Segment Reporting

The Company conducts its operations through two segments: the investment management 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 (iv) excludes the bargain purchase gain which resulted from the Convergex Group acquisition and (v) 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. The consolidation of these funds results include 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 investment management segment, as ultimately, this income or loss is not income or loss for the investment management 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 investment management 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, 2017
									Adjustments
	Investment Management			Broker-Dealer		Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	57,383	$	57,383		$	—		$	—			$	57,383
Brokerage	19			89,949		89,968			—			(5,748		)	(i)	84,220
Management fees	12,983			811		13,794			(640		)	(4,931		)	(a)	8,223
Incentive income (loss)	4,597			—		4,597			(402		)	(2,250		)	(a)	1,945
Investment income (loss)	9,927			6,022		15,949			—			(15,949		)	(c)(f)	—
Interest and dividends	—			—		—			—			14,318			(c)	14,318
Reimbursement from affiliates	—			—		—			(88		)	572			(e)	484
Aircraft lease revenue	—			—		—			—			934			(f)	934
Reinsurance premiums	—			—		—			—			7,186			(g)	7,186
Other revenue	387			552		939			—			2,463			(g)	3,402
Consolidated Funds revenues	—			—		—			735			—				735
Total revenues	27,913			154,717		182,630			(395		)	(3,405		)		178,830
Expenses
Non interest expense	21,333			147,732		169,065			—			8,439			(b)(c)(d)	177,504
Interest and dividends	3,662			1,123		4,785			—			10,347			(c)	15,132
Consolidated Funds expenses	—			—		—			1,712			—				1,712
Total expenses	24,995			148,855		173,850			1,712			18,786				194,348
Total other income (loss)	—			—		—			7,535			20,092			(c) (h)	27,627
Income taxes expense / (benefit)	—			—		—			—			2,281			(b)	2,281
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(524		)	—		(524		)	(5,428		)	790				(5,162		)
Economic Income (Loss) / Net Income (loss) attributable to Cowen Inc.	$	2,394		$	5,862	$	8,256		$	—		$	(3,590	)		$	4,666



	Three Months Ended September 30, 2016
									Adjustments
	Investment Management			Broker-Dealer		Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	36,722	$	36,722		$	—		$	—			$	36,722
Brokerage	—			51,524		51,524			—			(1,919		)	(i)	49,605
Management fees	15,746			793		16,539			(445		)	(5,822		)	(a)	10,272
Incentive income (loss)	11,825			—		11,825			(562		)	(9,979		)	(a)	1,284
Investment income (loss)	14,798			4,932		19,730			—			(19,730		)	(c)(f)	—
Interest and dividends	—			—		—			—			3,906			(c)	3,906
Reimbursement from affiliates	—			—		—			(76		)	2,216			(e)	2,140
Aircraft lease revenue	—			—		—			—			1,089			(f)	1,089
Reinsurance premiums	—			—		—			—			8,905			(g)	8,905
Other revenue	17,145			25		17,170			—			(963		)	(g)	16,207
Consolidated Funds revenues	—			—		—			897			—				897
Total revenues	59,514			93,996		153,510			(186		)	(22,297		)		131,027
Expenses
Non interest expense	43,589			92,259		135,848			(429		)	12,759			(b)(d)	148,178
Interest and dividends	3,205			1,079		4,284			—			3,328			(c)	7,612
Consolidated Funds expenses	—			—		—			2,469			—				2,469
Total expenses	46,794			93,338		140,132			2,040			16,087				158,259
Total other income (loss)	—			—		—			19,269			31,981			(c)	51,250
Income taxes expense / (benefit)	—			—		—			—			8,759			(b)	8,759
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(2,354		)	—		(2,354		)	(17,043		)	919				(18,478		)
Economic Income (Loss) / Net Income (loss) attributable to Cowen Inc.	$	10,366		$	658	$	11,024		$	—		$	(14,243	)		$	(3,219	)



	Nine Months Ended September 30, 2017
									Adjustments
	Investment Management			Broker-Dealer		Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	158,082	$	158,082		$	—		$	—			$	158,082
Brokerage	38			209,236		209,274			—			(10,675		)	(i)	198,599
Management fees	39,730			2,365		42,095			(1,773		)	(14,735		)	(a)	25,587
Incentive income (loss)	18,626			—		18,626			(3,669		)	(8,740		)	(a)	6,217
Investment income (loss)	34,412			17,353		51,765			—			(51,765		)	(c)(f)	—
Interest and dividends	—			—		—			—			27,324			(c)	27,324
Reimbursement from affiliates	—			—		—			(241		)	2,872			(e)	2,631
Aircraft lease revenue	—			—		—			—			3,036			(f)	3,036
Reinsurance premiums	—			—		—			—			21,957			(g)	21,957
Other revenue	2,067			1,247		3,314			—			2,833			(g)	6,147
Consolidated Funds revenues	—			—		—			4,751			—				4,751
Total revenues	94,873			388,283		483,156			(932		)	(27,893		)		454,331
Expenses
Non interest expense	68,524			371,792		440,316			(199		)	37,916			(b)(d)	478,033
Interest and dividends	10,141			3,312		13,453			—			23,820			(c)	37,273
Consolidated Funds expenses	—			—		—			9,423			—				9,423
Total expenses	78,665			375,104		453,769			9,224			61,736				524,729
Total other income (loss)	—			—		—			44,111			80,196			(c) (h)	124,307
Income taxes expense / (benefit)	—			—		—			—			3,407			(b)	3,407
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(4,129		)	—		(4,129		)	(33,955		)	2,672				(35,412		)
Economic Income (Loss) / Net Income (loss) attributable to Cowen Inc.	$	12,079		$	13,179	$	25,258		$	—		$	(10,168	)		$	15,090



	Nine Months Ended September 30, 2016
										Adjustments
	Investment Management			Broker-Dealer			Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	98,156		$	98,156		$	—		$	—			$	98,156
Brokerage	—			153,417			153,417			—			(5,777		)	(i)	147,640
Management fees	47,604			2,334			49,938			(1,239		)	(16,748		)	(a)	31,951
Incentive income (loss)	19,174			—			19,174			(569		)	(15,782		)	(a)	2,823
Investment income (loss)	(444		)	(147		)	(591		)	—			591			(c)(f)	—
Interest and dividends	—			—			—			—			11,664			(c)	11,664
Reimbursement from affiliates	—			—			—			(224		)	8,492			(e)	8,268
Aircraft lease revenue	—			—			—			—			3,071			(f)	3,071
Reinsurance premiums	—			—			—			—			23,243			(g)	23,243
Other revenue	19,366			84			19,450			—			(1,510		)	(g)	17,940
Consolidated Funds revenues	—			—			—			4,541			—				4,541
Total revenues	85,700			253,844			339,544			2,509			7,244				349,297
Expenses
Non interest expense	77,917			257,972			335,889			(429		)	28,170			(b)(d)	363,630
Interest and dividends	9,645			3,288			12,933			—			8,933			(c)	21,866
Consolidated Funds expenses	—			—			—			6,428			—				6,428
Total expenses	87,562			261,260			348,822			5,999			37,103				391,924
Total other income (loss)	—			—			—			(1,915		)	18,092			(c)	16,177
Income taxes expense / (benefit)	—			—			—			—			(6,553		)	(b)	(6,553		)
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(6,589		)	—			(6,589		)	5,405			3,708				2,524
Economic Income (Loss) / Net Income (loss) attributable to Cowen Inc.	$	(8,451	)	$	(7,416	)	$	(15,867	)	$	—		$	(1,506	)		$	(17,373	)

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) included 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, the healthcare royalty business 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.

(d) Economic Income (Loss) recognizes the Company's proportionate share of expenses, for certain real estate

operating entities and the activist business, 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 investment income for Economic Income (Loss).

(g) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of

expenses, within other revenue.

(h) Economic Income (Loss) excludes the bargain purchase gain which resulted from the Convergex Group acquisition.

(i) Economic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities.

For the three and nine months ended September 30, 2017 and 2016, there was no one fund or other customer which represented more than 10% of the Company's total revenues.