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

6 Months Ended

Jun. 30, 2013

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

The following table presents the assets and liabilities that are measured at fair value on a recurring basis on the accompanying condensed consolidated statements of financial condition by caption and by level within the valuation hierarchy as of June 30, 2013 and 2012:

Operating Entities



	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

Consolidated Funds' investments



	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

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.



	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

(a) Change in consolidated funds.

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

(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.



	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.

- Definition

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

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