UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2019~~March 31, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_________to ________

Commission File Number: 0-10200

________________________________________

SEI INVESTMENTS COMPANY

(Exact Name of Registrant as Specified in its Charter)

________________________________________



Pennsylvania		23-1707341
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

1 Freedom Valley Drive, Oaks, Pennsylvania 19456-1100

(Address of Principal Executive Offices) (Zip Code)

(610) 676-1000

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:




Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SEIC	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x

The number of shares outstanding of the registrant’s common stock, as of the close of business on ~~October~~April 17, ~~2019:~~2020:



Common Stock, $0.01 par value		~~150,256,238~~147,931,955

SEI INVESTMENTS COMPANY TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements.	2
	Consolidated Balance Sheets (Unaudited) -- ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	2
	Consolidated Statements of Operations (Unaudited) -- For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	4
	Consolidated Statements of Comprehensive Income (Unaudited) -- For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	5
	Consolidated Statements of Changes in Equity (Unaudited) -- For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	6
	Consolidated Condensed Statements of Cash Flows (Unaudited) -- For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	87
	Notes to Consolidated Financial Statements	98
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	3026
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	4439
Item 4.	Controls and Procedures.	4439

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	4540
Item 1A.	Risk Factors.	4642
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	4742
Item 6.	Exhibits.	4742
	Signatures	4843

~~Page~~ 1 ~~of 48~~

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

SEI Investments Company

Consolidated Balance Sheets

(unaudited)

(In thousands, except par value)


	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Assets
Current Assets:
Cash and cash equivalents	$	767,809	$	754,525	$	746,870	$	841,446
Restricted cash	3,100		3,514		3,101		3,101
Receivables from investment products	52,140		49,869		51,612		54,165
Receivables, net of allowance for doubtful accounts of $1,311 and $718	349,332		315,336
Receivables, net of allowance for doubtful accounts of $1,281 and $1,201					358,130		340,358
Securities owned	32,862		30,892		31,420		33,486
Other current assets	34,894		36,676		42,017		32,289
Total Current Assets	1,240,137		1,190,812		1,233,150		1,304,845
Property and Equipment, net of accumulated depreciation of $346,377 and $338,206	154,584		145,863
Property and Equipment, net of accumulated depreciation of $360,148 and $353,453					173,255		160,859
Operating Lease Right-of-Use Assets	41,054		—		41,383		42,789
Capitalized Software, net of accumulated amortization of $430,644 and $395,171	300,848		309,500
Investments Available for Sale	101,580		111,901
Capitalized Software, net of accumulated amortization of $454,776 and $442,677					290,427		296,068
Available for Sale and Equity Securities					110,558		116,917
Investments in Affiliated Funds, at fair value	5,533		4,887		3,753		5,988
Investment in Unconsolidated Affiliate	41,437		52,342		45,285		67,413
Goodwill	64,489		64,489		64,489		64,489
Intangible Assets, net of accumulated amortization of $7,853 and $5,090	28,907		31,670
Intangible Assets, net of accumulated amortization of $9,694 and $8,773					27,066		27,987
Deferred Contract Costs	28,506		24,007		32,760		30,991
Deferred Income Taxes	1,421		2,042		2,603		2,822
Other Assets, net	32,109		34,155		33,302		30,202
Total Assets	$	2,040,605	$	1,971,668	$	2,058,031	$	2,151,370

The accompanying notes are an integral part of these consolidated financial statements.

~~Page~~ 2 ~~of 48~~

SEI Investments Company

Consolidated Balance Sheets

(unaudited)

(In thousands, except par value)


	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Liabilities and Equity
Current Liabilities:
Accounts payable	$	8,712		$	10,920		$	13,086		$	4,423
Accrued liabilities	193,919			279,634			179,772			272,801
Current portion of long-term operating lease liabilities	7,888			—			8,715			9,156
Deferred revenue	5,529			5,154			5,978			7,185
Total Current Liabilities	216,048			295,708			207,551			293,565
Long-term Income Taxes Payable	803			803			803			803
Deferred Income Taxes	56,339			57,795			53,991			55,722
Long-term Operating Lease Liabilities	37,816			—			37,008			38,450
Other Long-term Liabilities	26,292			24,215			24,412			24,052
Total Liabilities	337,298			378,521			323,765			412,592
Commitments and Contingencies
Shareholders' Equity:
Common stock, $0.01 par value, 750,000 shares authorized; 150,222 and 153,634 shares issued and outstanding	1,502			1,536
Common stock, $0.01 par value, 750,000 shares authorized; 147,903 and 149,745 shares issued and outstanding							1,479			1,497
Capital in excess of par value	1,137,636			1,106,641			1,170,649			1,158,900
Retained earnings	599,949			517,970			597,486			601,885
Accumulated other comprehensive loss, net	(35,780		)	(33,000		)	(35,348		)	(23,504		)
Total Shareholders' Equity	1,703,307			1,593,147			1,734,266			1,738,778
Total Liabilities and Shareholders' Equity	$	2,040,605		$	1,971,668		$	2,058,031		$	2,151,370

The accompanying notes are an integral part of these consolidated financial statements.

~~Page~~ 3 ~~of 48~~

SEI Investments Company

Consolidated Statements of Operations

(unaudited)

(In thousands, except per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Revenues:
Asset management, administration and distribution fees	$	330,943		$	322,778		$	969,812		$	955,495		$	331,853		$	313,944
Information processing and software servicing fees	85,311			85,904			256,848			263,615			82,909			86,876
Total revenues	416,254			408,682			1,226,660			1,219,110			414,762			400,820
Expenses:
Subadvisory, distribution and other asset management costs	44,978			45,276			134,960			135,690			45,337			43,805
Software royalties and other information processing costs	7,198			7,767			22,719			24,462			7,447			8,128
Compensation, benefits and other personnel	130,579			127,480			386,913			379,132			131,481			130,335
Stock-based compensation	5,453			5,878			15,555			16,396			6,929			5,038
Consulting, outsourcing and professional fees	48,789			51,758			144,325			150,906			53,290			50,206
Data processing and computer related	22,338			21,754			65,514			63,478			22,704			20,992
Facilities, supplies and other costs	15,926			16,689			51,771			52,085			16,796			18,745
Amortization	12,947			12,405			38,407			36,420			13,077			12,679
Depreciation	7,409			7,255			22,162			21,515			7,473			7,331
Total expenses	295,617			296,262			882,326			880,084			304,534			297,259
Income from operations	120,637			112,420			344,334			339,026			110,228			103,561
Net gain (loss) from investments	611			89			2,121			(460		)
Net (loss) gain from investments													(3,989		)	1,279
Interest and dividend income	4,167			3,482			12,737			9,146			3,203			4,257
Interest expense	(154		)	(122		)	(477		)	(511		)	(152		)	(157		)
Equity in earnings of unconsolidated affiliate	37,609			41,726			112,758			123,406			29,907			37,317
Income before income taxes	162,870			157,595			471,473			470,607			139,197			146,257
Income taxes	30,702			29,276			98,784			80,773			29,955			32,276
Net income	$	132,168		$	128,319		$	372,689		$	389,834		$	109,242		$	113,981
Basic earnings per common share	$	0.88		$	0.82		$	2.45		$	2.48		$	0.73		$	0.74
Shares used to compute basic earnings per share	150,855			156,283			152,009			157,086			149,468			153,310
Diluted earnings per common share	$	0.86		$	0.80		$	2.40		$	2.41		$	0.72		$	0.73
Shares used to compute diluted earnings per share	154,227			160,511			155,311			162,053			152,368			156,541
Dividends declared per common share	$	—		$	—		$	0.33		$	0.30

The accompanying notes are an integral part of these consolidated financial statements.

~~Page~~ 4 ~~of 48~~

SEI Investments Company

Consolidated Statements of Comprehensive Income

(unaudited)

(In thousands)


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended March 31,
	2019				2018					2019				2018					2020				2019
Net income		$	132,168				$	128,319			$	372,689				$	389,834			$	109,242			$	113,981
Other comprehensive loss, net of tax:
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments		(5,207		)			(435		)		(4,687		)			(7,261		)		(13,075		)		3,397
Unrealized gain (loss) on investments:
Unrealized gains (losses) during the period, net of income taxes of $(27), $91, $(497) and $463	71				(337	)				1,633				(1,662	)
Less: reclassification adjustment for losses (gains) realized in net income, net of income taxes of $(23), $(29), $(73) and $(75)	96	167			130		(207		)	274	1,907			(32	)	(1,694		)
Total other comprehensive loss, net of tax		(5,040		)			(642		)		(2,780		)			(8,955		)
Unrealized gains (losses) during the period, net of income taxes of $(339) and $(240)																			1,131				797
Less: reclassification adjustment for losses (gains) realized in net income, net of income taxes of $(28) and $(24)																			100	1,231			86	883
Total other comprehensive (loss) income, net of tax																				(11,844		)		4,280
Comprehensive income		$	127,128				$	127,677			$	369,909				$	380,879			$	97,398			$	118,261

The accompanying notes are an integral part of these consolidated financial statements.

~~Page~~ 5 ~~of 48~~

SEI Investments Company

Consolidated Statements of Changes in Equity

(unaudited)

(In thousands)


	Shares of Common Stock		Common Stock			Capital In Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity			Shares of Common Stock		Common Stock			Capital In Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
	For the Three Months Ended September 30, 2019																	For the Three Months Ended March 31, 2020
Balance, July 1, 2019	150,955		$	1,509		$	1,122,068		$	541,664		$	(30,740	)	$	1,634,501
Balance, January 1, 2020																		149,745		$	1,497		$	1,158,900		$	601,885		$	(23,504	)	$	1,738,778
Net income	—		—			—			132,168			—			132,168			—		—			—			109,242			—			109,242
Other comprehensive loss	—		—			—			—			(5,040		)	(5,040		)	—		—			—			—			(11,844		)	(11,844		)
Purchase and retirement of common stock	(1,400	)	(15		)	(7,469		)	(73,883		)	—			(81,367		)	(2,433	)	(24		)	(13,767		)	(113,641		)	—			(127,432		)
Issuance of common stock under employee stock purchase plan	21		1			998			—			—			999			21		—			1,106			—			—			1,106
Issuance of common stock upon exercise of stock options	646		7			16,586			—			—			16,593			570		6			17,481			—			—			17,487
Stock-based compensation	—		—			5,453			—			—			5,453			—		—			6,929			—			—			6,929
Balance, September 30, 2019	150,222		$	1,502		$	1,137,636		$	599,949		$	(35,780	)	$	1,703,307
Balance, March 31, 2020																		147,903		$	1,479		$	1,170,649		$	597,486		$	(35,348	)	$	1,734,266


	Shares of Common Stock		Common Stock			Capital In Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity			Shares of Common Stock		Common Stock			Capital In Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
	For the Three Months Ended September 30, 2018																	For the Three Months Ended March 31, 2019
Balance, July 1, 2018	156,800		$	1,568		$	1,094,771		$	522,764		$	(28,221	)	$	1,590,882
Balance, January 1, 2019																		153,634		$	1,536		$	1,106,641		$	517,970		$	(33,000	)	$	1,593,147
Net income	—		—			—			128,319			—			128,319			—		—			—			113,981			—			113,981
Other comprehensive loss	—		—			—			—			(642		)	(642		)
Other comprehensive income																		—		—			—			—			4,280			4,280
Purchase and retirement of common stock	(1,668	)	(17		)	(8,117		)	(94,502		)	—			(102,636		)	(1,725	)	(17		)	(9,202		)	(79,570		)	—			(88,789		)
Issuance of common stock under employee stock purchase plan	21		1			1,106			—			—			1,107			32		—			1,322			—			—			1,322
Issuance of common stock upon exercise of stock options	322		3			7,599			—			—			7,602			335		4			7,567			—			—			7,571
Stock-based compensation	—		—			5,878			—			—			5,878			—		—			5,038			—			—			5,038
Balance, September 30, 2018	155,475		$	1,555		$	1,101,237		$	556,581		$	(28,863	)	$	1,630,510
Balance, March 31, 2019																		152,276		$	1,523		$	1,111,366		$	552,381		$	(28,720	)	$	1,636,550

The accompanying notes are an integral part of these consolidated financial statements.

~~Page 6 of 48~~

~~SEI Investments Company~~

~~Consolidated Statements of Changes in Equity~~

~~(unaudited)~~

~~(In thousands)~~

Shares of Common Stock Common Stock Capital In Excess of Par Value Retained Earnings Accumulated Other Comprehensive Loss Total Equity
For the Nine Months Ended September 30, 2019
Balance, January 1, 2019 153,634
$ 1,536
$ 1,106,641
$ 517,970
$ (33,000 ) $ 1,593,147
Net income —
—
—
372,689
—
372,689
Other comprehensive loss —
—
—
—
(2,780 ) (2,780 )
Purchase and retirement of common stock (4,950 ) (50 ) (26,408 ) (240,726 ) —
(267,184 )
Issuance of common stock under employee stock purchase plan 77
1
3,391
—
—
3,392
Issuance of common stock upon exercise of stock options 1,461
15
38,457
—
—
38,472
Stock-based compensation —
—
15,555
—
—
15,555
Dividends declared ($0.33 per share) —
—
—
(49,984 ) —
(49,984 )
Balance, September 30, 2019 150,222
$ 1,502
$ 1,137,636
$ 599,949
$ (35,780 ) $ 1,703,307

Shares of Common Stock Common Stock Capital In Excess of Par Value Retained Earnings Accumulated Other Comprehensive Loss Total Equity
For the Nine Months Ended September 30, 2018
Balance, January 1, 2018 157,069
$ 1,571
$ 1,027,709
$ 467,467
$ (19,908 ) $ 1,476,839
Cumulative effect upon adoption of ASC 606 —
—
—
14,402
—
14,402
Net income —
—
—
389,834
—
389,834
Other comprehensive loss —
—
—
—
(8,955 ) (8,955 )
Purchase and retirement of common stock (4,419 ) (44 ) (21,507 ) (267,983 ) —
(289,534 )
Issuance of common stock under employee stock purchase plan 57
1
3,257
—
—
3,258
Issuance of common stock upon exercise of stock options 2,768
27
75,382
—
—
75,409
Stock-based compensation —
—
16,396
—
—
16,396
Dividends declared ($0.30 per share) —
—
—
(47,139 ) —
(47,139 )
Balance, September 30, 2018 155,475
$ 1,555
$ 1,101,237
$ 556,581
$ (28,863 ) $ 1,630,510

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Page 7 of 48~~6

SEI Investments Company

Consolidated Condensed Statements of Cash Flows

(unaudited)

(In thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Cash flows from operating activities:
Net income	$	372,689		$	389,834		$	109,242		$	113,981
Adjustments to reconcile net income to net cash provided by operating activities (See Note 1)	8,846			28,064			(10,270		)	(54,082		)
Net cash provided by operating activities	381,535			417,898			98,972			59,899
Cash flows from investing activities:
Additions to property and equipment	(30,515		)	(21,652		)	(20,674		)	(7,317		)
Additions to capitalized software	(26,821		)	(33,371		)	(6,458		)	(9,937		)
Purchases of marketable securities	(126,030		)	(122,259		)	(29,407		)	(43,672		)
Prepayments and maturities of marketable securities	137,783			116,568			37,623			45,200
Cash paid for acquisition, net of cash acquired	—			(5,794		)
Sales of marketable securities							64			—
Other investing activities	2,538			(10,900		)	1,500			—
Net cash used in investing activities	(43,045		)	(77,408		)	(17,352		)	(15,726		)
Cash flows from financing activities:
Repayments under revolving credit facility	—			(30,000		)
Payment of contingent consideration							(633		)	—
Purchase and retirement of common stock	(262,861		)	(290,563		)	(130,558		)	(90,777		)
Proceeds from issuance of common stock	41,864			78,667			18,593			8,893
Payment of dividends	(100,745		)	(94,318		)	(52,452		)	(50,760		)
Net cash used in financing activities	(321,742		)	(336,214		)	(165,050		)	(132,644		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(3,878		)	(6,552		)	(11,146		)	3,272
Net increase (decrease) in cash, cash equivalents and restricted cash	12,870			(2,276		)
Net decrease in cash, cash equivalents and restricted cash							(94,576		)	(85,199		)
Cash, cash equivalents and restricted cash, beginning of period	758,039			747,752			844,547			758,039
Cash, cash equivalents and restricted cash, end of period	$	770,909		$	745,476		$	749,971		$	672,840

Non-cash operating activities:
Operating lease right-of-use assets and lease liabilities recorded upon adoption of ASC 842	$	44,169		$	—
Operating lease right-of-use assets and net lease liabilities recorded upon adoption of ASC 842							$	—		$	44,169

The accompanying notes are an integral part of these consolidated financial statements.

~~Page 8 of 48~~7

Notes to Consolidated Financial Statements

(all figures are in thousands except share and per share data)

Note 1. Summary of Significant Accounting Policies

Nature of Operations

SEI Investments Company (the Company), a Pennsylvania corporation, provides comprehensive platforms for investment processing, investment ~~management,~~operations and investment ~~operations platforms~~management to wealth managers, financial institutions, financial advisors, investment managers, institutional investors ~~investment managers~~ and ultra-high-net-worth families in the United States, Canada, the United Kingdom, continental Europe and various other locations throughout the world.

Investment processing platforms consist of application and business process outsourcing services, professional services and transaction-based services. Revenues from investment processing platforms are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of Operations.

Investment management programs consist of mutual funds, alternative investments and separate accounts. These include a series of money market, equity, fixed-income and alternative investment portfolios, primarily in the form of registered investment companies. The Company serves as the administrator and investment advisor for many of these products. Revenues from investment management programs are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

~~Investment~~ operations platforms consist of outsourcing services including fund and investment accounting, administration, reconciliation, investor servicing and client reporting. Revenues from investment operations platforms are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Investment management platforms consists of investment products including mutual funds, collective investment products, alternative investment portfolios and separately managed accounts. The Company serves as the administrator and investment advisor for many of these products. Revenues from investment management platforms are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Certain financial information and accompanying note disclosure normally included in the Company’s Annual Report on Form 10-K have been condensed or omitted. The interim financial information is unaudited but reflects all adjustments (consisting of only normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of financial position of the Company as of ~~September 30, 2019,~~March 31, 2020, the results of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ and cash flows for the ~~nine-month periods~~three-months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019. These interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The Company adopted the requirements of ~~the~~ Accounting Standards Update (ASU) ~~No. 2016-2 Leases~~2016-13, Financial Instruments-Credit Losses (Topic ~~842)~~326): Measurement of Credit Losses on Financial Instruments (Accounting Standards ~~Codifications~~Codification (ASC) ~~842 (ASC 842)~~326)) ~~using~~(ASU 2016-13) and subsequent amendments ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (ASU 2019-04) and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses (ASU 2019-11) on January 1, 2020. ASU 2016-13 and the ~~modified retrospective method~~related amendments are hereafter referred to as ASC 326. ASC 326 requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. The Company owns mortgage-backed securities issued by the Government National Mortgage Association (GNMA), a federal agency of the U.S. government classified as Available-for-sale debt securities which qualify for the zero credit risk allowance. The Company's U.S. Treasury and other U.S. government agency securities classified as Securities owned are outside the scope of ASC 326. There was no impact to the Company's disclosures related to its marketable securities from the implementation of ASC 326.

In accordance with ASC 326, the Company evaluated its receivable balances for credit risk based upon the source of revenue, its ability to collect fees directly from investment products or directly from assets in the client's account, a review of actual historical credit losses, and the potential for expected credit loss from its current client base. The Company has no meaningful historical credit loss data and a very limited amount of losses pertaining directly to a client's inability to satisfy its receivable balance even during periods of economic distress. The credit loss reserve recognized by the Company through the implementation of ASC 326 during the ~~nine~~three months ended ~~September 30, 2019. As a result~~March 31, 2020 was immaterial.

The Company also adopted the requirements of ASU 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04) on January 1, 2020. The adoption of ASC 842, the Company recorded additional lease assets and net lease liabilities of $44,169 as of January 1, 2019. Upon implementation, the Company elected the package of practical expedients permitted under the transition guidance within the new standard which allowed the Company to carryforward the historical lease identification, classification and initial direct cost. ASC 842ASU 2017-04 did not ~~materially~~have a material impact on the ~~Company’s~~Company's consolidated ~~net income or consolidated cash flows (see following caption "Leases").~~ financial statements and related disclosures.

With the exception of the adoption of ASC ~~842,~~326 and ASU 2017-04, there have been no other significant changes in significant accounting policies during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Variable Interest Entities

The Company or its affiliates have created numerous investment products for its clients in various types of legal entity structures. The Company serves as the Manager, Administrator and Distributor for these investment products and may also serve as the Trustee for some of the investment products. The Company receives asset management, distribution, administration and custodial fees for these services. Clients are the equity investors and participate in proportion to their ownership percentage in the net income or loss and net capital gains or losses of the products, and, on liquidation, will participate in proportion to their ownership percentage in the remaining net assets of the products after satisfaction of outstanding liabilities.

The Company has concluded that it is not the primary beneficiary of the entities and, therefore, is not required to consolidate any of the pooled investment vehicles for which it receives asset management, distribution, administration and custodial fees under the VIE model. The entities either do not meet the definition of a VIE or the Company does not hold a variable interest in the entities. The entities either qualify for the money market scope exception, or are entities in which the Company’s asset management, distribution, administration and custodial fees are commensurate with the services

~~Page 9 of 48~~

provided and include fair terms and conditions, or are entities that are limited partnerships which have substantive kick-out rights. The Company acts as a fiduciary and does not hold any other interests other than insignificant seed money investments in the pooled investment vehicles. For this reason, the Company also concluded that it is not required to consolidate the pooled investment vehicles under the voting interest entity model.

The Company is a party to expense limitation agreements with certain SEI-sponsored money market funds subject to Rule 2a-7 of the Investment Company Act of 1940 which establish a maximum level of ordinary operating expenses incurred by the fund in any fiscal year including, but not limited to, fees of the administrator or its affiliates. Under the terms of these agreements, the Company waived ~~$6,390~~$6,641 and ~~$6,525~~$7,905 in fees during the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. ~~During the nine months ended September 30, 2019 and 2018, the Company waived $21,091 and $19,551, respectively, in fees.~~

Revenue Recognition

Revenue is recognized when the transfer of control of promised goods or services under the terms of a contract with customers are satisfied in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those promised goods or services. Certain portions of the Company’s revenues involve a third party in providing goods or services to its customers. In such circumstances, the Company must determine whether the nature of its promise to the customer is to provide the underlying goods or services (the Company is the principal in the transaction and reports the transaction gross) or to arrange for a third party to provide the underlying goods or services (the entity is the agent in the transaction and reports the transaction net). See Note 13 for related disclosures regarding revenue recognition.

Cash and Cash Equivalents

Cash and cash equivalents includes ~~$319,977~~$278,514 and ~~$315,840~~$414,581 at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, primarily invested in SEI-sponsored open-ended money market mutual funds. The SEI-sponsored mutual funds are Level 1 assets.

Restricted Cash

Restricted cash includes $3,000 at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 segregated for regulatory purposes related to trade-execution services conducted by SEI Investments (Europe) Limited. Restricted cash also includes ~~$100 and $514~~$101 at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018, respectively,~~2019 segregated in special reserve accounts for the benefit of customers of the Company’s broker-dealer subsidiary, SEI Investments Distribution Co. (SIDCO), in accordance with certain rules established by the Securities and Exchange Commission (SEC) for broker-dealers.

Capitalized Software

The Company capitalized ~~$26,821~~$6,458 and ~~$33,371~~$9,937 of software development costs during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. The Company's software development costs primarily relate to significant enhancements to the SEI Wealth Platform^SM(SWP). The Company capitalized ~~$26,029~~$6,229 and ~~$32,526~~$9,739 of software development costs for significant enhancements to SWP during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. As of ~~September 30, 2019,~~March 31, 2020, the net book value of SWP was ~~$283,128~~$274,885. The net book value includes ~~$51,781~~$58,149 of capitalized software development costs in-progress associated with future ~~releases.~~releases of SWP. Capitalized software development costs in-progress associated with future releases of SWP were ~~$42,238~~$55,332 as of December 31, ~~2018.~~2019. SWP has a weighted average remaining life of 8.4 years. Amortization expense for SWP was ~~$31,567~~$10,797 and ~~$29,723~~$10,399 during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

Earnings per Share

The calculations of basic and diluted earnings per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ are:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020		2019
Net income	$	132,168	$	128,319	$	372,689	$	389,834	$	109,242	$	113,981
Shares used to compute basic earnings per common share	150,855,000		156,283,000		152,009,000		157,086,000		149,468,000		153,310,000
Dilutive effect of stock options	3,372,000		4,228,000		3,302,000		4,967,000		2,900,000		3,231,000
Shares used to compute diluted earnings per common share	154,227,000		160,511,000		155,311,000		162,053,000		152,368,000		156,541,000
Basic earnings per common share	$	0.88	$	0.82	$	2.45	$	2.48	$	0.73	$	0.74
Diluted earnings per common share	$	0.86	$	0.80	$	2.40	$	2.41	$	0.72	$	0.73

~~Page 10 of 48~~

During the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ employee stock options to purchase ~~6,239,000~~7,408,000 and ~~6,183,000~~6,323,000 shares of common stock with an average exercise price of ~~$54.91~~$58.76 and $53.38, respectively, were outstanding but not included in the computation of diluted earnings per common share. During the nine months ended September 30, 2019 and 2018, employee stock options to purchase 6,269,000 and 6,153,000 shares of common stock with an average exercise price of $54.84 and $53.15,$54.81, respectively, were outstanding but not included in the computation of diluted earnings per common share. These options for the three ~~and nine~~ month periods were not included in the computation of diluted earnings per common share because either the performance conditions have not been satisfied or would not have been satisfied if the reporting date was the end of the contingency period or the options' exercise price was greater than the average market price of the Company’s common stock and the effect on diluted earnings per common share would have been anti-dilutive.

~~Leases~~

The Company determines if an arrangement is a lease at the inception of the contract. The Company's operating leases are included in Operating lease right-of-use (ROU) assets, Current portion of long-term operating lease liabilities, and Long-term operating lease liabilities on the accompanying Consolidated Balance Sheet.

The operating lease ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit interest rate, the Company utilizes an estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. In determining the discount rate used in the present value calculation, the Company has elected to apply the portfolio approach for leases of equipment provided the leases commenced at or around the same time. This election allows the Company to account for leases at a portfolio level provided that the resulting accounting at this level would not differ materially from the accounting at the individual lease level. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company has elected to account for lease and non-lease components separately. Operating lease ROU assets include all contractual lease payments and initial direct costs incurred, less any lease incentives. Facility leases generally only contain lease expense and non-component items such as taxes and pass through charges. Only the lease components are included in the ROU assets and lease liabilities. Additionally, the Company has elected not to apply the recognition requirements of ASC 842 to leases which have a lease term of less than one year at the commencement date.

The majority of the Company's leases for corporate facilities and equipment contain terms for renewal and extension of the lease agreement. The exercise of lease renewal options is generally at the Company’s sole discretion. The Company includes the lease extensions when it is reasonably certain the Company will exercise the extension. The Company’s lease agreements do not contain any material variable lease payments, material residual value guarantees or any material restrictive covenants. The Company does not currently have any finance leases.

~~See Note 15 for information on related disclosures regarding leases.~~

New Accounting Pronouncements

In ~~June 2016,~~December 2019, the FASB issued ASU ~~No. 2016-13, Financial Instruments-Credit Losses~~2019-12, Income Taxes (Topic ~~326)~~740): ~~Measurement of Credit Losses on Financial Instruments~~Simplifying the Accounting for Income Taxes (ASU 2016-13) and a subsequent amendment ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (ASU 2019-04) in April 2019. ASU 2016-13 requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities2019-12). The standard removes certain exceptions to the ~~amount by which carrying value exceeds fair value~~general principles in Topic 740 and also ~~requires the reversal of previously recognized credit losses if fair value increases.~~clarifies and amends existing guidance to improve consistent application. ASU 2019-04 provides certain improvements to ASU 2016-13. ASU 2016-13 and ASU 2019-04 become effective for the Company during the first quarter of 2020. Early adoption is permitted. The Company is currently finalizing its evaluation of ASU 2016-13 and ASU 2019-04 and does not believe the adoption of the updated standards will have a material impact on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04). The objective of ASU 2017-04 is to simplify the subsequent measurement of goodwill by entities performing their annual goodwill impairment tests by comparing the fair value of a reporting unit, including income tax effects from any tax-deductible goodwill, with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds fair value. ASU 2017-042019-12 is effective for the Company beginning in the first quarter of ~~2020. Early adoption is permitted.~~2021. The Company ~~does not believe~~is currently evaluating the ~~adoption~~impact of adopting ASU ~~2017-04 will have a material impact~~2019-12 on its consolidated financial statements and related disclosures.

~~In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes~~Reclassifications

Certain prior year amounts have been reclassified to ~~the Disclosure Requirements for Fair Value Measurement (ASU 2018-13) which modifies the disclosure requirements~~conform to current year presentation.

~~Page 11 of 48~~10

on fair value measurements. ASU 2018-13 is effective for the Company beginning in the first quarter of 2020. The Company is currently finalizing its evaluation of ASU 2018-13 and does not believe the adoption of the updated standard will have a material impact on its consolidated financial statements and related disclosures.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities (ASU 2018-17). The new standard changes how entities evaluate decision-making fees under the variable interest entity guidance. ASU 2018-17 is effective for the Company beginning in the first quarter of 2020. The Company does not believe the adoption of ASU 2018-17 will have a material impact on its consolidated financial statements and related disclosures.

Statements of Cash Flows

For purposes of the Consolidated Statements of Cash Flows, the Company considers investment instruments purchased with an original maturity of three months or less to be cash equivalents.

The following table provides the details of the adjustments to reconcile net income to net cash provided by operating activities for the ~~nine~~three months ended ~~September 30:~~March 31:


	2019			2018			2020			2019
Net income	$	372,689		$	389,834		$	109,242		$	113,981
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	22,162			21,515			7,473			7,331
Amortization	38,407			36,420			13,077			12,679
Equity in earnings of unconsolidated affiliate	(112,758		)	(123,406		)	(29,907		)	(37,317		)
Distributions received from unconsolidated affiliate	123,663			138,216			52,036			33,237
Stock-based compensation	15,555			16,396			6,929			5,038
Provision for losses on receivables	593			(29		)	80			(85		)
Deferred income tax expense	(1,405		)	8,378			(1,879		)	(984		)
Net (gain) loss from investments	(2,121		)	460
Change in long-term income taxes payable	—			(9,859		)
Net loss (gain) from investments							3,989			(1,279		)
Change in other long-term liabilities	2,077			1,930			360			277
Change in other assets	(56		)	(4,214		)	(4,658		)	1,334
Contract costs capitalized, net of amortization	(4,499		)	(3,463		)	(1,769		)	(138		)
Other	(721		)	(99		)	(1,612		)	(63		)
Change in current assets and liabilities
(Increase) decrease in
Receivables from investment products	(2,271		)	2,263			2,553			(2,693		)
Receivables	(34,589		)	(44,878		)	(17,852		)	(18,304		)
Other current assets	729			(5,955		)	(9,728		)	574
(Decrease) increase in
Accounts payable	(2,208		)	3,893			8,663			(5,678		)
Accrued liabilities	(34,087		)	(9,717		)	(36,818		)	(47,836		)
Deferred revenue	375			213			(1,207		)	(175		)
Total adjustments	8,846			28,064			(10,270		)	(54,082		)
Net cash provided by operating activities	$	381,535		$	417,898		$	98,972		$	59,899


~~Note 2.~~	~~Investment in Unconsolidated Affiliate~~

Note 2. Investment in Unconsolidated Affiliate

LSV Asset Management

The Company has an investment in LSV Asset Management (LSV), a registered investment advisor that provides investment advisory services primarily to institutions, including pension plans and investment companies. LSV is currently an investment sub-advisor for a limited number of SEI-sponsored investment products. The Company's partnership interest in LSV as of ~~September 30, 2019~~March 31, 2020 was 38.9%. The Company accounts for its interest in LSV using the equity

~~Page 12 of 48~~

method because of its less than 50% ownership. The Company’s interest in the net assets of LSV is reflected in Investment in unconsolidated affiliate on the accompanying Consolidated Balance Sheets and its interest in the earnings of LSV is reflected in Equity in earnings of unconsolidated affiliate on the accompanying Consolidated Statements of Operations.

At ~~September 30, 2019,~~March 31, 2020, the Company’s total investment in LSV was ~~$41,437.~~$45,285. The Company receives partnership distributions from LSV on a quarterly basis. The Company received partnership distributions from LSV of ~~$123,663~~$52,036 and ~~$138,216~~$33,237 in the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. As such, the Company considers these distribution payments as returns on investment rather than returns of the Company's original investment in LSV and has therefore classified the associated cash inflows as an operating activity on the Consolidated Statements of Cash Flows.

The Company’s proportionate share in the earnings of LSV was ~~$37,609~~$29,907 and ~~$41,726~~$37,317 during the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. ~~During the nine months ended September 30, 2019 and 2018, the Company’s proportionate share in the earnings of LSV was $112,758 and $123,406, respectively.~~

These tables contain condensed financial information of LSV:


Condensed Statement of Operations	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020		2019
Revenues	$	121,232	$	133,921	$	365,164	$	397,750	$	99,996	$	120,915
Net income	96,699		107,284		289,918		317,295		76,897		95,948


Condensed Balance Sheets	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Current assets	$	138,320	$	138,083	$	113,926	$	144,547
Non-current assets	4,721		1,165		4,769		5,048
Total assets	$	143,041	$	139,248	$	118,695	$	149,595

Current liabilities	$	75,192	$	47,874	$	42,631	$	46,828
Non-current liabilities	4,738		—		5,153		5,326
Partners’ capital	63,111		91,374		70,911		97,441
Total liabilities and partners’ capital	$	143,041	$	139,248	$	118,695	$	149,595

On April 1, 2020, LSV provided an interest in the partnership to select key employees which reduced the ownership percentage of each existing partner on a pro-rata basis. As a result, the Company's total partnership interest in LSV was reduced slightly from approximately 38.9% to approximately 38.8%.


~~Note 3.~~	~~Composition of Certain Financial Statement Captions~~

Note 3. Composition of Certain Financial Statement Captions

Receivables

Receivables on the accompanying Consolidated Balance Sheets consist of:


	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Trade receivables	$	91,372		$	76,362		$	87,126		$	86,043
Fees earned, not billed	241,340			226,001			256,280			240,239
Other receivables	17,931			13,691			16,005			15,277
	350,643			316,054			359,411			341,559
Less: Allowance for doubtful accounts	(1,311		)	(718		)	(1,281		)	(1,201		)
	$	349,332		$	315,336		$	358,130		$	340,358

Fees earned, not billed represents receivables from contracts with customers earned but unbilled and results from timing differences between services provided and contractual billing schedules. These billing schedules generally provide for fees to be billed on a quarterly basis. In addition, certain fees earned from investment operations services are calculated based on assets under administration that have an extended valuation process. Billings to these clients occur once the asset valuation processes are completed.

Receivables from investment products on the accompanying Consolidated Balance Sheets primarily represent fees receivable for distribution, investment advisory, and administration services to various regulated investment companies and other investment products sponsored by SEI.

~~Page 13 of 48~~

Property and Equipment

Property and Equipment on the accompanying Consolidated Balance Sheets consists of:


	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Buildings	$	162,677		$	160,796		$	162,891		$	162,882
Equipment	119,585			126,954			131,660			123,945
Land	10,830			10,772			10,830			10,830
Purchased software	142,693			139,245			144,342			143,705
Furniture and fixtures	18,478			18,103			19,902			18,835
Leasehold improvements	19,656			18,959			19,695			20,700
Construction in progress	27,042			9,240			44,083			33,415
	500,961			484,069			533,403			514,312
Less: Accumulated depreciation	(346,377		)	(338,206		)	(360,148		)	(353,453		)
Property and Equipment, net	$	154,584		$	145,863		$	173,255		$	160,859

The Company recognized ~~$22,162~~$7,473 and ~~$21,515~~$7,331 in depreciation expense related to property and equipment for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

Deferred Contract Costs

Deferred contract costs, which primarily consist of deferred sales commissions, were ~~$28,506~~$32,760 and ~~$24,007~~$30,991 as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. The Company deferred expenses related to contract costs of ~~$4,575~~$2,997 and ~~$1,400~~$1,126 during the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively. During the nine months ended September 30, 2019 and 2018, the Company deferred expenses related to contract costs of $7,673 and $5,483,~~ respectively. Amortization expense related to deferred contract costs were ~~$3,174~~$1,228 and ~~$2,020~~$988 during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, and are included in Compensation, benefits and other personnel on the accompanying Consolidated Statements of Operations. There was 0 impairment loss in relation to deferred contract costs during the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

Accrued Liabilities

Accrued liabilities on the accompanying Consolidated Balance Sheets consist of:


	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Accrued employee compensation	$	73,997	$	97,603	$	33,519	$	96,991
Accrued consulting, outsourcing and professional fees	27,491		31,000		32,444		28,610
Accrued sub-advisory, distribution and other asset management fees	45,495		42,583		48,478		46,245
Accrued dividend payable	—		50,761		—		52,452
Accrued income taxes					23,663		2,010
Other accrued liabilities	46,936		57,687		41,668		46,493
Total accrued liabilities	$	193,919	$	279,634	$	179,772	$	272,801

Note 4. Fair Value Measurements

The fair value of the Company’s financial assets and liabilities, except for the Company's investment funds sponsored by LSV, is determined in accordance with the fair value hierarchy. The fair value of the Company’s Level 1 financial assets consist mainly of investments in open-ended mutual funds that are quoted daily. Level 2 financial assets consist of ~~Government National Mortgage Association (GNMA)~~GNMA mortgage-backed securities held by the Company's wholly-owned limited purpose federal thrift subsidiary, SEI Private Trust Company (SPTC), Federal Home Loan Bank (FHLB) and other U.S. government agency short-term notes held by SIDCO. The financial assets held by SIDCO were purchased as part of a cash management program requiring only short term, top-tier investment grade government and corporate securities. The financial assets held by SPTC are debt securities issued by GNMA and are backed by the full faith and credit of the U.S. government. These securities were purchased for the sole purpose of satisfying applicable regulatory requirements and have maturity dates which range from 2023 to 2041.

The fair value of the Company's investment funds sponsored by LSV is measured using the net asset value per share (NAV) as a practical expedient. The NAVs of the funds are calculated by the funds' independent custodian and are derived from the fair values of the underlying investments as of the reporting date. The funds allow for investor redemptions at the

~~Page 14 of 48~~13

end of each calendar month. This investment has not been classified in the fair value hierarchy but is presented in the tables below to permit reconciliation to the amounts presented on the accompanying Consolidated Balance Sheets.

The valuation of the Company's Level 2 financial assets held by SIDCO and SPTC are based upon securities pricing policies and procedures utilized by third-party pricing vendors.

The pricing policies and procedures applied for our Level 1 and Level 2 financial assets during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 were consistent with those as described in our Annual Report on Form 10-K at December 31, ~~2018.~~2019. The Company had no Level 3 financial assets at ~~September 30, 2019~~March 31, 2020 or December 31, ~~2018~~2019 that were required to be measured at fair value on a recurring basis. The Company's Level 3 financial liabilities at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 consist entirely of the estimated contingent consideration resulting from an acquisition (See Note 12). The fair value of the contingent consideration was determined using a Monte-Carlo simulation model. Key assumptions for the Monte-Carlo simulation model include expected revenues, expected volatility, risk-free rate and ~~correlation coefficient.~~other factors. There were no transfers of financial assets between levels within the fair value hierarchy during the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

The fair value of certain financial assets of the Company was determined using the following inputs:


			Fair Value Measurements at the End of the Reporting Period Using						Fair Value Measurements at the End of the Reporting Period Using
Assets	September 30, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		March 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Equity available-for-sale securities	$	11,313	$	11,313	$	—
Fixed-income available-for-sale securities	90,267		—		90,267
Equity securities							$	10,033	$	10,033	$	—
Available-for-sale debt securities							100,525		—		100,525
Fixed-income securities owned	32,862		—		32,862		31,420		—		31,420
Investment funds sponsored by LSV (1)	5,533						3,753
	$	139,975	$	11,313	$	123,129	$	145,731	$	10,033	$	131,945


			Fair Value Measurements at the End of the Reporting Period Using						Fair Value Measurements at the End of the Reporting Period Using
Assets	December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Equity available-for-sale securities	$	10,218	$	10,218	$	—
Fixed-income available-for-sale securities	101,683		—		101,683
Equity securities							$	12,119	$	12,119	$	—
Available-for-sale debt securities							104,798		—		104,798
Fixed-income securities owned	30,892		—		30,892		33,486		—		33,486
Investment funds sponsored by LSV (1)	4,887						5,988
	$	147,680	$	10,218	$	132,575	$	156,391	$	12,119	$	138,284

(1) The fair value amounts presented in the tables above are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the accompanying Consolidated Balance Sheets (See Note 5).

~~Page 15 of 48~~14

Note 5. Marketable Securities

~~Investments~~ The Company's marketable securities include investments in money market funds and commercial paper classified as cash equivalents, available-for-sale debt securities, investments in SEI-sponsored and non-SEI-sponsored mutual funds, equities, investments in funds sponsored by LSV and securities owned by SIDCO.

Cash Equivalents

The Company's investments in money market funds and commercial paper classified as cash equivalents had a fair value of $425,697 and $543,765 at March 31, 2020 and December 31, 2019, respectively. There were no material unrealized or realized gains or losses from these investments during the three months ended March 31, 2020 and 2019.

Available for Sale and Equity Securities

~~Investments available for sale classified as non-current assets~~Available For Sale and Equity Securities on the accompanying Consolidated Balance Sheets consist of:


	At September 30, 2019									At March 31, 2020
	Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value		Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Available-for-sale debt securities										$	98,322	$	2,203	$	—		$	100,525
SEI-sponsored mutual funds	$	7,477	$	105	$	(411	)	$	7,171	7,508		—		(1,126		)	6,382
Equities and other mutual funds	3,476		666		—			4,142		3,595		56		—			3,651
Debt securities	89,625		642		—			90,267
	$	100,578	$	1,413	$	(411	)	$	101,580	$	109,425	$	2,259	$	(1,126	)	$	110,558


	At December 31, 2018									At December 31, 2019
	Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value		Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Available-for-sale debt securities										$	104,193	$	605	$	—		$	104,798
SEI-sponsored mutual funds	$	7,446	$	—	$	(788	)	$	6,658	7,564		125		(39		)	7,650
Equities and other mutual funds	3,434		126		—			3,560		3,637		832		—			4,469
Debt securities	103,518		—		(1,835		)	101,683
	$	114,398	$	126	$	(2,623	)	$	111,901	$	115,394	$	1,562	$	(39	)	$	116,917

Net unrealized gains at ~~September 30,~~March 31, 2020 of the Company's available-for-sale debt securities were $1,696 (net of income tax expense of $507). Net unrealized gains at December 31, 2019 of the Company's available-for-sale debt securities were ~~$494 (net of income tax expense of $148). Net unrealized losses at December 31, 2018 of the Company's available-for-sale debt securities were $1,413~~$465 (net of income tax benefit of ~~$422)~~$140). These net unrealized gains ~~and losses~~ are reported as a separate component of Accumulated other comprehensive loss on the accompanying Consolidated Balance Sheets.

There were gross realized ~~gains~~losses of ~~$1,031~~$128 and $109 from available-for-sale debt securities during the three months ended March 31, 2020 and 2019, respectively. There were no gross realized ~~losses of $1,520~~gains from available-for-sale debt securities during the ~~nine~~three months ended ~~September 30, 2018. Gross realized gains~~March 31, 2020 and 2019. Realized losses from available-for-sale ~~securities during the nine months ended September 30, 2019 were immaterial. Gains and losses from available-for-sale~~debt securities, including amounts reclassified from accumulated comprehensive loss, are reflected in Net (loss) gain from investments on the accompanying Consolidated Statements of Operations.

There were gross realized gains of $189 and gross realized losses of $235 from mutual funds and equities during the three months ended March 31, 2020. During the three months ended March 31, 2019, there were gross realized gains of $43 and gross realized losses of $3 from mutual funds and equities. Gains and losses from mutual funds and equities are reflected in Net (loss) gain from investments on the accompanying Consolidated Statements of Operations.

Investments in Affiliated Funds

The Company has an investment in funds sponsored by LSV. The Company records this investment on the accompanying Consolidated Balance Sheets at fair value. Unrealized gains and losses from the change in fair value of these funds are recognized in Net gain (loss) from investments on the accompanying Consolidated Statements of Operations.

The investment primarily consists of U.S. dollar denominated funds that invest primarily in securities of Canadian, Australian and Japanese companies as well as various other global securities. The underlying securities held by the funds are translated into U.S. dollars within the funds. The funds had a fair value of ~~$5,533~~$3,753 and ~~$4,887~~$5,988 at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. The Company recognized ~~gains of $646 and~~unrealized losses of ~~$298~~$2,235 and $452 during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, from the change in fair value of the funds. ~~There were no material gains or losses during the three months ended September 30, 2019 and 2018 from the change in fair value of the funds.~~

Securities Owned

The Company’s broker-dealer subsidiary, SIDCO, has investments in U.S. government agency securities with maturity dates less than one year. These investments are reflected as Securities owned on the accompanying Consolidated Balance Sheets. Due to specialized accounting practices applicable to investments by broker-dealers, the securities are reported at fair value and changes in fair value are recorded in current period earnings. The securities had a fair value of ~~$32,862~~$31,420 and ~~$30,892~~$33,486 at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. There were no material net gains or losses related to the securities during the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019.

Note 6. Line of Credit

The Company has a five-year $300,000 Credit Agreement (the Credit Facility) with Wells Fargo Bank, National Association, and a syndicate of other lenders. The Credit Facility is scheduled to expire in June 2021, at which time any aggregate principal amount of loans outstanding becomes payable in full. Any borrowings made under the Credit Facility will accrue interest at rates that, at the Company's option, are based on a base rate (the Base Rate) plus a premium that

~~Page 16 of 48~~

can range from 0.25% to 1.00% or the London InterBank Offered Rate (LIBOR) plus a premium that can range from 1.25% to 2.00% depending on the Company’s Leverage Ratio (a ratio of consolidated indebtedness to consolidated EBITDA for the four preceding fiscal quarters, all as defined in the related agreement). The Base Rate is defined as the highest of a) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 0.50%, b) the prime commercial lending rate of Wells Fargo, c) the applicable LIBOR plus 1.00%, or d) 0%. The Company also pays quarterly commitment fees based on the unused portion of the Credit Facility. The quarterly fees for the Credit Facility can range from 0.15% of the amount of the unused portion to 0.30%, depending on the Company’s Leverage Ratio. Certain wholly-owned subsidiaries of the Company have guaranteed the obligations of the Company under the agreement. The aggregate amount of the Credit Facility may be increased by an additional $100,000 under certain conditions set forth in the agreement. The Company may issue up to $15,000 in letters of credit under the terms of the Credit Facility. The Company pays a periodic commission fee of 1.25% plus a fronting fee of 0.175% of the aggregate face amount of the outstanding letters of credit issued under the Credit Facility.

The Credit Facility contains covenants that restrict the ability of the Company to engage in mergers, consolidations, asset sales, investments, transactions with affiliates other than wholly-owned subsidiaries, or to incur liens or other indebtedness including contingent obligations or guarantees, as defined in the agreement. In the event of a default under the Credit Facility, the Company would also be restricted from paying dividends on, or repurchasing its common stock without the approval of the lenders. Upon the occurrence of certain financial or economic events, significant corporate events, or certain other events of default constituting an event of default under the Credit Facility, all loans outstanding may be declared immediately due and payable and all commitments under the agreement may be terminated.

As of ~~September 30, 2019,~~March 31, 2020, the Company had outstanding letters of credit of $11,553 under the Credit Facility. These letters of credit were issued primarily for the expansion of the Company's headquarters and are scheduled to expire during the remainder of ~~2019.~~2020. The amount of the Credit Facility that is available for general corporate purposes as of ~~September 30, 2019~~March 31, 2020 was $288,447.

The Company was in compliance with all covenants of the Credit Facility during the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

Note 7. Shareholders’ Equity

Stock-Based Compensation

The Company has only non-qualified stock options outstanding under its equity compensation plans. All outstanding stock options have performance-based vesting provisions specific to each option grant that tie the vesting of the applicable stock options to the Company’s financial performance. The Company’s stock options vest at a rate of 50% when a specified ~~diluted earnings per share~~financial vesting target is achieved, and the remaining 50% when a second, higher specified ~~diluted earnings per share~~financial vesting target is achieved. Options do not vest due to the passage of time but solely as a result of achievement of the financial vesting targets. Options granted in December 2017 and thereafter include a service condition which requires a minimum two or four year waiting period from the grant date along with the attainment of the applicable financial vesting target. ~~Earnings per share targets exclude the impact of stock-based compensation and are established at time of grant.~~ The targets are measured annually on December 31. The amount of stock-based compensation expense recognized in the period is based upon management’s estimate of when the ~~earnings per share~~financial vesting targets may be achieved. Any change in management’s estimate could result in the remaining amount of stock-based compensation expense to be accelerated, spread out over a longer period, or reversed. This may cause volatility in the recognition of stock-based compensation expense in future periods and could materially affect the Company’s earnings.

The Company recognized stock-based compensation expense in its Consolidated Financial Statements in the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Stock-based compensation expense	$	5,453		$	5,878		$	15,555		$	16,396		$	6,929		$	5,038
Less: Deferred tax benefit	(1,042		)	(1,311		)	(2,959		)	(3,556		)	(1,381		)	(946		)
Stock-based compensation expense, net of tax	$	4,411		$	4,567		$	12,596		$	12,840		$	5,548		$	4,092

As of ~~September 30, 2019,~~March 31, 2020, there was approximately ~~$50,330~~$66,934 of unrecognized compensation cost remaining related to unvested employee stock options that management expects will vest and is being amortized.

The Company issues new common shares associated with the exercise of stock options. The total intrinsic value of options exercised during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$43,246.~~$18,687. The total options exercisable as of ~~September 30, 2019~~March 31, 2020 had an intrinsic value of ~~$197,860.~~$81,585. The total intrinsic value for options exercisable is calculated as

~~Page 17 of 48~~

the difference between the market value of the Company’s common stock as of ~~September 30, 2019~~March 31, 2020 and the weighted average exercise price of the options. The market value of the Company’s common stock as of ~~September 30, 2019~~March 31, 2020 was ~~$59.26~~$46.34 as reported by the Nasdaq Stock Market, LLC. The weighted average exercise price of the options exercisable as of ~~September 30, 2019~~March 31, 2020 was ~~$25.08.~~$37.85. Total options that were outstanding as of ~~September 30, 2019~~March 31, 2020 were ~~14,132,000.~~15,055,000. Total options that were exercisable as of ~~September 30, 2019~~March 31, 2020 were ~~7,890,000.~~7,647,000.

Common Stock Buyback

The Company’s Board of Directors, under multiple authorizations, has authorized the repurchase of the Company’s common stock on the open market or through private transactions. The Company purchased ~~4,950,000~~2,433,000 shares at a total cost of ~~$267,184~~$127,432 during the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, which reduced the total shares outstanding of common stock. The cost of stock purchases during the period includes the cost of certain transactions that settled in the following quarter. On March 18, 2020, the Company's Board of Directors approved an increase in the stock repurchase program by an additional $250,000. As of ~~September 30, 2019,~~March 31, 2020, the Company had approximately ~~$198,695~~$240,097 of authorization remaining for the purchase of common stock under the program.

The Company immediately retires its common stock when purchased. Upon retirement, the Company reduces Capital in excess of par value for the average capital per share outstanding and the remainder is charged against Retained earnings. If the Company reduces its Retained earnings to zero, any subsequent purchases of common stock will be charged entirely to Capital in excess of par value.

~~Cash Dividend~~

On May 29, 2019, the Board of Directors declared a cash dividend of $0.33 per share on the Company's common stock, which was paid on June 20, 2019, to shareholders of record on June 12, 2019. Cash dividends declared during the nine months ended September 30, 2019 and 2018 were $49,984 and $47,139, respectively.

Note 8. Accumulated Other Comprehensive Loss

The components of Accumulated other comprehensive loss, net of tax, are as follows:


	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Investments			Accumulated Other Comprehensive Loss			Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Investments		Accumulated Other Comprehensive Loss
Balance, January 1, 2019	$	(31,587	)	$	(1,413	)	$	(33,000	)
Balance, January 1, 2020										$	(23,969	)	$	465	$	(23,504	)

Other comprehensive loss before reclassifications	(4,687		)	1,633			(3,054		)	(13,075		)	1,131		(11,944		)
Amounts reclassified from accumulated other comprehensive loss	—			274			274			—			100		100
Net current-period other comprehensive loss	(4,687		)	1,907			(2,780		)	(13,075		)	1,231		(11,844		)

Balance, September 30, 2019	$	(36,274	)	$	494		$	(35,780	)
Balance, March 31, 2020										$	(37,044	)	$	1,696	$	(35,348	)

Note 9. Business Segment Information

The Company’s reportable business segments are:

Private Banks – provides outsourced investment processing and investment management platforms to banks and trust institutions, independent wealth advisers and financial advisors worldwide;

Investment Advisors – provides investment management and investment processing platforms to affluent investors through a network of independent registered investment advisors, financial planners and other investment professionals in the United States;

Institutional Investors – provides investment management and administrative outsourcing platforms to retirement plan sponsors, healthcare systems, higher education and other not-for-profit organizations worldwide;

Investment Managers – provides investment operations outsourcing platforms to fund companies, banking institutions, traditional and non-traditional investment managers worldwide and family offices in the United States; and

Investments in New Businesses – focuses on providing investment management solutions to ultra-high-net-worth families residing in the United States; developing internet-based investment ~~services~~services; developing network and ~~advice platforms;~~data protection services; modularizing larger technology platforms into stand-alone components; entering new markets; and conducting other research and development activities.

~~Page 18 of 48~~

The information in the following tables is derived from the Company’s internal financial reporting used for corporate management purposes. There are no inter-segment revenues for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019. Management evaluates Company assets on a consolidated basis during interim periods. The accounting policies of the reportable business segments are the same as those described in Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The following tables highlight certain financial information about each of the Company’s business segments for the three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:


	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses			Total		Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses			Total
	For the Three Months Ended September 30, 2019													For the Three Months Ended March 31, 2020
Revenues	$	117,250	$	103,033	$	80,337	$	112,186	$	3,448		$	416,254	$	113,221	$	102,321	$	79,203	$	116,629	$	3,388		$	414,762
Expenses	110,788		51,509		37,268		71,889		7,926			279,380		110,653		52,432		38,267		74,289		10,910			286,551
Operating profit (loss)	$	6,462	$	51,524	$	43,069	$	40,297	$	(4,478	)	$	136,874	$	2,568	$	49,889	$	40,936	$	42,340	$	(7,522	)	$	128,211


	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses			Total		Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses			Total
	For the Three Months Ended September 30, 2018													For the Three Months Ended March 31, 2019
Revenues	$	118,449	$	102,550	$	83,466	$	101,275	$	2,942		$	408,682	$	118,259	$	94,761	$	80,113	$	104,649	$	3,038		$	400,820
Expenses	116,471		53,287		40,497		65,296		5,769			281,320		110,962		52,502		38,754		69,066		5,940			277,224
Operating profit (loss)	$	1,978	$	49,263	$	42,969	$	35,979	$	(2,827	)	$	127,362	$	7,297	$	42,259	$	41,359	$	35,583	$	(2,902	)	$	123,596

A reconciliation of the total operating profit reported for the business segments to income from operations in the Consolidated Statements of Operations for the three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ is as follows:


	2019			2018			2020			2019
Total operating profit from segments	$	136,874		$	127,362		$	128,211		$	123,596
Corporate overhead expenses	(16,237		)	(14,942		)	(17,983		)	(20,035		)
Income from operations	$	120,637		$	112,420		$	110,228		$	103,561

The following tables provide additional information for the three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ pertaining to our business segments:


	Capital Expenditures (1)				Depreciation				Capital Expenditures (1)				Depreciation
	2019		2018		2019		2018		2020		2019		2020		2019
Private Banks	$	8,018	$	7,999	$	3,640	$	3,427	$	9,925	$	8,461	$	3,882	$	3,549
Investment Advisors	4,468		3,927		1,162		1,168		5,390		3,947		1,151		1,179
Institutional Investors	1,070		962		393		410		1,358		871		302		405
Investment Managers	5,311		4,104		1,793		1,796		9,032		3,349		1,812		1,771
Investments in New Businesses	379		287		101		137		418		241		70		91
Total from business segments	$	19,246	$	17,279	$	7,089	$	6,938	$	26,123	$	16,869	$	7,217	$	6,995
Corporate overhead	663		460		320		317		997		385		256		336
	$	19,909	$	17,739	$	7,409	$	7,255	$	27,120	$	17,254	$	7,473	$	7,331

(1) Capital expenditures include additions to property and equipment and capitalized software.

~~Page 19 of 48~~


	Amortization				Amortization
	2019		2018		2020		2019
Private Banks	$	7,322	$	6,943	$	7,421	$	7,141
Investment Advisors	2,609		2,445		2,652		2,523
Institutional Investors	440		427		427		433
Investment Managers	2,334		2,346		2,335		2,339
Investments in New Businesses	185		186		185		185
Total from business segments	$	12,890	$	12,347	$	13,020	$	12,621
Corporate overhead	57		58		57		58
	$	12,947	$	12,405	$	13,077	$	12,679

~~The following tables highlight certain financial information about each of the Company’s business segments for the nine months ended September 30, 2019 and 2018:~~

Private
Banks

Investment
Advisors

Institutional
Investors

Investment
Managers

Investments
In New
Businesses
Total
For the Nine Months Ended September 30, 2019
Revenues $ 351,601
$ 297,916
$ 241,559
$ 326,037
$ 9,547
$ 1,226,660
Expenses 329,540
154,569
115,383
209,326
20,663
829,481
Operating profit (loss) $ 22,061
$ 143,347
$ 126,176
$ 116,711
$ (11,116 ) $ 397,179

Private
Banks

Investment
Advisors

Institutional
Investors

Investment
Managers

Investments
In New
Businesses
Total
For the Nine Months Ended September 30, 2018
Revenues $ 361,739
$ 301,632
$ 252,391
$ 295,696
$ 7,652
$ 1,219,110
Expenses 343,515
158,792
122,617
191,955
16,807
833,686
Operating profit (loss) $ 18,224
$ 142,840
$ 129,774
$ 103,741
$ (9,155 ) $ 385,424

A reconciliation of the total operating profit reported for the business segments to income from operations in the Consolidated Statements of Operations for the nine months ended September 30, 2019 and 2018 is as follows:

2019 2018
Total operating profit from segments $ 397,179
$ 385,424
Corporate overhead expenses (52,845 ) (46,398 )
Income from operations $ 344,334
$ 339,026

~~The following tables provide additional information for the nine months ended September 30, 2019 and 2018 pertaining to our business segments:~~

Capital Expenditures (1) Depreciation
2019 2018 2019 2018
Private Banks $ 25,240
$ 27,767
$ 10,774
$ 10,069
Investment Advisors 12,973
12,471
3,506
3,378
Institutional Investors 2,990
2,926
1,212
1,310
Investment Managers 13,535
9,994
5,384
5,411
Investments in New Businesses 964
731
302
442
Total from business segments $ 55,702
$ 53,889
$ 21,178
$ 20,610
Corporate Overhead 1,634
1,134
984
905
$ 57,336
$ 55,023
$ 22,162
$ 21,515

~~(1) Capital expenditures include additions to property and equipment and capitalized software.~~

~~Page 20 of 48~~

Amortization
2019 2018
Private Banks $ 21,680
$ 20,317
Investment Advisors 7,682
7,203
Institutional Investors 1,300
1,281
Investment Managers 7,019
7,036
Investments in New Businesses 555
410
Total from business segments $ 38,236
$ 36,247
Corporate Overhead 171
173
$ 38,407
$ 36,420

Note 10. Income Taxes

The gross liability for unrecognized tax benefits at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 was ~~$14,627~~$16,207 and ~~$14,367,~~$15,356, respectively, exclusive of interest and penalties, of which ~~$14,183~~$16,133 and ~~$13,774~~$15,194 would affect the effective tax rate if the Company were to recognize the tax benefit.

The Company classifies interest and penalties on unrecognized tax benefits as income tax expense. As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the combined amount of accrued interest and penalties related to tax positions taken on tax returns was ~~$1,520~~$2,200 and ~~$1,289,~~$1,962, respectively.

September 30, 2019 December 31, 2018
Gross liability for unrecognized tax benefits, exclusive of interest and penalties $ 14,627
$ 14,367
Interest and penalties on unrecognized benefits 1,520
1,289
Total gross uncertain tax positions $ 16,147
$ 15,656
Amount included in Current liabilities $ 1,008
$ 3,131
Amount included in Other long-term liabilities 15,139
12,525
$ 16,147
$ 15,656



	March 31, 2020		December 31, 2019
Gross liability for unrecognized tax benefits, exclusive of interest and penalties	$	16,207	$	15,356
Interest and penalties on unrecognized benefits	2,200		1,962
Total gross uncertain tax positions	$	18,407	$	17,318
Amount included in Current liabilities	$	4,950	$	4,896
Amount included in Other long-term liabilities	13,457		12,422
	$	18,407	$	17,318

The Company's effective income tax rate for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ differs from the federal income tax statutory rate due to the following:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020		2019
Statutory rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
State taxes, net of federal tax benefit	2.6		2.3		2.6		2.3		3.1		2.6
Foreign tax expense and tax rate differential	(0.3	)	(0.2	)	(0.2	)	(0.2	)	(0.1	)	(0.1	)
Tax benefit from stock option exercises	(2.2	)	(1.4	)	(1.5	)	(4.8	)	(2.2	)	(1.1	)
Expiration of the statute of limitations	(1.2	)	(1.0	)	(0.4	)	(0.3	)
Provision-to-return adjustment	(0.6	)	(2.3	)	(0.2	)	(0.8	)
Other, net	(0.4	)	0.2		(0.3	)	—		(0.3	)	(0.3	)
	18.9	%	18.6	%	21.0	%	17.2	%	21.5	%	22.1	%

The ~~increase~~decrease in the Company's effective tax rate for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was primarily due to ~~reduced~~increased tax benefits related to the ~~lower~~higher volume of stock option exercises as compared to the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019.

The Company files income tax returns in the United States on a consolidated basis and in many U.S. state and foreign jurisdictions. The Company is subject to examination of income tax returns by the Internal Revenue Service (IRS) and other domestic and foreign tax authorities. The Company is no longer subject to U.S. federal income tax examination for years before ~~2015~~2016 and is no longer subject to state, local or foreign income tax examinations by authorities for years before ~~2014.~~2015.

The Company estimates it will recognize ~~$1,008~~$4,950 of gross unrecognized tax benefits. This amount is expected to be paid within one year or to be removed at the expiration of the statute of limitations and resolution of income tax audits and is netted against the current payable account. These unrecognized tax benefits are related to tax positions taken on certain

~~Page 21 of 48~~

federal, state, and foreign tax returns. However, the timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. While it is reasonably possible that some issues under examination could be resolved in the next twelve months, based upon the current facts and circumstances, the Company cannot reasonably estimate the timing of such resolution or the total range of potential changes as it relates to the current unrecognized tax benefits that are recorded as part of the Company’s financial statements.

Note 11. Commitments and Contingencies

In the ordinary course of business, the Company from time to time enters into contracts containing indemnification obligations of the Company. These obligations may require the Company to make payments to another party upon the occurrence of certain events including the failure by the Company to meet its performance obligations under the contract. These contractual indemnification provisions are often standard contractual terms of the nature customarily found in the type of contracts entered into by the Company. In many cases, there are no stated or notional amounts included in the indemnification provisions. There are no amounts reflected on the Consolidated Balance Sheets as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 related to these indemnifications.

Stanford Trust Company Litigation

SEI has been named in 7 lawsuits filed in Louisiana courts; 4 of the cases also name SPTC as a defendant. The underlying allegations in all actions relate to the purported role of SPTC in providing back-office services to Stanford Trust Company. The complaints allege that SEI and SPTC participated in some manner in the sale of “certificates of deposit” issued by Stanford International Bank so as to be a “seller” of the certificates of deposit for purposes of primary liability under the Louisiana Securities Law or so as to be secondarily liable under that statute for sales of certificates of deposit made by Stanford Trust Company. NaN of the actions also include claims for violations of the Louisiana Racketeering Act

and possibly conspiracy, and a third also asserts claims of negligence, breach of contract, breach of fiduciary duty, violations of the uniform fiduciaries law, negligent misrepresentation, detrimental reliance, violations of the Louisiana Racketeering Act, and conspiracy.

The procedural status of the 7 cases varies. The Lillie case, filed originally in the 19th Judicial District Court for the Parish of East Baton Rouge, was brought as a class action and is procedurally the most advanced of the cases. SEI and SPTC filed exceptions, which the Court granted in part, dismissing claims under the Louisiana Unfair Trade Practices Act and permitting the claims under the Louisiana Securities Law to go forward. On March 11, 2013, newly-added insurance carrier defendants removed the case to the United States District Court for the Middle District of Louisiana. On August 7, 2013, the Judicial Panel on Multidistrict Litigation transferred the matter to the Northern District of Texas where MDL 2099, In re: Stanford Entities Securities Litigation (“(“the Stanford MDL”), is pending. On September 22, 2015, the District Court on the motion of SEI and SPTC dismissed plaintiffs’ claims for primary liability under Section 714(A) of the Louisiana Securities Law, but declined to dismiss plaintiffs’ claims for secondary liability under Section 714(B) of the Louisiana Securities Law based on the allegations pled by plaintiffs. On November 4, 2015, the District Court granted SEI and SPTC's motion to dismiss plaintiffs' claims under Section 712(D) of the Louisiana Securities Law. Consequently, the only claims of plaintiffs remaining in Lillie are plaintiffs' claims for secondary liability against SEI and SPTC under Section 714(B) of the Louisiana Securities Law. On May 2, 2016, the District Court certified the class as being "all persons for whom Stanford Trust Company purchased or renewed Stanford Investment Bank Limited certificates of deposit in Louisiana between January 1, 2007 and February 13, 2009". Notice of the pendency of the class action was mailed to potential class members on October 4, 2016.

On December 1, 2016, a group of plaintiffs who opted out of the Lillie class filed a complaint against SEI and SPTC in the United States District Court in the Middle District of Louisiana (“Ahders Complaint”), alleging claims essentially the same as those in ~~Lillie~~.Lillie. In January 2017, the Judicial Panel on Multidistrict Litigation transferred the Ahders proceeding to the Northern District of Texas and the Stanford MDL. During February 2017, SEI and SPTC filed ~~its~~their response to the Ahders Complaint, and in March 2017 the District Court for the Northern District of Texas approved the stipulated dismissal of all claims in this Complaint predicated on Section 712(D) or Section 714(A) of the Louisiana Securities Law. In both cases, as a resultof the proceedings in the Northern District of Texas, only the plaintiffs’ secondary liability claims under Section 714(B) of the Louisiana Securities Law remain. Limited discovery and motions practice have occurred, including SEI and SPTC’s filing of a dispositive summary judgment motion in the Lillie proceeding. On January 31, 2019, the Judicial Panel on Multidistrict Litigation remanded the Lillie and Ahders proceedings to the Middle District of Louisiana.

OnWith respect to the Lillie proceeding, on July 9, 2019, the District Court issued an order granting SEI’s Summary Judgment Motion to dismiss the remaining Section 714(B) claim ~~in the~~ ~~Lillie~~ ~~proceeding~~ and denying Plaintiffs’ Motion for Continuance of SEI and SPTC’s Motion for Summary Judgment pursuant to Rule 56(d). On July 17, 2019, Plaintiffs filed a Motion for Reconsideration and/or New Trial. The Court denied Plaintiffs’ Motion for Reconsideration and/or New Trial and entered a Final Judgment in favor of SEI and SPTC on August 15, 2019. On August 27, 2019, Plaintiffs-Appellants filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit of the District Court's dismissal of the Lillie matter. On November 20, 2019, Plaintiffs-Appellants filed a Motion in Support of the Notice of Appeal. On January 17, 2020, SEI and SPTC timely filed their brief in opposition to the Plaintiffs-Appellants' motion for appeal. On February 7, 2020, Plaintiffs-Appellants filed their reply brief.

~~Page 22 of 48~~

OnWith respect to the Ahders proceeding, on July 16, 2019, SEI and SPTC filed a Motion for Summary Judgment pursuant to Rule 56(d) ~~in the~~ ~~Ahders~~ ~~proceeding~~ to have the remaining Section 714(B) claim dismissed.

On ~~July 17, 2019, Plaintiffs filed a Motion for Reconsideration and/or New Trial as to~~January 24, 2020, the ~~July 9, 2019 Ruling and Order (ECF 146) by the Honorable Brian A. Jackson denying a continuance of~~District Court issued an order granting SEI’s ~~Motion for~~ Summary Judgment ~~pursuant~~Motion to ~~Rule 56(d). The Court denied Plaintiffs’ Motion and entered a Final Judgment in favor of SEI on August 15, 2019.~~

dismiss the remaining Section 714(B) claim. On ~~August 27, 2019, Plaintiffs~~March 17, 2020, Plaintiffs-Appellants filed a Notice of Appeal to the United States Court of ~~Appeal~~Appeals for the Fifth Circuit of the District Court's dismissal of the Ahders matter. Plaintiffs’ Motion in Support of the Notice of Appeal must be filed with the Court by November 20, 2019. If Plaintiffs’ Motion in Support of Appeal is filed, SEI intends to contest the Plaintiffs' appeal.

Another case, filed in the 23rd Judicial District Court for the Parish of Ascension, also was removed to federal court and transferred by the Judicial Panel on Multidistrict Litigation to the Northern District of Texas and the Stanford MDL. The schedule for responding to that Complaint has not yet been established.

NaN additional cases remain in the Parish of East Baton Rouge. Plaintiffs filed petitions in 2010 and have granted SEI and SPTC indefinite extensions to respond. No material activity has taken place since.

In 2 additional cases, filed in East Baton Rouge and brought by the same counsel who filed the Lillie action, virtually all of the litigation to date has involved motions practice and appellate litigation regarding the existence of federal subject matter jurisdiction under the federal Securities Litigation Uniform Standards Act (SLUSA). The matters were removed to the United States District Court for the Northern District of Texas and consolidated. The court then dismissed the action under SLUSA. The Court of Appeals for the Fifth Circuit reversed that order, and the Supreme Court of the United States affirmed the Court of Appeals judgment on February 26, 2014. The matters were remanded to state court and no material activity has taken place since that date.

While the outcome of this litigation remains uncertain, SEI and SPTC believe that they have valid defenses to plaintiffs' claims and intend to defend the lawsuits vigorously. Because of uncertainty in the make-up of the Lillie class, the specific theories of liability that may survive a motion for summary judgment or other dispositive motion, the relative lack of discovery regarding damages, causation, mitigation and other aspects that may ultimately bear upon loss, the Company is not reasonably able to provide an estimate of loss, if any, with respect to the foregoing lawsuits.

SEI Capital Accumulation Plan Litigation

On September 28, 2018, a class action complaint was filed in the United States District Court for the Eastern District of Pennsylvania by Gordon Stevens, individually and as the representative of similarly situated persons, and on behalf of the SEI Capital Accumulation Plan (the “Plan”) naming the Company and its affiliated and/or related entities SEI Investments Management Corporation, SEI Capital Accumulation Plan Design Committee, SEI Capital Accumulation Plan Investment Committee, SEI Capital Accumulation Plan Administration Committee, and John Does 1-30 as defendants (the “Stevens Complaint”). The Stevens Compliant seeks unspecified damages for defendants’ breach of fiduciary duties under ERISA with respect to selecting and monitoring the Plan’s investment options and by retaining affiliated investment products in the Plan.

Although SEI believes its defenses against the plaintiff’s allegations were valid, the Company agreed to settle this matter in the very early stages of the litigation in order to avoid the high cost of protracted class-action litigation and internal distractions such cases bring. ~~The written settlement agreement was submitted to~~On March 3, 2020, the Court ~~on July 26, 2019, and is a matter of public record. A Preliminary~~issued its Approval Order approving the settlement ~~agreement was issued by the Court and the Court has scheduled a fairness hearing for December 18, 2019.~~agreement. The settlement agreement will not be finalized until the Court has issued a final approval after the December 18, 2019. The Company expects final Court approval of the settlement by year-end. The Company expects the financial impact of the settlement agreement is not material to the Company.

SS&C Advent Matter

On February 28, 2020, SEI Global Services, Inc. ("SGSI"), a wholly-owned subsidiary of the Company, filed a complaint under seal in the United States District Court for the Eastern District of Pennsylvania against SS&C Advent ("Advent") and SS&C Technologies Holdings, Inc. ("SS&C") alleging that SS&C and Advent breached the terms of the contract between the parties and asking the Court to hold SS&C and Advent to their bargained-for obligations (the "Advent Matter"). In addition to Breach of Contract, the complaint also includes counts for Declaratory Judgment, Tortious Interference with Existing and Prospective Contractual Relations, Violation of the New York General Business Law Section 349, Violations of Section 2 of the Sherman Antitrust Act, Promissory Estoppel and Breach of the Covenant of Good Faith and Fair Dealing. SGSI seeks various forms of relief, including declaratory judgment, specific performance under the contract, and monetary damages, including treble damages and attorney’s fees. Additionally, on February 28, 2020, SGSI filed a related Motion to File Complaint Under Seal (the "Under Seal Motion") requesting that the Advent Matter complaint be maintained under seal and not a matter of public record.

On March 3, 2020, prior to any motions being filed by any of the parties, the Court denied SGSI’s Under Seal Motion. The complaint became a matter of public record on April 15, 2020.

SEI does not believe that it will have to change providers under the current terms of its contract with SS&C or Advent and that the process of litigating its rights under this contract may be a multi-year process. Consequently, SEI does not believe that the Advent Matter will create any consequence to the services it provides to its clients in the near term. SEI believes that it has alternatives available to it that will enable it to continue to provide currently provided services to its clients in all material respects in the unlikely event that there ultimately is a negative outcome in the Advent Matter.

SEI believes it has a strong basis for proving the actions it alleges in the Advent Matter and looks forward to the opportunity to assert its rights under contract. SEI expects the financial impact of litigating the Advent Matter to be immaterial.

Other Matters

The Company is also a party to various other actions and claims arising in the normal course of business that the Company does not believe are material. The Company believes that the ultimate resolution of these matters will not have a material adverse effect on the Company's financial position or the manner in which the Company conducts its business. Currently, the Company does not believe the amount of losses associated with these matters can be estimated. While the Company does not believe that the amount of such losses will, when liquidated or estimable, be material to its financial position, the assumptions may be incorrect and any such loss could have a material adverse effect on the Company's results of operations or the manner in which the Company conducts its business in the period(s) during which the underlying matters are resolved.

~~Page 23 of 48~~22

~~Note 12. Business Acquisition~~

On April 2, 2018, the Company acquired all ownership interests of Huntington Steele, LLC (Huntington Steele), a registered investment advisor based in Seattle, Washington servicing the ultra-high-net-worth market. The total purchase price for Huntington Steele was $17,914, which includes $5,794 in cash consideration, net of $125 in cash acquired, and a contingent purchase price of $12,120. The contingent purchase price consists of amounts payable to the sellers upon the attainment of specified financial measures determined at various intervals occurring between 2019 and 2023. The Company made a payment of $433 to the sellers during the nine months ended September 30, 2019. As of September 30, 2019, the current portion of the contingent purchase price of $535 is included in Accrued liabilities on the accompanying Balance Sheet. The long-term portion of the contingent consideration of $11,152 is included in Other long-term liabilities on the accompanying Balance Sheet.

Note ~~13.~~12. Goodwill and Intangible Assets

On April 2, 2018, the Company acquired all ownership interests of Huntington Steele, ~~(See Note 12)~~LLC (Huntington Steele). The total purchase price was allocated to Huntington Steele’s net tangible and intangible assets based upon their estimated fair values at the date of purchase. The excess purchase price over the value of the identifiable intangible assets was recorded as goodwill. The total amount of goodwill from this transaction amounted to $11,499 and is included on the accompanying Consolidated Balance Sheets. The total purchase price for Huntington Steele included a contingent purchase price payable to the sellers upon the attainment of specified financial measures determined at various intervals occurring between 2019 and 2023. The Company made payments of $433 and $633 during 2019 and the three months ended March 31, 2020, respectively, to the sellers and recorded a fair value adjustment related to the contingent consideration. As of March 31, 2020, the fair value of the contingent consideration of $10,955 is included in Other long-term liabilities on the accompanying Balance Sheet.

In July 2017, the Company acquired all ownership interests of Archway Technology Partners, LLC, Archway Finance & Operations, Inc. and Keystone Capital Holdings, LLC (collectively, Archway), a provider of operating technologies and services to the family office industry. The total purchase price was allocated to Archway’s net tangible and intangible assets based upon their estimated fair values at the date of purchase. The excess purchase price over the value of the net tangible and identifiable intangible assets was recorded as goodwill. The total amount of goodwill from this transaction amounted to $52,990 and is included on the accompanying Consolidated Balance Sheets.

There were 0 changes to the Company's goodwill during the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

The Company recognized ~~$2,763 and $2,617~~$921 of amortization expense related to the intangible assets acquired through the acquisitions of Huntington Steele and Archway during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018, respectively.~~2019.

Note ~~14.~~13. Revenues from Contracts with Customers

The Company’s principal sources of revenues are: (1) asset management, administration and distribution fees primarily earned based upon a contractual percentage of net assets under management or administration; and (2) information processing and software servicing fees that are either recurring and primarily earned based upon the number of trust accounts being serviced or a percentage of the total average daily market value of the clients' assets processed on the Company's platforms, or non-recurring and based upon project-oriented contractual agreements related to client implementations.

Disaggregation of Revenue

The following tables provide additional information pertaining to our revenues disaggregated by major product line and primary geographic market based on the location of the use of the products or services for each of the Company’s business segments for the three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:

~~Page 24 of 48~~23


	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total		Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total
Major Product Lines:	For the Three Months Ended September 30, 2019												For the Three Months Ended March 31, 2020
Investment management fees from pooled investment products	$	34,074	$	72,150	$	13,602	$	161	$	323	$	120,310	$	32,844	$	70,180	$	13,317	$	193	$	359	$	116,893
Investment management fees from investment management agreements	314		26,240		66,373		—		3,099		96,026		347		27,420		65,710		—		2,963		96,440
Investment operations fees	434		—		—		102,543		—		102,977		475		—		—		106,201		—		106,676
Investment processing fees - PaaS	43,462		—		—		—		—		43,462		46,153		—		—		—		—		46,153
Investment processing fees - SaaS	34,018		—		—		2,789		—		36,807		29,169		—		—		3,251		—		32,420
Professional services fees	3,533		—		—		1,398		—		4,931		2,715		—		—		1,274		—		3,989
Account fees and other	1,415		4,643		362		5,295		26		11,741		1,518		4,721		176		5,710		66		12,191
Total revenues	$	117,250	$	103,033	$	80,337	$	112,186	$	3,448	$	416,254	$	113,221	$	102,321	$	79,203	$	116,629	$	3,388	$	414,762

Primary Geographic Markets:
United States	$	76,864	$	103,033	$	63,405	$	104,859	$	3,448	$	351,609	$	74,014	$	102,321	$	62,089	$	108,443	$	3,388	$	350,255
United Kingdom	24,604		—		12,717		—		—		37,321		24,359		—		12,824		—		—		37,183
Canada	10,985		—		1,743		—		—		12,728		10,401		—		1,598		—		—		11,999
Ireland	4,797		—		2,310		7,327		—		14,434		4,447		—		2,530		8,186		—		15,163
Other	—		—		162		—		—		162		—		—		162		—		—		162
Total revenues	$	117,250	$	103,033	$	80,337	$	112,186	$	3,448	$	416,254	$	113,221	$	102,321	$	79,203	$	116,629	$	3,388	$	414,762


	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total		Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total
Major Product Lines:	For the Three Months Ended September 30, 2018												For the Three Months Ended March 31, 2019
Investment management fees from pooled investment products	$	34,897	$	73,663	$	14,614	$	206	$	267	$	123,647	$	32,973	$	66,623	$	13,661	$	205	$	309	$	113,771
Investment management fees from investment management agreements	197		24,525		68,318		79		2,641		95,760		702		23,838		66,171		—		2,698		93,409
Investment operations fees	381		—		—		92,185		—		92,566		376		—		—		94,867		—		95,243
Investment processing fees - PaaS	44,836		—		—		624		—		45,460		43,911		—		—		—		—		43,911
Investment processing fees - SaaS	32,925		—		—		2,417		—		35,342		34,708		—		—		2,549		—		37,257
Professional services fees	3,408		—		—		1,792		—		5,200		3,777		—		—		1,417		—		5,194
Account fees and other	1,805		4,362		534		3,972		34		10,707		1,812		4,300		281		5,611		31		12,035
Total revenues	$	118,449	$	102,550	$	83,466	$	101,275	$	2,942	$	408,682	$	118,259	$	94,761	$	80,113	$	104,649	$	3,038	$	400,820

Primary Geographic Markets:
United States	$	73,188	$	102,550	$	64,601	$	95,132	$	2,942	$	338,413	$	77,454	$	94,761	$	62,325	$	98,058	$	3,038	$	335,636
United Kingdom	28,647		—		13,817		—		—		42,464		25,350		—		13,466		—		—		38,816
Canada	11,730		—		1,895		—		—		13,625		10,660		—		1,727		—		—		12,387
Ireland	4,884		—		2,828		6,143		—		13,855		4,795		—		2,311		6,591		—		13,697
Other	—		—		325		—		—		325		—		—		284		—		—		284
Total revenues	$	118,449	$	102,550	$	83,466	$	101,275	$	2,942	$	408,682	$	118,259	$	94,761	$	80,113	$	104,649	$	3,038	$	400,820

~~Page 25 of 48~~24

Private
Banks

Investment
Advisors

Institutional
Investors

Investment
Managers

Investments
In New
Businesses
Total
Major Product Lines: For the Nine Months Ended September 30, 2019
Investment management fees from pooled investment products $ 100,498
$ 208,860
$ 41,062
$ 550
$ 957
$ 351,927
Investment management fees from investment management agreements 1,299
75,526
199,620
—
8,510
284,955
Investment operations fees 1,172
—
—
297,342
—
298,514
Investment processing fees - PaaS 130,529
—
—
—
—
130,529
Investment processing fees - SaaS 103,502
—
—
7,931
—
111,433
Professional services fees 9,896
—
—
4,363
—
14,259
Account fees and other 4,705
13,530
877
15,851
80
35,043
Total revenues $ 351,601
$ 297,916
$ 241,559
$ 326,037
$ 9,547
$ 1,226,660

Primary Geographic Markets: ��
United States $ 229,207
$ 297,916
$ 189,383
$ 304,711
$ 9,547
$ 1,030,764
United Kingdom 75,649
—
39,323
—
—
114,972
Canada 32,527
—
5,178
—
—
37,705
Ireland 14,218
—
6,977
21,326
—
42,521
Other —
—
698
—
—
698
Total revenues $ 351,601
$ 297,916
$ 241,559
$ 326,037
$ 9,547
$ 1,226,660

~~Page 26 of 48~~

Private
Banks

Investment
Advisors

Institutional
Investors

Investment
Managers

Investments
In New
Businesses
Total
Major Product Lines: For the Nine Months Ended September 30, 2018
Investment management fees from pooled investment products $ 105,251
$ 218,562
$ 45,819
$ 445
$ 729
$ 370,806
Investment management fees from investment management agreements 609
70,678
205,202
242
6,824
283,555
Investment operations fees 1,138
—
—
267,951
—
269,089
Investment processing fees - PaaS 133,336
—
—
1,749
—
135,085
Investment processing fees - SaaS 102,980
—
—
7,152
—
110,132
Professional services fees 13,022
—
—
5,660
—
18,682
Account fees and other 5,403
12,392
1,370
12,497
99
31,761
Total revenues $ 361,739
$ 301,632
$ 252,391
$ 295,696
$ 7,652
$ 1,219,110

Primary Geographic Markets:
United States $ 226,990
$ 301,632
$ 193,417
$ 279,736
$ 7,652
$ 1,009,427
United Kingdom 85,177
—
42,498
—
—
127,675
Canada 34,847
—
6,700
—
—
41,547
Ireland 14,725
—
8,282
15,960
—
38,967
Other —
—
1,494
—
—
1,494
Total revenues $ 361,739
$ 301,632
$ 252,391
$ 295,696
$ 7,652
$ 1,219,110

Investment management fees from pooled investment products - Revenues associated with clients' assets invested in Company-sponsored pooled investment products. Contractual fees are stated as a percentage of the average market value of assets under management and collected on a monthly basis. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Investment management fees from investment management agreements - Revenues based on assets of clients of the Institutional Investors segment primarily invested in Company-sponsored products. Each client is charged an investment management fee that is stated as a percentage of the average market value of all assets under management. The client is billed directly on a quarterly basis. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Revenues associated with the separately managed account program offered through registered investment advisors located throughout the United States. The contractual fee is stated as a percentage of the average market value of all assets invested in the separately managed account and collected on a quarterly basis. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Investment operations fees - Revenues earned from accounting and administrative services, distribution support services and regulatory and compliance services to investment management firms and family offices. The Company contracts directly with the investment management firm or family office. The contractual fees are stated as a percentage of net assets under administration and billed when asset valuations are finalized. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Investment processing fees - Platform as a Service - Revenues associated with clients that outsource their entire investment operation and back-office processing functions. Through the use of the Company's proprietary platforms, the Company assumes all back-office investment processing services including investment processing, custody and safekeeping of assets, income collections, securities settlement and other related trust activities. The contractual fee is based on a monthly fee plus additional fees determined on a per-account or per-transaction basis. Contractual fees can also be stated as a percentage of the value of assets processed on the Company's platforms each month as long as the fee is in excess of a monthly contractual minimum. The client is billed directly on a monthly basis. Revenues are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of Operations.

Investment processing fees - Software as a Service - Revenues associated with clients that outsource investment processing technology software and computer processing by accessing our proprietary software and data center remotely

~~Page 27 of 48~~

but retain responsibility for all investment operations, client administration and other back-office trust operations. The contractual fee is based on a monthly fee plus additional fees determined on a per-account or per-transaction basis. The client is billed directly on a monthly basis. Revenues are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of Operations.

Professional services fees - Revenues associated with the business services migration for investment processing clients of the Private Banks segment and investment operations clients of the Investment Managers segment. In addition, Professional services include other services such as business transformation consulting. Typically, fees are stated as a contractual fixed fee. The client is billed directly and fees are collected according to the terms of the agreement.

Account fees and other - Revenues associated with custody account servicing, account terminations, reimbursements received for out-of-pocket expenses, and other fees for the provision of ancillary services.

Revenue is recognized by the Company when the performance obligations are satisfied and transfer of control to the client is completed. The majority of the Company’s performance obligations are satisfied and control is transferred to the client continuously. Therefore, revenue is recognized on a monthly basis. The amount of revenue recognized reflects the amount of consideration expected to be received by the Company in exchange for satisfied performance obligations.

The Company does not disclose the value of unsatisfied performance obligations as the majority of its contracts relate to: 1) contracts with an original term of one year or less; 2) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed; and 3) contracts that are based on the value of assets under management or administration.

~~Note 15. Leases~~

The Company has operating leases for corporate facilities and equipment. The Company's expense related to leases during the three and nine months ended September 30, 2019 was $2,502 and $7,599, respectively, and is included in Facilities, supplies and other costs on the accompanying Consolidated Statement of Operations.

~~The Company's future minimum lease payments under non-cancelable leases as of September 30, 2019 are as follows:~~

2019 (excluding the nine months ended September 30, 2019) $ 2,515
2020 8,955
2021 7,657
2022 7,369
2023 7,374
Thereafter 16,726
Total future minimum lease payments 50,596
Less: Imputed interest (4,892 )
Total $ 45,704

~~The following table provides supplemental Consolidated Balance Sheet information related to the Company's leases:~~

September 30, 2019
Current portion of long-term operating lease liabilities $ 7,888
Long-term operating lease liabilities 37,816
Total operating lease liabilities $ 45,704

Weighted average remaining lease term 6.5 years

Weighted average discount rate 2.66 %

~~Page 28 of 48~~

~~The following table provides supplemental cash flow information related to the Company's leases:~~

For the Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities $ 8,053

Right-of-use assets obtained in exchange for lease obligations 4,178

~~Page 29 of 48~~25

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(In thousands, except asset balances and per share data)

This discussion reviews and analyzes the consolidated financial condition, the consolidated results of operations and other key factors that may affect future performance. This discussion should be read in conjunction with the Consolidated Financial Statements, the Notes to the Consolidated Financial Statements and the Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Overview

Consolidated Summary

~~We are~~SEI is a leading global provider of technology-driven wealth and investment management solutions. We deliver comprehensive platforms, services and infrastructure – encompassing investment processing, investment ~~management~~operations and investment ~~operations platforms. We~~management – to help ~~corporations, financial institutions,~~wealth managers, financial advisors, investment managers, institutional and ~~ultra-high-net-worth families~~private investors create and manage ~~wealth by providing comprehensive, innovative, investment and investment-business platforms.~~wealth. Investment processing fees are earned as monthly fees for contracted services, including computer processing services, software licenses and investment operations services, as well as transaction-based fees for providing securities valuation and trade-execution. ~~Investment~~A portion of investment processing fees ~~can be stated~~are earned as a percentage of the market value of our clients' assets processed on ~~the~~ our platforms. Investment operations and investment management fees are earned as a percentage of ~~average~~ assets under management, administration or advised assets. As of ~~September 30, 2019,~~March 31, 2020, through our subsidiaries and partnerships in which we have a significant interest, we manage, advise or administer ~~$1.0 trillion~~$920.2 billion in hedge, private equity, mutual fund and pooled or separately managed assets, including ~~$334.7~~$283.4 billion in assets under management and ~~$662.0~~$632.3 billion in client assets under administration. Our affiliate, LSV Asset Management (LSV), manages ~~$100.3~~$70.9 billion of assets which are included as assets under management.

Our Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ were:


	Three Months Ended September 30,				Percent Change*		Nine Months Ended September 30,								Percent Change*	Three Months Ended March 31,								Percent Change*
	2019		2018			2019				2018				2020				2019						Percent Change*
Revenues	$	416,254	$	408,682	Percent Change*	2%		$	1,226,660			$	1,219,110		Percent Change*		1%	$	414,762			$	400,820		3%
Expenses	295,617		296,262		—%		882,326				880,084				—%	304,534				297,259				2%
Income from operations	120,637		112,420		7%		344,334				339,026				2%	110,228				103,561				6%
Net gain (loss) from investments	611		89		NM		2,121				(460		)		NM
Net (loss) gain from investments																(3,989		)		1,279				NM
Interest income, net of interest expense	4,013		3,360		19%		12,260				8,635				42%	3,051				4,100				(26)%
Equity in earnings from unconsolidated affiliate	37,609		41,726		(10)%		112,758				123,406				(9)%	29,907				37,317				(20)%
Income before income taxes	162,870		157,595		3%		471,473				470,607				—%	139,197				146,257				(5)%
Income taxes	30,702		29,276		5%		98,784				80,773				22%	29,955				32,276				(7)%
Net income	132,168		128,319		3%		372,689				389,834				(4)%	109,242				113,981				(4)%
Diluted earnings per common share	$	0.86	$	0.80	8%		$	2.40			$	2.41			—%	$	0.72			$	0.73			(1)%

* Variances noted "NM" indicate the percent change is not meaningful.

The following items had a significant impact on our financial results for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:

Revenue from Asset management, administration and distribution fees increased primarily from higher average assets under administration infrom market appreciation and positive cash flows from new and existing clients during 2019 and early 2020. The sharp market volatility occurring during March 2020 negatively impacted our ~~Investment Managers segment.~~revenues from assets under management and partially offset our revenue growth. Our average assets under administration increased ~~$77.3~~$85.0 billion, or 14%, to ~~$623.9~~$679.2 billion in the first ~~nine~~three months of ~~2019~~2020 as compared to ~~$546.6~~$594.2 billion during the first ~~nine~~three months of ~~2018.~~2019. Our average assets under management, excluding LSV, ~~decreased $1.1~~increased $14.0 billion to ~~$228.3~~$237.2 billion in the first ~~nine~~three months of ~~2019~~2020 as compared to ~~$229.4~~$223.2 billion during the first ~~nine~~three months of ~~2018.~~2019.

Information processing and software servicing fees in our Private Banks segment decreased by ~~$5.9~~$4.7 million during the first ~~nine~~three months of ~~2019~~2020 due to decreased non-recurring fees and previously announced client losses.

Our proportionate share in the earnings of LSV decreased to ~~$112.8~~$29.9 million in the first ~~nine~~three months of ~~2019~~2020 as compared to ~~$123.4~~$37.3 million in the first ~~nine~~three months of ~~2018~~2019 due to ~~negative cash flows, lost clients, lower performance fees and~~ lower assets under management from ~~LSV's~~negative cash flows from existing clients, ~~from the significant market depreciation in late 2018. Market appreciation~~negative markets during March 2020 and ~~new~~ client ~~activity during 2019 partially offset the decline in LSV's assets under management.~~losses.

~~Page 30 of 48~~26

Our operating expenses, primarily personnel costs, increased in the first nine months of 2019. These expenses are primarily related to servicing existing clients and acquiring new clients. The increase was partially offset by cost containment measures implemented in late 2018 and early 2019. These operating expenses are included in Compensation, benefits and other personnel costs on the accompanying Consolidated Statements of Operations.

We capitalized ~~$26.0~~$6.2 million in the first ~~nine~~three months of ~~2019~~2020 for the SEI Wealth Platform as compared to ~~$32.5~~$9.7 million in the first ~~nine~~three months of ~~2018.~~2019. Amortization expense related to SWP increased to ~~$31.6~~$10.8 million during the first ~~nine~~three months of ~~2019~~2020 as compared to ~~$29.7~~$10.4 million during the first ~~nine~~three months of ~~2018.~~2019.

Our effective tax rate during the ~~third~~first quarter of ~~2019~~2020 was ~~18.9%~~21.5% as compared to ~~18.6% during the third quarter of 2018. Our tax rate was 21.0%~~22.1% during the first ~~nine months~~quarter of ~~2019 as compared to 17.2% during the first nine months of 2018.~~2019. The ~~increase~~decline in our ~~effective~~ tax rate ~~in the nine month period~~ was primarily due to ~~reduced~~increased tax benefits ~~from a lower volume of~~associated with stock option ~~exercise activity (See the caption "Income Taxes" later in this discussion for more information).~~exercises.

We continued our stock repurchase program during ~~2019~~2020 and purchased ~~5.0~~2.4 million shares for ~~$267.2~~$127.4 million in the ~~nine~~three month period.

Impact to our revenues due to COVID-19

The occurrence of unforeseen or catastrophic events, including the emergence of a pandemic or other widespread health emergency (or concerns over the possibility of such an emergency), could create economic and financial disruptions, and could lead to operational difficulties that could impair our ability to manage our business. In December 2019, a novel strain of coronavirus (COVID-19) was identified in Wuhan, China. Since that time, it has spread globally, leading the World Health Organization to declare the COVID-19 virus outbreak a global pandemic in March 2020.

In March 2020, we executed upon our business resiliency and contingency plans. To date, our remote capabilities have proven to be effective during the disruption caused by the COVID-19 pandemic with almost the entire workforce working remotely, with only a very limited number of on-site activities in our operational offices continuing to be performed.

To the extent that critical government or infrastructure functions upon which we rely are suspended, or in the event we are unable to have personnel onsite in our operational offices for an extended period, we would need to seek alternative arrangements to mitigate those issues. This could impair our ability to provide a number of services to our clients.

We are closely monitoring the international landscape for changes in governmental measures both in the United States and in the locations where we rely on critical outsourced services, including India. Each location is interpreting ‘essential services’ somewhat differently and the restrictions on staff attending worksites are particularly stringent in India. We are closely monitoring our outsourced partners in India to assess and manage the impact of the current lockdown and we have executed plans to triage and prioritize offshore work for repatriation to our onshore locations. We have experienced very limited service disruption and there has not been a material impact on our operations to date.

We continue to be in regular contact with regulators, clients and vendors to confirm the measures taken to continue operating during this crisis, taking into consideration the latest announcements from state and federal authorities.

The majority of our revenues are based on the value of assets invested in investment products that we manage or administer which are affected by changes in the capital markets and the portfolio strategy of our clients or their customers. The market volatility occurring in March 2020 in response to measures taken to contain the spread of the COVID-19 virus negatively impacted our asset-based fee revenues and partially offset our revenue growth. Additionally, changes in the portfolio strategy of our clients or their customers in response to the market volatility resulted in asset flows into our lower margin liquidity products and negatively impacted our earnings.

The extent to which the spread of the COVID-19 virus impacts our business, financial condition, and results of operations will depend on future developments. Should the COVID-19 virus grow in scope or intensify in severity, or if the current measures taken by national and local authorities to contain the effects of COVID-19 are prolonged, the resulting market conditions may continue to adversely affect our revenues and earnings derived from assets under management and administration.

~~Page 31 of 48~~27

Ending Asset Balances

(In millions)


	As of September 30,				Percent Change	As of March 31,				Percent Change
	2019		2018		Percent Change	2020		2019		Percent Change
Private Banks:
Equity and fixed-income programs	$	22,580	$	22,739	(1)%	$	21,160	$	22,369	(5)%
Collective trust fund programs	4		4		—%	5		4		25%
Liquidity funds	3,695		3,142		18%	4,143		3,753		10%
Total assets under management	$	26,279	$	25,885	2%	$	25,308	$	26,126	(3)%
Client assets under administration	23,985		23,394		3%	21,497		22,886		(6)%
Total assets	$	50,264	$	49,279	2%	$	46,805	$	49,012	(5)%
Investment Advisors:
Equity and fixed-income programs	$	65,059	$	63,958	2%	$	54,856	$	61,277	(10)%
Collective trust fund programs	4		5		(20)%	2		5		(60)%
Liquidity funds	2,673		3,182		(16)%	5,969		4,362		37%
Total assets under management	$	67,736	$	67,145	1%	$	60,827	$	65,644	(7)%
Institutional Investors:
Equity and fixed-income programs	$	82,659	$	85,248	(3)%	$	72,399	$	82,578	(12)%
Collective trust fund programs	81		74		9%	94		79		19%
Liquidity funds	2,290		2,544		(10)%	3,672		2,529		45%
Total assets under management	$	85,030	$	87,866	(3)%	$	76,165	$	85,186	(11)%
Client assets under advisement	4,467		4,131		8%	3,406		3,694		(8)%
Total assets	$	89,497	$	91,997	(3)%	$	79,571	$	88,880	(10)%
Investment Managers:
Equity and fixed-income programs	$	—	$	99	NM	$	—	$	—	NM
Collective trust fund programs	53,169		46,934		13%	48,226		49,232		(2)%
Liquidity funds	477		580		(18)%	392		704		(44)%
Total assets under management	$	53,646	$	47,613	13%	$	48,618	$	49,936	(3)%
Client assets under administration (A)	637,986		552,411		15%	610,794		585,997		4%
Total assets	$	691,632	$	600,024	15%	$	659,412	$	635,933	4%
Investments in New Businesses:
Equity and fixed-income programs	$	1,621	$	1,179	37%	$	1,484	$	1,466	1%
Liquidity funds	132		162		(19)%	152		218		(30)%
Total assets under management	$	1,753	$	1,341	31%	$	1,636	$	1,684	(3)%
Client assets under advisement	825		730		13%	1,056		729		45%
Total assets	$	2,578	$	2,071	24%	$	2,692	$	2,413	12%
LSV:
Equity and fixed-income programs (B)	$	100,295	$	109,363	(8)%	$	70,851	$	103,163	(31)%
Total:
Equity and fixed-income programs (C)	$	272,214	$	282,586	(4)%	$	220,750	$	270,853	(18)%
Collective trust fund programs	53,258		47,017		13%	48,327		49,320		(2)%
Liquidity funds	9,267		9,610		(4)%	14,328		11,566		24%
Total assets under management	$	334,739	$	339,213	(1)%	$	283,405	$	331,739	(15)%
Client assets under advisement	5,292		4,861		9%	4,462		4,423		1%
Client assets under administration (D)	661,971		575,805		15%	632,291		608,883		4%
Total assets under management, advisement and administration	$	1,002,002	$	919,879	9%	$	920,158	$	945,045	(3)%

~~Page 32 of 48~~28


(A)	Client assets under administration in the Investment Managers segment include ~~$52.6~~$50.4 billion of assets that are at fee levels below our normal full service assets (as of ~~September 30, 2019)~~March 31, 2020).


(B)	Equity and fixed-income programs include assets managed by LSV in which fees are based on performance only. The ending value of these assets as of ~~September 30, 2019~~March 31, 2020 was ~~$2.4~~$1.3 billion.


(C)	Equity and fixed-income programs include ~~$5.7~~$8.4 billion of assets invested in various asset allocation funds at ~~September 30, 2019.~~March 31, 2020.


(D)	In addition to the numbers presented, SEI also administers an additional ~~$12.4~~$11.5 billion in Funds of Funds assets (as of ~~September 30, 2019)~~March 31, 2020) on which SEI does not earn an administration fee.

~~Page 33 of 48~~29

Average Asset Balances

(In millions)


	Three Months Ended September 30,				Percent Change		Nine Months Ended September 30,								Percent Change	Three Months Ended March 31,								Percent Change
	2019		2018			2019				2018				2020				2019						Percent Change
Private Banks:
Equity and fixed-income programs	$	22,432	$	22,516	Percent Change	—%		$	22,117			$	22,933		Percent Change		(4)%	$	24,657			$	21,831		13%
Collective trust fund programs	4		4		—%		4				4				—%	4				4				—%
Liquidity funds	3,625		3,376		7%		3,573				3,537				1%	3,581				3,706				(3)%
Total assets under management	$	26,061	$	25,896	1%		$	25,694			$	26,474			(3)%	$	28,242			$	25,541			11%
Client assets under administration	23,717		23,175		2%		22,980				23,059				—%	24,840				22,098				12%
Total assets	$	49,778	$	49,071	1%		$	48,674			$	49,533			(2)%	$	53,082			$	47,639			11%
Investment Advisors:
Equity and fixed-income programs	$	64,761	$	63,399	2%		$	61,971			$	62,980			(2)%	$	64,933			$	58,732			11%
Collective trust fund programs	5		5		—%		5				5				—%	3				5				(40)%
Liquidity funds	2,580		2,958		(13)%		3,781				2,559				48%	3,284				5,298				(38)%
Total assets under management	$	67,346	$	66,362	1%		$	65,757			$	65,544			—%	$	68,220			$	64,035			7%
Institutional Investors:
Equity and fixed-income programs	$	82,398	$	84,885	(3)%		$	82,240			$	85,712			(4)%	$	79,926			$	81,725			(2)%
Collective trust fund programs	80		74		8%		79				74				7%	86				79				9%
Liquidity funds	2,287		2,469		(7)%		2,335				2,665				(12)%	2,342				2,375				(1)%
Total assets under management	$	84,765	$	87,428	(3)%		$	84,654			$	88,451			(4)%	$	82,354			$	84,179			(2)%
Client assets under advisement	3,797		4,263		(11)%		3,644				4,316				(16)%	3,760				3,494				8%
Total assets	$	88,562	$	91,691	(3)%		$	88,298			$	92,767			(5)%	$	86,114			$	87,673			(2)%
Investment Managers:
Equity and fixed-income programs	$	—	$	95	NM		$	—			$	100			NM	$	—			$	—			NM
Collective trust fund programs	52,587		45,856		15%		50,006				46,915				7%	55,952				47,322				18%
Liquidity funds	460		555		(17)%		505				679				(26)%	617				559				10%
Total assets under management	$	53,047	$	46,506	14%		$	50,511			$	47,694			6%	$	56,569			$	47,881			18%
Client assets under administration (A)	630,328		541,063		16%		600,967				523,564				15%	654,386				572,065				14%
Total assets	$	683,375	$	587,569	16%		$	651,478			$	571,258			14%	$	710,955			$	619,946			15%
Investments in New Businesses:
Equity and fixed-income programs	$	1,609	$	1,148	40%		$	1,480			$	1,114			33%	$	1,663			$	1,394			19%
Liquidity funds	142		146		(3)%		174				104				67%	168				202				(17)%
Total assets under management	$	1,751	$	1,294	35%		$	1,654			$	1,218			36%	$	1,831			$	1,596			15%
Client assets under advisement	842		777		8%		822				547				50%	1,222				708				73%
Total assets	$	2,593	$	2,071	25%		$	2,476			$	1,765			40%	$	3,053			$	2,304			33%
LSV:
Equity and fixed-income programs (B)	$	100,094	$	109,527	(9)%		$	102,510			$	109,270			(6)%	$	88,059			$	104,517			(16)%
Total:
Equity and fixed-income programs (C)	$	271,294	$	281,570	(4)%		$	270,318			$	282,109			(4)%	$	259,238			$	268,199			(3)%
Collective trust fund programs	52,676		45,939		15%		50,094				46,998				7%	56,045				47,410				18%
Liquidity funds	9,094		9,504		(4)%		10,368				9,544				9%	9,992				12,140				(18)%
Total assets under management	$	333,064	$	337,013	(1)%		$	330,780			$	338,651			(2)%	$	325,275			$	327,749			(1)%
Client assets under advisement	4,639		5,040		(8)%		4,466				4,863				(8)%	4,982				4,202				19%
Client assets under administration (D)	654,045		564,238		16%		623,947				546,623				14%	679,226				594,163				14%
Total assets under management, advisement and administration	$	991,748	$	906,291	9%		$	959,193			$	890,137			8%	$	1,009,483			$	926,114			9%

~~Page 34 of 48~~30


(A)	Average client assets under administration in the Investment Managers segment for the three months ended ~~September 30, 2019~~March 31, 2020 include ~~$52.6~~$49.8 billion that are at fee levels below our normal full service assets.


(B)	Equity and fixed-income programs include assets managed by LSV in which fees are based on performance only. The average value of these assets for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~$2.7~~$1.9 billion.


(C)	Equity and fixed-income programs include ~~$5.7~~$7.0 billion of average assets invested in various asset allocation funds for the three months ended ~~September 30, 2019.~~March 31, 2020.


(D)	In addition to the numbers presented, SEI also administers an additional ~~$12.4~~$11.5 billion of average assets in Funds of Funds assets for the three months ended ~~September 30, 2019~~March 31, 2020 on which SEI does not earn an administration fee.

In the preceding tables, assets under management are total assets of our clients or their customers invested in our equity and fixed-income investment programs, collective trust fund programs, and liquidity funds for which we provide asset management services through our subsidiaries and partnerships in which we have a significant interest. Assets under advisement include assets for which we provide advisory services through a subsidiary to the accounts but do not manage the underlying assets. Assets under administration include total assets of our clients or their customers for which we provide administrative services, including client fund balances for which we provide administration and/or distribution services through our subsidiaries and partnerships in which we have a significant interest. The assets presented in the preceding tables do not include assets processed on SWP and are not included in the accompanying Consolidated Balance Sheets because we do not own them.

Business Segments

Revenues, Expenses and Operating Profit (Loss) for our business segments for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 compared to the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 were as follows:


	Three Months Ended September 30,						Percent Change		Nine Months Ended September 30,								Percent Change	Three Months Ended March 31,								Percent Change
	2019			2018				2019				2018				2020				2019						Percent Change
Private Banks:
Revenues	$	117,250		$	118,449		Percent Change	(1)%		$	351,601			$	361,739		Percent Change		(3)%	$	113,221			$	118,259		(4)%
Expenses	110,788			116,471			(5)%		329,540				343,515				(4)%	110,653				110,962				—%
Operating Profit	$	6,462		$	1,978		227%		$	22,061			$	18,224			21%	$	2,568			$	7,297			(65)%
Operating Margin	6		%	2		%			6		%		5		%			2		%		6		%
Investment Advisors:
Revenues	$	103,033		$	102,550		—%		$	297,916			$	301,632			(1)%	$	102,321			$	94,761			8%
Expenses	51,509			53,287			(3)%		154,569				158,792				(3)%	52,432				52,502				—%
Operating Profit	$	51,524		$	49,263		5%		$	143,347			$	142,840			—%	$	49,889			$	42,259			18%
Operating Margin	50		%	48		%			48		%		47		%			49		%		45		%
Institutional Investors:
Revenues	$	80,337		$	83,466		(4)%		$	241,559			$	252,391			(4)%	$	79,203			$	80,113			(1)%
Expenses	37,268			40,497			(8)%		115,383				122,617				(6)%	38,267				38,754				(1)%
Operating Profit	$	43,069		$	42,969		—%		$	126,176			$	129,774			(3)%	$	40,936			$	41,359			(1)%
Operating Margin	54		%	51		%			52		%		51		%			52		%		52		%
Investment Managers:
Revenues	$	112,186		$	101,275		11%		$	326,037			$	295,696			10%	$	116,629			$	104,649			11%
Expenses	71,889			65,296			10%		209,326				191,955				9%	74,289				69,066				8%
Operating Profit	$	40,297		$	35,979		12%		$	116,711			$	103,741			13%	$	42,340			$	35,583			19%
Operating Margin	36		%	36		%			36		%		35		%			36		%		34		%
Investments in New Businesses:
Revenues	$	3,448		$	2,942		17%		$	9,547			$	7,652			25%	$	3,388			$	3,038			12%
Expenses	7,926			5,769			37%		20,663				16,807				23%	10,910				5,940				84%
Operating Loss	$	(4,478	)	$	(2,827	)	NM		$	(11,116	)		$	(9,155	)		NM	$	(7,522	)		$	(2,902	)		NM

For additional information pertaining to our business segments, see Note 9 to the Consolidated Financial Statements.

~~Page 35 of 48~~31

Private Banks


	Three Months Ended September 30,				Percent Change		Nine Months Ended September 30,								Percent Change	Three Months Ended March 31,								Percent Change
	2019		2018			2019				2018				2020				2019						Percent Change
Revenues:
Information processing and software servicing fees	$	82,503	$	82,921	Percent Change	(1)%		$	248,850			$	254,764		Percent Change		(2)%	$	79,633			$	84,302		(6)%
Asset management, administration & distribution fees	34,747		35,528		(2)%		102,751				106,975				(4)%	33,588				33,957				(1)%
Total revenues	$	117,250	$	118,449	(1)%		$	351,601			$	361,739			(3)%	$	113,221			$	118,259			(4)%

Revenues decreased ~~$1.2~~$5.0 million, or 1%4%, in the three month period ~~and decreased $10.1 million, or 3%, in the nine month period ended September 30, 2019~~ and were primarily affected by:

Decreased investment processing fees from the loss of clients offset by new client conversions and growth from existing clients;

~~Decreased non-recurring professional services fees from existing clients as well as clients scheduled for implementation;~~ and

Decreased investment management fees from existing international clients due to negative cash ~~flows;~~flows and

~~The negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations.~~ market volatility during March 2020.

Operating margins ~~increased~~decreased to 6%2% compared to 2%6% in the three month ~~period and increased to 6% compared to 5% in the nine month~~ period. Operating income ~~increased~~decreased by ~~$4.5~~$4.7 million, or ~~227%~~65%, in the three ~~month period and increased $3.8 million, or 21%, in the nine~~ month period and was primarily affected by:

~~Decreased~~A decrease in revenues; and

Increased costs, mainly personnel and consulting costs, related to maintenance, support and client migrations to ~~SWP;~~

~~Decreased direct expenses associated with decreased investment management fees from existing international clients; and~~

~~Decreased direct expenses associated with client losses; partially offset by~~

~~A decrease in revenues;~~

~~Increased amortization expense related to SWP due to continued enhancements; and~~

~~The net negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations.~~SWP.

Investment Advisors


	Three Months Ended September 30,				Percent Change		Nine Months Ended September 30,								Percent Change	Three Months Ended March 31,								Percent Change
	2019		2018			2019				2018				2020				2019						Percent Change
Revenues:
Investment management fees-SEI fund programs	$	72,150	$	73,663	Percent Change	(2)%		$	208,860			$	218,562		Percent Change		(4)%	$	70,180			$	66,623		5%
Separately managed account fees	26,240		24,525		7%		75,526				70,678				7%	27,420				23,838				15%
Other fees	4,643		4,362		6%		13,530				12,392				9%	4,721				4,300				10%
Total revenues	$	103,033	$	102,550	—%		$	297,916			$	301,632			(1)%	$	102,321			$	94,761			8%

Revenues increased ~~slightly~~$7.6 million, or 8% in the three month period and ~~decreased $3.7 million, or 1%, in the nine month period ended September 30, 2019 and~~ were primarily affected by:

~~Decreased~~Increased investment management fees ~~as favorable~~from market ~~conditions were more than~~appreciation during 2019 and early 2020; and

Increased separately managed account program fees from positive cash flows into SEI’s strategist programs; partially offset by

The impact to investment management fees from the market volatility during March 2020, negative cash flows and a decrease in average basis points earned on assets due to client-directed shifts into ~~lower fee investment~~liquidity products ~~including~~and SEI's ETF ~~program; partially offset by~~

~~Increased separately managed account program fees from positive cash flows into SEI’s ETF programs.~~

~~Page 36 of 48~~

program.

Operating margin increased to ~~50%~~49% compared to ~~48%~~45% in the three ~~month period and increased to 48% compared to 47% in the nine~~ month period. Operating income increased ~~$2.3~~$7.6 million, or 5%18%, in the three month period and ~~increased slightly in the nine month period and~~ was primarily affected by:

An increase in revenues;

Decreased costs, mainly personnel and consulting costs, related to maintenance, support and client migrations to SWP;

~~Decreased sales compensation expense;~~ and


•	Decreased costs associated with accounts formerly processed on TRUST 3000^® due to client migrations to SWP; partially offset by

~~A decrease in revenues;~~

~~Increased personnel costs for marketing to and servicing new advisors;~~

Increased direct expenses associated with increased assets into our investment ~~products; and~~products.

~~Increased amortization expense related to SWP due to continued enhancements.~~

Institutional Investors

Revenues decreased ~~$3.1 million,~~$900 thousand, or 4%1%, in the three month period ~~and decreased $10.8 million, or 4%, in the nine month period ended September 30, 2019~~ and were primarily affected by:

Defined benefit client losses, mainly resulting from acquisitions and plan curtailments; and

The impact to investment management fees from negative ~~impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations;~~markets during March 2020; partially offset by

Asset funding from new sales of our investment management platforms; and

Increased investment management fees from market ~~appreciation.~~appreciation during 2019 and early 2020.

Operating margin ~~increased to 54% compared to 51%~~remained at 52% in the three month ~~period and increased to 52% compared to 51% in the nine month~~ period. Operating income ~~increased~~decreased slightly in the three ~~month period and decreased $3.6 million, or 3%, in the nine~~ month period and was primarily affected by:

A decrease in revenues; ~~and~~

~~The net negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations;~~ partially offset by

Decreased direct expenses associated with investment management fees.

Investment Managers

Revenues increased ~~$10.9~~$12.0 million, or 11%, in the three month period ~~and increased $30.3 million, or 10%, in the nine month period ended September 30, 2019~~ and were primarily affected by:

Positive cash flows into alternative, traditional and separately managed account offerings from new and existing clients; partially offset by

The impact of negative markets during March 2020 to assets under administration; and

Client losses and fund closures.

Operating margin ~~remained at 36% in the three month period and~~ increased to 36% compared to ~~35%~~34% in the ~~nine~~three month period. Operating income increased ~~$4.3~~$6.8 million, or ~~12%~~19%, in the three ~~month period and increased $13.0 million, or 13%, in the nine~~ month period and was primarily affected by:

An increase in revenues; ~~and~~

~~The net positive impact from foreign currency exchange rate fluctuations between the U.S. dollar and the Euro on our foreign operations;~~ partially offset by

Increased costs associated with new business, primarily personnel expenses ~~technology~~ and ~~other operational costs to service new and existing clients;~~third-party vendor costs; and

Increased non-capitalized investment spending, mainly consulting costs.

Other

Corporate overhead expenses

Corporate overhead expenses primarily consist of general and administrative expenses and other costs not directly attributable to a reportable business segment. Corporate overhead expenses were ~~$16.2~~$18.0 million and ~~$14.9~~$20.0 million in the

~~Page 37 of 48~~

three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $52.8 million and $46.4 million in the nine months ended September 30, 2019 and 2018,~~ respectively. The ~~increase~~decrease in corporate overhead expenses is primarily due to ~~increased~~a decrease in non-recurring personnel-related ~~costs, primarily severance~~ costs.

Other income and expense

Other income and expense items on the accompanying Consolidated Statements of Operations consists of:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Net gain (loss) from investments	$	611		$	89		$	2,121		$	(460	)
Net (loss) gain from investments													$	(3,989	)	$	1,279
Interest and dividend income	4,167			3,482			12,737			9,146			3,203			4,257
Interest expense	(154		)	(122		)	(477		)	(511		)	(152		)	(157		)
Equity in earnings of unconsolidated affiliate	37,609			41,726			112,758			123,406			29,907			37,317
Total other income and expense items, net	$	42,233		$	45,175		$	127,139		$	131,581		$	28,969		$	42,696

Net (loss) gain from investments

Net losses from investments in the three months ended March 31, 2020 were primarily due to unrealized losses recorded in current earnings related to LSV-sponsored investment funds and Company-sponsored mutual funds from the market volatility in March 2020 (See Note 5).

Interest and dividend income

Interest and dividend income is earned based upon the amount of cash that is invested daily. The ~~increase~~decrease in interest and dividend income in the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 was due to an overall ~~increase~~decline in interest rates.

Equity in earnings of unconsolidated affiliate

Equity in earnings of unconsolidated affiliate reflects our less than 50% ownership in LSV. As of ~~September 30, 2019,~~March 31, 2020, our total partnership interest in LSV was 38.9%. The table below presents the revenues and net income of LSV and our proportionate share in LSV's earnings.


	Three Months Ended September 30,				Percent Change		Nine Months Ended September 30,								Percent Change	Three Months Ended March 31,								Percent Change
	2019		2018			2019				2018				2020				2019						Percent Change
Revenues of LSV	$	121,232	$	133,921	Percent Change	(9)%		$	365,164			$	397,750		Percent Change		(8)%	$	99,996			$	120,915		(17)%
Net income of LSV	96,699		107,284		(10)%		289,918				317,295				(9)%	76,897				95,948				(20)%

SEI's proportionate share in earnings of LSV	$	37,609	$	41,726	(10)%		$	112,758			$	123,406			(9)%	$	29,907			$	37,317			(20)%

The decline in our earnings from LSV in the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 was due to ~~negative cash flows, lost clients,~~ lower ~~performance fees and decreased~~ assets under management from ~~LSV's~~negative cash flows from existing clients, ~~due to~~ the ~~significant~~ market ~~depreciation in late 2018. Market appreciation~~volatility during March 2020 and ~~new~~ client ~~activity during the first nine months of 2019 partially offset the decline in LSV's assets under management.~~losses. Average assets under management by LSV decreased ~~$6.8~~$16.4 billion to ~~$102.5~~$88.1 billion during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 as compared to ~~$109.3~~$104.5 billion during the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, a decrease of 6%16%.

Income Taxes

Our effective income tax rates for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ differs from the federal income tax statutory rate due to the following:

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Statutory rate 21.0 % 21.0 % 21.0 % 21.0 %
State taxes, net of federal tax benefit 2.6
2.3
2.6
2.3
Foreign tax expense and tax rate differential (0.3 ) (0.2 ) (0.2 ) (0.2 )
Tax benefit from stock option exercises (2.2 ) (1.4 ) (1.5 ) (4.8 )
Expiration of the statute of limitations (1.2 ) (1.0 ) (0.4 ) (0.3 )
Provision-to-return adjustment (0.6 ) (2.3 ) (0.2 ) (0.8 )
Other, net (0.4 ) 0.2
(0.3 ) —
18.9 % 18.6 % 21.0 % 17.2 %

~~Page 38 of 48~~



	Three Months Ended March 31,
	2020		2019
Statutory rate	21.0	%	21.0	%
State taxes, net of federal tax benefit	3.1		2.6
Foreign tax expense and tax rate differential	(0.1	)	(0.1	)
Tax benefit from stock option exercises	(2.2	)	(1.1	)
Other, net	(0.3	)	(0.3	)
	21.5	%	22.1	%

The ~~increase~~decrease in our effective tax rate for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was primarily due to ~~reduced~~increased tax benefits due to a ~~lower~~higher volume of stock option exercise activity as compared to the prior year period.

Stock-Based Compensation

We recognized ~~$15.6~~$6.9 million and ~~$16.4~~$5.0 million in stock-based compensation expense during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. The amount of stock-based compensation expense we recognize is based upon our estimate of when ~~earnings per share~~financial vesting targets may be achieved. Any change in our estimate could result in the amount of stock-based compensation expense to be accelerated, spread out over a longer period, or reversed. This may cause volatility in the recognition of stock-based compensation expense in future periods and could materially affect our earnings.

Fair Value Measurements

The fair value of our financial assets and liabilities, except for the investment funds sponsored by LSV, is determined in accordance with the fair value hierarchy. The fair value of the investment funds sponsored by LSV is measured using the net asset value per share (NAV) as a practical expedient. The fair value of all other financial assets are determined using Level 1 or Level 2 inputs and consist mainly of investments in equity or fixed-income mutual funds that are quoted daily and Government National Mortgage Association (GNMA) and other U.S. government agency securities that are single issuer pools that are valued based on current market data of similar assets. The Company's Level 3 financial liabilities at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 consist entirely of the estimated contingent consideration resulting from an acquisition (See Note 12 to the Consolidated Financial Statements). We did not have any other financial liabilities at ~~September 30, 2019~~March 31, 2020 or December 31, ~~2018~~2019 that were required to be measured at fair value on a recurring basis (See Note 4 to the Consolidated Financial Statements).

Regulatory Matters

Like many firms operating within the financial services industry, we are experiencing a difficult and increasingly complex regulatory environment across our markets. Our current scale and reach as a provider to the financial services industry, the introduction and implementation of new platforms for our financial services industry clients, the increased regulatory oversight of the financial services industry generally, new laws and regulations affecting the financial services industry and ever-changing regulatory interpretations of existing laws and regulations, and a greater propensity of regulators to pursue enforcement actions and other sanctions against regulated entities, have made this an increasingly challenging and costly regulatory environment in which to operate.

SEI and our regulated subsidiaries have undergone or been scheduled to undergo a range of periodic or thematic reviews, examinations or investigations by numerous regulatory authorities around the world, including the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, Inc., the Financial Conduct Authority of the United Kingdom, the Central Bank of Ireland and others. These regulatory activities typically result in the identification of matters or practices to be addressed by us or our subsidiaries and, in certain circumstances, the regulatory authorities require remediation activities or pursue enforcement proceedings against us or our subsidiaries. From time to time, the regulators in different jurisdictions will elevate their level of scrutiny of our operations as our business expands or is deemed critical to the operations of the relevant financial markets. As described under the caption “Regulatory Considerations” in our Annual Report on Form 10-K, the range of possible sanctions that are available to regulatory authorities include limitations on our ability to engage in business for specified periods of time, the revocation of registration, censures and fines. The direct and indirect costs of responding to these regulatory activities, implementation of any remediation actions, and of complying with new or modified regulations, as well as the potential financial costs and potential reputational impact against us of any enforcement proceedings that might result, is uncertain but could have a material adverse impact on our operating results or financial position.

~~Page 39 of 48~~

Liquidity and Capital Resources


	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Net cash provided by operating activities	$	381,535		$	417,898		$	98,972		$	59,899
Net cash used in investing activities	(43,045		)	(77,408		)	(17,352		)	(15,726		)
Net cash used in financing activities	(321,742		)	(336,214		)	(165,050		)	(132,644		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(3,878		)	(6,552		)	(11,146		)	3,272
Net increase (decrease) in cash, cash equivalents and restricted cash	12,870			(2,276		)
Net decrease in cash, cash equivalents and restricted cash							(94,576		)	(85,199		)
Cash, cash equivalents and restricted cash, beginning of period	758,039			747,752			844,547			758,039
Cash, cash equivalents and restricted cash, end of period	$	770,909		$	745,476		$	749,971		$	672,840

Cash requirements and liquidity needs are primarily funded through our cash flow from operations and our capacity for additional borrowing. At ~~September 30, 2019,~~March 31, 2020, our unused sources of liquidity consisted of cash and cash equivalents and the amount available under our credit facility.

Our credit facility provides for borrowings of up to $300.0 million and is scheduled to expire in June 2021 (See Note 6 to the Consolidated Financial Statements). As of ~~October~~April 17, ~~2019,~~2020, we had outstanding letters of credit of $11.6 million which reduced our amount available under the credit facility to $288.4 million. These letters of credit were primarily issued for the expansion of our corporate headquarters and are due to expire ~~during the fourth quarter of 2019.~~in late 2020.

The availability of the credit facility is subject to compliance with certain covenants set forth in the agreement. The credit facility contains covenants which restrict our ability to engage in mergers, consolidations, asset sales, investments, transactions with affiliates other than wholly-owned subsidiaries, or to incur liens or other indebtedness including contingent obligations or guarantees, as defined in the agreement. In the event of a default under the credit facility, we would also be restricted from paying dividends on, or repurchasing, our common stock. Currently, our ability to borrow from the credit facility is not limited by any covenant of the agreement. Our credit facility is provided through Wells Fargo Bank, National Association, and a syndicate of other well-established financial institutions. As of April 17, 2020, we are not aware of any issues related to the ability of the lenders to honor the borrowing terms in our credit facility agreement.

Our credit facility contains terms that utilize the London InterBank Offered Rate (LIBOR) as a potential component of the interest rate to be applied to the borrowings we may undertake under the agreement (See Note 6 to the Consolidated Financial Statements). We are currently monitoring the actions of LIBOR’s regulator and the implementation of alternative

reference rates in advance of the expected discontinuation of LIBOR after 2021 to determine any potential impact to our current credit facility and negotiations for subsequent borrowing agreements.

The majority of our excess cash reserves are primarily placed in accounts located in the United States that invest entirely in SEI-sponsored money market mutual funds denominated in the U.S. dollar. We also utilize demand deposit accounts or money market accounts at several well-established financial institutions located in the United States. Accounts used to manage these excess cash reserves do not impose any restrictions or limitations that would prevent us from being able to access such cash amounts immediately. As of ~~October~~April 17, ~~2019,~~2020, the amount of cash and cash equivalents considered free and immediately accessible for other general corporate purposes was ~~$397.0~~$354.5 million.

Our cash and cash equivalents include accounts managed by our subsidiaries that are used in their operations or to cover specific business and regulatory requirements. The availability of this cash for other purposes beyond the operations of these subsidiaries may be limited. We therefore do not include accounts of our foreign subsidiaries in our calculation of free and immediately accessible cash for other general corporate purposes. ~~With the enactment of the Tax Act, a~~A portion of the undistributed earnings of our foreign subsidiaries are deemed repatriated. Any subsequent transfer of available cash related to the repatriated earnings of our foreign subsidiaries could significantly increase our free and immediately accessible cash.

Cash flows from operations ~~decreased $36.4~~increased $39.1 million in the first ~~nine~~three months of ~~2019~~2020 compared to the first ~~nine~~three months of ~~2018~~2019 primarily from ~~the decrease in our net income, lower~~higher distribution payments received from our unconsolidated affiliate, LSV, and the ~~negative~~positive impact from the change in our working capital accounts.

~~Page 40 of 48~~

Net cash used in investing activities includes:

•Purchases, sales and maturities of marketable securities. Our purchases, sales and maturities of marketable securities in the first ~~nine~~three months of ~~2019~~2020 and ~~2018~~2019 were as follows:


	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Purchases	$	(126,030	)	$	(122,259	)	$	(29,407	)	$	(43,672	)
Sales and maturities	137,783			116,568			37,687			45,200
Net investing activities from marketable securities	$	11,753		$	(5,691	)	$	8,280		$	1,528

•

The capitalization of costs incurred in developing computer software. We capitalized ~~$26.8~~$6.5 million of software development costs in the first ~~nine~~three months of ~~2019~~2020 as compared to ~~$33.4~~$9.9 million in the first ~~nine~~three months of ~~2018.~~2019. The majority of our software development costs are related to significant enhancements for the expanded functionality of the SEI Wealth Platform.

•

Capital expenditures. Our capital expenditures in the first ~~nine~~three months of ~~2019~~2020 were ~~$30.5~~$20.7 million as compared to ~~$21.7~~$7.3 million in the first ~~nine~~three months of ~~2018.~~2019. Our expenditures in ~~2019~~2020 and ~~2018~~2019 primarily include purchased software, equipment for our data center operations and the expansion of our corporate headquarters which is scheduled to be completed ~~in mid~~during the fourth quarter 2020. Total expenditures ~~in 2020~~ related to the expansion for the remainder of 2020 are expected to be approximately ~~$20.0~~$15.1 million. Prolonged work restrictions due to the COVID-19 virus outbreak may delay the planned completion date.

Net cash used in financing activities includes:

•

The repurchase of our common stock. Our Board of Directors has authorized the repurchase of our common stock through multiple authorizations. Currently, there is no expiration date for our common stock repurchase program. We had total capital outlays of ~~$262.9~~$130.6 million during the first ~~nine~~three months of ~~2019~~2020 and ~~$290.6~~$90.8 million during the first ~~nine~~three months of ~~2018~~2019 for the repurchase of our common stock.

•

Proceeds from the issuance of our common stock. We received ~~$41.9~~$18.6 million in proceeds from the issuance of our common stock during the first ~~nine~~three months of ~~2019~~2020 as compared to ~~$78.7~~$8.9 million during the first ~~nine~~three months of ~~2018.~~2019. The ~~decrease~~increase in proceeds is primarily attributable to a ~~lower~~higher level of stock option exercise activity.


•	Dividend payments. Cash dividends paid were ~~$100.7~~$52.5 million in the first ~~nine~~three months of ~~2019~~2020 as compared to ~~$94.3~~$50.8 million in the first ~~nine~~three months of ~~2018.~~


•	~~Principal repayments on revolving credit facility.~~ In July 2017, we borrowed $40.0 million for the funding of an acquisition. We made principal payments of $10.0 million each during October 2017 and March 2018 and a final payment of $20.0 million in April 2018 to repay the entire outstanding balance.2019.

We believe our operating cash flow, available borrowing capacity, and existing cash and cash equivalents should provide adequate funds for ongoing operations; continued investment in new products and equipment; our common stock repurchase program, expansion of our corporate headquarters and future dividend payments.

Forward-Looking Information and Risk Factors

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information contained in this discussion is or may be considered forward-looking. Forward-looking statements relate to future operations, strategies, financial results or other developments. Forward-looking statements are based upon estimates and assumptions that involve certain risks and uncertainties, many of which are beyond our control or are subject to change. Although we believe our assumptions are reasonable, they could be inaccurate. Our actual future revenues and income could differ materially from our expected results. We have no obligation to publicly update or revise any forward-looking statements.

Among the risks and uncertainties which may affect our future operations, strategies, financial results or other developments are those risks described in our latest Annual Report on Form 10-K in Part I, Item 1A. These risks include the following:

changes in capital markets that may affect our revenues and earnings;

product development risk;

risk of failure by a third-party service provider;

data and cyber security risks;

operational risks associated with the processing of investment transactions;

~~Page 41 of 48~~

systems and technology risks;

pricing pressure from increased competition, disruptive technology and poor investment performance;

the affect on our earnings and cashflows from the performance of LSV Asset Management;

third party pricing services for the valuation of securities invested in our investment products;

external factors affecting the fiduciary management market;

the affect of extensive governmental regulation;

litigation and regulatory examinations and investigations;

our ability to capture the expected value from acquisitions, divestitures, joint ventures, minority stakes or strategic alliances;

increased costs and regulatory risks from the growth of our business;

fiduciary or other legal liability for client losses from our investment management operations;

consolidation within our target markets;

our ability to receive dividends or other payments in needed amounts from our subsidiaries;

the exit by the United Kingdom from the European Union;

third party approval of our investment products with advisors affiliated with independent broker-dealers or other networks;

the effectiveness of our business, risk management and business continuity strategies, models and processes;

financial and non-financial covenants which may restrict our ability to manage liquidity needs;

changes in, or interpretation of, accounting principles or tax rules and regulations;

fluctuations in foreign currency exchange rates;

fluctuations in interest rates affecting the value of our fixed-income investment securities;

our ability to hire and retain qualified employees;

the competence and integrity of our employees and third-parties;

stockholder activism efforts;

retention of executive officers and senior management personnel; and

unforeseen or catastrophic events, including the emergence of pandemic, terrorist attacks, extreme weather events or other natural disasters.

We conduct our operations through ~~several~~many regulated wholly-owned subsidiaries. These subsidiaries are:

SEI Investments Distribution Co., or SIDCO, a broker-dealer registered with the SEC under the Securities Exchange Act of 1934 and a member of the Financial Industry Regulatory Authority, Inc., or FINRA;

SEI Investments Management Corporation, or SIMC, an investment advisor registered with the SEC under the Investment Advisers Act of 1940 and with the Commodity Futures Trading Commission, or CFTC, under the Commodity Exchange Act;

SEI Private Trust Company, or SPTC, a limited purpose federal thrift chartered and regulated by the Office of the Comptroller of the Currency;

SEI Trust Company, or STC, a Pennsylvania trust company, regulated by the Pennsylvania Department of Banking and Securities;

SEI Investments (Europe) Limited, or SIEL, an investment manager and financial institution subject to regulation by the Financial Conduct Authority of the United Kingdom;

SEI Investments Canada Company, or SEI Canada, an investment fund manager that has various other capacities that is regulated by the Ontario Securities Commission and various provincial authorities;

SEI Investments Global, Limited, or SIGL, a management company for Undertakings for Collective Investment in Transferable Securities, or UCITS, and for Alternative Investment Funds, or AIFs, that is regulated primarily by the Central Bank of Ireland, or CBI;

SEI Investments - Global Fund Services, Ltd., or GFSL, an authorized provider of administration services for Irish and non-Irish collective investment schemes that is regulated by the CBI; and

SEI Investments - Depositary and Custodial Services (Ireland) Limited, or D&C, an authorized provider of depositary and custodial services that is regulated by the CBI.

In addition to the regulatory authorities listed above, our subsidiaries are subject to the jurisdiction of regulatory authorities in other foreign countries. In addition to our wholly-owned subsidiaries, we also own a minority interest of approximately 38.9 percent in LSV, which is also an investment advisor registered with the SEC.

~~Page 42 of 48~~

The Company, its regulated subsidiaries, their regulated services and solutions and their customers are all subject to extensive legislation, regulation and supervision that recently has been subject to, and continues to experience, significant change and increased regulatory activity. These changes and regulatory activities could have a material adverse effect on us and our clients.

The various governmental agencies and self-regulatory authorities that regulate or supervise the Company and its subsidiaries have broad administrative powers. In the event of a failure to comply with laws, regulations and requirements of these agencies and authorities, the possible business process changes required or sanctions that may be imposed include the suspension of individual employees, limitations on our ability to engage in business for specified periods of time, the revocation of applicable registration as a broker-dealer, investment advisor or other regulated entity, and, as the case may be, censures and fines. Additionally, certain securities and banking laws applicable to us and our subsidiaries provide for certain private rights of action that could give rise to civil litigation. Any litigation could have significant financial and non-financial consequences including monetary judgments and the requirement to take action or limit activities that could ultimately affect our business.

Governmental scrutiny from regulators, legislative bodies and law enforcement agencies with respect to matters relating to our regulated subsidiaries and their activities, services and solutions, our business practices, our past actions and other matters has increased dramatically in the past several years. Responding to these examinations, investigations, actions and lawsuits, regardless of the ultimate outcome of the proceeding, is time consuming and expensive and can divert the time and effort of our senior management from our business. Penalties, fines and changes to business processes sought by regulatory authorities have increased substantially over the last several years, and certain regulators have been more likely in recent years to commence enforcement actions or to advance or support legislation targeted at the financial services industry. We continue to be subject to inquiries from examinations and investigations by supervisory and enforcement divisions of regulatory authorities and expect this to continue in the future. We believe this is also the case with many of our regulated clients. Governmental scrutiny and legal and enforcement proceedings can also have a negative impact on our reputation, our relationship with clients and prospective clients, and on the morale and performance of our employees, which could adversely affect our businesses and results of operations.

We are subject to the USA PATRIOT Act of 2001, which contains anti-money laundering and financial transparency laws and requires implementation of regulations applicable to financial services companies, including standards for verifying client identification and monitoring client transactions and detecting and reporting suspicious activities. Anti-money laundering laws outside the United States contain similar requirements. We offer investment and banking solutions that also are subject to regulation by the federal and state securities and banking authorities, as well as foreign regulatory authorities, where applicable. Existing or future regulations that affect these solutions could lead to a reduction in sales of these solutions or require modifications of these solutions.

Compliance with existing and future regulations and responding to and complying with recent increased regulatory activity affecting broker-dealers, investment advisors, investment companies, financial institutions and their service providers

could have a significant impact on us. We periodically undergo regulatory examinations and respond to regulatory inquiries and document requests. In addition, recent and continuing legislative activity in the United States and in other jurisdictions (including the European Union and the United Kingdom) have made and continue to make extensive changes to the laws regulating financial services firms. As a result of these examinations, inquiries and requests, as a result of increased civil litigation activity, and as a result of these new laws and regulations, we engage legal counsel and other subject matter experts, review our compliance procedures, solution and service offerings, and business operations, and make changes as we deem necessary or as may be required by the applicable authority. These additional activities and required changes may result in increased expense or may reduce revenues.

Our bank clients are subject to supervision by federal, state and foreign banking and financial services authorities concerning the manner in which such clients purchase and receive our products and services. Our plan sponsor clients and our subsidiaries providing services to those clients are subject to supervision by the Department of Labor and compliance with employee benefit regulations. Investment advisor and broker-dealer clients are regulated by the SEC, state securities authorities, or FINRA. Existing or future regulations applicable to our clients may affect our clients’ purchase of our products and services.

In addition, see the discussion of governmental regulations in Item 1A “Risk Factors” in our latest Annual Report on Form 10-K for a description of the risks that proposed regulatory changes may present for our business.

~~Page 43 of 48~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Information required by this item is set forth under the captions "Our revenues and earnings are affected by changes in capital markets" and "Changes in interest rates may affect the value of our fixed-income investment securities" in Item 1A "Risk Factors" and under the caption "Sensitivity of our revenues and earnings to capital market fluctuations and client portfolio strategy" in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. There have been no material changes to this information as it is disclosed in our Annual Report on Form 10-K for ~~2018.~~2019.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are effective in ensuring that information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b) Change in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the quarter ended ~~September 30, 2019~~March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We implemented internal controls to ensure we adequately evaluated our leases and properly assessed the impact of the new accounting standard related to leases on our consolidated financial statements to facilitate the adoption of this standard on January 1, 2019 as well as the ongoing accounting under the new standard. There were no significant changes to our internal control over financial reporting during 2019 as a result of the ongoing accounting under the new accounting standard.

~~Page 44 of 48~~39

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Stanford Trust Company Litigation

SEI has been named in seven lawsuits filed in Louisiana courts; four of the cases also name SPTC as a defendant. The underlying allegations in all actions relate to the purported role of SPTC in providing back-office services to Stanford Trust Company. The complaints allege that SEI and SPTC participated in some manner in the sale of “certificates of deposit” issued by Stanford International Bank so as to be a “seller” of the certificates of deposit for purposes of primary liability under the Louisiana Securities Law or so as to be secondarily liable under that statute for sales of certificates of deposit made by Stanford Trust Company. Two of the actions also include claims for violations of the Louisiana Racketeering Act and possibly conspiracy, and a third also asserts claims of negligence, breach of contract, breach of fiduciary duty, violations of the uniform fiduciaries law, negligent misrepresentation, detrimental reliance, violations of the Louisiana Racketeering Act, and conspiracy.

The procedural status of the seven cases varies. The Lillie case, filed originally in the 19th Judicial District Court for the Parish of East Baton Rouge, was brought as a class action and is procedurally the most advanced of the cases. SEI and SPTC filed exceptions, which the Court granted in part, dismissing claims under the Louisiana Unfair Trade Practices Act and permitting the claims under the Louisiana Securities Law to go forward. On March 11, 2013, newly-added insurance carrier defendants removed the case to the United States District Court for the Middle District of Louisiana. On August 7, 2013, the Judicial Panel on Multidistrict Litigation transferred the matter to the Northern District of Texas where MDL 2099, In re: Stanford Entities Securities Litigation (“(“the Stanford MDL”), is pending. On September 22, 2015, the District Court on the motion of SEI and SPTC dismissed plaintiffs’ claims for primary liability under Section 714(A) of the Louisiana Securities Law, but declined to dismiss plaintiffs’ claims for secondary liability under Section 714(B) of the Louisiana Securities Law based on the allegations pled by plaintiffs. On November 4, 2015, the District Court granted SEI and SPTC's motion to dismiss plaintiffs' claims under Section 712(D) of the Louisiana Securities Law. Consequently, the only claims of plaintiffs remaining in Lillie are plaintiffs' claims for secondary liability against SEI and SPTC under Section 714(B) of the Louisiana Securities Law. On May 2, 2016, the District Court certified the class as being "all persons for whom Stanford Trust Company purchased or renewed Stanford Investment Bank Limited certificates of deposit in Louisiana between January 1, 2007 and February 13, 2009". Notice of the pendency of the class action was mailed to potential class members on October 4, 2016.

~~Page 45 of 48~~

Two additional cases remain in the Parish of East Baton Rouge. Plaintiffs filed petitions in 2010 and have granted SEI and SPTC indefinite extensions to respond. No material activity has taken place since.

In two additional cases, filed in East Baton Rouge and brought by the same counsel who filed the Lillie action, virtually all of the litigation to date has involved motions practice and appellate litigation regarding the existence of federal subject matter jurisdiction under the federal Securities Litigation Uniform Standards Act (SLUSA). The matters were removed to the United States District Court for the Northern District of Texas and consolidated. The court then dismissed the action under SLUSA. The Court of Appeals for the Fifth Circuit reversed that order, and the Supreme Court of the United States affirmed the Court of Appeals judgment on February 26, 2014. The matters were remanded to state court and no material activity has taken place since that date.

SEI Capital Accumulation Plan Litigation

SS&C Advent Matter

On March 3, 2020, prior to any motions being filed by any of the parties, the Court denied SGSI’s Under Seal Motion. The complaint became a matter of public record on April 15, 2020.

Other Matters

Item 1A. Risk Factors.

Information regarding risk factors appears in Part I – Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for ~~2018.~~2019.

~~Page 46 of 48~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.


(e)	Our Board of Directors has authorized the repurchase of up to ~~$4.178~~$0.004 billion worth of our common stock through multiple authorizations. Currently, there is no expiration date for our common stock repurchase program. On March 18, 2020, our Board of Directors approved an increase in the stock repurchase program by an additional $250 million.

Information regarding the repurchase of common stock during the three months ended ~~September 30, 2019~~March 31, 2020 is as follows:

Period
Total Number
of Shares
Purchased

Average
Price Paid
per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Program

Approximate Dollar
Value of Shares that
May Yet Be
Purchased
Under the Program
July 2019 —
$ —
—
$ 280,061,000
August 2019 725,000
56.85
725,000
238,847,000
September 2019 675,000
59.49
675,000
198,695,000
Total 1,400,000
$ 58.12
1,400,000



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
January 2020	—	$	—	—	$	117,530,000
February 2020	781,000	64.55		781,000	67,123,000
March 2020	1,652,000	46.62		1,652,000	240,097,000
Total	2,433,000	$	52.37	2,433,000

Item 6. Exhibits.

The following is a list of exhibits filed as part of the Form 10-Q.



31.1		Rule 13a-15(e)/15d-15(e) Certification of Chief Executive Officer.

31.2		Rule 13a-15(e)/15d-15(e) Certification of Chief Financial Officer.

32		Section 1350 Certifications.

99.1		Press release dated ~~October~~April 23, ~~2019~~2020 of SEI Investments Company related to the Company's financial and operating results for the ~~third~~first quarter ended ~~September 30, 2019.~~March 31, 2020.

101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

~~Page 47 of 48~~42

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		SEI INVESTMENTS COMPANY

Date:	~~October 24, 2019~~April 28, 2020	By:	/s/ Dennis J. McGonigle
			Dennis J. McGonigle
			Chief Financial Officer

~~Page 48 of 48~~43



2019 (excluding the nine months ended September 30, 2019)	$	2,515
2020	8,955
2021	7,657
2022	7,369
2023	7,374
Thereafter	16,726
Total future minimum lease payments	50,596
Less: Imputed interest	(4,892		)
Total	$	45,704



	For the Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	8,053

Right-of-use assets obtained in exchange for lease obligations	4,178