Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Operating Lease Obligations

The Company has entered into leases for real estate and other facilities. These leases contain rent escalation clauses and options to extend the lease term. The Company does not include renewal options in the lease term for calculating the Company's lease liability as the renewal options allow the Company operational flexibility and the Company is not reasonably certain to exercise these renewal options at this time. The Company records the expenses related to occupancy and equipment on a straight-line basis over the lease term and these expenses are included in occupancy and equipment expense and client services and business development expense in the accompanying condensed consolidated statements of operations.

For the three and nine months ended September 30, 2021 and 2020, quantitative information regarding the Company's operating lease obligations reflected in the accompanying condensed consolidated statements of operations were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(dollars in thousands)
Lease cost
Operating lease cost	$	6,074	$	5,687	$	17,677	$	17,044
Short-term lease cost	62		52		127		155
Variable lease cost	920		829		2,690		2,431
Sublease income	(132)		(190)		(448)		(623)
Total lease costs	$	6,924	$	6,378	$	20,046	$	19,007

The following table summarizes the supplemental cash flow information and certain other information related to operating leases for the nine months ended September 30, 2021 and 2020:

	Nine Months Ended September 30,
	2021			2020
	(dollars in thousands)
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	20,555		$	20,228
Weighted average remaining lease term - operating leases (in years)	5.33			4.78
Weighted average discount rate - operating leases	4.10		%	3.69		%

As of September 30, 2021, maturities of the outstanding operating lease liabilities for the Company were as follows:

	Equipment Leases (operating)		Real Estate and Other Facility Rental (a) (b)
	(dollars in thousands)
2021	$	66	$	4,646
2022	150		25,076
2023	11		22,807
2024	—		20,006
2025	—		9,461
Thereafter	—		24,368
Total operating leases	227		106,364
Less discount	6		12,183
Less short-term leases	—		19
Total lease liability	$	221	$	94,162

(a)The Company has entered into various agreements to sublease certain of its premises.

(b)During the nine months ended September 30, 2021, the Company recognized an increase of $30.1 million of operating right-of-use assets and leases liabilities related to facility leases.

See Note 19 for further information on the finance lease minimum payments.

Other Commitments

As of September 30, 2021, future minimum annual service payments for the Company were as follows:

	Service Payments
	(dollars in thousands)
2021	$	7,796
2022	22,331
2023	10,069
2024	5,254
2025	3,366
Thereafter	10,594
Total service payment commitments	$	59,410

Unfunded Commitments

The following table summarizes unfunded commitments as of September 30, 2021:

Entity	Unfunded Commitments		Commitment Term
	(dollars in thousands)
HealthCare Royalty Partners funds (a)	$	6,093	3.30 years
Eclipse Ventures Fund I, L.P.	$	28	3.30 years
Eclipse Fund II, L.P.	$	33	4.30 years
Eclipse Continuity Fund I, L.P.	$	34	5.30 years
Cowen Healthcare Investments III LP	$	3,207	5.30 years
Cowen Healthcare Investments IV LP	$	6,868	6.30 years
Cowen Sustainable Investments I LP	$	15,715	8.30 years

(a) The Company is a limited partner of the HealthCare Royalty Partners funds (which are managed by Healthcare Royalty Management) and is a member of HealthCare Royalty Partners General Partners. The Company will make its pro-rata investment in the HealthCare Royalty Partners funds along with the other limited partners.

Litigation

In the ordinary course of business, the Company and its affiliates, subsidiaries and current and former officers, directors and employees (the "Company and Related Parties") are named as defendants in, or as parties to, various legal actions and proceedings. Certain of these actions and proceedings assert claims or seek relief in connection with alleged violations of securities, banking, anti-fraud, anti-money laundering, employment and other statutory and common laws. Certain of these actual or threatened legal actions and proceedings include claims for substantial or indeterminate compensatory or punitive damages, or for injunctive relief.

In the ordinary course of business, the Company and Related Parties are also subject to governmental and regulatory examinations, information gathering requests (both formal and informal), certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. Certain of the Company's affiliates and subsidiaries are registered broker-dealers, futures commission merchants, investment advisers or other regulated entities and, in those capacities, are subject to regulation by various U.S., state and foreign securities, commodity futures and other regulators. In connection with formal and informal inquiries by these regulators, the Company receives requests and orders seeking documents and other information in connection with various aspects of the Company's regulated activities.

Due to the global scope of the Company's operations, and its presence in countries around the world, the Company and Related Parties may be subject to litigation, governmental and regulatory examinations, information gathering requests, investigations and proceedings (both formal and informal), in multiple jurisdictions with legal and regulatory regimes that may differ substantially, and present substantially different risks, from those to which the Company and Related Parties are subject in the United States.

The Company seeks to resolve all litigation and regulatory matters in the manner management believes is in the best interests of the Company and its shareholders, and contests liability, allegations of wrongdoing and, where applicable, the amount of damages or scope of any penalties or other relief sought as appropriate in each pending matter.

In accordance with US GAAP, the Company establishes reserves for contingencies when the Company believes that it is probable that a loss has been incurred and the amount of loss can be reasonably estimated. The Company discloses a contingency

if there is at least a reasonable possibility that a loss may have been incurred and there is no reserve for the loss because the conditions above are not met. The Company's disclosure includes an estimate of the reasonably possible loss or range of loss for those matters, for which an estimate can be made. Neither a reserve nor disclosure is required for losses that are deemed remote.The Company appropriately reserves for certain matters where, in the opinion of management, the likelihood of liability is probable and the extent of such liability is reasonably estimable. Such amounts are included within accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated statements of financial condition. Estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including, but not limited to, the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal counsel, the Company's defenses and its experience in similar cases or proceedings as well as its assessment of matters, including settlements, involving other defendants in similar or related cases or proceedings. The Company may increase or decrease its legal reserves in the future, on a matter-by-matter basis, to account for developments in such matters. The Company accrues legal fees as incurred.