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 adjustments 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 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):



	Three Months Ended June 30, 2016
										Adjustments
	Alternative Investment			Broker-Dealer			Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	35,287		$	35,287		$	—		$	—			$	35,287
Brokerage	—			49,026			49,026			—			(1,926		)	(e)	47,100
Management fees	15,729			766			16,495			(424		)	(5,422		)	(a)	10,649
Incentive income	429			—			429			150			(151		)	(a)	428
Investment Income	(16,636		)	(5,535		)	(22,171		)	—			22,171			(c)	—
Interest and dividends	—			—			—			—			4,105			(c)	4,105
Aircraft lease revenue	—			—			—			—			1,982			(f)	1,982
Reimbursement from affiliates	—			—			—			(134		)	2,375			(e)	2,241
Other revenue	1,540			(212		)	1,328			—			12,019			(c)(f)	13,346
Consolidated Funds revenues	—			—			—			2,093			—				2,093
Total revenues	1,062			79,332			80,394			1,685			35,153				117,231
Expenses
Non interest expense	14,067			81,952			96,019			—			12,620			(b)(c)(d)	108,639
Interest and dividends	3,257			1,118			4,375			—			2,569			(c)	6,944
Consolidated Funds expenses	—			—			—			2,143			—				2,143
Total expenses	17,324			83,070			100,394			2,143			15,189				117,726
Total other income (loss)	—			—			—			(17,771		)	(20,888		)	(c)	(38,658		)
Income taxes expense / (benefit)	—			—			—			—			(11,992		)	(b)	(11,992		)
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(2,008		)	—			(2,008		)	18,229			484				16,705
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc.	$	(18,270	)	$	(3,738	)	$	(22,008	)	$	—		$	11,552			$	(10,456	)



	Three Months Ended June 30, 2015
										Adjustments
	Alternative Investment			Broker-Dealer			Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	68,518		$	68,518		$	—		$	—			$	68,518
Brokerage	5			34,929			34,934			—			23			(e)	34,957
Management fees	16,540			—			16,540			(330		)	(5,944		)	(a)	10,266
Incentive income	(7,815		)	—			(7,815		)	(124		)	5,839			(a)	(2,100		)
Investment Income	9,259			2,956			12,215			—			(12,215		)	(c)	—
Interest and dividends	—			—			—			—			3,159			(c)	3,159
Reimbursement from affiliates	—			—			—			(91		)	3,593			(e)	3,502
Other revenue	72			(15		)	57			—			647			(c)	704
Consolidated Funds revenues	—			—			—			602			—				602
Total revenues	18,061			106,388			124,449			57			(4,898		)		119,608
Expenses
Non interest expense	16,198			92,890			109,088			—			1,179			(b)(c)(d)	110,267
Interest and dividends	2,866			1,279			4,145			—			1,950			(c)	6,095
Consolidated Funds expenses	—			—			—			634			—				634
Total expenses	19,064			94,169			113,233			634			3,129				116,996
Total other income (loss)	—			—			—			1,317			10,049			(c)	11,366
Income taxes expense / (benefit)	—			—			—			—			3,346			(b)	3,346
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(1,051		)	—			(1,051		)	(740		)	(2,125		)		(3,916		)
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc.	$	(2,054	)	$	12,219		$	10,165		$	—		$	(3,449	)		$	6,716



	Six Months Ended June 30, 2016
										Adjustments
	Alternative Investment			Broker-Dealer			Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	61,434		$	61,434		$	—		$	—			$	61,434
Brokerage	—			101,893			101,893			—			(3,858		)	(e)	98,035
Management fees	31,858			1,541			33,399			(794		)	(10,926		)	(a)	21,679
Incentive income	7,349			—			7,349			(7		)	(5,803		)	(a)	1,539
Investment Income	(15,242		)	(5,080		)	(20,322		)	—			20,322			(c)	—
Interest and dividends	—			—			—			—			7,758			(c)	7,758
Aircraft lease revenue	—			—			—			—			1,982			(f)	1,982
Reimbursement from affiliates	—			—			—			(148		)	6,276			(e)	6,128
Other revenue	2,222			59			2,281			—			13,790			(c)(f)	16,071
Consolidated Funds revenues	—			—			—			3,644			—				3,644
Total revenues	26,187			159,847			186,034			2,695			29,541				218,270
Expenses
Non interest expense	34,329			165,713			200,042			—			15,410			(b)(c)(d)	215,452
Interest and dividends	6,440			2,209			8,649			—			5,605			(c)	14,254
Consolidated Funds expenses	—			—			—			3,959			—				3,959
Total expenses	40,769			167,922			208,691			3,959			21,015				233,665
Total other income (loss)	—			—			—			(21,184		)	(13,889		)	(c)	(35,073		)
Income taxes expense / (benefit)	—			—			—			—			(15,312		)	(b)	(15,312		)
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(4,235		)	—			(4,235		)	22,448			2,789				21,002
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc.	$	(18,817	)	$	(8,075	)	$	(26,892	)	$	—		$	12,738			$	(14,154	)



	Six Months June 30, 2015
									Adjustments
	Alternative Investment			Broker-Dealer		Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	133,751	$	133,751		$	—		$	—			$	133,751
Brokerage	23			70,435		70,458			—			(47		)	(e)	70,411
Management fees	33,147			—		33,147			(567		)	(11,930		)	(a)	20,650
Incentive income	7,547			—		7,547			(306		)	(6,969		)	(a)	272
Investment Income	31,090			10,005		41,095			—			(41,095		)	(c)	—
Interest and dividends	—			—		—			—			6,242			(c)	6,242
Reimbursement from affiliates	—			—		—			(176		)	7,320			(e)	7,144
Other revenue	93			32		125			—			1,247			(c)	1,372
Consolidated Funds revenues	—			—		—			860			—				860
Total revenues	71,900			214,223		286,123			(189		)	(45,232		)		240,702
Expenses
Non interest expense	51,032			189,218		240,250			—			2,686			(b)(c)(d)	242,936
Interest and dividends	5,910			2,257		8,167			—			3,707			(c)	11,874
Consolidated Funds expenses	—			—		—			992			—				992
Total expenses	56,942			191,475		248,417			992			6,393				255,802
Total other income (loss)	—			—		—			3,724			51,719			(c)	55,443
Income taxes expense / (benefit)	—			—		—			—			10,293			(b)	10,293
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(3,896		)	—		(3,896		)	(2,543		)	(197		)		(6,636		)
Economic Income (Loss) / Net Income (loss) attributable to Cowen Group, Inc.	$	11,062		$	22,748	$	33,810		$	—		$	(10,396	)		$	23,414

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 and acquisition related adjustments as management does not consider

these items when evaluating the performance of the segment.

underwriting income from the Company's insurance related activities net of 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) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of

revenues under US GAAP.

(f) Aircraft lease revenue is shown net of expenses in other revenue for Economic Income (Loss).

For the three and six months ended June 30, 2016 and 2015, there was no one fund or other customer which represented more than 10% of the Company's total revenues.