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. Expenses not directly associated with specific segments are allocated based on the most relevant measures applicable, including headcount, square footage and other factors.

In general, Economic Income (Loss) is a pre-tax measure that (i) eliminates the impact of consolidation for consolidated funds (ii) excludes goodwill and intangible impairment (iii) excludes certain other acquisition-related and/or reorganization expenses and (iv) excludes preferred stock dividends. 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 activist 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 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):



	Three Months Ended September 30, 2015
										Adjustments
	Alternative Investment			Broker-Dealer			Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	53,012		$	53,012		$	—		$	—			$	53,012
Brokerage	18			41,857			41,875			—			(790		)	(e)	41,085
Management fees	17,739			282			18,021			(371		)	(7,131		)	(a)	10,519
Incentive income	(8,629		)	—			(8,629		)	29			8,693			(a)	93
Investment Income	(16,781		)	(5,243		)	(22,024		)	—			22,024			(c)	—
Interest and dividends	—			—			—			—			3,604			(c)(e)	3,604
Reimbursement from affiliates	—			—			—			(85		)	3,440			(f)	3,355
Other revenue	(9		)	573			564			—			748			(c)	1,312
Consolidated Funds revenues	—			—			—			274			—				274
Total revenues	(7,662		)	90,481			82,819			(153		)	30,588				113,254
Expenses
Non interest expense	6,133			84,721			90,854			—			2,112			(c)(d)	92,966
Interest and dividends	2,970			1,287			4,257			—			3,110			(c)(e)	7,367
Consolidated Funds expenses	—			—			—			634			—				634
Total expenses	9,103			86,008			95,111			634			5,222				100,967
Total other income (loss)	—			—			—			554			(23,924		)	(c)	(23,370		)
Income taxes expense / (benefit)	—			—			—			—			(5,081		)	(b)	(5,081		)
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(2,231		)	—			(2,231		)	233			(2,346		)		(4,344		)
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc.	$	(18,996	)	$	4,473		$	(14,523	)	$	—		$	4,177			$	(10,346	)



	Three Months Ended September 30, 2014
									Adjustments
	Alternative Investment			Broker-Dealer		Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	45,799	$	45,799		$	—		$	—			$	45,799
Brokerage	15			35,568		35,583			—			(1,249		)	(e)	34,334
Management fees	16,319			—		16,319			(246		)	(6,277		)	(a)	9,796
Incentive income	4,488			—		4,488			(34		)	(5,291		)	(a)	(837		)
Investment Income	4,064			3,399		7,463			—			(7,463		)	(c)	—
Interest and dividends	—			—		—			—			13,725			(c)(e)	13,725
Reimbursement from affiliates	—			—		—			119			2,354			(f)	2,473
Other revenue	43			353		396			—			724			(c)	1,120
Consolidated Funds revenues	—			—		—			691			—				691
Total revenues	24,929			85,119		110,048			530			(3,477		)		107,101
Expenses
Non interest expense	21,754			77,050		98,804			—			832			(c)(d)	99,636
Interest and dividends	1,852			812		2,664			—			9,765			(c)(e)	12,429
Consolidated Funds expenses	—			—		—			635			—				635
Total expenses	23,606			77,862		101,468			635			10,597				112,700
Total other income (loss)	—			—		—			888			15,381			(c)	16,269
Income taxes expense / (benefit)	—			—		—			—			141			(b)	141
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(1,877		)	—		(1,877		)	(783		)	(1,346		)		(4,006		)
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc.	$	(554	)	$	7,257	$	6,703		$	—		$	(180	)		$	6,523



	Nine Months Ended September 30, 2015
									Adjustments
	Alternative Investment			Broker-Dealer		Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	186,763	$	186,763		$	—		$	—			$	186,763
Brokerage	41			112,292		112,333			—			(837		)	(e)	111,496
Management fees	50,885			282		51,167			(937		)	(19,061		)	(a)	31,169
Incentive income	(1,081		)	—		(1,081		)	(278		)	1,724			(a)	365
Investment Income	14,309			4,763		19,072			—			(19,072		)	(c)	—
Interest and dividends	—			—		—			—			9,846			(c)(e)	9,846
Reimbursement from affiliates	—			—		—			(261		)	10,760			(f)	10,499
Other revenue	84			605		689			—			1,995			(c)	2,684
Consolidated Funds revenues	—			—		—			1,134			—				1,134
Total revenues	64,238			304,705		368,943			(342		)	(14,645		)		353,956
Expenses
Non interest expense	57,164			273,939		331,103			—			4,799			(c)(d)	335,902
Interest and dividends	8,880			3,545		12,425			—			6,816			(c)(e)	19,241
Consolidated Funds expenses	—			—		—			1,626			—				1,626
Total expenses	66,044			277,484		343,528			1,626			11,615				356,769
Total other income (loss)	—			—		—			4,278			27,795			(c)	32,073
Income taxes expense / (benefit)	—			—		—			—			5,212			(b)	5,212
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(6,128		)	—		(6,128		)	(2,310		)	(2,542		)		(10,980		)
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc.	$	(7,934	)	$	27,221	$	19,287		$	—		$	(6,219	)		$	13,068



	Nine Months Ended September 30, 2014
									Adjustments
	Alternative Investment			Broker-Dealer		Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	125,653	$	125,653		$	—		$	—			$	125,653
Brokerage	40			104,943		104,983			—			(4,508		)	(e)	100,475
Management fees	46,574			—		46,574			(723		)	(17,439		)	(a)	28,412
Incentive income	16,900			—		16,900			(188		)	(12,327		)	(a)	4,385
Investment Income	29,025			8,207		37,232			—			(37,232		)	(c)	—
Interest and dividends	—			—		—			—			35,437			(c)(e)	35,437
Reimbursement from affiliates	—			—		—			(45		)	7,436			(f)	7,391
Other revenue	140			354		494			—			1,933			(c)	2,427
Consolidated Funds revenues	—			—		—			2,500			—				2,500
Total revenues	92,679			239,157		331,836			1,544			(26,700		)		306,680
Expenses
Non interest expense	71,421			220,913		292,334			—			3,269			(c)(d)	295,603
Interest and dividends	5,083			878		5,961			—			23,733			(c)(e)	29,694
Consolidated Funds expenses	—			—		—			1,335			—				1,335
Total expenses	76,504			221,791		298,295			1,335			27,002				326,632
Total other income (loss)	—			—		—			3,509			54,863			(c)	58,372
Income taxes expense / (benefit)	—			—		—			—			266			(b)	266
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(8,320		)	—		(8,320		)	(3,718		)	(1,371		)		(13,409		)
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc.	$	7,855		$	17,366	$	25,221		$	—		$	(476	)		$	24,745

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.

(b) Economic Income (Loss) excludes income taxes as management does not consider this item when evaluating the

performance of the segment.

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 (prior to January 2015) and other brokerage dividends

as brokerage revenue.

(f) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of

revenues under US GAAP.

For the three and nine months ended September 30, 2015 and 2014, there was no one fund or other customer which represented more than 10% of the Company's total revenues.