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Investments of Operating Entities and Consolidated Funds
 12 Months Ended
Dec. 31, 2021
Investments, Debt and Equity Securities [Abstract]  
Investments of Operating Entities and Consolidated Funds Investments of Operating Entities and Consolidated Funds
a.    Operating entities
Securities owned, at fair value
Securities owned, at fair value are held by the Company and are considered held for trading. Substantially all equity securities, which are not part of the Company's self-clearing securities finance activities, are pledged to external clearing brokers under terms which permit the external clearing broker to sell or re-pledge the securities to others subject to certain limitations.
As of December 31, 2021 and 2020, securities owned, at fair value consisted of the following:
As of December 31,
 20212020
 (dollars in thousands)
Common stock$2,428,820 $1,770,301 
Preferred stock134,930 69,358 
Warrants and rights46,459 27,701 
Government bonds16,002 19,721 
Corporate bonds21,468 86,503 
Convertible bonds5,250 6,040 
Term loan (*)3,907 12,623 
Trade claims (*)3,496 8,713 
Private investments410 642 
$2,660,742 $2,001,602 
(*)The Company has elected the fair value option for securities owned, at fair value with a fair value of $3.5 million and $8.8 million, respectively, at December 31, 2021 and 2020.
Receivable on and Payable for derivative contracts, at fair value
The Company predominantly enters into derivative transactions to satisfy client needs and to manage its own exposure to market and credit risks resulting from its trading activities. The Company’s direct exposure to derivative financial instruments includes futures, currency forwards, equity swaps, interest rate swaps and options. The Company's derivatives trading activities expose the Company to certain risks, such as price and interest rate fluctuations, volatility risk, credit risk, counterparty risk, foreign currency movements and changes in the liquidity of markets.
The Company's long and short exposure to derivatives is as follows:
Receivable on derivative contractsAs of December 31,
20212020
 Number of contracts / Notional ValueFair valueNumber of contracts / Notional ValueFair value
 (dollars in thousands)
Currency forwards$10,727 $80 $4,902 $15 
Equity swaps$2,235,181 306,578 $944,544 64,634 
Options (a)217,393 61,219 371,188 49,102 
Netting - swaps (b)(81,742)(62,269)
$286,135 $51,482 
Payable for derivative contracts
As of December 31,
20212020
 Number of contracts / Notional ValueFair valueNumber of contracts / Notional ValueFair value
 (dollars in thousands)
Futures$9,378 $266 $— $— 
Currency forwards$149,575 1,346 $123,346 3,067 
Equity swaps$988,329 114,689 $896,863 43,560 
Options (a)182,440 36,192 198,320 66,566 
Netting - swap (b)(92,330)(37,033)
$60,163 $76,160 
(a) Includes the volume of contracts for index, equity, commodity future and cash conversion options.
(b) Derivatives are reported on a net basis, by counterparty, when a legal right of offset exists under an enforceable netting agreement as well as net of cash collateral received or posted under enforceable credit support agreements. See Note 2f for further information on offsetting of derivative financial instruments.
The following tables present the gross and net derivative positions and the related offsetting amount, as of December 31, 2021 and 2020. This table does not include the impact of over-collateralization.
Gross amounts offset on the Consolidated Statements of Financial Condition (a)Net amounts included on the Consolidated Statements of Financial ConditionGross amounts not offset in the Consolidated Statements of Financial Condition
Gross amounts recognizedFinancial instruments (a)Cash Collateral pledged (a)Net amounts
(dollars in thousands)
As of December 31, 2021
Receivable on derivative contracts, at fair value$367,877 $81,742 $286,135 $1,421 $211,442 $73,272 
Payable for derivative contracts, at fair value152,493 92,330 60,163 2,839 — 57,324 
As of December 31, 2020
Receivable on derivative contracts, at fair value$113,751 $62,269 $51,482 $691 $169 $50,622 
Payable for derivative contracts, at fair value113,193 37,033 76,160 691 3,174 72,295 
(a)Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
The realized and unrealized gains/(losses) related to derivatives trading activities were $(205.5) million, $(146.9) million and $(13.0) million for the years ended December 31, 2021, 2020, and 2019, respectively, and are included in Investment income- Securities principal transactions, net in the accompanying consolidated statements of operations. The net gains (losses) on derivative contracts in the table above are one of a number of activities comprising the Company's business activities and are calculated before consideration of economic hedging transactions, which generally offset the net gains (losses) included above.
Pursuant to the various derivatives transactions discussed above, except for exchange traded derivatives and certain options, the Company is required to post/receive collateral. These amounts are recognized in receivable from brokers, dealers and clearing organizations and payable to brokers, dealers and clearing organizations respectively. As of December 31, 2021 and 2020, all derivative contracts were with major financial institutions.
Other investments
As of December 31, 2021 and 2020, other investments included the following:
As of December 31,
 20212020
 (dollars in thousands)
Portfolio funds, at fair value (1)$137,986 $133,454 
Carried interest (2)88,925 82,892 
Equity method investments (3)47,200 38,681 
$274,111 $255,027 
(1) Portfolio funds, at fair value
The portfolio funds, at fair value as of December 31, 2021 and 2020, included the following:
As of December 31,
20212020
(dollars in thousands)
HealthCare Royalty Partners LP (a)(*)$832 $1,072 
HealthCare Royalty Partners II LP (a)(*)1,259 1,588 
Eclipse Ventures Fund I, L.P. (b)5,829 4,457 
Eclipse Ventures Fund II, L.P. (b)2,354 1,733 
Eclipse Continuity Fund I, L.P. (b)1,641 1,101 
Starboard Value and Opportunity Fund LP (c)(*)49,252 42,519 
Starboard Value and Opportunity Fund Ltd (c) (*)2,732 2,364 
Lagunita Biosciences, LLC (d)5,671 3,850 
Starboard Leaders Fund LP (e)(*)2,823 2,020 
Formation8 Partners Fund I, L.P. (f)20,992 31,894 
BDC Fund I Coinvest 1, L.P. (g) 1,250 1,250 
Difesa Partners, LP (h) 1,017 848 
Cowen Sustainable Investments I LP (i)(*)13,102 — 
Cowen Healthcare Investments II LP (i) (*)13,055 26,186 
Cowen Healthcare Investments III LP (i)(*)8,426 5,714 
Cowen Healthcare Investments IV LP (i)(*)1,071 — 
Eclipse SPV I, LP (j)(*)1,445 1,708 
TriArtisan ES Partners LLC (k)(*)1,805 1,657 
TriArtisan PFC Partners LLC (l)(*)1,112 691 
Ramius Merger Fund LLC (m)(*)1,692 2,197 
Other private investment (n)(*)303 326 
Other affiliated funds (o)(*)323 279 
$137,986 $133,454 
* These portfolio funds are affiliates of the Company.
The Company has no unfunded commitments regarding the portfolio funds held by the Company except as noted in Note 27.
(a)HealthCare Royalty Partners, L.P. and HealthCare Royalty Partners II, L.P. are private equity funds and therefore distributions will be made when cash flows are received from the underlying investments, typically on a quarterly basis.
(b)Each of Eclipse Ventures Fund I, L.P., Eclipse Ventures Fund II, L.P. and Eclipse Continuity Fund I, L.P. are venture capital funds which invests in early stage and growth stage hardware companies. Distributions will be made when the underlying investments are liquidated.
(c)Starboard Value and Opportunity Fund LP and Starboard Value and Opportunity Fund Ltd permits quarterly withdrawals upon 90 days' notice.
(d)Lagunita Biosciences, LLC, is a healthcare investment company that creates and grows early stage companies to commercialize impactful translational science that addresses significant clinical needs, is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.
(e)Starboard Leaders Fund LP does not permit withdrawals, but instead allows terminations with respect to capital commitments upon 30 days' prior written notice at any time following the first anniversary of an investor's initial capital contribution.
(f)Formation8 Partners Fund I, L.P. is a private equity fund which invests in early stage and growth transformational information and energy technology companies. Distributions will be made when the underlying investments are liquidated.
(g)BDC Fund I Coinvest 1, L.P. is a private equity fund focused on investing in growth companies in industries disrupted by digitization. Distributions will be made when the underlying investments are liquidated.
(h)Difesa Partners, LP permits semi-annual withdrawals occurring on or after the anniversary of initial contribution upon 90 days written notice.
(i)Cowen Sustainable Investments I LP, Cowen Healthcare Investments II LP, Cowen Healthcare Investments III LP and Cowen Healthcare Investments IV LP are private equity funds.  Distributions are made from the fund when cash flows or securities are received from the underlying investments. Investors do not have redemption rights.
(j)Eclipse SPV I, L.P. is a co-investment vehicle organized to invest in a private company focused on software-driven automation projects.  Distributions will be made when the underlying investments are liquidated.
(k)TriArtisan ES Partners LLC is a co-investment vehicle organized to invest in a privately held nuclear services company. Distributions will be made when the underlying investment is liquidated.
(l)TriArtisan PFC Partners LLC is a co-investment vehicle organized to invest in a privately held casual dining restaurant chain. Distributions will be made when the underlying investment in liquidated.
(m)Ramius Merger Fund LLC permits monthly withdrawals on 45 days prior notice.
(n)Other private investment represents the Company's closed end investment in a portfolio fund that invests in a wireless broadband communication provider in Italy.
(o)The majority of these investment funds are affiliates of the Company or are managed by the Company and the investors can redeem from these funds as investments are liquidated.
(2)Carried interest
The Company applies an accounting policy election to recognize incentive income allocated to the Company under an equity ownership model in other investments in the accompanying consolidated statements of financial condition (see Note 2x). Carried interest allocated to the Company from certain portfolio funds represents Cowen's general partner capital accounts from those funds. These balances are subject to change upon cash distributions, additional allocations or reallocations back to limited partners within the respective funds. All carried interest balances are earned from affiliates of the Company.
A portion of the Company's carried interest is granted to employees through profit sharing awards designed to more closely align compensation with the overall realized performance of the Company. These arrangements enable certain employees to earn compensation based on performance revenue earned by the Company and are recorded within compensation payable in the accompanying consolidated statements of financial condition and employee compensation and benefits expense in the accompanying consolidated statements of operation based on the probable and estimable payments under the terms of the awards. 
The carried interest as of December 31, 2021 and 2020, included the following:
As of December 31,
20212020
(dollars in thousands)
Cowen Healthcare Investments II LP$23,327 $62,112 
Cowen Healthcare Investments III LP18,523 11,520 
Cowen Sustainable Investments I LP7,436 — 
Cowen Sustainable Investments Offshore I LP9,196 — 
CSI I Prodigy Co-Investment LP2,436 — 
CSI PRTA Co- Investment LP9,535 — 
TriArtisan TGIF Partners LLC4,047 3,361 
TriArtisan ES Partners LLC3,401 3,152 
TriArtisan PFC Partners LLC9,394 1,455 
Ramius Multi-Strategy Fund LP587 734 
Ramius Merger Fund LLC 861 368 
RCG IO Renergys Sarl136 190 
Other affiliated funds46 — 
$88,925 $82,892 
(3) Equity method investments
Equity method investments include investments held by the Company in several operating companies. The operating agreement that governs the management of day-to-day operations and affairs of these entities stipulates that certain decisions require support and approval from other members in addition to the support and approval of the Company. As a result, all operating decisions made in these entities requires the support of both the Company and an affirmative vote of a majority of the other managing members who are not affiliates of the Company. As the Company does not possess control over any of these entities, the presumption of consolidation has been overcome pursuant to current Accounting Standards and the Company accounts for these investments under the equity method of accounting. Included in equity method investments are the investments in (a) HealthCare Royalty Partners General Partners (b) Starboard Value (and certain related parties) which serves as an operating company whose operations primarily include the day-to-day management (including portfolio management) of several activist investment funds and related managed accounts and (c) operating companies whose operations primarily include the day-to-day management of real estate entities.
During 2020, the Company completed assessments of the recoverability of the Company's equity method investments and determined that the carrying value of the investment in Surf House Ocean View Holdings, LLC exceeded the estimated fair value of the Company's interest, which was other than temporary. An other than temporary impairment charge of $11.3 million, and $2.6 million for the years ended December 31, 2020, and 2019, respectively was recognized to reduce the carrying value of the investment to fair value, which was then completely impaired. Impairment charges are included in net gains (losses) on other investments on the accompanying consolidated statement of operations. The Company recorded no impairment charges in relation to its other equity method investments for the year ended December 31, 2021, 2020, and 2019.
The Company elected to use the cumulative earnings approach for the distributions it receives from its equity method investments. Under the cumulative earnings approach, any distributions received up to the amount of cumulative earnings are treated as return on investment and classified in operating activities within the cash flows. Any excess distributions would be considered as return of investments and classified in investing activities.
The following table summarizes equity method investments held by the Company:
As of December 31,
20212020
(dollars in thousands)
Starboard Value LP$36,889 $31,528 
HealthCare Royalty GP III, LLC 1,957 2,213 
RCG Longview Management, LLC— 268 
HealthCare Royalty GP, LLC 1,451 920 
HealthCare Royalty GP II, LLC 213 269 
HealthCare Royalty GP IV, LLC1,716 304 
RCG Longview Debt Fund IV Management, LLC331 331 
HCR Overflow Fund GP, LLC839 740 
RCG Longview Equity Management, LLC— 105 
 HCRP MGS Account Management, LLC 598 500 
HCR Stafford Fund GP, LLC2,955 1,025 
Liberty Harbor North— 222 
Other251 256 
$47,200 $38,681 
The Company's income (loss) from equity method investments was income of $35.5 million, $18.9 million and $24.6 million for the years ended December 31, 2021, 2020, and 2019, respectively, and is included in net gains (losses) on other investments on the accompanying consolidated statements of operations.
Securities sold, not yet purchased, at fair value
Securities sold, not yet purchased, at fair value represent obligations of the Company to deliver a specified security at a contracted price and, thereby, create a liability to purchase that security at prevailing prices. The Company's liability for securities to be delivered is measured at their fair value as of the date of the consolidated financial statements. However, these transactions result in off-balance sheet risk, as the Company's ultimate cost to satisfy the delivery of securities sold, not yet purchased, at fair value may exceed the amount reflected in the accompanying consolidated statements of financial condition. As of December 31, 2021 and 2020, securities sold, not yet purchased, at fair value consisted of the following:
As of December 31,
 20212020
 (dollars in thousands)
Common stock$1,192,396 $699,894 
Corporate bonds37 11,358 
Government bonds— 1,500 
Preferred stock9,009 6,589 
Warrants and rights6 8,774 
$1,201,448 $728,115 
Securities purchased under agreements to resell/securities sold under agreements to repurchase and securities lending and borrowing transactions
The following tables present the contractual gross and net securities borrowing and lending agreements and securities sold under agreements to repurchase and the related offsetting amount as of December 31, 2021 and 2020.
Gross amounts not offset on the Consolidated Statements of Financial Condition
Gross amounts recognized, net of allowanceGross amounts offset on the Consolidated Statements of Financial Condition (a)Net amounts included on the Consolidated Statements of Financial ConditionAdditional Amounts AvailableFinancial instrumentsCash Collateral pledged (b)Net amounts
(dollars in thousands)
As of December 31, 2021
Securities borrowed$1,704,603 $— $1,704,603 $— $1,652,007 $— $52,596 
Securities loaned1,586,572 — 1,586,572 — 1,592,140 — (5,568)
Securities sold under agreements to repurchase63,469 — 63,469 — 74,443 — (10,974)
As of December 31, 2020
Securities borrowed$1,908,187 $— $1,908,187 $— $1,809,399 $— $98,788 
Securities loaned2,476,414 — 2,476,414 — 2,383,342 — 93,072 
Securities purchased under agreements to resell191 — 191 — 204 — (13)
Securities sold under agreements to repurchase5,036 — 5,036 — 5,544 — (508)
(a)Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
(b)Includes the amount of cash collateral held/posted.
The following tables present gross obligations for securities loaned and securities sold under agreements to repurchase by remaining contractual maturity and class of collateral pledged as of December 31, 2021 and 2020:
Open and OvernightUp to 30 days31 - 90 daysGreater than 90 daysTotal
(dollars in thousands)
As of December 31, 2021
Securities loaned
    Common stock$1,570,835 $— $— $— $1,570,835 
    Corporate bonds15,737 — — — 15,737 
Securities sold under agreements to repurchase
    Common stock— 20,906 42,563 — 63,469 
As of December 31, 2020
Securities loaned
    Common stock2,232,688 — — — 2,232,688 
    Corporate bonds243,726 — — — 243,726 
Securities sold under agreements to repurchase
Corporate bonds$— $— $5,036 $— $5,036 
Variable Interest Entities
The total assets and liabilities of the variable interest entities for which the Company has concluded that it holds a variable interest, but for which it is not the primary beneficiary, are $9.7 billion and $744.5 million as of December 31, 2021 and $8.0 billion and $1.3 billion as of December 31, 2020, respectively. The carrying value of the Company's exposure to loss for these variable interest entities as of December 31, 2021 was $165.5 million, and as of December 31, 2020 was $210.7 million, all of which is included in other investments, at fair value in the accompanying consolidated statements of financial condition. Additionally, the Company's maximum exposure to loss for the variable interest entities noted above as of December 31, 2021 and 2020, was $233.6 million and $326.0 million, respectively.  The maximum exposure to loss often differs from the carrying value of exposure to loss of the variable interests. The maximum exposure to loss is dependent on the nature of the variable interests in the VIEs and is limited to the notional amounts of certain commitments and guarantees.
b.    Consolidated Funds
Securities owned, at fair value
As of December 31, 2021 and 2020, securities owned, at fair value, held by the Consolidated Funds consisted of the following:
As of December 31,
 20212020
 (dollars in thousands)
     Common stock$— $4,816 
     Warrants and rights— 5,806 
$— $10,622 
Other investments, at fair value
Investments in portfolio funds, at fair value
As of December 31, 2021 and 2020, investments in portfolio funds, at fair value, included the following:
As of December 31,
20212020
(dollars in thousands)
Investments of Enterprise LP$99,067 $104,475 
Investments of Cowen Sustainable Investments I LP— 88,195 
$99,067 $192,670 
Consolidated portfolio fund investments of Enterprise LP    
On May 12, 2010, the Company announced its intention to close Enterprise Master. Enterprise LP operated under a "master-feeder" structure up until January 1, 2019, when Enterprise Master distributed its capital to each feeder and was liquidated. As of December 31, 2021 and 2020, the consolidated investments in portfolio funds include Enterprise LP's investment in RCG Special Opportunities Fund, Ltd which is a portfolio fund that invests in a limited number of private equity investments directly as well as through affiliated portfolio funds.
Consolidated portfolio fund investments of Cowen Sustainable Investments I LP
Cowen Sustainable Investments I LP ("CSI I LP") is a private investment fund making debt and equity investments in companies and real assets that are accelerating the global transition to a sustainable economy. The fund primarily focuses its investments around four themes: (i) renewable energy and battery storage; (ii) clean transportation; (iii) sustainable agriculture and food production; and (iv) resource and industrial efficiency. As of December 31, 2020, CSI I LP had made investments in ecoATM, LLC, a manufacturer and owner of automated kiosks that allow consumers to sell back unwanted smart phones, and Proterra, Inc, a designer and manufacturer of zero-emission electric transit vehicles and electric vehicle technology solutions for commercial applications. CSI I LP is a private equity-style vehicle that does not permit redemptions; proceeds realized from the fund’s investments are expected to be distributed after the end of the fund’s investment period. CSI I LP was consolidated as of December 31, 2020 and deconsolidated during the first quarter of 2021 (See Note 2).
Indirect Concentration of the Underlying Investments Held by Consolidated Funds
From time to time, either directly held by the Company, indirectly through the Company's consolidated entities or indirectly through its investments in the Consolidated Funds, the Company may maintain exposure to a particular issue or issuer (both long and/or short) which may account for 5% or more of the Company's equity. Based on information that is available to the Company as of December 31, 2021 and 2020, the Company assessed whether or not its interests in an issuer for which the Company's pro-rata share exceeds 5% of the Company's equity. There was one indirect concentration that exceeded 5% of the Company's equity as of December 31, 2021 and December 31, 2020, respectively.
Through its investments in a Consolidated Fund and combined with direct Company investments, the Company maintained exposure to a particular investment which accounted for 5% or more of the Company's equity.
Investment's percentage of the Company's stockholders' equity
IssuerSecurity TypeCountryIndustryPercentage of Stockholders' EquityMarket Value
(dollars in thousands)
As of December 31, 2021Linkem S.p.A.Equity and warrantsItalyWireless Broadband8.22 %$83,537 
As of December 31, 2020Linkem S.p.A.Equity, loans and warrantsItalyWireless Broadband9.07 %$87,944