Variable Interest Entities and Consolidation of Investment Vehicles (Tables)

3 Months Ended

9 Months Ended

12 Months Ended

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2012

Dec. 31, 2011

Mar. 31, 2012

Variable Interest Entities and Consolidation of Investment Vehicles [Abstract]

Impact of Consolidated Investment Entities on Consolidated Financial Statements

Consolidating Balance Sheets



	December 31, 2012									March 31, 2012
	Balance Before Consolidation of CIVs		CIVs		Eliminations			Consolidated Totals		Balance Before Consolidation of CIVs		CIVs		Eliminations			Consolidated Totals
Current assets	$	1,803,299	$	64,112	$	(37,826	)	$	1,829,585	$	2,439,162	$	57,714	$	(39,408	)	$	2,457,468
Non-current assets	5,030,705		254,770		—			5,285,475		5,801,680		296,599		—			6,098,279
Total assets	$	6,834,004	$	318,882	$	(37,826	)	$	7,115,060	$	8,240,842	$	354,313	$	(39,408	)	$	8,555,747
Current liabilities	$	515,207	$	3,494	$	(404	)	$	518,297	$	971,804	$	4,467	$	(489	)	$	975,782
Long-term debt of CIVs	—		250,160		—			250,160		—		271,707		—			271,707
Other non-current liabilities	1,403,381		3,237		—			1,406,618		1,603,064		3,872		—			1,606,936
Total liabilities	1,918,588		256,891		(404		)	2,175,075		2,574,868		280,046		(489		)	2,854,425
Redeemable non-controlling interests	1,343		—		20,333			21,676		996		—		23,035			24,031
Total stockholders’ equity	4,914,073		61,991		(57,755		)	4,918,309		5,664,978		74,267		(61,954		)	5,677,291
Total liabilities and equity	$	6,834,004	$	318,882	$	(37,826	)	$	7,115,060	$	8,240,842	$	354,313	$	(39,408	)	$	8,555,747

Consolidating Statements of Income (Loss)



	Three Months Ended
	December 31, 2012												December 31, 2011
	Balance Before Consolidation of CIVs			CIVs			Eliminations			Consolidated Totals			Balance Before Consolidation of CIVs			CIVs			Eliminations			Consolidated Totals
Total operating revenues	$	674,506		$	—		$	(606	)	$	673,900		$	627,731		$	—		$	(753	)	$	626,978
Total operating expenses	1,307,124			703			(604		)	1,307,223			567,550			859			(754		)	567,655
Operating income (loss)	(632,618		)	(703		)	(2		)	(633,323		)	60,181			(859		)	1			59,323
Total other non-operating income (expense)	(1,385		)	(3,458		)	(598		)	(5,441		)	(19,357		)	7,424			358			(11,575		)
Income (loss) before income tax provision (benefit)	(634,003		)	(4,161		)	(600		)	(638,764		)	40,824			6,565			359			47,748
Income tax provision (benefit)	(180,214		)	—			—			(180,214		)	12,607			—			—			12,607
Net income (loss)	(453,789		)	(4,161		)	(600		)	(458,550		)	28,217			6,565			359			35,141
Less: Net income (loss) attributable to noncontrolling interests	81			—			(4,761		)	(4,680		)	85			—			6,924			7,009
Net income (loss) attributable to Legg Mason, Inc.	$	(453,870	)	$	(4,161	)	$	4,161		$	(453,870	)	$	28,132		$	6,565		$	(6,565	)	$	28,132



	Nine Months Ended
	December 31, 2012												December 31, 2011
	Balance Before Consolidation of CIVs			CIVs			Eliminations			Consolidated Totals			Balance Before Consolidation of CIVs			CIVs			Eliminations			Consolidated Totals
Total operating revenues	$	1,946,667		$	—		$	(1,780	)	$	1,944,887		$	2,016,413		$	—		$	(2,430	)	$	2,013,983
Total operating expenses	2,421,982			2,196			(1,779		)	2,422,399			1,746,967			2,906			(2,431		)	1,747,442
Operating income (loss)	(475,315		)	(2,196		)	(1		)	(477,512		)	269,446			(2,906		)	1			266,541
Total other non-operating income (expense)	(75,651		)	(6,089		)	(1		)	(81,741		)	(85,586		)	15,607			(3,472		)	(73,451		)
Income (loss) before income tax provision (benefit)	(550,966		)	(8,285		)	(2		)	(559,253		)	183,860			12,701			(3,471		)	193,090
Income tax provision (benefit)	(168,814		)	—			—			(168,814		)	38,868			—			—			38,868
Net income (loss)	(382,152		)	(8,285		)	(2		)	(390,439		)	144,992			12,701			(3,471		)	154,222
Less: Net income (loss) attributable to noncontrolling interests	379			—			(8,287		)	(7,908		)	244			—			9,230			9,474
Net income (loss) attributable to Legg Mason, Inc.	$	(382,531	)	$	(8,285	)	$	8,285		$	(382,531	)	$	144,748		$	12,701		$	(12,701	)	$	144,748

Fair Value Assets and Liabilities Measured on Recurring Basis of Consolidated Investments Entities



	As of December 31, 2012
	Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)			Total
Assets:
Trading investments:
Hedge funds	$	1,875	$	6,446		$	20,796		$	29,117
Investments:
CLO loans	—		216,465			—			216,465
CLO bonds	—		10,742			—			10,742
Private equity funds	—		—			26,307			26,307
Total investments	—		227,207			26,307			253,514
	$	1,875	$	233,653		$	47,103		$	282,631

Liabilities:
CLO debt	$	—	$	—		$	(250,160	)	$	(250,160	)
Derivative liabilities	—		(3,237		)	—			(3,237		)
	$	—	$	(3,237	)	$	(250,160	)	$	(253,397	)



	As of December 31, 2012
	Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)			Total
Assets:
Trading investments:
Hedge funds	$	1,875	$	6,446		$	20,796		$	29,117
Investments:
CLO loans	—		216,465			—			216,465
CLO bonds	—		10,742			—			10,742
Private equity funds	—		—			26,307			26,307
Total investments	—		227,207			26,307			253,514
	$	1,875	$	233,653		$	47,103		$	282,631

Liabilities:
CLO debt	$	—	$	—		$	(250,160	)	$	(250,160	)
Derivative liabilities	—		(3,237		)	—			(3,237		)
	$	—	$	(3,237	)	$	(250,160	)	$	(253,397	)



	As of March 31, 2012
	Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)			Total
Assets:
Trading investments:
Hedge funds	$	1,016	$	6,443		$	24,116		$	31,575
Investments:
CLO loans	—		260,690			—			260,690
CLO bonds	—		9,092			—			9,092
Private equity funds	—		—			25,071			25,071
Total investments	—		269,782			25,071			294,853
	$	1,016	$	276,225		$	49,187		$	326,428

Liabilities:
CLO debt	$	—	$	—		$	(271,707	)	$	(271,707	)
Derivative liabilities	—		(3,872		)	—			(3,872		)
	$	—	$	(3,872	)	$	(271,707	)	$	(275,579	)

Fair Value Inputs Assets Liabilities Quantitative Information



Value as of December 31, 2012			Valuation technique	Unobservable input	Range (weighted average)
$	(250,160	)	Discounted cash flow	Discount rate	1.2	%	-	12.0	%	(2.5%)
				Default rate	2.5	%	-	4.0	%	(3.4%)
				Constant prepayment rate				15.0	%



Value as of December 31, 2012			Valuation technique	Unobservable input	Range (weighted average)
$	(250,160	)	Discounted cash flow	Discount rate	1.2	%	-	12.0	%	(2.5%)
				Default rate	2.5	%	-	4.0	%	(3.4%)
				Constant prepayment rate				15.0	%

Fair Value Assets and Liabilities of Consolidated Investment Entities Measured on Recurring Basis, Unobservable Input, Reconciliation



	Value as of September 30, 2012			Purchases		Sales			Settlements / Other		Transfers		Realized and unrealized gains/(losses), net			Value as of December 31, 2012
Assets:
Hedge funds	$	21,751		$	426	$	(1,359	)	$	—	$	—	$	(22	)	$	20,796
Private equity funds	23,237			2,781		(327		)	—		—		616			26,307
	$	44,988		$	3,207	$	(1,686	)	$	—	$	—	$	594		$	47,103
Liabilities:
CLO debt	$	(277,309	)	$	—	$	—		$	32,821	$	—	$	(5,672	)	$	(250,160	)
Total realized and unrealized gains (losses), net													$	(5,078	)



	Value as of September 30, 2011			Purchases		Sales			Transfers		Realized and unrealized gains, net		Value as of December 31, 2011
Assets:
Hedge funds	$	33,327		$	3,794	$	(10,954	)	$	—	$	380	$	26,547
Private equity funds	23,513			—		—			—		358		23,871
	$	56,840		$	3,794	$	(10,954	)	$	—	$	738	$	50,418
Liabilities:
CLO debt	$	(267,714	)	$	—	$	—		$	—	$	2,236	$	(265,478	)
Total realized and unrealized gains, net											$	2,974



	Value as of March 31, 2012			Purchases		Sales			Settlements / Other		Transfers		Realized and unrealized gains/(losses), net			Value as of December 31, 2012
Assets:
Hedge funds	$	24,116		$	922	$	(3,276	)	$	—	$	—	$	(966	)	$	20,796
Private equity funds	25,071			2,781		(2,357		)	—		—		812			26,307
	$	49,187		$	3,703	$	(5,633	)	$	—	$	—	$	(154	)	$	47,103
Liabilities:
CLO debt	$	(271,707	)	$	—	$	—		$	32,821	$	—	$	(11,274	)	$	(250,160	)
Total realized and unrealized gains (losses), net													$	(11,428	)



	Value as of March 31, 2011			Purchases		Sales			Transfers In		Transfers Out			Realized and unrealized gains, net		Value as of December 31, 2011
Assets:
Hedge funds	$	34,272		$	14,493	$	(26,461	)	$	1,057	$	(1,057	)	$	4,243	$	26,547
Private equity funds	17,879			3,974		—			—		—			2,018		23,871
	$	52,151		$	18,467	$	(26,461	)	$	1,057	$	(1,057	)	$	6,261	$	50,418
Liabilities:
CLO debt	$	(278,320	)	$	—	$	—		$	—	$	—		$	12,842	$	(265,478	)
Total realized and unrealized gains, net														$	19,103

Consolidated Investment Vehicles, Fair Value, Investments Entities that Calculate Net Asset Value Per Share



		Fair Value Determined Using NAV						As of December 31, 2012
Category of Investment	Investment Strategy	December 31, 2012			March 31, 2012			Unfunded Commitments		Remaining Term
Hedge funds	Global macro, fixed income, long/short equity, systematic, emerging market, U.S. and European hedge	$	29,117	⁽¹⁾	$	31,575	⁽²⁾	n/a		n/a
Private equity funds	Long/short equity	26,307		⁽³⁾	25,071		⁽³⁾	$	7,444	6 years
Total		$	55,424		$	56,646		$	7,444

n/a – not applicable


(1)	9% daily redemption; 6% monthly redemption; 3% quarterly redemption; and 82% are subject to three to five year lock-up or side pocket provisions.


(2)	5% daily redemption; 6% monthly redemption; 5% quarterly redemption; and 84% are subject to three to five year lock-up or side pocket provisions.


(3)	Liquidations are expected over the remaining term.

Fair Value, Option, Quantitative Disclosures

The following table presents the fair value and unpaid principal balance of CLO loans, bonds and debt carried at fair value under the fair value option as of December 31, 2012 and March 31, 2012:



	December 31, 2012			March 31, 2012
CLO loans and bonds
Unpaid principal balance	$	231,388		$	277,156
Unpaid principal balance in excess of fair value	(4,181		)	(7,374		)
Fair value	$	227,207		$	269,782

Unpaid principal balance of loans that are more than 90 days past due and also in nonaccrual status	$	—		$	2,963
Unpaid principal balance in excess of fair value for loans that are more than 90 days past due and also in nonaccrual status	—			(1,023		)
Fair value of loans more than 90 days past due and in nonaccrual status	$	—		$	1,940

CLO debt
Principal amounts outstanding	$	267,901		$	300,959
Excess unpaid principal over fair value	(17,741		)	(29,252		)
Fair value	$	250,160		$	271,707

Schedule of Variable Interest Entities Assets Liabilities and Maximum Risk of Loss



	As of December 31, 2012
	VIE Assets Not Consolidated		VIE Liabilities Not Consolidated		Equity Interests on the Consolidated Balance Sheet		Maximum Risk of Loss ⁽¹⁾
CLO	$	392,830	$	364,830	$	—	$	448
Other sponsored investment funds	13,062,094		1,127,160		48,768		85,884
Total	$	13,454,924	$	1,491,990	$	48,768	$	86,332



	As of March 31, 2012
	VIE Assets Not Consolidated		VIE Liabilities Not Consolidated		Equity Interests on the Consolidated Balance Sheet		Maximum Risk of Loss ⁽¹⁾
CLO	$	390,861	$	362,861	$	—	$	442
Public-Private Investment Program ⁽²⁾	674,520		3,213		282		282
Other sponsored investment funds	17,296,521		20,544		54,161		93,521
Total	$	18,361,902	$	386,618	$	54,443	$	94,245


(1)	Includes equity investments the Company has made or is required to make and any earned but uncollected management fees.


(2)	Upon liquidation of the fund, Legg Mason's investment was fully redeemed in the quarter ended December 31, 2012.

- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

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Reference 2: http://www.xbrl.org/2003/role/presentationRef

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-Name Statement of Financial Accounting Standard (FAS)

-Number 159

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Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 19

-Subparagraph a

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

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-Number 159

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Reference 5: http://www.xbrl.org/2003/role/presentationRef

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-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 19

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+ Details