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 March 31, 2013 and 2012, securities owned, at fair value consisted of the following:



	As of March 31, 2013		As of December 31, 2012
	(dollars in thousands)
U.S. Government securities (a)	$	134	$	137,478
Preferred stock	2,332		2,332
Common stocks	293,067		259,292
Convertible bonds (b)	8,615		6,202
Corporate bonds (c)	143,446		193,078
Options	18,908		20,546
Warrants and rights	3,343		2,354
Mutual funds	2,953		2,845
	$	472,798	$	624,127


(a)	As of March 31, 2013, maturities ranged from September 2013 to April 2016 and interest rates ranged between 0.11% and 5.95%. As of December 31, 2012, maturities ranged from November 2013 to November 2022 and interest rates ranged between 0.25% and 5.95%.


(b)	As of March 31, 2013, maturities ranged from May 2014 to October 2014 with an interest rate of 5.00% to 6.25%. As of December 31, 2012, maturities ranged from May 2014 to July 2014 with an interest rate of 5.00%.


(c)	As of March 31, 2013, maturities ranged from April 2013 to February 2041 and interest rates ranged between 2.47% and 12.50%. As of December 31, 2012, maturities ranged from January 2013 to February 2041 and interest rates ranged between 3.09% and 12.50%.

The Company's direct involvement with derivative financial instruments includes futures, currency forwards 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 and currency forward derivative contracts, at fair value, as of March 31, 2013 and December 31, 2012 of $0.3 million and $0.2 million, respectively, is included in other assets in the accompanying condensed consolidated statements of financial condition. The Company's short exposure to futures and currency forward derivative contracts, at fair value, as of March 31, 2013 and December 31, 2012 of $0.2 million and $1.0 million, respectively, is included in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated statements of financial condition. The realized and unrealized gains/(losses) related to derivatives trading activities for the three months ended March 31, 2013, and 2012, were $1.6 million, and $0.6 million, respectively, and are included in other income in the accompanying condensed 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 March 31, 2013 and December 31, 2012, collateral consisting of $3.4 million and $6.7 million of cash, respectively, is included in receivable from brokers on the accompanying condensed consolidated statements of financial condition. As of March 31, 2013 and December 31, 2012 all derivative contracts were with multiple major financial institutions.

Other investments

As of March 31, 2013 and December 31, 2012, other investments consisted of the following:



	As of March 31, 2013		As of December 31, 2012
	(dollars in thousands)
(1) Portfolio Funds, at fair value	$	57,549	$	55,898
(2) Real estate investments, at fair value	1,875		1,864
(3) Equity method investments	20,368		26,462
(4) Lehman claims, at fair value	660		706
	$	80,452	$	84,930


(1)	Portfolio Funds, at fair value

The Portfolio Funds, at fair value as of March 31, 2013 and December 31, 2012, included the following:



	As of March 31, 2013		As of December 31, 2012
	(dollars in thousands)
HealthCare Royalty Partners (a)(*)	$	8,182	$	7,866
HealthCare Royalty Partners II (a)(*)	3,361		6,415
OSP Credit Fund LP (formerly known as Ramius Global Credit Fund LP) (b)(*)	15,249		14,196
Tapestry Investment Co PCC Ltd (c)	81		194
Starboard Value and Opportunity Fund LP (d)(*)	16,395		15,706
Formation 8 Partners Fund I (e)	1,500		1,500
RCG LV Park Lane LLC (f)	705		708
RCGL 12E13th LLC (g)	400		—
RCG Longview Debt Fund V, L.P. (g)	2,301		—
Other private investment (h)	7,593		7,826
Other affiliated funds (i)(*)	1,782		1,487
	$	57,549	$	55,898

* 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 in Note 13.


(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)	OSP Credit Fund LP (formerly known as 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)	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.


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


(e)	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.


(f)	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.


(g)	RCGL 12E13th LLC and RCG Longview Debt Fund V, L.P. are real estate private equity structures and therefore distributions will be made when the underlying investments are liquidated.


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


(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 March 31, 2013 and December 31, 2012 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 $1.9 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 March 31, 2013		As of December 31, 2012
	(dollars in thousands)
RCG Longview Debt Fund IV Management, LLC	$	1,079	$	1,954
HealthCare Royalty GP, LLC	667		642
HealthCare Royalty GP II, LLC	569		1,086
CBOE Stock Exchange, LLC	2,015		2,058
Starboard Value LP	7,398		12,757
RCG Longview Partners, LLC	1,826		1,535
RCG Longview Louisiana Manager, LLC	1,883		1,866
RCG Urban American, LLC	1,414		1,380
RCG Urban American Management, LLC	642		545
RCG Longview Equity Management, LLC	192		285
Urban American Real Estate Fund II, L.P.	1,736		1,636
RCG Kennedy House, LLC	309		377
Other	638		341
	$	20,368	$	26,462

As of March 31, 2013 and December 31, 2012, 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. These amounts are included in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated statements of financial condition. 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.

The Company's income (loss) from equity method investments was $4.2 million and $4.2 million, for the three months ended March 31, 2013 and 2012, respectively, and is included in net gains (losses) on securities, derivatives and other investments on the accompanying condensed consolidated statements of operations. In addition, the Company recorded no impairment charges in relation to its equity method investments for the three months ended March 31, 2013 and 2012, respectively.

For the period ended March 31, 2013, 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 summarized income statement information for the significant investees for the three months ended March 31, 2013 and 2012. The summarized income statement information for the Company's investments in the individually significant investees is as follows:



	Three months ended March 31,
	2013		2012
	(dollars in thousands)
Revenues	$	4,865	$	4,997
Less: Expenses	1,327		1,374
Net realized and unrealized gains (losses)	107		37
Net Income	$	3,645	$	3,660


(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 5b(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 March 31, 2013 and December 31, 2012, 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 5b(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 condensed 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 condensed 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 March 31, 2013 and December 31, 2012 securities sold, not yet purchased, at fair value consisted of the following:



	As of March 31, 2013		As of December 31, 2012
	(dollars in thousands)
Common stocks	215,863		168,797
Corporate bonds (a)	60		61
Options	12,907		9,076
Warrants and rights	3		3
	$	228,833	$	177,937


(a)	As of March 31, 2013, the maturity was January 2026 with an interest rate of 5.55%. As of December 31, 2012, the maturity was January 2026 with an interest rate of 5.55% .

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 March 31, 2013 and 2012:



	As of March 31, 2013
	(dollars in thousands)
Securities sold under agreements to repurchase
Agreements with Royal Bank of Canada bearing interest of 1.74% - 2.1% due on December 2013 to July 2017	29,241
	$	29,241



	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

For all of the Company's holdings of repurchase agreements as of March 31, 2013, 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 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 March 31, 2013 and December 31, 2012, the Company had pledged collateral, consisting of government and corporate bonds, in the amount of $36.2 million and $173.7 million, respectively, which is included in securities owned, at fair value in the accompanying condensed 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 returned, 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.

As of March 31, 2013, the Company has loaned to brokers and dealers, securities having a market value of $435.9 million. In addition, as of March 31, 2013, the Company has borrowed from brokers and dealers, securities having a market value of $438.2 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 $214.4 million as of March 31, 2013 and $1.4 billion and $22.8 million as of December 31, 2012, respectively. In addition, the maximum exposure relating to these variable interest entities as of March 31, 2013 was $207.2 million, and as of December 31, 2012 was $220.9 million, all of which is included in other investments, at fair value in the Company's condensed consolidated statements of financial condition. The exposure to loss primarily relates to the Consolidated Feeder Funds' investment in their Unconsolidated Master Funds as of March 31, 2013 and December 31, 2012.


b.	Consolidated Funds

Securities owned, at fair value

As of March 31, 2013 the Company held no securities owned, at fair value, held by the Consolidated Funds. As of December 31, 2012 securities owned, at fair value, held by the Consolidated Funds are comprised of:



	As of December 31, 2012
	(dollars in thousands)
Government sponsored securities (a)	$	1,911
Commercial paper (b)	1,614
	$	3,525


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


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

Other investments, at fair value

As of March 31, 2013 and December 31, 2012 other investments, at fair value, held by the Consolidated Funds are comprised of:



	As of March 31, 2013		As of December 31, 2012
	(dollars in thousands)
(1) Portfolio Funds	$	178,357	$	190,081
(2) Lehman claims	15,140		14,124
	$	193,497	$	204,205


(1)	Investments in Portfolio Funds, at fair value

As of March 31, 2013 and December 31, 2012, investments in Portfolio Funds, at fair value, included the following:



	As of March 31, 2013		As of December 31, 2012
	(dollars in thousands)
Investments of Enterprise LP	$	170,250	$	173,348
Investments of consolidated fund of funds	8,107		16,733
	$	178,357	$	190,081

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 condensed consolidated statements of financial condition and include Enterprise LP's investment of $170.3 million and $173.3 million in Enterprise Master as of March 31, 2013 and December 31, 2012, 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 $8.1 million and $16.7 million as of March 31, 2013 and December 31, 2012, respectively. These investments include the investments of Levered FOF, Multi‑Strat Master FOF and Vintage Master FOF, all of which are investment companies managed by Ramius Alternative Solutions LLC and RTS Global 3X, which is managed by Ramius Trading Strategies LLC. Multi‑Strat Master FOF's investment 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 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 was liquidated on March 31, 2013. As such it holds no investments as of March 31, 2013. RTS Global 3X's investment objective was 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 sought 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 allocated 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 March 31, 2013 and December 31, 2012:



		Fair Value as of March 31, 2013
	Strategy	Ramius Levered Multi-Strategy FOF LP		Ramius Multi-Strategy Master FOF LP		Ramius Vintage Multi-Strategy Master FOF LP		Total
		(dollars in thousands)
Tapestry Pooled Account V LLC*	Credit-Based	$	260	$	534	$	571	$	1,365	(a)
Externally Managed Portfolio Funds	Event Driven	1,295		1,942		2,737		5,974		(c)
Externally Managed Portfolio Funds	Hedged Equity	—		—		768		768		(d)
		$	1,555	$	2,476	$	4,076	$	8,107



		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		(a)
Independently Advised Portfolio Funds*	Futures & Global Macro	—		—		—		7,161		7,161		(b)
Externally Managed Portfolio Funds	Event Driven	1,545		2,316		3,264		—		7,125		(c)
Externally Managed Portfolio Funds	Hedged Equity	—		—		790		—		790		(d)
		$	1,860	$	2,965	$	4,747	$	7,161	$	16,733

* 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)

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.

(b)

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).


(c)	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.


(d)	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.


(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. In February 2013, Enterprise Master sold its unsecured claim, including the amount received in connection with the first dividend, for $1.3 million, or par. Enterprise Master distributed the proceeds of the sale to the Company in March 2013. Enterprise Master is valuing the $11.7 million claim at $19.0 million as of March 31, 2013. Of the $19.0 million current valuation of Enterprise Master's claim, $15.1 million was attributable to Enterprise LP based on its ownership percentage in Enterprise Master at the time of the Administration. Of the $11.7 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”). 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. In February 2013, LBIE, Lehman Brothers Holdings, Inc. and LBI announced that they entered into two separate agreements settling all intercompany claims between LBI on the one part, and LBHI and LBIE on the other part. The settlement agreements are subject to the approval by the U.S. Bankruptcy Judge in the LBI Securities Investor Protection Act (SIPA) proceeding and, in the case of the agreement between LBI and LBIE, an order of the English High Court. The U.S. Banking Judge approved the settlement agreement in April 2013. Upon receipt of these approvals, the settlements will allow the trustee appointed under SIPA (the “SIPA Trustee”) to proceed with plans to allocate and distribute sufficient cash and securities to LBI's customer claimants, including LBIE with respect to the LBIE Omnibus Customer Claim, to enable the SIPA Trustee to satisfy valid customer claims in full. In March 2013, LBIE made a consensual proposal to the clients holding trust assets pursuant to the LBIE Omnibus Customer Claim to facilitate the return of the amounts recovered from LBI with respect to the LBIE Omnibus Customer Claim. Under the consensual proposal, LBIE indicated that it intends to liquidate any securities received from LBI with respect to 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 November 30, 2012 (the “Best Claim”). LBIE's purpose in seeking a consensual arrangement with its clients relating to the liquidation and allocation described above was to ensure that a distribution could be made without having to seek UK court direction on these issues, which would otherwise substantially delay any distribution. LBIE has 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, it expects to be able to make distributions to its clients in excess of 90% of a client's Best Claim. On April 2, 2013, LBIE announced that the consensual proposal had been accepted by a sufficient number of clients to satisfy the acceptance threshold and would therefore become effective. As of March 31,2013, the Company is valuing the trust assets of Enterprise Master believed to be held at LBI at 90% of its Best Claim, or $14.8 million.

The remaining components of the LBIE claims included within the $19.0 million value as of March 31,2013 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”) and (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 $5.2 million, 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. 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 $4.2 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 LBHI. 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 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. As discussed above, approval of the settlement agreements between LBI, LBHI and LBIE should allow the SIPA Trustee to proceed with plans to allocate and distribute sufficient cash and securities to LBI's customer claimants to enable the SIPA Trustee to satisfy valid customer claims in full. The timing of distributions from LBI to its customers remains uncertain. As a result, management has estimated recovery with respect to the Company's exposure to LBI at 86% or $3.6 million as of March 31, 2013, which represents a full recovery with respect to the Company's exposure discounted to take into account the uncertainty regarding when the assets will actually be returned. 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 5a(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 March 31, 2013 and December 31, 2012, 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 March 31, 2013 or December 31, 2012.

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 March 31, 2013 and December 31, 2012:

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



	As of March 31, 2013		As of December 31, 2012
	(dollars in thousands)
Bank debt	$	106	$	79
Common stock	2,682		2,680
Preferred stock	997		997
Private equity	297		297
Restricted stock	110		26
Rights	1,665		1,714
Trade claims	128		128
Warrants	2		2
	$	5,987	$	5,923

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



	As of March 31, 2013		As of December 31, 2012
Description	(dollars in thousands)
Currency forwards	$	5	$	6
	$	5	$	6

Portfolio Funds, owned by Enterprise Master, at fair value



		As of March 31, 2013		As of December 31, 2012
	Strategy	(dollars in thousands)
RCG Longview Equity Fund, LP*	Real Estate	$	10,493	$	11,027
RCG Longview II, LP*	Real Estate	860		970
RCG Longview Debt Fund IV, LP*	Real Estate	29,440		30,572
RCG Longview, LP*	Real Estate	316		265
RCG Soundview, LLC*	Real Estate	445		2,374
RCG Urban American Real Estate Fund, L.P.*	Real Estate	1,962		1,987
RCG International Sarl*	Multi-Strategy	1,492		752
RCG Special Opportunities Fund, Ltd*	Multi-Strategy	80,067		80,166
RCG Endeavour, LLC*	Multi-Strategy	41		43
RCG Energy, LLC *	Energy	14,941		14,239
RCG Renergys, LLC*	Energy	1		1
Other Private Investments	Various	12,071		12,430
Real Estate Investments	Real Estate	12,502		12,321
		$	164,631	$	167,147


*	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. RTS Global 3X was liquidated on March 31, 2013. As such it holds no investments as of March 31, 2013. 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:



	As of December 31, 2012
	(dollars in thousands)
Bond futures	$	489
Commodity forwards	(659		)
Commodity futures	47
Currency forwards	202
Currency futures	264
Energy futures	239
Equity future	(27		)
Index futures	(257		)
Interest rate futures	40
	$	338