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

3 Months Ended

Mar. 31, 2013

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 condensed consolidated statements of financial condition by caption and by level within the valuation hierarchy as of March 31, 2013 and 2012:

Operating Entities



	Assets at Fair Value as of March 31, 2013
	Level 1		Level 2		Level 3		Total
			(dollars in thousands)
Securities owned and derivatives
US Government securities	$	134	$	—	$	—	$	134
Preferred stock	—		—		2,332		2,332
Common stocks	288,686		2,103		2,278		293,067
Convertible bonds	—		8,615		—		8,615
Corporate bonds	—		143,446		—		143,446
Futures	1		—		—		1
Currency forwards	—		248		—		248
Options	18,808		100		—		18,908
Warrants and rights	100		—		3,243		3,343
Mutual funds	2,953		—		—		2,953
Other investments
Portfolio Funds	—		31,990		25,559		57,549
Real estate investments	—		—		1,875		1,875
Lehman claim	—		—		660		660
	$	310,682	$	186,502	$	35,947	$	533,131



	Liabilities at Fair Value as of March 31, 2013
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Securities sold, not yet purchased and derivatives
Common stocks	$	215,863	$	—	$	—	$	215,863
Corporate bonds	—		60		—		60
Futures	173		—		—		173
Currency forwards	—		70		—		70
Options	12,756		151		—		12,907
Warrants and rights	—		—		3		3
	$	228,792	$	281	$	3	$	229,076



	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

Consolidated Funds' investments



	Assets at Fair Value as of March 31, 2013
	Level 1		Level 2		Level 3		Total
			(dollars in thousands)
Other investments
Portfolio Funds	$	—	$	—	$	178,357	$	178,357
Lehman claims	—		—		15,140		15,140
	$	—	$	—	$	193,497	$	193,497



	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

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

The following table includes a rollforward of the amounts for the three months ended March 31, 2013 and 2012 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.



	Balance at December 31, 2012		Transfers in			Transfers out		Purchases/(covers)		(Sales)/short buys			Realized gains (losses)			Unrealized gains (losses)			Balance at March 31, 2013
	(dollars in thousands)
Operating Entities
Preferred stock	$	2,332	$	—		$	—	$	—	$	—		$	—		$	—		$	2,332
Common stocks	2,549		—			—		—		(265		)	260			(266		)	2,278
Corporate Bond	515		—			—		2,735		(3,346		)	(914		)	1,010			—
Warrants and Rights	1,713		290		(c)	—		166		(110		)	—			1,184			3,243
Warrants and Rights, sold not yet purchased	3		—			—		—		—			—			—			3
Portfolio Funds	25,670		—			—		3,590		(3,876		)	8			167			25,559
Real estate	1,864		—			—				—			—			11			1,875
Lehman claim	706		—			—		—		—			—			(46		)	660
Consolidated Funds
Portfolio Funds	182,920		—			—		—		(7,031		)	222			2,246			178,357
Lehman claim	14,124		—			—		—		(1,449		)	1,360			1,105			15,140



	Balance at December 31, 2011		Transfers in			Transfers out				Purchases/(covers)			(Sales)/short buys			Realized gains (losses)			Unrealized gains (losses)			Balance at March 31, 2012
	(dollars in thousands)
Operating Entities
Preferred stock	$	250	$	—		$	—			$	—		$	—		$	—		$	2		$	252
Common stocks	819		—			—				—			(6		)	6			8			827
Warrants and Rights	1,534		—			(88		)	(b)	257			(65		)	56			1,622			3,316
Warrants and Rights, sold not yet purchased	—		—			(1,004		)		(302		)	973			(35		)	368			—
Portfolio Funds	16,919		—			—				1,622			(529		)	6			995			19,013
Real estate	2,353		—			—				152			—			—			74			2,579
Lehman claim	553		—			—				—			—			—			21			574
Consolidated Funds
Portfolio Funds	213,402		16,769		(a)	(17,151		)	(a)	415			(2,888		)	214			5,596			216,357
Lehman claim	7,340		—			—				—			(2,291		)	1,914			(1,617		)	5,346

(a) Change in consolidated funds.

(b) The security was listed on an exchange subsequent to a private funding.

Fair Value Inputs, Assets, Quantitative Information

The following table includes quantitative information as of March 31, 2013 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 March 31, 2013		Valuation techniques	Unobservable Inputs	Range

Common and preferred stocks	$	4,610	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
Warrants and rights, net	3,240		Model based	Volatility	Volatility: 20% to 150%
Lehman claim	660		Discounted cash flows, transactions, and market quotes.	Projected cash flows and DCF discount rate.	DCF discount rates: 0% - 15%
	$	8,510
Other level 3 assets and liabilities (a)	220,931
Total level 3 assets and liabilities	$	229,441

(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.

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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