(Mark One) | |
Q | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2013 | |
or | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
Delaware (State or Other Jurisdiction of Incorporation or Organization) | 27-0423711 (I.R.S. Employer Identification No.) |
599 Lexington Avenue New York, New York (Address of Principal Executive Offices) | 10022 (Zip Code) |
Large accelerated filer o | Accelerated filer Q | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Item No. | Page No. | |||
As of June 30, | As of December 31, | ||||||
2013 | 2012 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 36,881 | $ | 83,538 | |||
Cash collateral pledged | 10,891 | 9,160 | |||||
Securities owned, at fair value | 438,514 | 624,127 | |||||
Securities borrowed | 581,677 | 408,096 | |||||
Other investments | 84,732 | 84,930 | |||||
Receivable from brokers | 25,899 | 71,306 | |||||
Fees receivable, net of allowance | 42,408 | 34,707 | |||||
Due from related parties | 24,024 | 21,022 | |||||
Fixed assets, net of accumulated depreciation and amortization of $32,930 and $30,003, respectively | 29,977 | 32,202 | |||||
Goodwill | 36,207 | 28,545 | |||||
Intangible assets, net of accumulated amortization of $24,822 and $22,945, respectively | 13,917 | 12,984 | |||||
Other assets | 18,508 | 16,278 | |||||
Consolidated Funds | |||||||
Cash and cash equivalents | 743 | 3,559 | |||||
Securities owned, at fair value | 40,785 | 3,525 | |||||
Other investments, at fair value | 193,282 | 204,205 | |||||
Other assets | 550 | 292 | |||||
Total Assets | $ | 1,578,995 | $ | 1,638,476 | |||
Liabilities and Stockholders' Equity | |||||||
Liabilities | |||||||
Securities sold, not yet purchased, at fair value | $ | 153,126 | $ | 177,937 | |||
Securities sold under agreement to repurchase | 6,311 | 165,945 | |||||
Securities loaned | 581,643 | 410,441 | |||||
Payable to brokers | 142,312 | 188,788 | |||||
Compensation payable | 16,165 | 45,752 | |||||
Short-term borrowings and other debt | 4,376 | 4,132 | |||||
Fees payable | 3,489 | 5,277 | |||||
Due to related parties | 527 | 662 | |||||
Accounts payable, accrued expenses and other liabilities | 52,621 | 55,425 | |||||
Consolidated Funds | |||||||
Securities sold, not yet purchased, at fair value | 10,346 | — | |||||
Payable to brokers | 10,231 | — | |||||
Capital withdrawals payable | — | 2,891 | |||||
Accounts payable, accrued expenses and other liabilities | 160 | 414 | |||||
Total Liabilities | 981,307 | 1,057,664 | |||||
Commitments and Contingencies (Note 13) | |||||||
Redeemable non-controlling interests | 91,562 | 85,703 | |||||
Stockholders' equity | |||||||
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized, no shares issued and outstanding | — | — | |||||
Class A common stock, par value $0.01 per share: 250,000,000 shares authorized, 130,519,096 shares issued and 117,861,088 outstanding as of June 30, 2013 and 123,740,112 shares issued and 112,447,892 outstanding as of December 31, 2012, respectively (including 482,522 and 336,895 restricted shares, respectively) | 1,160 | 1,135 | |||||
Class B common stock, par value $0.01 per share: 250,000,000 authorized, no shares issued and outstanding | — | — | |||||
Additional paid-in capital | 728,976 | 713,211 | |||||
(Accumulated deficit) retained earnings | (189,348 | ) | (187,865 | ) | |||
Accumulated other comprehensive income (loss) | 110 | 356 | |||||
Less: Class A common stock held in treasury, at cost, 12,330,829 and 11,292,220 shares as of June 30, 2013 and December 31, 2012, respectively. | (34,772 | ) | (31,728 | ) | |||
Total Stockholders' Equity | 506,126 | 495,109 | |||||
Total Liabilities and Stockholders' Equity | $ | 1,578,995 | $ | 1,638,476 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | |||||||||||||||
Investment banking | $ | 25,571 | $ | 16,254 | $ | 42,737 | $ | 31,884 | |||||||
Brokerage | 31,521 | 24,568 | 58,121 | 48,581 | |||||||||||
Management fees | 9,698 | 9,932 | 19,191 | 19,649 | |||||||||||
Incentive income | 1,954 | 580 | 4,565 | 1,271 | |||||||||||
Interest and dividends | 10,521 | 5,868 | 19,842 | 11,240 | |||||||||||
Reimbursement from affiliates | 1,214 | 1,381 | 2,699 | 2,426 | |||||||||||
Other revenues | 485 | 831 | 963 | 1,698 | |||||||||||
Consolidated Funds | |||||||||||||||
Interest and dividends | 241 | 30 | 253 | 91 | |||||||||||
Other revenues | 2 | 26 | 77 | 109 | |||||||||||
Total revenues | 81,207 | 59,470 | 148,448 | 116,949 | |||||||||||
Expenses | |||||||||||||||
Employee compensation and benefits | 47,507 | 43,097 | 91,730 | 89,780 | |||||||||||
Floor brokerage and trade execution | 4,893 | 4,182 | 9,371 | 7,934 | |||||||||||
Interest and dividends | 7,240 | 3,207 | 13,658 | 4,931 | |||||||||||
Professional, advisory and other fees | 3,002 | 3,695 | 6,855 | 7,621 | |||||||||||
Service fees | 2,687 | 3,155 | 5,264 | 5,392 | |||||||||||
Communications | 3,979 | 3,853 | 8,753 | 7,254 | |||||||||||
Occupancy and equipment | 6,548 | 5,544 | 12,267 | 10,786 | |||||||||||
Depreciation and amortization | 2,609 | 2,363 | 5,162 | 4,518 | |||||||||||
Client services and business development | 4,659 | 3,753 | 8,758 | 7,579 | |||||||||||
Other expenses | 3,003 | 3,941 | 6,987 | 7,360 | |||||||||||
Consolidated Funds | |||||||||||||||
Interest and dividends | 106 | 4 | 106 | 20 | |||||||||||
Professional, advisory and other fees | 92 | 561 | 488 | 849 | |||||||||||
Floor brokerage and trade execution | 180 | — | 180 | — | |||||||||||
Other expenses | 107 | 70 | 145 | 140 | |||||||||||
Total expenses | 86,612 | 77,425 | 169,724 | 154,164 | |||||||||||
Other income (loss) | |||||||||||||||
Net gains (losses) on securities, derivatives and other investments | 4,994 | 9,787 | 16,801 | 29,458 | |||||||||||
Consolidated Funds | |||||||||||||||
Net realized and unrealized gains (losses) on investments and other transactions | 3,711 | (2,417 | ) | 8,781 | 3,547 | ||||||||||
Net realized and unrealized gains (losses) on derivatives | 158 | 373 | 462 | 414 | |||||||||||
Net gains (losses) on foreign currency transactions | 48 | 23 | (167 | ) | (15 | ) | |||||||||
Total other income (loss) | 8,911 | 7,766 | 25,877 | 33,404 | |||||||||||
Income (loss) before income taxes | 3,506 | (10,189 | ) | 4,601 | (3,811 | ) | |||||||||
Income tax expense (benefit) | 158 | 191 | 334 | 333 | |||||||||||
Net income (loss) | 3,348 | (10,380 | ) | 4,267 | (4,144 | ) | |||||||||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries | 2,255 | (2,434 | ) | 5,750 | (193 | ) | |||||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | $ | 1,093 | $ | (7,946 | ) | $ | (1,483 | ) | $ | (3,951 | ) | ||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 117,235 | 114,561 | 115,471 | 114,420 | |||||||||||
Diluted | 120,901 | 114,561 | 115,471 | 114,420 | |||||||||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | 0.01 | $ | (0.07 | ) | $ | (0.01 | ) | $ | (0.03 | ) | ||||
Diluted | $ | 0.01 | $ | (0.07 | ) | $ | (0.01 | ) | $ | (0.03 | ) |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||||||||
Net income (loss) | $ | 4,267 | $ | (4,144 | ) | ||||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||
Foreign currency translation | (4 | ) | 72 | ||||||||||||||||
Defined benefit pension plans: | |||||||||||||||||||
Prior service cost arising during the period | — | — | |||||||||||||||||
Net gain/(loss) arising during the period | (252 | ) | 160 | ||||||||||||||||
Add: amortization of prior service cost included in net periodic pension cost | 10 | (242 | ) | 10 | 170 | ||||||||||||||
Total other comprehensive income, net of tax | (246 | ) | 242 | ||||||||||||||||
Comprehensive income (loss) | $ | 4,021 | $ | (3,902 | ) |
Common Shares Outstanding | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings/ (Accumulated deficit) | Total Stockholders' Equity | Redeemable Non-controlling Interest | |||||||||||||||||||||||
Balance, December 31, 2012 | 112,447,892 | $ | 1,135 | $ | (31,728 | ) | $ | 713,211 | $ | 356 | $ | (187,865 | ) | $ | 495,109 | $ | 85,703 | |||||||||||||
Net income (loss) | — | — | — | — | — | (1,483 | ) | (1,483 | ) | 5,750 | ||||||||||||||||||||
Defined benefit plans | — | — | — | — | (242 | ) | — | (242 | ) | — | ||||||||||||||||||||
Foreign currency translation | — | — | — | — | (4 | ) | — | (4 | ) | — | ||||||||||||||||||||
Capital contributions | — | — | — | — | — | — | — | 10,181 | ||||||||||||||||||||||
Capital withdrawals | — | — | — | — | — | — | — | (10,072 | ) | |||||||||||||||||||||
Restricted stock awards issued | 3,937,337 | — | — | — | — | — | — | — | ||||||||||||||||||||||
Common stock issued upon acquisition (See Note 2) | 2,514,468 | 25 | — | 6,272 | — | — | 6,297 | — | ||||||||||||||||||||||
Purchase of treasury stock, at cost | (1,038,609 | ) | — | (3,044 | ) | — | — | — | (3,044 | ) | — | |||||||||||||||||||
Amortization of share based compensation | — | — | — | 9,493 | — | — | 9,493 | — | ||||||||||||||||||||||
Balance, June 30, 2013 | 117,861,088 | $ | 1,160 | $ | (34,772 | ) | $ | 728,976 | $ | 110 | $ | (189,348 | ) | $ | 506,126 | $ | 91,562 | |||||||||||||
Common Shares Outstanding | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings/ (Accumulated deficit) | Total Stockholders' Equity | Redeemable Non-controlling Interest | |||||||||||||||||||||||
Balance, December 31, 2011 | 114,047,637 | $ | 1,135 | $ | (16,902 | ) | $ | 688,427 | $ | (215 | ) | $ | (163,980 | ) | $ | 508,465 | $ | 104,587 | ||||||||||||
Net income (loss) | — | — | — | — | — | (3,951 | ) | (3,951 | ) | (193 | ) | |||||||||||||||||||
Defined benefit plans | — | — | — | — | 170 | — | 170 | — | ||||||||||||||||||||||
Foreign currency translation | — | — | — | — | 72 | — | 72 | — | ||||||||||||||||||||||
Deconsolidation of funds | (17,104 | ) | ||||||||||||||||||||||||||||
Consolidation of funds | — | — | — | — | — | — | — | 18,521 | ||||||||||||||||||||||
Capital withdrawals | — | — | — | — | — | — | — | (7,351 | ) | |||||||||||||||||||||
Restricted stock awards issued | 2,701,314 | — | — | — | — | — | — | — | ||||||||||||||||||||||
Purchase of treasury stock, at cost | (2,540,683 | ) | — | (6,357 | ) | — | — | — | (6,357 | ) | — | |||||||||||||||||||
Amortization of share based compensation | — | — | — | 13,526 | — | — | 13,526 | — | ||||||||||||||||||||||
Balance, June 30, 2012 | 114,208,268 | $ | 1,135 | $ | (23,259 | ) | $ | 701,953 | $ | 27 | $ | (167,931 | ) | $ | 511,925 | $ | 98,460 |
Cowen Group, Inc. Condensed Consolidated Statements of Cash Flows (dollars in thousands) (unaudited) | |||||||
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 4,267 | $ | (4,144 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by / (used in) operating activities: | |||||||
Depreciation and amortization | 5,162 | 4,518 | |||||
Share-based compensation | 9,493 | 13,526 | |||||
Deferred rent obligations | (3,178 | ) | (952 | ) | |||
Net loss on disposal of fixed assets | 350 | — | |||||
Purchases of securities owned, at fair value | (3,961,275 | ) | (3,318,650 | ) | |||
Proceeds from sales of securities owned, at fair value | 4,117,993 | 3,232,262 | |||||
Proceeds from sales of securities sold, not yet purchased, at fair value | 1,704,969 | 2,497,536 | |||||
Payments to cover securities sold, not yet purchased, at fair value | (1,679,429 | ) | (2,403,844 | ) | |||
Net (gains) losses on securities, derivatives and other investments | (13,467 | ) | (24,157 | ) | |||
Consolidated Funds | |||||||
Purchases of securities owned, at fair value | (223,860 | ) | (163,715 | ) | |||
Proceeds from sales of securities owned, at fair value | 206,052 | 167,812 | |||||
Proceeds from sales of securities sold, not yet purchased, at fair value | 33,334 | — | |||||
Payments to cover securities sold, not yet purchased, at fair value | (36,462 | ) | — | ||||
Purchases of other investments | (973 | ) | (7,122 | ) | |||
Proceeds from sales of other investments | 21,270 | 11,986 | |||||
Net realized and unrealized (gains) losses on investments and other transactions | (7,030 | ) | (4,883 | ) | |||
(Increase) decrease in operating assets: | |||||||
Cash acquired upon transaction | 10,747 | — | |||||
Cash collateral pledged | 151 | 528 | |||||
Securities owned, at fair value, held at broker dealer | 10,982 | 23,444 | |||||
Securities borrowed | (173,581 | ) | — | ||||
Receivable from brokers | 46,695 | 46,808 | |||||
Fees receivable, net of allowance | (7,471 | ) | 4,258 | ||||
Due from related parties | (3,002 | ) | 447 | ||||
Other assets | (488 | ) | 3,301 | ||||
Consolidated Funds | |||||||
Cash and cash equivalents | 2,816 | 926 | |||||
Other assets | (258 | ) | 1,036 | ||||
Increase (decrease) in operating liabilities: | |||||||
Securities sold, not yet purchased, at fair value, held at broker dealer | (37,985 | ) | (14,181 | ) | |||
Securities loaned | 171,202 | — | |||||
Payable to brokers | (46,476 | ) | 13,434 | ||||
Compensation payable | (47,604 | ) | (50,540 | ) | |||
Fees payable | (1,788 | ) | 490 | ||||
Due to related parties | (135 | ) | (1,143 | ) | |||
Accounts payable, accrued expenses and other liabilities | (5,868 | ) | (5,406 | ) | |||
Consolidated Funds | |||||||
Payable to brokers | 10,231 | — | |||||
Due to related parties | — | 25 | |||||
Accounts payable, accrued expenses and other liabilities | (254 | ) | 324 | ||||
Net cash provided by / (used in) operating activities | $ | 105,130 | $ | 23,924 | |||
The accompanying notes are an integral part of these consolidated financial statements. | |||||||
Six Months Ended June 30, | |||||||
(continued) | 2013 | 2012 | |||||
Cash flows from investing activities: | |||||||
Securities purchased under agreement to resell | $ | — | $ | (58,313 | ) | ||
Purchases of other investments | (12,255 | ) | (3,889 | ) | |||
Proceeds from sales of other investments | 23,502 | 7,429 | |||||
Purchase of business, net of cash acquired (Note 2) | — | (10,062 | ) | ||||
Cash paid to acquire net assets (contingent payable) | (73 | ) | — | ||||
Purchase of fixed assets | (554 | ) | (1,084 | ) | |||
Net cash provided by / (used in) investing activities | 10,620 | (65,919 | ) | ||||
Cash flows from financing activities: | |||||||
Securities sold under agreement to repurchase | (159,634 | ) | 6,175 | ||||
Borrowings on short-term borrowings and other debt | 2,044 | — | |||||
Repayments on short-term borrowings and other debt | (1,800 | ) | (794 | ) | |||
Purchase of treasury stock | (235 | ) | (4,516 | ) | |||
Capital contributions by non-controlling interests in operating entities | 501 | — | |||||
Capital withdrawals to non-controlling interests in operating entities | (807 | ) | (2,267 | ) | |||
Consolidated Funds | |||||||
Capital contributions by non-controlling interests in Consolidated Funds | 9,680 | — | |||||
Capital withdrawals to non-controlling interests in Consolidated Funds | (12,156 | ) | (5,409 | ) | |||
Net cash provided by / (used in) financing activities | (162,407 | ) | (6,811 | ) | |||
Change in cash and cash equivalents | (46,657 | ) | (48,806 | ) | |||
Cash and cash equivalents at beginning of period | 83,538 | 128,875 | |||||
Cash and cash equivalents at end of period | $ | 36,881 | $ | 80,069 | |||
Supplemental non-cash information | |||||||
Non compete agreements and covenants with limiting conditions acquired (see Note 2) | $ | 460 | $ | — | |||
Common stock issuance upon close of acquisition (see Note 2) | $ | 6,297 | $ | — | |||
Purchase of treasury stock, at cost, through net settlement (see Note 15) | $ | 2,808 | $ | 1,841 | |||
Net assets of consolidated entities | $ | — | $ | 18,521 | |||
Net assets of deconsolidated entities | $ | — | $ | 17,104 |
a. | Basis of presentation |
b. | Principles of consolidation |
c. | Use of estimates |
d. | Valuation of investments and derivative contracts |
i. | Portfolio funds—Portfolio funds (“Portfolio Funds”) include interests in funds and investment companies managed by the Company or its affiliates. The Company follows US GAAP regarding fair value measurements and disclosures relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). The guidance permits, as a practical expedient, an entity holding investments in certain entities that either are investment companies as defined by the AICPA Audit and Accounting Guide, Investment Companies, or have attributes similar to an investment company, and calculate net asset value per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment. |
ii. | Real estate investments—Real estate investments are valued at fair value. The fair value of real estate investments are estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Real estate investments without a public market are valued based on assumptions and valuation techniques used by the Company. Such valuation techniques may include discounted cash flow analysis, prevailing market capitalization rates or earnings multiples applied to earnings from the investment, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties, consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence, as well as independent external appraisals. In general, the Company considers several valuation techniques when measuring the fair value of a real estate investment. However, in certain circumstances, a single valuation technique may be appropriate. Real estate investments are reviewed on a quarterly basis by the Company for significant changes at the property level or a significant change in the overall market which would impact the value of the real estate investment resulting in unrealized appreciation or depreciation. |
e. | Securities borrowed and securities loaned |
f. | Securities purchased under agreements to resell and securities sold under agreements to repurchase |
a. | Operating Entities |
As of June 30, 2013 | As of December 31, 2012 | ||||||
(dollars in thousands) | |||||||
U.S. Government securities (a) | $ | 3,506 | $ | 137,478 | |||
Preferred stock | 333 | 2,332 | |||||
Common stocks | 289,602 | 259,292 | |||||
Convertible bonds (b) | 4,426 | 6,202 | |||||
Corporate bonds (c) | 116,649 | 193,078 | |||||
Options | 18,883 | 20,546 | |||||
Warrants and rights | 2,247 | 2,354 | |||||
Mutual funds | 2,868 | 2,845 | |||||
$ | 438,514 | $ | 624,127 |
(a) | As of June 30, 2013, maturities ranged from July 2013 to April 2016 and interest rates ranged between 0.02% 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 June 30, 2013, the maturity was July 2014 with an interest rate of 5.00%. As of December 31, 2012, maturities ranged from May 2014 to July 2014 with an interest rate of 5.00%. |
(c) | As of June 30, 2013, maturities ranged from September 2013 to October 2019 and interest rates ranged between 3.11% and 12.00%. 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 June 30, 2013 | As of December 31, 2012 | ||||||
(dollars in thousands) | |||||||
(1) Portfolio Funds, at fair value | $ | 61,872 | $ | 55,898 | |||
(2) Real estate investments, at fair value | 2,158 | 1,864 | |||||
(3) Equity method investments | 20,424 | 26,462 | |||||
(4) Lehman claims, at fair value | 278 | 706 | |||||
$ | 84,732 | $ | 84,930 |
(1) | Portfolio Funds, at fair value |
As of June 30, 2013 | As of December 31, 2012 | ||||||
(dollars in thousands) | |||||||
HealthCare Royalty Partners (a)(*) | $ | 9,214 | $ | 7,866 | |||
HealthCare Royalty Partners II (a)(*) | 4,239 | 6,415 | |||||
Orchard Square Partners Credit Fund LP (formerly known as Ramius Global Credit Fund LP) (b)(*) | 12,046 | 14,196 | |||||
Tapestry Investment Co PCC Ltd (c) | 81 | 194 | |||||
Starboard Value and Opportunity Fund LP (d)(*) | 16,665 | 15,706 | |||||
Formation 8 Partners Fund I (e) | 1,384 | 1,500 | |||||
RCG LV Park Lane LLC (f) | 685 | 708 | |||||
RCGL 12E13th LLC (g) | 400 | — | |||||
RCG Longview Debt Fund V, L.P. (g) | 7,260 | — | |||||
Other private investment (h) | 7,730 | 7,826 | |||||
Other affiliated funds (i)(*) | 2,168 | 1,487 | |||||
$ | 61,872 | $ | 55,898 |
(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) | Orchard Square Partners 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 information 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 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 |
(3) | Equity method investments |
As of June 30, 2013 | As of December 31, 2012 | ||||||
(dollars in thousands) | |||||||
RCG Longview Debt Fund IV Management, LLC | $ | 1,336 | $ | 1,954 | |||
RCG Longview Debt Fund V Partners, LLC | 643 | — | |||||
HealthCare Royalty GP, LLC | 751 | 642 | |||||
HealthCare Royalty GP II, LLC | 718 | 1,086 | |||||
CBOE Stock Exchange, LLC | 2,015 | 2,058 | |||||
Starboard Value LP | 8,515 | 12,757 | |||||
RCG Longview Partners, LLC | 1,857 | 1,535 | |||||
RCG Longview Louisiana Manager, LLC | 1,613 | 1,866 | |||||
RCG Urban American, LLC | 247 | 1,380 | |||||
RCG Urban American Management, LLC | 45 | 545 | |||||
RCG Longview Equity Management, LLC | 211 | 285 | |||||
Urban American Real Estate Fund II, LLC | 1,537 | 1,636 | |||||
RCG Kennedy House, LLC | 377 | 377 | |||||
Other | 559 | 341 | |||||
$ | 20,424 | $ | 26,462 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(dollars in thousands) | |||||||||||||||
Revenues | $ | 4,019 | $ | 4,810 | $ | 9,074 | $ | 9,962 | |||||||
Expenses | (1,420 | ) | (1,463 | ) | (2,838 | ) | (2,926 | ) | |||||||
Net realized and unrealized gains (losses) | 285 | 19 | 322 | 109 | |||||||||||
Net Income | $ | 2,884 | $ | 3,366 | $ | 6,558 | $ | 7,145 |
(4) | Lehman Claims, at fair value |
As of June 30, 2013 | As of December 31, 2012 | ||||||
(dollars in thousands) | |||||||
Common stocks | $ | 139,911 | $ | 168,797 | |||
Corporate bonds (a) | 55 | 61 | |||||
Options | 13,160 | 9,076 | |||||
Warrants and rights | — | 3 | |||||
$ | 153,126 | $ | 177,937 |
(a) | As of June 30, 2013 and December 31, 2012, the maturity was January 2026 with an interest rate of 5.55% . |
As of June 30, 2013 | |||
(dollars in thousands) | |||
Securities sold under agreements to repurchase | |||
Agreements with Royal Bank of Canada bearing interest of 1.75% due on June 2015 to January 2016 | $ | 6,311 | |
$ | 6,311 |
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 |
b. | Consolidated Funds |
As of June 30, 2013 | As of December 31, 2012 | ||||||
(dollars in thousands) | |||||||
Common stocks | $ | 40,330 | $ | — | |||
Government sponsored securities (a) | — | 1,911 | |||||
Commercial paper (b) | — | 1,614 | |||||
Options | 455 | — | |||||
$ | 40,785 | $ | 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. |
As of June 30, 2013 | As of December 31, 2012 | ||||||
(dollars in thousands) | |||||||
(1) Portfolio Funds | $ | 177,848 | $ | 190,081 | |||
(2) Lehman claims | 15,434 | 14,124 | |||||
$ | 193,282 | $ | 204,205 |
(1) | Investments in Portfolio Funds, at fair value |
As of June 30, 2013 | As of December 31, 2012 | ||||||
(dollars in thousands) | |||||||
Investments of Enterprise LP | $ | 170,300 | $ | 173,348 | |||
Investments of consolidated fund of funds | 7,548 | 16,733 | |||||
$ | 177,848 | $ | 190,081 |
Fair Value as of June 30, 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 | $ | 261 | $ | 537 | $ | 574 | $ | 1,372 | (a) | ||||||||
Externally Managed Portfolio Funds | Event Driven | 1,183 | 1,774 | 2,500 | 5,457 | (c) | ||||||||||||
Externally Managed Portfolio Funds | Hedged Equity | — | — | 719 | 719 | (d) | ||||||||||||
$ | 1,444 | $ | 2,311 | $ | 3,793 | $ | 7,548 |
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 |
(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 |
As of June 30, 2013 | |||
(dollars in thousands) | |||
Common stocks | $ | 10,290 | |
Options | 56 | ||
$ | 10,346 |
As of June 30, 2013 | As of December 31, 2012 | ||||||
(dollars in thousands) | |||||||
Bank debt | $ | 156 | $ | 79 | |||
Common stock | 2,704 | 2,680 | |||||
Preferred stock | 997 | 997 | |||||
Private equity | 309 | 297 | |||||
Restricted stock | 73 | 26 | |||||
Rights | 2,362 | 1,714 | |||||
Trade claims | 128 | 128 | |||||
Warrants | 2 | 2 | |||||
$ | 6,731 | $ | 5,923 |
As of June 30, 2013 | As of December 31, 2012 | ||||||
Description | (dollars in thousands) | ||||||
Currency forwards | $ | 33 | $ | 6 | |||
$ | 33 | $ | 6 |
As of June 30, 2013 | As of December 31, 2012 | ||||||||
Strategy | (dollars in thousands) | ||||||||
RCG Longview Equity Fund, LP* | Real Estate | $ | 10,708 | $ | 11,027 | ||||
RCG Longview II, LP* | Real Estate | 814 | 970 | ||||||
RCG Longview Debt Fund IV, LP* | Real Estate | 25,694 | 30,572 | ||||||
RCG Longview, LP* | Real Estate | 321 | 265 | ||||||
RCG Soundview, LLC* | Real Estate | 441 | 2,374 | ||||||
RCG Urban American Real Estate Fund, L.P.* | Real Estate | 1,938 | 1,987 | ||||||
RCG International Sarl* | Multi-Strategy | 1,573 | 752 | ||||||
RCG Special Opportunities Fund, Ltd* | Multi-Strategy | 85,151 | 80,166 | ||||||
RCG Endeavour, LLC* | Multi-Strategy | 31 | 43 | ||||||
RCG Energy, LLC * | Energy | 10,322 | 14,239 | ||||||
RCG Renergys, LLC* | Energy | 1 | 1 | ||||||
Other Private Investments | Various | 12,252 | 12,430 | ||||||
Real Estate Investments | Real Estate | 13,057 | 12,321 | ||||||
$ | 162,303 | $ | 167,147 |
* | These Portfolio Funds are affiliates of the Company. |
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 |
Assets at Fair Value as of June 30, 2013 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(dollars in thousands) | |||||||||||||||
Securities owned and derivatives | |||||||||||||||
US Government securities | $ | 3,506 | $ | — | $ | — | $ | 3,506 | |||||||
Preferred stock | — | — | 333 | 333 | |||||||||||
Common stocks | 285,226 | 2,103 | 2,273 | 289,602 | |||||||||||
Convertible bonds | — | 4,426 | — | 4,426 | |||||||||||
Corporate bonds | — | 116,649 | — | 116,649 | |||||||||||
Futures | 93 | — | — | 93 | |||||||||||
Currency forwards | — | 635 | — | 635 | |||||||||||
Equity swaps | 177 | 146 | — | 323 | |||||||||||
Options | 18,348 | 535 | — | 18,883 | |||||||||||
Warrants and rights | 111 | — | 2,136 | 2,247 | |||||||||||
Mutual funds | 2,868 | — | — | 2,868 | |||||||||||
Other investments | |||||||||||||||
Portfolio Funds | — | 29,040 | 32,832 | 61,872 | |||||||||||
Real estate investments | — | — | 2,158 | 2,158 | |||||||||||
Lehman claim | — | — | 278 | 278 | |||||||||||
$ | 310,329 | $ | 153,534 | $ | 40,010 | $ | 503,873 |
Liabilities at Fair Value as of June 30, 2013 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(dollars in thousands) | |||||||||||||||
Securities sold, not yet purchased and derivatives | |||||||||||||||
Common stocks | $ | 139,911 | $ | — | $ | — | $ | 139,911 | |||||||
Corporate bonds | — | 55 | — | 55 | |||||||||||
Futures | 583 | — | — | 583 | |||||||||||
Currency forwards | — | 10 | — | 10 | |||||||||||
Equity swaps | 13 | 84 | — | 97 | |||||||||||
Options | 12,729 | 431 | — | 13,160 | |||||||||||
$ | 153,236 | $ | 580 | $ | — | $ | 153,816 |
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 June 30, 2013 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(dollars in thousands) | |||||||||||||||
Securities owned | |||||||||||||||
Common stocks | $ | 40,330 | $ | — | $ | — | $ | 40,330 | |||||||
Options | 455 | — | — | 455 | |||||||||||
Other investments | |||||||||||||||
Portfolio Funds | — | — | 177,848 | 177,848 | |||||||||||
Lehman claims | — | — | 15,434 | 15,434 | |||||||||||
$ | 40,785 | $ | — | $ | 193,282 | $ | 234,067 |
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 |
Liabilities at Fair Value as of June 30, 2013 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(dollars in thousands) | |||||||||||||||
Securities sold, not yet purchased and derivatives | |||||||||||||||
Common stocks | $ | 10,290 | $ | — | $ | — | $ | 10,290 | |||||||
Options | 56 | — | — | 56 | |||||||||||
$ | 10,346 | $ | — | $ | — | $ | 10,346 |
Three Months Ended June 30, 2013 | |||||||||||||||||||||||||||||||
Balance at March 31, 2013 | Transfers in | Transfers out | Purchases/(covers) | (Sales)/short buys | Realized gains (losses) | Unrealized gains (losses) | Balance at June 30, 2013 | ||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||
Operating Entities | |||||||||||||||||||||||||||||||
Preferred stock | $ | 2,332 | $ | — | $ | (2,000 | ) | $ | — | $ | — | $ | — | $ | 1 | $ | 333 | ||||||||||||||
Common stocks | 2,278 | — | — | — | (8 | ) | — | 3 | 2,273 | ||||||||||||||||||||||
Warrants and Rights | 3,243 | — | — | — | — | — | (1,107 | ) | 2,136 | ||||||||||||||||||||||
Warrants and Rights, sold not yet purchased | 3 | — | — | — | — | (4 | ) | 1 | — | ||||||||||||||||||||||
Portfolio Funds | 25,559 | — | — | 8,981 | (2,857 | ) | (286 | ) | 1,435 | 32,832 | |||||||||||||||||||||
Real estate | 1,875 | — | — | — | — | — | 283 | 2,158 | |||||||||||||||||||||||
Lehman claim | 660 | — | — | — | (382 | ) | — | — | 278 | ||||||||||||||||||||||
Consolidated Funds | |||||||||||||||||||||||||||||||
Portfolio Funds | 178,357 | — | — | — | (2,918 | ) | 98 | 2,311 | 177,848 | ||||||||||||||||||||||
Lehman claim | 15,140 | — | — | — | — | — | 294 | 15,434 |
Three Months Ended June 30, 2012 | |||||||||||||||||||||||||||||||
Balance at March 31, 2012 | Transfers in | Transfers out | Purchases/(covers) | (Sales)/short buys | Realized gains (losses) | Unrealized gains (losses) | Balance at June 30, 2012 | ||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||
Operating Entities | |||||||||||||||||||||||||||||||
Preferred stock | $ | 252 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (12 | ) | $ | 240 | ||||||||||||||
Common stocks | 827 | — | — | — | — | — | (108 | ) | 719 | ||||||||||||||||||||||
Warrants and Rights | 3,316 | — | — | 25 | — | — | (497 | ) | 2,844 | ||||||||||||||||||||||
Warrants and Rights, sold not yet purchased | — | — | — | (4 | ) | 9 | — | (2 | ) | 3 | |||||||||||||||||||||
Portfolio Funds | 19,012 | — | — | 1,230 | (285 | ) | 2 | (83 | ) | 19,876 | |||||||||||||||||||||
Real estate | 2,579 | — | — | — | (501 | ) | — | 1 | 2,079 | ||||||||||||||||||||||
Lehman claim | 574 | — | — | — | — | — | 157 | 731 | |||||||||||||||||||||||
Consolidated Funds | |||||||||||||||||||||||||||||||
Portfolio Funds | 215,815 | — | — | 19 | (2,138 | ) | (1,906 | ) | (2,283 | ) | 209,507 | ||||||||||||||||||||
Lehman claim | 5,346 | — | — | — | — | 1,192 | — | 6,538 |
Six Months Ended June 30, 2013 | |||||||||||||||||||||||||||||||
Balance at December 31, 2012 | Transfers in | Transfers out | Purchases/(covers) | (Sales)/short buys | Realized gains (losses) | Unrealized gains (losses) | Balance at June 30, 2013 | ||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||
Operating Entities | |||||||||||||||||||||||||||||||
Preferred stock | $ | 2,332 | $ | — | $ | (2,000 | ) | (e) | $ | — | $ | — | $ | — | $ | 1 | $ | 333 | |||||||||||||
Common stocks | 2,549 | — | — | — | (273 | ) | 260 | (263 | ) | 2,273 | |||||||||||||||||||||
Corporate Bond | 515 | — | — | 2,735 | (3,346 | ) | (914 | ) | 1,010 | — | |||||||||||||||||||||
Warrants and Rights | 1,713 | 290 | (c) | — | 166 | (110 | ) | — | 77 | 2,136 | |||||||||||||||||||||
Warrants and Rights, sold not yet purchased | 3 | — | — | — | — | (4 | ) | 1 | — | ||||||||||||||||||||||
Portfolio Funds | 25,670 | — | — | 12,571 | (6,733 | ) | (278 | ) | 1,602 | 32,832 | |||||||||||||||||||||
Real estate | 1,864 | — | — | — | — | — | 294 | 2,158 | |||||||||||||||||||||||
Lehman claim | 706 | — | — | — | (382 | ) | — | (46 | ) | 278 | |||||||||||||||||||||
Consolidated Funds | |||||||||||||||||||||||||||||||
Portfolio Funds | 182,920 | — | — | — | (9,949 | ) | 320 | 4,557 | 177,848 | ||||||||||||||||||||||
Lehman claim | 14,124 | — | — | — | (1,449 | ) | 1,360 | 1,399 | 15,434 |
Six Months Ended June 30, 2012 | |||||||||||||||||||||||||||||||||
Balance at December 31, 2011 | Transfers in | Transfers out | Purchases/(covers) | (Sales)/short buys | Realized gains (losses) | Unrealized gains (losses) | Balance at June 30, 2012 | ||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||
Operating Entities | |||||||||||||||||||||||||||||||||
Preferred stock | $ | 250 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (10 | ) | $ | 240 | ||||||||||||||||
Common stocks | 819 | — | — | — | (6 | ) | 6 | (100 | ) | 719 | |||||||||||||||||||||||
Warrants and Rights | 1,534 | — | (88 | ) | (b) | 282 | (65 | ) | 56 | 1,125 | 2,844 | ||||||||||||||||||||||
Warrants and Rights, sold not yet purchased | — | — | (1,004 | ) | (d) | (306 | ) | 982 | (35 | ) | 366 | 3 | |||||||||||||||||||||
Portfolio Funds | 16,919 | — | — | 2,851 | (814 | ) | 7 | 913 | 19,876 | ||||||||||||||||||||||||
Real estate | 2,353 | — | — | 152 | (501 | ) | — | 75 | 2,079 | ||||||||||||||||||||||||
Lehman claim | 553 | — | — | — | — | — | 178 | 731 | |||||||||||||||||||||||||
Consolidated Funds | |||||||||||||||||||||||||||||||||
Portfolio Funds | 213,402 | 16,227 | (a) | (17,151 | ) | (a) | 434 | (5,026 | ) | (1,692 | ) | 3,313 | 209,507 | ||||||||||||||||||||
Lehman claim | 7,340 | — | — | — | (2,291 | ) | 1,914 | (425 | ) | 6,538 |
Quantitative Information about Level 3 Fair Value Measurements | |||||||||
Fair Value at June 30, 2013 | Valuation techniques | Unobservable Inputs | Range | ||||||
Common and preferred stocks | $ | 2,606 | 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 | 2,136 | Model based | Volatility | Volatility: 20% to 150% | |||||
$ | 4,742 | ||||||||
Other level 3 assets and liabilities (a) | 228,550 | ||||||||
Total level 3 assets and liabilities | $ | 233,292 |
(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. The quantitative disclosures also exclude financial instruments for which the determination of fair value is based on prices from prior transactions. |
As of June 30, | As of December 31, | ||||||
2013 | 2012 | ||||||
(dollars in thousands) | |||||||
Redeemable non-controlling interests in consolidated subsidiaries | |||||||
Operating companies | $ | 7,197 | $ | 4,106 | |||
Consolidated funds | 84,365 | 81,597 | |||||
$ | 91,562 | $ | 85,703 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(dollars in thousands) | |||||||||||||||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries | |||||||||||||||
Operating companies | $ | 1,601 | $ | 301 | $ | 3,396 | $ | 594 | |||||||
Consolidated funds | 654 | (2,735 | ) | 2,354 | (787 | ) | |||||||||
$ | 2,255 | $ | (2,434 | ) | $ | 5,750 | $ | (193 | ) |
Shares Subject to Option | Weighted Average Exercise Price/Share | Weighted Average Remaining Term | Aggregate Intrinsic Value(1) | ||||||||||
(in years) | (dollars in thousands) | ||||||||||||
Balance outstanding at December 31, 2012 | 773,763 | $ | 12.58 | 1.6 | $ | — | |||||||
Options granted | — | — | — | — | |||||||||
Options acquired | — | — | — | — | |||||||||
Options expired | (114,969 | ) | 16.00 | — | — | ||||||||
Balance outstanding at June 30, 2013 | 658,794 | $ | 11.99 | 1.3 | $ | — | |||||||
Options exercisable at June 30, 2013 | 558,792 | $ | 13.51 | 0.8 | $ | — |
(1) | Based on the Company's closing stock price of $2.89 on June 30, 2013 and $2.45 on December 31, 2012. |
Shares Subject to Option | Weighted Average Exercise Price/Share | Weighted Average Remaining Term | Aggregate Intrinsic Value(1) | ||||||||||
(in years) | (dollars in thousands) | ||||||||||||
Balance outstanding at December 31, 2012 | — | $ | — | — | $ | — | |||||||
SAR's granted | 400,000 | 2.90 | 4.71 | — | |||||||||
SAR's acquired | — | — | — | — | |||||||||
SAR's expired | — | — | — | — | |||||||||
Balance outstanding at June 30, 2013 | 400,000 | $ | 2.90 | 4.71 | $ | — | |||||||
SAR's exercisable at June 30, 2013 | — | $ | — | — | $ | — |
(1) | Based on the Company's closing stock price of $2.89 on June 30, 2013. |
Nonvested Restricted Shares and Restricted Stock Units | Weighted-Average Grant Date Fair Value | |||||
Balance outstanding at December 31, 2012 | 10,252,023 | $ | 4.15 | |||
Granted | 6,384,072 | 2.55 | ||||
Vested | (3,830,086 | ) | 3.98 | |||
Cancelled | — | — | ||||
Forfeited | (107,334 | ) | 3.32 | |||
Balance outstanding at June 30, 2013 | 12,698,675 | $ | 3.41 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(dollars in thousands) | |||||||||||||||
Components of net periodic benefit cost included in employee compensation and benefits | |||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | — | |||||||
Interest cost | 47 | 53 | 98 | 106 | |||||||||||
Expected return on plan assets | (59 | ) | (59 | ) | (122 | ) | (116 | ) | |||||||
Amortization of (loss) / gain | — | — | — | — | |||||||||||
Amortization of prior service cost | 5 | 5 | 10 | 10 | |||||||||||
Effect of settlement | (95 | ) | (1 | ) | (95 | ) | (3 | ) | |||||||
Net periodic benefit cost | $ | (102 | ) | $ | (2 | ) | $ | (109 | ) | $ | (3 | ) |
Equipment Leases (a) | Service Payments | Facility Leases (b) | |||||||||
(dollars in thousands) | |||||||||||
2013 | $ | 1,650 | $ | 7,632 | $ | 10,175 | |||||
2014 | 1,548 | 10,776 | 18,876 | ||||||||
2015 | 1,051 | 2,645 | 16,126 | ||||||||
2016 | 194 | 165 | 13,039 | ||||||||
2017 | — | — | 9,938 | ||||||||
Thereafter | — | — | 43,733 | ||||||||
$ | 4,443 | $ | 21,218 | $ | 111,887 |
(a) | Equipment Leases include the Company's commitments relating to operating and capital leases. See Note 14 for further information on the capital lease minimum payments which are included in the table. |
(b) | The Company has entered into various agreements to sublease certain of its premises. The Company recorded sublease income related to these leases of $0.4 million and $0.3 million for the three months ended June 30, 2013 and 2012, respectively, and $0.7 million and $0.8 million for the six months ended June 30, 2013 and 2012, respectively. |
As of June 30, 2013 | As of December 31, 2012 | ||||||
(dollars in thousands) | |||||||
Notes payable | $ | 1,145 | $ | 206 | |||
Capital lease obligations | 3,231 | 3,926 | |||||
$ | 4,376 | $ | 4,132 |
Location | Amount | Maturity | ||||
(dollars in thousands) | ||||||
San Francisco | $ | 82 | May 12, 2014 | |||
New York | $ | 1,193 | September 3, 2013 | |||
New York | $ | 6,754 | December 12, 2013 | |||
New York | $ | 1,002 | February 22, 2014 | |||
New York | $ | 1,861 | March 19, 2014 |
Capital Lease Obligation | Short Term Borrowings | ||||||
(dollars in thousands) | |||||||
2013 | $ | 771 | $ | 1,135 | |||
2014 | 1,402 | 46 | |||||
2015 | 1,051 | — | |||||
2016 | 194 | — | |||||
2017 | — | — | |||||
Thereafter | — | — | |||||
Subtotal | 3,418 | 1,181 | |||||
Less: Amount representing interest (a) | (187 | ) | (36 | ) | |||
Total | $ | 3,231 | $ | 1,145 |
(a) | Amount necessary to reduce net minimum lease payments to present value calculated at the Company's implicit rate at lease inception. |
Treasury stock shares | Cost (dollars in thousands) | Average cost per share | ||||||||
Balance outstanding at December 31, 2012 | 11,292,220 | $ | 31,728 | $ | 2.81 | |||||
Shares purchased for minimum tax withholding under the Equity Plan | 949,312 | 2,808 | 2.96 | |||||||
Purchase of treasury stock | 89,297 | 236 | 2.64 | |||||||
Balance outstanding at June 30, 2013 | 12,330,829 | $ | 34,772 | $ | 2.82 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(dollars in thousands, except per share data) | |||||||||||||||
Net income (loss) | 3,348 | (10,380 | ) | $ | 4,267 | $ | (4,144 | ) | |||||||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries | 2,255 | (2,434 | ) | 5,750 | (193 | ) | |||||||||
Net income (loss) less Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries | 1,093 | (7,946 | ) | (1,483 | ) | (3,951 | ) | ||||||||
Shares for basic and diluted calculations: | |||||||||||||||
Weighted average shares used in basic computation | 117,235 | 114,561 | 115,471 | 114,420 | |||||||||||
Stock options | — | — | — | — | |||||||||||
Stock appreciation rights | — | — | — | — | |||||||||||
Restricted stock | 3,666 | — | — | — | |||||||||||
Weighted average shares used in diluted computation | 120,901 | 114,561 | $ | 115,471 | $ | 114,420 | |||||||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | 0.01 | $ | (0.07 | ) | $ | (0.01 | ) | $ | (0.03 | ) | ||||
Diluted | $ | 0.01 | $ | (0.07 | ) | $ | (0.01 | ) | $ | (0.03 | ) |
Three Months Ended June 30, 2013 | |||||||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||
Alternative Investment | Broker-Dealer (1) | Total Economic Income/(Loss) | Funds Consolidation | Other Adjustments | US GAAP | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||
Investment banking | $ | — | $ | 25,571 | $ | 25,571 | $ | — | $ | — | $ | 25,571 | |||||||||||||
Brokerage | — | 33,300 | 33,300 | — | (1,779 | ) | (e) | 31,521 | |||||||||||||||||
Management fees | 14,606 | — | 14,606 | (286 | ) | (4,622 | ) | (a) | 9,698 | ||||||||||||||||
Incentive income | 3,765 | — | 3,765 | — | (1,811 | ) | (a) | 1,954 | |||||||||||||||||
Investment Income | 3,834 | (271 | ) | 3,563 | — | (3,563 | ) | (c) | — | ||||||||||||||||
Interest and dividends | — | — | — | — | 10,521 | (c) | 10,521 | ||||||||||||||||||
Reimbursement from affiliates | — | — | — | (196 | ) | 1,410 | (b) | 1,214 | |||||||||||||||||
Other revenue | 114 | 164 | 278 | — | 207 | (c) | 485 | ||||||||||||||||||
Consolidated Funds revenues | — | — | — | 243 | — | 243 | |||||||||||||||||||
Total revenues | 22,319 | 58,764 | 81,083 | (239 | ) | 363 | 81,207 | ||||||||||||||||||
Expenses | |||||||||||||||||||||||||
Employee compensation and benefits | 10,411 | 37,303 | 47,714 | — | (207 | ) | 47,507 | ||||||||||||||||||
Interest and dividends | 50 | 22 | 72 | — | 7,168 | (c) | 7,240 | ||||||||||||||||||
Non-compensation expenses—Fixed | 8,471 | 15,312 | 23,783 | — | (23,783 | ) | (c)(d) | — | |||||||||||||||||
Non-compensation expenses—Variable | 1,139 | 7,423 | 8,562 | — | (8,562 | ) | (c)(d) | — | |||||||||||||||||
Non-compensation expenses | — | — | — | — | 31,380 | (c)(d) | 31,380 | ||||||||||||||||||
Reimbursement from affiliates | (1,411 | ) | — | (1,411 | ) | — | 1,411 | (b) | — | ||||||||||||||||
Consolidated Funds expenses | — | — | — | 485 | — | 485 | |||||||||||||||||||
Total expenses | 18,660 | 60,060 | 78,720 | 485 | 7,407 | 86,612 | |||||||||||||||||||
Other income (loss) | |||||||||||||||||||||||||
Net gain (loss) on securities, derivatives and other investments | — | — | — | — | 4,994 | (c) | 4,994 | ||||||||||||||||||
Consolidated Funds net gains (losses) | — | — | — | 1,378 | 2,539 | 3,917 | |||||||||||||||||||
Total other income (loss) | — | — | — | 1,378 | 7,533 | 8,911 | |||||||||||||||||||
Income (loss) before income taxes and non-controlling interests | 3,659 | (1,296 | ) | 2,363 | 654 | 489 | 3,506 | ||||||||||||||||||
Income taxes expense / (benefit) | — | — | — | — | 158 | (b) | 158 | ||||||||||||||||||
Economic Income (Loss) / Net income (loss) before non-controlling interests | 3,659 | (1,296 | ) | 2,363 | 654 | 331 | 3,348 | ||||||||||||||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries | (893 | ) | — | (893 | ) | (654 | ) | (708 | ) | (2,255 | ) | ||||||||||||||
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc. stockholders | $ | 2,766 | $ | (1,296 | ) | $ | 1,470 | $ | — | $ | (377 | ) | $ | 1,093 |
Three Months Ended June 30, 2012 | |||||||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||
Alternative Investment | Broker-Dealer (1) | Total Economic Income/(Loss) | Funds Consolidation | Other Adjustments | US GAAP | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||
Investment banking | $ | — | $ | 16,254 | $ | 16,254 | $ | — | $ | — | $ | 16,254 | |||||||||||||
Brokerage | — | 24,568 | 24,568 | — | — | 24,568 | |||||||||||||||||||
Management fees | 14,586 | — | 14,586 | (394 | ) | (4,260 | ) | (a) | 9,932 | ||||||||||||||||
Incentive income | 2,583 | — | 2,583 | — | (2,003 | ) | (a) | 580 | |||||||||||||||||
Investment Income | 6,694 | 1,592 | 8,286 | — | (8,286 | ) | (c) | — | |||||||||||||||||
Interest and dividends | — | — | — | — | 5,868 | (c) | 5,868 | ||||||||||||||||||
Reimbursement from affiliates | — | — | — | (54 | ) | 1,435 | (b) | 1,381 | |||||||||||||||||
Other revenue | 216 | (287 | ) | (71 | ) | — | 902 | (c) | 831 | ||||||||||||||||
Consolidated Funds revenues | — | — | — | 56 | — | 56 | |||||||||||||||||||
Total revenues | 24,079 | 42,127 | 66,206 | (392 | ) | (6,344 | ) | 59,470 | |||||||||||||||||
Expenses | |||||||||||||||||||||||||
Employee compensation and benefits | 13,500 | 28,145 | 41,645 | — | 1,452 | 43,097 | |||||||||||||||||||
Interest and dividends | 12 | 47 | 59 | — | 3,148 | (c) | 3,207 | ||||||||||||||||||
Non-compensation expenses—Fixed | 8,560 | 15,929 | 24,489 | — | (24,489 | ) | (c)(d) | — | |||||||||||||||||
Non-compensation expenses—Variable | 1,138 | 6,000 | 7,138 | — | (7,138 | ) | (c)(d) | — | |||||||||||||||||
Non-compensation expenses | — | — | — | — | 30,486 | (c)(d) | 30,486 | ||||||||||||||||||
Reimbursement from affiliates | (1,435 | ) | — | (1,435 | ) | — | 1,435 | (b) | — | ||||||||||||||||
Consolidated Funds expenses | — | — | — | 635 | — | 635 | |||||||||||||||||||
Total expenses | 21,775 | 50,121 | 71,896 | 635 | 4,894 | 77,425 | |||||||||||||||||||
Other income (loss) | |||||||||||||||||||||||||
Net gains (losses) on securities, derivatives and other investments | — | — | — | — | 9,787 | (c) | 9,787 | ||||||||||||||||||
Consolidated Funds net gains (losses) | — | — | — | (1,707 | ) | (314 | ) | (2,021 | ) | ||||||||||||||||
Total other income (loss) | — | — | — | (1,707 | ) | 9,473 | 7,766 | ||||||||||||||||||
Income (loss) before income taxes and non-controlling interests | 2,304 | (7,994 | ) | (5,690 | ) | (2,734 | ) | (1,765 | ) | (10,189 | ) | ||||||||||||||
Income taxes expense / (benefit) | — | — | — | — | 191 | (b) | 191 | ||||||||||||||||||
Economic Income (Loss) / Net income (loss) before non-controlling interests | 2,304 | (7,994 | ) | (5,690 | ) | (2,734 | ) | (1,956 | ) | (10,380 | ) | ||||||||||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries | (300 | ) | — | (300 | ) | 2,734 | — | 2,434 | |||||||||||||||||
Economic Income (Loss) / Net income (loss) attributable to Cowen Group, Inc. stockholders | $ | 2,004 | $ | (7,994 | ) | $ | (5,990 | ) | $ | — | $ | (1,956 | ) | $ | (7,946 | ) |
Six Months Ended June 30, 2013 | |||||||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||
Alternative Investment | Broker-Dealer (1) | Total Economic Income/(Loss) | Funds Consolidation | Other Adjustments | US GAAP | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||
Investment banking | $ | — | $ | 42,737 | $ | 42,737 | $ | — | $ | — | $ | 42,737 | |||||||||||||
Brokerage | — | 61,317 | 61,317 | — | (3,196 | ) | (e) | 58,121 | |||||||||||||||||
Management fees | 28,750 | — | 28,750 | (597 | ) | (8,962 | ) | (a) | 19,191 | ||||||||||||||||
Incentive income | 8,892 | — | 8,892 | — | (4,327 | ) | (a) | 4,565 | |||||||||||||||||
Investment Income | 12,138 | 2,298 | 14,436 | — | (14,436 | ) | (c) | — | |||||||||||||||||
Interest and dividends | — | — | — | — | 19,842 | (c) | 19,842 | ||||||||||||||||||
Reimbursement from affiliates | — | — | — | (131 | ) | 2,830 | (b) | 2,699 | |||||||||||||||||
Other revenue | 226 | (389 | ) | (163 | ) | — | 1,126 | (c) | 963 | ||||||||||||||||
Consolidated Funds revenues | — | — | — | 330 | — | 330 | |||||||||||||||||||
Total revenues | 50,006 | 105,963 | 155,969 | (398 | ) | (7,123 | ) | 148,448 | |||||||||||||||||
Expenses | |||||||||||||||||||||||||
Employee compensation and benefits | 24,324 | 67,911 | 92,235 | — | (505 | ) | 91,730 | ||||||||||||||||||
Interest and dividends | 131 | 65 | 196 | — | 13,462 | (c) | 13,658 | ||||||||||||||||||
Non-compensation expenses—Fixed | 17,609 | 29,952 | 47,561 | — | (47,561 | ) | (c)(d) | — | |||||||||||||||||
Non-compensation expenses—Variable | 2,145 | 13,768 | 15,913 | — | (15,913 | ) | (c)(d) | — | |||||||||||||||||
Non-compensation expenses | — | — | — | — | 63,417 | (c)(d) | 63,417 | ||||||||||||||||||
Reimbursement from affiliates | (2,830 | ) | — | (2,830 | ) | — | 2,830 | (b) | — | ||||||||||||||||
Consolidated Funds expenses | — | — | — | 919 | — | 919 | |||||||||||||||||||
Total expenses | 41,379 | 111,696 | 153,075 | 919 | 15,730 | 169,724 | |||||||||||||||||||
Other income (loss) | |||||||||||||||||||||||||
Net gains (losses) on securities, derivatives and other investments | — | — | — | — | 16,801 | (c) | 16,801 | ||||||||||||||||||
Consolidated Funds net gains (losses) | — | — | — | 3,671 | 5,405 | 9,076 | |||||||||||||||||||
Total other income (loss) | — | — | — | 3,671 | 22,206 | 25,877 | |||||||||||||||||||
Income (loss) before income taxes and non-controlling interests | 8,627 | (5,733 | ) | 2,894 | 2,354 | (647 | ) | 4,601 | |||||||||||||||||
Income taxes expense / (benefit) | — | — | — | — | 334 | (b) | 334 | ||||||||||||||||||
Economic Income (Loss) / Net income (loss) before non-controlling interests | 8,627 | (5,733 | ) | 2,894 | 2,354 | (981 | ) | 4,267 | |||||||||||||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries | (2,692 | ) | — | (2,692 | ) | (2,354 | ) | (704 | ) | (5,750 | ) | ||||||||||||||
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc. stockholders | $ | 5,935 | $ | (5,733 | ) | $ | 202 | $ | — | $ | (1,685 | ) | $ | (1,483 | ) |
Six Months Ended June 30, 2012 | |||||||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||
Alternative Investment | Broker-Dealer (1) | Total Economic Income/(Loss) | Funds Consolidation | Other Adjustments | US GAAP | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||
Investment banking | $ | — | $ | 31,884 | $ | 31,884 | $ | — | $ | — | $ | 31,884 | |||||||||||||
Brokerage | — | 48,581 | 48,581 | — | — | 48,581 | |||||||||||||||||||
Management fees | 28,606 | — | 28,606 | (787 | ) | (8,170 | ) | (a) | 19,649 | ||||||||||||||||
Incentive income | 6,605 | — | 6,605 | — | (5,334 | ) | (a) | 1,271 | |||||||||||||||||
Investment Income | 23,496 | 5,895 | 29,391 | — | (29,391 | ) | (c) | — | |||||||||||||||||
Interest and dividends | — | — | — | — | 11,240 | (c) | 11,240 | ||||||||||||||||||
Reimbursement from affiliates | — | — | — | (125 | ) | 2,551 | (b) | 2,426 | |||||||||||||||||
Other revenue | 340 | (27 | ) | 313 | — | 1,385 | (c) | 1,698 | |||||||||||||||||
Consolidated Funds revenues | — | — | — | 200 | — | 200 | |||||||||||||||||||
Total revenues | 59,047 | 86,333 | 145,380 | (712 | ) | (27,719 | ) | 116,949 | |||||||||||||||||
Expenses | |||||||||||||||||||||||||
Employee compensation and benefits | 30,946 | 56,608 | 87,554 | — | 2,226 | 89,780 | |||||||||||||||||||
Interest and dividends | 30 | 117 | 147 | — | 4,784 | (c) | 4,931 | ||||||||||||||||||
Non-compensation expenses—Fixed | 15,529 | 30,203 | 45,732 | — | (45,732 | ) | (c)(d) | — | |||||||||||||||||
Non-compensation expenses—Variable | 2,447 | 11,566 | 14,013 | — | (14,013 | ) | (c)(d) | — | |||||||||||||||||
Non-compensation expenses | — | — | — | — | 58,444 | (c)(d) | 58,444 | ||||||||||||||||||
Reimbursement from affiliates | (2,551 | ) | — | (2,551 | ) | — | 2,551 | (b) | — | ||||||||||||||||
Consolidated Funds expenses | — | — | — | 1,009 | — | 1,009 | |||||||||||||||||||
Total expenses | 46,401 | 98,494 | 144,895 | 1,009 | 8,260 | 154,164 | |||||||||||||||||||
Other income (loss) | |||||||||||||||||||||||||
Net gains (losses) on securities, derivatives and other investments | — | — | — | — | 29,458 | (c) | 29,458 | ||||||||||||||||||
Consolidated Funds net gains (losses) | — | — | — | 934 | 3,012 | 3,946 | |||||||||||||||||||
Total other income (loss) | — | — | — | 934 | 32,470 | 33,404 | |||||||||||||||||||
Income (loss) before income taxes and non-controlling interests | 12,646 | (12,161 | ) | 485 | (787 | ) | (3,509 | ) | (3,811 | ) | |||||||||||||||
Income taxes expense / (benefit) | — | — | — | — | 333 | (b) | 333 | ||||||||||||||||||
Economic Income (Loss) / Net income (loss) before non-controlling interests | 12,646 | (12,161 | ) | 485 | (787 | ) | (3,842 | ) | (4,144 | ) | |||||||||||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries | (600 | ) | — | (600 | ) | 787 | 6 | 193 | |||||||||||||||||
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc. stockholders | $ | 12,046 | $ | (12,161 | ) | $ | (115 | ) | $ | — | $ | (3,836 | ) | $ | (3,951 | ) |
• | Assets under management. Our revenues from management fees are directly linked to assets under management. As a result, the future performance of our alternative investment business will depend on, among other things, our ability to retain assets under management and to grow assets under management from existing and new products. In addition, positive performance increases assets under management which results in higher management fees. As previously disclosed, redemptions in Ramius Multi-Strategy Fund Ltd triggered certain contractual rights of affiliates of UniCredit S.p.A (“UniCredit S.p.A”), which would have allowed them to withdraw their assets held in that fund upon 30 days notice. Such affiliates of UniCredit S.p.A instead agreed, pursuant to a modification agreement, to extend the time period pursuant to which the Company was required to return the bulk of its assets in our funds by the end of 2010. The Company returned a significant portion of the assets during 2010 and as of June 30, 2013, including redemptions effective on July 1, 2013, we have returned approximately $582 million to affiliates of UniCredit S.p.A with a remaining investment balance of approximately $146 million invested in our investment vehicles, including a fund of funds managed account. |
• | Investment performance. Our revenues from incentive income are linked to the performance of the funds and accounts that we manage. Performance also affects assets under management because it influences investors' decisions to invest assets in, or withdraw assets from, the funds and accounts managed by us. |
• | Fee and allocation rates. Our management fee revenues are linked to the management fee rates we charge as a percentage of assets under management. Our incentive income revenues are linked to the incentive allocation rates we charge as a percentage of performance-driven asset growth. Our incentive allocations are generally subject to “high-water marks,” whereby incentive income is generally earned by us only to the extent that the net asset value of a fund at the end of a measurement period exceeds the highest net asset value as of the end of the earlier measurement period for which we earned incentive income. Our incentive allocations, in some cases, are subject to performance hurdles. |
• | Investment performance of our own capital. We invest our own capital and the performance of such invested capital affects our revenues. As of July 1, 2013, we had investments of approximately $117.6 million, $150.5 million and $14.3 million in the Enterprise Fund (an entity which invests its capital in Ramius Enterprise Master Fund Ltd), |
• | Underwriting, private placement and strategic/financial advisory fees. Our revenues from investment banking are directly linked to the underwriting fees we earn in equity and debt securities offerings in which the Company acts as an underwriter, private placement fees earned in non-underwritten transactions, sales commissions earned in at-the-market offerings and success fees earned in connection with advising both buyers and sellers, principally in mergers and acquisitions. As a result, the future performance of our investment banking business will depend on, among other things, our ability to secure lead manager and co-manager roles in clients capital raising transactions as well as our ability to secure mandates as a client's strategic financial advisor. |
• | Commissions. Our commission revenues depend for the most part on our customer trading volumes. |
• | Principal transactions. Principal transactions revenue includes net trading gains and losses from the Company's market-making activities and net trading gains and losses on inventory and other firm positions. Commissions associated with these transactions are also included herein. In certain cases, the Company provides liquidity to clients buying or selling blocks of shares of listed stocks without previously identifying the other side of the trade at execution, which subjects the Company to market risk. |
• | Equity research fees. Equity research fees are paid to the Company for providing equity research. The Company also permits institutional customers to allocate a portion of their commissions to pay for research products and other services provided by third parties. Our ability to generate revenues relating to our equity research depends on the quality of our research and its relevance to our institutional customers and other clients. |
• | Our alternative investment business was affected by the conditions impacting the global financial markets and the hedge fund industry during 2008, which was characterized by substantial declines in investment performance and unanticipated levels of requested redemptions. While the environment for investing in alternative investment products has since improved, the variability of redemptions could continue to affect our alternative investment business, and it is possible that we could intermittently experience redemptions above historical levels, regardless of fund performance. |
• | Our broker-dealer business has been, and may continue to be, adversely affected by market conditions. Increased competition continues to affect our investment banking and capital markets businesses. The same factors also affect trading volumes in secondary financial markets, which affect our brokerage business. Commission rates, market volatility, increased competition from larger financial firms and other factors also affect our brokerage revenues and may cause these revenues to vary from period to period. |
• | Our broker-dealer business focuses primarily on small to mid-capitalization and private companies in specific industry sectors. These sectors may experience growth or downturns independent of general economic and market conditions, or may face market conditions that are disproportionately better or worse than those impacting the economy and markets generally. In addition, increased government regulation has had, and may continue to have, a disproportionate effect on capital formation by smaller companies. Therefore, our broker-dealer business could be affected differently than overall market trends. |
• | Hedge Funds. Management fees for the Company's hedge funds are generally charged at an annual rate of up to 2% of assets under management. Management fees are generally calculated monthly based on assets under management at the end of each month before incentive income. |
• | Alternative Solutions. Management fees for the Alternative Solutions business are generally charged at an annual rate of up to 2% of assets under management. Management fees are generally calculated monthly based on assets under management at the end of each month before incentive income or based on assets under management at |
• | Real Estate Funds. Management fees from the Company's real estate funds are generally charged by their general partners at an annual rate from 1% to 1.5% of total capital commitments during the investment period and of invested capital or net asset value of the applicable fund after the investment period has ended. Management fees are typically paid to the general partners on a quarterly basis, at the beginning of the quarter in arrears, and are prorated for changes in capital commitments throughout the investment period and invested capital after the investment period. The general partners of the Company's real estate funds are owned jointly by the Company and third parties. Accordingly, the management fees (in addition to incentive income and investment income) generated by these real estate funds are split between the Company and the other general partners. Pursuant to US GAAP, these fees and other income received by the general partners that are accounted for under the equity method of accounting and are reflected under net gains (losses) on securities, derivatives and other investments in the condensed consolidated statements of operations. |
• | HealthCare Royalty Partners Funds. During the investment period (as defined in the management agreement of the HealthCare Royalty Partners funds), management fees for the HealthCare Royalty Partners funds are generally charged at an annual rate of up to 2% of committed capital. After the investment period, management fees are generally charged at an annual rate of up to 2% of net asset value. Management fees for the HealthCare Royalty Partners funds are calculated on a quarterly basis. |
• | Ramius Trading Strategies. Management fees for Ramius Trading Strategies Managed Futures Fund, a mutual fund launched in September 2011, are 1.60% per annum (subject to an overall expense cap of 1.85%). Management fees and platform fees for the Company's private commodity trading advisory business are generally charged at an annual rate of up to 1.00%. Management and platform fees are generally calculated monthly based on assets under management at the end of each month. |
• | Underwriting fees. The Company earns underwriting revenues in securities offerings in which the Company acts as an underwriter, such as initial public offerings, follow-on equity offerings, debt offerings, and convertible security offerings. Underwriting revenues include management fees, selling concessions and underwriting fees. Fee revenue relating to underwriting commitments is recorded when all significant items relating to the underwriting process have been completed and the amount of the underwriting revenue has been determined. This generally is the point at which all of the following have occurred: (i) the issuer's registration statement has become effective with the SEC, or the other offering documents are finalized; (ii) the Company has made a firm commitment for the purchase of securities from the issuer; and (iii) the Company has been informed of the number of securities that it has been allotted. |
• | Strategic/financial advisory fees. The Company's strategic advisory revenues include success fees earned in connection with advising companies, principally in mergers and acquisitions and liability management transactions. The Company also earns fees for related advisory work such as providing fairness opinions. The Company records strategic advisory revenues when the services for the transactions are completed under the terms of each assignment or engagement and collection is reasonably assured. Expenses associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded. |
• | Placement and sales agent fees. The Company earns agency placement fees and sales agent commissions in non-underwritten transactions such as private placements of debt and equity and debt securities, including, private investment in public equity transactions (“PIPEs”), and as sales agent in at-the-market offerings of equity securities. The Company records placement revenues when the services for the transactions are completed under the terms of each assignment or engagement and collection is reasonably assured. The Company records sales agent commissions on a trade date basis. Expenses associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded. |
• | Commissions. Commission revenue includes fees from executing client transactions. These fees are recognized on a trade date basis. The Company permits institutional customers to allocate a portion of their commissions to pay for research products and other services provided by third parties. The amounts allocated for those purposes are commonly referred to as soft dollar arrangements. Commissions on soft dollar brokerage are recorded net of the related expenditures on an accrual basis. Commission revenues also includes fees from making algorithms available to clients. |
• | Principal Transactions. Principal transaction, net revenue includes net trading gains and losses from the Company's market-making activities in fixed income and over-the-counter equity securities, listed options trading, trading of convertible securities, and trading gains and losses on inventory and other firm positions, which include warrants previously received as part of investment banking transactions. Commissions associated with these transactions are also included herein. In certain cases, the Company provides liquidity to clients buying or selling blocks of shares of listed stocks without previously identifying the other side of the trade at execution, which subjects the Company to market risk. These positions are typically held for a very short duration. |
• | Equity Research Fees. Equity research fees are paid to the Company for providing equity research. Revenue is recognized once an arrangement exists, access to research has been provided, the fee amount is fixed or determinable, and collection is reasonably assured. |
• | Compensation and Benefits. Compensation and benefits is comprised of salaries, benefits, discretionary cash bonuses and equity-based compensation. Annual incentive compensation is variable, and the amount paid is generally based on a combination of employees' performance, their contribution to their business segment, and the Company's performance. Generally, compensation and benefits comprise a significant portion of total expenses, with annual incentive compensation comprising a significant portion of total compensation and benefits expenses. |
• | Interest and Dividends. Interest and dividend expense relates primarily to trading activity with respect to the Company's investments. |
• | General, Administrative and Other. General, administrative and other expenses are primarily related to professional services, occupancy and equipment, business development expenses, communications, insurance and other miscellaneous expenses. These expenses may also include certain one-time charges and non-cash expenses. |
• | Consolidated Funds Expenses. Certain funds are consolidated by the Company pursuant to US GAAP. As such, the Company's condensed consolidated financial statements reflect the expenses of these consolidated entities and the portion attributable to other investors is allocated to a redeemable non-controlling interest. |
Platform | |||||||||||||||||||||
Hedge Funds (a) (b) | Alternative Solutions (c) | Ramius Trading Strategies (d) | Real Estate (a) | Healthcare Royalty Partners (e) (f) | Other (g) | Total | |||||||||||||||
(dollars in millions) | |||||||||||||||||||||
January 1, 2010 | 1,608 | 2,376 | — | 1,628 | 807 | 1,429 | 7,848 | ||||||||||||||
Net Subscriptions/(Redemptions) | (392 | ) | 323 | 78 | — | 234 | 800 | 1,043 | |||||||||||||
Performance (h) | 169 | 93 | 4 | (115 | ) | 151 | |||||||||||||||
January 1, 2011 | 1,385 | 2,792 | 82 | 1,628 | 1,041 | 2,114 | 9,042 | ||||||||||||||
Net Subscriptions/(Redemptions) | 493 | 56 | 194 | — | 432 | 125 | 1,300 | ||||||||||||||
Performance (h) | 39 | (98 | ) | (14 | ) | — | — | (4 | ) | (77 | ) | ||||||||||
January 1, 2012 | 1,917 | 2,750 | 262 | 1,628 | 1,473 | 2,235 | 10,265 | ||||||||||||||
Net Subscriptions/(Redemptions) | 59 | (370 | ) | (111 | ) | (95 | ) | — | (2,130 | ) | (2,647 | ) | |||||||||
Performance (h) | 373 | 85 | (5 | ) | — | — | — | 453 | |||||||||||||
January 1, 2013 | 2,349 | 2,465 | 146 | 1,533 | 1,473 | 105 | 8,071 | ||||||||||||||
Net Subscriptions/(Redemptions) | 244 | 607 | (38 | ) | 222 | — | (25 | ) | 1,010 | ||||||||||||
Performance (h) | 190 | (228 | ) | (2 | ) | — | — | — | (40 | ) | |||||||||||
July 1, 2013 | 2,783 | 2,844 | 106 | 1,755 | 1,473 | 80 | 9,041 |
Platform | |||||||||||||||||||||
Hedge Funds (a) (b) | Alternative Solutions (c) | Ramius Trading Strategies (d) | Real Estate (a) | Healthcare Royalty Partners (e) (f) | Other (g) | Total | |||||||||||||||
(dollars in millions) | |||||||||||||||||||||
April 1, 2013 | 2,565 | 3,022 | 119 | 1,661 | 1,473 | 91 | 8,931 | ||||||||||||||
Net Subscriptions/(Redemptions) | 163 | 80 | (9 | ) | 94 | — | (11 | ) | 317 | ||||||||||||
Performance (h) | 55 | (258 | ) | (4 | ) | — | — | — | (207 | ) | |||||||||||
July 1, 2013 | 2,783 | 2,844 | 106 | 1,755 | 1,473 | 80 | 9,041 |
(a) | The Company owns between 30% and 55% of the general partners or managing members of the real estate business, the activist business and the long/short credit business (as of 4/1/13) (the single strategy hedge funds). We do not possess unilateral control over any of these general partners or managing members. |
(b) | These amounts include the Company's invested capital of approximately $117.6 million, $118.2 million and $125.8 million as of July 1, 2013, January 1, 2013 and January 1, 2012, respectively. |
(c) | These amounts include the Company's invested capital of approximately $1.5 million, $2.5 million and $5.2 million as of July 1, 2013, January 1, 2013 and January 1, 2012, respectively. |
(d) | These amounts include Ramius Trading Strategies Managed Futures Fund and the Company's invested capital of approximately $2.4 million, $19.4 million and $22.3 million as of July 1, 2013, January 1, 2013 and January 1, 2012, respectively. RTS Global 3X was liquidated on March 31, 2013, therefore, the notional amount of the Company's investment in RTS Global 3X Fund LP is only included in the Company's assets under management as of January 1, 2013 and prior years. |
(e) | These amounts include the Company's invested capital of approximately $14.9 million, $16.0 million and $8.6 million as of July 1, 2013, January 1, 2013 and January 1, 2012, respectively. |
(f) | This amount reflects committed capital. |
(g) | The Company's cash management services business provided clients with investment guidelines for managing cash and established investment programs for managing their cash in separately managed accounts. Given the current focus of the Company's alternative investment management business and the areas where the Company believes it can achieve long term growth, as of November 1, 2012, the Company no longer offered cash management services and arranged for the transfer of the remaining assets under management related to such business to another asset manager. This transfer was completed in December 2012. The Company continues to provide mortgage advisory services where the Company manages collateralized debt obligations held by investors. |
(h) | Net performance is net of all management and incentive fees and includes the effect of any foreign exchange translation adjustments and leverage in certain funds. |
Strategy | Net Value | % of Stockholders' Equity | |||
(dollars in millions) | |||||
Trading | $ | 235.0 | 46% | ||
Merchant Banking | 110.1 | 22% | |||
Real Estate | 59.9 | 12% | |||
Total | 405.0 | 80% | |||
Stockholders' Equity | $ | 506.1 | 100% |
Condensed Consolidated Statements of Operations | ||||||||||||||
(unaudited) | ||||||||||||||
Three Months Ended June 30, | Period to Period | |||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Revenues | ||||||||||||||
Investment banking | $ | 25,571 | $ | 16,254 | $ | 9,317 | 57 | % | ||||||
Brokerage | 31,521 | 24,568 | 6,953 | 28 | % | |||||||||
Management fees | 9,698 | 9,932 | (234 | ) | (2 | )% | ||||||||
Incentive income | 1,954 | 580 | 1,374 | 237 | % | |||||||||
Interest and dividends | 10,521 | 5,868 | 4,653 | 79 | % | |||||||||
Reimbursement from affiliates | 1,214 | 1,381 | (167 | ) | (12 | )% | ||||||||
Other revenues | 485 | 831 | (346 | ) | (42 | )% | ||||||||
Consolidated Funds revenues | 243 | 56 | 187 | 334 | % | |||||||||
Total revenues | 81,207 | 59,470 | 21,737 | 37 | % | |||||||||
Expenses | ||||||||||||||
Employee compensation and benefits | 47,507 | 43,097 | 4,410 | 10 | % | |||||||||
Interest and dividends | 7,240 | 3,207 | 4,033 | 126 | % | |||||||||
General, administrative and other expenses | 31,380 | 30,486 | 894 | 3 | % | |||||||||
Consolidated Funds expenses | 485 | 635 | (150 | ) | (24 | )% | ||||||||
Total expenses | 86,612 | 77,425 | 9,187 | 12 | % | |||||||||
Other income (loss) | ||||||||||||||
Net gain (loss) on securities, derivatives and other investments | 4,994 | 9,787 | (4,793 | ) | (49 | )% | ||||||||
Consolidated Funds net gains (losses) | 3,917 | (2,021 | ) | 5,938 | (294 | )% | ||||||||
Total other income (loss) | 8,911 | 7,766 | 1,145 | 15 | % | |||||||||
Income (loss) before income taxes | 3,506 | (10,189 | ) | 13,695 | (134 | )% | ||||||||
Income taxes expense (benefit) | 158 | 191 | (33 | ) | (17 | )% | ||||||||
Net income (loss) | 3,348 | (10,380 | ) | 13,728 | (132 | )% | ||||||||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries | 2,255 | (2,434 | ) | 4,689 | (193 | )% | ||||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | $ | 1,093 | $ | (7,946 | ) | $ | 9,039 | (114 | )% |
Condensed Consolidated Statements of Operations | ||||||||||||||
(unaudited) | ||||||||||||||
Six Months Ended June 30, | Period to Period | |||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Revenues | ||||||||||||||
Investment banking | $ | 42,737 | $ | 31,884 | $ | 10,853 | 34 | % | ||||||
Brokerage | 58,121 | 48,581 | 9,540 | 20 | % | |||||||||
Management fees | 19,191 | 19,649 | (458 | ) | (2 | )% | ||||||||
Incentive income | 4,565 | 1,271 | 3,294 | 259 | % | |||||||||
Interest and dividends | 19,842 | 11,240 | 8,602 | 77 | % | |||||||||
Reimbursement from affiliates | 2,699 | 2,426 | 273 | 11 | % | |||||||||
Other revenues | 963 | 1,698 | (735 | ) | (43 | )% | ||||||||
Consolidated Funds revenues | 330 | 200 | 130 | 65 | % | |||||||||
Total revenues | 148,448 | 116,949 | 31,499 | 27 | % | |||||||||
Expenses | ||||||||||||||
Employee compensation and benefits | 91,730 | 89,780 | 1,950 | 2 | % | |||||||||
Interest and dividends | 13,658 | 4,931 | 8,727 | 177 | % | |||||||||
General, administrative and other expenses | 63,417 | 58,444 | 4,973 | 9 | % | |||||||||
Consolidated Funds expenses | 919 | 1,009 | (90 | ) | (9 | )% | ||||||||
Total expenses | 169,724 | 154,164 | 15,560 | 10 | % | |||||||||
Other income (loss) | ||||||||||||||
Net gain (loss) on securities, derivatives and other investments | 16,801 | 29,458 | (12,657 | ) | (43 | )% | ||||||||
Consolidated Funds net gains (losses) | 9,076 | 3,946 | 5,130 | 130 | % | |||||||||
Total other income (loss) | 25,877 | 33,404 | (7,527 | ) | (23 | )% | ||||||||
Income (loss) before income taxes | 4,601 | (3,811 | ) | 8,412 | (221 | )% | ||||||||
Income taxes expense (benefit) | 334 | 333 | 1 | — | % | |||||||||
Net income (loss) | 4,267 | (4,144 | ) | 8,411 | (203 | )% | ||||||||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries | 5,750 | (193 | ) | 5,943 | (3,079 | )% | ||||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | $ | (1,483 | ) | $ | (3,951 | ) | $ | 2,468 | (62 | )% |
Economic Income (Loss) | ||||||||||||||||||||||||||||||
Three Month Ended June 30, | ||||||||||||||||||||||||||||||
2013 | 2012 | Total Period-to-Period | ||||||||||||||||||||||||||||
Alternative Investment | Total 2013 | Alternative Investment | Total 2012 | |||||||||||||||||||||||||||
Broker-Dealer (a) | Broker-Dealer (a) | $ Change | % Change | |||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||
Economic Income Revenues | ||||||||||||||||||||||||||||||
Investment banking | $ | — | $ | 25,571 | $ | 25,571 | $ | — | $ | 16,254 | $ | 16,254 | $ | 9,317 | 57 | % | ||||||||||||||
Brokerage | — | 33,300 | 33,300 | — | 24,568 | 24,568 | 8,732 | 36 | % | |||||||||||||||||||||
Management fees | 14,606 | — | 14,606 | 14,586 | — | 14,586 | 20 | — | % | |||||||||||||||||||||
Incentive income (loss) | 3,765 | — | 3,765 | 2,583 | — | 2,583 | 1,182 | 46 | % | |||||||||||||||||||||
Investment income (loss) | 3,834 | (271 | ) | 3,563 | 6,694 | 1,592 | 8,286 | (4,723 | ) | (57 | )% | |||||||||||||||||||
Other revenues | 114 | 164 | 278 | 216 | (287 | ) | (71 | ) | 349 | (492 | )% | |||||||||||||||||||
Total economic income revenues | 22,319 | 58,764 | 81,083 | 24,079 | 42,127 | 66,206 | 14,877 | 22 | % | |||||||||||||||||||||
Economic Income Expenses | ||||||||||||||||||||||||||||||
Compensation and benefits | 10,411 | 37,303 | 47,714 | 13,500 | 28,145 | 41,645 | 6,069 | 15 | % | |||||||||||||||||||||
Non-compensation expenses—Fixed | 8,521 | 15,334 | 23,855 | 8,572 | 15,976 | 24,548 | (693 | ) | (3 | )% | ||||||||||||||||||||
Non-compensation expenses—Variable | 1,139 | 7,423 | 8,562 | 1,138 | 6,000 | 7,138 | 1,424 | 20 | % | |||||||||||||||||||||
Reimbursement from affiliates | (1,411 | ) | — | (1,411 | ) | (1,435 | ) | — | (1,435 | ) | 24 | (2 | )% | |||||||||||||||||
Total economic income expenses | 18,660 | 60,060 | 78,720 | 21,775 | 50,121 | 71,896 | 6,824 | 9 | % | |||||||||||||||||||||
Net economic income (loss) (before non-controlling interest) | 3,659 | (1,296 | ) | 2,363 | 2,304 | (7,994 | ) | (5,690 | ) | 8,053 | (142 | )% | ||||||||||||||||||
Non-controlling interest | (893 | ) | — | (893 | ) | (300 | ) | — | (300 | ) | (593 | ) | 198 | % | ||||||||||||||||
Economic income (loss) | $ | 2,766 | $ | (1,296 | ) | $ | 1,470 | $ | 2,004 | $ | (7,994 | ) | $ | (5,990 | ) | $ | 7,460 | (125 | )% |
Three Months Ended June 30, | Period-to-Period | |||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Non-compensation expenses—fixed: | ||||||||||||||
Interest expense | $ | 73 | $ | 59 | $ | 14 | 24 | % | ||||||
Professional, advisory and other fees | 2,341 | 3,119 | (778 | ) | (25 | )% | ||||||||
Occupancy and equipment | 6,238 | 5,220 | 1,018 | 20 | % | |||||||||
Depreciation and amortization | 2,601 | 2,361 | 240 | 10 | % | |||||||||
Service fees | 2,678 | 3,154 | (476 | ) | (15 | )% | ||||||||
Other | 9,924 | 10,635 | (711 | ) | (7 | )% | ||||||||
Total | $ | 23,855 | $ | 24,548 | $ | (693 | ) | (3 | )% |
Three Months Ended June 30, | Period-to-Period | |||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Non-compensation expenses—Variable: | ||||||||||||||
Floor brokerage and trade execution | $ | 3,649 | $ | 2,906 | $ | 743 | 26 | % | ||||||
Expenses related to Luxembourg reinsurance companies | 516 | 735 | (219 | ) | (30 | )% | ||||||||
Marketing and business development | 4,397 | 3,497 | 900 | 26 | % | |||||||||
Total | $ | 8,562 | $ | 7,138 | $ | 1,424 | 20 | % |
Economic Income (Loss) | ||||||||||||||||||||||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||||||||||
2013 | 2012 | Total Period-to-Period | ||||||||||||||||||||||||||||
Alternative Investment | Total 2013 | Alternative Investment | Total 2012 | |||||||||||||||||||||||||||
Broker-Dealer (a) | Broker-Dealer (a) | $ Change | % Change | |||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||
Economic Income Revenues | ||||||||||||||||||||||||||||||
Investment banking | $ | — | $ | 42,737 | $ | 42,737 | $ | — | $ | 31,884 | $ | 31,884 | $ | 10,853 | 34 | % | ||||||||||||||
Brokerage | — | 61,317 | 61,317 | — | 48,581 | 48,581 | 12,736 | 26 | % | |||||||||||||||||||||
Management fees | 28,750 | — | 28,750 | 28,606 | — | 28,606 | 144 | 1 | % | |||||||||||||||||||||
Incentive income (loss) | 8,892 | — | 8,892 | 6,605 | — | 6,605 | 2,287 | 35 | % | |||||||||||||||||||||
Investment income (loss) | 12,138 | 2,298 | 14,436 | 23,496 | 5,895 | 29,391 | (14,955 | ) | (51 | )% | ||||||||||||||||||||
Other revenues | 226 | (389 | ) | (163 | ) | 340 | (27 | ) | 313 | (476 | ) | (152 | )% | |||||||||||||||||
Total economic income revenues | 50,006 | 105,963 | 155,969 | 59,047 | 86,333 | 145,380 | 10,589 | 7 | % | |||||||||||||||||||||
Economic Income Expenses | ||||||||||||||||||||||||||||||
Compensation and benefits | 24,324 | 67,911 | 92,235 | 30,946 | 56,608 | 87,554 | 4,681 | 5 | % | |||||||||||||||||||||
Non-compensation expenses—Fixed | 17,740 | 30,017 | 47,757 | 15,559 | 30,320 | 45,879 | 1,878 | 4 | % | |||||||||||||||||||||
Non-compensation expenses—Variable | 2,145 | 13,768 | 15,913 | 2,447 | 11,566 | 14,013 | 1,900 | 14 | % | |||||||||||||||||||||
Reimbursement from affiliates | (2,830 | ) | — | (2,830 | ) | (2,551 | ) | — | (2,551 | ) | (279 | ) | 11 | % | ||||||||||||||||
Total economic income expenses | 41,379 | 111,696 | 153,075 | 46,401 | 98,494 | 144,895 | 8,180 | 6 | % | |||||||||||||||||||||
Net economic income (loss) (before non-controlling interest) | 8,627 | (5,733 | ) | 2,894 | 12,646 | (12,161 | ) | 485 | 2,409 | 497 | % | |||||||||||||||||||
Non-controlling interest | (2,692 | ) | — | (2,692 | ) | (600 | ) | — | (600 | ) | (2,092 | ) | 349 | % | ||||||||||||||||
Economic income (loss) | $ | 5,935 | $ | (5,733 | ) | $ | 202 | $ | 12,046 | $ | (12,161 | ) | $ | (115 | ) | $ | 317 | (276 | )% |
Six Months Ended June 30, | Period-to-Period | |||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Non-compensation expenses—fixed: | ||||||||||||||
Interest expense | $ | 196 | $ | 147 | $ | 49 | 33 | % | ||||||
Professional, advisory and other fees | 5,413 | 6,410 | (997 | ) | (16 | )% | ||||||||
Occupancy and equipment | 11,593 | 9,753 | 1,840 | 19 | % | |||||||||
Depreciation and amortization | 5,142 | 4,515 | 627 | 14 | % | |||||||||
Service fees | 5,224 | 5,378 | (154 | ) | (3 | )% | ||||||||
Other | 20,189 | 19,676 | 513 | 3 | % | |||||||||
Total | $ | 47,757 | $ | 45,879 | $ | 1,878 | 4 | % |
Six Months Ended June 30, | Period-to-Period | |||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Non-compensation expenses—Variable: | ||||||||||||||
Floor brokerage and trade execution | $ | 6,623 | $ | 5,578 | $ | 1,045 | 19 | % | ||||||
Expenses related to Luxembourg reinsurance companies | 1,032 | 1,345 | (313 | ) | (23 | )% | ||||||||
Marketing and business development | 8,258 | 7,090 | 1,168 | 16 | % | |||||||||
Total | $ | 15,913 | $ | 14,013 | $ | 1,900 | 14 | % |
• | pay our operating expenses, primarily consisting of compensation and benefits and general and administrative expenses; and |
• | provide capital to facilitate the growth of our existing business. |
As of June 30, 2013 | |||
(dollars in thousands) | |||
Securities purchased under agreements to resell | |||
Agreements with Royal Bank of Canada bearing interest of 1.75% due on June 2015 to January 2016 | $ | 6,311 | |
$ | 6,311 |
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 |
Location | Amount | Maturity | ||||
(dollars in thousands) | ||||||
San Francisco | $ | 82 | May 12, 2014 | |||
New York | $ | 1,193 | September 3, 2013 | |||
New York | $ | 6,754 | December 12, 2013 | |||
New York | $ | 1,002 | February 22, 2014 | |||
New York | $ | 1,861 | March 19, 2014 |
i. | Portfolio funds—Portfolio funds (“Portfolio Funds”) include interests in funds and investment companies managed by the Company or its affiliates. The Company follows US GAAP regarding fair value measurements and disclosures relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). The guidance permits, as a practical expedient, an entity holding investments in certain entities that either are investment companies as defined by the AICPA Audit and Accounting Guide, Investment Companies, or have attributes similar to an investment company, and calculate net asset value per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment. |
ii. | Real estate investments—Real estate investments are valued at fair value. The fair value of real estate investments are estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Real estate investments without a public market are valued based on assumptions and valuation techniques used by the Company. Such valuation techniques may include discounted cash flow analysis, prevailing market capitalization rates or earnings multiples applied to earnings from the investment, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties, consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence, as well as independent external appraisals. In general, the Company considers several valuation techniques when measuring the fair value of a real estate investment. However, in certain circumstances, a single valuation technique may be appropriate. Real estate investments are reviewed on a quarterly basis by the Company for significant changes at the property level or a significant change in the overall market which would impact the value of the real estate investment resulting in unrealized appreciation or depreciation. |
• | Hedge Funds. Management fees for the Company's hedge funds are generally charged at an annual rate of up to 2% of assets under management. Management fees are generally calculated monthly based on assets under management at the end of each month before incentive income. |
• | Alternative Solutions. Management fees for the Alternative Solutions business are generally charged at an annual rate of up to 2% of assets under management. Management fees are generally calculated monthly based on assets under management at the end of each month before incentive income or based on assets under management at the beginning of the month. Management fees earned from the Alternative Solutions business are based and initially calculated on estimated net asset values and actual fees ultimately earned could be impacted to the extent of any changes in these estimates. |
• | Real Estate Funds. Management fees from the Company's real estate funds are generally charged by their general partners at an annual rate from 1% to 1.5% of total capital commitments during the investment period and of invested capital or net asset value of the applicable fund after the investment period has ended. Management fees are typically paid to the general partners on a quarterly basis, at the beginning of the quarter in arrears, and are prorated for changes in capital commitments throughout the investment period and invested capital after the investment period. The general |
• | HealthCare Royalty Partners (formerly Cowen HealthCare Royalty Partners) Funds. During the investment period (as defined in the management agreement of the HealthCare Royalty Partners funds), management fees for the HealthCare Royalty Partners funds are generally charged at an annual rate of up to 2% of committed capital. After the investment period, management fees are generally charged at an annual rate of up to 2% of net asset value. Management fees for the HealthCare Royalty Partners funds are calculated on a quarterly basis. |
• | Ramius Trading Strategies. Management fees for Ramius Trading Strategies Managed Futures Fund, a mutual fund launched in September 2011, are 1.60% per annum (subject to an overall expense cap of 1.85%). Management fees and platform fees for the Company's private commodity trading advisory business are generally charged at an annual rate of up to 1.00%. Management and platform fees are generally calculated monthly based on assets under management at the end of each month. |
• | Underwriting fees. The Company earns underwriting revenues in securities offerings in which the Company acts as an underwriter, such as initial public offerings, follow-on equity offerings, debt offerings, and convertible security offerings. Underwriting revenues include management fees, selling concessions and underwriting fees. Fee revenue relating to underwriting commitments is recorded when all significant items relating to the underwriting process have been completed and the amount of the underwriting revenue has been determined. This generally is the point at which all of the following have occurred: (i) the issuer's registration statement has become effective with the SEC, or the |
• | Strategic/financial advisory fees. The Company's strategic advisory revenues include success fees earned in connection with advising companies, principally in mergers and acquisitions and liability management transactions. The Company also earns fees for related advisory work such as providing fairness opinions. The Company records strategic advisory revenues when the services for the transactions are completed under the terms of each assignment or engagement and collection is reasonably assured. Expenses associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded. |
• | Placement and sales agent fees. The Company earns agency placement fees and sales agent commissions in non-underwritten transactions such as private placements of debt and equity and debt securities, including, private investment in public equity transactions (“PIPEs”), and as sales agent in at-the-market offerings of equity securities. The Company records placement revenues when the services for the transactions are completed under the terms of each assignment or engagement and collection is reasonably assured. The Company records sales agent commissions on a trade date basis. Expenses associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs | |||||||||||
Month 1 (April 1, 2013 – April 30, 2013) | |||||||||||||||
Common stock repurchases(1) | — | $ | — | — | — | (3 | ) | ||||||||
Employee transactions(2) | — | $ | — | — | — | ||||||||||
Total | |||||||||||||||
Month 2 (May 1, 2013 – May 31, 2013) | |||||||||||||||
Common stock repurchases(1) | — | $ | — | — | — | (3 | ) | ||||||||
Employee transactions(2) | 403,865 | $ | 2.80 | — | — | ||||||||||
Total | 403,865 | $ | 2.80 | ||||||||||||
Month 3 (June 1, 2013 – June 30, 2013) | |||||||||||||||
Common stock repurchases(1) | — | $ | — | — | — | (3 | ) | ||||||||
Employee transactions(2) | 479,449 | $ | 3.13 | — | — | ||||||||||
Total | 479,449 | $ | 3.13 | ||||||||||||
Total (April 1, 2013 – June 30, 2013) | |||||||||||||||
Common stock repurchases(1) | — | $ | — | — | — | (3 | ) | ||||||||
Employee transactions(2) | 883,314 | $ | 2.98 | — | — | ||||||||||
Total | 883,314 | 2.98 |
(1) | The Company's Board of Directors have authorized the repurchase, subject to market conditions, of up to $35.0 million of the Company's outstanding common stock. |
(2) | Represents shares of common stock withheld in satisfaction of tax withholding obligations upon the vesting of equity awards. |
(3) | Board approval of repurchases is based on dollar amount. The Company cannot estimate the number of shares that may yet be purchased. |
COWEN GROUP, INC. | |||||||
By: | /s/ PETER A. COHEN | ||||||
Name: | Peter A. Cohen | ||||||
Title: | Chief Executive Officer and President (principal executive officer) | ||||||
By: | /s/ STEPHEN A. LASOTA | ||||||
Name: | Stephen A. Lasota | ||||||
Date: | August 7, 2013 | Title: | Chief Financial Officer (principal financial officer and principal accounting officer) |
Exhibit No. | Description | |||
10.1 | Employment Agreement between Cowen Group, Inc. and John Holmes dated August 2, 2012 (filed herewith).* | |||
10.2 | Employment Agreement between Cowen Group, Inc. and Michael Singer dated December 5, 2012 (filed herewith).* | |||
31.1 | Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (filed herewith). | |||
31.2 | Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (filed herewith). | |||
32 | Certification of CEO and CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (furnished herewith). | |||
101.INS | XBRL INSTANCE DOCUMENT ** | |||
101.SCH | XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT ** | |||
101.CAL | XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT ** | |||
101.DEF | XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT ** | |||
101.LAB | XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT ** | |||
101.PRE | XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT ** |
* | Signifies management contract or compensatory plan or arrangement. |
** | Pursuant to Rule 406T of Regulation S-T, this information shall not be deemed filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections. |
Date: _____________, 2012 | (Signature) |
Title | Date | Identifying Number or Brief Description |
By: /s/ Peter A. Cohen Peter A. Cohen Chairman and Chief Executive Officer | By: /s/ Jane Gerhard Jane Gerhard Head of Human Resources |
1. | I have reviewed this Quarterly Report on Form 10-Q of Cowen Group, Inc: |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 7, 2013 | /s/ PETER A. COHEN | ||
Name: Peter A. Cohen Title: Chief Executive Officer and President (principal executive officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Cowen Group, Inc: |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 7, 2013 | /s/ STEPHEN A. LASOTA | ||
Name: Stephen A. Lasota Title: Chief Financial Officer (principal financial officer and principal accounting officer) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 7, 2013 | /s/ PETER A. COHEN | ||
Name: Peter A. Cohen Title: Chief Executive Officer and President (principal executive officer) | ||||
/s/ STEPHEN A. LASOTA | ||||
Name: Stephen A. Lasota Title: Chief Financial Officer (principal financial officer and principal accounting officer) |
Share-Based Compensation and Employee Ownership Plans
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Jun. 30, 2013
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation and Employee Ownership Plans | Share-Based Compensation and Employee Ownership Plans The Company issues share based compensation under the 2006 Equity and Incentive Plan, the 2007 Equity and Incentive Plan (both established prior to the November 2009 transaction between Ramius and Cowen) and the Cowen Group, Inc. 2010 Equity and Incentive Plan (collectively, the “Equity Plans”). The Equity Plans permit the grant of options, restricted shares, restricted stock units, stock appreciation rights and other equity based awards to the Company's employees, consultants and directors for up to 17,725,000 shares of common stock plus any approved additional shares in accordance with the Equity Plans. Stock options granted generally vest over two-to-five-year periods and expire seven years from the date of grant. Restricted shares and restricted share units issued may be immediately vested or may generally vest over a two-to-five-year period. Stock appreciation rights awards ("SAR's") vest and expire after 5 years from grant date. As of June 30, 2013, there were approximately 1.8 million shares available for future issuance under the Equity Plans. Under the 2010 Equity Plan, the Company awarded $27.7 million of deferred cash awards to its employees in February 2013 in addition to awards granted during 2012. These awards vest over a period of five years and accrue interest at 0.75% per year. As of June 30, 2013, the Company had unrecognized compensation expense related to these awards of $31.3 million. In addition to the Equity Plans, certain employees of the Company, in November 2009, were issued membership interests in RCG Holdings LLC (formerly Ramius LLC) ("RCG") by RCG, a related party of the Company (the “RCG Grants”). Substantially all of the assets owned by RCG consist of shares of common stock of the Company. Accordingly, upon withdrawal of capital from RCG, members receive either distributions in kind of shares of common stock of the Company, or the proceeds from the sale of shares of the Company's common stock attributable to their capital accounts. The RCG Grants are subject to a service condition and vest to each employee over a period of approximately three years. Any RCG Grants forfeited are redistributed to the remaining stakeholders in RCG, which includes both employees and non-employees. The RCG Grants represent awards to employees of the Company by a related party, as compensation for services provided to the Company. As such, the expense related to these grants is included in the compensation expense of the Company, with a corresponding credit to stockholders equity. The Company measures compensation cost for share based awards according to the equity method. In accordance with the expense recognition provisions of those standards, the Company amortizes unearned compensation associated with share based awards on a straight-line basis over the vesting period of the option or award. In relation to awards under the Equity Plans, the Company recognized expense of $4.7 million and $5.9 million for the three months ended June 30, 2013 and 2012, respectively, and $9.5 million and $10.4 million for the six months ended June 30, 2013 and 2012, respectively. The income tax effect recognized for the Equity Plans was a benefit of $3.7 million and $2.3 million for the three months ended June 30, 2013 and 2012, respectively, and $5.7 million and $4.6 million for the six months ended June 30, 2013 and 2012, respectively; however, these benefits were offset by a valuation allowance. In relation to awards under the RCG Grants, the Company recognized expense of $1.6 million and $3.1 million for the three and six months ended June 30, 2012, respectively. The income tax effect recognized for the RCG Grants was a benefit of $0.6 million and $1.2 million for the three and six months ended June 30, 2012; however, these benefits were offset by valuation allowances. Stock Options and Stock Appreciation Rights The Company values options and SAR's using the Black-Scholes option valuation model which requires the Company to make assumptions regarding the expected term, volatility, risk-free rate and dividend yield. The fair value of each award is estimated on the date of grant utilizing a Black-Scholes option valuation model that uses the following assumptions: Expected term. Expected term represents the period of time that awards granted are expected to be outstanding. The Company elected to use the "simplified" calculation method, as applicable to companies that lack extensive historical data. The mid-point between the vesting date and the contractual expiration date is used as the expected term under this method. Expected volatility. The Company bases its expected volatility on its own stock price history. Risk free rate. The risk-free rate for periods within the expected term of the award is based on the interest rate of a traded zero-coupon U.S. Treasury bond with a term equal to the awards' expected term on the date of grant. Dividend yield. The Company has not paid and does not expect to pay dividends in the foreseeable future. Accordingly, the assumed dividend yield is zero. The following table summarizes the Company's stock option activity for the six months ended June 30, 2013:
As of June 30, 2013, the unrecognized compensation expense related to the Company's grant of stock options was insignificant. The following table summarizes the Company's SAR's for the six months ended June 30, 2013:
As of June 30, 2013, the unrecognized compensation expense related to the Company's grant of SAR's was $0.3 million. Restricted Shares and Restricted Stock Units Granted to Employees Restricted shares and restricted stock units are referred to collectively as restricted stock. The following table summarizes the Company's restricted share and restricted stock unit activity for the six months ended June 30, 2013:
The fair value of restricted stock is determined based on the number of shares granted and the quoted price of the Company's common stock on the date of grant. As of June 30, 2013, there was $31.5 million of unrecognized compensation expense related to the Company's grant of nonvested restricted shares and restricted stock units to employees. Unrecognized compensation expense related to nonvested restricted shares and restricted stock units granted to employees is expected to be recognized over a weighted-average period of 2.04 years. Restricted Shares and Restricted Stock Units Granted to Non-employee Board Members There were 257,947 restricted stock units awarded, which were immediately vested and expensed, during the three and six months ended June 30, 2013. Vested awards of 112,320 were delivered during the three and six months ended June 30, 2013. As of June 30, 2013 there were 482,522 restricted stock units outstanding. |
Significant Accounting Policies
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||
Significant Accounting Policies | Significant Accounting Policies
These unaudited condensed consolidated financial statements and related notes have been prepared in accordance with US GAAP and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) related to interim financial statements. Results for interim periods should not be considered indicative of results for any other interim period or for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2012 and 2011 and for the years ended December 31, 2012, 2011, and 2010, included in the Form 10-K of Cowen Group as filed with the SEC on March 7, 2013. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are necessary for a fair presentation of the results for the interim periods. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by US GAAP. All material intercompany transactions and balances have been eliminated in consolidation. Certain fund entities that are consolidated in these condensed consolidated financial statements, as further discussed below, are not subject to these consolidation provisions with respect to their own investments pursuant to their specialized accounting. The Company serves as the managing member/general partner and/or investment manager to affiliated fund entities which it sponsors and manages. Funds in which the Company has a controlling financial interest are consolidated with the Company pursuant to US GAAP as described below. Consequently, the Company's condensed consolidated financial statements reflect the assets, liabilities, income and expenses of these funds on a gross basis. The ownership interests in these funds that are not owned by the Company are reflected as redeemable non-controlling interests in consolidated subsidiaries in the accompanying condensed consolidated financial statements. The management fees and incentive income earned by the Company from these funds are eliminated in consolidation.
The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting operating entity ("VOE") or a variable interest entity ("VIE") under US GAAP. Voting Operating Entities—VOEs are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders at risk have the obligation to absorb losses, the right to receive residual returns and the right to direct the activities of the entity that most significantly impact the entity's economic performance. VOEs are consolidated in accordance with US GAAP. Under US GAAP, the usual condition for a controlling financial interest in a VOE is ownership of a majority voting interest. Accordingly, the Company consolidates VOEs in which it owns a majority of the entity's voting shares or units. US GAAP also provides that a general partner of a limited partnership (or a managing member, in the case of a limited liability company) is presumed to control the partnership, and thus should consolidate it, unless a simple majority of the limited partners has the right to remove the general partner without cause or to terminate the partnership. In accordance with these standards, the Company presently consolidates eight entities deemed to be VOEs for which it acts as the general partner and investment manager. As of June 30, 2013 and December 31, 2012, the Company consolidates the following funds: Ramius Enterprise LP (“Enterprise LP”), Ramius Multi‑Strategy Master FOF LP (“Multi‑Strat Master FOF”), Ramius Vintage Multi‑Strategy Master FOF LP (“Vintage Master FOF”), Ramius Levered Multi‑Strategy FOF LP (“Levered FOF”), and (effective May 1, 2013) Ramius Merger Fund LLC (“Merger Fund”) (collectively the "Consolidated Funds"). RTS Global 3X was consolidated as of December 31, 2012 but was liquidated on March 31, 2013. The Company also consolidates three investment companies; RCG Linkem II LLC, formed to make an investment in a wireless broadband communication provider in Italy, and Ramius Co-Investment I LLC (formerly known as Cowen Bluebird LLC) and Ramius Co-Investment II LLC (formerly known as RCG Ultragenex Holdings LLC), which were both formed to make investments in biomedical companies that develop innovative gene therapies for severe genetic disorders. The Company determined that RCG Linkem II, LLC, Ramius Co-Investment I LLC and Ramius Co-Investment II LLC are VOE's due to its controlling equity interests held through the managing member and/or affiliates and control exercised by the managing member who is not subject to substantive removal rights. Variable Interest Entities—VIEs are entities that lack one or more of the characteristics of a VOE. In accordance with US GAAP, an enterprise must consolidate all VIEs of which it is the primary beneficiary. Under the US GAAP consolidation model for VIEs, an enterprise that (1) has the power to direct the activities of a VIE that most significantly impacts the VIE's economic performance, and (2) has an obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE, is considered to be the primary beneficiary of the VIE and thus is required to consolidate it. However, the FASB has deferred the application of the revised consolidation model for VIEs that meet the following conditions: (a) the entity has all the attributes of an investment company as defined under AICPA Audit and Accounting Guide, Investment Companies, or does not have all the attributes of an investment company but is an entity for which it is acceptable based on industry practice to apply measurement principles that are consistent with investment companies, (b) the reporting entity does not have explicit or implicit obligations to fund any losses of the entity that could potentially be significant to the entity, and (c) the entity is not a securitization entity, asset‑backed financing entity or an entity that was formerly considered a qualifying special‑purpose entity. The Company's involvement with its funds is such that all three of the above conditions are met for substantially all of the funds managed by the Company. Where the VIEs have qualified for the deferral, the analysis is based on previous consolidation rules. These rules require an analysis to (a) determine whether an entity in which the Company holds a variable interest is a variable interest entity and (b) whether the Company's involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests (e.g., management and performance related fees), would be expected to absorb a majority of the VIE's expected losses, receive a majority of the VIEs expected residual returns, or both. If these conditions are met, the Company is considered to be the primary beneficiary of the VIE and thus is required to consolidate it. The Company reconsiders whether it is the primary beneficiary of a VIE by performing a periodic qualitative and/or quantitative analysis of the VIE that includes a review of, among other things, its capital structure, contractual agreements between the Company and the VIE, the economic interests that create or absorb variability, related party relationships and the design of the VIE. As of June 30, 2013, and December 31, 2012, the Company does not consolidate any VIEs. As of June 30, 2013 and December 31, 2012, the Company holds a variable interest in Ramius Enterprise Master Fund Ltd (“Enterprise Master”) (the “Unconsolidated Master Fund”) through one of its Consolidated Funds, Enterprise LP. Investment companies, which account for their investments under the specialized industry accounting guidance for investment companies prescribed under US GAAP, are not subject to the consolidation provisions for their investments. Therefore, the Company has not consolidated the Unconsolidated Master Fund. In the ordinary course of business, the Company also sponsors various other entities that it has determined to be VIEs. These VIEs are primarily funds and real estate entities for which the Company serves as the general partner, managing member and/or investment manager with decision-making rights. The Company does not consolidate any of these funds or real estate entities that are VIEs as it has concluded that it is not the primary beneficiary in each instance. Fund investors are entitled to all of the economics of these VIEs with the exception of the management fee and incentive income, if any, earned by the Company. The Company's involvement with funds and real estate entities that are unconsolidated VIEs is limited to providing investment management services in exchange for management fees and incentive income. Although the Company may advance amounts and pay certain expenses on behalf of the funds and real estate entities that it considers to be VIEs, it does not provide, nor is it required to provide, any type of substantive financial support to these entities outside of regular investment management services. (See Note 5 for additional disclosures on VIEs) Equity Method Investments—For operating entities over which the Company exercises significant influence but which do not meet the requirements for consolidation as outlined above, the Company uses the equity method of accounting. The Company's investments in equity method investees are recorded in other investments in the condensed consolidated statements of financial condition. The Company's share of earnings or losses from equity method investees is included in net gains (losses) on securities, derivatives and other investments in the condensed consolidated statements of operations. The Company evaluates for impairment its equity method investments whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. The difference between the carrying value of the equity method investment and its estimated fair value is recognized as an impairment charge when the loss in value is deemed other than temporary. Other—If the Company does not consolidate an entity, apply the equity method of accounting or account for an investment under the cost method, the Company accounts for all securities which are bought and held principally for the purpose of selling them in the near term as trading securities in accordance with US GAAP, at fair value with unrealized gains (losses) resulting from changes in fair value reflected within net gains (losses) on securities, derivatives and other investments in the condensed consolidated statements of operations. Retention of Specialized Accounting—The Consolidated Funds are investment companies and apply specialized industry accounting for investment companies. The Company has retained this specialized accounting for these funds pursuant to US GAAP. The Company reports its investments on the condensed consolidated statements of financial condition at their estimated fair value, with unrealized gains (losses) resulting from changes in fair value reflected within net realized and unrealized gains (losses) on investments and other transactions. Accordingly, the accompanying condensed consolidated financial statements reflect different accounting policies for investments depending on whether or not they are held through a consolidated investment company. In addition, the Company's broker‑dealer subsidiaries, Cowen and Company, LLC (“Cowen and Company”), Cowen Capital LLC, ATM USA, LLC, Cowen Equity Finance LP and Cowen Securities, apply the specialized industry accounting for brokers and dealers in securities also prescribed under US GAAP. The Company also retains specialized accounting in consolidation.
The preparation of the accompanying condensed consolidated financial statements in conformity with US GAAP requires the management of the Company to make estimates and assumptions that affect the fair value of securities and other investments, the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the accompanying condensed consolidated financial statements, the accounting for goodwill and identifiable intangible assets and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.
US GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1 Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date; Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active; and Level 3 Fair value is determined based on pricing inputs that are unobservable and includes situations where there is little, if any, market activity for the asset or liability. The determination of fair value for assets and liabilities in this category requires significant management judgment or estimation. Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. The Company considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Company's perceived risk of that instrument. The Company and its operating subsidiaries act as the manager for the Consolidated Funds. Both the Company and the Consolidated Funds hold certain investments which are valued by the Company, acting as the investment manager. The fair value of these investments is generally estimated based on proprietary models developed by the Company, which include discounted cash flow analysis, public market comparables, and other techniques and may be based, at least in part, on independently sourced market information. The material estimates and assumptions used in these models include the timing and expected amount of cash flows, the appropriateness of discount rates used, and, in some cases, the ability to execute, timing of, and estimated proceeds from expected financings. Significant judgment and estimation goes into the selection of an appropriate valuation methodology as well as the assumptions used in these models, and the timing and actual values realized with respect to investments could be materially different from values derived based on the use of those estimates. The valuation methodologies applied impact the reported value of the Company's investments and the investments held by the Consolidated Funds in the condensed consolidated financial statements. Certain of the Company's investments are relatively illiquid or thinly traded and may not be immediately liquidated on demand if needed. Fair values assigned to these investments may differ significantly from the fair values that would have been used had a ready market for the investments existed and such differences could be material. The Company primarily uses the “market approach” to value its financial instruments measured at fair value. In determining an instrument's level within the hierarchy, the Company categorizes the Company's financial instruments into three categories: securities, derivative contracts and other investments. To the extent applicable, each of these categories can further be divided between those held long or sold short. The Company has the option to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The election is made on an instrument by instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument. The Company has elected the fair value option for its investments through Ramius Co-Investment I LLC (formerly known as Cowen Bluebird LLC), Ramius Co-Investment II LLC (formerly known as RCG Ultragenex Holdings LLC) and certain investments it holds though its operating companies. This option has been elected because the Company believes that it is consistent with the manner in which the business is managed as well as the way that financial instruments in other parts of the business are recorded. Securities—Securities whose values are based on quoted market prices in active markets for identical assets, and are therefore classified in level 1 of the fair value hierarchy, include active listed equities, certain U.S. government and sovereign obligations, ETF's and certain money market securities. The Company does not adjust the quoted price for such instruments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price. Certain positions for which trading activity may not be readily visible, consisting primarily of convertible debt, corporate debt and loans, are stated at fair value and classified within level 2. The estimated fair values assigned by management are determined in good faith and are based on available information considering, trading activity, broker quotes, quotations provided by published pricing services, counterparties and other market participants, and pricing models using quoted inputs, and do not necessarily represent the amounts which might ultimately be realized. As level 2 investments include positions that are not always traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability. Derivative contracts—Derivative contracts can be exchange‑traded or privately negotiated over-the-counter (“OTC”). Exchange‑traded derivatives, such as futures contracts and exchange traded option contracts, are typically classified within level 1 or level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. OTC derivatives, such as generic forwards, swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within level 2. Futures and currency forwards are included within other assets on the accompanying condensed consolidated statements of financial condition and all other derivatives are included within securities owned, at fair value on the accompanying condensed consolidated statements of financial condition. Other investments—Other investments consist primarily of portfolio funds, real estate investments and equity method investments, which are valued as follows:
The Company categorizes its investments in Portfolio Funds within the fair value hierarchy dependent on its ability to redeem the investment. If the Company has the ability to redeem its investment at NAV at the measurement date or within the near term, the Portfolio Fund is categorized as a level 2 investment within the fair value hierarchy. If the Company does not know when it will have the ability to redeem its investment or cannot do so in the near term, the Portfolio Fund is categorized as a level 3 investment within the fair value hierarchy. See Notes 5 and 6 for further details of the Company's investments in Portfolio Funds.
The Company also reflects its real estate equity investments net of investment level financing. Valuation adjustments attributable to underlying financing arrangements are considered in the real estate equity valuation based on amounts at which the financing liabilities could be transferred to market participants at the measurement date. Real estate and capital markets are cyclical in nature. Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates and interest and inflation rates. In addition, the Company invests in real estate and real estate related investments for which no liquid market exists. The market prices for such investments may be volatile and may not be readily ascertainable. Amounts ultimately realized by the Company from investments sold may differ from the fair values presented, and the differences could be material. The Company's real estate investments are typically categorized as a level 3 investment within the fair value hierarchy as management uses significant unobservable inputs in determining their estimated fair value. See Notes 5 and 6 for further information regarding the Company's investments, including equity method investments, and fair value measurements.
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.
The Company uses securities purchased under agreements to resell and securities sold under agreements to repurchase (“Repurchase Agreements”) as part of its liquidity management activities and to support its trading and risk management activities. In particular, securities purchased and sold under Repurchase Agreements are used for short-term liquidity purposes. As of June 30, 2013 and December 31, 2012, Repurchase Agreements are secured predominantly by liquid corporate credit and/or government issued securities. The use of Repurchase Agreements will fluctuate with the Company's need to fund short term credit or obtain competitive short term credit financing. The Company's securities purchased under agreements to resell and securities sold under agreements to repurchase were transacted pursuant to agreements with one counterparty as of June 30, 2013 and multiple counterparties as of December 31, 2012. Collateral is valued daily and the Company and its counterparties may adjust the collateral or require additional collateral to be deposited when appropriate. Collateral held by counterparties may be sold or re-hypothecated by such counterparties, subject to certain limitations sometimes imposed by the Company and in accordance with the master netting agreements in place with the counter party. Collateralized Repurchase Agreements may result in credit exposure in the event the counterparties to the transactions are unable to fulfill their contractual obligations. The Company minimizes the credit risk associated with this activity by monitoring credit exposure and collateral values, and by requiring additional collateral to be promptly deposited with or returned to the Company when deemed necessary. g. Deferred rent Deferred rent primarily consists of step rent, allowances from landlords and valuing the Company's lease properties in accordance with US GAAP. Step rent represents the difference between actual operating lease payments due and straight-line rent expense, which is recorded by the Company over the term of the lease, including the build-out period. This amount is recorded as deferred rent in the early years of the lease, when cash payments are generally lower than straight-line rent expense, and reduced in the later years of the lease when payments begin to exceed the straight-line expense. Landlord allowances are generally comprised of amounts received and/or promised to the Company by landlords and may be received in the form of cash or free rent. These allowances are part of the negotiated terms of the lease. The Company records receivable from the landlord and a deferred rent liability when the allowances are earned. This deferred rent is amortized into income (through lower rent expense) over the term (including the pre-opening build-out period) of the applicable lease, and the receivable is reduced as amounts are received from the landlord. Liabilities resulting from valuing the Company's leased properties acquired through business combinations are quantified by comparing the current fair value of the leased space to the current rental payments on the date of acquisition. Deferred rent, included in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated statements of financial condition, as of June 30, 2013 and December 31, 2012 is $17.1 million and $13.8 million, respectively. h. New accounting pronouncements Recently issued accounting pronouncements In July 2013, the FASB issued guidance which was directed to eliminate the disparity in practice for the financial statement presentation of an unrecognized tax benefit when a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward exist. The guidance requires an entity to present the unrecognized tax benefit as a reduction to deferred tax asset for a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward with certain exceptions. The guidance is effective prospectively for reporting periods beginning after December 15, 2013 for all unrecognized tax benefits that exist at the effective date. Early adoption and retrospective application is also permitted. The Company is currently evaluating the impact of this guidance on the Company's financial condition and results of operations. In June 2013, the FASB issued guidance which amended the scope, measurement and disclosure requirements for Financial Services - Investment Companies. The guidance among other things changed the definition and criteria used for the investment company assessment. The guidance also require investment companies to measure non-controlling ownership interest in other investment companies at fair value rather than using equity method of accounting and requires certain additional disclosures. The guidance is effective for reporting periods beginning after December 15, 2013. The Company is currently evaluating the impact of this guidance on the Company's financial condition and results of operations. In April 2013, the FASB issued guidance which improved and clarified the requirements as to when an entity should apply the liquidation basis of accounting and provides principles for the recognition and measurement of assets and liabilities. The guidance requires an entity to prepare its financial statements using liquidation basis of accounting when the liquidation is imminent and to present relevant information about entity's resources by measuring and presenting assets and liabilities at the amount of expected cash proceeds and / or settlement amounts. The guidance is effective prospectively for reporting periods beginning after December 15, 2013. The Company is currently evaluating the impact of this guidance on the Company's financial condition and the results of operations and its applicability on certain of its affiliated entities. |
Segment Reporting
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Jun. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting The Company conducts its operations through two segments: the alternative investment segment and the broker‑dealer segment. These activities are conducted primarily in the United States and substantially all of its revenues are generated domestically. The performance measure for these segments is Economic Income (Loss), which management uses to evaluate the financial performance of and make operating decisions for the segments including determining appropriate compensation levels. In general, Economic Income (Loss) is a pre-tax measure that (i) eliminates the impact of consolidation for consolidated funds, (ii) excludes equity award expense related to the November 2009 Ramius/Cowen transaction, and (iii) excludes certain other acquisition-related and/or reorganization expenses (See Note 2). In addition, Economic Income (Loss) revenues include investment income that represents the income the Company has earned in investing its own capital, including realized and unrealized gains and losses, interest and dividends, net of associated investment related expenses. For US GAAP purposes, these items are included in each of their respective line items. Economic Income (Loss) revenues also include management fees, incentive income and investment income earned through the Company's investment as a general partner in certain real estate entities and the Company's investment in the Value and Opportunity business. For US GAAP purposes, all of these items are recorded in other income (loss). In addition, Economic Income (Loss) expenses are reduced by reimbursement from affiliates, which for US GAAP purposes is presented gross as part of revenue. As further stated below, one major difference between Economic Income (Loss) and US GAAP net income (loss) is that Economic Income (Loss) presents the segments' results of operations without the impact resulting from the full consolidation of any of the Consolidated Funds. Consolidation of these funds results in including in income the pro rata share of the income or loss attributable to other owners of such entities which is reflected in net income (loss) attributable to redeemable non-controlling interest in consolidated subsidiaries in the accompanying condensed consolidated statements of operations. This pro rata share has no effect on the overall financial performance for the alternative investment segment, as ultimately, this income or loss is not income or loss for the alternative investment segment itself. Included in Economic Income (Loss) is the actual pro rata share of the income or loss attributable to the Company as an investor in such entities, which is relevant in management making operating decisions and evaluating financial performance. The following tables set forth operating results for the Company's alternative investment and broker dealer segments and related adjustments necessary to reconcile the Company's Economic Income (Loss) measure to arrive at the Company's consolidated US GAAP net income (loss):
(1) For the three months ended June 30, 2013, the Company has reflected $0.3 million of investment income and related compensation expense of $0.1 million within the broker-dealer segment in proportion to its capital.
(1) For the three months ended June 30, 2012, the Company has reflected $1.7 million of investment income and related compensation expense of $0.6 million within the broker-dealer segment in proportion to its capital.
(1) For the six months ended June 30, 2013, the Company has reflected $2.6 million of investment income and related compensation expense of $0.9 million within the broker-dealer segment in proportion to its capital.
(1) For the six months ended June 30, 2012, the Company has reflected $5.9 million of investment income and related compensation expense of $1.9 million within the broker-dealer segment in proportion to its capital. The following is a summary of the adjustments made to US GAAP net income (loss) for the segment to arrive at Economic Income (Loss): Funds Consolidation: The impacts of consolidation and the related elimination entries of the Consolidated Funds are not included in Economic Income (Loss). Adjustments to reconcile to US GAAP net income (loss) include elimination of incentive income and management fees earned from the Consolidated Funds and addition of fund expenses excluding management fees paid, fund revenues and investment income (loss). Other Adjustments: (a) Economic Income (Loss) recognizes revenues (i) net of distribution fees paid to agents and (ii) our proportionate share of management and incentive fees of certain real estate operating entities and the activist business (2012 and 2011 only). (b) Economic Income (Loss) excludes income taxes as management does not consider this item when evaluating the performance of the segment. Also, reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of revenues under US GAAP. (c) Economic Income (Loss) recognizes Company income from proprietary trading net of related expenses. (d) Economic Income (Loss) recognizes the Company's proportionate share of expenses for certain real estate and other operating entities for which the investments are recorded under the equity method of accounting for investments. (e) Economic Income (Loss) recognizes stock borrow/loan activity and other brokerage dividends as brokerage revenue. For the three and six months ended June 30, 2013 and 2012, there was no one fund or other customer which represented more than 10% of the Company's total revenues. Primarily all of the revenues earned by the alternative investment segment were from related parties for the three and six months ended June 30, 2013 and 2012. There were no revenues earned from related parties by the broker dealer segment in the three and six months ended June 30, 2013 and 2012. |
Receivables from and Payable to Brokers (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Brokers and Dealers [Abstract] | ||
Receivable from brokers | $ 25,899 | $ 71,306 |
Payable to brokers | $ 142,312 | $ 188,788 |
Defined Benefit Plans
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Jun. 30, 2013
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans | Defined Benefit Plans The amounts contained in the following table relate to the Company's defined benefit plans for the three and six months ended June 30, 2013 and 2012:
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Investments of Operating Entities and Consolidated Funds - Lehman Claims (Details) (USD $)
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1 Months Ended | |||||||||||||||||||||||||
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Jun. 30, 2013
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Dec. 31, 2012
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Jun. 30, 2013
Operating Entities
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Dec. 31, 2012
Operating Entities
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Jun. 30, 2013
Operating Entities
Lehman Claim
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Dec. 31, 2012
Operating Entities
Lehman Claim
|
Nov. 30, 2012
Operating Entities
Lehman Claim
|
Nov. 02, 2012
Operating Entities
Lehman Claim
|
Sep. 15, 2008
Operating Entities
Lehman Claim
|
Jun. 30, 2013
Consolidated Funds
|
Dec. 31, 2012
Consolidated Funds
|
Jun. 30, 2013
Consolidated Funds
Lehman Claim
|
Dec. 31, 2012
Consolidated Funds
Lehman Claim
|
Feb. 29, 2012
Enterprise Master
Lehman Claim
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Dec. 31, 2011
Enterprise Master
Lehman Claim
|
Jul. 31, 2010
Enterprise Master
Lehman Claim
|
Jun. 30, 2010
Enterprise Master
Lehman Claim
|
Jun. 30, 2013
Enterprise Master
Lehman Claim
|
Feb. 28, 2013
Enterprise Master
Lehman Claim
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Nov. 30, 2012
Enterprise Master
Lehman Claim
|
Nov. 02, 2012
Enterprise Master
Lehman Claim
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Sep. 15, 2008
Enterprise Master
Lehman Claim
|
Jun. 30, 2013
Enterprise Master
Trust Assets
|
Jun. 30, 2013
Enterprise Master
Foreign Denominated Assets
|
Jun. 30, 2013
Enterprise Master
Cash
|
Jun. 30, 2013
Enterprise LP
Lehman Claim
|
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Investment Holdings [Line Items] | ||||||||||||||||||||||||||
Initial value | $ 1,000,000 | $ 11,700,000 | $ 24,300,000 | $ 4,900,000 | ||||||||||||||||||||||
Claim settlement receivable | 900,000 | 1,300,000 | ||||||||||||||||||||||||
Percent of client's Best Claim | 97.00% | |||||||||||||||||||||||||
Distribution percent withheld for tax | 30.00% | |||||||||||||||||||||||||
Value of Best Claim | 16,000,000 | |||||||||||||||||||||||||
Dividend percent received | 43.30% | 25.20% | 25.20% | |||||||||||||||||||||||
Dividend amount received | 400,000 | 200,000 | 300,000 | |||||||||||||||||||||||
Other Investments, Claim Settlement Sold | 1,300,000 | |||||||||||||||||||||||||
Estimated recoverable percent | 99.00% | |||||||||||||||||||||||||
Assets returned | 2,400,000 | 9,500,000 | ||||||||||||||||||||||||
Proceeds from sale of returned assets | 10,700,000 | |||||||||||||||||||||||||
Distributions of proceeds from returned assets | 2,900,000 | |||||||||||||||||||||||||
Net Equity Claim | 12,400,000 | |||||||||||||||||||||||||
Other investments | 84,732,000 | 84,930,000 | 84,732,000 | 84,930,000 | 278,000 | 706,000 | 193,282,000 | 204,205,000 | 15,434,000 | 14,124,000 | 4,900,000 | 15,400,000 | ||||||||||||||
Other Investments, claim to trust assets held by LBIE through Lehman Brothers | 10,600,000 | |||||||||||||||||||||||||
Distributions of client's Best Claim | 90.00% | |||||||||||||||||||||||||
Other Investments, initial claim current value | 19,300,000 | |||||||||||||||||||||||||
Claim Resolution Agreement fee | 1.00% | 1.00% | ||||||||||||||||||||||||
Other Investments, not within control of LBIE | $ 4,600,000 | |||||||||||||||||||||||||
Recoverable claims assigned to variable interest entities | 100.00% |
Goodwill Schedule of Goodwill by Segment (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Goodwill [Line Items] | ||
Goodwill | $ 36,207 | $ 28,545 |
Dahlman Rose & Company, LLC
|
||
Goodwill [Line Items] | ||
Goodwill | $ 7,700 |
Earnings Per Share (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share, Basic and Diluted | The computation of earnings per share is as follows:
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Guarantees and Off-Balance Sheet Arrangements
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
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Guarantees [Abstract] | |
Guarantees and Off-Balance Sheet Arrangements | Guarantees and Off-Balance Sheet Arrangements Guarantees US GAAP requires the Company to disclose information about its obligations under certain guarantee arrangements. Those standards define guarantees as contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying security (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. Those standards also define guarantees as contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement as well as indirect guarantees of the indebtedness of others. In the normal course of its operations, the Company enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company expects the risk of loss to be remote. The Company indemnifies and guarantees certain service providers, such as clearing and custody agents, trustees and administrators, against specified potential losses in connection with their acting as an agent of, or providing services to, the Company or its affiliates. The Company also indemnifies some clients against potential losses incurred in the event specified third-party service providers, including sub-custodians and third-party brokers, improperly execute transactions. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make significant payments under these arrangements and has not recorded any contingent liability in the condensed consolidated financial statements for these indemnifications. The Company is a member of various securities exchanges. Under the standard membership agreements, members are required to guarantee the performance of other members and, accordingly, if another member becomes unable to satisfy its obligations to the exchange, all other members would be required to meet the shortfall. The Company's liability under these arrangements is not quantifiable and could exceed the cash and securities it has posted as collateral. However, management believes that the potential for the Company to be required to make payments under these arrangements is remote. Accordingly, no contingent liability is recorded in the accompanying condensed consolidated statements of financial condition for these arrangements. The Company also provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the breach of those representations and warranties. The Company may also provide standard indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due either to a change in or adverse application of certain tax laws. These indemnifications generally are standard contractual terms and are entered into in the normal course of business. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the accompanying condensed consolidated financial statements for these indemnifications. Through the Company's securities lending program (see Note 5(a)), the Company can borrow and lend customers' securities, via custodial and non-custodial arrangements, to third parties. As part of this program, the Company provides a guarantee in an aggregate amount of $150 million to counterparties of the securities lending agreements, which protects the lender against the failure of the third-party borrower to return the lent securities in the event the Company did not obtain sufficient collateral. To minimize its liability under these indemnification agreements, the Company obtains cash or other highly liquid collateral with a market value exceeding 100% of the value of the securities on loan from the borrower. Collateral is marked to market daily to assure that collateralization is adequate. Additional collateral is called from the borrower if a shortfall exists, or collateral may be released to the borrower in the event of overcollateralization. If a borrower defaults, the Company would use the collateral held to purchase replacement securities in the market or to credit the lending customer with the cash equivalent thereof. In conjunction with the acquisition of Cowen Securities (See Note 2) the Company has agreed to guarantee loans which were issued to employees of Cowen Securities by a third party bank prior to the acquisition. The value of these loans at June 30, 2013 was $2.7 million. Off-Balance Sheet Arrangements The Company has no material off-balance sheet arrangements as of June 30, 2013 and December 31, 2012. However, through indemnification provisions in our clearing agreement, customer activities may expose us to off-balance-sheet credit risk. Pursuant to the clearing agreement, the Company is required to reimburse our clearing broker, without limit, for any losses incurred due to a counterparty's failure to satisfy its contractual obligations. However, these transactions are collateralized by the underlying security, thereby reducing the associated risk to changes in the market value of the security through the settlement date. In addition, during the normal course of business, the Company has exposure to a number of risks including market risk, currency risk, credit risk, operational risk, liquidity risk and legal risk. As part of the Company's risk management process, these risks are monitored on a regular basis throughout the course of the year. |
Related Party Transactions
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6 Months Ended |
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Jun. 30, 2013
|
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Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company acts as managing member, general partner and/or investment manager to the Ramius managed funds, HealthCare Royalty Management, LLC, and the HealthCare Royalty Partners funds, and certain managed accounts. Management fees and incentive income are primarily earned from affiliated entities. Fees receivable primarily represents the management fees and incentive income owed to the Company from these related funds and certain affiliated managed accounts. As of June 30, 2013 and December 31, 2012, $12.6 million and $13.6 million, respectively, included in fees receivable are earned from related parties. The Company may, at its discretion, reimburse certain fees charged to the funds that it manages to avoid duplication of fees when such funds have an underlying investment in another affiliated investment fund. For the three months ended June 30, 2013 and 2012, the Company reimbursed the funds that it manages $0.5 million and $0.6 million, respectively, and $1.0 million and $1.4 million for the six months ended June 30, 2013 and 2012, respectively, which were recorded net in management fees and incentive income in the accompanying consolidated statements of operations. As of June 30, 2013 and December 31, 2012, related amounts still payable were $1.7 million and $1.7 million, respectively, and were reflected in fees payable in the accompanying condensed consolidated statements of financial condition. As a result of a business combination in 2004, Ramius Alternative Solutions LLC acquired receivables of $9.6 million and assumed liabilities of a corresponding amount relating to various agreements with investors. Such amounts have been recorded in fees receivable and due to related parties, respectively, in the accompanying condensed consolidated statements of financial condition. The remaining balance yet to be paid was $0.1 million and $0.3 million as of June 30, 2013 and December 31, 2012, respectively. All amounts outstanding as of June 30, 2013, will be paid in 2013. The Company may also make loans to employees or other affiliates, excluding executive officers of the Company. These loans are interest bearing and settle pursuant to the agreed-upon terms with such employees or affiliates and are included in due from related parties in the condensed consolidated statements of financial condition. As of June 30, 2013 and December 31, 2012, loans to employees of $8.5 million and $5.1 million, respectively, were included in due from related parties on the condensed consolidated statements of financial condition. Of these amounts $5.7 million and $2.3 million, respectively, are related to forgivable loans. These forgivable loans provide for a cash payment up-front to employees, with the amount due back to the Company forgiven over a vesting period. An employee that voluntarily ceases employment, or is terminated with cause, is generally required to pay back to the Company any unvested forgivable loans granted to them. The forgivable loans are recorded as an asset to the Company on the date of grant and payment, and then amortized to compensation expense on a straight-line basis over the vesting period. The vesting period on forgivable loans is generally one to three years. The Company recorded compensation expense of $0.9 million and $0.4 million, respectively, related to the amortization of forgivable loans for the three months ended June 30, 2013 and 2012, and $1.2 million and $0.8 million for the six months ended June 30, 2013 and 2012, respectively . This expense is included in employee compensation and benefits in the condensed consolidated statement of operations. For the three and six months ended June 30, 2013 and 2012 the interest income was insignificant for all loans and advances. The remaining balance included in due from related parties primarily relates to amounts due to the Company from affiliated funds and real estate entities due to expenses paid on their behalf. In April 2011, the Company entered into a credit agreement with Starboard Value LP (see Note 5), whereby the Company can loan up to $3.0 million to Starboard Value LP at an interest rate of LIBOR plus 3.75% (payable quarterly) with a maturity of March 30, 2014. As of June 30, 2013, $1.5 million is included in due from related parties in the accompanying condensed consolidated statement of financial condition. For the three and six months ended June 30, 2013 and 2012, interest charged for this loan was insignificant. Included in due to related parties is approximately $0.5 million and $0.4 million as of June 30, 2013 and December 31, 2012, respectively, related to a subordination agreement with an investor in certain real estate funds. This total is based on a hypothetical liquidation of the real estate funds as of the balance sheet date. |
Investments of Operating Entities and Consolidated Funds - Real Estate Investments (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Investment Holdings [Line Items] | ||
Other investments | $ 84,732 | $ 84,930 |
Operating Entities
|
||
Investment Holdings [Line Items] | ||
Other investments | 84,732 | 84,930 |
Operating Entities | Real Estate Investments
|
||
Investment Holdings [Line Items] | ||
Other investments | 2,158 | 1,864 |
RCG RE Manager, LLC | Operating Entities | Real Estate Equity Investment
|
||
Investment Holdings [Line Items] | ||
Other investments | $ 2,200 | $ 1,900 |
Defined Benefit Plans (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Periodic Benefit Cost | The amounts contained in the following table relate to the Company's defined benefit plans for the three and six months ended June 30, 2013 and 2012:
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Organization and Business (Details)
|
6 Months Ended |
---|---|
Jun. 30, 2013
segment
|
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of business segments | 2 |
Fair Value Measurements for Operating Entities and Consolidated Funds (Tables)
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 June 30, 2013 and 2012: Operating Entities
Consolidated Funds' investments
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table includes a rollforward of the amounts for the three and six months ended June 30, 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.
(a) Change in consolidated funds. (b) The security was listed on an exchange subsequent to a private funding. (c) The security was acquired through an acquisition (See Note 2). (d) The security began trading on an exchange due to a business combination. (e) The company completed an initial public offering. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Inputs, Assets, Quantitative Information | The following table includes quantitative information as of June 30, 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.
|
Income Taxes Income Tax Expense (Details) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Income Taxes [Line Items] | ||
Effective income tax rate | 7.25% | (8.74%) |
Statutory tax rate | 35.00% | 35.00% |
Undistributed earnings of foreign subsidiaries | $ 1.7 | |
Undistributed Earnings of Foreign Subsidiaries
|
||
Income Taxes [Line Items] | ||
Tax effect if undistributed foreign earnings were repatriated | $ 0.2 |
Guarantees and Off-Balance Sheet Arrangements (Details) (USD $)
|
Jun. 30, 2013
|
---|---|
Securities Lending
|
|
Guaranty loans | $ 150,000,000 |
Employee Loans
|
|
Guaranty loans | $ 2,700,000 |
Defined Benefit Plans (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Components of net periodic benefit cost included in employee compensation and benefits | ||||
Service cost | $ 0 | $ 0 | $ 0 | $ 0 |
Interest cost | 47 | 53 | 98 | 106 |
Expected return on plan assets | (59) | (59) | (122) | (116) |
Amortization of (loss) / gain | 0 | 0 | 0 | 0 |
Amortization of prior service cost | 5 | 5 | 10 | 10 |
Effect of settlement | (95) | (1) | (95) | (3) |
Net periodic benefit cost | $ (102) | $ (2) | $ (109) | $ (3) |
Investments of Operating Entities and Consolidated Funds - Securities Owned at Fair Value (Details) (USD $)
|
3 Months Ended | 6 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2013
Operating Entities
|
Dec. 31, 2012
Operating Entities
|
Jun. 30, 2013
Operating Entities
Other Income
|
Jun. 30, 2012
Operating Entities
Other Income
|
Jun. 30, 2013
Operating Entities
Other Income
|
Jun. 30, 2012
Operating Entities
Other Income
|
Jun. 30, 2013
Operating Entities
Derivative contracts, at fair value
Receivables from Brokers-Dealers and Clearing Organizations
|
Dec. 31, 2012
Operating Entities
Derivative contracts, at fair value
Receivables from Brokers-Dealers and Clearing Organizations
|
Jun. 30, 2013
Operating Entities
US Government Securities
|
Dec. 31, 2012
Operating Entities
US Government Securities
|
Jun. 30, 2013
Operating Entities
US Government Securities
Minimum
|
Dec. 31, 2012
Operating Entities
US Government Securities
Minimum
|
Jun. 30, 2013
Operating Entities
US Government Securities
Maximum
|
Dec. 31, 2012
Operating Entities
US Government Securities
Maximum
|
Dec. 31, 2012
Operating Entities
Convertible Bonds
|
Jun. 30, 2013
Operating Entities
Convertible Bonds
|
Jun. 30, 2013
Operating Entities
Convertible Bonds
Minimum
|
Jun. 30, 2013
Operating Entities
Common Stock
|
Dec. 31, 2012
Operating Entities
Common Stock
|
Jun. 30, 2013
Operating Entities
Preferred Stock
|
Dec. 31, 2012
Operating Entities
Preferred Stock
|
Jun. 30, 2013
Operating Entities
Corporate Bonds
|
Dec. 31, 2012
Operating Entities
Corporate Bonds
|
Jun. 30, 2013
Operating Entities
Corporate Bonds
Minimum
|
Dec. 31, 2012
Operating Entities
Corporate Bonds
Minimum
|
Jun. 30, 2013
Operating Entities
Corporate Bonds
Maximum
|
Dec. 31, 2012
Operating Entities
Corporate Bonds
Maximum
|
Jun. 30, 2013
Operating Entities
Options Held
|
Dec. 31, 2012
Operating Entities
Options Held
|
Jun. 30, 2013
Operating Entities
Warrants and Rights
|
Dec. 31, 2012
Operating Entities
Warrants and Rights
|
Jun. 30, 2013
Operating Entities
Credit Default Swaps, Futures and Equity Swap Contracts
Other
|
Dec. 31, 2012
Operating Entities
Credit Default Swaps, Futures and Equity Swap Contracts
Other
|
Jun. 30, 2013
Operating Entities
Futures and Equity Swap Contracts
Accounts Payable, Accrued Expenses and Other Liabilities
|
Dec. 31, 2012
Operating Entities
Futures and Equity Swap Contracts
Accounts Payable, Accrued Expenses and Other Liabilities
|
Jun. 30, 2013
Operating Entities
Mutual Funds
|
Dec. 31, 2012
Operating Entities
Mutual Funds
|
Jun. 30, 2013
Consolidated Funds
|
Dec. 31, 2012
Consolidated Funds
|
Dec. 31, 2012
Consolidated Funds
Equity Securities
|
Jun. 30, 2013
Consolidated Funds
Government Sponsored Securities
|
Dec. 31, 2012
Consolidated Funds
Government Sponsored Securities
|
Dec. 31, 2012
Consolidated Funds
Government Sponsored Securities
Minimum
|
Dec. 31, 2012
Consolidated Funds
Government Sponsored Securities
Maximum
|
Jun. 30, 2013
Consolidated Funds
Commercial Paper
|
Dec. 31, 2012
Consolidated Funds
Commercial Paper
|
Dec. 31, 2012
Consolidated Funds
Options Held
|
Jun. 30, 2013
Enterprise Master
|
Dec. 31, 2012
Enterprise Master
|
Jun. 30, 2013
Enterprise Master
Debt
|
Dec. 31, 2012
Enterprise Master
Debt
|
Jun. 30, 2013
Enterprise Master
Common Stock
|
Dec. 31, 2012
Enterprise Master
Common Stock
|
Jun. 30, 2013
Enterprise Master
Preferred Stock
|
Dec. 31, 2012
Enterprise Master
Preferred Stock
|
Jun. 30, 2013
Enterprise Master
Private Equity
|
Dec. 31, 2012
Enterprise Master
Private Equity
|
Jun. 30, 2013
Enterprise Master
Restricted Stock
|
Dec. 31, 2012
Enterprise Master
Restricted Stock
|
Jun. 30, 2013
Enterprise Master
Rights
|
Dec. 31, 2012
Enterprise Master
Rights
|
Jun. 30, 2013
Enterprise Master
Warrants and Rights
|
Dec. 31, 2012
Enterprise Master
Warrants and Rights
|
Jun. 30, 2013
Enterprise Master
Currency Forwards
|
Dec. 31, 2012
Enterprise Master
Currency Forwards
|
Jun. 30, 2013
Enterprise Master
Trade Claims
|
Dec. 31, 2012
Enterprise Master
Trade Claims
|
|||||||||||||||||||||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trading Securities | $ 0 | $ 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other investments | 84,732,000 | 84,930,000 | 84,732,000 | 84,930,000 | 193,282,000 | 204,205,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative, Fair Value, Net | 33,000 | 6,000 | 33,000 | 6,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities | 3,506,000 | [1] | 137,478,000 | [1] | 6,202,000 | [2] | 4,426,000 | [2] | 333,000 | 2,332,000 | 116,649,000 | [3] | 193,078,000 | [3] | 0 | [4] | 1,911,000 | [4] | 0 | [5] | 1,614,000 | [5] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Securities | 289,602,000 | 259,292,000 | 18,883,000 | 20,546,000 | 2,247,000 | 2,354,000 | 2,868,000 | 2,845,000 | 156,000 | 79,000 | 2,704,000 | 2,680,000 | 997,000 | 997,000 | 309,000 | 297,000 | 73,000 | 26,000 | 2,362,000 | 1,714,000 | 2,000 | 2,000 | 128,000 | 128,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities owned, at fair value | 438,514,000 | 624,127,000 | 438,514,000 | 624,127,000 | 40,785,000 | 3,525,000 | 6,731,000 | 5,923,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities, interest rate | 0.02% | 0.25% | 5.95% | 5.95% | 5.00% | 5.00% | 3.11% | 3.09% | 12.00% | 12.50% | 0.28% | 4.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets | 1,000,000 | 200,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative liabilities | 700,000 | 1,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized and unrealized gains/(losses) related to derivatives trading activities | 800,000 | 1,600,000 | 2,200,000 | 2,200,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Collateral posted | $ 5,300,000 | $ 6,700,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Segment Reporting (Details) (USD $)
|
3 Months Ended | 6 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
customer
|
Jun. 30, 2012
customer
|
Jun. 30, 2013
segment
customer
|
Jun. 30, 2012
customer
|
|||||||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||||||||||
Number of Operating Segments | 2 | |||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Investment banking | $ 25,571,000 | $ 16,254,000 | $ 42,737,000 | $ 31,884,000 | ||||||||||||||||||||||
Brokerage | 31,521,000 | 24,568,000 | 58,121,000 | 48,581,000 | ||||||||||||||||||||||
Management fees | 9,698,000 | 9,932,000 | 19,191,000 | 19,649,000 | ||||||||||||||||||||||
Incentive income | 1,954,000 | 580,000 | 4,565,000 | 1,271,000 | ||||||||||||||||||||||
Interest and dividends | 10,521,000 | 5,868,000 | 19,842,000 | 11,240,000 | ||||||||||||||||||||||
Reimbursement from affiliates | 1,214,000 | 1,381,000 | 2,699,000 | 2,426,000 | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Employee compensation and benefits | 47,507,000 | 43,097,000 | 91,730,000 | 89,780,000 | ||||||||||||||||||||||
Interest and dividends | 7,240,000 | 3,207,000 | 13,658,000 | 4,931,000 | ||||||||||||||||||||||
Total expenses | 86,612,000 | 77,425,000 | 169,724,000 | 154,164,000 | ||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 4,994,000 | 9,787,000 | 16,801,000 | 29,458,000 | ||||||||||||||||||||||
Total other income (loss) | 8,911,000 | 7,766,000 | 25,877,000 | 33,404,000 | ||||||||||||||||||||||
Income taxes expense / (benefit) | 158,000 | 191,000 | 334,000 | 333,000 | ||||||||||||||||||||||
Economic income (loss)/ net income (loss) before non-controlling interests | 3,348,000 | (10,380,000) | 4,267,000 | (4,144,000) | ||||||||||||||||||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | 1,093,000 | (7,946,000) | (1,483,000) | (3,951,000) | ||||||||||||||||||||||
Number of major customers | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Reported Under U.S. GAAP
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Investment banking | 25,571,000 | 16,254,000 | 42,737,000 | 31,884,000 | ||||||||||||||||||||||
Brokerage | 31,521,000 | 24,568,000 | 58,121,000 | 48,581,000 | ||||||||||||||||||||||
Management fees | 9,698,000 | 9,932,000 | 19,191,000 | 19,649,000 | ||||||||||||||||||||||
Incentive income | 1,954,000 | 580,000 | 4,565,000 | 1,271,000 | ||||||||||||||||||||||
Investment Income | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Interest and dividends | 10,521,000 | 5,868,000 | 19,842,000 | 11,240,000 | ||||||||||||||||||||||
Reimbursement from affiliates | 1,214,000 | 1,381,000 | 2,699,000 | 2,426,000 | ||||||||||||||||||||||
Other revenue | 485,000 | 831,000 | 963,000 | 1,698,000 | ||||||||||||||||||||||
Total revenues | 81,207,000 | 59,470,000 | 148,448,000 | 116,949,000 | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Employee compensation and benefits | 47,507,000 | 43,097,000 | 91,730,000 | 89,780,000 | ||||||||||||||||||||||
Interest and dividends | 7,240,000 | 3,207,000 | 13,658,000 | 4,931,000 | ||||||||||||||||||||||
Non-compensation expenses - Fixed | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Non-compensation expenses - Variable | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Non-compensation expenses | 31,380,000 | 30,486,000 | 63,417,000 | 58,444,000 | ||||||||||||||||||||||
Reimbursement from affiliates | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Total expenses | 86,612,000 | 77,425,000 | 169,724,000 | 154,164,000 | ||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 4,994,000 | 9,787,000 | 16,801,000 | 29,458,000 | ||||||||||||||||||||||
Total other income (loss) | 8,911,000 | 7,766,000 | 25,877,000 | 33,404,000 | ||||||||||||||||||||||
Income (loss) before income taxes and non-controlling interests | 3,506,000 | (10,189,000) | 4,601,000 | (3,811,000) | ||||||||||||||||||||||
Income taxes expense / (benefit) | 158,000 | 191,000 | 334,000 | 333,000 | ||||||||||||||||||||||
Economic income (loss)/ net income (loss) before non-controlling interests | 3,348,000 | (10,380,000) | 4,267,000 | (4,144,000) | ||||||||||||||||||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries | (2,255,000) | 2,434,000 | (5,750,000) | 193,000 | ||||||||||||||||||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | 1,093,000 | (7,946,000) | (1,483,000) | (3,951,000) | ||||||||||||||||||||||
Operating Segments | Reported Under Economic Income/(Loss)
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Investment banking | 25,571,000 | 16,254,000 | 42,737,000 | 31,884,000 | ||||||||||||||||||||||
Brokerage | 33,300,000 | 24,568,000 | 61,317,000 | 48,581,000 | ||||||||||||||||||||||
Management fees | 14,606,000 | 14,586,000 | 28,750,000 | 28,606,000 | ||||||||||||||||||||||
Incentive income | 3,765,000 | 2,583,000 | 8,892,000 | 6,605,000 | ||||||||||||||||||||||
Investment Income | 3,563,000 | 8,286,000 | 14,436,000 | 29,391,000 | ||||||||||||||||||||||
Interest and dividends | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Reimbursement from affiliates | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Other revenue | 278,000 | (71,000) | (163,000) | 313,000 | ||||||||||||||||||||||
Total revenues | 81,083,000 | 66,206,000 | 155,969,000 | 145,380,000 | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Employee compensation and benefits | 47,714,000 | 41,645,000 | 92,235,000 | 87,554,000 | ||||||||||||||||||||||
Interest and dividends | 72,000 | 59,000 | 196,000 | 147,000 | ||||||||||||||||||||||
Non-compensation expenses - Fixed | 23,783,000 | 24,489,000 | 47,561,000 | 45,732,000 | ||||||||||||||||||||||
Non-compensation expenses - Variable | 8,562,000 | 7,138,000 | 15,913,000 | 14,013,000 | ||||||||||||||||||||||
Non-compensation expenses | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Reimbursement from affiliates | (1,411,000) | (1,435,000) | (2,830,000) | (2,551,000) | ||||||||||||||||||||||
Total expenses | 78,720,000 | 71,896,000 | 153,075,000 | 144,895,000 | ||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Total other income (loss) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Income (loss) before income taxes and non-controlling interests | 2,363,000 | (5,690,000) | 2,894,000 | 485,000 | ||||||||||||||||||||||
Income taxes expense / (benefit) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Economic income (loss)/ net income (loss) before non-controlling interests | 2,363,000 | (5,690,000) | 2,894,000 | 485,000 | ||||||||||||||||||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries | (893,000) | (300,000) | (2,692,000) | (600,000) | ||||||||||||||||||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | 1,470,000 | (5,990,000) | 202,000 | (115,000) | ||||||||||||||||||||||
Alternative Investment | Reported Under Economic Income/(Loss)
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Investment banking | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Brokerage | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Management fees | 14,606,000 | 14,586,000 | 28,750,000 | 28,606,000 | ||||||||||||||||||||||
Incentive income | 3,765,000 | 2,583,000 | 8,892,000 | 6,605,000 | ||||||||||||||||||||||
Investment Income | 3,834,000 | 6,694,000 | 12,138,000 | 23,496,000 | ||||||||||||||||||||||
Interest and dividends | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Reimbursement from affiliates | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Other revenue | 114,000 | 216,000 | 226,000 | 340,000 | ||||||||||||||||||||||
Total revenues | 22,319,000 | 24,079,000 | 50,006,000 | 59,047,000 | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Employee compensation and benefits | 10,411,000 | 13,500,000 | 24,324,000 | 30,946,000 | ||||||||||||||||||||||
Interest and dividends | 50,000 | 12,000 | 131,000 | 30,000 | ||||||||||||||||||||||
Non-compensation expenses - Fixed | 8,471,000 | 8,560,000 | 17,609,000 | 15,529,000 | ||||||||||||||||||||||
Non-compensation expenses - Variable | 1,139,000 | 1,138,000 | 2,145,000 | 2,447,000 | ||||||||||||||||||||||
Non-compensation expenses | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Reimbursement from affiliates | (1,411,000) | (1,435,000) | (2,830,000) | (2,551,000) | ||||||||||||||||||||||
Total expenses | 18,660,000 | 21,775,000 | 41,379,000 | 46,401,000 | ||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Total other income (loss) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Income (loss) before income taxes and non-controlling interests | 3,659,000 | 2,304,000 | 8,627,000 | 12,646,000 | ||||||||||||||||||||||
Income taxes expense / (benefit) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Economic income (loss)/ net income (loss) before non-controlling interests | 3,659,000 | 2,304,000 | 8,627,000 | 12,646,000 | ||||||||||||||||||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries | (893,000) | (300,000) | (2,692,000) | (600,000) | ||||||||||||||||||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | 2,766,000 | 2,004,000 | 5,935,000 | 12,046,000 | ||||||||||||||||||||||
Broker-Dealer | Reported Under Economic Income/(Loss)
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Investment banking | 25,571,000 | [1] | 16,254,000 | [2] | 42,737,000 | [3] | 31,884,000 | [4] | ||||||||||||||||||
Brokerage | 33,300,000 | [1] | 24,568,000 | [2] | 61,317,000 | [3] | 48,581,000 | [4] | ||||||||||||||||||
Management fees | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Incentive income | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Investment Income | (271,000) | [1] | 1,592,000 | [2] | 2,298,000 | [3] | 5,895,000 | [4] | ||||||||||||||||||
Interest and dividends | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Reimbursement from affiliates | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Other revenue | 164,000 | [1] | (287,000) | [2] | (389,000) | [3] | (27,000) | [4] | ||||||||||||||||||
Total revenues | 58,764,000 | [1] | 42,127,000 | [2] | 105,963,000 | [3] | 86,333,000 | [4] | ||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Employee compensation and benefits | 37,303,000 | [1] | 28,145,000 | [2] | 67,911,000 | [3] | 56,608,000 | [4] | ||||||||||||||||||
Interest and dividends | 22,000 | [1] | 47,000 | [2] | 65,000 | [3] | 117,000 | [4] | ||||||||||||||||||
Non-compensation expenses - Fixed | 15,312,000 | [1] | 15,929,000 | [2] | 29,952,000 | [3] | 30,203,000 | [4] | ||||||||||||||||||
Non-compensation expenses - Variable | 7,423,000 | [1] | 6,000,000 | [2] | 13,768,000 | [3] | 11,566,000 | [4] | ||||||||||||||||||
Non-compensation expenses | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Reimbursement from affiliates | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Total expenses | 60,060,000 | [1] | 50,121,000 | [2] | 111,696,000 | [3] | 98,494,000 | [4] | ||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Total other income (loss) | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Income (loss) before income taxes and non-controlling interests | (1,296,000) | [1] | (7,994,000) | [2] | (5,733,000) | [3] | (12,161,000) | [4] | ||||||||||||||||||
Income taxes expense / (benefit) | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Economic income (loss)/ net income (loss) before non-controlling interests | (1,296,000) | [1] | (7,994,000) | [2] | (5,733,000) | [3] | (12,161,000) | [4] | ||||||||||||||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | (1,296,000) | [1] | (7,994,000) | [2] | (5,733,000) | [3] | (12,161,000) | [4] | ||||||||||||||||||
Investment Income from Entity's Capital | 300,000 | 1,700,000 | 2,600,000 | 5,900,000 | ||||||||||||||||||||||
Compensation Expense Related to Investment of Entity's Capital | 100,000 | 600,000 | 900,000 | 1,900,000 | ||||||||||||||||||||||
Funds Consolidation | Reconciliation from Economic Income/(Loss) to U.S. GAAP
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Investment banking | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Brokerage | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Management fees | (286,000) | (394,000) | (597,000) | (787,000) | ||||||||||||||||||||||
Incentive income | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Investment Income | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Interest and dividends | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Reimbursement from affiliates | (196,000) | (54,000) | (131,000) | (125,000) | ||||||||||||||||||||||
Other revenue | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Total revenues | (239,000) | (392,000) | (398,000) | (712,000) | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Employee compensation and benefits | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Interest and dividends | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Non-compensation expenses - Fixed | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Non-compensation expenses - Variable | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Non-compensation expenses | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Reimbursement from affiliates | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Total expenses | 485,000 | 635,000 | 919,000 | 1,009,000 | ||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Total other income (loss) | 1,378,000 | (1,707,000) | 3,671,000 | 934,000 | ||||||||||||||||||||||
Income (loss) before income taxes and non-controlling interests | 654,000 | (2,734,000) | 2,354,000 | (787,000) | ||||||||||||||||||||||
Income taxes expense / (benefit) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Economic income (loss)/ net income (loss) before non-controlling interests | 654,000 | (2,734,000) | 2,354,000 | (787,000) | ||||||||||||||||||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries | (654,000) | 2,734,000 | (2,354,000) | 787,000 | ||||||||||||||||||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Other Adjustments | Reconciliation from Economic Income/(Loss) to U.S. GAAP
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Investment banking | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Brokerage | (1,779,000) | [5] | 0 | (3,196,000) | [5] | 0 | ||||||||||||||||||||
Management fees | (4,622,000) | [6] | (4,260,000) | [6] | (8,962,000) | [6] | (8,170,000) | [6] | ||||||||||||||||||
Incentive income | (1,811,000) | [6] | (2,003,000) | [6] | (4,327,000) | [6] | (5,334,000) | [6] | ||||||||||||||||||
Investment Income | (3,563,000) | [7] | (8,286,000) | [7] | (14,436,000) | [7] | (29,391,000) | [7] | ||||||||||||||||||
Interest and dividends | 10,521,000 | [7] | 5,868,000 | [7] | 19,842,000 | [7] | 11,240,000 | [7] | ||||||||||||||||||
Reimbursement from affiliates | 1,410,000 | [8] | 1,435,000 | [8] | 2,830,000 | [8] | 2,551,000 | [8] | ||||||||||||||||||
Other revenue | 207,000 | [7] | 902,000 | [7] | 1,126,000 | [7] | 1,385,000 | [7] | ||||||||||||||||||
Total revenues | 363,000 | (6,344,000) | (7,123,000) | (27,719,000) | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Employee compensation and benefits | (207,000) | 1,452,000 | (505,000) | 2,226,000 | ||||||||||||||||||||||
Interest and dividends | 7,168,000 | [7] | 3,148,000 | [7] | 13,462,000 | [7] | 4,784,000 | [7] | ||||||||||||||||||
Non-compensation expenses - Fixed | (23,783,000) | [7],[9] | (24,489,000) | [7],[9] | (47,561,000) | [7],[9] | (45,732,000) | [7],[9] | ||||||||||||||||||
Non-compensation expenses - Variable | (8,562,000) | [7],[9] | (7,138,000) | [7],[9] | (15,913,000) | [7],[9] | (14,013,000) | [7],[9] | ||||||||||||||||||
Non-compensation expenses | 31,380,000 | [7],[9] | 30,486,000 | [7],[9] | 63,417,000 | [7],[9] | 58,444,000 | [7],[9] | ||||||||||||||||||
Reimbursement from affiliates | 1,411,000 | [8] | 1,435,000 | [8] | 2,830,000 | [8] | 2,551,000 | [8] | ||||||||||||||||||
Total expenses | 7,407,000 | 4,894,000 | 15,730,000 | 8,260,000 | ||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 4,994,000 | [7] | 9,787,000 | [7] | 16,801,000 | [7] | 29,458,000 | [7] | ||||||||||||||||||
Total other income (loss) | 7,533,000 | 9,473,000 | 22,206,000 | 32,470,000 | ||||||||||||||||||||||
Income (loss) before income taxes and non-controlling interests | 489,000 | (1,765,000) | (647,000) | (3,509,000) | ||||||||||||||||||||||
Income taxes expense / (benefit) | 158,000 | [8] | 191,000 | [8] | 334,000 | [8] | 333,000 | [8] | ||||||||||||||||||
Economic income (loss)/ net income (loss) before non-controlling interests | 331,000 | (1,956,000) | (981,000) | (3,842,000) | ||||||||||||||||||||||
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries | (708,000) | 0 | (704,000) | 6,000 | ||||||||||||||||||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | (377,000) | (1,956,000) | (1,685,000) | (3,836,000) | ||||||||||||||||||||||
Consolidated Funds | Reported Under U.S. GAAP
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Total revenues | 243,000 | 56,000 | 330,000 | 200,000 | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Total expenses | 485,000 | 635,000 | 919,000 | 1,009,000 | ||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 3,917,000 | (2,021,000) | 9,076,000 | 3,946,000 | ||||||||||||||||||||||
Consolidated Funds | Operating Segments | Reported Under Economic Income/(Loss)
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Total revenues | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Total expenses | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Consolidated Funds | Alternative Investment | Reported Under Economic Income/(Loss)
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Total revenues | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Total expenses | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Consolidated Funds | Broker-Dealer | Reported Under Economic Income/(Loss)
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Total revenues | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Total expenses | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 0 | [1] | 0 | [2] | 0 | [3] | 0 | [4] | ||||||||||||||||||
Consolidated Funds | Funds Consolidation | Reconciliation from Economic Income/(Loss) to U.S. GAAP
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Total revenues | 243,000 | 56,000 | 330,000 | 200,000 | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Total expenses | 485,000 | 635,000 | 919,000 | 1,009,000 | ||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | 1,378,000 | (1,707,000) | 3,671,000 | 934,000 | ||||||||||||||||||||||
Consolidated Funds | Other Adjustments | Reconciliation from Economic Income/(Loss) to U.S. GAAP
|
||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Total revenues | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Total expenses | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||
Net gain (losses) on securities, derivatives and other investments | $ 2,539,000 | $ (314,000) | $ 5,405,000 | $ 3,012,000 | ||||||||||||||||||||||
|
Regulatory Requirements
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Brokers and Dealers [Abstract] | |
Regulatory Requirements | Regulatory Requirements As registered broker‑dealers, Cowen and Company, Cowen Capital, ATM USA, Cowen Equity Finance and Cowen Securities are subject to the SEC's Uniform Net Capital Rule 15c3-1 (the “Rule”), which requires the maintenance of minimum net capital. Under the alternative method permitted by the Rule, Cowen and Company's minimum net capital requirement, as defined, is $1.0 million. Under the basic method permitted by the Rule, Cowen Capital is required to maintain minimum net capital, as defined, equivalent to the greater of $1.0 million or 6.667% of aggregate indebtedness. ATM USA is required to maintain minimum net capital, as defined, equivalent to the greater of $5,000 or 6.667% of aggregate indebtedness. Cowen Equity Finance is required to maintain minimum net capital, as defined, equal to $250,000. Cowen Securities is required to maintain minimum net capital, as defined, equivalent to the greater of $236,000 or 6.667% of aggregate indebtedness. The broker-dealers are not permitted to withdraw equity if certain minimum net capital requirements are not met. As of June 30, 2013, Cowen and Company had total net capital of approximately $38.9 million, which was approximately $37.9 million in excess of its minimum net capital requirement of $1.0 million. As of June 30, 2013, Cowen Capital had total net capital of approximately $4.0 million, which was approximately $3.0 million in excess of its minimum net capital requirement of $1.0 million. As of June 30, 2013, ATM USA had total net capital of approximately $1.2 million, which was approximately $1.2 million in excess of its minimum net capital requirement of $23,004. As of June 30, 2013, Cowen Equity Finance had total net capital of approximately $10.6 million which was approximately $10.3 million in excess of its minimum net capital requirement of $250,000. As of June 30, 2013, Cowen Securities had total net capital of approximately $1.1 million which was approximately $1.0 million in excess of its minimum net capital requirement of $0.1 million. During the second quarter of 2013, many of the processes performed by Cowen Securities were transferred to Cowen and Company. On June 24, 2013, Cowen Securities filed Form BDW Uniform Request for Withdrawal from Broker-Dealer Registration which has not yet been approved therefore Cowen Securities was still subject to the SEC's Uniform Net Capital Rule 15c3-1 as of June 30, 2013. Cowen and Company, Cowen Capital and Cowen Securities are exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934 as its activities are limited to those set forth in the conditions for exemption appearing in paragraph (k)(2)(ii) of the Rule. Similarly, ATM USA and Cowen Equity Finance are exempt from the provisions of Rule 15c3-3 under (k)(2)(i). Proprietary accounts of introducing brokers (“PAIB”) held at the clearing broker are considered allowable assets for net capital purposes, pursuant to agreements between Cowen and Company, Cowen Capital and Cowen Securities and the clearing broker, which require, among other things, that the clearing broker performs computations for PAIB and segregates certain balances on behalf of Cowen and Company, Cowen Capital and Cowen Securities, if applicable. Ramius UK Ltd. ("Ramius UK") and CIL are subject to the capital requirements of the Financial Services Authority (“FSA”) of the UK. Financial Resources, as defined, must exceed the requirement of the FSA. As of June 30, 2013, Ramius UK's Financial Resources of $0.5 million exceeded its minimum requirement of $0.2 million by $0.3 million. As of June 30, 2013, CIL's Financial Resources of $4.0 million exceeded its minimum requirement of $2.1 million by $1.9 million. Cowen and Company (Asia) Limited (“CCAL”) (formerly known as Cowen Latitude Advisors Limited) is subject to the financial resources requirements of the Securities and Futures Commission (“SFC”) of Hong Kong. Financial Resources, as defined, must exceed the Total Financial Resources requirement of the SFC. As of June 30, 2013, CCAL's Financial Resources of $1.1 million exceeded the minimum requirement of $0.4 million by $0.7 million. |
Condensed Consolidated Statements of Changes in Equity (USD $)
|
Total
|
Common Stock
|
Treasury Stock
|
Additional Paid-in Capital
|
Accumulated Other Comprehensive Income (Loss)
|
Retained Earnings/(Accumulated deficit)
|
Redeemable Non-controlling Interest
|
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2011 | $ 508,465,000 | $ 1,135,000 | $ (16,902,000) | $ 688,427,000 | $ (215,000) | $ (163,980,000) | $ 104,587,000 |
Balance, shares at Dec. 31, 2011 | 114,047,637 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | (3,951,000) | (3,951,000) | |||||
Net income (loss) attributable to redeemable non-controlling interests | (193,000) | (193,000) | |||||
Defined benefit plans | 170,000 | 170,000 | |||||
Foreign currency translation | 72,000 | 72,000 | |||||
Deconsolidation of funds | (17,104,000) | ||||||
Consolidation of funds | 18,521,000 | ||||||
Capital withdrawals | (7,351,000) | ||||||
Restricted stock awards issued, shares | 2,701,314 | ||||||
Common stock issued upon acquisition (See Note 2) | 0 | ||||||
Purchase of treasury stock, at cost | (6,357,000) | (6,357,000) | |||||
Purchase of treasury stock, at cost, shares | (2,540,683) | ||||||
Amortization of share based compensation | 13,526,000 | 13,526,000 | |||||
Balance at Jun. 30, 2012 | 511,925,000 | 1,135,000 | (23,259,000) | 701,953,000 | 27,000 | (167,931,000) | 98,460,000 |
Balance, shares at Jun. 30, 2012 | 114,208,268 | ||||||
Balance at Dec. 31, 2012 | 495,109,000 | 1,135,000 | (31,728,000) | 713,211,000 | 356,000 | (187,865,000) | 85,703,000 |
Balance, shares at Dec. 31, 2012 | 112,447,892 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) attributable to Cowen Group, Inc. stockholders | (1,483,000) | (1,483,000) | |||||
Net income (loss) attributable to redeemable non-controlling interests | 5,750,000 | 5,750,000 | |||||
Defined benefit plans | (242,000) | (242,000) | |||||
Foreign currency translation | (4,000) | (4,000) | |||||
Capital contributions | 10,181,000 | ||||||
Capital withdrawals | (10,072,000) | ||||||
Restricted stock awards issued, shares | 3,937,337 | ||||||
Common stock issued upon acquisition (See Note 2) | 6,297,000 | 25,000 | 6,272,000 | ||||
Common stock issued upon acquisition (See Note 2), shares | 2,514,468 | ||||||
Purchase of treasury stock, at cost | (3,044,000) | (3,044,000) | |||||
Purchase of treasury stock, at cost, shares | (1,038,609) | ||||||
Amortization of share based compensation | 9,493,000 | 9,493,000 | |||||
Balance at Jun. 30, 2013 | $ 506,126,000 | $ 1,160,000 | $ (34,772,000) | $ 728,976,000 | $ 110,000 | $ (189,348,000) | $ 91,562,000 |
Balance, shares at Jun. 30, 2013 | 117,861,088.000 |
Organization and Business
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business Cowen Group, Inc., a Delaware corporation formed in 2009, is a diversified financial services firm and, together with its consolidated subsidiaries (collectively, “Cowen,” “Cowen Group” or the “Company”), provides alternative investment management, investment banking, research, market-making and sales and trading services through its two business segments: alternative investment and broker-dealer. The Company's alternative investment segment includes hedge funds, replication products, mutual funds, managed futures funds, funds of funds, real estate and healthcare royalty funds, offered primarily under the Ramius name. The broker-dealer segment offers research, brokerage and investment banking services to companies and institutional investor clients primarily in the healthcare, technology, media and telecommunications, consumer, aerospace and defense, industrials, real estate investment trusts ("REITs"), clean technology, energy, metals and mining, transportation, chemicals and agriculture sectors, primarily under the Cowen name. |
Cash collateral pledged
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Cash and Cash Equivalents [Abstract] | |
Cash collateral pledged | Cash collateral pledged As of June 30, 2013 and December 31, 2012, the Company pledged cash collateral in the amount of $10.9 million and $9.2 million, respectively, which relates to letters of credit issued to the landlords of the Company's premises in New York City and San Fransisco (see Note 14). |
Acquisitions
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Business Combinations [Abstract] | |
Acquisitions | Acquisitions On March 11, 2013, the Company completed its acquisition of Dahlman Rose & Company, LLC, a privately-held investment bank specializing in the energy, metals and mining, transportation, chemicals and agriculture sectors. This acquisition was an all-stock transaction. In the aggregate, the purchase price, assets acquired and liabilities assumed were not significant and the near term impact to the Company and its consolidated results of operations and cash flows is not expected to be significant. Dahlman Rose & Company, LLC was subsequently renamed to Cowen Securities LLC ("Cowen Securities"). Post acquisition, Cowen Securities is included in the broker-dealer segment (See Note 18). The Company has not yet finalized with the sellers certain closing date balance sheet adjustments, resolution of which will potentially impact the purchase price, assets and liabilities recognized and the resulting goodwill. The Company does not believe the impact will be material. The preliminary purchase price allocation of Cowen Securities is based upon all information available to us at the present time, and is based upon management's preliminary estimates of the fair values using valuation techniques including income, cost and market approaches. As of June 30, 2013, the purchase price allocation is preliminary pending the Company's final determination of the fair values of the assets and liabilities, which the Company expects will occur within twelve months following the acquisition. Upon the completion of the final purchase price allocation, any reallocation of fair values to the assets acquired and liabilities assumed in the acquisitions could have an impact on the amounts recognized on the condensed consolidated statements of financial condition. The acquisition was accounted for under the acquisition method of accounting in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). As such, results of operations for the Cowen Securities are included in the accompanying condensed consolidated statements of operations since the date of the acquisition, and the assets acquired, liabilities assumed and the resulting goodwill were recorded at their fair values within their respective line items on the accompanying condensed consolidated statement of financial condition. |
Significant Accounting Policies (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
cowenfund
|
Dec. 31, 2012
|
---|---|---|
Organization [Line Items] | ||
Number of funds, Consolidated | 8 | |
Deferred rent | $ 17.1 | $ 13.8 |
Investment Company
|
||
Organization [Line Items] | ||
Number of funds, Consolidated | 3 |
Subsequent Events
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated events through August 7, 2013 which is the date the condensed consolidated financial statements were available to be issued and has determined that there were no additional subsequent events requiring adjustment or disclosure in the condensed consolidated financial statements. |
Redeemable Non-Controlling Interests in Consolidated Subsidiaries (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable non-controlling interests in consolidated subsidiaries | Redeemable non-controlling interests in consolidated subsidiaries and the related net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries are comprised as follows:
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Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries |
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Related Party Transactions (Details) (USD $)
|
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
|
Jun. 30, 2013
Affiliated Entity
Asset Management Income
|
Jun. 30, 2012
Affiliated Entity
Asset Management Income
|
Jun. 30, 2013
Affiliated Entity
Asset Management Income
|
Jun. 30, 2012
Affiliated Entity
Asset Management Income
|
Jun. 30, 2013
Affiliated Entity
Fees Receivable
|
Dec. 31, 2012
Affiliated Entity
Fees Receivable
|
Jun. 30, 2013
Affiliated Entity
Fees Receivable
Raimus Alternative Solutions L.L.C.
|
Dec. 31, 2012
Affiliated Entity
Fees Receivable
Raimus Alternative Solutions L.L.C.
|
Dec. 31, 2004
Affiliated Entity
Fees Receivable
Raimus Alternative Solutions L.L.C.
|
Jun. 30, 2013
Affiliated Entity
Fees Payable
|
Dec. 31, 2012
Affiliated Entity
Fees Payable
|
Jun. 30, 2013
Employees
|
Dec. 31, 2012
Employees
|
Apr. 30, 2011
Equity Method Investee
Starboard Value L.P.
|
Apr. 30, 2011
Equity Method Investee
Starboard Value L.P.
LIBOR
|
Jun. 30, 2013
Equity Method Investee
Due from Related Parties
Starboard Value L.P.
|
Jun. 30, 2013
Investor
|
Dec. 31, 2012
Investor
|
Jun. 30, 2013
Minimum
|
Jun. 30, 2013
Maximum
|
|
Related Party Transaction [Line Items] | |||||||||||||||||||||||||
Fees receivable from related parties | $ 12,600,000 | $ 13,600,000 | |||||||||||||||||||||||
Reimbursement to affiliated funds | 500,000 | 600,000 | 1,000,000 | 1,400,000 | |||||||||||||||||||||
Fees payable to related parties | 1,700,000 | 1,700,000 | |||||||||||||||||||||||
Receivables acquired in business combination | 100,000 | 300,000 | 9,600,000 | ||||||||||||||||||||||
Due from employees | 8,500,000 | 5,100,000 | |||||||||||||||||||||||
Forgivable Loan Balances | 5,700,000 | 2,300,000 | |||||||||||||||||||||||
Deferred Compensation Arrangement with Individual, Award Vesting Period | 1 year | 3 years | |||||||||||||||||||||||
Amortization on Forgivable Loans | 900,000 | 400,000 | 1,200,000 | 800,000 | |||||||||||||||||||||
Credit agreement with related party, maximum loan amount | 3,000,000.0 | ||||||||||||||||||||||||
Credit agreement with related party, interest rate spread | 3.75% | ||||||||||||||||||||||||
Credit agreement with related party, loan receivable | 1,500,000 | ||||||||||||||||||||||||
Due to Affiliate | $ 527,000 | $ 527,000 | $ 662,000 | $ 500,000 | $ 400,000 |
Treasury stock (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury Stock Activity | The following represents the activity relating to the treasury stock held by the Company during the six months ended June 30, 2013:
|
Regulatory Requirements (Details) (USD $)
|
Jun. 30, 2013
|
---|---|
U.S. Securities and Exchange Commission | Cowen and Company
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Net capital requirement under alternative method | $ 1,000,000 |
Net capital | 38,900,000 |
Excess net capital under alternative method | 37,900,000 |
U.S. Securities and Exchange Commission | Cowen and Company | Minimum
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Net capital requirement under alternative method | 1,000,000 |
U.S. Securities and Exchange Commission | Cowen Capital, LLC
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Minimum net capital required | 1,000,000 |
Net capital | 4,000,000 |
Excess capital | 3,000,000 |
U.S. Securities and Exchange Commission | Cowen Capital, LLC | Minimum
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Minimum net capital required | 1,000,000 |
Net capital requirement as a percentage of indebtedness | 6.667% |
U.S. Securities and Exchange Commission | ATM USA
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Minimum net capital required | 23,004 |
Net capital | 1,200,000 |
Excess capital | 1,200,000 |
U.S. Securities and Exchange Commission | ATM USA | Minimum
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Minimum net capital required | 5,000 |
Net capital requirement as a percentage of indebtedness | 6.667% |
U.S. Securities and Exchange Commission | Cowen Securities
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Minimum net capital required | 100,000 |
Net capital | 1,100,000 |
Excess capital | 1,000,000 |
U.S. Securities and Exchange Commission | Cowen Securities | Minimum
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Minimum net capital required | 236,000 |
Net capital requirement as a percentage of indebtedness | 6.667% |
U.S. Securities and Exchange Commission | Cowen Equity Finance
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Minimum net capital required | 250,000 |
Net capital | 10,600,000 |
Excess capital | 10,300,000 |
U.K. Financial Services Authority | Raimus U.K., Ltd.
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Financial resources | 500,000 |
Financial resources requirement | 200,000 |
Excess financial resources | 300,000 |
U.K. Financial Services Authority | Cowen International Limited
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Financial resources | 4,000,000 |
Financial resources requirement | 2,100,000 |
Excess financial resources | 1,900,000 |
H.K. Securities and Futures Commission | Cowen and Company (Asia) Limited
|
|
Regulatory Requirements for Broker-Dealers [Line Items] | |
Financial resources | 1,100,000 |
Financial resources requirement | 400,000 |
Excess financial resources | $ 700,000 |
Fair Value Measurements for Operating Entities and Consolidated Funds Fair Value Inputs, Unobservable Inputs, Quantitative Information (Details) (Operating Entities, Level 3, USD $)
In Thousands, unless otherwise specified |
6 Months Ended | 6 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2013
Other Assets and Liabilities
|
Jun. 30, 2013
Income Approach and Market Approach Valuation Techniques
Common and Preferred Stock
|
Jun. 30, 2013
Income Approach and Market Approach Valuation Techniques
Common and Preferred Stock
Minimum
|
Jun. 30, 2013
Income Approach and Market Approach Valuation Techniques
Common and Preferred Stock
Maximum
|
Jun. 30, 2013
Market Approach Valuation Technique
Warrants and Rights
|
Jun. 30, 2013
Market Approach Valuation Technique
Warrants and Rights
Minimum
|
Jun. 30, 2013
Market Approach Valuation Technique
Warrants and Rights
Maximum
|
Jun. 30, 2013
Fair Value, Measurements, Recurring
Warrants and Rights
|
Dec. 31, 2012
Fair Value, Measurements, Recurring
Warrants and Rights
|
||||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | |||||||||||||
DCF discount rate | 15.00% | 25.00% | |||||||||||
Market multiple | 9 | 10 | |||||||||||
Volatility | 20.00% | 150.00% | |||||||||||
Investments at fair value | $ 4,742 | $ 2,606 | $ 2,136 | $ 2,136 | $ 1,713 | ||||||||
Assets and liabilities at fair value | $ 233,292 | $ 228,550 | [1] | ||||||||||
|