Fair Value Measurements for Operating Entities and Consolidated Funds (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table presents the assets and liabilities that are measured at fair value on a recurring basis on the accompanying consolidated statements of financial condition by caption and by level within the valuation hierarchy as of December 31, 2012 and 2011:

Operating Entities



	Assets at Fair Value as of December 31, 2012
	Level 1		Level 2		Level 3		Total
			(dollars in thousands)
Securities owned and derivatives
US Government securities	$	137,478	$	—	$	—	$	137,478
Preferred stock	—		—		2,332		2,332
Common stocks	254,606		2,137		2,549		259,292
Convertible bonds	—		6,202		—		6,202
Corporate bonds	—		192,563		515		193,078
Currency forwards	—		202		—		202
Options	18,273		2,273		—		20,546
Warrants and rights	641		—		1,713		2,354
Mutual funds	2,845		—		—		2,845
Other investments
Portfolio Funds	—		30,228		25,670		55,898
Real estate investments	—		—		1,864		1,864
Lehman claim	—		—		706		706
	$	413,843	$	233,605	$	35,349	$	682,797



	Liabilities at Fair Value as of December 31, 2012
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Securities sold, not yet purchased and derivatives
Common stocks	$	168,797	$	—	$	—	$	168,797
Corporate bonds	—		61		—		61
Futures	370		—		—		370
Currency forwards	—		603		—		603
Options	8,990		86		—		9,076
Warrants and rights	—		—		3		3
	$	178,157	$	750	$	3	$	178,910



	Assets at Fair Value as of December 31, 2011
	Level 1		Level 2		Level 3		Total
			(dollars in thousands)
Securities owned and derivatives
US Government securities	$	182,868	$	—	$	—	$	182,868
Preferred stock	—		—		250		250
Common stocks	248,598		713		819		250,130
Convertible bonds	—		18,130		—		18,130
Corporate bonds	—		231,864		—		231,864
Futures	172		—		—		172
Equity swaps	—		635		—		635
Options	55,530		169		—		55,699
Warrants and rights	1,225		—		1,534		2,759
Mutual funds	3,214		—		—		3,214
Other investments
Portfolio Funds	—		23,431		16,919		40,350
Real estate investments	—		—		2,353		2,353
Lehman claim	—		—		553		553
	$	491,607	$	274,942	$	22,428	$	788,977



	Liabilities at Fair Value as of December 31, 2011
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Securities sold, not yet purchased and derivatives
US Government securities	$	165,197	$	—	$	—	$	165,197
Common stocks	123,875		2		—		123,877
Corporate bonds	—		1,529		—		1,529
Futures	617		—		—		617
Equity swaps—short exposure	—		140		—		140
Options	43,648		—		—		43,648
	$	333,337	$	1,671	$	—	$	335,008

Consolidated Funds' investments



	Assets at Fair Value as of December 31, 2012
	Level 1		Level 2		Level 3		Total
			(dollars in thousands)
Securities owned
US Government securities	$	1,911	$	—	$	—	$	1,911
Commercial paper	—		1,614		—		1,614
Other investments
Portfolio Funds	—		7,161		182,920		190,081
Lehman claims	—		—		14,124		14,124
	$	1,911	$	8,775	$	197,044	$	207,730



	Assets at Fair Value as of December 31, 2011
	Level 1		Level 2		Level 3		Total
			(dollars in thousands)
Securities owned
US Government securities	$	2,006	$	—	$	—	$	2,006
Commercial paper	—		3,927		—		3,927
Corporate bonds	—		401		—		401
Other investments
Portfolio Funds	—		8,078		213,402		221,480
Lehman claims	—		—		7,340		7,340
	$	2,006	$	12,406	$	220,742	$	235,154

Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The following table includes a rollforward of the amounts for the years ended December 31, 2012 and 2011 for financial instruments classified within level 3. The classification of a financial instrument within level 3 is based upon the significance of the unobservable inputs to the overall fair value measurement



	Years ended December 31, 2012 and 2011
	Operating Entities																																Consolidated Funds
	Preferred stock		Common stocks			Common stocks, sold not yet purchased			Restricted common stock			Corporate Bond			Warrants and rights				Warrants and Rights, sold not yet purchased				Portfolio funds				Real estate			Lehman claim			Portfolio funds				Lehman claim
			(dollars in thousands)
Balance at December 31, 2010	$	—	$	334		$	—		$	5,000		$	—		$	1,977			$	—			$	17,081			$	1,882		$	313		$	311,242			$	6,243
Transfers in	—		—			—			—			—			—				—				566			(b)	—			—			—				—
Transfers out	—		—			—			—			—			—				—				—				—			—			—				—
Purchases/(covers)	250		437			(978		)	—			—			111				—				45,925				330			—			2				—
(Sales)/short buys	—		(568		)	833			(4,857		)	—			(84		)		—				(48,835		)		(10		)	—			(104,243		)		—
Realized gains (losses)	—		159			145			(143		)	—			48				—				157				—			—			2,508				—
Unrealized gains (losses)	—		457			—			—			—			(518		)		—				2,025				151			240			3,893				1,097
Balance at December 31, 2011	$	250	$	819		$	—		$	—		$	—		$	1,534			$	—			$	16,919			$	2,353		$	553		$	213,402			$	7,340
Transfers in	—		—			—			—			—							—				—				—			—			16,227			(a)	—
Transfers out	—		—			—			—			—			(89		)	(c)	(1,004		)	(d)	—				—			—			(17,151		)	(a)	—
Purchases/(covers)	2,000		1,789			—			—			4,600			632				(297		)		10,116				153			—			434				—
(Sales)/short buys	—		(6		)	—			—			(3,050		)	(212		)		977				(3,482		)		(781		)	(234		)	(28,892		)		(2,292		)
Realized gains (losses)	—		6			—			—			—			56				(37		)		(41		)		—			—			(3,823		)		1,914
Unrealized gains (losses)	82		(59		)	—			—			(1,035		)	(208		)		364				2,158				139			387			2,723				7,162
Balance at December 31, 2012	$	2,332	$	2,549		$	—		$	—		$	515		$	1,713			$	3			$	25,670			$	1,864		$	706		$	182,920			$	14,124

(a) Change in consolidated funds (see Note 3b).

(b) Changes in the observability of inputs in the valuation of such assets.

(d) The security began trading on an exchange due to a business combination.

Fair Value Inputs, Assets, Quantitative Information

The following table includes quantitative information as of December 31, 2012 for financial instruments classified within level 3. The table below quantifies information about the significant unobservable inputs used in the fair value measurement of the Company's level 3 financial instruments.



	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at December 31, 2012		Valuation techniques	Unobservable Inputs	Range (weighted average)

Common and preferred stocks	$	4,881	Discounted cash flows, market multiples, recent transactions, bid levels, and comparable transactions	Market multiples and DCF discount rate	DCF discount rates: 15%-25%, Market multiples: 9x-10x
Corporate Bonds	515		Broker dealer quotes, trading activity and recovery analysis	Liquidity discount, discount rate and timing to recovery	Liquidation discount: 35%
Warrants and rights, net	1,710		Model based	Volatility	Volatility: 20% to 40%
Lehman claim	706		Discounted cash flows, transactions, and market quotes.	Projected cash flows and DCF discount rate.	DCF discount rates: 0% - 15%
	$	7,812
Other level 3 assets and liabilities (a)	224,578
Total level 3 assets and liabilities	$	232,390

(a)

Quantitative disclosures of unobservable inputs and assumptions are not required for investments for which NAV per share is used as a practical expedient to determine fair value, as their redemption features rather than observability of inputs cause them to be classified as a level 3 type asset within the fair value hierarchy. In addition, the fair value of the Consolidated Funds' investments are determined based on net asset value and therefore quantitative disclosures are not included in the table above.