates ranged between 0.28% and 4.00%. As of December 31, 2011, maturities ranged from October 2012 to October 2013 and interest rates ranged between 0.32% and 1.74%.


(b)	As of December 31, 2012, commercial paper was purchased at a discount and matures on January 2, 2013. As of December 31, 2011, commercial paper was purchased at a discount and matured on January 3, 2012.


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

Other investments, at fair value

As of December 31, 2012 and 2011 other investments, at fair value, held by the Consolidated Funds are comprised of:



	As of December 31,
	2012		2011
	(dollars in thousands)
(1) Portfolio Funds	$	190,081	$	221,480
(2) Lehman claims	14,124		7,340
	$	204,205	$	228,820


(1)	Investments in Portfolio Funds, at fair value

As of December 31, 2012 and 2011, investments in Portfolio Funds, at fair value, included the following:



	As of December 31,
	2012		2011
	(dollars in thousands)
Investments of Enterprise LP	$	173,348	$	193,012
Investments of consolidated fund of funds	16,733		28,468
	$	190,081	$	221,480

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 are recorded in other investments on the accompanying consolidated statements of financial condition and include Enterprise LP's investment of $173.3 million and $193.0 million in Enterprise Master as of December 31, 2012 and 2011, 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 the consolidated fund of funds investment companies are $16.7 million and $28.5 million as of December 31, 2012 and 2011, respectively. These investments include the investments of Levered FOF, Multi‑Strat Master FOF and Vintage Master FOF as of December 31, 2012 and Levered FOF, Multi‑Strat FOF and Vintage FOF as of December 31, 2011 (see Note 3b), all of which are investment companies managed by Ramius Alternative Solutions LLC. RTS Global 3X is consolidated as of December 31, 2012 and 2011, which is managed by Ramius Trading Strategies LLC. Multi‑Strat Master FOF's investment objectives (as was Multi-Strat FOF's objective) 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 Master FOF's investment objective (as was Vintage FOF's 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. Levered FOF, Multi‑Strat Master FOF and Vintage Master FOF are all in liquidation. 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, 2012 and 2011:



		Fair Value as of December 31, 2012
	Strategy	Ramius Levered Multi-Strategy FOF LP		Ramius Multi-Strategy Master FOF LP		Ramius Vintage Multi-Strategy Master FOF LP		RTS Global 3X Fund LP		Total
		(dollars in thousands)
Tapestry Pooled Account V LLC*	Credit-Based	$	315	$	649	$	693	$	—	$	1,657	(b)
Independently Advised Portfolio Funds*	Futures & Global Macro	—		—		—		7,161		7,161		(c)
Externally Managed Portfolio Funds	Event Driven	1,545		2,316		3,264		—		7,125		(d)
Externally Managed Portfolio Funds	Hedged Equity	—		—		790		—		790		(e)
		$	1,860	$	2,965	$	4,747	$	7,161	$	16,733



		Fair value as of December 31, 2011
	Strategy	Ramius Levered Multi-Strategy FOF LP		Ramius Multi-Strategy FOF LP		Ramius Vintage Multi-Strategy FOF LP		RTS Global 3X Fund LP		Total
		(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

* These Portfolio Funds are affiliates of the Company.

The Company has no unfunded commitments regarding investments held by the four consolidated fund of 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 underlying 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 month for a $10,000 fee) and the notification period for redemptions is 5 business days (or 3 business days for intra month redemptions).


(d)	The Event Driven strategy is generally implemented through various combinations and permutations of merger arbitrage, restructuring and distressed instruments. The investments in this category are primarily 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, 2012, 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 based on the value of assets at the time of Lehman's insolvency held directly by Enterprise Master and through Enterprise Master's ownership interest in affiliated funds consisted 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 Master and its affiliated funds. A distribution of $2.9 million occurred in February of 2012. After giving effect of these distributions, the remaining Net Equity Claim for Enterprise Master held directly and through its ownership interest in affiliated funds is $12.4 million. On November 2, 2012, Enterprise Master executed a Claims Determination Deed with respect to the unsecured portion of its direct claim against LBIE. By entering into this deed, Enterprise Master and LBIE reached agreement on the amount of Enterprise Master's unsecured claim, which was agreed to be approximately $1.3 million. As a result of entering into this deed, Enterprise Master is entitled to participate in dividends to unsecured creditors of LBIE and at the end of November 2012 Enterprise Master received its first dividend in an amount equal to 25.2% of its agreed claim, or approximately $0.3 million. While this dividend was received by Enterprise Master, Enterprise Master has not yet distributed the proceeds to the Company. The Company does not know the timing with respect to future dividends to unsecured creditors or the ultimate value that will be received. Enterprise Master is valuing the $12.4 million claim at $17.7 million as of December 31, 2012. Of the $17.7 million current valuation of Enterprise Master's claim, $14.1 million was attributable to Enterprise LP based on its ownership percentage in Enterprise Master at the time of the Administration. Of the $12.4 million net equity claim, $10.6 million represents claims to trust assets that the Company believes were held by LBIE through Lehman Brothers, Inc. (“LBI”). As discussed in Note 6a(4), the Company has an additional $0.9 million claim against LBIE, without taking into account the dividend that was received in November 2012, as a result of certain cash and cash equivalent balances held at LBIE. LBIE has made a corresponding claim for these assets and other trust assets held at LBI by LBIE on behalf of other prime brokerage clients pursuant to an omnibus customer claim (the “LBIE Omnibus Customer Claim”). LBIE will only be able to return trust assets held at LBI to Enterprise Master once LBIE receives a distribution from LBI in respect of the LBIE Omnibus Customer Claim. There has been a recent announcement regarding an agreement in principle being reached between LBIE and LBI (“LBI/LBIE Agreement in Principle”) with respect to their claims against each other, which also includes an agreement regarding the LBIE Omnibus Customer Claim. This agreement in principle is non-binding and still subject to execution of a definitive agreement and approval of the bankruptcy court. LBIE has also announced that as a result of the agreement in principle that has been reached, it intends to liquidate any securities received from LBI in respect of the LBIE Omnibus Customer Claim and will then allocate the value received from LBI among all of the LBIE clients who had trust assets held at LBI under the LBIE Omnibus Customer Claim. In allocating the amounts received from LBI, LBIE has indicated that it intends to allow clients to determine their entitlements on a portfolio basis based on the higher of (i) the market value of the portfolio as of September 19, 2008 or (ii) the market value of the portfolio together with accrued income thereon as of a current date (the “Best Claim”). LBIE also announced that it intends to seek a consensual arrangement with its clients relating to the liquidation and allocation described above so that a distribution can be made without having to seek UK court direction on these issues, which would otherwise substantially delay any distribution. In its announcement, LBIE indicated that based on the value of the assets it expects to receive from LBI and the Best Claims of its clients, all valued as at November 30, 2012, and assuming the agreement in principle with LBI becomes effective and that LBIE's clients agree to the consensual arrangement, it expects to be able to make distributions to its clients in excess of 90% of a client's Best Claim. As of December 31, 2012, the Company is valuing the trust assets of Enterprise Master believed to be held at LBI at 90% of its Best Claim, or $12.1 million.

The remaining components of the LBIE claims included within the $17.7 million value as of December 31, 2012 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 foreign denominated trust assets that are not within the control of LBIE (which the Company does not believe are held through LBI), were valued at $4.9 million, a significant increase in value from the prior period) which represents the market value of those assets less a 1% discount that corresponds to the fee charged under the CRA, which represented the Company's estimate of potential recovery rates and (c) the remaining unsecured claims against LBIE were valued at par, 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. These are not part of the LBIE Omnibus Customer Claim. 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 currently exceeds the assets that are likely to be in the fund of customer property. As discussed above, there has been a recent announcement regarding an agreement in principle being reached between LBIE and LBI with respect to their claims against each other which should reduce the total amount of claims against the fund of customer property. As discussed above, this agreement in principle is non-binding and still subject to execution of a definitive agreement and approval of the bankruptcy court. 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, but taking into consideration the agreement in principle reached between LBIE and LBI and the reduction of the total amount of claims against LBI as contemplated by that agreement, management has estimated recovery with respect to the Company's exposure to LBI at 80% or $4.2 million as of December 31, 2012, which represents the weighted average between 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.(See Note 6a(4)).

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, 2012 and 2011, 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, 2012 or December 31, 2011.

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, 2012, 2011 and 2010 were as follows:



	Year Ended December 31,
	2012			2011			2010
	(dollars in thousands)
Consolidated Funds net gains (losses) on investments and other transactions:
Net realized gains (losses) on investments and other transactions	$	(8,121	)	$	4,959		$	16,696
Net unrealized gains (losses) on investments and other transactions	14,497			(34		)	16,420
Consolidated Funds net gains (losses) on derivatives:
Net realized gains (losses) on derivatives	$	915		$	(651	)	$	(1,892	)
Net unrealized gains (losses) on derivatives	(38		)	68			1,131

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, 2012 and 2011:

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



	As of December 31,
	2012		2011
	(dollars in thousands)
Bank debt	$	79	$	—
Common stock	2,680		2,173
Preferred stock	997		1,027
Private equity	297		276
Restricted stock	26		47
Rights	1,714		2,173
Trade claims	128		128
Warrants	2		3
	$	5,923	$	5,827

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



	As of December 31,
Description	2012		2011
	(dollars in thousands)
Currency forwards	$	6	$	53
	$	6	$	53

Portfolio Funds, owned by Enterprise Master, at fair value



		As of December 31,
		2012		2011
	Strategy	(dollars in thousands)
624 Art Holdings, LLC*	Artwork	$	—	$	38
RCG Longview Equity Fund, LP*	Real Estate	11,027		14,460
RCG Longview II, LP*	Real Estate	970		1,592
RCG Longview Debt Fund IV, LP*	Real Estate	30,572		23,594
RCG Longview, LP*	Real Estate	265		271
RCG Soundview, LLC*	Real Estate	2,374		2,748
RCG Urban American Real Estate Fund, L.P.*	Real Estate	1,987		3,142
RCG International Sarl*	Multi-Strategy	752		870
Ramius Navigation Fund Ltd*	Multi-Strategy	—		1,106
RCG Special Opportunities Fund, Ltd*	Multi-Strategy	80,166		97,144
Ramius Credit Opportunities Fund Ltd*	Distressed	—		121
RCG Endeavour, LLC*	Multi-Strategy	43		47
RCG Energy, LLC *	Energy	14,239		16,560
RCG Renergys, LLC*	Energy	1		2
Other Private Investments	Various	12,430		16,580
Real Estate Investments	Real Estate	12,321		15,795
		$	167,147	$	194,070


*	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, when Multi‑Strat FOF's and Vintage FOF were consolidated as of December 31, 2011, represented their proportionate share of their master fund's net assets; as a result, the master funds investments in Portfolio Funds reflected below may have exceeded the net investments which Multi‑Strat FOF and Vintage FOF have recorded. Due to a restructuring related to the liquidation of the funds, Multi‑Strat Master FOF and Vintage Master FOF were first consolidated during the first quarter of 2012 (see Note 3b). The following table presents summarized investment information for the underlying Portfolio Funds held by Multi‑Strat Master FOF and Vintage Master FOF, at estimated fair value, as of December 31, 2011:



		As of December 31, 2011
	Strategy	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	$	—
Tapestry Pooled Account V, LLC*	Credit-Based	901		962
Externally Managed Funds	Credit-Based	40		399
Externally Managed Funds	Event Driven	3,015		5,044
Externally Managed Funds	Fixed Income Arbitrage	79		—
Externally Managed Funds	Hedged Equity	1,272		1,753
Externally Managed Funds	Multi Strategy	1,319		1,442
		$	7,178	$	9,600


*	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, 2012 and 2011:



	As of December 31,
	2012			2011
	(dollars in thousands)
Bond futures	$	489		$	(2	)
Commodity options	—			181
Currency options	—			487
Commodity forwards	(659		)	51
Commodity futures	47			756
Currency forwards	202			157
Currency futures	264			418
Energy futures	239			2
Equity future	(27		)	—
Foreign currency option	—			358
Index options	—			80
Index futures	(257		)	80
Interest rate futures	40			20
Interest rate options	—			(25		)
	$	338		$	2,563