0001466538--12-312020Q2false278,402941,5956586503,3002,620731721122,407114,50436,74532,84631,92526,3950.010.0110,000,00010,000,000120,750120,750120,750120,750120,750,000120,750,00020,931,94418,605,5810.010.0162,500,00062,500,00048,573,54447,215,93827,641,60028,610,357299,436216,9120.010.0162,500,00062,500,000——4P5Y901,6858.5477,007101211811.2510.46.256.756.56.576.751012119.7511.2510.56.256.756.56.576.7511201120206.256.756.5110097132.3152215152215222217176.256.756.530—4116.9676.1353535403520202020P2YP5YP7YP2YP5YP4YP1YP5Y0001466538cown:OperatingCompanyMembercown:TradeConversionMember2019-01-012019-06-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549
FORM 10-Q
(Mark One)
Q
☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20192020
or
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-34516
Cowen Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
27-0423711
(I.R.S. Employer
Identification No.)
599 Lexington Avenue
New York, New York
(Address of Principal Executive Offices)
10022
(Zip Code)
(646) 562-1000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Exchange on Which Registered
Class A Common Stock, par value $0.01 per shareCOWNThe Nasdaq Global Market
7.35% Senior Notes due 2027
COWNZ

The Nasdaq Global Market
7.75% Senior Notes due 2033COWNLThe Nasdaq Global Market
Securities registered pursuant to Section 12(g) of the Act: None
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 Q☒    No o☐
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  Q☒  No o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large"large accelerated filer,” “accelerated" "accelerated filer,” “smaller" "smaller reporting company,”" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o☐
Accelerated filer Q☒
Non-accelerated filer o☐


Smaller reporting company o
☐
Emerging growth company o
☐
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. o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o☐    No Q☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of July 31, 2019,29, 2020, there were 29,516,65227,673,602 shares of the registrant's common stock outstanding.

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Special Note Regarding Forward-Looking Statements
We have made statements in this Quarterly Report on Form 10-Q (including in “Management's"Management's Discussion and Analysis of Financial Condition and Results of Operations”Operations") that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking terms such as “may,” “might,” “will,” “would,” “could,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “possible,” “potential,” “intend,” “seek”"may," "might," "will," "would," "could," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "project," "possible," "potential," "intend," "seek" or “continue,”"continue," the negative of these terms and other comparable terminology or similar expressions. In addition, our management may make forward-looking statements to analysts, representatives of the media and others. These forward-looking statements represent only the Company's beliefs regarding future events (many of which, by their nature, are inherently uncertain and beyond our control) and are predictions only, based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. In particular, you should consider the risks contained in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 and the risks contained in Item 1A of this periodic report on Form 10-Q for the quarterly periodthree and six months ended June 30, 2019.2020.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations.
Unaudited Condensed Consolidated Financial Statements are presented for the three and six months ended June 30, 20192020 and 2018.2019. The Consolidated Financial Statements as of December 31, 20182019 were audited.






3
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements

Cowen Inc.
Condensed Consolidated Statements of Financial Condition
(dollars in thousands, except share and per share data)
(unaudited)
Cowen Inc.
Condensed Consolidated Statements of Financial Condition
(dollars in thousands, except share and per share data)
(unaudited)
Cowen Inc.
Condensed Consolidated Statements of Financial Condition
(dollars in thousands, except share and per share data)
(unaudited)
AssetsAs of June 30, 2019 As of December 31, 2018AssetsAs of June 30, 2020As of December 31, 2019
Cash and cash equivalents$182,400
 $259,148
Cash and cash equivalents$340,075  $301,123  
Cash collateral pledged7,097
 6,318
Cash collateral pledged7,511  6,563  
Segregated cash139,070
 176,647
Segregated cash177,526  107,328  
Securities owned, at fair value ($224,264 and $57,583 were pledged to various parties)900,346
 520,888
Securities owned, at fair value ($278,402 and $941,595 were pledged to various parties)Securities owned, at fair value ($278,402 and $941,595 were pledged to various parties)954,512  1,633,552  
Receivable on derivative contracts, at fair value32,220
 25,125
Receivable on derivative contracts, at fair value88,846  62,977  
Securities borrowed1,390,366
 407,795
Securities borrowed1,553,385  754,441  
Other investments ($146,133 and $141,236 at fair value, respectively)200,297
 181,407
Other investments ($122,407 and $114,504 at fair value, respectively)Other investments ($122,407 and $114,504 at fair value, respectively)207,663  185,722  
Deposits with clearing organizations, brokers and banks97,723
 89,423
Deposits with clearing organizations, brokers and banks103,838  91,755  
Receivable from brokers, dealers and clearing organizations, net of allowance of $780 and $472, respectively617,368
 786,113
Receivable from customers, net of allowance of $563 and $516, respectively87,480
 37,858
Fees receivable, net of allowance of $915 and $1,569, respectively126,500
 111,946
Receivable from brokers, dealers and clearing organizations, net of allowance of $731 and $721, respectivelyReceivable from brokers, dealers and clearing organizations, net of allowance of $731 and $721, respectively1,128,617  681,695  
Receivable from customers, net of allowance of $658 and $650, respectivelyReceivable from customers, net of allowance of $658 and $650, respectively106,874  105,647  
Fees receivable, net of allowance of $3,300 and $2,620, respectivelyFees receivable, net of allowance of $3,300 and $2,620, respectively179,125  126,358  
Due from related parties29,007
 33,870
Due from related parties24,059  26,749  
Fixed assets, net of accumulated depreciation and amortization of $29,684 and $31,630, respectively27,728
 26,443
Fixed assets, net of accumulated depreciation and amortization of $36,745 and $32,846, respectivelyFixed assets, net of accumulated depreciation and amortization of $36,745 and $32,846, respectively34,898  33,661  
Operating lease right-of-use assets101,628
 —
Operating lease right-of-use assets83,833  92,852  
Goodwill137,728
 60,678
Goodwill137,728  137,728  
Intangible assets, net of accumulated amortization of $44,633 and $38,093, respectively40,604
 24,943
Intangible assets, net of accumulated amortization of $31,925 and $26,395, respectivelyIntangible assets, net of accumulated amortization of $31,925 and $26,395, respectively28,557  35,200  
Deferred tax asset, net86,464
 93,057
Deferred tax asset, net35,947  79,166  
Other assets, net of allowance of $11 and $0, respectively105,265
 79,014
Other assetsOther assets121,108  84,158  
Consolidated Funds   Consolidated Funds  
Cash and cash equivalents3,357
 38,118
Cash and cash equivalents118  30,874  
Securities owned, at fair value345,292
 187,633
Securities owned, at fair value113,176  375,278  
Receivable on derivative contracts, at fair value4,454
 4,416
Receivable on derivative contracts, at fair value—  5,833  
Other investments177,828
 186,395
Other investments92,522  175,769  
Receivable from brokers19,524
 8,328
Receivable from brokers—  25,964  
Other assets2,436
 740
Other assets75  1,632  
Total Assets$4,862,182
 $3,346,303
Total Assets$5,519,993  $5,162,025  
Liabilities and Stockholders' Equity   Liabilities and Stockholders' Equity  
Liabilities   Liabilities
Securities sold, not yet purchased, at fair value$438,584
 $195,307
Securities sold, not yet purchased, at fair value$544,654  $451,836  
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase—  23,244  
Payable for derivative contracts, at fair value22,445
 16,082
Payable for derivative contracts, at fair value54,469  60,761  
Securities loaned1,492,986
 414,852
Securities loaned1,622,484  1,601,866  
Payables to brokers, dealers and clearing organizations241,012
 228,731
Payable to brokers, dealers and clearing organizationsPayable to brokers, dealers and clearing organizations240,561  271,018  
Payable to customers428,146
 525,153
Payable to customers787,662  430,224  
Commission management payable96,731
 95,270
Commission management payable124,572  71,620  
Compensation payable117,634
 223,994
Compensation payable279,492  223,139  
Operating lease liabilities106,873
 —
Operating lease liabilities87,704  97,581  
Notes payable and other debt315,290
 262,965
Notes payable and other debt314,329  345,451  
Convertible debt116,273
 134,489
Convertible debt121,195  118,688  
Fees payable45,881
 22,565
Fees payable85,812  21,540  
Due to related parties675
 571
Accounts payable, accrued expenses and other liabilities162,921
 110,423
Accounts payable, accrued expenses and other liabilities166,212  141,557  
Consolidated Funds   
Payable for derivative contracts, at fair value2,616
 1,663
Payable to brokers11,126
 23,521
Capital withdrawals payable4,759
 11,106
Accounts payable, accrued expenses and other liabilities494
 424
Total Liabilities$3,604,446
 $2,267,116

4

Table of Contents

Cowen Inc.
Condensed Consolidated Statements of Financial Condition
(dollars in thousands, except share and per share data)
(unaudited)
As of June 30, 2020As of December 31, 2019
(continued)
Consolidated Funds 
Due to related parties—  581  
Payable for derivative contracts, at fair value—  4,769  
Payable to brokers—  864  
Capital withdrawals payable—  1,276  
Accounts payable, accrued expenses and other liabilities237  560  
Total Liabilities$4,429,383  $3,866,575  
Commitments and Contingencies (Note 17)
Temporary Equity
Redeemable non-controlling interests$—  $391,275  
Permanent Equity
Cowen Inc. stockholders' equity
Preferred stock, par value $0.01 per share: 10,000,000 shares authorized, 120,750 shares issued and outstanding as of June 30, 2020 (aggregate liquidation preference of $120,750,000) and 10,000,000 shares authorized, 120,750 shares issued and outstanding as of December 31, 2019 (aggregate liquidation preference of $120,750,000), respectively$1  $1  
Class A common stock, par value $0.01 per share: 62,500,000 shares authorized, 48,573,544 shares issued and 27,641,600 outstanding as of June 30, 2020 and 62,500,000 shares authorized, 47,215,938 shares issued and 28,610,357 outstanding as of December 31, 2019, respectively (including 299,436 and 216,912 restricted shares, respectively)334  334  
Class B common stock, par value $0.01 per share: 62,500,000 authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively—  —  
Additional paid-in capital1,135,141  1,110,635  
(Accumulated deficit) retained earnings81,185  (16,809) 
Accumulated other comprehensive income (loss)(5) (5) 
Less: Class A common stock held in treasury, at cost, 20,931,944 and 18,605,581 shares as of June 30, 2020 and December 31, 2019, respectively(314,971) (284,301) 
Total Cowen Inc. Stockholders' Equity901,685  809,855  
Nonredeemable non-controlling interests188,925  94,320  
Total Permanent Equity$1,090,610  $904,175  
Total Liabilities, Temporary Equity and Permanent Equity$5,519,993  $5,162,025  
Cowen Inc.
Condensed Consolidated Statements of Financial Condition
(dollars in thousands, except share and per share data)
(unaudited)
 As of June 30, 2019 As of December 31, 2018
(continued)   
Commitments and Contingencies (Note 17)
 
Redeemable non-controlling interests$440,312
 $284,780
Stockholders' equity   
Preferred stock, par value $0.01 per share: 10,000,000 shares authorized, 120,750 shares issued and outstanding as of June 30, 2019 (aggregate liquidation preference of $120,750,000) and 10,000,000 shares authorized, 120,750 shares issued and outstanding as of December 31, 2018 (aggregate liquidation preference of $120,750,000), respectively$1
 $1
Class A common stock, par value $0.01 per share: 62,500,000 shares authorized, 46,144,900 shares issued and 29,480,287 outstanding as of June 30, 2019 and 62,500,000 shares authorized, 43,774,731 shares issued and 28,437,860 outstanding as of December 31, 2018, respectively (including 174,285 and 253,772 restricted shares, respectively)334
 324
Class B common stock, par value $0.01 per share: 62,500,000 authorized, no shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively—
 —
Additional paid-in capital1,093,898
 1,062,877
(Accumulated deficit) retained earnings(22,449) (34,648)
Accumulated other comprehensive income (loss)(3) (5)
Less: Class A common stock held in treasury, at cost, 16,664,613 and 15,336,871 shares as of June 30, 2019 and December 31, 2018, respectively(254,357) (234,142)
Total Stockholders' Equity$817,424
 $794,407
Total Liabilities and Stockholders' Equity$4,862,182
 $3,346,303


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

5

Table of Contents


Cowen Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Revenues   
Investment banking$203,982  $114,705  $309,010  $194,811  
Brokerage147,224  111,382  286,586  208,845  
Management fees11,653  7,039  23,257  14,180  
Incentive income—  8  —  23  
Interest and dividends47,918  40,047  89,995  69,139  
Reimbursement from affiliates247  254  508  542  
Reinsurance premiums5,967  14,331  16,438  20,922  
Other revenues1,490  930  3,340  1,991  
Consolidated Funds  
Interest and dividends332  3,449  2,857  5,774  
Other revenues27  19  658  34  
Total revenues418,840  292,164  732,649  516,261  
Interest and dividends expense49,304  39,528  88,096  68,612  
Total net revenues369,536  252,636  644,553  447,649  
Expenses   
Employee compensation and benefits305,282  136,409  429,710  268,291  
Brokerage and trade execution costs34,866  27,124  67,752  52,770  
Underwriting expenses8,871  6,406  12,511  9,537  
Professional, advisory and other fees14,395  13,620  25,434  23,861  
Service fees6,768  5,659  13,605  11,323  
Communications8,073  8,278  16,249  16,359  
Occupancy and equipment8,973  10,454  18,503  20,376  
Depreciation and amortization6,200  4,952  11,642  9,908  
Client services and business development2,760  11,884  14,563  23,185  
Goodwill impairment—  4,100  —  4,100  
Reinsurance claims, commissions and amortization of deferred acquisition costs6,434  10,782  16,864  16,944  
Other expenses7,321  5,638  11,549  9,653  
Consolidated Funds  
Interest and dividends812  1,356  2,064  2,223  
Professional, advisory and other fees274  373  1,264  518  
Brokerage and trade execution costs17  35  37  88  
Other expenses482  467  934  884  
Total expenses411,528  247,537  642,681  470,020  
Other income (loss)   
Net gains (losses) on securities, derivatives and other investments196,502  3,910  152,519  42,994  
Consolidated Funds  
Net realized and unrealized gains (losses) on investments and other transactions35,812  6,536  (37,607) 9,180  
Net realized and unrealized gains (losses) on derivatives1,574  (719) 1,850  (1,481) 
Net gains (losses) on foreign currency transactions(16) (35) (38) (59) 
Total other income (loss)233,872  9,692  116,724  50,634  
Income (loss) before income taxes191,880  14,791  118,596  28,263  
Income tax expense (benefit)44,932  5,073  43,759  8,250  
Net income (loss)146,948  9,718  74,837  20,013  
Cowen Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Revenues       
Investment banking$114,705
 $84,826
 $194,811
 $182,814
Brokerage111,382
 103,285
 208,845
 209,018
Management fees7,039
 7,373
 14,180
 14,790
Incentive income8
 48
 23
 64
Interest and dividends40,047
 25,109
 69,139
 51,063
Reimbursement from affiliates254
 336
 542
 713
Aircraft lease revenue—
 419
 —
 1,134
Reinsurance premiums14,331
 9,226
 20,922
 17,873
Other revenues930
 876
 1,991
 2,212
Consolidated Funds       
Interest and dividends3,449
 3,075
 5,774
 6,271
Other revenues19
 —
 34
 5
Total revenues292,164
 234,573
 516,261
 485,957
Interest and dividends expense39,528
 24,306
 68,612
 48,846
Total net revenues252,636
 210,267
 447,649
 437,111
        
Expenses       
Employee compensation and benefits135,984
 131,845
 266,172
 266,985
Brokerage and trade execution costs27,124
 28,902
 52,770
 59,100
Underwriting expenses6,406
 4,785
 9,537
 8,848
Professional, advisory and other fees13,620
 5,819
 23,861
 12,843
Service fees5,659
 4,852
 11,323
 10,047
Communications8,278
 7,106
 16,359
 14,672
Occupancy and equipment10,454
 10,384
 20,376
 20,245
Depreciation and amortization4,952
 3,194
 9,908
 6,419
Client services and business development11,884
 7,865
 23,185
 16,096
Goodwill impairment4,100
 —
 4,100
 —
Reinsurance claims, commissions and amortization of deferred acquisition costs10,782
 9,924
 16,944
 18,655
Other expenses5,638
 5,591
 9,653
 9,672
Consolidated Funds       
Interest and dividends1,356
 2,479
 2,223
 4,390
Professional, advisory and other fees373
 345
 518
 557
Brokerage and trade execution costs35
 89
 88
 153
Other expenses467
 236
 884
 480
Total expenses247,112
 223,416
 467,901
 449,162
Other income (loss)       
Net gains (losses) on securities, derivatives and other investments3,910
 16,719
 42,994
 32,688
Gain/(loss) on debt extinguishment—
 (556) —
 (556)
Consolidated Funds       
Net realized and unrealized gains (losses) on investments and other transactions6,536
 28,268
 9,180
 44,004
Net realized and unrealized gains (losses) on derivatives(719) 2,119
 (1,481) 4,594
Net gains (losses) on foreign currency transactions(35) 598
 (59) 252
Total other income (loss)9,692
 47,148
 50,634
 80,982
Income (loss) before income taxes15,216
 33,999
 30,382
 68,931
Income tax expense (benefit)5,073
 3,993
 8,250
 10,916
Net income (loss)10,143
 30,006
 22,132
 58,015
        
        
        
        

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Cowen Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
(continued)
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds33,113  3,906  (29,075) 4,418  
Net income (loss) attributable to Cowen Inc.113,835  5,812  103,912  15,595  
Preferred stock dividends1,698  1,698  3,396  3,396  
Net income (loss) attributable to Cowen Inc. common stockholders$112,137  $4,114  $100,516  $12,199  
Weighted average common shares outstanding:   
Basic27,983  29,769  28,289  29,766  
Diluted29,316  31,522  29,644  31,572  
Earnings (loss) per share:    
Basic$4.01  $0.14  $3.55  $0.41  
Diluted$3.83  $0.13  $3.39  $0.39  
Cowen Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
(continued)       
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds4,331
 24,607
 6,537
 35,763
Net income (loss) attributable to Cowen Inc.5,812
 5,399
 15,595
 22,252
Preferred stock dividends1,698
 1,698
 3,396
 3,396
Net income (loss) attributable to Cowen Inc. common stockholders$4,114
 $3,701
 $12,199
 $18,856
        
Weighted average common shares outstanding: 
  
    
Basic29,769
 29,769
 29,766
 29,688
Diluted31,522
 30,720
 31,572
 30,460
Earnings (loss) per share:       
Basic$0.14
 $0.12
 $0.41
 $0.64
Diluted$0.13
 $0.12
 $0.39
 $0.62


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

7

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Cowen Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(dollars in thousands)
(unaudited)









Three Months Ended June 30,Six Months Ended June 30,
Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 20182020201920202019
Net income (loss)  $10,143
   $30,006
   $22,132
   $58,015
Net income (loss)$146,948  $9,718  $74,837  $20,013  
Other comprehensive income (loss), net of tax:                Other comprehensive income (loss), net of tax:
Foreign currency translation2
   —
   2
   1
  Foreign currency translation—  2  —  2  
Total other comprehensive income (loss), net of tax  2
   —
   2
   1
 Total other comprehensive income (loss), net of tax—  2  —  2  
Comprehensive income (loss)  $10,145
   $30,006
   $22,134
   $58,016
Comprehensive income (loss)$146,948  $9,720  $74,837  $20,015  
Less: Comprehensive income attributable to non-controlling interests Less: Comprehensive income attributable to non-controlling interests33,113  3,906  (29,075) 4,418  
Comprehensive income (loss) attributable to Cowen Inc.Comprehensive income (loss) attributable to Cowen Inc.$113,835  $5,814  $103,912  $15,597  


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




8

Table of Contents

Cowen Inc.
Condensed Consolidated Statements of Changes in Equity
(dollars in thousands, except share data)

(unaudited)

Common Shares OutstandingCommon StockPreferred Shares OutstandingPreferred StockTreasury StockAdditional
Paid-in Capital		Accumulated Other Comprehensive Income (Loss)Retained Earnings/ (Accumulated deficit)Total Cowen Inc. Stockholders' EquityNonredeemable Non-controlling InterestsTotal Permanent EquityRedeemable Non-controlling Interest
Balance, March 31, 202027,628,117  $334  120,750  $1  $(305,192) $1,119,534  $(5) $(29,869) $784,803  $138,241  $923,044  $318,001  
Net income (loss) attributable to Cowen Inc.—  —  —  —  —  —  —  113,835  113,835  —  113,835  —  
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds—  —  —  —  —  —  —  —  —  5,047  5,047  28,066  
Capital contributions—  —  —  —  —  —  —  —  —  —  —  65,356  
Capital withdrawals—  —  —  —  —  —  —  —  —  (2,959) (2,959) (50,712) 
Consolidation of entity—  —  —  —  —  —  —  —  —  48,596  48,596  —  
Deconsolidation of entities—  —  —  —  —  —  —  —  —  —  (360,711) 
Restricted stock awards issued691,149  —  —  —  —  —  —  —  —  —  —  —  
Purchase of treasury stock, at cost(711,098) —  —  —  (9,779) —  —  —  (9,779) —  (9,779) —  
Common stock issuance upon acquisition (See Note 3)33,432  —  —  —  —  308  —  —  308  308  —  
Preferred stock dividends (See Note 19)—  —  —  —  —  —  —  (1,698) (1,698) —  (1,698) —  
Cash dividends to common stockholders (See Note 19)—  —  —  —  —  —  —  (1,083) (1,083) —  (1,083) —  
Amortization of share-based compensation—  —  —  —  —  15,299  —  —  15,299  —  15,299  —  
Balance, June 30, 202027,641,600  $334  120,750  $1  $(314,971) $1,135,141  $(5) $81,185  $901,685  $188,925  $1,090,610  $—  
Common Shares OutstandingCommon StockPreferred Shares OutstandingPreferred StockTreasury StockAdditional
Paid-in Capital		Accumulated Other Comprehensive Income (Loss)Retained Earnings/ (Accumulated deficit)Total Cowen Inc. Stockholders' EquityNonredeemable Non-controlling InterestsTotal Permanent EquityRedeemable Non-controlling Interest
Balance, March 31, 201929,580,687  $334  120,750  $1  $(243,519) $1,084,534  $(5) $(26,563) $814,782  $65,443  $880,225  $348,514  
Net income (loss) attributable to Cowen Inc.—  —  —  —  —  —  —  5,812  5,812  —  5,812  —  
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and funds—  —  —  —  —  —  —  —  —  2,045  2,045  1,861  
Foreign currency translation—  —  —  —  —  —  2  —  2  —  2  —  
Capital contributions—  —  —  —  —  —  —  —  —  9,084  9,084  31,537  
Capital withdrawals—  —  —  —  —  —  —  —  —  (649) (649) (22,269) 
Restricted stock awards issued585,383  —  —  —  —  —  —  —  —  —  —  —  
Purchase of treasury stock, at cost(685,783) —  —  —  (10,838) —  —  —  (10,838) —  (10,838) —  
Preferred stock dividends (See Note 19)—  —  —  —  —  —  —  (1,698) (1,698) —  (1,698) —  
Amortization of share-based compensation—  —  —  —  —  9,364  —  —  9,364  —  9,364  —  
Balance, June 30, 201929,480,287  $334  120,750  $1  $(254,357) $1,093,898  $(3) $(22,449) $817,424  $75,923  $893,347  $359,643  



 Common Shares Outstanding Common Stock Preferred Shares Outstanding Preferred Stock Treasury Stock 
Additional
Paid-in Capital
 Accumulated Other Comprehensive Income (Loss) Retained Earnings/ (Accumulated deficit) Total Stockholders' Equity Redeemable Non-controlling Interest
Balance, March 31, 201929,580,687
 $334
 120,750
 $1
 $(243,519) $1,084,534
 $(5) $(26,563) $814,782
 $418,277
Net income (loss) attributable to Cowen Inc.—
 —
 —
 —
 —
 —
 —
 5,812
 5,812
 —
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds—
 —
 —
 —
 —
 —
 —
 —
 —
 4,331
Foreign currency translation—
 —
 —
 —
 —
 —
 2
 —
 2
 —
Capital contributions—
 —
 —
 —
 —
 —
 —
 —
 —
 40,622
Capital withdrawals—
 —
 —
 —
 —
 —
 —
 —
 —
 (22,918)
Restricted stock awards issued585,383
 —
 —
 —
 —
 —
 —
 —
 —
 —
Purchase of treasury stock, at cost(685,783) —
 —
 —
 (10,838) —
 —
 —
 (10,838)  
Preferred stock dividends, $0.06/share (See Note 19)—
 —
 —
 —
 —
 —
 —
 (1,698) (1,698) —
Amortization of share-based compensation—
 —
 —
 —
 —
 9,364
 —
 —
 9,364
 —
Balance, June 30, 201929,480,287
 $334
 120,750
 $1
 $(254,357) $1,093,898
 $(3) $(22,449) $817,424
 $440,312
                    
 Common Shares Outstanding Common Stock Preferred Shares Outstanding Preferred Stock Treasury Stock 
Additional
Paid-in Capital
 Accumulated Other Comprehensive Income (Loss) Retained Earnings/ (Accumulated deficit) Total Stockholders' Equity Redeemable Non-controlling Interest
Balance, March 31, 201829,517,218
 $324
 120,750
 $1
 $(200,915) $1,014,904
 $(7) $(55,520) $758,787
 $392,326
Net income (loss) attributable to Cowen Inc.—
 —
 —
 —
 —
 —
 —
 5,399
 5,399
 —
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds—
 —
 —
 —
 —
 —
 —
 —
 —
 24,607
Capital contributions—
 —
 —
 —
 —
 —
 —
 —
 —
 10,876
Capital withdrawals—
 —
 —
 —
 —
 —
 —
 —
 —
 (15,742)
Restricted stock awards issued558,723
 —
 —
 —
 —
 —
 —
 —
 —
 —
Purchase of treasury stock, at cost(466,469) —
 —
 —
 (7,094) —
 —
 —
 (7,094) —
Preferred stock dividends (See Note 19)—
 —
 —
 —
 —
 —
 —
 (1,698) (1,698) —
Embedded cash conversion option (See Note 19)—
 —
 —
 —
 —
 28,973
 —
 —
 28,973
 —
Amortization of share-based compensation—
 —
 —
 —
 —
 8,840
 —
 —
 8,840
 —
Balance, June 30, 201829,609,472
 $324
 120,750
 $1
 $(208,009) $1,052,717
 $(7) $(51,819) $793,207
 $412,067






9

Table of Contents

Common Shares OutstandingCommon StockPreferred Shares OutstandingPreferred StockTreasury StockAdditional
Paid-in Capital		Accumulated Other Comprehensive Income (Loss)Retained Earnings/ (Accumulated deficit)Total Cowen Inc. Stockholders' EquityNonredeemable Non-controlling InterestsTotal Permanent EquityRedeemable Non-controlling Interest
Balance, December 31, 201928,610,357  $334  120,750  $1  $(284,301) $1,110,635  $(5) $(16,809) $809,855  $94,320  $904,175  $391,275  
Cumulative effect of the adoption of the new current expected credit loss standard (See Note 2d)—  —  —  —  —  —  —  (10) (10) —  (10) —  
Net income (loss) attributable to Cowen Inc.—  —  —  —  —  —  —  103,912  103,912  —  103,912  —  
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and funds—  —  —  —  —  —  —  —  —  3,849  3,849  (32,924) 
Capital contributions—  —  —  —  —  —  —  —  —  88,682  88,682  184,223  
Capital withdrawals—  —  —  —  —  —  —  —  —  (46,522) (46,522) (181,863) 
Consolidation of entity—  —  —  —  —  —  —  —  —  48,596  48,596  —  
Deconsolidation of entities—  —  —  —  —  —  —  —  —  —  —  (360,711) 
Restricted stock awards issued1,282,912  —  —  —  —  —  —  —  —  —  —  —  
Purchase of treasury stock, at cost(2,326,363) —  —  —  (30,670) —  —  —  (30,670) —  (30,670) —  
Common stock issuance related to acquisition (See Note 3)74,694  —  —  —  —  926  —  —  926  —  926  —  
Preferred stock dividends (See Note 19)—  —  —  —  —  —  —  (3,396) (3,396) —  (3,396) —  
Cash dividends to common stockholders (See Note 19)—  —  —  —  —  —  —  (2,512) (2,512) —  (2,512) —  
Amortization of share-based compensation—  —  —  —  —  23,580  —  —  23,580  —  23,580  —  
Balance, June 30, 202027,641,600  $334  120,750  $1  $(314,971) $1,135,141  $(5) $81,185  $901,685  $188,925  $1,090,610  $—  
Common Shares OutstandingCommon StockPreferred Shares OutstandingPreferred StockTreasury StockAdditional
Paid-in Capital		Accumulated Other Comprehensive Income (Loss)Retained Earnings/ (Accumulated deficit)Total Cowen Inc. Stockholders' EquityNonredeemable Non-controlling InterestsTotal Permanent EquityRedeemable Non-controlling Interest
Balance, December 31, 201828,437,860  $324  120,750  $1  $(234,142) $1,062,877  $(5) $(34,648) $794,407  $64,880  $859,287  $216,923  
Net income (loss) attributable to Cowen Inc.—  —  —  —  —  —  —  15,595  15,595  —  15,595  —  
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and funds—  —  —  —  —  —  —  —  —  1,757  1,757  2,661  
Foreign currency translation—  —  —  —  —  —  2  —  2  —  2  —  
Capital contributions—  —  —  —  —  —  —  —  —  11,110  11,110  191,485  
Capital withdrawals—  —  —  —  —  —  —  —  —  (1,824) (1,824) (51,426) 
Common stock issued upon acquisition (See Note 3)1,033,350  10  —  —  —  14,436  —  —  14,446  —  14,446  —  
Restricted stock awards issued1,336,819  —  —  —  —  —  —  —  —  —  —  —  
Purchase of treasury stock, at cost(1,327,742) —  —  —  (20,215) —  —  —  (20,215) —  (20,215) —  
Preferred stock dividends (See Note 19)—  —  —  —  —  —  —  (3,396) (3,396) —  (3,396) —  
Embedded cash conversion option (See Note 19)—  —  —  —  —  (596) —  —  (596) —  (596) —  
Amortization of share-based compensation—  —  —  —  —  17,181  —  —  17,181  —  17,181  —  
Balance, June 30, 201929,480,287  $334  120,750  $1  $(254,357) $1,093,898  $(3) $(22,449) $817,424  $75,923  $893,347  $359,643  
 Common Shares Outstanding Common Stock Preferred Shares Outstanding Preferred Stock Treasury Stock 
Additional
Paid-in Capital
 Accumulated Other Comprehensive Income (Loss) Retained Earnings/ (Accumulated deficit) Total Stockholders' Equity Redeemable Non-controlling Interest
Balance, December 31, 201828,437,860
 $324
 120,750
 $1
 $(234,142) $1,062,877
 $(5) $(34,648) $794,407
 $284,780
Net income (loss) attributable to Cowen Inc.—
 —
 —
 —
 —
 —
 —
 15,595
 15,595
 —
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds—
 —
 —
 —
 —
 —
 —
 —
 —
 6,537
Foreign currency translation—
 —
 —
 —
 —
 —
 2
 —
 2
 —
Capital contributions—
 —
 —
 —
 —
 —
 —
 —
 —
 202,595
Capital withdrawals—
 —
 —
 —
 —
 —
 —
 —
 —
 (53,600)
Restricted stock awards issued1,336,819
 —
 —
 —
 —
 —
 —
 —
 —
 —
Purchase of treasury stock, at cost(1,327,742) —
 —
 —
 (20,215) —
 —
 —
 (20,215) —
Common stock issuance upon acquisition (See Note 3)1,033,350
 10
 —
 —
 —
 14,436
 —
 —
 14,446
 —
Preferred stock dividends, $0.06/share (See Note 19)—
 —
 —
 —
 —
 —
 —
 (3,396) (3,396) —
Embedded cash conversion option, net of tax (See Note 19)—
 —
 —
 —
 —
 (596) —
 —
 (596) —
Amortization of share-based compensation—
 —
 —
 —
 —
 17,181
 —
 —
 17,181
 —
Balance, June 30, 201929,480,287
 $334
 120,750
 $1
 $(254,357) $1,093,898
 $(3) $(22,449) $817,424
 $440,312
                    
 Common Shares Outstanding Common Stock Preferred Shares Outstanding Preferred Stock Treasury Stock 
Additional
Paid-in Capital
 Accumulated Other Comprehensive Income (Loss) Retained Earnings/ (Accumulated deficit) Total Stockholders' Equity Redeemable Non-controlling Interest
Balance, December 31, 201729,632,020
 $324
 120,750
 $1
 $(186,846) $1,004,664
 $(8) $(70,116) $748,019
 $440,604
Cumulative effect of the adoption of the new revenue recognition standard (See Note 2)—
 —
 —
 —
 —
 —
 —
 (559) (559) —
Net income (loss) attributable to Cowen Inc.—
 —
 —
 —
 —
 —
 —
 22,252
 22,252
 —
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds—
 —
 —
 —
 —
 —
 —
 —
 —
 35,763
Foreign currency translation—
 —
 —
 —
 —
 —
 1
 —
 1
 —
Capital contributions—
 —
 —
 —
 —
 —
 —
 —
 —
 19,136
Capital withdrawals—
 —
 —
 —
 —
 —
 —
 —
 —
 (50,877)
Deconsolidation of entity—
 —
 ��
 —
 —
 —
 —
 —
 —
 (32,559)
Restricted stock awards issued1,439,755
 —
 —
 —
 —
 —
 —
 —
 —
 —
Purchase of treasury stock, at cost(1,462,303) —
 —
 —
 (21,163) —
 —
 —
 (21,163) —
Preferred stock dividends (See Note 19)—
 —
 —
 —
 —
 —
 —
 (3,396) (3,396) —
Embedded cash conversion option (See Note 19)—
 —
 —
 —
 —
 28,973
 —
 —
 28,973
 —
Amortization of share-based compensation—
 —
 —
 —
 —
 19,080
 —
 —
 19,080
 —
Balance, June 30, 201829,609,472
 $324
 120,750
 $1
 $(208,009)
$1,052,717

$(7)
$(51,819) $793,207
 $412,067


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

10

Table of Contents


Cowen Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
 Six Months Ended June 30,
 20202019
Cash flows from operating activities:  
Net income (loss)$74,837  $20,013  
Adjustments to reconcile net income (loss) to net cash provided by / (used in) operating activities:
Depreciation and amortization11,642  9,908  
Goodwill impairment—  4,100  
Amortization of debt issuance costs674  509  
Amortization of debt discount (premium)2,241  2,419  
Noncash lease expense(858) (1,632) 
Share-based compensation23,580  17,181  
Change in deferred taxes43,219  5,997  
Net loss (gain) on disposal of fixed assets—  97  
Purchases of securities owned, at fair value(989,060) (900,815) 
Proceeds from sales of securities owned, at fair value1,136,485  751,611  
Proceeds from sales of securities sold, not yet purchased, at fair value699,116  639,630  
Payments to cover securities sold, not yet purchased, at fair value(695,813) (590,363) 
Proceeds from other investments17,126  8,174  
Net (gains) losses on securities, derivatives and other investments(148,104) (42,314) 
Consolidated Funds��
Purchases of securities owned, at fair value(1,837,137) (1,421,720) 
Proceeds from sales of securities owned, at fair value1,786,399  1,280,181  
Purchases of other investments(1,840) (2,798) 
Proceeds from other investments6,734  17,168  
Net realized and unrealized (gains) losses on investments and other transactions39,525  (22,496) 
(Increase) decrease in operating assets: 
Securities owned, at fair value, held at broker-dealer701,807  (201,355) 
Receivable on derivative contracts, at fair value(25,869) (7,095) 
Securities borrowed(798,944) (982,571) 
Deposits with clearing organizations, brokers and banks(12,083) (8,300) 
Receivable from brokers, dealers and clearing organizations(446,922) 168,745  
Receivable from customers, net of allowance(1,227) (49,622) 
Fees receivable, net of allowance(52,767) (7,285) 
Due from related parties2,507  4,862  
Other assets(979) (27,269) 
Consolidated Funds 
Cash and cash equivalents9,817  34,816  
Receivable on derivative contracts, at fair value(19,710) (38) 
Receivable from brokers(961) (11,196) 
Other assets890  (963) 
Increase (decrease) in operating liabilities: 
Securities sold, not yet purchased, at fair value, held at broker-dealer84,612  177,006  
Securities sold under agreement to repurchase(23,244) —  
Payable for derivative contracts, at fair value(6,292) 6,363  
Securities loaned20,618  1,078,134  
Payable to brokers, dealers and clearing organizations(30,457) 12,281  
Payable to customers357,438  (97,007) 
Commission management payable52,952  1,461  
Compensation payable50,324  (117,243) 
Fees payable64,272  23,316  
Due to related parties(9) (4,646) 
Accounts payable, accrued expenses and other liabilities30,978  18,221  
Consolidated Funds 
Contributions received in advance450  —  
Payable to brokers8,560  (12,395) 
Payable for derivative contracts, at fair value11,967  953  
Due to related parties(393) —  
Cowen Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands
(unaudited)
 Six Months Ended June 30,
 2019 2018
Cash flows from operating activities:   
Net income (loss)$22,132
 $58,015
Adjustments to reconcile net income (loss) to net cash provided by / (used in) operating activities:   
Depreciation and amortization9,908
 6,419
Amortization of debt issuance costs509
 656
Amortization of debt discount2,419
 2,871
Noncash lease expense(1,632) —
Gain / (loss) on extinguishment of debt—
 652
Share-based compensation17,181
 19,080
Change in deferred taxes5,997
 10,953
Deferred rent obligations—
 (939)
Net loss (gain) on disposal of fixed assets97
 155
Goodwill impairment4,100
 —
Purchases of securities owned, at fair value(900,815) (2,525,789)
Proceeds from sales of securities owned, at fair value751,611
 2,779,569
Proceeds from sales of securities sold, not yet purchased, at fair value639,630
 1,789,059
Payments to cover securities sold, not yet purchased, at fair value(590,363) (1,940,907)
Proceeds from the sale of other investments8,174
 3,870
Net (gains) losses on securities, derivatives and other investments(42,314) (28,237)
Consolidated Funds   
Purchases of securities owned, at fair value(1,421,720) (306,995)
Proceeds from sales of securities owned, at fair value1,280,181
 344,079
Purchases of other investments(2,798) (1,414)
Proceeds from sales of other investments17,168
 10,289
Net realized and unrealized (gains) losses on investments and other transactions(22,496) (47,628)
(Increase) decrease in operating assets:   
Securities owned, at fair value, held at broker-dealer(201,355) (89,077)
Receivable on derivative contracts, at fair value(7,095) 43,982
Securities borrowed(982,571) (104,973)
Deposits with clearing organizations, brokers and banks(8,300) (660)
Receivable from brokers, dealers and clearing organizations168,745
 (159,702)
Receivable from customers, net of allowance(49,622) (5,321)
Fees receivable, net of allowance(7,285) (32,917)
Due from related parties4,862
 2,448
Other assets(27,269) 13,027
Consolidated Funds   
Cash and cash equivalents34,816
 5,590
Receivable on derivative contracts, at fair value(38) 882
Receivable from brokers(11,196) (3,294)
Other assets(963) (91)
Increase (decrease) in operating liabilities:   
Securities sold, not yet purchased, at fair value, held at broker-dealer177,006
 30,292
Payable for derivative contracts, at fair value6,363
 10,097
Securities loaned1,078,134
 (22,365)
Payable to brokers, dealers and clearing organizations12,281
 (11,510)
Payable to customers(97,007) 168,099
Commission management payable1,461
 21,721
Compensation payable(119,012) (28,644)
Fees payable23,316
 15,562
Due to related parties(4,646) 4
Accounts payable, accrued expenses and other liabilities18,221
 6,747
    
    
    
    

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Condensed Consolidated Statements of Cash Flows
(dollars in thousands
(unaudited)
Cowen Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)		Cowen Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Six Months Ended June 30, Six Months Ended June 30,
2019 2018 20202019
   
(continued)   (continued)
Consolidated Funds   
Payable to brokers(12,395) 1,241
Payable for derivative contracts, at fair value953
 (6,085)
Accounts payable, accrued expenses and other liabilities(144) 225
Accounts payable, accrued expenses and other liabilities95  (144) 
Net cash provided by / (used in) operating activities(225,771) 29,036
Net cash provided by / (used in) operating activities146,196  (226,121) 
Cash flows from investing activities:   Cash flows from investing activities: 
Purchases of other investments(9,513) (20,227)Purchases of other investments(33,211) (9,513) 
Purchase of business (See Note 3)(48,581) —
Purchase of business (See Note 3)—  (48,581) 
Proceeds from sales of other investments12,867
 13,295
Proceeds from sales of other investments27,579  12,867  
Proceeds from loans held for investment—
 13
Purchase of fixed assets(3,666) (1,397)
Purchase of fixed assets and intangiblesPurchase of fixed assets and intangibles(6,236) (3,666) 
Net cash provided by / (used in) investing activities(48,893) (8,316)Net cash provided by / (used in) investing activities(11,868) (48,893) 
Cash flows from financing activities:   Cash flows from financing activities:  
Repayments on convertible debt(20,860) (13,500)Repayments on convertible debt—  (20,860) 
Deferred debt issuance cost(1,480) (3,883)Deferred debt issuance cost—  (1,480) 
Borrowings on notes and other debt55,175
 105,516
Borrowings on notes and other debt62,812  55,175  
Repayments on notes and other debt(5,051) (2,987)Repayments on notes and other debt(94,342) (1,655) 
Purchase of treasury stock(8,079) (10,862)Purchase of treasury stock(24,571) (8,079) 
Cash dividends paidCash dividends paid(2,512) —  
Preferred dividends paidPreferred dividends paid(3,396) (3,396) 
Contingent liability payment(1,235) (570)Contingent liability payment(5,653) (1,235) 
Capital contributions by redeemable non-controlling interests in operating entities11,110
 200
Capital withdrawals to redeemable non-controlling interests in operating entities(1,346) (1,113)
Capital contributions by non-controlling interests in operating entitiesCapital contributions by non-controlling interests in operating entities286  11,110  
Capital withdrawals to non-controlling interests in operating entitiesCapital withdrawals to non-controlling interests in operating entities(2,900) (996) 
Consolidated Funds   Consolidated Funds 
Capital contributions by redeemable non-controlling interests in Consolidated Funds191,485
 18,937
Capital withdrawals to redeemable non-controlling interests in Consolidated Funds(58,601) (58,136)
Capital contributions by non-controlling interests in Consolidated FundsCapital contributions by non-controlling interests in Consolidated Funds272,619  191,485  
Capital withdrawals to non-controlling interests in Consolidated FundsCapital withdrawals to non-controlling interests in Consolidated Funds(226,573) (58,601) 
Net cash provided by / (used in) financing activities161,118
 33,602
Net cash provided by / (used in) financing activities(24,230) 161,468  
Change in cash and cash equivalents(113,546) 54,322
Change in cash and cash equivalents110,098  (113,546) 
Cash and cash equivalents, including cash collateral pledged and segregated cash, beginning of period442,113
 264,208
Cash and cash equivalents, including cash collateral pledged and segregated cash, beginning of period415,014  442,113  
Cash and equivalents at end of period:   Cash and equivalents at end of period:
Cash and cash equivalents182,400
 207,708
 Cash and cash equivalents340,075  182,400  
Cash collateral pledged7,097
 15,513
 Cash collateral pledged7,511  7,097  
Segregated cash139,070
 95,309
 Segregated cash177,526  139,070  
Cash and cash equivalents, including cash collateral pledged and segregated cash, end of period$328,567
 $318,530
Cash and cash equivalents, including cash collateral pledged and segregated cash, end of period$525,112  $328,567  
Supplemental information   Supplemental information   
Cash paid during the year for interest$52,260
 $39,061
Cash paid during the year for interest$72,452  $52,260  
Cash paid during the year for taxes$3,580
 $2,233
Cash paid during the year for taxes$1,455  $3,580  
Supplemental non-cash information   Supplemental non-cash information  
Purchase of treasury stock, at cost, through net settlement (See Note 19)$12,015
 $8,376
Purchase of treasury stock, at cost, through net settlement (See Note 19)$6,029  $12,015  
Preferred stock dividends declared (See Note 19)$3,396
 $3,396
Preferred stock dividends declared (See Note 18)Preferred stock dividends declared (See Note 18)$3,396  $3,396  
Net assets (liabilities) acquired upon acquisition (net of cash)$90,727
 $—
Net assets (liabilities) acquired upon acquisition (net of cash)$—  $90,727  
Transfer of investment from consolidated funds, securities owned, fair value to securities owned, fair value$—
 $8,820
Initial recognition of operating lease right-of-use assets$103,694
 $—
Initial recognition of operating lease right-of-use assets$—  $103,694  
Initial recognition of operating lease liabilities$110,505
 $—
Initial recognition of operating lease liabilities$—  $110,505  
Noncash transfer of net assets from Unconsolidated Master Fund to Consolidated Fund$97,655
 $—
Noncash transfer of net assets from Unconsolidated Master Fund to Consolidated Fund$—  $97,655  
Net decrease in redeemable non-controlling interests in Consolidated Funds due to deconsolidation of consolidated fund (See Note 2)$—
 $32,559
Separately recognized conversion option reclassification from a derivative liability to equity (Note 19)$—
 $28,973
Common stock issuance upon close of acquisition (see Note 3)$14,446
 $—
Net decrease in non-controlling interests in Consolidated Funds due to deconsolidation of two Consolidated Funds (See Note 2)Net decrease in non-controlling interests in Consolidated Funds due to deconsolidation of two Consolidated Funds (See Note 2)$360,711  $—  
Net increase in non-controlling interests due to consolidation of operating entityNet increase in non-controlling interests due to consolidation of operating entity$48,596  $—  
Common stock issuance in relation to acquisition (See Note 3)Common stock issuance in relation to acquisition (See Note 3)$926  $14,446  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Cowen Inc.

Notes to Unaudited Condensed Consolidated Financial Statements
Index
Index
Notes to Unaudited Condensed Consolidated Financial StatementsPage
14
1514
2826
3028
3029
3129
4038
4846
4946
4946
49
Note 12—Commission Management Payable
5147
5147
48
5148
5249
5350
5351
5753
6056
6257
6257
6359
6865
6966
7067
7268



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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

1. Organization and Business
Cowen Inc., a Delaware corporation formed in 2009, is a diversified financial services firm that, together with its consolidated subsidiaries (collectively, "Cowen" or the "Company"), provides investment management, investment banking, research, sales and trading, prime brokerage, global clearing, and commission management services and investment management through its two2 business segments: the Operating Company (“("Op Co”Co") and the Asset Company (“("Asset Co”Co").
The Op Co segment consists of four divisions: the Cowen Investment Management (“CIM”) division, the Investment Banking division, the Markets division, the Research division and the ResearchCowen Investment Management ("CIM") division. The Company refers to the Investment Banking division, the Markets division and the Research division combined as its investment banking businesses. Op Co's investment banking businesses offer advisory and global capital markets origination, domain knowledge-driven research, sales and trading platforms for institutional investors, global clearing, commission management services and also a comprehensive suite of prime brokerage service. Sectors covered by Op Co's investment banking business include healthcare, technology, media and telecommunications, consumer, industrials, information and technology services, and energy. Op Co’s CIM division includes advisers to investment funds (including private equity structures and privately placed hedge funds and private equity structures)funds) and registered funds. Op Co's investment banking businesses offer investment banking, research, sales and trading, prime brokerage, global clearing and commission management services to companies and primarily institutional investor clients. Op Co's investment banking businesses’ primary target sectors ("Target Sectors") are healthcare, technology, media and telecommunications, information and technology services, consumer, aerospace and defense, industrials, energy and transportation.
The Asset Co segment consists of certain of the Company’sCompany's private investments, private real estate businessinvestments and other legacy multi-sector long/short equityinvestment strategies. The focus of Asset Co is to drive future monetization of the invested capital of the segment.
Change in Segments
As noted in the prior reporting period, the Company continually monitors and reviews its segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact its reportable segments. Because of the change in the Chief Operating Decision Maker (“CODM”) of the Company at the end of 2017, the Company experienced a strategic shift to refocus the Company’s businesses on a set of differentiated products which are aligned to the content and insight within the Company’s domain of expertise.
During the second quarter of 2019, the Company realigned the business and reportable segment information that the CODM regularly reviews to evaluate performance for operating decision-making purposes, including evaluation and allocation of resources.  As a result, the Company changed its segment reporting structure based on the Company's domain expertise as a driver of balance sheet harmonization and repeatable revenues for its operating business versus the Company’s long-term monetization strategies.
As a result of the change in segments, effective for the quarter ended June 30, 2019, the Company has the following business segments:
The Op Co segment consists of four divisions: Cowen Investment Management, Investment Banking, Markets, and Research. Each of Op Co’s four divisions leverage the Research division’s core domain expertise to drive harmonized repeatable revenue for the segment.
–
The CIM division offers innovative investment products and solutions across the liquidity spectrum to institutional and private clients. CIM offers investors access to a number of strategies to meet their specific needs including merger arbitrage, activism, healthcare royalties, private healthcare investing and private sustainable investing which leverage the content and domain expertise that are aligned with the Company's core areas of expertise ("Cowen DNA").
–
The Investment Banking division includes public and private capital raising transactions and providing strategic advisory services.
–
The Markets division includes trading equity and equity-linked securities on behalf of institutional investors as well as a full-service suite of prime brokerage services, cross-asset trading, securities finance, global execution, clearing and commission management businesses.
–
The Research division provides the thought leadership and domain expertise that drives Cowen DNA. The research content that is created helps to facilitate brokerage revenue in the Markets division, drive deal flow in the Investment Banking division and facilitate investor relationships and investing within CIM’s innovative investment products and solutions.
The Asset Co segment consists of certain of the Company’s private investments, private real estate business and other legacy multi-strategy funds. While the Asset Co segment is not a reportable segment, the Company will provide segment level information for Asset Co.

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

2. Significant Accounting Policies
a. Basis of Presentationpresentation
These unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") as promulgated by the Financial Accounting Standards Board ("FASB") through Accounting Standards Codification (the "Accounting Standards") as the source of authoritative accounting principles in the preparation of financial statements, and include the accounts of the Company, its operating and other subsidiaries, and entities in which the Company has a controlling financial interest or a general partner interest. All material intercompany transactions and balances have been eliminated inon consolidation. Certain fund entitiesinvestment funds that are consolidated in these accompanying condensed consolidated financial statements, as further discussed below, are not subject to the consolidation provisions with respect to their own controlled investments pursuant to their specialized industry accounting.
The Company serves as the managing member/general partner and/or investment manager to affiliated fund entitiesinvestment funds which it sponsors and manages. FundsInvestment funds in which the Company has a controlling financial interest are consolidated with the Company pursuant to US GAAP as described below.Company. Consequently, the Company's condensed consolidated financial statements reflect the assets, liabilities, income and expenses of these investment funds on a gross basis. The ownership interests in these investment funds that are not owned by the Company are reflected as redeemable or nonredeemable non-controlling interests, dependent on the non-controlling interest holder's redemption rights, in consolidated subsidiaries in the accompanying condensed consolidated financial statements. The management fees and incentive income earned by the Company from these investment funds are eliminated in consolidation.
The year-endCompany carried out an analysis to evaluate instances where non-controlling interest parties have the unilateral right to redeem their ownership interest for cash, which resulted in a change to the presentation of certain nonredeemable non-controlling interests into permanent equity. Accordingly, prior period amounts have been recast to present nonredeemable non-controlling interests separately from redeemable non-controlling interests within the equity section of the accompanying condensed balance sheet data was derived fromconsolidated statements of financial condition. This has no impact on net income (loss) attributable to Cowen Inc. common stockholders, total assets or total liabilities.
With respect to the auditedCompany's private equity investment management strategies, a portion of the Company's carried interest is granted to employees through profit sharing awards designed to more closely align compensation with the overall realized performance of the Company. These arrangements enable certain employees to earn compensation based on performance revenue earned by the Company and are recorded within compensation payable in the accompanying condensed consolidated statements of financial condition and employee compensation and benefits expense in the accompanying condensed consolidated statements of operation based on the probable and estimable payments under the terms of the awards. Prior period amounts have been recast to reflect this accounting treatment.
The accompanying financial statements but does not include allshould be read in conjunction with the Company’s financial statements and notes thereto included in the our Annual Report on Form 10-K for the year ended December 31, 2019 (the "2019 Form 10-K"). Certain footnote disclosures included in the audited2019 Form 10-K have been condensed or omitted from these financial statements.statements as they are not required for interim reporting under US GAAP or are insignificant to the interim reporting period.
b.Principles of consolidation
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
b. Principles of consolidation
The Company consolidates all entities that it controls through a majority voting interest or otherwise, including those investment funds in which the Company either directly or indirectly has a controlling financial interest. In addition, the Company consolidates all variable interest entities for which it is the primary beneficiary.
In accordance with these standards, theThe Company consolidates four 4 investment funds for which it acts as the managing member/general partner and investment manager. As ofAt June 30, 2019,2020, the Company consolidated the following investment funds: Ramius Enterprise LP (“Enterprise LP”), Ramius Merger Fund LLC (the "Merger Fund"), Cowen Private Investments LP ("Cowen Private"), Cowen Sustainable Investments I LP ("CSI I LP") and Ramius Merger Arbitrage UCITS FundCSI I Golden Holdco LP ("UCITS Fund"Golden HoldCo") (each a "Consolidated Fund" and collectively the "Consolidated Funds").
During the second quarter of 2020, the Company deconsolidated Ramius Merger Fund LLC (the "Merger Fund") and UCITS Fund ("UCITS Fund") due to a partial redemption of the Company’s direct portfolio fund investment in Merger Fund and a partial termination of the notional value of UCITS Fund units referenced in a total return swap with a third party. The Company continues to hold a direct retained portfolio fund investment in the Merger Fund and continues to have economic exposure to the returns of UCITS Fund through a total return swap with a third party. Both Merger Fund and UCITS Fund continue to be related parties of the Company after deconsolidation.
The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting operating entity ("VOE") or a variable interest entity ("VIE") under US GAAP.
Voting Operating Entities—VOEs are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently, (ii) the equity holders at risk have the obligation to absorb losses, the right to receive residual returns and the right to direct the activities of the entity that most significantly impact the entity's economic performance and (iii) voting rights of equity holders are proportionate to their obligation to absorb losses or the right to receive returns.
Under US GAAP consolidation requirements, the usual condition for a controlling financial interest in a VOE is ownership of a majority voting interest. Accordingly, the Company consolidates all VOEs in which it owns a majority of the entity's voting shares or units.
Variable Interest Entities—VIEs are entities that lack one or more of the characteristics of a VOE. In accordance with US GAAP, an enterprise must consolidate all VIEs of which it is the primary beneficiary. Under the US GAAP consolidation model for VIEs, an enterprise that (1) has the power to direct the activities of a VIE that most significantly impacts the VIE's economic performance, and (2) has an obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE, is considered to be the primary beneficiary of the VIE and thus is required to consolidate it.
The Company reconsidersdetermines whether it is the primary beneficiary of a VIE upon its initial involvement with the VIE and reassesses whether it is the primary beneficiary on an ongoing basis as long as it has any continuing involvement with the VIE by performing a periodic qualitative and/or quantitative analysis of the VIE that includes a review of, among other things, its capital structure, contractual agreements between the Company and the VIE, the economic interests that create or absorb variability, related party relationships and the design of the VIE. As of June 30, 2020, the total assets and total liabilities of the consolidated VIEs were $327.2 million and $5.6 million, respectively. As of December 31, 2019, the total assets and total liabilities of the consolidated VIEs were $606.2$685.4 million and $11.2 million, respectively. As of December 31, 2018, the total assets and total liabilities of the consolidated VIEs were $468.0 million and $40.5$24.9 million, respectively. The increase is primarily related to other investors' subscriptions which increaseddeconsolidation of two Consolidated Funds and decrease in performance decreased the overall VIEs net assets. The VIEs act as investment managers and/or investment companies that may be managed by the

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Company or the Company may have equity interest in those investment companies. The VIEs are financed through their operations and/or loan agreements with the Company.
As of June 30,At December 31, 2019, the Company held a variable interest in Ramius Merger Master Fund Ltd ("Merger Master") (the “Unconsolidated or the "Unconsolidated Master Fund”Fund") through the Consolidated Funds. As of December 31, 2018, the Company held variable interests in Ramius Enterprise Master Fund Ltd (“Enterprise Master”) and Ramiusconsolidated Merger Master Fund Ltd ("Merger Master") (collectively the “Unconsolidated Master Funds”) through the Consolidated Funds.Fund. Investment companies, which account for their investments under the specialized industry accounting guidance for investment companies prescribed under US GAAP, are not subject to the consolidation provisions for their investments. Therefore, the Company hashad not consolidated the Unconsolidated Master Funds.Fund.
In the ordinary course of business, the Company also sponsors various other entities that it has determined to be VIEs. These VIEs are primarily investment funds for which the Company serves as the general partner, managing member and/or investment manager with decision-making rights.
The reason that the Company does not consolidate the Unconsolidated Master Fund or real estate funds that are VIEs is due to the Company's conclusion that it is not the primary beneficiary of these funds in each instance. Investment fund investors are entitled to all of the economics of these VIEs with the exception of the management fee and incentive income, if any, earned by the Company. The companyCompany has equity interests in the funds as both GPa general partner and Limiteda limited partner. In these instances the Company has
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
concluded that the variable interests are not potentially significant to the VIE. Although the Company may advance amounts and pay certain expenses on behalf of the investment funds that it considers to be VIEs, it does not provide, nor is it required to provide, any type of substantive financial support to these entities outside of regular investment management services (see Note 6 for additional disclosures on VIEs).
Equity Method Investments—For operating entities over which the Company exercises significant influence but which do not meet the requirements for consolidation as outlined above, the Company uses the equity method of accounting. The Company's investments in equity method investees are recorded in other investments in the accompanying condensed consolidated statements of financial condition. The Company's share of earnings or losses from equity method investees is included in net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations.
The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. The difference between the carrying value of the equity method investment and its estimated fair value is recognized as an impairment charge when the loss in value is deemed other than temporary.
Other—If the Company does not consolidate an entity or apply the equity method of accounting, the Company accounts for such entities (primarily, all securities of such entity which are bought and held principally for the purpose of selling them in the near term as trading securities) in accordance with US GAAP,, at fair value with unrealized gains (losses) resulting from changes in fair value reflected within net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations.
Retention of Specialized Accounting—The Consolidated Funds and certain other consolidated companies are investment companies and apply specialized industry accounting for investment companies. The Company has retained this specialized accounting for these investment funds pursuant to US GAAP.accounting. The Company reports its investments on the condensed consolidated statements of financial condition at their estimated fair value, with unrealized gains (losses) resulting from changes in fair value reflected within net realized and unrealized gains (losses) on investments and other transactions. Accordingly, the accompanying condensed consolidated financial statements reflect different accounting policies for investments depending on whether or not they are held through a consolidated investment company.
In addition, the Company's broker-dealer subsidiaries, Cowen and Company, LLC ("Cowen and Company"), Cowen Execution Services LLC ("Cowen Execution"), Westminster Research Associates LLC ("Westminster"), Cowen Execution Services Limited ("Cowen Execution Ltd"), ATM Execution LLC ("ATM Execution"), Cowen International Limited ("Cowen International Ltd"), and Cowen Prime Services LLC ("Cowen Prime") apply the specialized industry accounting for brokers and dealers in securities also prescribed under US GAAP.securities. The Company also retains specialized accounting upon consolidation.
c.Use of estimates
c. Use of estimates
The preparation of the accompanying condensed consolidated financial statements in conformity with US GAAP requires the management of the Company to make estimates and assumptions that affect the fair value of securities and other investments, the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the accompanying condensed consolidated financial statements, the accounting for goodwill and identifiable intangible assets and

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.
d.Allowance for credit losses
d. Allowance for credit losses
Effective January 1, 2020, the Company adopted ASC Topic 326, Financial Instruments – Credit Losses (“ASC 326”). ASC 326 impacts the impairment model for certain financial assets measured at amortized cost by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset, recorded at inception or purchase. Under the accounting update, the Company has the ability to determine there are no expected credit losses in certain circumstances (e.g., based on collateral arrangements or based on the credit quality of the borrower or issuer).
The Company identified securities borrowed and fees and other receivables carried at amortized cost (including, but not limited to, receivables related to securities transactions, corporate finance and syndicate receivables, management fees and incentive fees receivable) as impacted by the new guidance. ASC 326 specifies that the Company adopt the new guidance prospectively by means of a cumulative-effect adjustment to the opening retained earnings as of the beginning of the first reporting period effective. Accordingly, the Company recognized a cumulative effective adjustment of $0.01 million upon adoption.
The allowance for credit losses is based on the Company’s assessmentCompany's expectation of the collectability of receivables related tofinancial instruments carried at amortized cost, including securities transactions, prepaid researchborrowed and fees and other receivables.receivables utilizing the CECL framework. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
may affect the Company’s expectation of the collectability in determining the allowance for credit losses. Specifically, for prepaid research,The Company’s expectation is that the credit risk associated with fees and other receivables is not significant until they are 90 days past due based on the contractual arrangement and expectation of collection in accordance with industry standards.
For securities borrowed, the Company reviews clients' historical, current and forecasted trading activity in determiningapplies a practical expedient to measure the allowance for credit losses. losses based on the fair value of the collateral. If the fair value of the collateral held exceeds the amortized cost and the borrower is expected to continue to replenish the collateral as needed, the Company will not recognize an allowance. If the fair value of collateral is less than amortized cost and the borrower is expected to continue to replenish the collateral as needed, the Company applies the CECL model, utilizing a probability and loss given default methodology, only to the extent of the shortfall between the fair value of the collateral and amortized cost.
The credit loss expense related to the allowance for credit losses as well as any recoveries of amounts previously charged is reflected in other expenses in the accompanying condensed consolidated statements of operations.
e.Valuation of investments and derivative contracts
e. Valuation of investments and derivative contracts
US GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date;date

Level 2Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active; and

Level 3Fair value is determined based on pricing inputs that are unobservable and includes situations where there is little, if any, market activity for the asset or liability. The determination of fair value for assets and liabilities in this category requires significant management judgment or estimation.
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable”"observable" requires significant judgment by the Company. The Company considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Company's perceived risk of that instrument. Inputs reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
The Company and its operating subsidiaries act as the manager for the Consolidated Funds. Both the Company and the Consolidated Funds hold certain investments which are valued by the Company, acting as the investment manager. The fair value of these investments is generally estimated based on proprietary models developed by the Company, which include discounted cash flow analysis, public market comparables, and other techniques and may be based, at least in part, on independently sourced market information. The material estimates and assumptions used in these models include the timing and expected amount of cash flows, the appropriateness of discount rates used, and, in some cases, the ability to execute, timing of, and estimated proceeds from expected financings. Significant judgment and estimation impact the selection of an appropriate valuation methodology as well as the assumptions used in these models, and the timing and actual values realized with respect to investments could be materially different from values derived based on the use of those estimates. The valuation methodologies applied impact the reported value of the Company's investments and the investments held by the Consolidated Funds in the condensed consolidated financial statements. Certain of the Company's investments are relatively illiquid or thinly traded and may not be immediately liquidated on demand if needed. Fair values assigned to these investments may differ significantly from the fair values that would have been used had a ready market for the investments existed and such differences could be material.
The Company primarily uses the “market approach”"market approach" to value its financial instruments measured at fair value. In determining an instrument's level within the hierarchy, the Company categorizes the Company's financial instruments into three categories: securities, derivative contracts and other investments. To the extent applicable, each of these categories can further be divided between those held long or sold short.

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

The Company has the option to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The election is made on an instrument by instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument.  The Company has elected the fair value option for certain of its investments held by its operating companies.  This option has been elected because the Company believes that it is consistent with the manner in which the business is managed, as well as the way that financial instruments in other parts of the business are recorded. 
Securities—Securities with values based on quoted market prices in active markets for identical assets are classified within level 1 of the fair value hierarchy. These securities primarily include active listed equities, certain U.S. government and sovereign obligations, Exchange Traded Funds ("ETFs"), mutual funds and certain money market securities. The Company does not adjust the quoted price for such instruments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.
Certain positions for which trading activity may not be readily visible, consisting primarily of convertible debt, corporate debt and loans and restricted equities, are stated at fair value and classified within level 2 of the fair value hierarchy. The estimated fair values assigned by management are determined in good faith and are based on available information considering trading activity, broker quotes, quotations provided by published pricing services, counterparties and other market participants, and pricing models using quoted inputs, and do not necessarily represent the amounts which might ultimately be realized. As level 2 investments include positions that are not always traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability.
Derivative contractsContracts—Derivative contracts can be exchange-traded or privately negotiated over-the-counter (“OTC”). Exchange-traded derivatives, such as futures contracts and exchange-traded option contracts, are typically classified within level 1 or level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. OTC derivatives, such as generic forwards, swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within level 2. OTC derivatives, such as swaps and options where market data is not readily available or observable are classified as level 3.
Other investmentsInvestments—Other investments consist primarily of investmentportfolio funds, real estate investments, carried interest and equity method investments, which are valued as follows:
i.
i. Portfolio Funds—Portfolio funds (“Portfolio Funds”) include interests in private investment partnerships, foreign investment companies and other collective investment vehicles which may be managed by the Company or its affiliates. The Company applies the practical expedient provided by the US GAAP fair value measurements and disclosures guidance relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). The guidance permits an entity holding investments in certain entities that either are investment companies or have attributes similar to an investment company, and calculate NAV per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment. Investments which are valued using NAV per share as a practical expedient are not categorized within the fair value hierarchy.
ii. Real Estate Investments—Real estate debt and equity investments are measured at fair value. The fair value of real estate investments is estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Real estate investments without a public market are valued based on assumptions and valuation techniques used by the Company. Such valuation techniques may include discounted cash flow analysis, prevailing market capitalization rates or earnings multiples applied to earnings from the investment, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties, consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence, as well as independent external appraisals. In general, the Company considers several valuation techniques when measuring the fair value of a real estate investment. However, in certain circumstances, a single valuation technique may be appropriate. Real estate investments are reviewed on a quarterly basis by the Company for significant changes at the property level or a significant change in the overall market which would impact the value of the real estate investment resulting in unrealized appreciation or depreciation.
Portfolio funds—Portfolio funds (“Portfolio Funds”) include interests in private investment partnerships, foreign investment companies and other collective investment vehicles which may be managed by the Company or its affiliates. The Company follows US GAAP regarding fair value measurements and disclosures relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). The guidance permits, as a practical expedient, an entity holding investments in certain entities that (a) do not have readily determinable fair values, (b) are investments in an investment company within the scope of ASC 946 Financial Services - Investment Companies (“ASC 946”) and (c) whose NAV is calculated in a manner consistent with the measurement principles of ASC 946 as of the reporting date, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment. In accordance with US GAAP, investments which are valued using NAV per share as a practical expedient are not categorized within the fair value hierarchy.
ii.
Real estate investments—Real estate debt and equity investments are valued at fair value. The fair value of real estate investments is estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Real estate investments without a public market are valued based on assumptions and valuation techniques used by the Company. Such valuation techniques may include discounted cash flow analysis, prevailing market capitalization rates or earnings multiples applied to earnings from the investment, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties, consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence, as well as independent external appraisals. In general, the Company considers several valuation techniques when measuring the fair value of a real estate investment. However, in certain circumstances, a single valuation technique may be appropriate. Real estate investments are reviewed on a quarterly basis by the Company for significant changes at the property level or a significant change in the overall market which would impact the value of the real estate investment resulting in unrealized appreciation or depreciation.
Real estate and capital markets are cyclical in nature. Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates and interest and inflation rates. In addition, the Company invests in real estate and real estate relatedestate-related investments for which no liquid market exists. The market prices for such investments may be volatile and may not be readily ascertainable. Amounts ultimately realized by the Company from investments sold may differ from the fair values presented, and the differences could be material.

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

The Company's real estate investments are typically categorized as level 3 investments within the fair value hierarchy as management uses significant unobservable inputs in determining their estimated fair value.
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
See Notes 6 and 7 for further information regarding the Company's investments, including equity method investments and fair value measurements.
f.Fees receivable
iii. Carried Interest—For the private equity and debt fund products the Company offers, the Company is allocated incentive income by the investment funds based on the extent by which the investment funds performance exceeds predetermined thresholds. Carried interest allocations are generally structured from a legal standpoint as an allocation of capital in the Company’s capital account. The Company accounts for carried interest allocations by applying an equity ownership model. Accordingly, the Company accrues performance allocations quarterly based on the fair value of the underlying investments assuming hypothetical liquidation at book value.
iv. Equity Method Investments—For operating entities over which the Company exercises significant influence but which do not meet the requirements for consolidation as outlined above, the Company applies the equity method of accounting. The Company's investments in equity method investees are recorded in other investments in the accompanying condensed consolidated statements of financial condition. The Company's share of earnings or losses from equity method investees is included in net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations.
f. Receivable from and payable to brokers
Receivable from brokers, dealers, and clearing organizations includes amounts receivable for securities failed to deliver by the Company to a purchaser by the settlement date, amounts receivable from broker-dealers and clearing organizations, commissions receivable from broker-dealers, and interest receivable from securities financing arrangements.
Payable to brokers, dealers and clearing organizations includes amounts payable for securities failed to receive by the Company from a seller by the settlement date, amounts payable to broker-dealers and clearing organizations for unsettled trades, interest payable for securities financing arrangements, and payables of deposits held in proprietary account of brokers and dealers.
Pursuant to the master netting agreements the Company has entered into with its brokers, dealers and clearing organizations, receivables and payables arising from unsettled trade are presented net (assets less liabilities) across balances with the same counterparty. The Company's receivable from and payable to brokers, dealers and clearing organizations balances are held at multiple financial institutions.
g. Receivable from and payable to customers
Receivable from customers includes amounts owed by customers on cash and margin transactions, recorded on a settlement-date basis on the statement of financial condition.
Payable to customers primarily consists of amounts owed to customers relating to securities transactions not completed on settlement date, recorded on a settle-date basis on the statement of financial condition, and other miscellaneous customer payables.
Securities owned by customers, including those that collateralize margin, are not reflected as assets of the Company on the statement of financial condition. The Company holds these securities with the intention of settlement against customer orders and are held as collateral for customer receivables.
h. Fees receivable
Fees related to security transactions are reported net of an allowance for credit losses. An allowance for credit losses is assessed on any commission receivables aged over 180 days. 
Corporate finance and syndicate receivables, include receivables relating to the Company’s investment banking and advisory engagements net of allowance for credit losses. The Company records this allowance for credit losses on these receivables on a specific identification basis. The future collectability of the receivables is reviewed on a monthly basis based on the following factors: aging (usually if outstanding greater than 90 days), known financial stability of the paying company, as well as any other factors that might impact the collection of the outstanding fees.
Management and incentive fees are earned as the managing member, general partner and/or investment manager to the Company's investment funds and are recognized in accordance with appropriate revenue recognition guidance (see Note 2(l))2m).
g.Securities financing arrangements    
i. Securities financing arrangements
Securities borrowed and securities loaned are carried at the amounts of cash collateral advanced or received on a gross basis. The related rebates are recorded in the accompanying condensed consolidated statements of operations as interest and dividends income and interest and dividends expense. Securities borrowed transactions require the Company to deposit cash collateral with the lender. With respect to securities loaned, the Company receives cash or securities as collateral from the borrower. When the Company receives securities as collateral, and has concluded it (i) is the transferor and (ii) can pledge the securities to third parties, the Company recognizes the securities received as collateral at fair value in Securities owned, at fair value with the corresponding obligation to return the securities received as collateral at fair value in Securities sold, not yet purchased, at fair value. Securities received as collateral are not recognized when the Company either (i) is not the transferor or (ii) cannot pledge the securities to third parties. The initial collateral advanced or received approximates or is greater than the market value of
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
securities borrowed or loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or returned, as necessary. Securities borrowed and loaned may also result in credit exposures for the Company in an event that the counterparties are unable to fulfill their contractual obligations. The Company minimizes its credit risk by continuously monitoring its credit exposure and collateral values by demanding additional or returning excess collateral in accordance with the netting provisions available in the master securities lending contracts in place with the counterparties.See Note 2d for further information.
Fees and interest received or paid are recorded in interest and dividends income and interest and dividends expense, respectively, on an accrual basis in the accompanying condensed consolidated statements of operations. In cases where the fair value basis of accounting is elected, any resulting change in fair value would be reported in net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations. Accrued interest income and expense are recorded in receivable from brokers, dealers and clearing organizations and payable to brokers, dealers and clearing organizations, respectively, on an accrual basis in the accompanying condensed consolidated statements of financial condition. At June 30, 20192020 and December 31, 2018,2019, the Company did not have any securities lending transactions for which fair value basis of accounting was elected.
h.Fixed assets
Fixed assetsj.  Securities sold under agreements to repurchase
Securities sold under agreements to repurchase ("repos") are accounted for as collateralized financing transactions and are recorded at their contracted repurchase amount plus accrued interest. A repo is a transaction in which a firm sells financial instruments to a buyer, typically in exchange for cash, and simultaneously enters into an agreement to repurchase the same or substantially the same financial instruments from such buyer at a stated price plus accrued interest at cost less accumulated depreciation or amortization. Leasehold improvements are amortized on a straight-line basis over the lesser of their useful life or lease term.future date. When the Company commitsreceives securities as collateral, and has concluded it (i) is the transferor and (ii) can pledge the securities to third parties, the Company recognizes the securities received as collateral at fair value in Securities owned, at fair value with the corresponding obligation to return the securities received as collateral at fair value in Securities sold, not yet purchased, at fair value. Securities received as collateral are not recognized when the Company either (i) is not the transferor or (ii) cannot pledge the securities to third parties. The initial collateral advanced approximates or is greater than the market value of securities sold in the transaction. The Company typically enters into repo transactions with counterparties that prefer repo transactions to securities loaned transactions. The Company has executed master repo agreements with such counterparties and utilizes such counterparties to finance its own positions, or replace a plan to abandon fixed assets or leasehold improvements beforesecurities lending transaction with a repo for matched book purposes. The Company monitors the endmarket value of its original useful life, the estimated depreciation or amortization period is revised to reflect the shortened useful life of the asset. Other fixed assets are depreciatedrepos on a straight-linedaily basis, overwith additional collateral obtained or returned, as necessary. Repos may also result in credit exposures for the Company in an event that the counterparties are unable to fulfill their estimated useful lives.contractual obligations. The Company mitigates its credit risk by continuously monitoring its credit exposure and collateral values by demanding additional collateral or returning excess collateral in accordance with the netting provisions available in the master repo contracts in place with the counterparties.

        Interest paid is recorded in interest and dividends expense on an accrual basis in the accompanying condensed consolidated statements of operations. In cases where the fair value basis of accounting is elected, any resulting change in fair value would be reported in net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations. At June 30, 2020 and December 31, 2019, the Company did not have any repos for which fair value basis of accounting was elected.
19k. Goodwill and intangible assets

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

AssetDepreciable LivesDepreciation and/or Amortization Method
Telephone and computer equipment3-5 yearsStraight-line
Computer software3-8 yearsStraight-line
Furniture and fixtures5 yearsStraight-line
Leasehold improvementsTerm of LeaseStraight-line
Finance lease right-of-use asset5 yearsStraight-line
i.Goodwill and intangible assets
Goodwill
Goodwill represents the excess of the purchase price consideration of acquired companies over the estimated fair value assigned to the individual assets acquired and liabilities assumed. Goodwill is allocated to the Company's reporting units at the date the goodwill is initially recorded. Once goodwill has been allocated to the reporting units, it generally no longer retains its identification with a particular acquisition but instead becomes identifiable with the reporting unit. As a result, all of the fair value of each reporting unit is available to support the value of goodwill allocated to the unit.
In January 2017, the FASB issued guidance that simplifies the subsequent measurement of goodwill. The new guidance eliminated Step 2 from the goodwill impairment test which was required in computing the implied fair value of goodwill. Instead, under the new amendments, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company early adopted these amendments during the second quarter of 2019 in conjunction with a quantitative goodwill test performed due to the Company’s change in operating segments and restructuring of reporting units. See Note 11 for the impact of the goodwill impairment test.
In accordance with US GAAP inclusiverequirements for testing for impairment of the newly adopted amendments,goodwill, the Company tests goodwill for impairment on an annual basis or at an interim period if events or changed circumstances would more likely than not reduce the fair value of a reporting unit below its carrying amount. In testing for goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances led to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company concludes that fair value exceeds its carrying amount, then performing a quantitative impairment test is not necessary. If the Company concludes otherwise, the Company is required to perform a quantitative impairment test that requires a comparison of the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit exceeds its carrying value, the related goodwill is not considered impaired and no further analysis is required. If the carrying value of the reporting unit exceeds its fair value, then the Company recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. See Note 11 for further discussion.
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Intangible assets
Intangible assets with finite lives are amortized over their estimated average useful lives. The Company does not have any intangible assets deemed to have indefinite lives. Intangible assets are tested for potential impairment whenever events or changes in circumstances suggest that an asset or asset group's carrying value may not be fully recoverable. An impairment loss, calculated as the difference between the estimated fair value and the carrying value of an asset or asset group, is recognized in the accompanying condensed consolidated statements of operations if the sum of the estimated undiscounted cash flows relating to the asset or asset group is less than the corresponding carrying value. The Company continually monitors the estimated average useful lives of existing intangible assets.
j.Debt
Long-term debt is carriedl. Non-controlling interests in consolidated subsidiaries
Non-controlling interests represent the pro rata share of the income or loss of the non-wholly owned consolidated entities attributable to the other owners of such entities. When non-controlling interest holders have redemption features that can be exercised at the principal amount borrowed net of any unamortized discount/premium. The discount is accreted to interest expense using the effective interest method over the remaining lifeoption of the underlying debt obligations. Accrued but unpaid coupon interest is includedholder currently or contingent upon the occurrence of future events, their ownership has been classified as temporary equity. The remaining non-controlling interests have been classified in accounts payable, accrued expenses and other liabilities inpermanent equity as the accompanying condensed consolidated statements of financial condition.
k.Right-of-use assets and lease liabilities
Effective January 1, 2019,non-controlling interests are either not redeemable at the Company adopted ASC Topic 842, Leases ("ASC 842"). The new guidance increases transparency and comparability by requiring the recognition of right-of-use assets and lease liabilities on the condensed consolidated statements of financial condition. The recognition of these lease assets and lease liabilities represents a change from previous US GAAP requirements, which did not require lease assets and lease liabilities to be recognized for most leases.

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee, have not significantly changed from previous US GAAP requirements.
Under the effective date transition method selected by the Company, leases existing at, or entered into after January 1, 2019 were required to be recognized and measured. Prior period amounts have not been adjusted and continue to be reflected in accordance with the Company’s historical Accounting Standards. In applying ASC 842, the Company made an accounting policy election not to recognize the right-of-use assets and lease liabilities relating to short term leases. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2018 for discussions related to the Company's previous lease recognition policies. Implementation of ASC 842 included an analysis of contracts, including real estate leases and service contracts to identify embedded leases, to determine the initial recognition of right-of-use assets and lease liabilities, which required subjective assessment over the determinationoption of the associated discount rates. ASC 842 also provided various practical expedients which were assessed to determineholder or the ultimate impact of ASC 842 upon adoption. The standard includes a package of three practical expedients which permitholder does not have the Company to not reassess (1) whether any expired or existing contracts are or contain a lease, (2) the lease classification for any expired or existing leases and (3) any initial direct costs for any existing leases as of the effective date. The Company has elected to apply the package of practical expedients, hindsight practical expedient, and land easement practical expedient.
The adoption of ASC 842 resulted in the recording of operating lease right-of-use assets of $103.7 million and operating lease liabilities of $110.5 million at January 1, 2019.
The Company determines if an arrangement is or contains a lease at inception. The Company’s operating lease arrangements are primarily for real estate and facility leases as well as office equipment. The Company has applied an accounting policy election to combine its lease and nonlease components for its real estate and facility leases. ROU assets represent the Company’sunilateral right to use the underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company's variable lease payments consist of nonlease services related to the lease. Variable lease payments are excluded from the right-of-use asset and lease liabilities to the extent they are not based on consumer priced index or a market index and are recognized in the period in which the obligation for those payments is incurred. As most of the Company's leases do not provide an implicit rate and the implicit rate is not readily determinable, the Company usesredeem its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Right-of-use assets also include any lease payments made and exclude lease incentives. Many of the Company's operating lease agreements include options to extend the lease, which the Company does not include in the determination of the minimum lease term unless the options are reasonably certain to be exercised. Expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term.ownership interests.
The Company reconciles the operating lease expense with operating lease payments by presenting the amortization of the operating ROU asset and change in the operating lease liability in a single line item within the adjustments to reconcile net income (loss) to net cash provided by / (used in) operating activities in the accompanying Condensed Consolidated Statements of Cash Flows.
Please refer to Note 18 for information on the Company’s finance leases (formerly capital leases).
l.m. Revenue recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers ("("ASC Topic 606"), which requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company follows a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, the Company includes variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. Significant judgments are required in the application of the five-step model including; when determining whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company’sCompany's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events.
The Company's principle sources of revenue are generated within two segments: Op Co and Asset Co as more fully described below. Revenue from contracts with customers includes management fees, incentive income, investment banking revenue and brokerage services revenue excluding principal transactions. ASC Topic 606 does not apply to revenue associated

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

with financial instruments, interest income and expense, leasing and insurance contracts. The following is a description of principal activities, separated by business segments, from which the Company generates its revenue. For more detailed information about reportable segments, see Note 22.
Operating Company
The Op Co segment generates revenue through five principle sources: investment banking revenue, brokerage revenue, management fees, incentive income and investment income from the Company's own capital. Investment income is excluded from ASC Topic 606.
Asset Company
The Asset Co segment generates revenue through management fees, incentive income and investment income from the Company’s own capital. Investment Bankingincome is excluded from ASC Topic 606.
Investment banking
The Company earns investment banking revenue primarily from fees associated with public and private capital raising transactions and providing strategic advisory services. Investment banking revenues are derived primarily from public and private small- and mid-capitalization companies within the Company's Target Sectors.sectors.  
Investment banking revenue consists of underwriting fees, strategic/financial advisory fees, expenses reimbursed from clients and placement and sales agent fees. 
•Underwriting fees. The Company earns underwriting fees in securities offerings in which the Company acts as an underwriter, such as initial public offerings, follow-on equity offerings, debt offerings, and convertible securities
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
offerings. Fee revenue relating to underwriting commitments is recorded at the point in time when all significant items relating to the underwriting process have been completed and the amount of the underwriting revenue has been determined. This generally is the point at which all of the following have occurred: (i) the issuer's registration statement has become effective with the SEC or the other offering documents are finalized; (ii) the Company has made a firm commitment for the purchase of securities from the issuer; (iii) the Company has been informed of the number of securities that it has been allotted; and (iv) the issuer obtains control and benefits of the offering; which generally occurs on trade date.
Underwriting fees are recognized gross of transaction-related expenses, and such amounts are adjusted to reflect actual expenses in the period in which the Company receives the final settlement, typically within 90 days following the closing of the transaction.
•Strategic/financial advisory fees.The Company's strategic advisory revenue includes success fees earned in connection with advising companies, principally in mergers, acquisitions and restructuring transactions. The Company also earns fees for related advisory work such as providing fairness opinions. A significant portion of the Company's advisory revenue (i.e., success relatedsuccess-related advisory fees) is considered variable consideration and recognized when it is probable that the variable consideration will not be reversed in a future period. The variable consideration is constrained until satisfaction of the performance obligation. The Company records strategic advisory revenues at the point in time, gross of related expenses, when the services for the transactions are completed or the contract is canceled under the terms of each assignment or engagement.
•Placement and sales agent fees. The Company earns placement agency placement fees and sales agent commissions in non-underwritten transactions, such as private placements of loans and debt and equity securities, including private investment in public equity transactions (“PIPEs”("PIPEs"), and as sales agent in at-the-market offerings of equity securities. The Company records placement revenues (which may be in cash and/or securities) at the point in time when the services for the transactions are completed under the terms of each assignment or engagement. The Company records sales agent commissions on a trade-date basis.
•Expense reimbursements from clients.Investment banking revenue includes expense reimbursements for transaction-related expenses, primarily consisting of legal, travel and other costs directly associated with the transaction.  Expense reimbursements associated with investment banking engagements are recognized in revenue at the point in time when the Company is contractually entitled to reimbursement. The related expenses are presented gross within their respective expense category in the accompanyingcondensed consolidated statements of operations.
Brokerage
Brokerage revenue consists of commissions, principal transactions, equity and credit research fees and trade conversion revenue.
•Commissions.Commission revenue includes fees from executing and clearing client transactions and commission sharing arrangements. Trade execution and clearing services, when provided together, represent a single performance

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

obligation as the services are not separately identifiable in the context of the contract. Commission revenues associated with combined trade execution and clearing services on a standalone basis, are recognized at a point in time on trade-date. CommissionsCommission revenues are generally paid on settlement date and the Company records a receivable between trade-date and payment on settlement date. The Company permits institutional customers to allocate a portion of their commissions to pay for research products and other services provided by third parties. The amounts allocated for those purposes are commonly referred to as "soft dollar arrangements". The Company also offers institutional clients the ability to allocate a portion of their gross commissions incurred on trades executed with various brokers to pay for research products and other services provided by third parties by entering into commission sharing arrangements. The Company acts as an agent in the soft dollar and commission sharing arrangements as the customer controls the use of the soft dollars and directs payments to third-party service providers on its behalf. Accordingly, amounts allocated to soft dollar arrangements are netted against commission revenues and recorded on trade date. Commissions on soft dollar brokerage are recorded net of the related expenditures. The costs of commission sharing arrangements are recorded for each eligible trade and shown net of commission revenue.
•Principal transactions.Principal transactions revenue includes net trading gains and losses from the Company's market-making activities in over-the-counter equity and fixed income securities, trading of convertible securities, and trading gains and losses on inventory and other Company positions, which include securities previously received as part of investment banking transactions. In certain cases, the Company provides liquidity to clients by buying or selling blocks of shares of listed stocks without previously identifying the other side of the trade at execution, which subjects the Company to market risk. These positions are typically held for a short duration.
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
•Equity and credit research fees. Equity and credit research fees are paid to the Company for providing itsaccess to equity and credit research. In the US, revenue is recognized once an arrangement exists, access to research has been provided and the customer has benefited from the research. As part of MiFID II, the Company’s international customers of the Company's broker-dealers have executed equity and credit research contactscontracts with its clients. The contracts either contain a fixed price for providing access to research or a price at the discretion of the customer with a contract minimum. Fixed equity and credit research fees are recognized over the contract period as the customer is benefiting from the research throughout the contractscontract term. When the equity and credit research fees are based on the customer’s discretion with a contract minimum, the Company recognizes the contract minimum over the life of the contract as the customer benefits from the research provided and adjusts the revenue when the Company can estimate the amount of equity and credit research fees over the contract minimum. Additionally, the Company earns variable consideration for attending client conferences and events. Revenue is recognized when the Company attends a client conference or event.
•Trade conversion revenue.Trade conversion revenue includes fees earned from converting foreign securities into an American Depository Receipt (“ADR”("ADR") and fees earned from converting an ADR into foreign securities on behalf of customers, and margins earned from facilitating customer foreign exchange transactions. Trade conversion revenue is recognized on a trade-date basis.
Managementfees
The Company earns management fees from investment funds and certain managed accounts for which it serves as the investment manager; such fees earned are typically based on committed and invested capital. The Company has determined that the primary drivers of management fees are committed and invested capital relating to private equity funds. The management fees are earned as the investment management services are provided and are not subject to reversals. The performance obligation related to the transfer of these services is satisfied over time because the customer is receiving and consuming the benefits as they are provided by the Company.
Several investment managers and/or general partners of the investment funds are owned jointly by the Company and third parties. Accordingly, the management fees generated by these funds are split between the Company and these third parties based on the proportionate ownership of the management company. Pursuant to US GAAP, these fees received by the management companies are accounted for under the equity method of accounting and are reflected under net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations.
Management fees are generally paid on a quarterly basis and are prorated for capital inflows (or commitments) and redemptions (or distributions) and are recognized as revenue at that time as they relate specifically to the services provided in that period, which are distinct from the services provided in other periods. While some investors may have separately negotiated fees, in general the management fees are as follows:

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Hedge Funds. Management fees for the Company's hedge funds are generally charged at an annual rate of up to 2% of utilized invested capital, committed capital or notional trading level. Management fees are generally calculated monthly at the end of each month.
•Private Equity Funds. equity funds. Management fees for the Company's private equity or debt funds are generally charged at an annual rate of1% to 2% of committed capital during the investment period (as defined in the relevant partnership agreement). After the investment period, management fees for these private equity funds are generally charged at an annual rate of 0.5%1% to 2% of the net asset value or the aggregate cost basis of the unrealized investments held by the private equity funds.  For certain other private equity funds (and managed accounts), the management fees range from 0.2% to 1% and there is no adjustment based on the investment period.  Management fees for the Company's private equity funds are generally paid on a quarterly basis.
•Hedge funds. Management fees for the Company's hedge funds are generally charged at an annual rate of up to 2% of utilized invested capital, committed capital or notional trading level. Management fees are generally calculated monthly at the end of each month.
•Cowen Trading Strategies. trading strategies. Advisory fees for the Company's collateral management advisory business are typically paid quarterly based on utilized invested capital or committed capital, generally subject to a minimum fee.
Incentive income
The Company earns incentive income based on net profits (as defined in the respective investment management or partnership agreements) with respect to certain of the Company's investment funds and managed accounts.  The incentive income is either allocated to the Company or is charged to the investment funds in accordance with their respective investment management or partnership agreements. For the hedge funds the Company offers, incentive income earned is typically up to 20% (in certain cases on performance in excess of a benchmark) of the net profits earned for the full year that are attributable to each fee-paying investor. For the private equity and debt fund products the Company offers, the carried interest earned is typically up to 20% of the distributions made to investors after return of their contributed capital and generally a preferred return.
In relation to ASC Topic 606, the Company applies an accounting policy election to recognize incentive income allocated to the Company under an equity ownership model as net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations. The Company previously recognized these amounts as incentive income.  Under the equity method of accounting the Company recognizes its allocations of incentive income or carried interest within net gains (losses) along with the allocations proportionate to the Company’s ownership interests in the investment funds.
The Company recognizes incentive income charged to the Company's hedge funds based on the net profits of the hedge funds. The Company recognizes such incentive income when the fees are no longer subject to reversal or are crystalized. For a majority of the hedge funds, the incentive fee crystallizes annually when the high-water mark for such hedge funds is reset, which delays recognition of the incentive fee until year end.
In periods following a period of a net loss attributable to an investor, the Company generally does not earn incentive income on any future profits attributable to such investor until the accumulated net loss from prior periods is recovered, an arrangement commonly referred to as a “high-water mark.”
Generally, incentive income or carried interest is earned after the investor has received a full return of their invested capital, plus a preferred return.
Several investment managers and/or general partners of the Company's investment funds are jointly owned by the Company and third parties. Accordingly, the incentive fees generated by these investment funds are split between the Company and these third parties.  Pursuant to US GAAP, incentive income received by the general partners that are accounted for under the equity method of accounting are reflected under net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations.
Investment Income
Investment income earned by the Op Co segment is earned from investing the Company's capital in various strategies which align to existing businesses within Op Co and from investments in private capital raising transactions of its investment banking clients.
Asset Company
The Asset Co segment generates revenue through three principle sources: management fees, incentive income and investment income from the Company's own capital. Investment income is excluded from ASC Topic 606.

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Management fees
The Company earns management fees from investment funds and certain managed accounts for which it serves as the investment manager; such fees earned are typically based on committed and invested capital. The management fees are earned as the investment management services are provided and are not subject to reversals. The performance obligation related to the transfer of these services is satisfied over time because the customer is receiving and consuming the benefits as they are provided by the Company.
Several investment managers and/or general partners of the investment funds are owned jointly by the Company and third parties. Accordingly, the management fees generated by these funds are split between the Company and these third parties based on the proportionate ownership of the management company. Pursuant to US GAAP, these fees received by the management companies are accounted for under the equity method of accounting and are reflected under net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations.
Management fees are generally paid on a quarterly basis and are prorated for capital inflows (or commitments) and redemptions (or distributions) and are recognized as revenue at that time as they relate specifically to the services provided in that period, which are distinct from the services provided in other periods. While some investors may have separately negotiated fees, in general, the management fees are as follows:
Hedge Funds. Management fees for the Company's hedge funds are generally charged at an annual rate of up to 2% of utilized invested capital, committed capital or notional trading level. Management fees are generally calculated monthly at the end of each month.
Real Estate. Management fees from the Company's real estate business are generally charged at an annual rate from 0.25% to 1.50% of total capital commitments during the investment period and of invested capital or net asset value of the applicable real estate fund after the investment period has ended. Management fees are typically paid to the general partners on a quarterly basis, at the beginning of the quarter in arrears.
Incentive income
The Company earns incentive income based on net profits (as defined in the respective investment management or partnership agreement) related to certain of the Company's investment funds and managed accounts.  The incentive income is either allocated to the Company or is charged to the investment funds in accordance with their corresponding investment management or partnership agreement. For the hedge funds the Company offers, incentive income earned is typically up to 20% (in certain cases on performance in excess of a benchmark) of the net profits earned for the full year that are attributable to each fee-paying investor.  For the private equity and debt fund products the Company offers, the carried interest earned is typically up to 20% of the distributions made to investors after return of their contributed capital and generally a preferred return.
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
In relation to ASC Topic 606, the Company applies an accounting policy election to recognize incentive income allocated to the Company under an equity ownership model as net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations. The Company previously recognized these amounts as incentive income.  Under the equity method of accounting the Company recognizes its allocations of incentive income or carried interest within net gains (losses) along with the allocations proportionate to the Company’sCompany's ownership interests in the investment funds.


The Company recognizes incentive income charged to the Company's hedge funds based on the net profits of the hedge funds. The Company recognizes such incentive income when the fees are no longer subject to reversal or are crystalized.crystallized. For certain  hedge funds, the incentive fee crystallizes annually when the high-water mark for such hedge funds is reset, which delays recognition of the incentive fee until year end. In periods following a period of a net loss attributable to an investor, the Company generally does not earn incentive income on any future profits attributable to such investor until the accumulated net loss from prior periods is recovered, an arrangement commonly referred to as a “high-water"high-water mark.”"
Generally, incentive income or carried interest is earned after the investor has received a full return of theirits invested capital, plus a preferred return. However, for certain private equity structures, the Company is entitled to receive incentive fees earlier, provided that the investors have received their preferred return on a current basis or on an investor by investor basis. These private equity structures are generally subject to a potential clawback of these incentive fees upon the liquidation of the private equity structure if the investor has not received a full return of its invested capital plus the preferred return thereon.
Several investment managers and/or general partners of the Company's investment funds are jointly owned by the Company and third parties. Accordingly, the incentive fees generated by these investment funds are split between the Company and these third parties.  Pursuant to US GAAP, incentive income received by the general partners that are accounted for under

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

the equity method of accounting are reflected under net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations. 
Investment Incomeincome
Investment income earned by the Asset Co segmentCompany is earnedgenerated from investing the Company's capital in various strategies.
Revenue fromInvestments transactions and related income/expenses
Purchases and sales of securities, net of commissions, derivative contracts, and the related revenues and expenses are recorded on a trade-date basis with customers
Fornet trading gains and losses included as a component of net gains (losses) on securities, derivatives and other investments, and with respect to the threeConsolidated Funds and six months ended June 30, 2019other real estate entities as a component of net realized and 2018,unrealized gains (losses) on investments and other transactions and net realized and unrealized gains (losses) on derivatives, respectively, in the following tables presents revenues from contracts with customers disaggregated by fee type and segment.
    Three Months Ended June 30, Six Months Ended June 30,
    2019 2018 2019 2018
 (dollars in thousands)
Revenue from contracts with customersOperating Company
Investment Banking         
     Underwriting fees $75,169
 $62,751
 $123,204
 $134,519
     Strategic/financial advisory fees11,131
 14,498
 31,676
 28,858
     Placement and sales agent fees23,515
 7,577
 33,013
 19,437
     Expense reimbursements from clients4,890
 —
 6,918
 —
 Total Investment Banking Revenue114,705
 84,826
 194,811
 182,814
Brokerage         
     Commissions  96,341
 91,008
 181,116
 185,303
     Trade conversion revenue 4,559
 5,815
 8,665
 9,337
     Equity and credit research fees5,355
 5,724
 8,945
 9,563
 Total Brokerage Revenue from Customers106,255
 102,547
 198,726
 204,203
Management Fees6,796
 6,287
 13,439
 12,960
Incentive Income8
 48
 8
 64
Total revenue from contracts with customers - Op Co$227,764
 $193,708
 $406,984
 $400,041
        
 Asset Company
Management Fees243
 1,086
 741
 1,830
Incentive Income—
 —
 15
 —
Total revenue from contracts with customers - Asset Co243
 1,086
 756
 1,830
Total revenue from contracts with customers$228,007
 $194,794
 $407,740
 $401,871
accompanying condensed consolidated statements of operations.
Interest and dividends
Interest and dividends are earned by the Company from various sources. The Company receives interest and dividends primarily from securities finance activities and securities held by the Company for purposes of investing capital, investments held by its Consolidated Funds and its brokerage balances. Interest is recognized on an accrual basisin accordance with US GAAP and market convention for the imputation of interest of the host financial instrument. Interest income is recognized on the debt of those issuers that is deemed collectible. Interest income and expense includes premiums and discounts amortized and accreted on debt investments based on criteria determined by the Company using the effective yield method, which assumes the reinvestment of all interest payments. Dividends are recognized on the ex-dividend date.
Reimbursement from affiliates
The Company allocates, at its discretion, certain expenses incurred on behalf of its investment management businesses. These expenses relate to the administration of such subsidiaries and assets that the Company manages for its investment funds. In addition, pursuant to the investment funds' offering documents, the Company charges certain allowable expenses to the investment funds, including charges and personnel costs for legal, compliance, accounting, tax compliance, risk and technology expenses that directly relate to administering the assets of the investment funds. Such expenses that have been reimbursed at their actual costs are included in the accompanying condensed consolidated statements of operations as employee compensation and
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
benefits, professional, advisory and other fees, communications, occupancy and equipment, client services and business development and other expenses.

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Reinsurance-related contracts
Premiums for reinsurance-related contracts are earned over the coverage period. In most cases, premiums are recognized as revenues ratably over the term of the contract with unearned premiums computed on a monthly basis. For each of its contracts, the Company determines if the contract provides indemnification against loss or liability relating to insurance risk, in accordance with US GAAP. If the Company determines that a contract does not expose it to a reasonable possibility of a significant loss from insurance risk, the Company records the contract under the deposit method of accounting with any net amount receivable reflected as an asset in other assets, and any net amount payable reflected as a liability within accounts payable, accrued expenses and other liabilities on the condensed consolidated statements of financial condition.
The liabilities for losses and loss adjustment expenses are recorded at the estimated ultimate payment amounts, including reported losses.  Estimated ultimate payment amounts are based upon (1) reports of losses from policyholders, (2) individual case estimates and (3) estimates of incurred but unreported losses.
Provisions for losses and loss adjustment expenses are charged to earnings after deducting amounts recovered and estimates of recoverable amounts and are included in other expenses on the condensed consolidated statements of operations.
Costs of acquiring new policies, which vary with and are directly related to the production of new policies, have been deferred to the extent that such costs are deemed recoverable from future premiums or gross profits. Such costs include commissions and allowances as well as certain costs of policy issuance and underwriting and are included within other assets in the condensed consolidated statements of financial condition.
Interest and dividends expense
Interest and dividends expense relates primarily to securities finance activities, trading activity with respect to the Company's investments and interest expense on debt.
m.    Recent pronouncementsn. Income taxes
Recently adoptedThe Company accounts for income taxes in accordance with US GAAP which requires the recognition of tax benefits or expenses based on the estimated future tax effects of temporary differences between the financial statement and tax basis of its assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. Valuation allowances are established to reduce deferred tax assets to an amount that is more likely than not to be realized. The Company evaluates its deferred tax assets for recoverability considering negative and positive evidence, including its historical financial performance, projections of future taxable income, future reversals of existing taxable temporary differences, and tax planning strategies. The Company records a valuation allowance against its deferred tax assets to bring them to a level that it is more likely than not to be utilized. In evaluating the need for a valuation allowance, the Company estimates future taxable income based on management approved business plans. This process involves significant management judgment about assumptions that are subject to change from period to period. Because the recognition of deferred tax assets requires management to make significant judgments about future earnings, the periods in which items will impact taxable income and the application of inherently complex tax laws, the Company has identified the assessment of deferred tax assets and the need for any related valuation allowance as a critical accounting estimate.
US GAAP clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements, requiring the Company to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. The Company recognizes accrued interest and penalties related to its uncertain tax positions as a component of income tax expense.
In 2018,accordance with federal and state tax laws, the FASB issued guidance relatedCompany and its subsidiaries file consolidated federal, state, and local income tax returns as well as stand-alone state and local tax returns. The Company also has subsidiaries that are residents in foreign countries where tax filings have to the Tax Cuts and Jobs Act of 2017 (“TCJ Act”) for the optional reclassification of the residual tax effects, arising from the changebe submitted on a stand-alone or combined basis. These subsidiaries are subject to taxes in corporate tax rate, in accumulated other comprehensive loss to retained earnings. The reclassification is the difference between the amount previously recorded in other comprehensive income at the historical U.S. federal tax rate that remains in accumulated other comprehensive loss at the time the TCJ Act was effectivetheir respective countries and the amount that would have been recorded using the newly enacted rate. This guidance became effective during the first quarter of 2019; however, we did not elect to make the optional reclassification.
In 2018, the FASB issued final guidance aligning the measurementCompany is responsible for and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, which may lower their cost and reduce volatilitytherefore reports all taxes incurred by these subsidiaries in the income statement.condensed consolidated statements of operations. The guidance became effective duringforeign jurisdictions where the first quarter of 2019Company owns subsidiaries and impactedhas tax filing obligations are the Company’s recognitionUnited Kingdom, Luxembourg, Gibraltar, Germany, Switzerland, South Africa, Canada and measurement of the retention bonus pool established in connection with the Company’s acquisition of Quarton International AG, which include share based payment to employees and nonemployees. Please refer to Note 3 for more information.
In 2017, the FASB issued guidance to amend the amortization period for certain purchased callable debt securities held at a premium. Under prior guidance, entities generally amortized the premium as an adjustment of yield over the contractual life of the instrument. The new guidance shortened the amortization period for the premium to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. This guidance became effective during the first quarter of 2019; however, the guidance did not have an impact on the Company's financials as it does not have investments in callable debt securities measured on an amortized cost basis.
In 2017, the FASB issued guidance that simplifies the subsequent measurement of goodwill. The new guidance eliminated Step 2 from the goodwill impairment test which was required in computing the implied fair value of goodwill. Instead, under the new amendments, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company early adopted these amendments during the second quarter of 2019. Please refer to Note 2i for more information.
In 2016, the FASB issued guidance that amends and supersedes its previous guidance regarding leases. The new guidance requires the lessee to recognize the right to use lease assets and lease liabilities that arise from leases greater than one year, and

Hong Kong.
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

present them in its statement of financial condition. The guidance became effective during the first quarter of 2019. Please refer to Note 2k for more information.o. Recent pronouncements
Recently issuedadopted
In October 2018, the FASB issued guidance that made targeted changes to the related party consolidation guidance. The new guidance changes how entities evaluate decision-making fees underaccounting standard update aligns the variable interest entity guidance. To determineevaluation of whether decision-making fees representa decision maker's fee is a variable interest with the guidance in the primary beneficiary test by requiring the decision maker to consider an entity will consider indirect interestsinterest in a VIE held throughby a related partiesparty under common control on a proportionate basis underbasis. The standard became effective for the new guidance, rather thanCompany in their entirety, as has been the case underfirst quarter of 2020 and was adopted retrospectively with no impact to current guidance. The guidance is effective in annual periods beginning after December 15, 2019 and interim periods within those fiscal years with early adoption permitted. The Company is currently evaluating the impact of the new guidance and does not expect this guidance to have a material impact on its consolidated statements of financial condition or its consolidated statements of operations.previous consolidation conclusions.
In August 2018, the FASB issued guidance for accounting for upfront costs and fees paid by a customer in a cloud computing arrangement. The guidance requires capitalization ofaccounting standard aligns the requirements for capitalizing implementation costs incurred in connection with a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or the development or obtainment ofobtain internal use software. The guidance isstandard became effective for public business entities for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years for any implementation costs incurred after adoption. The Company is currently evaluating the impact of this guidance on the Company’s consolidated financial statements and does not expect this guidance to have a material impact on its consolidated statements of financial condition or its consolidated statements of operations.
In August 2018, as part of its disclosure framework project, the FASB amended the disclosure requirements for fair value measurement. The amendments update and eliminate various disclosure requirements that improve the overall usefulness of the disclosure requirement for financial statement users and reduce costs by eliminating disclosures that may not be useful. The guidance is effective for public business entities for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Since the guidance only relates to disclosure requirements, the Company does not expect this guidance to have a material impact on its consolidated statementsin the first quarter of financial condition or its consolidated statements of operations.2020 and was adopted prospectively.
In June 2016, the FASB issued guidance that impacts the impairment model for certain financial assets measured at amortized cost by requiring a current expected credit loss (“CECL”("CECL") methodology to estimate expected credit losses over the entire life of the financial asset, recorded at inception or purchase. CECL will replaceThe guidance became effective for the Company in the first quarter of 2020. Please refer to Note 2d. for more information.
In December 2019, the FASB issued guidance simplifying the accounting for income taxes. The guidance simplifies the accounting for income taxes by removing the following exceptions (i) the incremental approach for intra-period tax allocation when there is a loss model currently applicablefrom continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income), (ii) the requirement to loans, heldrecognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, (iii) the ability not to maturity securitiesrecognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary and other receivables carried at amortized cost.(iv) general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.Additionally the guidance requires that an entity (a) recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (b) evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction and (c) reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date as well as specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements.However, an entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority. The guidance also eliminatesmakes minor codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the concept of other-than-temporary impairment for available-for-sale securities. Impairments on available-for-sale securities will be required to be recognized in earnings through an allowance, when the fair value is less than amortized cost and a credit loss exists or the securities are expected to be sold before recovery of amortized cost. Under the accounting update, there may be an ability to determine there are no expected credit losses in certain circumstances, e.g., based on collateral arrangements for lending and financing transactions or based on the credit quality of the borrower or issuer. equity method.For public companies,business entities, the guidance is effective for reporting periods beginning after December 15, 20192020 and interim periods within those fiscal years.years with early adoption permitted. The Company is currently evaluatingearly adopted the guidance effective in the first quarter of 2020 and has determined no material impact from the adoption of this guidance on the Company’sCompany's consolidated financial statements and does not expect this guidance to have a material impact.statements.
3. Acquisition
Quarton
On January 2, 2019 (the "Acquisition Date"), the Company, together with its indirect wholly owned subsidiaries, Cowen International Ltd and Cowen QN Acquisition LLC, completed its previously announced acquisition (the "Acquisition") of Quarton International AG through the acquisition of all of the outstanding equity interest of Quarton International AG’sAG's affiliated combining companies, Quarton Management AG, Quarton International Europe AG, Quarton Partners, LLC and Quarton Securities GP, LLC (which owns a formerly U.S. Securities Exchange Commission ("SEC") registered broker-dealer that was subsequently renamed to Cowen Securities L.P. ("Cowen Securities") (see Note 23)23), comprising the U.S. and European operations of the acquired combining companies (collectively "Quarton"). Quarton is a group of leading global financial advisory companies serving the middle market. Quarton's operations were primarily conducted through eight entities based in the United States, Switzerland, and Germany.
The acquisitionAcquisition was accounted for under the acquisition method of accounting in accordance with US GAAP. As such, results of operations for Quarton are included in the accompanying condensed consolidated statements of operations since the date of acquisition,Acquisition Date, and the assets acquired and liabilities assumed were recorded at their fair value as of the acquisition date.Acquisition Date. Subsequent to the acquisition,Acquisition, the operations of Quarton were integrated within the Company's existing businesses.
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The aggregate estimated purchase price of the Acquisition was $103.0 million. On the Acquisition Date the Company paid upfront consideration of $75.3 million subject to certain net working capital and other customary adjustments, with

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

additional maximum contingent consideration of $40.0 million that will become payable dependent on the achievement of certain milestones by Quarton in each of the first four years (five years if certain conditions are met) following the Acquisition Date subject to a $10 million maximum in each year and a $40.0 million cumulative maximum. The Company estimated the contingent consideration at $27.7 million using the Monte Carlo valuation model which requires the Company to make estimates and assumptions regarding the future cash flows and profits. The contingent consideration liability is included within accounts payable, accrued expenses and other liabilities on the condensed consolidated statements of financial condition. Changes in these estimates and assumptions could have a significant impact on the amounts recognized. A portion of the preliminary purchase price was deposited into escrow, in the amount of $0.6 million, as a reserve for any future claims against the sellers of Quarton.  All consideration, including the upfront consideration and contingent consideration, consists of a combination of 80% cash and 20% shares of the Company’sCompany's Class A common stock. Shares issued on the Acquisition Date of 1,033,350 were valued based on the 30-trading day volume-weighted average price per share of $14.52 as of December 31, 2018. The fair value of the shares of Class A common stock issued was determined on the basis of the closing market price of the Company’sCompany's shares on the Acquisition Date. Any shares of Class A common stock issued in connection with any such contingent payments will be valued based on the 30-trading day volume-weighted average price per share as of the day immediately prior to the date on which such shares are to be issued. In addition, Quarton and the Company have established a retention bonus pool, for Quarton employees that remain employed at the end of each year there is a contingent payment which will be settled in a combination of 80% cash and 20% shares of the Company’sCompany's Class A common stock based on Quarton meeting certain economic performance hurdles. The bonus pool has an aggregate maximum of $10.0 million over a five-yearfive-year period with $2.5 million maximum in each year. The Company is recognizing the retention bonus over each contingent payment period based upon the Company’sCompany's revenue projections for Quarton. Goodwill, the excess of the purchase price over the fair value of net assets, primarily relates to expected synergies from combining operations and has been assigned to the Op Co segment of the Company. Tax deductible goodwill will differ from goodwill recognized by the Company in an amount equal to the difference between actual contingent consideration and estimated contingent consideration.
The table below summarizes the purchase price allocation of net tangible and intangible assets acquired and liabilities assumed as of January 2, 2019:
(dollars in thousands)
Cash and cash equivalents$12,236 
Fees receivable7,269 
Fixed assets1,085 
Operating lease right-of-use assets3,200 
Intangible assets22,200 
Other assets667 
Compensation payable(637)
Operating lease liabilities(3,200)
Due to related parties(4,750)
Accounts payable, accrued expenses and other liabilities(16,257)
Total identifiable net assets acquired and liabilities assumed21,813 
Goodwill81,150 
Total estimated purchase price$102,963 

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 (dollars in thousands)
Cash and cash equivalents$12,236
Fees receivable7,269
Fixed assets1,085
Operating lease right-of-use assets3,200
Intangible assets22,200
Other assets667
Compensation payable(637)
Operating lease liabilities(3,200)
Due to related parties(4,750)
Accounts payable, accrued expenses and other liabilities(16,257)
Total identifiable net assets acquired and liabilities assumed21,813
Goodwill81,150
Total estimated purchase price$102,963
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
As of the acquisition date,Acquisition Date, the estimated fair value of the Company's intangible assets, as acquired through the Acquisition, was $22.2 million.million and had a weighted average useful life of 2.8 years. The allocation of the intangible assets is shown within the following table:
 Estimated intangible assets acquiredEstimated average remaining useful lives
(dollars in thousands)(in years)
Intangible asset class
Trade name$900  3
Customer relationships7,100  4
Backlog12,600  2
Proprietary software1,600  3
Total intangible assets$22,200  

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Amortization expense for each of the three and six months ended June 30, 2020 and 2019 was $2.2 million and $4.5 million, respectively, and is included in depreciation and amortization in the accompanying condensed consolidated statements of operations. The estimated amortization expense related to these intangible assets in future periods is as follows:
(dollars in thousands)
(dollars in thousands)
2019$4,454
20208,908
2020$4,454  
20212,608
20212,608  
20221,775
20221,775  
2023—
2023—  
20242024—  
Thereafter—
Thereafter—  
$17,745
$8,837  
In addition to the purchase price consideration, for the three and six months ended June 30, 2019, the Company hashad incurred acquisition relatedacquisition-related expenses of $0.1 million and $1.1 million, respectively, including financial advisory, legal and valuation services, which are included in professional, advisory and other fees in the accompanying condensed consolidated statements of operations.
Included in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2019 are revenues of $6.9 million and $12.2 million, respectively, and net income of $0.8 million and $2.4 million, respectively, related to the results of operations of Quarton.
Subsequent to the acquisition, Quarton's businesses were integrated within the Op Co segment of the Company and therefore they are included within their respective line items in the accompanying condensed consolidated statements of operations. The following table provides supplemental pro forma financial information for the three and six months ended June 30, 2018, as if the acquisition were completed as of January 1, 2018. This unaudited supplemental pro forma information has been prepared for comparative purposes only and is not intended to be indicative of what the Company's financial results would have been had the acquisition been completed on January 1, 2018, nor does it purport to be indicative of any future results.
 Three Months Ended June 30, 2018 Six Months Ended June 30, 2018
 (dollars in thousands, except per share data)
Net revenues$218,625
 $454,962
Net income (loss) attributable to Cowen Inc. common stockholders3,057
 19,888
    
Net income (loss) per common share:   
  Basic$0.10
 $0.65
  Diluted0.10
 0.63
4. Cash Collateral Pledged
As of June 30, 20192020 and December 31, 2018,2019, the Company pledged cash collateral in the amount of $5.2$4.5 million and $5.3$4.6 million respectively, which relates to letters of credit issued to the landlords of the Company's premises in New York City, Boston Stamford and San Francisco. The Company also has pledged cash collateral for reinsurance agreements which amounted to $1.9$3.0 million, as of June 30, 2019,2020, and $1.0$2.0 million, as of December 31, 2018,2019, which isare expected to be released annuallyperiodically as per the terms of the reinsurance policy between MarchDecember 31, 2020 and March 2023 based on the policy periods covered by the reinsurance agreements31, 2024 (see Note 18).
5. Segregated Cash
As of June 30, 20192020, the Company has the following six irrevocable letters of credit, related to leased office space, for which there is cash collateral pledged, which the Company pays a fee on the stated amount of the letter of credit.
LocationAmountMaturity
(dollars in thousands)
New York$358 April 2021
New York$1,424 October 2020
New York$1,636 November 2020
Boston$385 March 2021
San Francisco$712 October 2025
$4,515 
To the extent any letter of credit is drawn upon, interest will be assessed at the prime commercial lending rate. As of June 30, 2020 and December 31, 2018,2019 there were no amounts due related to these letters of credit.
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
5. Segregated Cash
As of June 30, 2020 and December 31, 2019, cash segregated in compliance with federal regulations and other restricted deposits of $139.1$177.5 million and $176.6$107.3 million, respectively, consisted of cash deposited in Special Reserve Accounts for the exclusive benefit of customers under SEC Rule 15c3-3 and cash held in accounts designated as Special Reserve Bank Accounts for Proprietary Accounts of Broker-Dealers ("PAB").

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

6. Investments of Operating Entities and Consolidated Funds
a.Operating Entities
a. Operating entities
Securities owned, at fair value
Securities owned, at fair value are held by the Company and are considered held for trading. Substantially all equity securities, which are not part of the Company's self-clearing securities finance activities, are pledged to external clearing brokers under terms which permit the external clearing broker to sell or re-pledge the securities to others subject to certain limitations.
As of June 30, 20192020 and December 31, 2018,2019, securities owned, at fair value consisted of the following:
 As of June 30, 2019 As of December 31, 2018
 (dollars in thousands)
Common stock$824,881
 $472,299
Preferred stock9,772
 5,617
Warrants and rights9,874
 7,990
Government bonds (a)12,892
 13,398
Corporate bonds (d)24,625
 13,041
Convertible bonds (b) (c)6,318
 3,000
Term loan (b)1,496
 —
Trade claims (b)10,488
 5,543
 $900,346
 $520,888
As of June 30, 2020As of December 31, 2019
 (dollars in thousands)
Common stock$805,645  $1,546,484  
Preferred stock57,995  12,656  
Warrants and rights32,716  22,109  
Government bonds16,822  15,916  
Corporate bonds17,307  25,500  
Convertible bonds5,081  2,500  
Term loan (*)11,359  1,067  
Trade claims (*)7,587  7,320  
$954,512  $1,633,552  
(a)As of June 30, 2019, maturities range from August 2019 to October 2019 with an interest rate of 0%. As of December 31, 2018, maturities ranged from April 2019 to August 2019 with an interest rate of 0%.
(b)The Company has elected the fair value option for investments in securities of trade claims, convertible bond and term loan with a fair value of $10.5 million, $6.3 million and $1.5 million, respectively, at June 30, 2019. The Company has elected the fair value option for investments in securities of trade claims and convertible bond at a fair value of $5.5 million and $3.0 million, respectively, at December 31, 2018.
(c)As of June 30, 2019, maturities range from April 2020 to May 2024 with an interest rate of 8%. As of December 31, 2018, the maturity was June 2020 with an interest rate of 8%.
(d)As of June 30, 2019, maturities ranged from October 2019 to March 2038 and interest rates ranged from 4.88% to 10.75%. As of December 31, 2018, maturities ranged from April 2019 to April 2049 and interest rates ranged from 2% to 15.50%.
(*)The Company has elected the fair value option for securities owned, at fair value with a fair value of $7.1 million and $8.4 million, respectively, at June 30, 2020 and December 31, 2019.
Receivable on and Payable for derivative contracts, at fair value
The Company's direct involvement with derivative financial instruments includes total return swaps, futures, currency forwards, equity swaps, credit default swaps and options. The Company's derivatives trading activities exposesexpose the Company to certain risks, such as price and interest rate fluctuations, volatility risk, credit risk, counterparty risk, foreign currency movements and changes in the liquidity of markets.
The Company's long and short exposure to derivatives is as follows:
Receivable on derivative contractsAs of June 30, 2019 As of December 31, 2018Receivable on derivative contractsAs of June 30, 2020As of December 31, 2019
Number of contracts / Notional Value Fair value Number of contracts / Notional Value Fair value
(dollars in thousands)
Futures$—
 $—
 $42,288
 $334
Number of contracts / Notional ValueFair valueNumber of contracts / Notional ValueFair value
(dollars in thousands)
Currency forwards$105,769
 279
 $395
 1
Currency forwards$10,997  19  $—  —  
Swaps$121,469
 9,440
 $13,702
 917
Swaps$367,432  26,112  $383,752  2,911  
Options other (a)325,493
 22,501
 654,506
 23,130
Options other (a)420,187  62,715  550,188  60,066  
Pay to hold$—
 —
 $—
 743
  $32,220
   $25,125
$88,846  $62,977  

(a) Includes the volume of contracts for index, equity, commodity future and cash conversion options.
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Payable for derivative contractsAs of June 30, 2020As of December 31, 2019
 Number of contracts / Notional ValueFair valueNumber of contracts / Notional ValueFair value
 (dollars in thousands)
Futures$—  $—  $10,224  $217  
Currency forwards$243,765  1,360  $77,790  851  
Swaps$209,569  7,322  $607,717  23,169  
Options other (a)256,336  45,787  306,306  36,524  
$54,469  $60,761  
(a) Includes index, equity, commodity future and cash conversion options.
Payable for derivative contractsAs of June 30, 2019 As of December 31, 2018
 Number of contracts / Notional Value Fair value Number of contracts / Notional Value Fair value
 (dollars in thousands)
Futures$29,986
 $434
 $—
 $—
Currency forwards$960
 1
 $96,406
 709
Swaps$79,407
 2,231
 $52,905
 2,162
Options other (a)136,420
 19,779
 90,730
 13,211
   $22,445
   $16,082
(a) Includesthe volume of contracts for index, equity, commodity future and cash conversion options.
The following tables present the gross and net derivative positions and the related offsetting amount, as of June 30, 20192020 and December 31, 2018.2019. This table does not include the impact of over-collateralization.
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition (a)Net amounts included on the Condensed Consolidated Statements of Financial ConditionGross amounts not offset in the Condensed Consolidated Statements of Financial Condition
Gross amounts recognizedFinancial instrumentsCash Collateral pledgedNet amounts
(dollars in thousands)
As of June 30, 2020
Receivable on derivative contracts, at fair value$91,634  $2,788  $88,846  $3,783  $15,974  $69,089  
Payable for derivative contracts, at fair value57,257  2,788  54,469  3,783  3,209  47,477  
As of December 31, 2019
Receivable on derivative contracts, at fair value$66,217  $3,240  $62,977  $—  $2,911  $60,066  
Payable for derivative contracts, at fair value64,001  3,240  60,761  —  24,020  36,741  
       Gross amounts not offset in the Condensed Consolidated Statement of Financial Condition  
 Gross amounts recognized Gross amounts offset on the Condensed Consolidated Statements of Financial Condition (a) Net amounts included on the Condensed Consolidated Statements of Financial Condition Financial instruments Cash Collateral pledged (b) Net amounts
 (dollars in thousands)
As of June 30, 2019           
Receivable on derivative contracts, at fair value$32,220
 $—
 $32,220
 $—
 $9,719
 $22,501
Payable for derivative contracts, at fair value22,445
 —
 22,445
 —
 2,232
 20,213
            
As of December 31, 2018           
Receivable on derivative contracts, at fair value$25,125
 $—
 $25,125
 $—
 $1,662
 $23,463
Payable for derivative contracts, at fair value16,082
 —
 16,082
 —
 2,871
 13,211
(a)Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
(a)Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
(b)Includes the amount of collateral held or posted.
The realized and unrealized gains/(losses) related to derivatives trading activities were $(1.8)$(38.2) million and $6.1$(1.8) million for the three months ended June 30, 2020 and 2019, respectively, and 2018$(9.4) million and $(4.0) million and $14.0 million for the six months ended June 30, 20192020 and 2018,2019, respectively, and are included in other income in the accompanying condensed consolidated statements of operations.
Pursuant to the various derivatives transactions discussed above, except for the cash convertible note hedge (see Note 18), exchange traded derivatives and certain options, the Company is required to post/receive collateral. As of June 30, 2019 and December 31, 2018, collateral consisting of $8.6 million and $11.2 million of cash is includedThese amounts are recognized in receivable from brokers, dealers and clearing organizations and payable to brokers, dealers and clearing organizations respectively, on the accompanying condensed consolidated statements of financial condition.respectively. As of June 30, 20192020 and December 31, 2018,2019, all derivative contracts were with multiple major financial institutions.

Other investments
As of June 30, 2020 and December 31, 2019, other investments included the following:
As of June 30, 2020As of December 31, 2019
 (dollars in thousands)
Portfolio funds, at fair value (1)$122,407  $114,504  
Carried interest (2)52,416  30,360  
Equity method investments (3)32,840  40,858  
$207,663  $185,722  
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Other investments
As of June 30, 2019 and December 31, 2018, other investments included the following:
 As of June 30, 2019 As of December 31, 2018
 (dollars in thousands)
Portfolio Funds, at fair value (1)$146,133
 $141,236
Equity method investments (2)54,164
 40,171
 $200,297
 $181,407
(1) Portfolio Funds, at fair value
The Portfolio Funds, at fair value as of June 30, 20192020 and December 31, 2018,2019, included the following:
As of June 30, 2020As of December 31, 2019
As of June 30, 2019 As of December 31, 2018
(dollars in thousands)
Starboard Value and Opportunity Fund LP (c)(*)$36,585
 $32,579
(dollars in thousands)
Starboard Value and Opportunity Fund (c)(*)Starboard Value and Opportunity Fund (c)(*)$41,170  $37,895  
Formation8 Partners Fund I, L.P. (f)33,613
 34,099
Formation8 Partners Fund I, L.P. (f)32,152  33,613  
Cowen Healthcare Investments II LP (i) (*)Cowen Healthcare Investments II LP (i) (*)21,264  14,652  
Lagunita Biosciences, LLC (d)Lagunita Biosciences, LLC (d)5,025  4,802  
Eclipse Ventures Fund I, L.P. (b)Eclipse Ventures Fund I, L.P. (b)4,270  3,960  
HealthCare Royalty Partners II LP (a)(*)HealthCare Royalty Partners II LP (a)(*)1,606  1,781  
RCG Longview Debt Fund V, L.P. (g)(*)2,110
 4,394
RCG Longview Debt Fund V, L.P. (g)(*)1,227  1,732  
RCG Longview II LP (g) (*)4,461
 4,400
Cowen Healthcare Investments II LP (i) (*)23,925
 21,717
Eclipse Ventures Fund I, L.P. (b)4,580
 4,412
HealthCare Royalty Partners LP (a)(*)1,368
 1,833
HealthCare Royalty Partners LP (a)(*)1,166  1,326  
Lagunita Biosciences, LLC (d)5,054
 3,833
RCG IO Renergys Sarl (i) (*)868
 6,369
Starboard Leaders Fund LP (e)(*)1,454
 1,230
Starboard Leaders Fund LP (e)(*)1,579  1,560  
Eclipse SPV I, LP (j)(*)1,447
 1,447
Eclipse SPV I, LP (j)(*)1,621  1,447  
Ramius Merger Fund LLC (m)(*)Ramius Merger Fund LLC (m)(*)1,877  —  
TriArtisan ES Partners LLC (k)(*)TriArtisan ES Partners LLC (k)(*)1,262  1,082  
Cowen Healthcare Investments III LP (i)(*)Cowen Healthcare Investments III LP (i)(*)3,284  1,398  
TriArtisan PFC Partners LLC (l)(*)TriArtisan PFC Partners LLC (l)(*)540  909  
RCG Longview Equity Fund, LP (g) (*)795
 802
RCG Longview Equity Fund, LP (g) (*)779  835  
RCG Longview Debt Fund VI, LP (g) (*)2,003
 1,586
RCG Park Liberty GP Member LLC (g) (*)1,102
 1,023
HealthCare Royalty Partners II LP (a)(*)1,653
 1,037
RCGL PE MPA, LLC (g)(*)646
 618
RCG LPP2 PNW5 Co-Invest, L.P. (h)(*)12
 296
Other private investment (k)(*)19,900
 15,898
Other affiliated funds (l)(*)4,557
 3,663
$146,133
 $141,236
Difesa Partners, LP (h) (*)Difesa Partners, LP (h) (*)611  508  
Other private investment (n)(*)Other private investment (n)(*)298  4,448  
Other affiliated funds (o)(*)Other affiliated funds (o)(*)2,676  2,556  
$122,407  $114,504  
* These Portfolio Funds are affiliates of the Company.
The Company has no unfunded commitments regarding the Portfolio Funds held by the Company except as noted in Note 17.17.
(a)HealthCare Royalty Partners, L.P. and HealthCare Royalty Partners II, L.P. are private equity funds and therefore distributions will be made when cash flows are received from the underlying investments, typically on a quarterly basis.
(b)Eclipse Ventures Fund I, L.P. is a private equity fund which invests in early stage and growth hardware companies. Distributions will be made when the underlying investments are liquidated.
(c)Starboard Value and Opportunity Fund LP permits quarterly withdrawals upon 90 days' notice.
(d)Lagunita Biosciences, LLC, is a healthcare investment company that creates and grows early stage companies to commercialize impactful translational science that addresses significant clinical needs, is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.
(e)Starboard Leaders Fund LP does not permit withdrawals, but instead allows terminations with respect to capital commitments upon 30 days' prior written notice at any time following the first anniversary of an investor's initial capital contribution.

(a)HealthCare Royalty Partners, L.P. and HealthCare Royalty Partners II, L.P. are private equity funds and therefore distributions will be made when cash flows are received from the underlying investments, typically on a quarterly basis.
(b)Eclipse Ventures Fund I, L.P. is a private equity fund which invests in early stage and growth hardware companies. Distributions will be made when the underlying investments are liquidated.
(c)Starboard Value and Opportunity Fund permits quarterly withdrawals upon 90 days' notice.
(d)Lagunita Biosciences, LLC, is a healthcare investment company that creates and grows early stage companies to commercialize impactful translational science that addresses significant clinical needs, is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.
(e)Starboard Leaders Fund LP does not permit withdrawals, but instead allows terminations with respect to capital commitments upon 30 days' prior written notice at any time following the first anniversary of an investor's initial capital contribution.
(f)Formation8 Partners Fund I, L.P. is a private equity fund which invests in early stage and growth transformational information and energy technology companies. Distributions will be made when the underlying investments are liquidated.
(g)RCG Longview Debt Fund V, L.P. and RCG Longview Equity Fund, LP are real estate private equity structures. The timing of distributions depends on the nature of the underlying investments and therefore will be made either quarterly or when the underlying investments are liquidated.
(h)Difesa Partners, LP permits semi-annual withdrawals occurring on or after the anniversary of initial contribution upon 90 days written notice.
(i)Cowen Healthcare Investments II LP and Cowen Healthcare Investments III LP are private equity funds.  Distributions are made from the fund when cash flows or securities are received from the underlying investments. Investors do not have redemption rights.
(j)Eclipse SPV I, L.P. is a co-investment vehicle organized to invest in a private company focused on software-driven automation projects.  Distributions will be made when the underlying investments are liquidated.
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(k)TriArtisan ES Partners LLC is a co-investment vehicle organized to invest in a privately held nuclear services company. Distributions will be made when the underlying investment is liquidated.
(f)Formation8 Partners Fund I, L.P. is a private equity fund which invests in early stage and growth transformational information and energy technology companies. Distributions will be made when the underlying investments are liquidated.
(g)RCG Longview Debt Fund V, L.P., RCG Longview II LP, RCG Park Liberty GP Member LLC, RCG Longview Equity Fund, LP, RCGL PE MPA, LLC and RCG Longview Debt Fund VI, LP are real estate private equity structures. The timing of distributions depends on the nature of the underlying investments and therefore will be made either quarterly or when the underlying investments are liquidated.
(h)RCG LPP2 PNW5 Co-Invest, L.P. is a single purpose entity formed to participate in a joint venture which acquired five multi-unit residential rental properties located in the Pacific Northwest. RCG LPP2 PNW5 Co-Invest, L.P. is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.
(i)Cowen Healthcare Investments II LP and RCG IO Renergys Sarl are private equity funds.  Distributions are made from these funds when cash flows or securities are received from the underlying investments. Investors do not have redemption rights.
(j)Eclipse SPV I, L.P. is a co-investment vehicle organized to invest in a private company focused on software-driven automation projects.  Distributions will be made when the underlying investments are liquidated.
(k)Other private investment represents the Company's closed end investment in a Portfolio Fund that invests in a wireless broadband communication provider in Italy.
(l)The majority of these investment funds are affiliates of the Company or are managed by the Company and the investors can redeem from these funds as investments are liquidated.
(2)Equity method investments
(l)TriArtisan PFC Partners LLC is a co-investment vehicle organized to invest in a privately held casual dining restaurant chain. Distributions will be made when the underlying investment in liquidated.
(m)Ramius Merger Fund LLC is a private equity fund which permits monthly withdrawals on 45 days prior notice.
(n)Other private investment represents the Company's closed end investment in a Portfolio Fund that invests in a wireless broadband communication provider in Italy.
(o)The majority of these investment funds are affiliates of the Company or are managed by the Company and the investors can redeem from these funds as investments are liquidated.
(2)Carried interest
The Company applies an accounting policy election to recognize incentive income allocated to the Company under an equity ownership model in other investments in the accompanying condensed consolidated statements of financial condition (see Note 2m). Carried interest allocated to the Company from certain Portfolio Funds represents Cowen's general partner capital accounts from those funds. These balances are subject to change upon cash distributions, additional allocations or reallocations back to limited partners within the respective funds.
A portion of the Company's carried interest is granted to employees through profit sharing awards designed to more closely align compensation with the overall realized performance of the Company. These arrangements enable certain employees to earn compensation based on performance revenue earned by the Company are recorded within compensation payable in the accompanying condensed consolidated statements of financial condition. 
The carried interest as of June 30, 2020 and December 31, 2019, included the following:
As of June 30, 2020As of December 31, 2019
(dollars in thousands)
Cowen Healthcare Investments II LP (*)$51,656  $23,759  
Other private investment (a) (*)512  4,737  
RCG IO Renergys Sarl248  1,251  
Ramius Multi-Strategy Fund LP (*)—  613  
$52,416  $30,360  
(a)Other private investment represents the Company's closed end investment in a Portfolio Fund that invests in a wireless broadband communication provider in Italy.
* These carried interest balances are earned from affiliates of the Company.
(3)Equity method investments
Equity method investments include investments held by the Company in several operating companies whose operations primarily include the day to dayday-to-day management of a number of real estate funds, including the portfolio management and administrative services related to the acquisition, disposition, and active monitoring of the real estate funds' underlying debt and equity investments. The Company's ownership interests in these equity method investments range from 1%15% to 56%55%. The Company holds a majority of the outstanding ownership interest (i.e., more than 50%) in RCG Longview Partners II, LLC and 40% in Surf House Ocean Views Holdings, LLC (which is a joint venture in a real estate development project). The operating agreement that governs the management of day-to-day operations and affairs of these entities stipulates that certain decisions require support and approval from other members in addition to the support and approval of the Company. As a result, all operating decisions made in these entities requires the support of both the Company and an affirmative vote of a majority of the other managing members who are not affiliates of the Company. As the Company does not possess control over any of these entities, the presumption of consolidation has been overcome pursuant to current Accounting Standards and the Company accounts for these investments under the equity method of accounting. Also included in equity method investments are the investments in (a) HealthCare Royalty Partners General Partners and (b) Starboard Value (and certain related parties) which serves as an operating company whose operations primarily include the day to dayday-to-day management (including portfolio management) of several activist investment funds and related managed accounts. As part
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The Company completed an assessment of the recoverability of the Company's equity method investments and determined that the carrying value of the investment in operating companies,Surf House Ocean View Holdings, LLC exceeded the Company incurs certain expenses on behalfestimated fair value of its equity method investees. These expenses reflect direct and indirect costs associated with the respective business and are included in their respective line items in the accompanying condensed consolidated statements of operations. ForCompany's interest, which was other than temporary. Accordingly, an other than temporary impairment charge for the three months ended June 30, 2019 and 2018, the Company incurred $2.0 million and $2.1 million of these costs, respectively. For the six months ended June 30, 2019 and 2018, the Company incurred $4.72020 of $4.0 million and $4.0$11.3 million, respectively, was recognized to reduce the carrying value of these costs, respectively.the investment to fair value. The Company recorded no0 impairment charges in relation to its other equity method investments for the three and six months ended June 30, 20192020 and 2018.2019.
The Company elected to use the cumulative earnings approach for the distributions it receives from its equity method investments. Under the cumulative earnings approach, any distributions received up to the amount of cumulative earnings are treated as return on investment and classified in operating activities within the cash flows. Any excess distributions would be considered as return of investments and classified in investing activities.

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

The following table summarizes equity method investments held by the Company:
    
 As of June 30, 2019 As of December 31, 2018
 (dollars in thousands)
Surf House Ocean Views Holdings, LLC$8,493
 $7,589
Starboard Value LP27,472
 12,699
RCG Longview Debt Fund V Partners, LLC4,845
 11,000
RCG Longview Management, LLC4,407
 1,167
RCG Longview Debt Fund VI Partners LLC1,431
 1,254
HealthCare Royalty GP, LLC112
 149
HealthCare Royalty GP II, LLC280
 176
RCG Longview Debt Fund IV Management, LLC331
 331
HealthCare Royalty GP III, LLC2,016
 1,573
Triartisan ES Partners LLC1,026
 1,500
Triartisan PFC Partners LLC1,000
 —
RCG Kennedy House, LLC131
 131
RCG Longview Equity Management, LLC107
 114
RCG LPP II GP, LLC94
 272
RCG Park Liberty GP Member Manager, LLC1,248
 1,248
Other1,171
 968
 $54,164
 $40,171
For the period ended June 30, 2019, one equity method investment has met the significance criteria as defined under Regulation S-X Rule 4-08(g) of the SEC guidance ("Reg S-X 4-08(g)"). As such, the Company is presenting the following summarized financial information for the significant investee for the periods ended June 30, 2019 and December 31, 2018, and three and six months ended June 30, 2019 and 2018, and such information is as follows:
 As of June 30, 2019 As of December 31, 2018
 (dollars in thousands)  
Assets   
   Cash$532
 $37
   Performance & management fee receivable81,031
 16,594
   Investments4,211
 3,599
Liabilities—
 —
Equity$85,774
 $20,230
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
 (dollars in thousands)
Revenues$10,144
 $21,356
 $78,723
 $25,926
Expenses—
 —
 —
 —
Net realized and unrealized gains (losses)102
 191
 662
 242
Net Income$10,246
 $21,547
 $79,385
 $26,168
As of June 30, 2019 and December 31, 2018, the Company's share of losses in its equity method investment in RCG Longview Partners II, LLC has exceeded the carrying amount recorded in this investee. These amounts are included in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated statements of financial condition. RCG Longview Partners II, LLC, as general partner to a real estate fund, has reversed previously recorded incentive income allocations and has recorded a current clawback obligation to the limited partners in such fund. This obligation is due to a change in unrealized value of the real estate fund on which there have previously been distributed carried interest realizations; however, the settlement of a potential obligation is not due until the end of the life of the respective real estate fund. As the Company is obligated to return previous distributions it received from RCG Longview Partners II, LLC, it has continued to record its share of gains/losses in the investee including reflecting its share of the clawback obligation in the amount of $6.5 million and $6.5 million as of June 30, 2019 and December 31, 2018, respectively.

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

As of June 30, 2020As of December 31, 2019
(dollars in thousands)
Starboard Value LP$26,165  $24,292  
Surf House Ocean Views Holdings, LLC—  7,804  
HealthCare Royalty GP III, LLC2,208  2,230  
RCG Longview Debt Fund V Partners, LLC1,697  2,889  
RCG Longview Management, LLC247  583  
HealthCare Royalty GP, LLC131  108  
HealthCare Royalty GP II, LLC272  302  
RCG Longview Debt Fund IV Management, LLC331  331  
RCG Longview Equity Management, LLC105  105  
HCR Stafford Fund GP, LLC335  880  
Liberty Harbor North292  292  
Other1,057  1,042  
$32,840  $40,858  
The Company's income (loss) from equity method investments was $4.0a loss of $6.5 million and $8.0income of $4.0 million for the three months ended June 30, 2020 and 2019 and 2018, and $20.3$6.5 million and $11.9income of $20.3 million for the six months ended June 30, 20192020 and 2018,2019, respectively, and is included in net gains (losses) on securities, derivatives and other investments on the accompanying condensed consolidated statements of operations.
Regulation S-X Rule 10-01(b)(1)
For the periods ended June 30, 2020 and December 31, 2019 and for the six months periods ended June 30, 2020 and June 30, 2019, certain investments subject to Regulation S-X Rule 10-01(b)(1) of the SEC guidance held by the Company have met the significance criteria as defined thereunder. As such, the Company is required to present summarized financial information for these significant investees as of June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019, and such information is as follows:
Other equity method investmentsAs of June 30, 2020As of December 31, 2019
(dollars in thousands)
Assets$58,879  $95,825  
Liabilities—  82,482  
Equity$58,879  $13,343  

Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(dollars in thousands)
Revenues
$54,833  $10,130  $54,443  $78,710  
Expenses—  —  —  —  
Net realized and unrealized gains (losses)696  96  335  656  
Net income$55,529  $10,226  $54,778  $79,366  
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Securities sold, not yet purchased, at fair value
Securities sold, not yet purchased, at fair value represent obligations of the Company to deliver a specified security at a contracted price and, thereby, create a liability to purchase that security at prevailing prices. The Company's liability for securities to be delivered is measured at their fair value as of the date of the condensed consolidated financial statements. However, these transactions result in off-balance sheet risk, as the Company's ultimate cost to satisfy the delivery of securities sold, not yet purchased, at fair value may exceed the amount reflected in the accompanying condensed consolidated statements of financial condition. Substantially all equity securities and options are pledged to the clearing broker under terms which permit the clearing broker to sell or re-pledge the securities to others subject to certain limitations. As of June 30, 20192020 and December 31, 2018,2019, securities sold, not yet purchased, at fair value consisted of the following:
 As of June 30, 2020As of December 31, 2019
 (dollars in thousands)
Common stock$534,976  $425,448  
Corporate bonds894  5,933  
Government bonds1,500  1,950  
Preferred stock6,229  3,686  
Warrants and rights1,055  14,819  
$544,654  $451,836  
 As of June 30, 2019 As of December 31, 2018
 (dollars in thousands)
    
Common stock$409,034
 $194,305
Corporate bonds (a)2,581
 750
Government bonds (b)4,681
 —
Preferred stock2,088
 199
Warrants and rights20,200
 53
 $438,584
 $195,307
(a)As of June 30, 2019, the maturities ranged from October 2020 to May 2029 and interest rates ranged from 1.88% to 15.50%. As of December 31, 2018, the maturities ranged from October 2022 to January 2034 and interest rates ranged from 2.25% to 9.38%.
(b)As of June 30, 2019, the maturities ranged from October 2019 to March 2038 and interest rates ranged from 7.00% to 8.25%.
Securities sold under agreements to repurchase and securities lending and borrowing transactions
The following tables present the contractual gross and net securities borrowing and lending agreements and securities sold under agreements to repurchase and the related offsetting amount as of June 30, 20192020 and December 31, 2018.2019.
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition
Gross amounts recognized, net of allowanceGross amounts offset on the Condensed Consolidated Statements of Financial Condition (a)Net amounts included on the Condensed Consolidated Statements of Financial ConditionAdditional Amounts AvailableFinancial instrumentsCash Collateral pledged (b)Net amounts
(dollars in thousands)
As of June 30, 2020
Securities borrowed$1,553,385  $—  $1,553,385  $—  $1,481,707  $—  $71,678  
Securities loaned1,622,484  —  1,622,484  —  1,577,433  —  45,051  
As of December 31, 2019
Securities borrowed$754,441  $—  $754,441  $—  $751,913  $—  $2,528  
Securities loaned1,601,866  —  1,601,866  —  1,585,036  —  16,830  
Securities sold under agreements to repurchase23,244  —  23,244  —  27,384  —  (4,140) 
(a)Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
(b)Includes the amount of cash collateral held/posted.
34
       Gross amounts not offset on the Condensed Consolidated Statement of Financial Condition  
 Gross amounts recognized Gross amounts offset on the Condensed Consolidated Statements of Financial Condition (a) Net amounts included on the Condensed Consolidated Statements of Financial Condition Additional Amounts Available Financial instruments Cash Collateral pledged (b) Net amounts
 (dollars in thousands)
As of June 30, 2019             
Securities borrowed$1,390,366
 $—
 $1,390,366
 $—
 $1,343,751
 $—
 $46,615
Securities loaned1,492,986
 —
 1,492,986
 —
 1,445,362
 —
 47,624
              
As of December 31, 2018             
Securities borrowed$407,795
 $—
 $407,795
 $—
 $383,593
 $—
 $24,202
Securities loaned414,852
 —
 414,852
 —
 391,310
 —
 23,542
(a)Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
(b)Includes the amount of cash collateral held/posted.

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

The following tables present gross obligations for securities loaned transactionsand securities sold under agreements to repurchase by remaining contractual maturity and class of collateral pledged as of June 30, 20192020 and December 31, 2018:2019:
Open and OvernightUp to 30 days31 - 90 daysGreater than 90 daysTotal
Open and Overnight Up to 30 days 31 - 90 days Greater than 90 days Total(dollars in thousands)
(dollars in thousands)
As of June 30, 2019         
As of June 30, 2020As of June 30, 2020
Securities loaned         Securities loaned
Common stock$1,195,846
 $—
 $—
 $—
 $1,195,846
 Common stock$1,443,443  $—  $—  $—  $1,443,443  
Corporate bonds297,140
 —
 —
 —
 297,140
 Corporate bonds179,041  —  —  —  179,041  
As of December 31, 2018         
As of December 31, 2019As of December 31, 2019
Securities loaned         Securities loaned
Common stock$414,852
 $—
 $—
 $—
 $414,852
 Common stock$1,343,478  $—  $—  $—  $1,343,478  
Corporate bonds Corporate bonds258,388  —  —  —  $258,388  
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase—  —  23,244  —  $23,244  
Variable Interest Entities
The total assets and liabilities of the variable interest entities for which the Company has concluded that it holds a variable interest, but for which it is not the primary beneficiary, are $6.1 $6.5 billion and $331.8$634.8 million as of June 30, 20192020 and $5.1$6.1 billion and $157.6$617.5 million as of December 31, 2018,2019, respectively. The carrying value of the Company's exposure to loss for these variable interest entities as of June 30, 20192020 was $224.1$189.7 million, and as of December 31, 20182019 was $301.4$241.2 million, all of which is included in other investments, at fair value in the accompanying condensed consolidated statements of financial condition. The exposure to loss primarily relates to the Consolidated Funds' investment in their Unconsolidated Master Funds and the Company's investment in unconsolidated investment companies. Additionally, the Company’sCompany's maximum exposure to loss for the variable interest entities noted above as of June 30, 20192020 and December 31, 2018,2019, was $256.2$207.4 million and $332.4$261.7 million, respectively.  The maximum exposure to loss often differs from the carrying value of exposure to loss of the variable interests. The maximum exposure to loss is dependent on the nature of the variable interests in the VIEs and is limited to the notional amounts of certain commitments and guarantees.
b.Consolidated Funds
b. Consolidated Funds
Securities owned, at fair value
As of June 30, 20192020 and 2018,December 31, 2019, securities owned, at fair value, held by the Consolidated Funds consisted of the following:
As of June 30, 2020As of December 31, 2019
As of June 30, 2019 As of December 31, 2018
   
(dollars in thousands) (dollars in thousands)
Preferred stock$24,322
 $24,314
 Preferred stock$—  $4,393  
Common stock236,066
 95,565
 Common stock107,318  200,306  
Government bonds (a)—
 38,377
Corporate bonds (b)78,630
 24,098
Government bonds Government bonds—  161,607  
Corporate bonds Corporate bonds—  3,405  
Warrants and rights6,274
 5,279
 Warrants and rights5,858  5,567  
$345,292
 $187,633
$113,176  $375,278  
(a)As of December 31, 2018, maturities ranged from January 2019 to April 2019 and interest rates were 0%.
(b)As of June 30,2019, maturities ranged from May 2022 to November 2025 and interest rates ranged from 4.87% to 6.50%. As of December 31, 2018, maturities ranged from August 2020 to March 2026 and interest rates ranged from 5.88% to 7.63%.
Receivable on derivative contracts
As of June 30, 20192020 and December 31, 2018,2019, receivable on derivative contracts, at fair value, held by the Consolidated Funds are comprised of:

As of June 30, 2020As of December 31, 2019
(dollars in thousands)
Currency forwards$— $3,302 
Equity swaps— 927 
Options— 1,604 
$— $5,833 
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

 As of June 30, 2019 As of December 31, 2018
 (dollars in thousands)
Currency forwards$379
 $186
Equity swaps1,273
 2,477
Options2,802
 1,753
 $4,454
 $4,416
Payable for derivative contracts
As of June 30, 20192020 and December 31, 2018,2019, payable for derivative contracts, at fair value, held by the Consolidated Funds are comprised of:
 As of June 30, 2019 As of December 31, 2018
 (dollars in thousands)
Currency forwards$103
 $96
Equity swaps2,405
 713
Options108
 854
 $2,616
 $1,663
As of June 30, 2020As of December 31, 2019
(dollars in thousands)
Currency forwards$— $88 
Equity swaps— 3,931 
Options— 750 
$— $4,769 
Other investments, at fair value
Investments in Portfolio Funds, at fair value
As of June 30, 20192020 and December 31, 2018,2019, investments in Portfolio Funds, at fair value, included the following:
As of June 30, 2020As of December 31, 2019
As of June 30, 2019 As of December 31, 2018
(dollars in thousands)(dollars in thousands)
Investments of Enterprise LP$99,493
 $97,656
Investments of Enterprise LP$92,522  $99,153  
Investments of Merger Fund78,335
 88,739
Investments of Merger Fund—  76,616  
$177,828
 $186,395
$92,522  $175,769  
Consolidated portfolio fund investments of Enterprise LP 
On May 12, 2010, the Company announced its intention to close Enterprise Master. Enterprise LP operated under a “master-feeder”"master-feeder" structure up until January 1, 2019, when Enterprise Master distributed its capital to each feeder and was liquidated. As of June 30, 2020 and December 31, 2019, the consolidated investments in Portfolio Funds include Enterprise LP's investment in RCG Special Opportunities Fund, Ltd which is a portfolio fund that invests in a limited number of private equity investmentinvestments directly as well as through affiliated portfolio funds. As of December 31, 2018, the consolidated investments in Portfolio Funds included Enterprise LP's investment of $97.7 million in Enterprise Master. Prior to liquidation, strategies utilized by Enterprise Master included merger arbitrage and activist investing, investments in distressed securities, convertible hedging, capital structure arbitrage, equity market neutral, investments in private placements of convertible securities, proprietary mortgages, structured credit investments, investments in mortgage backed securities and other structured finance products, investments in real estate and real property interests, structured private placements and other relative value strategies. Enterprise Master had broad investment powers and maximum flexibility in seeking to achieve its investment objective. Enterprise Master was permitted to invest in equity securities, debt instruments, options, futures, swaps, credit default swaps and other derivatives. There are no unfunded commitments at Enterprise LP.
Consolidated portfolio fund investments of Merger Fund 
The Merger Fund, which was deconsolidated during the second quarter of 2020 (See Note 2b), operates under a “master-feeder”"master-feeder" structure, whereby Ramius Merger Master Ltd.'s ("Merger Master") shareholders are Merger Fund and Ramius Merger Fund Ltd. The consolidated investments in Portfolio Funds include Merger Fund's investment of $78.3 million and $88.7$76.6 million in Merger Master as of June 30, 2019 and December 31, 2018, respectively.2019. The Merger Master’sMaster's investment objective is to achieve consistent absolute returns while emphasizing the preservation of investor capital. The Merger Master seeks to achieve these objectives by taking a fundamental, research-driven approach to investing, primarily in the securities of issuers engaged in, or subject to, announced (or unannounced but otherwise anticipated) extraordinary corporate transactions, which may include, but are not limited to, mergers, acquisitions, leveraged buyouts, tender offers, hostile takeover bids, sale processes, exchange offers, and recapitalizations. Merger Master invests in the securities of one or more issuers engaged in or subject to such extraordinary corporate transactions. Merger Master typically

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

seeks to derive a profit by realizing the price differential, or “spread,”"spread," between the market price of securities purchased or sold short and the market price or value of securities realized in connection with the completion or termination of the extraordinary corporate transaction, or in connection with the adjustment of market prices in anticipation thereof, while seeking to minimize the market risk associated with the aforementioned investment activities. Merger Master will, depending on market conditions, generally focus the majority of its investment program on announced transactions. If the investment manager of Merger Master considers it necessary, it may either alone or as part of a group, also initiate shareholder actions seeking to maximize value. Such shareholder actions may include, but are not limited to, re-orienting management’smanagement's focus or initiating the sale of the company (or one or more of its divisions) to a third party. There are no unfunded commitments at Merger Fund.
Indirect Concentration of the Underlying Investments Held by Consolidated Funds
From time to time, either directly or indirectly through its investments in the Consolidated Funds, the Company may maintain exposure to a particular issue or issuer (both long and/or short) which may account for 5% or more of the Company's equity. Based on information that is available to the Company as of June 30, 20192020 and December 31, 2018,2019, the Company assessed whether or not its interests in an issuer for which the Company's pro-rata share exceeds 5% of the Company's equity. There was one indirect concentration that exceeded 5% of the Company's equity as of June 30, 20192020 and one at December 31, 2018.2019, respectively.
Through its investments in a Consolidated Fund and combined with direct Company investments, the Company maintained exposure to a particular investment which accounted for 5% or more of the Company's equity.
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
 Investment's percentage of the Company's equity
 Issuer Security Type Country Industry Percentage of Equity Market Value
           (dollars in thousands)
As of June 30, 2019Linkem Equity Italy Wireless Broadband 8.82% $72,036
As of December 31, 2018Linkem Equity Italy Wireless Broadband 8.36% $66,439
Investment's percentage of the Company's stockholders' equity
IssuerSecurity TypeCountryIndustryPercentage of Stockholders' EquityMarket Value
(dollars in thousands)
As of June 30, 2020LinkemEquity, loans and warrantsItalyWireless Broadband8.54 %$77,007  
As of December 31, 2019LinkemEquity, loans and warrantsItalyWireless Broadband9.53 %$77,142  
Underlying Investments of Unconsolidated Funds Held by Consolidated Funds
Enterprise Master and During the second quarter of 2020, the Company deconsolidated the Merger Fund due to a partial redemption of the Company’s direct portfolio fund investment in Merger Fund. The Company continues to hold a direct retained portfolio fund investment in the Merger Fund.
Merger Master
AtAs of December 31, 2018, Enterprise LP's investment in Enterprise Master represented Enterprise LP's proportionate share of Enterprise Master's net assets; as a result, the investment balances of Enterprise Master reflected below may exceed the net investment which Enterprise LP has recorded.2019, Merger Fund's investment in Merger Master representsrepresented Merger Fund's proportionate share of Merger Master's net assets; as a result, the investment balances of Merger Master reflected below may exceed the net investment which Merger Fund has recorded. The following tables present summarized investment information for the underlying investments and derivatives held by Enterprise Master and Merger Master as of June 30, 2019 and December 31, 2018:2019:
Securities owned by EnterpriseMerger Master at fair value
 As of December 31, 2018
 (dollars in thousands)
Common stock$469
 $469
Portfolio Funds, owned by Enterprise Master, at fair value
  As of December 31, 2018
 Strategy(dollars in thousands)
RCG Special Opportunities Fund, Ltd*Multi-Strategy$111,548
Other Private InvestmentsVarious846
  $112,394
*AffiliatesAs of the Company.December 31, 2019
(dollars in thousands)
Securities owned by Merger Master, at fair value
Common stock$76,531 
Warrants and rights748 
Corporate bonds2,074 
$79,353 
Securities sold, not yet purchased, by Merger Master, at fair value
Common stock$29,623 
Exchange traded funds38,527 
$68,150 





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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Merger Master
 As of June 30, 2019 As of December 31, 2018
 (dollars in thousands)
Securities owned by Merger Master, at fair value   
Common stock$324,742
 $162,811
Corporate bonds70,194
 116,488
 $394,936
 $279,299
    
Securities sold, not yet purchased, by Merger Master, at fair value   
Common stock$111,074
 $9,610
 $111,074
 $9,610
Receivable on derivative contracts, at fair value, owned by Merger Master
 As of June 30, 2019 As of December 31, 2018
    
Description(dollars in thousands)
Options$4,291
 $3,450
Equity swaps102
 5,320
 $4,393
 $8,770
As of December 31, 2019
Description(dollars in thousands)
Options$2,047 
Equity swaps406 
$2,453 
Payable for derivative contracts, at fair value, owned by Merger Master
As of December 31, 2019
Description(dollars in thousands)
Options$1,158 
Equity swaps268 
$1,426 






37
 As of June 30, 2019 As of December 31, 2018
Description(dollars in thousands)
Options$194
 $1,430
Currency forwards37,309
 270
Equity swaps347
 28
 $37,850
 $1,728
Table of Contents
Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
7. Fair Value Measurements for Operating Entities and Consolidated Funds
The following table presents the assets and liabilities that are measured at fair value on a recurring basis on the accompanying condensed consolidated statements of financial condition by caption and by level within the valuation hierarchy as of June 30, 20192020 and December 31, 2018:2019:

 Assets at Fair Value as of June 30, 2020
 Level 1Level 2Level 3Total
  (dollars in thousands) 
Operating Entities
    Securities owned, at fair value 
Government bonds$16,822  $—  $—  $16,822  
Preferred stock6,515  —  51,480  57,995  
Common stock790,412  417  14,816  805,645  
Convertible bonds—  —  5,081  5,081  
Corporate bonds—  16,549  758  17,307  
Trade claims—  —  7,587  7,587  
Term loan—  —  11,359  11,359  
Warrants and rights28,091  —  4,625  32,716  
    Receivable on derivative contracts, at fair value
Currency forwards—  19  —  19  
Swaps—  26,112  —  26,112  
Options62,378  —  337  62,715  
Consolidated Funds
    Securities owned, at fair value
Common stock4,367  —  102,951  107,318  
Warrants and rights—  —  5,858  5,858  
$908,585  $43,097  $204,852  $1,156,534  
Percentage of total assets measured at fair value on a recurring basis78.6 %3.7 %17.7 %
Portfolio Funds measured at net asset value (a)122,407  
Carried interest (a)52,416  
Consolidated Funds' Portfolio Funds measured at net asset value (a)92,522  
Equity method investments32,840  
Total investments$1,456,719  

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

 Liabilities at Fair Value as of June 30, 2020
 Level 1Level 2Level 3Total
 (dollars in thousands)
Operating Entities
     Securities sold, not yet purchased, at fair value    
Government bonds$—  $—  $1,500  $1,500  
Common stock534,976  —  —  534,976  
Corporate bonds—  94  800  894  
Preferred stock6,229  —  —  6,229  
Warrants and rights1,055  —  —  1,055  
    Payable for derivative contracts, at fair value
Currency forwards—  1,360  —  1,360  
Swaps—  7,322  —  7,322  
Options43,610  —  2,177  45,787  
Accounts payable, accrued expenses and other liabilities
          Contingent consideration liability (b)—  —  27,001  27,001  
$585,870  $8,776  $31,478  $626,124  
Percentage of total liabilities measured at fair value93.6 %1.4 %5.0 %
 Assets at Fair Value as of June 30, 2019
 Level 1 Level 2 Level 3 Total
   (dollars in thousands)  
Operating Entities       
    Securities owned, at fair value       
Government bonds$12,892
 $—
 $—
 $12,892
Preferred stock2,371
 —
 7,401
 9,772
Common stock811,041
 2,834
 11,006
 824,881
Convertible bonds—
 —
 6,318
 6,318
Corporate bonds—
 23,850
 775
 24,625
Trade claims—
 —
 10,488
 10,488
Term Loan—
 1,496
 —
 1,496
Warrants and rights9,279
 —
 595
 9,874
    Receivable on derivative contracts, at fair value      

Currency forwards—
 279
 —
 279
Swaps—
 9,440
 —
 9,440
Options22,501
 —
 —
 22,501
Consolidated Funds       
    Securities owned, at fair value       
Preferred stock—
 —
 24,322
 24,322
Common stock235,049
 —
 1,017
 236,066
Corporate bonds—
 78,630
 —
 78,630
Warrants and rights—
 —
 6,274
 6,274
   Receivable on derivative contracts, at fair value       
Currency forwards—
 379
 —
 379
Equity swaps—
 1,273
 —
 1,273
Options2,802
 —
 —
 2,802
 $1,095,935
 $118,181
 $68,196
 $1,282,312
Percentage of total assets measured at fair value on a recurring basis85.5% 9.2% 5.3%  
Portfolio Funds measured at net asset value (a)      146,133
Consolidated Funds' Portfolio Funds measured at net asset value (a)      177,828
Equity method investments      54,164
Total investments      $1,660,437

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

 Liabilities at Fair Value as of June 30, 2019
 Level 1 Level 2 Level 3 Total
 (dollars in thousands)
Operating Entities       
     Securities sold, not yet purchased, at fair value       
Government bonds$—
 $4,681
 $—
 $4,681
Common stock409,034
 —
 —
 409,034
Corporate bonds—
 2,581
 —
 2,581
Preferred stock2,088
 —
 —
 2,088
Warrants and rights20,200
 —
 —
 20,200
    Payable for derivative contracts, at fair value       
Futures434
 —
 —
 434
Currency forwards—
 1
 —
 1
Swaps—
 2,231
 —
 2,231
Options17,000
 —
 2,779
 19,779
Accounts payable, accrued expenses and other liabilities

 

 

  
          Contingent consideration liability (b)—
 —
 29,536
 29,536
Consolidated Funds       
   Payable for derivative contracts, at fair value       
Currency forwards—
 103
 —
 103
Options108
 —
 —
 108
Equity swaps—
 2,405
 —
 2,405
 $448,864
 $12,002
 $32,315
 $493,181
Percentage of total liabilities measured at fair value91.0% 2.4% 6.6%  
(a) In accordance with US GAAP, certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedientexpedient. Carried interest in portfolio funds have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the condensed consolidated statement of financial condition.
(b) In accordance with the terms of the purchase agreements for acquisitions that closed during the second quarter of 2016 and the first quarter of 2019, the Company is required to pay to the sellers a portion of future net income and/or revenues of the acquired businesses, if certain targets are achieved through the periods ended December 31, 2019 and December 31, 2023, respectively. For the acquisition that closed during 2016, the Company estimated the contingent consideration liability using the income approach (discounted cash flow method) which requires the Company to make estimates and assumptions regarding the future cash flows and profits. For the acquisition that closed during 2019, the Company estimated the contingent consideration liability using the present value of the monte carloMonte Carlo simulated revenue. Changes in these estimates and assumptions could have a significant impact on the amounts recognized. The undiscounted amounts as of June 30, 20192020 can range from $1.6$1.1 million to $40.0$35.1 million.



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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

 Assets at Fair Value as of December 31, 2019
 Level 1Level 2Level 3Total
  (dollars in thousands) 
Operating Entities
    Securities owned, at fair value    
Government bonds$15,916  $—  $—  $15,916  
Preferred stock4,821  —  7,835  12,656  
Common stock1,527,769  1,249  17,466  1,546,484  
Convertible bonds—  —  2,500  2,500  
Corporate bonds—  23,079  2,421  25,500  
Trade claims—  —  7,320  7,320  
Term loan—  1,067  —  1,067  
Warrants and rights21,515  —  594  22,109  
    Receivable on derivative contracts, at fair value
Swaps—  2,911  —  2,911  
Options59,730  —  336  60,066  
Consolidated Funds
    Securities owned, at fair value
Government bonds161,607  —  —  161,607  
Preferred stock—  —  4,393  4,393  
Common stock200,306  —  —  200,306  
Corporate bonds—  3,405  —  3,405  
Warrants and rights—  —  5,567  5,567  
    Receivable on derivative contracts, at fair value
Currency forwards—  3,302  —  3,302  
Equity swaps—  927  —  927  
Options1,604  —  —  1,604  
$1,993,268  $35,940  $48,432  $2,077,640  
Percentage of total assets measured at fair value on a recurring basis95.9 %1.7 %2.3 %
Portfolio Funds measured at net asset value (a)114,504  
Carried interest (a)30,360  
Consolidated Funds' Portfolio Funds measured at net asset value (a)175,769  
Equity method investments40,858  
Total investments$2,439,131  

40
 Assets at Fair Value as of December 31, 2018
 Level 1 Level 2 Level 3 Total
   (dollars in thousands)  
Operating Entities       
    Securities owned, at fair value       
Government bonds$13,398
 $—
 $—
 $13,398
Preferred stock449
 —
 5,168
 5,617
Common stock459,601
 2,848
 9,850
 472,299
Convertible bonds—
 —
 3,000
 3,000
Corporate bonds—
 13,041
 —
 13,041
Trade claims—
 —
 5,543
 5,543
Warrants and rights6,324
 —
 1,666
 7,990
    Receivable on derivative contracts, at fair value       
Futures334
 —
 —
 334
Currency forwards—
 1
 —
 1
Swaps—
 917
 —
 917
Options23,130
 —
 —
 23,130
Pay to hold—
 743
 —
 743
Consolidated Funds       
    Securities owned, at fair value       
Government bonds38,377
 —
 —
 38,377
Preferred stock—
 —
 24,314
 24,314
Common stock95,471
 —
 94
 95,565
Corporate bonds—
 24,098
 —
 24,098
Warrants and rights—
 —
 5,279
 5,279
    Receivable on derivative contracts, at fair value       
Currency forwards—
 186
 —
 186
Equity swaps—
 2,477
 —
 2,477
Options1,753
 —
 —
 1,753
 $638,837
 $44,311
 $54,914
 $738,062
Percentage of total assets measured at fair value on a recurring basis86.6% 6.0% 7.4%  
Portfolio Funds measured at net asset value (a)      141,236
Consolidated Funds' Portfolio Funds measured at net asset value (a)      186,395
Equity method investments      40,171
Total investments      $1,105,864

43

Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Liabilities at Fair Value as of December 31, 2018 Liabilities at Fair Value as of December 31, 2019
Level 1 Level 2 Level 3 Total Level 1Level 2Level 3Total
(dollars in thousands) (dollars in thousands)
Operating Entities       Operating Entities
Securities sold, not yet purchased, at fair value       Securities sold, not yet purchased, at fair value    
US Government securitiesUS Government securities$—  $—  $1,950  $1,950  
Common stock$194,305
 $—
 $—
 $194,305
Common stock425,448  —  —  425,448  
Corporate bonds—
 750
 —
 750
Corporate bonds—  4,933  1,000  5,933  
Preferred stock199
 —
 —
 199
Preferred stock3,686  —  —  3,686  
Warrants and rights53
 —
 —
 53
Warrants and rights14,819  —  —  14,819  
Payable for derivative contracts, at fair value       Payable for derivative contracts, at fair value
FuturesFutures217  —  —  217  
Currency forwards—
 709
 —
 709
Currency forwards—  851  —  851  
Swaps—
 2,162
 —
 2,162
Swaps—  23,169  —  23,169  
Options11,115
 —
 2,096
 13,211
Options33,604  —  2,920  36,524  
Accounts payable, accrued expenses and other liabilities       Accounts payable, accrued expenses and other liabilities
Contingent consideration liability (b)—
 —
 3,070
 3,070
 Contingent consideration liability (b)—  —  30,896  30,896  
Consolidated Funds       Consolidated Funds
Payable for derivative contracts, at fair value        Payable for derivative contracts, at fair value
Currency forwards—
 96
 —
 96
Currency forwards—  88  —  88  
Options854
 —
 —
 854
Options750  —  —  750  
Equity swaps—
 713
 —
 713
Equity swaps—  3,931  —  3,931  
$206,526
 $4,430
 $5,166
 $216,122
$478,524  $32,972  $36,766  $548,262  
Percentage of total liabilities measured at fair value95.6% 2.0% 2.4%  Percentage of total liabilities measured at fair value87.3 %6.0 %6.7 %
(a) In accordance with US GAAP, certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedientexpedient. Carried interest in portfolio funds have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the condensed consolidated statement of financial condition.
(b) In accordance with the terms of the purchase agreements for the acquisitionacquisitions that closed during the second quarter of 2016 and the first quarter of 2019, the Company is required to pay to the sellers a portion of future net income and/or revenues of the acquired business,businesses, if certain targets are achieved through the periods ended December 2020. The31, 2019 and December 31, 2023, respectively. For the acquisition that closed during 2016, the Company estimated the contingent consideration liability using the income approach (discounted cash flow method) which requires the Company to make estimates and assumptions regarding the future cash flows and profits. For the acquisition that closed during 2019, the Company estimated the contingent consideration liability using the present value of the Monte Carlo simulated revenue. Changes in these estimates and assumptions could have a significant impact on the amounts recognized. The undiscounted amounts as of December 31, 20182019 can range from $2.8$1.3 million to $3.4$40.0 million.
The following table includes a roll forward of the amounts for the three and six months ended June 30, 20192020 and 20182019 for financial instruments classified within level 3. The classification of a financial instrument within level 3 is based upon the significance of the unobservable inputs to the overall fair value measurement.

44
41

Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Three Months Ended June 30, 2020
Balance at March 31, 2020Transfers inTransfers outPurchases/(covers)(Sales)/shortsRealized and Unrealized gains/lossesBalance at June 30, 2020Change in unrealized gains/losses relating to instruments still held (1)
(dollars in thousands)
Operating Entities
Preferred stock$8,200  $45,530  (c)$—  $—  $(2,100) $(150) $51,480  $2,411  
Common stock17,510  —  (8) (a)—  (3,163) 477  14,816  (328) 
Convertible bonds2,786  —  —  2,295  —  —  5,081  —  
Corporate bonds2,812  —  —  98  (1,938) (214) 758  (214) 
Options, asset332  —  —  —  —  5  337  5  
Options, liability1,802  —  —  —  —  375  2,177  375  
Term Loan—  11,149  (c)—  —  —  210  11,359  210  
Warrants and rights598  3,615  (a)(c)—  —  —  412  4,625  412  
Trade claims9,648  —  —  575  (2,215) (421) 7,587  (441) 
Corporate bond, liability800  —  —  —  —  —  800  —  
Government bonds, liability1,500  —  —  —  —  —  1,500  —  
Contingent consideration liability28,658  —  —  —  (4,253) 2,596  27,001  2,596  
Consolidated Funds
Preferred stock4,393  —  (4,000) (d)—  —  (393) —  —  
Common stock100,000  4,000  (d)—  —  —  (1,049) 102,951  (1,049) 
Warrants and rights5,611  —  —  —  —  247  5,858  247  

Three Months Ended June 30, 2019
Balance at March 31, 2019Transfers inTransfers outPurchases/(covers)(Sales)/shortsRealized and Unrealized gains/lossesBalance at June 30, 2019Change in unrealized gains/losses relating to instruments still held (1)
(dollars in thousands)
Operating Entities
Preferred stock$7,157  $—  $—  $1,243  $(1,000) $1  $7,401  $1  
Common stock4,951  —  —  12,896  (6,519) (322) 11,006  (325) 
Convertible bonds5,000  —  (2,025) (b)9,971  (6,692) 64  6,318  64  
Corporate bonds261  —  —  514  —  —  775  —  
Options, liability1,733  —  —  —  —  1,046  2,779  1,046  
Warrants and rights454  —  —  —  141  595  141  
Trade claims5,487  —  —  5,095  (96) 2  10,488  —  
Contingent consideration liability29,536  —  —  —  —  —  29,536  —  
Consolidated Funds
Preferred stock24,322  —  —  —  —  —  24,322  —  
Common stock1,017  —  —  —  —  —  1,017  —  
Warrants and rights4,708  —  —  —  —  1,566  6,274  1,566  

42
                
 Three Months Ended June 30, 2019
 Balance at March 31, 2019 Transfers in Transfers out Purchases/(covers) (Sales)/shorts Realized and Unrealized gains/losses Balance at June 30, 2019 Change in unrealized gains/losses relating to instruments still held (1)
 (dollars in thousands)
Operating Entities               
Preferred stock$7,157
 $—
 $—
 $1,243
 $(1,000) $1
 $7,401
 $1
Common stock4,951
 —
 —
 12,896
 (6,519) (322) 11,006
 (325)
Convertible bonds5,000
 

 (2,025)(b)9,971
 (6,692) 64
 6,318
 64
Corporate bond261
 —
 —
 514
 —
 —
 775
 —
Options, liability1,733
 —
 —
 —
 —
 1,046
 2,779
 1,046
Warrants and rights454
 —
 —
 —
 —
 141
 595
 141
Trade claims5,487
 —
 —
 5,095
 (96) 2
 10,488
 —
Contingent consideration liability29,536
 —
 —
 —
 —
 —
 29,536
 —
Consolidated Funds               
Preferred stock24,322
 —
 —
 —
 —
 —
 24,322
 —
Common stock1,017
 —
 —
 —
 —
 —
 1,017
 —
Warrants and rights4,708
 —
 —
 —
 —
 1,566
 6,274
 1,566
                
 Three Months Ended June 30, 2018
 Balance at March 31, 2018 Transfers in Transfers out Purchases/(covers) (Sales)/shorts Realized and Unrealized gains/losses Balance at June 30, 2018 Change in unrealized gains/losses relating to instruments still held (1)
 (dollars in thousands)
Operating Entities               
Preferred stock$8,817
 $—
 $—
 $—
 $(217) $(1,178) $7,422
 $(1,817)
Common stock7,400
 —
 —
 221
 (1,200) (572) 5,849
 (547)
Options, liability21,395
 —
 (28,973)(c)—
 (259) 8,138
 301
 8,138
Warrants and rights1,702
 —
 (374)(b)—
 (143) 71
 1,256
 (1,176)
Trade claims5,955
 —
 —
 —
 (334) 78
 5,699
 14
Lehman claim312
 —
 —
 —
 —
 (17) 295
 (18)
Contingent consideration liability3,440
 —
 —
 —
 (570) —
 2,870
 —
Consolidated Funds               
Preferred stock11,893
 —
 —
 3,066
 —
 9,355
 24,314
 9,356
Common stock50
 —
 —
 —
 —
 44
 94
 43
Warrants and rights5,254
 —
 —
 (1,340) —
 824
 4,738
 (516)

45

Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Six Months Ended June 30, 2020
Balance at December 31, 2019Transfers inTransfers outPurchases/(covers)(Sales)/shortsRealized and Unrealized gains/lossesBalance at June 30, 2020Change in unrealized gains/losses relating to instruments still held (1)
(dollars in thousands)
Operating Entities
Preferred stock$7,835  $45,530  (c)$—  $365  $(2,100) $(150) $51,480  $2,411  
Common stock17,466  —  (8) (a)1,798  (3,755) (685) 14,816  (1,585) 
Convertible bonds2,500  —  —  2,581  —  —  5,081  —  
Corporate bond2,421  —  —  520  (1,962) (221) 758  (202) 
Options, asset336  —  —  —  —  1  337  1  
Options, liability2,920  —  —  —  —  (743) 2,177  (743) 
Term loan—  11,149  (c)—  —  —  210  11,359  210  
Warrants and rights594  3,615  (a)(c)—  —  —  416  4,625  416  
Trade claims7,320  1,044  (a)—  1,974  (2,215) (536) 7,587  (556) 
Corporate bond, liability1,000  —  —  —  —  (200) 800  (200) 
Government bonds, liability1,950  —  —  —  —  (450) 1,500  (450) 
Contingent consideration liability30,896  —  —  —  (5,653) 1,758  27,001  1,758  
Consolidated Funds
Preferred stock4,393  —  (4,000) (d)—  —  (393) —  —  
Common stock—  4,000  (d)—  100,000  —  (1,049) 102,951  (1,049) 
Warrants and rights$5,567  $—  $—  $—  $—  $291  $5,858  $291  

 Six Months Ended June 30, 2019
 Balance at December 31, 2018 Transfers in Transfers out Purchases/(covers) (Sales)/shorts Realized and Unrealized gains/losses Balance at June 30, 2019 Change in unrealized gains/losses relating to instruments still held (1)
 (dollars in thousands)  
Operating Entities               
Preferred stock$5,168
 $—
 $—
 $3,243
 $(1,000) $(10) $7,401
 $(10)
Common stock9,850
 —
 —
 14,158
 (12,472) (530) 11,006
 (332)
Convertible bonds3,000
 —
 (2,025)(b)14,971
 (9,692) 64
 6,318
 64
Corporate bond—
 —
 —
 775
 —
 —
 775
 —
Options, liability2,096
 —
 —
 —
 (4) 687
 2,779
 687
Warrants and rights1,666
 —
 —
 —
 (116) (955) 595
 32
Trade claims5,543
 —
 —
 5,095
 (152) 2
 10,488
 —
Contingent consideration liability3,070
 —
 —
 27,700
 (1,234) —
 29,536
 —
Consolidated Funds               
Preferred stock24,314
 —
 —

—
 —
 8
 24,322
 8
Common stock94
 —
 —
 407
 —
 516
 1,017
 516
Warrants and rights5,279
 —
 —
 —
 (1,088) 2,083
 6,274
 995
Six Months Ended June 30, 2018Six Months Ended June 30, 2019
Balance at December 31, 2017 Transfers in Transfers out Purchases/(covers) (Sales)/shorts Realized and Unrealized gains/losses Balance at June 30, 2018 Change in unrealized gains/losses relating to instruments still held (1)Balance at December 31, 2018Transfers inTransfers outPurchases/(covers)(Sales)/shortsRealized and Unrealized gains/lossesBalance at June 30, 2019Change in unrealized gains/losses relating to instruments still held (1)
(dollars in thousands)(dollars in thousands)
Operating Entities               Operating Entities
Preferred stock$8,115
 $—
 $—
 $1,415
 $(695) $(1,413) $7,422
 $(1,331)Preferred stock$5,168  $—  $—  $3,243  $(1,000) $(10) $7,401  $(10) 
Common stock7,570
 —
 —
 531
 (1,333) (919) 5,849
 (959)Common stock9,850  —  —  14,158  (12,472) (530) 11,006  (332) 
Convertible bonds282
 —
 —
 —
 (307) 25
 —
 —
Convertible bonds3,000  —  (2,025) (b)14,971  (9,692) 64  6,318  64  
Options, asset1,455
 —
 —
 —
 (1,455) —
 —
 —
Corporate bondCorporate bond—  —  —  775  —  —  775  —  
Options, liability22,401
 —
 (28,973)(c)—
 (259) 7,132
 301
 7,132
Options, liability2,096  —  —  —  (4) 687  2,779  687  
Warrants and rights2,517
 —
 (374)(b)—
 (143) (744) 1,256
 (666)Warrants and rights1,666  —  —  —  (116) (955) 595  32  
Trade claim5,950
 —
 —
 —
 (334) 83
 5,699
 20
Trade claim5,543  —  —  5,095  (152) 2  10,488  —  
Lehman claim301
 —
 —
 —
 —
 (6) 295
 (6)
Contingent consideration liability3,440
 —
 —
 —
 (570) —
 2,870
 —
Contingent consideration liability3,070  —  —  27,700  (1,234) —  29,536  —  
Consolidated Funds               Consolidated Funds
Preferred stock50,445
 —
 (38,552)(a)3,066
 —
 9,355
 24,314
 9,356
Preferred stock24,314  —  —  —  —  8  24,322  8  
Common stock50
 —
 —
 —
 —
 44
 94
 43
Common stock94  —  —  407  —  516  1,017  516  
Warrants and rights3,568
 —
 (20)(a)(1,340) —
 2,530
 4,738
 1,190
Warrants and rights$5,279  $—  $—  $—  $(1,088) $2,083  $6,274  $995  
(1) Unrealized gains/losses are reported in other income (loss) in the accompanying condensed consolidated statements of operations.
(a) The Company deconsolidatedsecurity stopped trading on an investment fund.open market.
(b) The investments were converted to common stock.
(c) On June 26, 2018, theThe Company received shareholder approvalconsolidated an operating entity which allows the Companyholds preferred stock, loans and warrants.
(d) The investment was involved in a reverse merger and preferred stock was converted to settle its
convertible note (see Note 18) entirely in class A common shares. Upon receiving shareholder approval, the
Company reclassified the embedded conversion option, associated with the convertible debt, to equity. (see Note 19).
All realized and unrealized gains (losses) in the table above are reflected in other income (loss) in the accompanying condensed consolidated statements of operations.
Certain assets and liabilities are measured at fair value on a nonrecurring basis and therefore are not included in the tables above.
The Company recognizes all transfers and the related unrealized gain (loss) at the beginning of the reporting period.

4643

Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Transfers between level 1 and 2 generally relate to whether the principal market for the security becomes active or inactive. Transfers between level 2 and 3 generally relate to whether significant relevant observable inputs are available for the fair value measurements or due to change in liquidity restrictions for the investments.
During the six months ended June 30, 2019 and 2018, there were no transfers between level 1 and level 2 assets and liabilities.
The following table includes quantitative information as of June 30, 20192020 and December 31, 20182019 for financial instruments classified within level 3. The table below quantifies information about the significant unobservable inputs used in the fair value measurement of the Company's level 3 financial instruments.
Quantitative Information about Level 3 Fair Value Measurements
Fair Value
June 30, 2020		Valuation TechniquesUnobservable InputsRangeWeighted Average
Level 3 Assets(dollars in thousands)
Common and preferred stocks$57,410  
Discounted cash flows
Guideline companies
Discount rate
Market Multiples
10% - 12%
6.25x - 6.75x
11%
6.5x
Options337  Discounted cash flows
Guideline companies
Discount rate
Market Multiples
10% - 12%
6.25x - 6.75x
11%
6.5x
Trade claims2,377  Discounted cash flowsDiscount rate20%20%
Warrants and rights10,464  
Discounted cash flows
Guideline companies
Discount rate
Market Multiples
4% - 11%
6.25x - 6.75x

6.9%
6.5x
Corporate, convertible bonds and term loan11,669  Discounted cash flows
Guideline companies
Recovery
Discount rate
Market Multiples
Probability of recovery
11% - 20%
6.25x - 6.75x
1% to 100%
11%
6.5x
97%
Other level 3 assets (a)122,595  
Total level 3 assets$204,852  
Level 3 Liabilities
Options2,177  Option pricing modelsVolatility35%35%
Contingent consideration liability27,001  Discounted cash flows Monte Carlo simulation
Discount rate
Volatility
15%-22%
22%
15%
22%
Other level 3 liabilities (a)2,300  
Total level 3 liabilities$31,478  

Quantitative Information about Level 3 Fair Value Measurements
Fair Value at December 31, 2019Valuation TechniquesUnobservable InputsRangeWeighted Average
Level 3 Assets(dollars in thousands)
Common and preferred stocks$10,876  Discounted cash flows / Guideline companies
Discount rate
Market Multiples
8% - 11.25%
6.5x - 7x
10.4%
6.75x
Trade claims24  Discounted cash flowsDiscount rate20%20%
Warrants and rights6,162  Model based Discounted cash flows
Volatility
Discount rate
30%
6% to 7%
—%
6.1%
Options336  Option pricing models
Discount rate
Market Multiples
9.75% - 11.25%
6.5x - 7x
10.5%
6.75x
Corporate and convertible bonds311  Discounted cash flows
Recovery
Discount rate
Probability of recovery
20%
1% to 3%
20%
2.3%
Other level 3 assets (a)30,723  
Total level 3 assets$48,432  
Level 3 Liabilities
Options2,920  Option pricing modelsVolatility35% to 40%35%
Contingent consideration liability30,896  Discounted cash flows
Discount rate
Volatility
15%-22%
17%
15%
17%
Other level 3 liabilities (a)2,950  
Total level 3 liabilities$36,766  
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
 Quantitative Information about Level 3 Fair Value Measurements
 
Fair Value at
June 30, 2019
 Valuation Techniques Unobservable Inputs Range
Level 3 Assets(dollars in thousands)      
Common and preferred stocks$325
 Discounted cash flows
Discount rate
8%
Trade claims27
 Discounted cash flows Discount rate 20%
Warrants and rights6,865
 Model based Discounted cash flows 
Volatility
Discount rate
 
30%
6% to 7%
Corporate and convertible bonds514
 
Discounted cash flows
Recovery
 
Discount rate
Probability of recovery
 20%
15% to 70%
Other level 3 assets (a)60,465
      
Total level 3 assets$68,196
      
Level 3 Liabilities       
Options2,779
 Option pricing models Volatility 35% to 40%
Contingent consideration liability29,536
 Discounted cash flows Monte Carlo simulation Discount rate Volatility 14%-23% 14%-20%
Total level 3 liabilities$32,315
      
(a)The quantitative disclosures exclude financial instruments for which the determination of fair value is based on prices from recent transactions.
 Quantitative Information about Level 3 Fair Value Measurements
 Fair Value at
December 31, 2018		 Valuation Techniques Unobservable Inputs Range
Level 3 Assets(dollars in thousands)      
Common and preferred stocks$4,323
 Guideline companies/Discounted cash flows Discount rate
Market multiples		 8%-14%
6.5x to 7x
Trade claims25
 Discounted cash flows Discount rate 20%
Warrants and rights1,666
 Model based Discounted cash flows Discount rate 7% to 9%
Other level 3 assets (a)48,900
      
Total level 3 assets$54,914
      
Level 3 Liabilities       
Options2,096
 Option pricing models Volatility 35% to 40%
Contingent consideration liability3,070
 Discounted cash flows Projected cash flow and discount rate 23%
Total level 3 liabilities$5,166
      
(a)The quantitative disclosures exclude financial instruments for which the determination of fair value is based on prices from recent transactions.
The Company has established valuation policies and procedures and an internal control infrastructure over its fair value measurement of financial instruments which includes ongoing oversight by the valuation committee as well as periodic audits performed by the Company's internal audit group. The valuation committee is comprised of senior management, including non-investment professionals, who are responsible for overseeing and monitoring the pricing of the Company's investments, including the review of the results of the independent price verification process, approval of new trading asset classes and use of applicable pricing models and approaches.
The US GAAP fair value leveling hierarchy is designated and monitored on an ongoing basis. In determining the designation, the Company takes into consideration a number of factors including the observability of inputs, liquidity of the

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investment and the significance of a particular input to the fair value measurement. Designations, models, pricing vendors, third party valuation providers and inputs used to derive fair market value are subject to review by the valuation committee and the internal audit group. The Company reviews its valuation policy guidelines on an ongoing basis and may adjust them in light of improved valuation metrics and models, the availability of reliable inputs and information, and prevailing market conditions. The Company reviews a daily profit and loss report, as well as other periodic reports, and analyzes material changes from period-to-periodperiod to period in the valuation of its investments as part of its control procedures. The Company also performs back testing on a regular basis by comparing prices observed in executed transactions to previous valuations.
The fair market value for level 3 securities may be highly sensitive to the use of industry standardindustry-standard models, unobservable inputs and subjective assumptions. The degree of fair market value sensitivity is also contingent upon the subjective weight given to specific inputs and valuation metrics. The Company holds various equity and debt instruments where different weight may be applied to industry standardindustry-standard models representing standard valuation metrics such as: discounted cash flows, market multiples, comparative transactions, capital rates, recovery rates and timing, and bid levels. Generally, changes in the weights ascribed to the various valuation metrics and the significant unobservable inputs in isolation may result in significantly lower or higher fair value measurements. Volatility levels for warrants and options are not readily observable and subject to interpretation. Changes in capital rates, discount rates and replacement costs could significantly increase or decrease the valuation of the real estate investments. The interrelationship between unobservable inputs may vary significantly amongst level 3 securities as they are generally highly idiosyncratic. Significant increases (decreases) in any of those inputs in isolation can result in a significantly lower (higher) fair value measurement.
Other financial assets and liabilities
The following table presents the carrying values and fair values, at June 30, 20192020 and December 31, 2018,2019, of financial assets and liabilities and information on their classification within the fair value hierarchy which are not measured at fair value on a recurring basis. For additional information regarding the financial instruments within the scope of this disclosure, and the methods and significant assumptions used to estimate their fair value see(see Note 2.2e).
 June 30, 2020December 31, 2019Fair Value Hierarchy
 Carrying AmountFair ValueCarrying AmountFair Value
  (dollars in thousands) 
Financial Assets 
Operating companies
Cash and cash equivalents$340,075  $340,075  $301,123  $301,123  Level 1
Cash collateral pledged7,511  7,511  6,563  6,563  Level 2
Segregated cash177,526  177,526  107,328  107,328  Level 1
Securities borrowed1,553,385  1,553,385  754,441  754,441  Level 2
Loans receivable37,503  37,503  (d)42,830  42,830  (d)Level 3
Consolidated Funds
Cash and cash equivalents118  118  30,874  30,874  Level 1
Financial Liabilities
Securities sold under agreements to repurchase—  —  23,244  27,384  Level 2
Securities loaned1,622,484  1,622,484  1,601,866  1,601,866  Level 2
Convertible debt121,195  (a)146,987  (b)118,688  (a)148,786  (b)Level 2
Notes payable and other debt314,329  (e)323,691  (c)345,451  (e)372,591  (c)Level 2
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
 June 30, 2019 December 31, 2018 Fair Value Hierarchy
 Carrying Amount Fair Value Carrying Amount Fair Value 
   (dollars in thousands)    
Financial Assets         
Operating companies         
Cash and cash equivalents$182,400
 $182,400
 $259,148
 $259,148
 Level 1
Cash collateral pledged7,097
 7,097
 6,318
 6,318
 Level 2
Segregated cash139,070
 139,070
 176,647
 176,647
 Level 1
Securities borrowed1,390,366
 1,343,751
 407,795
 383,593
 Level 2
Loans receivable36,190
 36,190
(d)36,021
 36,021
(d)Level 3
Consolidated Funds         
Cash and cash equivalents3,357
 3,357
 38,118
 38,118
 Level 1
Financial Liabilities  

      
Securities loaned1,492,986
 1,445,362
 414,852
 391,310
 Level 2
Convertible debt116,273
(a)157,386
(b)134,489
(a)157,433
(b)Level 2
Notes payable and other debt315,290
 330,848
(c)262,965
 258,546
(c)Level 2
(a)The carrying amount of the convertible debt includes an unamortized discount of $12.6 million and $14.9 million as of June 30, 2020 and December 31, 2019, respectively.
(a)The carrying amount of the convertible debt includes an unamortized discount of $17.1 million and $19.5 million as of June 30, 2019 and December 31, 2018, respectively.
(b)The convertible debt includes the conversion option and is based on the last broker quote available.
(c)Notes payable and other debt are based on the last broker quote available.
(d)The fair market value of level 3 loans is calculated using discounted cash flows.
(b)The convertible debt includes the conversion option and is based on the last broker quote available.
(c)Notes payable and other debt are based on the last broker quote available.
(d)The fair market value of level 3 loans is calculated using discounted cash flows where applicable.
(e)The carrying amount of the notes payable and other debt includes an unamortized premium of $0.4 million and $0.5 million as of June 30, 2020 and December 31, 2019, respectively.
8. Deposits with Clearing Organizations, Brokers and Banks
Under the terms of agreements between the Company and some of its clearing organizations, brokers and banks, balances owed are collateralized by certain of the Company’sCompany's cash and securities balances. As of June 30, 20192020 and December 31, 2018,2019, the Company had a total of $97.7$103.8 million and $89.4$91.8 million, respectively, in deposit accounts with clearing organizations, brokers and banks that could be used as collateral to offset losses incurred by the clearing organizations, brokers and banks, on behalf of the Company’sCompany's activities, if such losses were to occur.

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

9. Receivable From and Payable toTo Brokers, Dealers and Clearing Organizations
Receivable from and payable to brokers, dealers and clearing organizations includes cash held at the clearing brokers, amounts receivable or payable for unsettled transactions, monies borrowed and proceeds from short sales equal to the fair value of securities sold, not yet purchased, at fair value, which are restricted until the Company purchases the securities sold short. Pursuant to the master netting agreements the Company entered into with its brokers, dealers and clearing organizations, these balances are presented net (assets less liabilities) across balances with the same counterparty. The Company's receivable from and payable to brokers, dealers and clearing organizations balances are held at multiple financial institutions.
As of June 30, 20192020 and December 31, 2018,2019, amounts receivable from brokers, dealers and clearing organizations include:
As of June 30, 2020As of December 31, 2019
   
As of June 30, 2019 As of December 31, 2018
(dollars in thousands) (dollars in thousands)
Broker-dealers$547,293
 $692,581
Broker-dealers$936,384  $623,523  
Securities failed to deliver33,373
 72,918
Securities failed to deliver86,240  45,673  
Clearing organizations22,683
 15,319
Clearing organizations88,142  3,180  
Securities borrowed interest receivable14,019
 5,295
Securities borrowed interest receivable17,851  9,319  
$617,368
 $786,113
$1,128,617  $681,695  
As of June 30, 20192020 and December 31, 2018,2019, amounts payable to brokers, dealers and clearing organizations include:
As of June 30, 2020As of December 31, 2019
   
As of June 30, 2019 As of December 31, 2018
(dollars in thousands) (dollars in thousands)
Broker-dealers$166,728
 $159,443
Broker-dealers$110,343  $185,838  
Securities failed to receive52,482
 28,826
Securities failed to receive71,231  57,580  
Clearing organizations9,648
 36,338
Clearing organizations42,834  18,063  
Securities loaned interest payable12,154
 4,124
Securities loaned interest payable16,153  9,537  
$241,012
 $228,731
$240,561  $271,018  

10. Receivable From and Payable To Customers
As of June 30, 20192020 and December 31, 2018,2019, receivable from customers of $87.5$106.9 million and $37.9$105.6 million, respectively, consist of amounts owed by customers relating to securities transactions not completed on settlement date and receivables arising from the prepayment of Commission Sharing Agreements (“CSA”("CSA"), net of an allowance for credit losses. A prepaid CSA is established for research-related disbursements in advance of anticipated customer commission volumes.
As of June 30, 20192020 and December 31, 2018,2019, payable to customers of $428.1$787.7 million and $525.2$430.2 million, respectively, include amounts due on cash and margin transactions to the Company's clients, some of which have their assets held by a Company omnibus account, which are included within receivables from brokers, dealers and clearing organizations in the accompanying condensed consolidated statements of financial condition. In the omnibus structure, positions that are owned by Cowen International Ltd are fully cross collateralized by client funds, meaning that the Company, for all intents and purposes, has
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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
no market risk. Additionally, Cowen International Ltd has no obligation to settle any trade that it deems inappropriate from a risk perspective, adding an important market and counterparty risk mitigating factor.
11. Goodwill and Intangible Assets
In accordance with US GAAP, the Company tests goodwill for impairment on an annual basis or at an interim period if events or changed circumstances would more likely than not reduce the fair value of a reporting unit below its carrying amount. Under US GAAP, the Company first assesses the qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amounts as a basis for determining if it is necessary to perform a quantitative impairment test. Periodically estimating the fair value of a reporting unit requires significant judgment and often involves the use of significant estimates and assumptions. These estimates and assumptions could have a significant effect on whether or not an impairment charge is recorded and the magnitude of such a charge.
During the second quarter of 2019, the Company realigned its business segments to Op Co and Asset Co (See Note 1). Prior to the reorganization, our Investment Management segment was also a reporting unit for purposes of measuring and reporting goodwill.  The goodwill that was previously attributable to the Investment Management reporting unit was reallocated to the CIM reporting unit within the Op Co segment and the Asset Co reporting unit based on the relative fair value of the

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

respective portions that became attributable to those reporting units.  The Asset Co segment is also a reporting unit for purposes of measuring and reporting goodwill.
Based on the change in segments and restructuring of reporting units, the Company determined that it was necessary to perform a quantitative impairment test which involves estimates of future cash flows, discount rates, economic forecast and other assumptions which are then used in the market approach (earnings and / or transactions multiples) and / or income approach (discounted cash flow method).
Based on the results of the impairment analysis as of June 30, 2019, the Company recognized a goodwill impairment in the amount of $4.1 million within the Asset Co reporting unit. No impairment charges for goodwill were recognized during the year ended December 31, 2018.
The following table presents the changes in the Company's goodwill balance, by reporting unit for the periods ended June 30, 2019 and December 31, 2018:
 
Investment
Management
 Investment Bank Cowen Investment Management Asset Co Total
 (dollars in thousands)
Beginning balance - December 31, 2017         
Goodwill$29,026
 $51,337
 $—
 $—
 80,363
Accumulated impairment charges(10,200) (9,485) —
 —
 (19,685)
Net18,826
 41,852
 —
 —
 60,678
          
Activity: 2018         
Recognized goodwill—
 —
     —
Goodwill impairment charges—
 —
     —
          
Ending balance: December 31, 2018         
Goodwill29,026
 51,337
 —
 —
 80,363
Accumulated impairment charges(10,200) (9,485) —
 —
 (19,685)
Net18,826
 41,852
 —
 —
 60,678
          
Activity: 2019         
Recognized goodwill (See note 3)—
 81,150
 —
 —
 81,150
Realignment of segment goodwill:    

   

     Goodwill(29,026) —
 22,705
 6,321
 —
     Accumulated impairment charges10,200
 —
 (7,979) (2,221) —
Goodwill impairment charges—
 —
 —
 (4,100) (4,100)
          
Ending balance: June 30, 2019         
Goodwill—
 132,487
 22,705
 6,321
 161,513
Accumulated impairment charges—
 (9,485) (7,979) (6,321) (23,785)
Net$—
 $123,002
 $14,726
 $—
 $137,728
In connection with the Quarton transaction (see Note 3), in January 2019, the Company recognized goodwill of $81.2 million and intangible assets (including customer relationships, trade name, backlog and proprietary software) with an estimated fair value of $22.2 million which are included within intangible assets, net in the condensed consolidated statements of financial condition with the expected useful lives ranging from 2 to 4 years with a weighted average useful life of 2.8 years. Amortization expense related to intangibles from the Quarton acquisition for the three and six months ended June 30, 2019 is $2.2 million and $4.5 million, respectively. Goodwill, the excess of the purchase price over the fair value of net assets, primarily relates to expected synergies from combining operations and has been assigned to the Op Co segment of the Company. Tax deductible goodwill will differ from goodwill recognized by the Company in an amount equal to the difference between actual contingent consideration and estimated contingent consideration (see Note 3).

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

12. Commission Management Payable
The Company receives a gross commission from various clearing brokers, which is then used to fund commission sharing and recapture arrangements, less the portion retained as income to the Company. Accrued commission sharing and commission recapture payable of $96.7$124.6 million and $95.3$71.6 million, as of June 30, 20192020 and December 31, 2018,2019, respectively, are classified as commission management payable in the accompanying condensed consolidated statements of financial condition.
13. Redeemable12. Non-Controlling Interests in Consolidated Subsidiaries and Investment Funds
Redeemable and nonredeemable non-controlling interests in consolidated subsidiaries and investment funds and the related net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds are comprised as follows:
 As of June 30, 2020As of December 31, 2019
 (dollars in thousands)
Redeemable non-controlling interests in consolidated subsidiaries and investment funds
Consolidated Funds$—  $391,275  
Nonredeemable non-controlling interests in consolidated subsidiaries and investment funds
Operating companies60,726  11,513  
Consolidated Funds128,199  82,807  
$188,925  $485,595  

Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(dollars in thousands)
Income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds    
Operating companies$3,104  $428  $3,231  $540  
Consolidated Funds30,009  3,478  (32,306) 3,878  
$33,113  $3,906  $(29,075) $4,418  

47
 As of June 30, 2019 As of December 31, 2018
 (dollars in thousands)
Redeemable non-controlling interests in consolidated subsidiaries and investment funds   
Operating companies$22,857
 $10,434
Consolidated Funds417,455
 274,346
 $440,312
 $284,780
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
 (dollars in thousands)
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds       
Operating companies$853
 $1,954
 $2,659
 $3,574
Consolidated Funds3,478
 22,653
 3,878
 32,189
 $4,331
 $24,607
 $6,537
 $35,763
13. Revenue from Contracts with Customers
For the three and six months ended June 30, 2020 and 2019, the following tables presents revenues from contracts with customers disaggregated by fee type and segment.
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(dollars in thousands)
Revenue from contracts with customersOperating Company
Investment banking
     Underwriting fees$133,695  $75,169  $196,965  $123,204  
     Strategic/financial advisory fees39,634  11,131  61,630  31,676  
     Placement and sales agent fees25,977  23,515  43,573  33,013  
     Expense reimbursements from clients4,676  4,890  6,842  6,918  
Total investment banking revenue203,982  114,705  309,010  194,811  
Brokerage
     Commissions121,685  96,341  254,611  181,116  
     Trade conversion revenue4,327  4,559  8,966  8,665  
     Equity research fees5,016  5,355  9,044  8,945  
Total brokerage revenue from customers131,028  106,255  272,621  198,726  
Management fees11,424  6,796  22,771  13,439  
Incentive income—  8  —  8  
Total revenue from contracts with customers - Op Co$346,434  $227,764  $604,402  $406,984  
Asset Company
Management fees229  243  486  741  
Incentive income—  —  —  15  
Total revenue from contracts with customers - Asset Co229  243  486  756  
Total revenue from contracts with customers$346,663  $228,007  $604,888  $407,740  


14. Reinsurance
The Company’sCompany's wholly-owned Luxembourg subsidiary, Hollenfels Re SA (“Hollenfels”("Hollenfels") provides reinsurance to third party insurance and reinsurance companies. Hollenfels’sHollenfels's share of claims incurred and paid claims,during the periods below, as well as the change in claims outstanding or incurred but not reported plus expected development on reported claims (“("Claims IBNR”IBNR") during these periods were as follows:

Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(dollars in thousands)
Incurred and paid claims$3,693  $4,013  $7,928  $6,920  
Change in Claims IBNR6,623  756  $23,916  $10,891  
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
 (dollars in thousands)
Incurred and paid claims$4,013
 $4,112
 $6,920
 $7,729
Claims IBNR756
 156
 10,891
 8,411
Hollenfels utilizes several methods to determine its Claims IBNR. It generally employs an estimation methodology whereby historical average claims ratios over a period of up to 10 years are utilized, based on availability of data. In cases where current claims development contradicts historical results, Hollenfels employs a method to average claims ratios derived through different actuarial calculation methods. Also, if an event occurs that may give rise to significant future claims in excess of the amount calculated using the above-mentioned methodologies, the impact of such an event is calculated using existing claims data and actuarial estimation methods to adjust Hollenfels’sHollenfels's Claims IBNR. During the three and six months ended June 30, 2019,2020, Hollenfels calculated its claim liability or claim adjustment expenses using the above-mentioned methods consistent with prior years.
While Hollenfels typically settles its premiums and claim payments on a quarterly basis, the frequency of claims in the underlying policies is impractical for Hollenfels to obtain. Certain contracts Hollenfels has written are on a quota-share basis while the rest of the policies provide aggregate loss protection, rendering the collection of information for all underlying contracts impracticable. Hollenfels did not discount any of its reserves and did not cede any portion of its exposures during the three and six months ended June 30, 20192020 and June 30, 2018.

2019.
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From time to time, Hollenfels may enter into reinsurance agreements that require it to post collateral of cash or US government bonds to cover certain exposures as defined in the respective reinsurance agreements. As of June 30, 2020, Hollenfels pledged $16.9 million of collateral towards such reinsurance obligations, of which $3.0 million was cash and $13.9 million was US government bonds. As of December 31, 2019, total collateral pledged was $15.0 million, of which $2.0 million was cash and $13.0 million was US government bonds. Hollenfels expects the collateral to be periodically released between December 31, 2020 and March 31, 2024 in accordance with the terms of the reinsurance agreements.
15. Share-Based and Deferred Compensation and Employee Ownership Plans
The Company issueshas issued share-based compensation under the 2006 Equity and Incentive Plan, the 2007 Equity and Incentive Plan (both established prior to the November 2009 transaction between Ramius Capital Group LLC and Cowen) and the 2010 Equity and Incentive Plan (collectively, the “Equity Plans”(the "Equity Plan"). The Equity Plans permitPlan permits the grant of options, restricted shares, restricted stock units, stock appreciation rights ("SARs") and other equity-based awards to the Company's employees and directors. Stock options granted generally vest over two-to-five-yeartwo-to-five-year periods and expire seven years from the date of grant. Restricted shares and restricted share units issued, both of which are eligible to accrue dividend equivalents, may be immediately vested or may generally vest over a two-to-five-yeartwo-to five-year period. SARs vest and expire after five years from grant date. Awards are subject to the risk of forfeiture. As of June 30, 2019,2020, there were 0.5 million0 shares available for future issuance under the Equity Plans.
Under the 2010 Equity and Incentive Plan (See Note 26).
Under the Equity Plan, the Company awarded $41.8$50.2 million of deferred cash awards to its employees during the three and six months ended June 30, 2019.2020. These awards vest over a four-yearfour-year period and accrue interest at 0.70% per year. As of June 30, 2019,2020, the Company had unrecognized compensation expense related to the 2010 Equity and Incentive PlanPlan's deferred cash awards of $74.3$89.5 million.
The Company measures compensation cost for share basedshare-based awards according to the equity method. In accordance with the expense recognition provisions of those standards, the Company amortizes unearned compensation associated with share-based awards on a straight-line basis over the vesting period of the option or award, net of estimated forfeitures. In relation to awards under the Equity Plans,Plan, the Company recognized compensation expense of $9.4$15.3 million and $8.8$9.4 million for the three months ended June 30, 2020 and 2019 and 2018,$23.6 million and $17.2 million and $19.1 million for the six months ended June 30, 20192020 and 2018,2019, respectively. The income tax effect recognized for the Equity PlansPlan was a benefit of $2.0$3.5 million and $2.4$2.0 million for the three months ended June 30, 2020 and 2019 and 2018, and $4.2$5.3 million and $4.7$4.2 million for the six months ended June 30, 2020 and 2019, and 2018, respectively.
Restricted Stock Units Granted to Employees
Restricted shares and restricted stock units are referred to collectively as restricted stock. The following table summarizes the Company's restricted share and restricted stock unit activity for the six months ended June 30, 20192020 and 2018:2019:
Six Months Ended June 30, 2020Six Months Ended June 30, 2019
Nonvested Restricted Class A Common Shares and Class A Common Restricted Stock UnitsWeighted-Average
Grant Date
Fair Value		Nonvested Restricted Class A Common Shares and Class A Common Restricted Stock UnitsWeighted-Average
Grant Date
Fair Value
Beginning balance outstanding5,364,486  $16.67  5,962,295  $15.73  
Granted2,268,759  17.23  2,194,230  16.67  
Vested(1,290,624) 15.23  (1,282,843) 16.21  
Canceled(87,348) 14.80  (233,333) 14.12  
Forfeited(35,441) 15.95  (153,399) 13.94  
Ending balance outstanding6,219,832  $17.20  6,486,950  $16.06  
 Six Months Ended June 30, 2019 Six Months Ended June 30, 2018
 Nonvested Restricted Class A Common Shares and Class A Common Restricted Stock Units Weighted-Average
Grant Date
Fair Value		 Nonvested Restricted Class A Common Shares and Class A Common Restricted Stock Units Weighted-Average
Grant Date
Fair Value
Beginning balance outstanding5,962,295
 $15.73
 5,579,293
 $16.33
Granted2,194,230
 16.67
 2,179,443
 14.26
Vested(1,282,843) 16.21
 (1,390,392) 16.11
Canceled(233,333) 14.12
 —
 —
Forfeited(153,399) 13.94
 (44,556) 13.86
Ending balance outstanding6,486,950
 $16.06
 6,323,788
 $15.68

Included in the restricted share and restricted stock unit activity are performance linkedperformance-linked restricted stock units of 481,4381,033,333 which were awarded to employees of the Company in December 2013 and January 2014. An additional 700,000 performance linked restricted stock units were awarded in March 2016 and 333,333 in April of 2019. Of the awards granted, 130,438145,986 have been forfeitedvested and 233,333320,681 have been canceled, as they did not meet the performance criteria, through June 30, 2019.2020. The remaining awards, included in the outstanding balance as of June 30, 2019, will2020, vest between May 2019December 2020 and December 2021 and will be earned only to the extent that the Company attains specified market conditions relating to its volume-weighted average share price and total shareholder return in relation to certain benchmark indices and performance goals relating to aggregate net income and average return on shareholder equity. The actual number of RSUs ultimately earned could vary from zero,0, if performance goals are not met, to as much as 200% of the targeted award. Each RSU is equal to the one share of the Company’sCompany's Class A common stock. Compensation expense is recognized to the extent that it is probable that the Company will attain the performance goals.
The fair value of restricted stock (excluding certain performance linkedperformance-linked units which are valued using the Monte Carlo valuation model) is determined based on the number of shares granted and the quoted price of the Company's common stock on the date of grant.
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As of June 30, 2019,2020, there was $77.1$81.7 million of unrecognized compensation expense related to the Company's grant of nonvested restricted shares and restricted stock units to employees. Unrecognized compensation expense related to nonvested

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restricted shares and restricted stock units granted to employees is expected to be recognized over a weighted-average period of 2.382.48 years.
Restricted Shares and Restricted Stock Units Granted to Non-employeeNon-Employee Board Members
There were no0 restricted stock units awarded or delivered to non-employee board members during the three and six months ended June 30, 2020. As of June 30, 2020 there were 216,912 restricted stock units outstanding for non-employee board members. There were 0 restricted stock units awarded during the three and six months ended June 30, 2019, and 79,487 were delivered. As of June 30,December 31, 2019 there were 174,285216,912 restricted stock units outstanding. There were no restricted stock units awarded during the three and six months ended June 30, 2018. As of December 31, 2018 there were 253,772 restricted stock units outstanding.
16. Income Taxes
The taxable results of the Company’s U.S. operations are included in the consolidated income tax returns of Cowen, Inc. as well as stand-alone state and local tax returns. The Company has subsidiaries that are resident in foreign countries where tax filings have to beare submitted on a stand‑alonestand-alone basis. These subsidiaries are subject to tax in their respective countries and the Company is responsible for and, thus, reports all taxes incurred by these subsidiaries. The countries where the Company owns subsidiaries that file tax returns are United Kingdom, Luxembourg, Gibraltar, Germany, Switzerland, South Africa, Canada and Hong Kong.
The Company calculates its U.S. tax provision using the estimated annual effective tax rate methodology. The tax expense or benefit caused by an unusual or infrequent item is recorded in the quarter in which it occurs. To the extent that information is not available for the Company to fully determine the full year estimated impact of an item of income or tax adjustment, the Company calculates the tax impact of such item discretely. Accordingly, the Company uses the discrete methodology to calculate the income tax provision for its foreign subsidiaries and the tax impact of income attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds. Based on these methodologies, the Company’s effective income tax rate was 27.15%36.90% and 15.83%27.15% for the six months ended June 30, 20192020 and 2018,2019, respectively. During the six months ended June 30, 2019 and 2018,2020, the unusual or infrequent items whose tax impact were recorded discretely related primarily to foreign taxes, base-erosion anti-abuseas well as stock compensation.
For the six months ended June 30, 2020, the effective tax rate differs from the statutory rate of 21% primarily due to losses attributable to non-controlling interests in consolidated subsidiaries and investment funds, foreign taxes, stock compensation.
compensation, as well as other nondeductible expenses. For thethe six months ended June 30, 2019, the effective tax rate differs from the statutory rate of 21% primarily due to income attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds, foreign taxes, base-erosion anti-abuse tax, goodwill impairment, as well as other nondeductible expenses. For
As a result of the six months endedenactment of Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) signed on March 27, 2020, the Company is required to assess the tax impact of the Act in the quarter the law was enacted. Based on the management analysis, there was no material impact on the Company's financial statements as of June 30, 2018, the effective tax rate differs from the statutory rate of 21% primarily due to income attributable to redeemable non-controlling interests in consolidated subsidiaries and funds, stock compensation, foreign taxes, as well as other nondeductible expenses.2020.
The Company recordedmaintained an uncertain tax position liability of $0.3$0.3 million as of June 30, 20192020 and December 31, 20182019 related to New York State tax matters.
The Company records deferred tax assets and liabilities for the future tax benefit or expense that will result from differences between the carrying value of its assets for income tax purposes and for financial reporting purposes, as well as for operating or capital loss and tax credit carryovers. A valuation allowance is recorded to bring the net deferred tax assets to a level that, in management's view, is more likely than not to be realized in the foreseeable future. This level will be estimated based on a number of factors, especially the amount of net deferred tax assets of the Company that are actually expected to be realized, for tax purposes, in the foreseeable future. As of June 30, 2019,2020, the Company recorded a valuation allowance against deferred tax assets related to its foreign tax credits and foreign net operating losses.
The Company is subject to examination by the United States Internal Revenue Service as well as state, local and foreign tax authorities in jurisdictions where the Company has significant business operations, such as New York, United Kingdom, Luxembourg, Germany and Switzerland. Currently, the Company is under audit by New York State and the State of Massachusetts for the 2013 to 2017 tax years.years and 2016 to 2017 tax years, respectively. Management is not expecting a material tax liability from these audits.
The Company continues to permanently reinvest the capital and accumulated earnings of its subsidiaries in the United Kingdom, Germany, Switzerland, Canada, South Africa and Hong Kong.
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17. Commitments and Contingencies
Operating Lease Obligations
The Company has entered into leases for real estate and other facilities. These leases contain rent escalation clauses and options to extend the lease term. The Company does not include renewal options in the lease term for calculating the Company’sCompany's lease liability as the renewal options allow the Company operational flexibility and the Company is not reasonably certain to exercise these renewal options at this time as such the company has not incorporated the effect of the renewal options

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into the determination of the lease term.time. The Company records the expenses related to occupancy and equipment on a straight-line basis over the lease term and these expenses are included in occupancy and equipment expense and client services and business development expense in the accompanying condensed consolidated statements of operations.
For the three and six months ended June 30, 2020 and 2019, quantitative information regarding the Company's operating lease obligations reflected in the accompanying condensed consolidated statementstatements of operations were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(dollars in thousands)
Lease cost
Operating lease cost$5,672  $6,063  $11,357  $12,066  
Short-term lease cost52  93  197  139  
Variable lease cost815  147  1,603  446  
Sublease income(217) (240) (433) (507) 
Total lease costs$6,322  $6,063  $12,724  $12,144  
 Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
 (dollars in thousands)
Lease Cost   
Operating lease cost$6,063
 $12,066
Short-term lease cost74
 91
Variable lease cost147
 446
Sublease income(240) (507)
Total lease costs$6,044
 $12,096


The following table summarizes the supplemental cash flow information and certain other information related to operating leases for the six months ended June 30, 2020 and 2019:
Six Months Ended June 30,
Six Months Ended June 30, 201920202019
(dollars in thousands)(dollars in thousands)
Other Information 
Other informationOther information
Cash paid for amounts included in the measurement of lease liabilities: Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$13,786
Operating cash flows from operating leases$13,906  $13,786  
 
Weighted average remaining lease term - operating leases (in Years)5.72
Weighted average remaining lease term - operating leases (in years)Weighted average remaining lease term - operating leases (in years)4.935.72
Weighted average discount rate - operating leases4.14%Weighted average discount rate - operating leases4.16 %4.14 %
As of June 30, 2019,2020, maturities of the outstanding operating lease liabilities for the Company were as follows:
Equipment Leases (operating)Real Estate and Other Facility Rental (a) (b)
 (dollars in thousands)
2020$182  $10,597  
2021223  24,376  
202291  20,852  
20233  17,596  
2024—  14,774  
Thereafter—  10,080  
Total operating leases499  98,275  
Less discount33  10,840  
Less short-term leases—  197  
Total lease liability$466  $87,238  
 Equipment Leases (operating) Real Estate and Other Facility Rental (a) (b)
 (dollars in thousands)
2019$307
 $11,893
2020289
 24,020
202148
 23,486
20225
 20,249
2023—
 17,179
Thereafter—
 25,925
Total Operating Leases649
 122,752
Less discount16
 16,421
Less short term leases—
 91
Total Lease Liability$633
 $106,240
(a)The Company has entered into various agreements to sublease certain of its premises.
(a)The Company has entered into various agreements to sublease certain of its premises.
(b)In second quarter of 2019, the Company recognized operating ROU assets and leases liabilities of $3.9 million for real estate leases.
(b)During the six months ended June 30, 2020, the Company recognized operating right-of-use assets and leases liabilities of $0.4 million for facility leases.
See Note 18 for further information on the finance lease minimum payments.
Prior to the adoption of the new lease accounting guidance, the minimum rental commitments under non-cancelable operating leases at December 31, 2018, were as follows:

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 Equipment Leases (a) Service Payments Real Estate and other Facility Rental (b)
 (dollars in thousands)
2019$2,434
 $21,758
 $24,584
20201,492
 7,514
 22,608
20211,382
 1,877
 22,321
20221,123
 1,372
 19,166
2023374
 735
 16,204
Thereafter—
 735
 21,478
 $6,805
 $33,991
 $126,361
(a)Equipment Leases includes the Company's commitments relating to operating and capital leases. See Note 18 for further information on the capital lease minimum payments which are included in the table.
(b)The Company has entered into various agreements to sublease certain of its premises. The Company recorded sublease income related to these leases of $1.4 million, $1.1 million, and $2.2 million for the years ended December 31, 2018, 2017, and 2016 respectively.
Other Commitments
As of June 30, 2019,2020, future minimum annual service payments for the Company were as follows:
Service Payments
 (dollars in thousands)
2020$15,183  
202121,250  
202212,030  
20234,988  
20242,151  
Thereafter4,401  
Total service payment commitments$60,003  
  Service Payments
  (dollars in thousands)
2019 $11,827
2020 10,319
2021 5,425
2022 5,198
2023 3,573
Thereafter 6,331
Total Operating Leases $42,673
Clawback Obligations
For financial reporting purposes, the general partners of a real estate fund have recorded a liability for potential clawback obligations to the limited partners, due to changes in the unrealized value of the real estate fund's remaining investments and where the real estate fund's general partner has previously received carried interest distributions. The clawback liability, however, is not realized until the end of the real estate fund's life. The real estate fund is currently in a winding-up phase whereby the remaining assets of the real estate fund are being liquidated as promptly as possible so as to maximize value. However a final date for liquidation has not been set. The clawback obligations for the real estate fund were $6.5 million at June 30, 2019 and December 31, 2018, which is included in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated statements of financial condition.
The Company serves as the general partner/managing member and/or investment manager to various affiliated and sponsored investment funds. As such, the Company is contingently liable for obligations for those entities. These amounts are not included above as the Company believes that the assets in these investment funds are sufficient to discharge any liabilities.
Unfunded Commitments
The following table summarizes unfunded commitments as of June 30, 2019:2020:

EntityUnfunded CommitmentsCommitment Term
(dollars in thousands)
HealthCare Royalty Partners funds (a)$7,971 4.5 years
Eclipse Ventures Fund I, L.P.$81 4.5 years
Lagunita Biosciences, LLC$250 3.3 years
Eclipse Fund II, L.P.$120 5.5 years
Eclipse Continuity Fund I, L.P.$68 6.5 years
Cowen Healthcare Investments II LP$1,201 1.5 years
Cowen Healthcare Investments III LP$8,035 6.5 years
Cowen Sustainable Investments I LP$12,989 9.5 years
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Entity Unfunded Commitments Commitment term
  (dollars in thousands)  
Real estate (a) $23,749
 (a)
HealthCare Royalty Partners funds (b) 5,665
 2 years
Eclipse Ventures Fund I, L.P. (formerly Formation8 Partners Hardware Fund I, L.P.) 119
 5 years
Lagunita Biosciences, LLC 500
 3 years
Eclipse Fund II, L.P. 225
 6 years
Eclipse Continuity Fund I, L.P. 210
 7 years
Cowen Healthcare Investments II LP 6,891
 2 years
(a) The Company had unfunded commitments pertaining to capital commitments in five real estate investments held by the Company, all of which pertain to related party investments. Such commitments can be called at any time between two to four years, subject to advance notice.
(b) The Company is a limited partner of the HealthCare Royalty Partners funds (which are managed by Healthcare Royalty Management) and is a member of HealthCare Royalty Partners General Partners. The Company will make its pro-rata investment in the HealthCare Royalty Partners funds along with the other limited partners.
Litigation
In the ordinary course of business, the Company and its affiliates, subsidiaries and current and former officers, directors and employees (the "Company and Related Parties") are named as defendants in, or as parties to, various legal actions and proceedings. Certain of these actions and proceedings assert claims or seek relief in connection with alleged violations of securities, banking, anti-fraud, anti-money laundering, employment and other statutory and common laws. Certain of these actual or threatened legal actions and proceedings include claims for substantial or indeterminate compensatory or punitive damages, or for injunctive relief.

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

Due to the global scope of the Company's operations, and its presence in countries around the world, the Company and Related Parties may be subject to litigation, governmental and regulatory examinations, information gathering requests, investigations and proceedings (both formal and informal), in multiple jurisdictions with legal and regulatory regimes that may differ substantially, and present substantially different risks, from those to which the Company and Related Parties are subject in the United States.
The Company seeks to resolve all litigation and regulatory matters in the manner management believes is in the best interests of the Company and its shareholders, and contests liability, allegations of wrongdoing and, where applicable, the amount of damages or scope of any penalties or other relief sought as appropriate in each pending matter.
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In accordance with US GAAP, the Company establishes reserves for contingencies when the Company believes that it is probable that a loss has been incurred and the amount of loss can be reasonably estimated. The Company discloses a contingency if there is at least a reasonable possibility that a loss may have been incurred and there is no reserve for the loss because the conditions above are not met. The Company's disclosure includes an estimate of the reasonably possible loss or range of loss for those matters, for which an estimate can be made. Neither a reserve nor disclosure is required for losses that are deemed remote.
The Company appropriately reserves for certain matters where, in the opinion of management, the likelihood of liability is probable and the extent of such liability is reasonably estimable. Such amounts are included within accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated statements of financial condition. Estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including, but not limited to, the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal counsel, the Company's defenses and its experience in similar cases or proceedings as well as its assessment of matters, including settlements, involving

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other defendants in similar or related cases or proceedings. The Company may increase or decrease its legal reserves in the future, on a matter-by-matter basis, to account for developments in such matters. The Company accrues legal fees as incurred.
The following information reflects developments with respect to the Company’s legal proceedings that occurred during the quarter ended June 30, 2019.
On December 27, 2013, Landol Fletcher filed a putative class action lawsuit against Convergex Holdings, LLC, Convergex Group, LLC, Cowen Execution, Convergex Global Markets Limited and G-Trade Services LLC (collectively, “Convergex”) in the United States District Court for the Southern District of New York (Landol Fletcher and all others similarly situated v. Convergex Group LLC, Cowen Execution, Convergex Global Markets Ltd., Convergex Holdings LLC, G-Trade Services LLC, & Does 1-10, No. 1:13-CV-09150-LLS). The suit alleges breaches of fiduciary duty and prohibited transactions under ERISA and seeks to maintain a class action on behalf of all ERISA plan participants, beneficiaries and named fiduciaries whose plans were impacted by net trading by Convergex Global Markets Limited from October 2006 to December 2011. On April 11, 2014, Landol Fletcher and Frederick P. Potter Jr., filed an amended complaint raising materially similar allegations. This matter was assumed by the Company as a result of the Company’s previously announced acquisition of Convergex Group, which was completed on June 1, 2017. On February 17, 2016, the District Court granted Convergex’s motion to dismiss the amended complaint. Plaintiffs filed an appeal to the Second Circuit, and the AARP and Department of Labor filed amicus briefs on plaintiffs' behalf. The appeal was argued on December 12, 2016. On February 10, 2017, the Second Circuit Court of Appeals (1) reversed the District Court, finding that plaintiff has constitutional standing in a “representative” capacity to sue for damages to the ERISA defined benefit plan in which he is a participant, and (2) remanded to the District Court to reconsider, in light of the Circuit Court’s decision, the issue whether plaintiff has standing to pursue claims on behalf of ERISA plans in which plaintiff is not a participant. Convergex filed a petition for rehearing, and the Court of Appeals denied the petition. On June 30, 2017, the Company filed a notice of motion and memorandum of law in support of a motion to stay the proceedings in the District Court pending resolution of its petition for writ of certiorari, which the Company intended to file with the U.S. Supreme Court. On August 16, 2017, the District Court granted the Company’s motion to stay the proceedings in the District Court pending resolution of the Company’s petition for writ of certiorari. On September 1, 2017, the Company filed a petition with the United States Supreme Court for a writ of certiorari requesting review of the decision of the Court of Appeals. On January 8, 2018, the U.S. Supreme Court denied the Company’s petition for a writ of certiorari. The previously granted stay of the proceedings in the District Court was lifted, and the case proceeded in the District Court. Status conferences were held on April 6, 2018, October 12, 2018, and December 4, 2018. On March 15, 2019, the Company filed a motion to dismiss the plaintiff’s amended complaint. The District Court granted the Company’s motion on July 2, 2019. The status of the case going forward will depend on whether the plaintiffs appeal the District Court’s decision. We are indemnified against losses arising from this matter pursuant to, and subject to, the provisions of the purchase agreement relating to the acquisition of Convergex Group. While it is not possible to determine the ultimate outcome or duration of such litigation, based on current knowledge, the Company does not currently expect this case to have a material effect on its financial position or its results of operations.
18. Convertible Debt and Notes Payable
As of June 30, 20192020 and December 31, 2018,2019, the Company's outstanding debt was as follows:
As of June 30, 2020As of December 31, 2019
   
As of June 30, 2019 As of December 31, 2018
(dollars in thousands) (dollars in thousands)
Convertible debt$116,273
 $134,489
Convertible debt$121,195  $118,688  
Notes payable281,544
 229,740
Notes payable307,227  306,818  
Term loan28,200
 28,200
Term loansTerm loans—  32,180  
Other notes payable1,189
 —
Other notes payable3,785  2,516  
Finance lease obligations4,357
 5,025
Finance lease obligations3,317  3,937  
$431,563
 $397,454
$435,524  $464,139  
Convertible Debt
December 2022 Convertible Notes
The Company, on December 14, 2017, issued $135.0 million aggregate principal amount of 3.00%3.0% convertible senior notes due December2022 (the “December 2022 Convertible Notes”). The December 2022 Convertible Notes are due on December 15, 2022 unless earlier repurchased by the Company or converted by the holder in accordance with their terms prior to such date. The interest on the December 2022 Convertible Notes is payable semi-annually on December 15 and June 15 of each year. The December 2022 Convertible Notes are senior unsecured obligations of Cowen. The December 2022 Convertible Notes may be converted into cash or shares of Class A common stock at the Company's election based on the current

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conversion price. The December 2022 Convertible Notes were issued with an initial conversion price of $17.375 per share of Cowen’sCowen's Class A common stock.
The Company used the net proceeds, together with cash on hand, from the offering for general corporate purposes, including the repurchase or repayment of $115.1 million of the Company’s outstanding 3.0% cash convertible senior notes due March 2019 (the "March 2019 Convertible Notes") and the repurchase of approximately $19.5 million of the Company’s shares of its Class A common stock, which were consummated substantially concurrently with the closing of the offering. As of June 30, 2019,2020, the outstanding principal amount of the December 2022 Convertible Notes was $135.0 million. On June 26, 2018, the Company received shareholder approval for the Company to settle the December 2022 Convertible Notes entirely in Class A common stock. Upon receiving shareholder approval, the Company reclassified the separately recognized conversion option from a derivative liability to equity. Pursuant to the indenture governing the December 2022 Convertible Notes, conversions of the December 2022 Convertible Notes will be settled by the delivery and/or payment, as the case may be, of Cowen’s Class A Common Stock, cash, or a combination thereof, at the Company's election. The Company has the intent and ability to settle the convertible notes in cash and, as a result, the convertible notes do not have an impact on the Company's diluted earnings per share calculation (See Note 21).
The Company recorded interest expense of $1.0 million and $1.0 million for the three months ended June 30, 20192020 and 2018,2019, and $2.0 million and $2.0 million for the six months ended June 30, 20192020 and 2018,2019, respectively. The Company recognized the embedded cash conversion option at issuance date fair value, which also represents the initial unamortized discount on the December 2022 Convertible Notes of $23.4 million and is shown net in convertible debt in the accompanying condensed consolidated statements of financial condition. Amortization on the discount, included within interest and dividends expense in the accompanying condensed consolidated statements of operations is $1.1 million and $1.0$1.1 million for the three months ended June 30, 2020 and 2019, and 2018,$2.3 million and $2.1 million and $2.0 million for the six months ended June 30, 20192020 and 2018,2019, respectively, based on an effective interest rate of 7.13%. The Company capitalized the debt issuance costs in the amount of $2.2 million, which is a direct deduction from the carrying value of the debt and will be amortized over the life of the December 2022 Convertible Notes.
March 2019 Convertible Notes
On March 10, 2014, the Company issued $149.5 million of 3.0% cash convertible senior notes (the "March 2019 Convertible Notes"). The March 2019 Convertible Notes matured on March 15, 2019 and were fully repaid by the Company. The Company recorded interest expense of $0.2 million for the three months ended June 30, 2018, and $0.1 million and $0.7 million for the six months ended June 30, 2019 and 2018, respectively. Amortization on the discount, included withinin interest and dividends expense in the accompanying condensed consolidated statements of operations was $0.4 million for the three months ended June 30, 2018, and $0.3 million and $0.9 million for the six months ended June 30, 2019 and 2018, respectively, based on an effective interest rateoperations.
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Notes Payable
May 2024 Notes
On May 7, 2019, the Company completed its private placement of $53.0 million aggregate principal amount of 7.25% senior notes due May 2024 (the "May 2024 Notes") with certain institutional investors. On September 30, 2019, the Company issued an additional $25.0 million of the same series of notes. The additional May 2024 Notes were purchased at a premium of $0.5 million, which is shown net in notes payable in the accompanying condensed consolidated statement of financial condition. To date the May 2024 Notes have maintained their initial private rating, and the interest rate has remained unchanged. Interest on the May 2024 Notes is payable semi-annually in arrears on May 6 and November 6. The Company recorded interest expense of $1.4 million and $0.6 million for three months ended June 30, 2020 and 2019, and $2.8 million and $0.6 million for the three and six months ended June 30, 2020 and 2019, respectively. The Company capitalized debt issuance costs of approximately $1.5 million in May 2019 and $0.6 million in December 2019, which is a direct deduction from the carrying value of the debt and will be amortized over the life of the May 2024 Notes. Notes in interest and dividends expense in the accompanying condensed consolidated statements of operations.
June 2033 Notes
On June 11, 2018, the Company completed its public offering of $90.0 million of 7.75% senior notes due June 2033 (the “June"June 2033 Notes”Notes") and subsequently the underwriters exercised in full their option to purchase an additional $10.0 million principal amount of the June 2033 Notes. Interest on the June 2033 Notes is payable quarterly in arrears on March 15, June 15, September 15 and December 15. The Company recorded interest expense of $2.0$1.9 million and $0.4$2.0 million for the three months ended June 30, 20192020 and 2018,2019, and $3.9 million and $0.4$3.9 million for the six months ended June 30, 20192020 and 2018,2019, respectively. The Company capitalized debt issuance costs of approximately $3.6 million which is a direct deduction from the carrying value of the debt and will be amortized over the life of the June 2033 Notes. Notes in interest and dividends expense in the accompanying condensed consolidated statements of operations.
December 2027 Notes
On December 8, 2017, the Company completed its public offering of $120.0 million of 7.35% senior notes due December 2027 (the “December"December 2027 Notes”Notes") and subsequently the underwriters exercised in full their option to purchase an additional $18.0 million principal amount of the December 2027 Notes. Interest on the December 2027 Notes is payable quarterly in arrears on March 15, June 15, September 15 and December 15. The Company recorded interest expense of $2.5 million and $2.5 million for the three months ended June 30, 20192020 and 2018, 2019,and $5.1 million and $5.1 million for the six months ended June 30, 20192020 and 2018,2019, respectively. The Company capitalized debt issuance costs of approximately $5.0

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million which is a direct deduction from the carrying value of the debt and will be amortized over the life of the December 2027 Notes.Notes in interest and dividends expense in the accompanying condensed consolidated statements of operations. The net proceeds of the offering, after deducting the underwriting discount and estimated offering expenses payable by the Company were used to redeem all of its 8.25% senior notes due October 2021 and for general corporate purposes.
Term LoanLoans
On June 30, 2017, a subsidiary of the Company borrowed $28.2 million to fund general corporate purposes. This term loan has an effective interest rate of LIBOR plus 3.75% with a lump sum paymentIn July 2019, the subsidiary of the entire principal amount due (as amended) on June 26, 2020. TheCompany borrowed separately, from the same lender, $4.0 million to fund general corporate purposes. Each loan iswas secured by the value of the Company's limited partnership interests in two affiliated investment funds. The Company hashad provided a guarantee for this loan.these loans. Both loans had an effective interest rate of LIBOR plus 3.75% with a lump sum payment of the entire combined principal amount due (as amended) on June 26, 2020 when they were both fully repaid. The Company recorded interest expense of $0.4$0.3 million and $0.4 million for the three months ended June 30, 2020 and 2019, and 2018,$0.8 million and $0.9 million and $0.8 million for the six months ended June 30, 2020 and 2019, and 2018, respectively.
Other Notes Payable
During January 2019,2020, the Company borrowed $2.2$2.9 million to fund insurance premium payments. This note had an effective interest rate of 2.51%2.01% and was due onin December 31, 2019,2020, with monthly payment requirements of $0.2$0.3 million. As of June 30, 2019,2020, the outstanding balance on this note was $1.2$1.5 million. Interest expense for the three and six months ended June 30, 2020 and 2019 was insignificant.
During November 2019, the Company borrowed $2.6 million to fund general corporate capital expenditures. This note had an effective interest rate of 6% and is due in November 2024, with monthly payment requirements of $0.1 million. As of June 30, 2020, the outstanding balance on this note was $2.2 million. Interest expense for the six months ended June 30, 2020 was $0.1 million.
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Spike Line
In August 2019, Cowen Execution Services LLC ("Cowen Execution") renewed a one-year committed spike line facility to cover short term increases in National Securities Clearing Corporation margin deposit requirements. In connection with the merger of Cowen Execution into Cowen and Company (See Note 23), the spike line facility was amended in May 2020. Pursuant to that amendment, Cowen and Company replaced Cowen Execution as the borrower and accepted, reaffirmed and assumed all of Cowen Execution’s rights, duties, obligations and liabilities under the spike line facility and the related loan documents. The spike line facility has a capacity of $70 million. This facility has (i) an effective interest rate equal to the Federal Funds rate plus 2.50% on any money drawn from the liquidity facility and (ii) a commitment or unused line fee that is 50 basis points on the undrawn amount. All amounts outstanding under this facility were fully repaid during the second quarter of 2020. Interest expense for the three and six months ended June 30, 2020 was $0.1 million and $0.2 million, respectively.
Revolving Credit Facility
In December 2019, the Company entered into a two-year committed corporate credit facility with a capacity of $25 million. This credit facility has (i) an effective interest rate equal to LIBOR plus 3.25% on any money drawn from the credit facility and (ii) a commitment or unused line fee that is 50 basis points on the undrawn amount. All amounts oustanding under this corporate credit facility were fully repaid during the second quarter of 2020. Interest expense for the three and six months ended June 30, 2020 was $0.2 million and $0.3 million, respectively.
Finance Lease Obligations
The Company has entered into various finance leases for computer equipment. The Company's finance lease right-of-use asset amounted to $6.0 million and is recorded in fixed assets in the accompanying condensed consolidated statements of financial condition. These finance lease obligations are included in notes payable and other debt in the accompanying condensed consolidated statements of financial condition, and have a weighted average lease term of 3.7 years and weighted average interest rate of 4.93% as of June 30, 2019.
As of June 30, 2019 and December 31, 2018, the remaining balance on these finance leases was $4.4 million and $5.0 million, respectively.condition.
For the three and six months ended June 30, 20192020 and 2018,2019, quantitative information regarding the Company's finance lease obligations reflected in the accompanying condensed consolidated statementstatements of operations, the supplemental cash flow information and certain other information related to finance leases were as follows:
Three Months Ended June 30,Six Months Ended June 30,
Three Months Ended June 30, Six Months Ended June 30,2020201920202019
2019 2018 2019 2018(dollars in thousands)
(dollars in thousands)
Lease Cost       
Finance Lease Cost:       
Lease costLease cost
Finance lease cost:Finance lease cost:
Amortization of finance lease right-of-use assets$299
 $363
 $667
 $715
 Amortization of finance lease right-of-use assets$308  $299  $615  $667  
Interest on lease liabilities56
 52
 118
 97
 Interest on lease liabilities43  56  92  118  
Other Information       
Other informationOther information
Cash paid for amounts included in the measurement of lease liabilities:       Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases
 
 118
 97
 Operating cash flows from finance leases92  118  
Financing cash flows from finance leases
   $668
 $1,133
 Financing cash flows from finance leases$604  $668  
Weighted average remaining lease term - operating leases (in years)Weighted average remaining lease term - operating leases (in years)2.723.70
Weighted average discount rate - operating leasesWeighted average discount rate - operating leases4.88 %4.93 %
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Annual scheduled maturities of debt and minimum payments (of principal and interest) for all debt outstanding as of June 30, 2019,2020, are as follows:
Convertible DebtNotes PayableOther Notes PayableFinance Lease
Obligation
Convertible Debt Notes Payable Term loan Other Notes Payable Finance Lease
Obligation		 (dollars in thousands)
(dollars in thousands)
2019$2,025
 $10,868
 $863
 $1,214
 $571
20204,050
 21,736
 29,034
 —
 1,358
2020$2,025  $11,774  $1,817  $589  
20214,050
 21,736
 —
 —
 1,358
20214,050  23,548  593  1,394  
2022139,050
 21,736
 —
 —
 1,127
2022139,050  23,548  593  1,163  
2023—
 21,736
 —
 —
 374
2023—  23,548  593  411  
20242024—  98,721  543  11  
Thereafter—
 407,118
 —
 —
 —
Thereafter—  334,304  —  —  
Subtotal149,175
 504,930
 29,897
 1,214
 4,788
Subtotal145,125  515,443  4,139  3,568  
Less (a)(32,902) (223,386) (1,697) (25) (431)Less (a)(23,930) (208,216) (354) (251) 
Total$116,273
 $281,544
 $28,200
 $1,189
 $4,357
Total$121,195  $307,227  $3,785  $3,317  
(a)
Amount necessary to reduce net minimum payments to present value calculated at the Company's implicit rate at inception. This amount also includes capitalized debt costs and the unamortized discount on the convertible debt.
(a)Amount necessary to reduce net minimum payments to present value calculated at the Company's implicit rate at inception. This amount also includes capitalized debt costs and the unamortized discount on the Company's convertible debt.
Letters of Credit
As of June 30, 2019,2020, the Company has the following sevensix irrevocable letters of credit, related to leased office space, for which there is cash collateral pledged, which the Company pays a fee on the stated amount of the letter of credit. The Company also has pledged cash collateral for reinsurance agreements which amounted to $1.9 million, as of June 30, 2019, and $1.0 million, as of December 31, 2018, which is released annually between March 2020 and March 2023 based on the policy periods covered by the reinsurance agreements.
Location Amount Maturity
  (dollars in thousands)  
Boston $390
 March 2020
New York $356
 April 2020
New York $71
 October 2019
New York $398
 October 2019
New York $1,687
 October 2019
New York $1,617
 November 2019
San Francisco $711
 October 2025
(See Note 4).
To the extent any letter of credit is drawn upon, interest will be assessed at the prime commercial lending rate. As of June 30, 20192020 and December 31, 2018,2019 there were no amounts due related to these letters of credit.
19. Stockholder's Equity
Preferred Stock and Purchase of Capped Call Option
On May 19, 2015, the Company completed its offering of 120,750 shares of the Company's 5.625% Series A cumulative perpetual convertible preferred stock ("Series A Convertible Preferred Stock") that provided $117.2 million of proceeds, net of underwriting fees and issuance costs of $3.6 million. Each share of the Series A Convertible Preferred Stock is entitled to dividends at a rate of 5.625% per annum which will be payable, when and if declared by the board of directors of the Company, quarterly, in arrears, on February 15, May 15, August 15 and November 15 of each year. The Company may, at its option, pay dividends in cash, common stock or a combination thereof. The Company declared and accrued a cash dividend of $1.7 million and $1.7 million for the three months ended June 30, 20192020 and 2018,2019 and $3.4 million and $3.4 million for the six months ended June 30, 20192020 and 2018,2019, respectively.
Each share of Series A Convertible Preferred Stock is non-voting and has a liquidity preference over the Company's Class A common stock and ranks senior to all classes or series of the Company's Class A common stock, but junior to all of the Company's existing and future indebtedness with respect to divideddividend rights and rights upon the Company's involuntary liquidation, dissolution or winding down.

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Each share of Series A Convertible Preferred Stock is convertible, at the option of the holder, into a number of shares of the Company's Class A common stock equal to the liquidation preference of $1,000 divided by the conversion rate. The initial conversion rate (subsequent to the December 5, 2016 reverse stock split) is 38.0619 shares (which equates to $26.27 per share) of the Company's Class A common stock for each share of the Series A Convertible Preferred Stock. At any time on or after May 20, 2020, when the Company's capped call option expired, the Company may elect to convert all outstanding shares of the Series A Convertible Preferred Stock into shares of the Company’sCompany's Class A common stock, cash or a combination thereof, at the Company’sCompany's election, in each case, based on the then-applicable conversion rate, if the last reported sale price of the Company’sCompany's Class A common stock equals or exceeds 150% of the then-current conversion price on at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days (including on the last trading day of such period) immediately prior to such election. At the time of conversion, the conversion rate may be adjusted based on certain events including but not limited to the issuance of cash dividends or Class A common stock as dividends to the Company's Class A common shareholders or a share split or combination.
In connection with The Company has the issuanceintent and sale ofability to settle the Series A Convertible Preferred Stock,preferred shares in cash and, as a result, the Company entered into a capped call option transaction (the “Capped Call Option Transaction”) with Nomura Global Financial Products Inc. (the “option counterparty”) for $15.9 million. The Capped Call Option Transaction is expected generally to reducepreferred shares do not have an impact on the potential dilution to the Company’s Class A common stock (if the Company elects to convert to common shares) and/or offset any cash payments that the Company is required to make upon conversion of any Series A Convertible Preferred Stock. The Capped Call Option Transaction has an initial effective strike price of $26.27Company's diluted earnings per share which matches the initial conversion pricecalculation (See Note 21).
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Table of the Series A Convertible Preferred Stock, and a cap price of $33.54 per share. However,Contents
Cowen Inc.
Notes to the extent that the market price of Class A common stock, as measured under the terms of the Capped Call Option Transaction, exceeds the cap price thereof, there would nevertheless be dilution and/or such cash payments would not be offset. As the Capped Call Option Transaction is a free standing derivative that is indexed to the Company's own stock price and the Company controls if it is settled in cash or stock it qualifies for equity classification as a reduction to additional paid in capital.Unaudited Condensed Consolidated Financial Statements (Continued)
Embedded Cash Conversion Option on the December 2022 Convertible Notes
Upon issuance of the December 2022 Convertible Notes (see Note 18), the Company recognized the embedded cash conversion option at fair value of $23.4 million which was valued as of June 26, 2018 at $29.0 million. On June 26, 2018, the Company received shareholder approval for the Company to settle the December 2022 Convertible Notes entirely in Class A common stock. Upon receiving shareholder approval, the Company reclassified the separately recognized conversion option from a derivative liability to equity.
Cash Dividends to Common Stockholders
During the first quarter of 2020, the Company began the declaration of a quarterly cash dividend payable on its common stock. During March and June 2020, the Board of Directors declared a cash dividend of $0.04 per common share. Dividends are payable on all outstanding shares and on granted but unvested shares under the Equity Plan on the date of record (See Note 15). During the three and six months ended June 30, 2020, the Company accrued $1.1 million and $2.5 million, respectively, of cash dividends to its common stockholders.
Treasury Stock
Treasury stock of $254.4$315.0 million as of June 30, 2019,2020, compared to $234.1$284.3 million as of December 31, 2018,2019, resulted from $8.1$6.0 million acquired through repurchases of shares to cover employee minimum tax withholding obligations related to stock compensation vesting events under the Company's Equity PlansPlan or other similar transactions, $0.1$0.07 million received from an escrow account established to satisfy the Company’sCompany's indemnification claims arising under the terms of the purchase agreement entered into in connection with the Company’sCompany's acquisition of Convergex Group, LLC and $12.0$24.6 million purchased in connection with a share repurchase program.
The following represents the activity relating to the treasury stock held by the Company during the six months ended June 30, 2019:2020:
Treasury Stock SharesCost
(dollars in thousands)		Average Cost per Share
Balance outstanding at December 31, 201918,605,581  $284,301  $15.28  
Shares purchased for minimum tax withholding under the 2010 Equity Plan or other similar transactions490,717  6,029  12.29  
Shares of stock received in respect of indemnification claims5,189  70  13.41  
Purchase of treasury stock1,830,457  24,571  13.42  
Balance outstanding at June 30, 202020,931,944  $314,971  $15.05  
 Treasury stock shares Cost
(dollars in thousands)		 Average cost per share
Balance outstanding at December 31, 201815,336,871
 $234,142
 $15.27
Shares purchased for minimum tax withholding under the Equity Plans or other similar transactions542,444
 8,079
 14.89
Shares of stock received in respect of indemnification claims8,068
 121
 15.04
Purchase of treasury stock777,230
 12,015
 15.46
Balance outstanding at June 30, 201916,664,613
 $254,357
 $15.26


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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

20. Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income includes the after tax change in unrealized gains and losses on foreign currency translation adjustments. During the periods presented, the Company did not have material reclassifications out of other comprehensive income.
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
 (dollars in thousands)
Beginning Balance$(5) $(7) $(5) $(8)
Foreign currency translation2
 —
 2
 1
Ending Balance$(3) $(7) $(3) $(7)
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(dollars in thousands)
Beginning balance$(5) $(5) $(5) $(5) 
Foreign currency translation—  2  —  2  
Ending balance$(5) $(3) $(5) $(3) 

21. Earnings Per Share
The Company calculates its basic and diluted earnings per share in accordance with US GAAP. Basic earnings per share is calculated by dividing net income attributable to the Company's common stockholders by the weighted average number of common shares outstanding for the period. As of June 30, 2019,2020, there were 29,480,28727,641,600 shares of Class A common stock outstanding. As of June 30, 2019,2020, the Company has included 174,285216,912 fully vested, unissued restricted stock units in its calculation of basic earnings per share. As of December 31, 2018,2019, there were 28,437,86028,610,357 shares of Class A common stock outstanding. As of December 31, 2018,2019, the Company has included 253,772216,912 fully vested, unissued restricted stock units in its calculation of basic earnings per share.
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Diluted earnings per common share are calculated by adjusting the weighted average outstanding shares to assume conversion of all potentially dilutive items. The Company uses the treasury stock method to reflect the potential dilutive effect of the warrants (see Note 6(a)), unvested restricted shares, restricted stock units, and SAR's.SARs. In calculating the number of dilutive shares outstanding, the shares of common stock underlying unvested restricted shares and restricted stock units are assumed to have been delivered, and options and warrants are assumed to have been exercised, for the entire period being presented. The number of performance-linked unvested restricted stock units that are included in the calculation are at the amount that could be earned using current payout rates. The assumed proceeds from the assumed vesting, delivery and exercising were calculated as the amount of compensation cost attributed to future services and not yet recognized.
The Company can elect to settle the Series A Convertible Preferred Stock in shares, cash, or a combination of both. The Company's intent is to settle in cash and, based on current and projected liquidity needs, the Company has the ability to do so.
The computation of earnings per share is as follows:
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
 (dollars in thousands, except share and per share data)
Net income (loss)$146,948  $9,718  $74,837  20,013  
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds33,113  3,906  (29,075) 4,418  
Net income (loss) attributable to Cowen Inc.113,835  5,812  103,912  15,595  
Preferred stock dividends1,698  1,698  3,396  3,396  
Net income (loss) attributable to Cowen Inc. common stockholders$112,137  $4,114  $100,516  $12,199  
Shares for basic and diluted calculations:   
Weighted average shares used in basic computation27,983  29,769  28,289  29,766  
Restricted stock1,333  1,753  1,355  1,806  
Weighted average shares used in diluted computation29,316  31,522  29,644  31,572  
Earnings (loss) per share:   
Basic$4.01  $0.14  $3.55  $0.41  
Diluted$3.83  $0.13  $3.39  $0.39  

58
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
 (dollars in thousands, except share and per share data)
Net income (loss)$10,143
 $30,006
 $22,132
 $58,015
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds4,331
 24,607
 6,537
 35,763
Net income (loss) attributable to Cowen Inc.5,812
 5,399
 15,595
 22,252
Preferred stock dividends1,698
 1,698
 3,396
 3,396
Net income (loss) attributable to Cowen Inc. common stockholders$4,114
 $3,701
 $12,199
 $18,856
        
Shares for basic and diluted calculations:       
Weighted average shares used in basic computation29,769
 29,769
 29,766
 29,688
Restricted stock1,753
 951
 1,806
 772
Weighted average shares used in diluted computation31,522
 30,720
 31,572
 30,460
Earnings (loss) per share:       
Basic$0.14
 $0.12
 $0.41
 $0.64
Diluted$0.13
 $0.12
 $0.39
 $0.62

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

22. Segment Reporting
Change in Segments
During the second quarter of 2019 theThe Company realigned the information that the Chief Operating Decision Maker regularly reviews to evaluate performance for operating decision-making purposes, including evaluation and allocation of resources. As a result of this change in segment reporting, the Company retrospectively revised prior period results, by segment, to conform to the current period presentation (see Note 1). This structure includeshas two reportable business segments: Op Co and Asset Co. The structure is based on the Company's domain expertise as a driver of balance sheet harmonization and repeatable revenues for its operating business versus the Company’s long-term monetization strategies.
The Op Co segment consists of Cowen Investment Management (“CIM”),CIM, Investment Banking, Markets and Research. The Asset Co segment consists of the Company’sCompany's private investments, private real estate businessinvestments and other legacy multi-sector long/short equityinvestment strategies.
Performance Measuresmeasures
The performance measure for these segments is Economic Income (Loss), which management uses to evaluate the financial performance of and make operating decisions for the segments including determining appropriate compensation levels. Expenses not directly associated with specific segments are allocated based on the most relevant measures applicable, including headcount, square footage and other factors.
In general, Economic Income (Loss) is a pre-tax measure that (i) includes management reclassifications which the Company believes provides additional insight on the performance of the Company’s core businesses and divisions (ii) eliminates the impact of consolidation for Consolidated Funds and excludes (ii)(iii) goodwill and intangible impairment (iii)(iv) certain other transaction-related adjustments and/or reorganization expenses and (iv)(v) certain costs associated with debt. Economic Operating Income (Loss) represents Economic Income (Loss)is a similar measure but before depreciation and amortization expenses.In addition, Economic Income (Loss) revenues include investment income that represents the income the Company has earned in investing its own capital, including realized and unrealized gains and losses, interest and dividends, net of associated investment related expenses. For US GAAP purposes, these items are included in each of their respective line items. Economic Income (Loss) revenues also include management fees, incentive income and investment income earned through the Company's investment as a general partner in certain real estate entities and the Company's investment in the activist business and certain investment funds. For US GAAP purposes, all of these items, are recorded in other income (loss). Economic Income (Loss) recognizes (a) incentive fees during periods when the fees are not yet crystallized for US GAAP reporting and (b) retainer fees, relating to investment banking activities, earned during the period that would otherwise be deferred until closing for US GAAP reporting. In addition, Economic Income (Loss) expenses are reduced by reimbursement from affiliates, which for US GAAP purposes is presented gross as part of revenue.
As further stated below, one major difference between Economic Income (Loss) and US GAAP net income (loss) is that Economic Income (Loss) presents the segments' results of operations without the impact resulting from the full consolidation of any of the Consolidated Funds. The consolidation of these investment funds' results include the pro rata share of the income or loss attributable to other owners of such entities which is reflected in net income (loss) attributable to redeemable non-controlling interest in consolidated subsidiaries in the accompanying condensed consolidated statements of operations. This pro rata share has no effect on the overall financial performance for the segments, as ultimately, this income or loss is not income or loss for the segments themselves. Included in Economic Income (Loss) is the actual pro rata share of the income or loss attributable to the Company as an investor in such entities, which is relevant in management making operating decisions and evaluating financial performance. The Company does not disclose total asset information for its business segments as the information is not reviewed by the CODM.
The following tables set forth operating results for the Company's Op Coconsolidated US GAAP net income (loss) and Asset Co segmentsrelated reclassifications and related adjustments necessary to reconcile to the Company's Economic Income (Loss) measure to arrive atwhich represents the Company's consolidated US GAAP net income (loss):

Op Co and Asset Co segments' results:
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

 Three Months Ended June 30, 2020
 US GAAPReclassifications and Adjustments Economic Income
 Net income (loss)Management ReclassificationsFund Consolidation Reclassifications (k)Income Statement Adjustments Total Economic Income/(Loss)Operating CompanyAsset Company
 (dollars in thousands)
Revenues    
Investment banking$203,982  $(13,552) a, b$—  $—  $190,430  $190,430  $—  
Brokerage147,224  19,843  c, h—  —  167,067  167,067  —  
Management fees11,653  2,114  d, e635  —  14,402  14,234  168  
Incentive income (loss)—  46,375  e—  —  46,375  45,392  983  
Investment income (loss)—  140,486  f—  —  140,486  142,379  (1,893) 
Interest and dividends47,918  (47,918) c—  —  —  —  —  
Reimbursement from affiliates247  (272) b25  —  —  —  —  
Reinsurance premiums5,967  (5,967) g—  —  —  —  —  
Other revenue1,490  (1,532) g(18) —  (60) (62) 2  
Consolidated Funds revenues359  —  (359) —  —  —  —  
Total revenues418,840  139,577  283  —  558,700  559,440  (740) 
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)49,304  (40,602) c—  (1,131) l7,571  6,102  1,469  
Total net revenues369,536  180,179  283  1,131  551,129  553,338  (2,209) 
Expenses 
Compensation & Benefits305,282  (200) i—  —  305,082  304,644  438  
Fixed non-compensation expense—  37,475  e, j—  (2,615) m34,860  34,755  105  
Variable non-compensation expense—  40,822  j—  —  40,822  40,817  5  
Other non-compensation US GAAP expense98,461  (98,461) a, b, d, g, i—  —  —  —  —  
Depreciation & Amortization6,200  8  —  (545) p5,663  5,657  6  
Non-Controlling Interest—  1,739  j—  —  1,739  1,739  —  
Consolidated Funds expenses1,585  —  (1,585) —  —  —  —  
Total expenses411,528  (18,617) (1,585) (3,160) 388,166  387,612  554  
Other income (loss)233,872  (201,994) e, f, h(31,878) —  —  —  —  
Income taxes expense / (benefit)44,932  (95) —  (44,837) n—  —  —  
Income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds33,113  (3,103) j(30,010) —  —  —  —  
Income (loss) attributable to Cowen Inc.113,835  —  —  49,128  162,963  165,726  (2,763) 
Less: Preferred stock dividends1,698  —  —  —  1,698  1,387  311  
Economic Income (Loss)/ Income (loss) attributable to Cowen Inc. common stockholders$112,137  $—  $—  $49,128  161,265  164,339  (3,074) 
Add back: Depreciation and amortization expense5,663  5,657  6  
Economic Operating Income (Loss)$166,928  $169,996  $(3,068) 

60
              
 Three Months Ended June 30, 2019
       Adjustments    
 Operating Company Asset Company Total Economic Income/(Loss) Funds
Consolidation		 Other
Adjustments		   US GAAP
 (dollars in thousands)
Revenues             
Investment banking$104,216
 $—
 $104,216
 $—
 $10,489
 (a) $114,705
Brokerage120,672
 —
 120,672
 —
 (9,290) (b) 111,382
Management fees9,968
 500
 10,468
 (565) (2,864) (c) 7,039
Incentive income (loss)2,633
 1,596
 4,229
 —
 (4,221) (c) 8
Investment income (loss)(3,141) 3,626
 485
 —
 (485) (d) —
Interest and dividends—
 —
 —
 —
 40,047
 (b)(d) 40,047
Reimbursement from affiliates—
 —
 —
 (33) 287
 (e) 254
Reinsurance premiums—
 —
 —
 —
 14,331
 (f) 14,331
Other revenue4,304
 15
 4,319
 12
 (3,401) (f) 930
Consolidated Funds revenues—
 —
 —
 3,468
 —
   3,468
Total revenues238,652
 5,737
 244,389
 2,882
 44,893
   292,164
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)
5,298
 1,408
 6,706
 —
 32,822
 (b)(d) 39,528
Total net revenues233,354
 4,329
 237,683
 2,882
 12,071
   252,636
Expenses             
Non interest expense215,808
 3,011
 218,819
 —
 21,962
 (a)(e)(h)(i) 240,781
Goodwill impairments—
 —
 —
 —
 4,100
   4,100
Consolidated Funds expenses—
 —
 —
 2,231
 —
   2,231
Total expenses215,808
 3,011
 218,819
 2,231
 26,062
   247,112
Total other income (loss)—
 —
 —
 2,827
 6,865
 (c)(d)(i) 9,692
Income taxes expense / (benefit)—
 —
 —
 —
 5,073
 (h) 5,073
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds1,448
 235
 1,683
 3,478
 (830)   4,331
Income (loss) attributable to Cowen Inc.16,098
 1,083
 17,181
 —
 (11,369)   5,812
Less: Preferred stock dividends1,341
 357
 1,698
 —
 —
   1,698
Economic income (loss) / Income (loss) attributable to Cowen Inc. common stockholders14,757
 726
 15,483
 $—
 $(11,369)   $4,114
Add back: Depreciation and amortization expense4,945
 7
 4,952
        
Economic operating income (loss)$19,702
 $733
 $20,435
        

64

Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

 Three Months Ended June 30, 2019
 US GAAPReclassifications and AdjustmentsEconomic Income
 Net income (loss)Management ReclassificationsFund Consolidation Reclassifications (k)Income Statement AdjustmentsTotal Economic Income/(Loss)Operating CompanyAsset Company
 (dollars in thousands)
Revenues   
Investment banking$114,705  $(11,325) a, b$—  $836  o$104,216  $104,216  $—  
Brokerage111,382  12,662  c, h—  —  124,044  124,044  —  
Management fees7,039  2,864  d, e565  —  10,468  9,968  500  
Incentive income (loss)8  4,071  e—  150  o4,229  2,633  1,596  
Investment income (loss)—  (2,887) f—  —  (2,887) (6,513) 3,626  
Interest and dividends40,047  (40,047) c—  —  —  —  —  
Reimbursement from affiliates254  (287) b33  —  —  —  —  
Reinsurance premiums14,331  (14,331) g—  —  —  —  —  
Other revenue930  3,401  g(12) —  4,319  4,304  15  
Consolidated Funds revenues3,468  —  (3,468) —  —  —  —  
Total revenues292,164  (45,879) (2,882) 986  244,389  238,652  5,737  
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)39,528  (31,751) c—  (1,071) l6,706  5,298  1,408  
Total net revenues252,636  (14,128) (2,882) 2,057  237,683  233,354  4,329  
Expenses  
Compensation & Benefits136,409  —  i—  —  136,409  134,454  1,955  
Fixed non-compensation expense—  38,588  e, j—  (173) m38,415  37,171  1,244  
Variable non-compensation expense—  39,468  j—  —  39,468  39,428  40  
Other non-compensation US GAAP expense99,845  (99,845) a, b, d, g, i—  —  —  —  —  
Depreciation & Amortization4,952  —  —  —  4,952  4,945  7  
Non-Controlling Interest—  1,258  j—  —  1,258  1,258  —  
Goodwill impairments4,100  —  —  (4,100) p—  —  —  
Consolidated Funds expenses2,231  —  (2,231) —   —  —  —  
Total expenses247,537  (20,531) (2,231) (4,273)  220,502  217,256  3,246  
Other income (loss)9,692  (6,865) e, f, h(2,827) —  —  —  —  
Income taxes expense / (benefit)5,073  (34) —  (5,039) n—  —  —  
Income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds3,906  (428) j(3,478)  —  —  —  
Income (loss) attributable to Cowen Inc.5,812  —  —  11,369  17,181  16,098  1,083  
Less: Preferred stock dividends1,698  —  —  —  1,698  1,341  357  
Economic Income (Loss)/ Income (loss) attributable to Cowen Inc. common stockholders$4,114  $—  $—  $11,369  15,483  14,757  726  
Add back: Depreciation and amortization expense4,952  4,945  7  
Economic Operating Income (Loss)$20,435  $19,702  $733  

61
              
 Three Months Ended June 30, 2018
       Adjustments    
 Operating Company Asset Company Total
Economic Income/(Loss)		 Funds
Consolidation		 Other
Adjustments		   US GAAP
 (dollars in thousands)
Revenues             
Investment banking$80,042
 $—
 $80,042
 $—
 $4,784
 (a) $84,826
Brokerage113,186
 —
 113,186
 —
 (9,901) (b) 103,285
Management fees10,938
 1,548
 12,486
 (612) (4,501) (c) 7,373
Incentive income (loss)12,321
 (2,958) 9,363
 (8) (9,307) (c) 48
Investment income (loss)18,476
 1,478
 19,954
 —
 (19,954) (d)(g) —
Interest and dividends—
 —
 —
 —
 25,109
 (b)(d) 25,109
Reimbursement from affiliates—
 —
 —
 (65) 401
 (e) 336
Aircraft lease revenue—
 —
 —
 —
 419
 (g) 419
Reinsurance premiums—
 —
 —
 —
 9,226
 (f) 9,226
Other revenue(811) 90
 (721) —
 1,597
 (f) 876
Consolidated Funds revenues—
 —
 —
 3,075
 —
   3,075
Total revenues234,152
 158
 234,310
 2,390
 (2,127)   234,573
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)
3,134
 990
 4,124
 —
 20,182
 (b)(d) $24,306
Total net revenues231,018
 (832) 230,186
 2,390
 (22,309)   210,267
Expenses             
Non interest expense203,684
 2,281
 205,965
 —
 14,302
 (a)(e)(h)(i) 220,267
Consolidated Funds expenses—
 —
 —
 3,149
 —
   3,149
Total expenses203,684
 2,281
 205,965
 3,149
 14,302
   223,416
Total other income (loss)—
 —
 —
 23,411
 23,737
 (c)(d)(i)(j) 47,148
Income taxes expense / (benefit)—
 —
 —
 —
 3,993
 (h) 3,993
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds1,672
 808
 2,480
 22,652
 (525)   24,607
Income (loss) attributable to Cowen Inc.25,662
 (3,921) 21,741
 —
 (16,342)   5,399
Less: Preferred stock dividends1,290
 408
 1,698
 —
 —
   1,698
Economic income (loss) / Income (loss) attributable to Cowen Inc. common stockholders24,372
 (4,329) 20,043
 $—
 $(16,342)   $3,701
Add back: Depreciation and amortization expense2,913
 46
 2,959
        
Economic operating income (loss)$27,285
 $(4,283) $23,002
        

65

Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

 Six Months Ended June 30, 2020
 US GAAPReclassifications and AdjustmentsEconomic Income
 Net income (loss)Management ReclassificationsFund Consolidation Reclassifications (k)Income Statement AdjustmentsTotal Economic Income/(Loss)Operating CompanyAsset Company
 (dollars in thousands)
Revenues  
Investment banking$309,010  $(19,383) a, b$—  $—  $289,627  $289,627  $—  
Brokerage286,586  13,153  c, h—  —  299,739  299,739  —  
Management fees23,257  3,154  d, e1,312  —  27,723  27,351  372  
Incentive income (loss)—  42,288  e—  —  42,288  43,449  (1,161) 
Investment income (loss)—  109,383  f—  —  109,383  122,931  (13,548) 
Interest and dividends89,995  (89,995) c—  —  —  —  —  
Reimbursement from affiliates508  (558) b50  —  —  —  —  
Reinsurance premiums16,438  (16,438) g—  —  —  —  —  
Other revenue3,340  (2,822) g(18) —  500  498  2  
Consolidated Funds revenues3,515  —  (3,515) —  —  —  —  
Total revenues732,649  38,782  (2,171) —  769,260  783,595  (14,335) 
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)88,096  (70,505) c—  (2,242) l15,349  12,445  2,904  
Total net revenues644,553  109,287  (2,171) 2,242  753,911  771,150  (17,239) 
Expenses 
Compensation & Benefits429,710  1,076  i—  —  430,786  429,650  1,136  
Fixed non-compensation expense—  74,175  e, j—  (1,830) m72,345  72,094  251  
Variable non-compensation expense—  84,121  j—  —  84,121  84,109  12  
Other non-compensation US GAAP expense197,030  (197,030) a, b, d, g, i—  —  —  —  —  
Depreciation & Amortization11,642  —  —  (545) p11,097  11,085  12  
Non-Controlling Interest—  3,479  j—  —  3,479  3,479  —  
Consolidated Funds expenses4,299  —  (4,299) —  —  —  —  
Total expenses642,681  (34,179) (4,299) (2,375) 601,828  600,417  1,411  
Other income (loss)116,724  (146,902) e, f, h30,178  —  —  —  —  
Income taxes expense / (benefit)43,759  (205) —  (43,554) n—  —  —  
Income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds(29,075) (3,231)  j32,306  —  —  —  —  
Income (loss) attributable to Cowen Inc.103,912  —  —  48,171  152,083  170,733  (18,650) 
Less: Preferred stock dividends3,396  —  —  —  3,396  2,745  651  
Economic Income (Loss)/ Income (loss) attributable to Cowen Inc. common stockholders$100,516  $—  $—  $48,171  148,687  167,988  (19,301) 
Add back: Depreciation and amortization expense11,097  11,085  12  
Economic Operating Income (Loss)$159,784  $179,073  $(19,289) 

62
 Six Months Ended June 30, 2019
       Adjustments    
 Operating Company Asset Company Total Economic Income (Loss) 
Funds
Consolidation
 
Other
Adjustments
   US GAAP Net Income (Loss)
 (dollars in thousands)
Revenues             
Investment banking$187,212
 $—
 $187,212
 $—
 $7,599
 (a) $194,811
Brokerage225,829
 —
 225,829
 —
 (16,984) (b) 208,845
Management fees19,695
 1,203
 20,898
 (1,066) (5,652) (c) 14,180
Incentive income (loss)19,270
 1,706
 20,976
 (544) (20,409) (c) 23
Investment income (loss)13,001
 4,467
 17,468
 —
 (17,468) (d) —
Interest and dividends—
 —
 —
 —
 69,139
 (b)(d) 69,139
Reimbursement from affiliates—
 —
 —
 (67) 609
 (e) 542
Reinsurance premiums—
 —
 —
 —
 20,922
 (f) 20,922
Other revenue5,427
 51
 5,478
 12
 (3,499) (f) 1,991
Consolidated Funds revenues—
 —
 —
 5,808
 —
   5,808
Total revenues470,434
 7,427
 477,861
 4,143
 34,257
   516,261
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)10,615
 2,655
 13,270
 —
 55,342
 (b)(d) 68,612
Total net revenues459,819
 4,772
 464,591
 4,143
 (21,085)   447,649
Expenses             
Non interest expense421,562
 4,442
 426,004
 —
 34,084
 (a)(e)(h)(i) 460,088
Goodwill impairment—
 —
 —
 —
 4,100
   4,100
Consolidated Funds expenses—
 —
 —
 3,713
 —
   3,713
Total expenses421,562
 4,442
 426,004
 3,713
 38,184
   467,901
Total other income (loss)—
 —
 —
 3,448
 47,186
 (c)(d)(i) 50,634
Income taxes expense / (benefit)—
 —
 —
 —
 8,250
 (h) 8,250
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds3,250
 1,181
 4,431
 3,878
 (1,772)   6,537
Income (loss) attributable to Cowen Inc.35,007
 (851) 34,156
 —
 (18,561)   $15,595
Less: Preferred stock dividends2,717
 679
 3,396
 —
 —
   3,396
Economic income (loss) / Income (loss) attributable to Cowen Inc. common stockholders32,290
 (1,530) 30,760
 $—
 $(18,561)   $12,199
Add back: Depreciation and amortization expense9,884
 24
 9,908
        
Economic operating income (loss)$42,174
 $(1,506) $40,668
        


66

Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

 Six Months Ended June 30, 2019
 US GAAPReclassifications and AdjustmentsEconomic Income
 Net income (loss)Management ReclassificationsFund Consolidation Reclassifications (k)Income Statement AdjustmentsTotal Economic Income/(Loss)Operating CompanyAsset Company
 (dollars in thousands)
Revenues   
Investment banking$194,811  $(9,871) a, b$—  $2,272  o$187,212  $187,212  $—  
Brokerage208,845  27,071  c, h—  —  235,916  235,916  —  
Management fees14,180  5,651  d, e1,067  —  20,898  19,695  1,203  
Incentive income (loss)23  19,804  e543  606  o20,976  19,270  1,706  
Investment income (loss)—  7,381  f—  —  7,381  2,914  4,467  
Interest and dividends69,139  (69,139) c—  —  —  —  —  
Reimbursement from affiliates542  (609) b67  —  —  —  —  
Reinsurance premiums20,922  (20,922) g—  —  —  —  —  
Other revenue1,991  3,499  g(12) —  5,478  5,427  51  
Consolidated Funds revenues5,808  —  (5,808) —  —  —  —  
Total revenues516,261  (37,135) (4,143) 2,878  477,861  470,434  7,427  
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)68,612  (53,225) c—  (2,117) l13,270  10,615  2,655  
Total net revenues447,649  16,090  (4,143) 4,995  464,591  459,819  4,772  
Expenses 
Compensation & Benefits268,291  64  i—  —  268,355  264,703  3,652  
Fixed non-compensation expense—  74,475  e, j—  (1,185) m73,290  71,428  1,862  
Variable non-compensation expense—  76,599  j—  —  76,599  76,514  85  
Other non-compensation US GAAP expense184,008  (184,008) a, b, d, g, i—  —  —  —  —  
Depreciation & Amortization9,908  —  —  —  9,908  9,884  24  
Non-Controlling Interest—  2,283  j—  —  2,283  2,283  —  
Goodwill impairment4,100  —  —  (4,100) p—  —  —  
Consolidated Funds expenses3,713  —  (3,713) —  —  —  —  
Total expenses470,020  (30,587) (3,713) (5,285) 430,435  424,812  5,623  
Other income (loss)50,634  (47,186) e, f, h(3,448) —  —  —  —  
Income taxes expense / (benefit)8,250  31  —  (8,281) n—  —  —  
Income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds4,418  (540) j(3,878) —   —  —  —  
Income (loss) attributable to Cowen Inc.15,595  —  —  18,561  34,156  35,007  (851) 
Less: Preferred stock dividends3,396  —  —  —  3,396  2,717  679  
Economic Income (Loss)/ Income (loss) attributable to Cowen Inc. common stockholders$12,199  $—  $—  $18,561  30,760  32,290  (1,530) 
Add back: Depreciation and amortization expense9,908  9,884  24  
Economic Operating Income (Loss)$40,668  $42,174  $(1,506) 
 Six Months Ended June 30, 2018
       Adjustments    
 Operating Company Asset Company Total Economic Income (Loss) 
Funds
Consolidation
 
Other
Adjustments
   US GAAP Net Income (Loss)
 (dollars in thousands)
Revenues             
Investment banking$173,966
 $—
 $173,966
 $—
 $8,848
 (a) $182,814
Brokerage227,257
 —
 227,257
 —
 (18,239) (b) 209,018
Management fees22,217
 3,396
 25,613
 (1,815) (9,008) (c) 14,790
Incentive income (loss)15,360
 (801) 14,559
 (17) (14,478) (c) 64
Investment income (loss)36,710
 (2,454) 34,256
 —
 (34,256) (d)(g) —
Interest and dividends—
 —
 —
 —
 51,063
 (b)(d) 51,063
Reimbursement from affiliates—
 —
 —
 (133) 846
 (e) 713
Aircraft lease revenue—
 —
 —
 —
 1,134
 (g) 1,134
Reinsurance premiums—
 —
 —
 —
 17,873
 (f) 17,873
Other revenue(147) 313
 166
 —
 2,046
 (f) 2,212
Consolidated Funds revenues—
 —
 —
 6,276
 —
   6,276
Total revenues475,363
 454
 475,817
 4,311
 5,829
   485,957
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)
7,661
 2,420
 10,081
 —
 38,765
 (b)(d) 48,846
Total net revenues467,702
 (1,966) 465,736
 4,311
 (32,936)   437,111
Expenses             
Non interest expense410,059
 5,239
 415,298
 —
 28,284
 (a)(e)(h)(i) 443,582
Consolidated Funds expenses—
 —
 —
 5,580
 —
   5,580
Total expenses410,059
 5,239
 415,298
 5,580
 28,284
   449,162
Total other income (loss)—
 —
 —
 33,458
 47,524
 (c)(d)(i)(j) 80,982
Income taxes expense / (benefit)—
 —
 —
 —
 10,916
 (h) 10,916
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds3,812
 826
 4,638
 32,189
 (1,064)   35,763
Income (loss) attributable to Cowen Inc.53,831
 (8,031) 45,800
 —
 (23,548)   22,252
Less: Preferred stock dividends2,581
 815
 3,396
 —
 —
   3,396
Economic income (loss) / Income (loss) attributable to Cowen Inc. common stockholders51,250
 (8,846) 42,404
 $—
 $(23,548)   $18,856
Add back: Depreciation and amortization expense5,842
 103
 5,945
        
Economic operating income (loss)$57,092
 $(8,743) $48,349
        

The following is a summary of the adjustments made to US GAAP net income (loss) to arrive at
Economic Income (Loss):
Funds Consolidation:The impacts of consolidation and the related elimination entries of the Consolidated Funds are not included in Economic Income (Loss). Adjustments to reconcile to US GAAP net income (loss) included elimination of incentive income and management fees earned from the Consolidated Funds and addition of investment fund expenses excluding management fees paid, investment fund revenues and investment income (loss).
Other Adjustments:
(a)     Economic Income (Loss) presents underwriting expenses net of investment banking revenues, expenses reimbursed
from clients within their respective expense category. Economic Income (Loss) also records retainer fees, relating to investment banking activities, collectible during the period that would otherwise be deferred until closing for US GAAP reporting.




67
63

Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(b)Adjustments made to US GAAP net income (loss) to arrive at Economic Operating Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities which
Management Reclassifications
Management reclassification adjustments and fund consolidation reclassification adjustments have no effect on economic income. These adjustments are reclassifications to change the location of certain line items.
aEconomic Income (Loss) presents underwriting expenses net of investment banking revenues.
bEconomic Income (Loss) presents expenses reimbursed from clients and affiliates within their respective expense category but is included as a part of revenues under US GAAP.
cEconomic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities which are shown gross in interest income and interest expense for US GAAP.
dEconomic Income (Loss) recognizes revenues net of fund start-up costs and distribution fees paid to agents.
eEconomic Income (Loss) recognizes the Company's proportionate share of management and incentive fees and associated share of expenses on a gross basis for certain real estate operating entities, the healthcare royalty business and the activist business. Additionally, carried interest, which the Company applies an equity ownership model to, is recorded in other income (loss) for US GAAP and is shown as incentive income for Economic Income (Loss).
fEconomic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends) for which the majority of this activity is shown in other income (loss) for US GAAP reporting.
gEconomic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue. The costs are recorded within expenses for US GAAP reporting.
hEconomic Income (Loss) recognizes gains and losses on investments held as part of the Company's facilitation and trading business within brokerage revenues as these investments are directly related to the markets business activities.
iEconomic Income (Loss) presents certain payments to associated banking partners as compensation rather than non-compensation expenses.
jEconomic Income (Loss) presents US GAAP expenses as either Fixed non-compensation or Variable non-compensation expenses. The Company also presents US GAAP Income (loss) attributable to non-controlling interests within total other expenses for Economic Income (Loss).
Fund Consolidation Reclassifications
kThe impacts of consolidation and the related elimination entries of the Consolidated Funds are not included in Economic Income (Loss). Adjustments to reconcile to US GAAP net income (loss) included elimination of incentive income and management fees earned from the Consolidated Funds and addition of investment fund expenses excluding management fees paid, investment fund revenues and investment income (loss).
Income Statement Adjustments
lEconomic Income (Loss) excludes the amortization of discount on convertible debt.
mEconomic Income (Loss) excludes acquisition related adjustments as management does not consider these items when evaluating the performance of the Company.
nEconomic Income (Loss) excludes income taxes.
oFor periods prior to the first quarter of 2020, Economic Income (Loss) records a) income from uncrystallized incentive fees and b) retainer fees, relating to investment banking activities, earned during the period that would otherwise be deferred until closing for US GAAP reporting. Similar amounts are not adjusted subsequently.
pEconomic Income (Loss) excludes goodwill and intangible impairment.
(c)     Economic Income (Loss) recognizes revenues (i) net
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Cowen Inc.
Notes to agents, (ii) records income fromConsolidated Financial Statements (Continued)
uncrystallized incentive fees and (iii) the Company's proportionate share of management and incentive fees of certain
real estate operating entities, the healthcare royalty business and the activist business.
(d)     Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends).
(e)     Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of
revenues under US GAAP.
(f)     Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of
expenses, within other revenue.
(g)     Aircraft lease revenue is shown net of expenses in investment income for Economic Income (Loss).
(h)    Economic Income (Loss) excludes income taxes and acquisition related adjustments as management does not consider
these items when evaluating the performance of the segment.
(i)     Economic Income (Loss) recognizes the Company's proportionate share of expenses, for certain real estate
operating entities and the activist business, for which the investments are recorded under the equity method of accounting for investments.
(j)     Economic Income (Loss) excludes gain/(loss) on debt extinguishment.
For the three and six months ended June 30, 2019 and 2018, there was no one investment fund or other customer which represented more than 10% of the Company's total revenues.
23. Regulatory Requirements
As registered broker-dealers, Cowen and Company, Cowen Execution, ATM Execution, Cowen Prime and Westminster are subject to the SEC's Uniform Net Capital Rule 15c3-1 (“("SEC Rule 15c3-1”15c3-1"), which requires the maintenance of minimum net capital. Each registered broker-dealer has elected to compute net capital under the alternative method permitted by the Rule.that rule. Under the alternative method, Cowen and Company's minimum net capital requirement, as defined in (a)(4) of theSEC Rule 15c3-1, is $1.0 million. Cowen Execution,and Company, ATM Execution, Cowen Prime and Westminster are required to maintain minimum net capital, as defined in (a)(1)(ii) of theSEC Rule 15c3-1, equal to the greater of $250,000 or 2% of aggregate debits arising from customer transactions. Advances to affiliates, repayment of borrowings, distributions, dividend payments and other equity withdrawals are subject to certain notification and other requirementsprovisions of theSEC Rule 15c3-1 and other regulatory bodies.
On February 7, 2019, FINRA approved the transfer of all of Cowen Securities’ business and personnel toMay 1, 2020, Cowen and Company.Company completed its merger with Cowen Securities subsequently filed a Form BDW, pursuantExecution. Cowen and Company is the surviving entity. The merger had no impact to Section 15(b) of the Securities Exchange Act of 1934, with FINRA to withdraw its status as a broker-dealer given that it will no longer conduct a securities business. On May 21, 2019, Cowen Securities Form BDW was approved and officially deregistered with the SEC.Company’s financial results.
Cowen Prime is also subject to Commodity Futures Trading Commission Regulation 1.17 (“("Regulation 1.17”1.17"). Regulation 1.17 requires net capital equal to or in excess of $45,000 or the amount of net capital required by SEC Rule 15c3-1, whichever is greater. Cowen Executionand Company is also subject to Options Clearing Corporation ("OCC") Rule 302. OCC Rule 302 requires maintenance of net capital equal to the greater of $2.0 million or 2% of aggregate debit items. At June 30, 2019,2020, Cowen Executionand Company had $114.4$296.4 million of net capital in excess of this minimum requirement.
Cowen International Ltd and Cowen Execution Ltd are subject to the capital requirements of the FCA, as defined, and must exceed the minimum capital requirement set forth by the FCA. Effective June 1, 2018, the FCA approved Ramius UK’s application to cancel all of its FCA authorization permissions. Accordingly, Ramius UK is no longer an FCA regulated and authorized firm. Ramius UK sought the cancellation. Cowen Execution Ltd was formally approved to trade in a principal capacity conditional upon the completion, and communication to the Wholesale Supervision, of the implementation of its order management system.
Cowen and Company (Asia) Limited (“Cowen Asia”),Asia, a previously established entity, was re-registered with regulatory approval on May 17, 2019. Cowen Asia is subject to the financial resources requirements of the Securities and Futures Commission (“SFC”("SFC") of Hong Kong. Financial Resources must exceed the Total Financial Resources requirement of the SFC.
As of June 30, 2019,2020, these regulated broker-dealers had regulatory net capital or financial resources, regulatory net capital requirements or minimum FCA or SFC requirement and excess as follows:

SubsidiaryNet CapitalMinimum Net Capital RequirementExcess Net Capital
 (dollars in thousands)
Cowen and Company$300,725  $4,287  $296,438  
ATM Execution$5,154  $250  $4,904  
Cowen Prime$20,238  $250  $19,988  
Westminster$29,402  $250  $29,152  
Cowen International Ltd$22,388  $12,104  $10,284  
Cowen Execution Ltd$11,044  $2,781  $8,263  
Cowen Asia$1,329  $387  $942  
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Subsidiary Net Capital Minimum Net Capital Requirement Excess Net Capital
  (dollars in thousands)
Cowen and Company $95,807
 $1,000
 $94,807
Cowen Execution $116,967
 $2,541
 $114,426
ATM Execution $5,375
 $250
 $5,125
Cowen Prime $12,091
 $250
 $11,841
Westminster $21,602
 $250
 $21,352
Cowen International Ltd $15,479
 $8,562
 $6,917
Cowen Execution Ltd $5,158
 $3,087
 $2,071
Cowen and Company (Asia) Limited $1,092
 $384
 $708
The Company’sCompany's U.S. broker-dealers must also comply with SEC Rule 15c3-3 or claim an exemption pursuant to subparagraphs (k)(2)(i) or (k)(2)(ii) of that rule. Firms can rely on more than one exemption. Cowen and Company, Cowen Prime and ATM Execution claim the (k)(2)(ii) exemption with regardsregard to some or all of their customer accounts and transactions that are introduced on a fully-disclosed basis to their clearing agents for clearing, settlement and custody. Cowen and Company, Cowen Prime and Westminster claim the (k)(2)(i) exemption with regards to customer transactions and balances that are cleared, settled and custodied in bank accounts designated as Special Accounts for the Exclusive Benefit of Customers ("Special Bank Accounts.Accounts").
In accordance with the requirements of SEC Rule 15c3-3, Cowen Executionand Company may be required to deposit in a Special Reserve Account cash or acceptable qualified securities for the exclusive benefit of customers. As of June 30, 2019,2020, Cowen Executionand Company had nosegregated approximately $25.7 million of cash, while its required deposit in accordance with the SEC Rule 15c3-3. However, Cowen Execution had approximately $15.6was $24.3 million of cash segregated..
As a clearing broker-dealer, Cowen Executionand Company is required to compute a reserve requirement for proprietary accounts of broker-dealers (“PAB accounts”("PAB"), as defined in SEC Rule 15c3-3. Cowen Executionand Company conducts PAB reserve computations in order to determine the amount it is required to deposit in its PAB Reserve Bank Accounts pursuant to SEC Rule 15c3-3. This allows each correspondent firm that uses Cowen Executionand Company as its clearing broker-dealer to classify its PAB account assets held at Cowen Executionand Company as allowable assets in the correspondent's net capital calculation. At June 30, 2019,2020, Cowen Executionand Company had $27.7$37.7 million of cash on deposit in PAB Reserve Bank Accounts, which was more than its required deposit of $21.9$25.9 million.
Cowen and Company, ATM Execution, Cowen Prime and Cowen ExecutionPrime also maintain certain assets in PAB accounts held at their respective clearing brokers. Each treats its assets held in those PAB accounts at the respective clearing brokers as allowable assets for net capital purposes.
Cowen’s
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Cowen Inc.
Notes to Consolidated Financial Statements (Continued)
Cowen's Luxembourg reinsurance companies, Vianden RCG Re SCA and Hollenfels, individually and their Luxembourg parent holding company, Ramius Enterprise Luxembourg Holdco S.à r.l., on a combined basis with the reinsurance companies, are required to maintain a solvency capital ratio as calculated by relevant European Commission directives and local regulatory rules in Luxembourg. Each reinsurance company’scompany's individual solvency capital ratio as well as the combined solvency capital ratio of the holding and reinsurance companies calculated as of December 31 of each year must exceed a minimum requirement. As of the last testing date, December 31, 2018,2019, all of these entities were in excess of this minimum requirement. The companies are currently, and Managementmanagement expects they will be at the next testing date of December 31, 2019,2020, in compliance with these requirements.
Based on minimum capital and surplus requirements pursuant to the laws of the state of New York that apply to captive insurance companies, RCG Insurance Company, Cowen’sCowen's captive insurance company incorporated and licensed in the state of New York, was required to maintain capital and surplus of approximately $0.3 million as of June 30, 2019.2020. RCG Insurance Company’s capital and surplus as of June 30, 20192020 totaled approximately $32.5 $31.3 million.
24. Related Party Transactions
The Company and its affiliated entities are the managing member, general partner and/or investment manager to the Company's investment funds and certain managed accounts. Management fees and incentive income are primarily earned from affiliated entities. As of June 30, 20192020 and December 31, 2018, $19.42019, $19.1 million and $19.4$20.5 million, respectively, included in fees receivable, are earned from related parties. The Company may, at its discretion, reimburse certain fees charged to the investment funds that it manages to avoid duplication of fees when such funds have an underlying investment in another affiliated investment fund. For the three and six months ended June 30, 20192020 and 2018,2019, the amounts which the Company reimbursed the investment funds it manages were immaterial. Fees receivable and fees payable are recorded at carrying value, which approximates fair value.

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

The Company may also make loans to employees or other affiliates, excluding executive officers of the Company. These loans are interest bearing and settle pursuant to the agreed-upon terms with such employees or affiliates, and are included in due from related parties in the accompanying condensed consolidated statements of financial condition. As of June 30, 20192020 and December 31, 2018,2019, loans to employees of $14.6$11.6 million and $17.0$14.9 million, respectively, were included in due from related parties on the accompanying condensed consolidated statements of financial condition. Of these amounts $7.3$5.2 million and $8.8$7.1 million, respectively, are related to forgivable loans. These forgivable loans provide for a cash payment up-front to employees, with the amount due back to the Company forgiven over a vesting period.  An employee that voluntarily ceases employment, or is terminated with cause, is generally required to pay back to the Company any unvested forgivable loans granted to them.  The forgivable loans are recorded as an asset to the Company on the date of grant and payment, and then amortized to compensation expense on a straight-line basis over the vesting period.  The vesting period on forgivable loans is generally one to three years. The Company recorded compensation expense of $0.9 million and $0.8$0.9 million for the three months ended June 30, 2020 and 2019 and 2018,$2.0 million and $1.8 million and $1.4 million for the six months ended June 30, 2019,2020 and 2018,2019, respectively. This expense is included in employee compensation and benefits in the accompanying condensed consolidated statementstatements of operations. For the three and six months ended June 30, 2019,2020, the interest income was $0.1 million for these related party loans and advances, respectively, and are included in interest and dividends in the accompanying condensed consolidated statementstatements of operations. For the three and six months ended June 30, 2018,2019, the interest income was immaterial$0.1 million for these related party loans and advances, respectively, and areadvances. This income is included in interest and dividends in the accompanying condensed consolidated statementstatements of operations.
As of June 30, 20192020 and December 31, 2018,2019, included in due from related parties is $6.9$5.9 million and $7.7$6.5 million, respectively, related to the sales of portions of the Company's ownership interest in the activist business of Starboard Value to the Starboard principals. It is being financed through the profits of the relevant Starboard entities over a 5 yearfive-year period and earns interest at 5%5.0% per annum.  The interest income for the three months ended June 30, 20192020 and 20182019 was $0.1 million and $0.1 million and for the six months ended June 30, 2020 and 2019, and 2018, was $0.2$0.1 million and $0.2 million, respectively.
The remaining balance included in due from related parties of $7.6$6.6 million and $8.9$5.3 million as of June 30, 20192020 and December 31, 2018,2019, respectively, relates to amounts due to the Company from affiliated investment funds and real estate entities due to expenses paid on their behalf. Included in due to related parties is approximately $0.6$0.2 million and $0.6$0.3 million as of June 30, 20192020 and December 31, 2018,2019, respectively, related to a subordination agreement with an investor in certain real estate funds. This total is based on a hypothetical liquidation of the real estate funds as of the balance sheet date.
Employees and certain other related parties invest on a discretionary basis within consolidated entities. These investments generally are subject to preferential management fee and performance fee arrangements. As of June 30, 20192020 and December 31, 2018,2019, such investments aggregated $35.4$132.2 million and $25.1$36.0 million, respectively, were included in redeemable non-controlling interests on the accompanying condensed consolidated statements of financial condition. Their share of the net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds aggregated $0.8$4.0 million and $1.5$0.8 million for the three
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Cowen Inc.
Notes to Consolidated Financial Statements (Continued)
months ended June 30, 2019three months ended and 2018, and $2.3$4.0 million and $4.3$2.3 million for the six months ended June 30, 20192020 and 2018,2019, respectively.
The Company may, at times, have unfunded commitment amounts pertaining to related parties. See Note 17 "Commitments and Contingencies" for amounts committed as of June 30, 2019 and December 31, 2018.2020.
25. Guarantees and Off-Balance Sheet Arrangements
Guarantees
US GAAP requires the Company to disclose information about its obligations under certain guarantee arrangements. Those standards define guarantees as contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying security (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. Those standards also define guarantees as contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement as well as indirect guarantees of the indebtedness of others.
In the normal course of its operations, the Company enters into contracts that contain a variety of representations and warranties which provide general indemnifications. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company expects the risk of loss to be remote.

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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

The Company indemnifies and guarantees certain service providers, such as clearing and custody agents, trustees and administrators, against specified potential losses in connection with their acting as an agent of, or providing services to, the Company or its affiliates. The Company also indemnifies some clients against potential losses incurred in the event specified third-party service providers, including sub-custodians and third-party brokers, improperly execute transactions. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make significant payments under these arrangements and has not recorded any contingent liability in the condensed consolidated financial statements for these indemnifications.
The Company also provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the breach of those representations and warranties. The Company may also provide standard indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due either to a change in or adverse application of certain tax laws. These indemnifications generally are standard contractual terms and are entered into in the normal course of business. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the accompanying condensed consolidated financial statements for these indemnifications.
The Company may maintain cash and cash equivalents at financial institutions in excess of federally insured limits. The Company has not experienced any material losses in such accounts and does not believe it is exposed to significant credit risks in relation to such accounts.
Off-Balance Sheet Arrangements
The Company has no material off-balance sheet arrangements, which have not been disclosed, as of June 30, 20192020 and December 31, 2018.2019. Through indemnification provisions in clearing agreements with clients, customer activities may expose the Company to off-balance-sheet credit risk. Pursuant to the clearing agreement, the Company is required to reimburse the Company's clearing broker, without limit, for any losses incurred due to a counterparty's failure to satisfy its contractual obligations. However, these transactions are collateralized by the underlying security, thereby reducing the associated risk to changes in the market value of the security through the settlement date.
The Company’sCompany's customer securities activities are transacted on a delivery versus payment, cash or margin basis. In delivery versus payment transactions, the Company is exposed to risk of loss in the event of the customers’customers' or brokers’brokers' inability to meet the terms of their contracts.
In margin transactions, the Company extends credit to clients collateralized by cash and securities in their account. In the event the customers or brokers fail to satisfy their obligations, the Company may be required to purchase or sell securities at prevailing market prices in order to fulfill the obligations.
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Cowen Inc.
Notes to Consolidated Financial Statements (Continued)
The Company’sCompany's exposure to credit risk can be directly impacted by volatile securities markets, which may impair the ability of counterparties to satisfy their contractual obligations. The Company seeks to control its credit risk through a variety of reporting and control procedures, including establishing credit limits based upon a review of the customers’customers' financial condition and credit ratings. The Company seeks to control the risk associated with its customer margin transactions by requiring customers to maintain margin collateral in compliance with various regulatory and internal guidelines. The Company also monitors required margin levels daily and, pursuant to its guidelines, requires customers to deposit additional collateral, or reduce positions, when necessary.
In addition, during the normal course of business, the Company has exposure to a number of risks including market risk, currency risk, credit risk, operational risk, liquidity risk and legal risk. As part of the Company's risk management process, these risks are monitored on a regular basis throughout the course of the year.
The Company enters into secured and unsecured borrowing agreements to obtain funding necessary to cover daily securities settlements with clearing corporations. At times, funding is required for unsettled customer delivery versus payment and riskless principal transactions, as well as to meet deposit requirements with clearing organizations. Secured arrangements are collateralized by the securities. The Company maintains uncommitted financing arrangements with large financial institutions, the details of which are summarized below as of June 30, 2019.2020.

LenderContractual AmountAvailable AmountMaturity DateDescription
Pledge Lines(dollars in thousands)
Texas Capital Bank$75,000  $75,000  NoneSecured Depository Trust Company Pledge Line
BMO Harris Bank75,000  75,000  NoneSecured Tri-Party Pledge Facility
BMO Harris Bank150,000  150,000  NoneSecured Depository Trust Company Pledge Line
       Total300,000  300,000  
Spike Line
BMO Harris Bank
Canadian Imperial Bank
of Commerce
Texas Capital Bank
70,000  70,000  August 21, 2020Unsecured committed spike line facility to cover short term increases in National Securities Clearing Corporation margin deposit requirements
Revolving Credit Facility
BMO Harris Bank25,000  25,000  December 2, 2021Unsecured Corporate Revolver
Total Credit Lines$395,000  $395,000  
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Cowen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Lender Contractual Amount Available Amount Maturity Date Description
Pledge Lines (dollars in thousands)    
Texas Capital Bank $75,000
 $75,000
 None Secured Depository Trust Company Pledge Line
BMO Harris Bank 75,000
 75,000
 None Secured Tri-Party Pledge Facility
BMO Harris Bank 150,000
 150,000
 None Secured Depository Trust Company Pledge Line
       Total 300,000
 300,000
    
         
Revolving Credit Facility        
BMO Harris Bank
Canadian Imperial Bank
of Commerce
Texas Capital Bank
 70,000
 70,000
 August 23, 2019 (Syndicated) Unsecured liquidity facility to cover increases in National Securities Clearing Corporation margin deposit requirements
Total Credit Lines $370,000
 $370,000
    
26. Subsequent Events
On July 21, 2020, the Board of Directors declared a quarterly cash dividend payable on its common stock of $0.04 per common share, payable on September 15, 2020, to stockholders of record on September 1, 2020.
On July 21, 2020, the Board of Directors approved the 2020 Equity and Incentive Plan (for which on July 24, 2020 the Company filed the related registration statement) which resulted in 3.0 million additional shares to be available for future issuance to the Company's employees and directors.
The Company has evaluated events that have occurred after the balance sheet date but before the financial statements are issued and has determined that there were no other subsequent events requiring adjustment or disclosure in the condensed consolidated financial statements.







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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
The discussion contains forward-looking statements, which involve numerous risks and uncertainties, including, but not limited to, those described withinin the sections titled “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 (the "2019 Form 10-K") and in Item 1A of this periodic reportQuarterly Report on Form 10-Q, formany of which risks are currently elevated by, and may or will continue to be elevated by, the quarterly period ended June 30, 2019.COVID-19 pandemic. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the condensed consolidated financial statements and related notes of Cowen Inc. included elsewhere in this quarterly report. Actual results may differ materially from those contained in any forward-looking statements.
Overview


Cowen Inc., a Delaware corporation formed in 2009, is a diversified financial services firm that, together with its consolidated subsidiaries (collectively, "Cowen" or the "Company"), provides investment management, investment banking, research, sales and trading, prime brokerage, global clearing, and commission management services and investment management through its two business segments: the Operating Company (“("Op Co”Co") and the Asset Company (“("Asset Co”Co").
Operating Company
The Op Co segment consists of four divisions: the Cowen Investment Management (“CIM”("CIM") division, the Investment Banking division, the Markets division and the Research division. The Company refers to the Investment Banking division, the Markets division and the Research division combinedcollectively as its investment banking businesses. Op Co’sCo's CIM division includes advisers to investment funds (including private equity structures and privately placed hedge funds and private equity structures)funds), and registered funds. Op Co’sCo's investment banking businesses offer industry focused investment banking for growth-oriented companies including advisory and global capital markets origination, and domain knowledge-driven research, sales and trading platforms for institutional investors, global clearing, and commission management services and also a comprehensive suite of prime brokerage services.
The CIM division is the Company's investment management business, which operates primarily under the Cowen Investment Management name. CIM offers innovative investment products and solutions across the liquidity spectrum to institutional and private clients. The predecessor to this business was founded in 1994 and, through one of its subsidiaries, has been registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act") since 1997. The Company's investment management business offers investors access to a number of strategies to meet their specific needs including private healthcare investing, private sustainable investing, healthcare royalties, activism and merger arbitrage. The CIM division focuses on attracting and retaining talented investment teams and providing seed capital and working capital, an institutional infrastructure, robust sales and marketing and industry knowledge. A portion of the Company’s capital is invested alongside the Company's investment management clients. The Company has also invested some of its capital in its reinsurance businesses.
Op Co’sCo's investment banking businesses include investment banking, research, sales and trading, prime brokerage, global clearing and commission management services provided primarily to companies and primarily institutional investor clients. Our primary target sectors ("Target Sectors") areSectors covered by Op Co's investment banking business include healthcare, technology, media and telecommunications, consumer, industrials, information and technology services, consumer, aerospace and defense, industrials, energy and transportation.energy. We provide research and brokerage services to over 5,0006,000 domestic and international clients seeking to trade securities and other financial instruments, principally in our target sectors. The investment banking businesses also offer a full-service suite of introduced prime brokerage services targeting emerging private fund managers. Historically, we have focused our investment banking efforts on small to mid-capitalization public companies as well as private companies. From time to time, the Company invests in private capital raising transactions of its investment banking clients.
Asset Company
The Asset Co segment consists of the Company’sCompany's private investments, private real estate businessinvestments and other legacy multi-sector long/short equityinvestment strategies. The focus of Asset Co is to drive future monetization of the invested capital of the segment.
Certain Factors Impacting Our Business
Our Company's businesses and results of operations are impacted by the following factors:
Investment performance.  Our revenues from incentive income are linked to the performance of the investment funds and accounts that we manage. Performance also affects assets under management because it influences investors' decisions to invest assets in, or withdraw assets from, the investment funds and accounts managed by us.
Fee and allocation rates.  Our management fee revenues are linked to the management fee rates we charge as a percentage of contributed and invested capital. Our incentive income revenues are linked to the incentive allocation rates we charge as a percentage of performance-driven asset growth. Our incentive allocations are generally subject to

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“high-water marks,” whereby incentive income is generally earned by us only to the extent that the net asset value of an investment fund at the end of a measurement period exceeds the highest net asset value as of the end of the earlier measurement period for which we earned incentive income. Our incentive allocations, in some cases, are subject to performance hurdles. Additionally, our revenues from management fees are directly linked to assets under management. Positive performance in our legacy funds increases assets under management which results in higher management fees.
Investment performance of our own capital.  We invest our own capital and the performance of such invested capital affects our revenues.
•Underwriting, private placement and strategic/financial advisory fees.  Our revenues from investment banking are directly linked to the underwriting fees we earn in equity and debt securities offerings in which the Company acts as an underwriter, private placement fees earned in non-underwritten transactions, sales commissions earned in at-the-market offerings and success fees earned in connection with advising both buyers and sellers, principally in mergers and acquisitions. As a result, the future performance of our investment banking business will depend on, among other things, our ability to secure lead manager and co-manager roles in clients' capital raising transactions as well as our ability to secure mandates as a client's strategic financial advisor.
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•Liquidity.  As a clearing broker-dealer in the U.S., we are subject to cash deposit requirements with clearing organizations, brokers and banks that may be large in relation to our total liquid assets.
Commissions.•Equity research fees.  Equity research fees are paid to the Company for providing access to equity research. The Company also permits institutional customers to allocate a portion of their commissions to pay for research products and other services provided by third parties. Our commissionability to generate revenues depend for the most part onrelating to our customer trading volumes andequity research depends on the notional valuequality of the non-U.S. securities traded by our customers.
research and its relevance to our institutional customers and other clients.
•Principal transactions. Principal transactions revenue includes net trading gains and losses from the Company's market-making activities and net trading gains and losses on inventory and other Company positions. Commissions associated with these transactions are also included herein. In certain cases, the Company provides liquidity to clients buying or selling blocks of shares of listed stocks without previously identifying the other side of the trade at execution, which subjects the Company to market risk.
Equity•Commissions.  Our commission revenues depend for the most part on our customer's trading volumes and credit research fees.  Equityon the notional value of the non-U.S. securities traded by our customers.
•Investment performance.  Our revenues from incentive income are linked to the performance of the investment funds and credit researchaccounts that we manage. Performance also affects assets under management because it influences investors' decisions to invest assets in, or withdraw assets from, the investment funds and accounts managed by us.
•Fee and allocation rates.  Our management fee revenues are linked to the management fee rates we charge as a percentage of contributed and invested capital. Our incentive income revenues are linked to the incentive allocation rates we charge as a percentage of performance-driven asset growth. Our incentive allocations are generally subject to "high-water marks," whereby incentive income is generally earned by us only to the extent that the net asset value of an investment fund at the end of a measurement period exceeds the highest net asset value as of the end of the earlier measurement period for which we earned incentive income. Our incentive allocations, in some cases, are subject to performance hurdles. Additionally, our revenues from management fees are paiddirectly linked to the Company for providing its equity and credit research. The Company also permits institutional customers to allocate a portion of their commissions to pay for research products and other services provided by third parties. Our ability to generate revenues relating toassets under management. Positive performance in our equity and credit research depends on the quality of our research and its relevance to our institutional customers and other clients.
legacy funds increases assets under management which results in higher management fees.
•Investment performance of our own capital.  We invest our own capital and the performance of such invested capital affects our revenues.  Investment income in the investment bank business includes gains and losses generated by the capital the Company invests in private capital raising transactions of its investment banking clients.  Our revenues from investment income are linked to the performance of the underlying investments.
Liquidity.  As a clearing broker-dealer in the U.S., we are subject to cash deposit requirements with clearing organizations, brokers and banks that may be large in relation to our total liquid assets.
External Factors Impacting Our Business
Our financial performance is highly dependent on the environment in which our businesses operate. We believe a favorable business environment is characterized by many factors, including a stable geopolitical climate, transparent financial markets, low inflation, low interest rates, low unemployment, strong business profitability and high business and investor confidence. Unfavorable or uncertain economic or market conditions can be caused by declines in economic growth, business activity or investor or business confidence, limitations on the availability (or increases in the cost of) credit and capital, increases in inflation or interest rates, exchange rate volatility, unfavorable global asset allocation trends, outbreaks of hostilities or other geopolitical instability, corporate, political or other scandals that reduce investor confidence in the capital markets, global health crisis, such as the ongoing COVID-19 pandemic, or a combination of these or other factors. Until the COVID-19 pandemic subsides, we expect reduced levels in certain of our investment banking activities, reduced revenues from incentive income in our investment management business and reduced investment income. Our businesses and profitability have been and may continue to be adversely affected by market conditions in many ways, including the following:
•Our investment bank business has been, and may continue to be, adversely affected by market conditions. Increased competition continues to affect our investment banking and capital markets businesses. The same factors also affect trading volumes in secondary financial markets, which affect our brokerage business. Commission rates, market volatility, increased competition from larger financial firms and other factors also affect our brokerage revenues and may cause these revenues to vary from period to period.
•Our investment management business can be adversely affected by unanticipated levels of requested redemptions. We experienced significant levels of requested redemptions during the 2008 financial crisis and, while the environment for investing in investment management products has since improved, it is possible that we could intermittently experience redemptions above historical levels, regardless of investment fund performance.
•Our investment bank business focuses primarily on small to mid-capitalization and private companies in specific industry sectors. These sectors may experience growth or downturns independent of general economic and market conditions, or may face market conditions that are disproportionately better or worse than those impacting the economy and markets generally. In addition, increased government regulation has had, and may continue to have, a disproportionate effect on
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capital formation by smaller companies. Therefore, our investment bank business could be affected differently than overall market trends.

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Our investment management business can be adversely affected by unanticipated levels of requested redemptions. We experienced significant levels of requested redemptions during the 2008 financial crisis and, while the environment for investing in investment management products has since improved, it is possible that we could intermittently experience redemptions above historical levels, regardless of investment fund performance.
Our businesses, by their nature, do not produce predictable earnings. Our results in any period can be materially affected by conditions in global financial markets and economic conditions generally. We are also subject to various legal and regulatory actions that impact our business and financial results.
Recent Developments
ChangeThe COVID-19 outbreak continues to cause significant disruption in Segments
As notedbusiness activity both globally and in the prior reporting period, the Company continually monitors and reviews its segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact its reportable segments. Because of the change in the Chief Operating Decision Maker (“CODM”) of the Company at the end of 2017, the Company experienced a strategic shift to refocus the Company’s businesses on a set of differentiated products which are aligned to the content and insight within the Company’s domain of expertise.
During the second quarter of 2019, the Company realigned the business and reportable segment information that the CODM regularly reviews to evaluate performance for operating decision-making purposes, including evaluation and allocation of resources.  As a result, the Company changed its segment reporting structure based on the Company's domain expertise as a driver of balance sheet harmonization and repeatable revenues for its operating business versus the Company’s long-term monetization strategies.
United States. As a result of the change in segments, effective for the quarter ended June 30, 2019, the Company has the following business segments:
spread of COVID-19, economic uncertainties have arisen which may negatively impact our businesses, financial condition, results of operations, cash flows, strategies and prospects. The Op Co segment consists of four divisions: Cowen Investment Management (“CIM”), Investment Banking, Markets, and Research. Each of Op Co’s four divisions leverage the Research division’s core domain expertise to drive harmonized repeatable revenue for the segment.
–
The CIM division offers innovative investment products and solutions across the liquidity spectrum to institutional and private clients. CIM offers investors access to a number of strategies to meet their specific needs including merger arbitrage, activism, healthcare royalties, private healthcare investing and private sustainable investing which leverage the content and domain expertise that are aligned with the Company's core areas of expertise ("Cowen DNA").
–
The Investment Banking division includes public and private capital raising transactions and providing strategic advisory services.
–
The Markets division includes trading equity and equity-linked securities on behalf of institutional investors as well as a full-service suite of prime brokerage services, cross-asset trading, securities finance, global execution, clearing and commission management businesses.
–
The Research division provides the thought leadership and domain expertise that drives Cowen DNA. The research content that is created helps to facilitate brokerage revenue in the Markets division, drive deal flow in the Investment Banking division and facilitate investor relationships and investing within CIM’s innovative investment products and solutions.
The Asset Co segment consists of certainextent of the Company’s private investments, private real estate businessultimate impact of COVID-19 on our operational and other legacy multi-strategy funds. Whilefinancial performance will depend on certain developments, including the Asset Co segmentduration and spread of the outbreak and impact on our clients, employees, vendors and the markets in which we operate our businesses, all of which is not a reportable segment, the Company will provide segment level information for Asset Co.
uncertain at this time and cannot be predicted.
Debt
On May 7, 2019, the Company completed its private placement of $53.0 million aggregate principal amount of 7.25% senior notes due May 2024 (the "May 2024 Notes") with certain institutional investors.  Interest on the May 2024 Notes is payable semi-annually in arrears on May 6 and November 6.
Basis of presentationPresentation
The unaudited condensed consolidated financial statements of the Company in this Form 10-Q are prepared in accordance with Generally Accepted Accounting Principles in the United States ("US GAAPGAAP") as promulgated by the Financial Accounting Standards Board ("FASB") through Accounting Standards Codification (the "Accounting Standards") as the source of authoritative accounting principles in the preparation of financial

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statements and include the accounts of the Company, its subsidiaries, and entities in which the Company has a controlling financial interest or a substantive, controlling general partner interest. All material intercompany transactions and balances have been eliminated in consolidation. Certain fund entities that are consolidated in the condensed consolidated financial statements, are not subject to these consolidation provisions with respect to their own investments pursuant to their specialized accounting.
The Company serves as the managing member/general partner and/or investment manager to affiliated fund entities which it sponsors and manages. Certain of these funds in which the Company has a substantive, controlling general partner interest are consolidated with the Company pursuant to US GAAP as described below (the “Consolidated Funds”). Consequently, the Company's condensed consolidated financial statements reflect the assets, liabilities, income and expenses of these funds on a gross basis. The ownership interests in these funds which are not owned by the Company are reflected as redeemable and nonredeemable non-controlling interests in consolidated subsidiaries in the condensed consolidated financial statements appearing elsewhere in this Form 10-Q. The management fees and incentive income earned by the Company from these funds are eliminated in consolidation.
Expenses
The Company's expenses consist of compensation and benefits, reinsurance costs, general, administrative and other, and Consolidated Funds expenses.
•Compensation and Benefits.  Compensation and benefits is comprised of salaries, benefits, discretionary cash bonuses and equity-based compensation. Annual incentive compensation is variable, and the amount paid is generally based on a combination of employees' performance, their contribution to their business segment, and the Company's performance. Generally, compensation and benefits comprise a significant portion of total expenses, with annual incentive compensation comprising a significant portion of total compensation and benefits expenses.
•Reinsurance claims, commissions and amortization of deferred acquisition costs. Reinsurance relatedReinsurance-related expenses reflect loss and claim reserves, acquisition costs and other expenses incurred with respect to our insurance and reinsurance operations.
•Operating, General Administrative and Other.Administrative.  General, administrative and other expenses are primarily related to professional services, occupancy and equipment, business development expenses, communications, expenses associated with our reinsurance business and other miscellaneous expenses. These expenses may also include certain one-time charges and non-cash expenses.
•Depreciation and Amortization.Deprecation and amortization is comprised of depreciation expense for tangible assets and the amortization of intangible assets. The depreciation of assets capitalized under finance leases is included in depreciation and amortization expenses as well.
•Consolidated Funds Expenses.  The Company's condensed consolidated financial statements reflect the expenses of the Consolidated Funds and the portion attributable to other investors is allocated to a redeemable non-controlling interest.
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Income Taxes
The taxable results of the Company’s U.S. operations are subject to U.S. federal, state and local taxation as a corporation. The Company is also subject to foreign taxation on income it generates in certain countries.
The Company records deferred tax assets and liabilities for the future tax benefit or expense that will result from differences between the carrying value of its assets for income tax purposes and for financial reporting purposes, as well as for operating or capital loss and tax credit carryovers. A valuation allowance is recorded to bring the net deferred tax assets to a level that, in management’s view, is more likely than not to be realized in the foreseeable future. This level will be estimated based on a number of factors, especially the amount of net deferred tax assets of the Company that are actually expected to be realized, for tax purposes, in the foreseeable future. Deferred tax liabilities that cannot be realized in a similar future time period and thus that cannot offset the Company’s deferred tax assets are not taken into account when calculating the Company’s net deferred tax assets.
The Company continues to monitor the financial statement impact of the Tax Cuts and Jobs Act (“TCJA”) enacted in 2017 as regulations and formal guidance continue to be issued.Non-Controlling Interests
Redeemable Non-controlling Interests
Redeemable non-controlling interests represent the pro rata share of the income or loss of the non-wholly owned consolidated entities attributable to the other owners of such entities. Due toWhen non-controlling interest holders have redemption features that can be exercised at the fact thatoption of the holder currently or contingent upon the occurrence of future events, their ownership has been classified as temporary equity. The remaining non-controlling interests have been classified in permanent equity as the non-controlling interests are either not redeemable at the option of the holder theyor the holder does not have been classified as temporary equity.the unilateral right to redeem its ownership interests.

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Investment Fund Performance and Assets Under Management
For the quarterthree months ended June 30, 2019,2020, the Company's public equityactivist and merger arbitrage investment strategies (including the merger arbitrage-focused UCITS Fund) had, modestlyin the aggregate, positive results during a quarter with positive returns for both the Russell 2000 and the S&P 500. The Company's private fund investment capabilities are all in their investment periods. The Company's activist strategy had moderately positive performance for the quarter, as did the Russell 2000 Index. The Company's merger arbitrage strategy had modestly positive returns for the quarter, outperforming the HFRX Merger Arbitrage Index, which had moderately negative results for the quarter. The merger arbitrage focused UCITS fund also had a small gain.results. The Company's healthcare royalty strategy’s third investment fund remains in its investment period. Ongoing opportunities instrategy is now making allocations from the pharmaceutical and healthcare sectors remain robust and the investment fund was 97% committed at quarter end.strategy's fourth fund. Our most recent private healthcare strategy is now deploying capital from its third fund, remains in its investment period, endinghaving made eleven investments by the quarterend of the three months ended June 30, 2020, with twelve holdings and a pipeline of opportunities ahead. Our real estate affiliate's third private-equity style real estate fund and its sixth debt fund are both in their investment periods.Finally, our private sustainability strategy is now deploying capital. The liquidation of certain multi-strategy hedge funds advised by the Company also continues.
As of July 1, 2019,June 30, 2020, the Company had assets under managementmanagement of $12.1 billion, a 16.3% increase as compared to assets under management of $10.4 billion as of January 1, 2019.$11.5 billion.
CapabilityPrivate Healthcare InvestmentsHealthcare RoyaltiesActivismMerger ArbitrageSustainabilityOther (a)
(dollars in millions)
AUM$819$3,474$5,831$471$207$689
Team
Private Equityüüü
Hedge Fundüü
Managed Accountüüü
UCITSü
Otherü
(a) Other capabilities include private equity funds, legacy funds, and other trading strategies.
The Company's Invested Capital
The Company invests a significant portion of its capital base to help drive results and facilitate the growth of the Op Co and Asset Co business segments. Within Op Co, Managementmanagement allocates capital to three primary investment categories: (i) broker dealerbroker-dealer capital and related trading strategies; (ii) liquid alternative trading strategies; and (iii) public and private health carehealthcare strategies. Broker dealerBroker-dealer capital and related trading strategies include capital investments in the Company’s broker dealersCompany's broker-dealers as well as securities finance and SPACspecial purpose acquisition company trading strategies to grow liquidity and returns within operating businesses.  Much of the Company’sCompany's public and private healthcare strategies and liquid alternative trading strategies portfolios are invested alongside the Company's investment management clients. The Company’sCompany's liquid alternative trading strategies include merger arbitrage and activist fund strategies. In addition, from time to time, the Company makes investments in private capital raising transactions of its investment banking clients.
The Company allocates capital to Asset Co’sCo's private investments and private real estate strategies. The Company’sinvestments. Asset Co's private investments include the Company’sCompany's investment in Italian wireless broadband provider Linkem, and private equity funds Formation8/Eclipse. The Company'sFormation8 and Eclipse and legacy real estate investment strategy focuses on making investments alongside the investment management clients invested in the real estate funds managed by RCG Longview, as well as in direct investments in commercial real estate projects.investments.
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As of June 30, 2019,2020, the Company's invested capital amounted to a net value of $678.0$836.2 million (supporting a long market value of $842.7 million)$1,624.8 million), representing approximately 83%93% of Cowen's stockholders' equity presented in accordance with US GAAP. The table below presents the Company's invested equity capital by strategy and as a percentage of Cowen's stockholders' equity as of June 30, 2019.2020. The total net values presented in the table below do not tie in total to Cowen's condensed consolidated statement of financial condition as of June 30, 20192020 because they represent only some of the line items in the accompanying condensed consolidated statement of financial condition.
StrategyNet Value % of Stockholders' EquityStrategyNet Value% of Stockholders' Equity
(dollars in millions) (dollars in millions)
Op Co  Op Co
Broker dealer capital and related trading$400.3
 49%
Broker-dealer capital and related trading Broker-dealer capital and related trading$576.0  69%
Public and Private Healthcare57.3
 7% Public and Private Healthcare54.3  7%
Liquid Alternative Trading71.4
 9% Liquid Alternative Trading66.9  8%
Other Other14.6  2%
Asset Co  Asset Co
Private Investments128.6
 16% Private Investments122.3  15%
Private Real Estate20.4
 2% Private Real Estate2.1  —%
Total678.0
 83%Total836.2  93%
Stockholders' Equity$817.4
 100%
Cowen Inc. Stockholders' EquityCowen Inc. Stockholders' Equity$901.7  100%
The allocations shown in the table above will change over time.

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Results of Operations
To provide comparative information of the Company's operating results for the periods presented, a discussion of Economic Income (Loss) (which is a non-GAAP measure) of our Op Co and Asset Co segments follows the discussion of our total consolidated US GAAP results. Economic Income (Loss) reflects, on a consistent basis for all periods presented in the Company's condensed consolidated financial statements, income earned from the Company's investment funds and managed accounts and from its own invested capital. Economic Income (Loss) excludes certain adjustments required under US GAAP. See the section titled “Management's"Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company-SegmentCompany—Segment Analysis and Economic Income (Loss),”" and Note 22 to the accompanying Company's condensed consolidated financial statements, appearing elsewhere in this Form 10-Q,, for a reconciliation of Economic Income (Loss) to total Company US GAAP net income (loss).

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Three Months Ended June 30, 2020 Compared with Three Months Ended June 30, 2019 Compared with the Three Months Ended June 30, 2018
 Condensed Consolidated Statements of Operations
 (unaudited)
 Three Months Ended June 30, Period to Period
 2019 2018 $ Change % Change
 (dollars in thousands)
Revenues       
Investment banking$114,705
 $84,826
 $29,879
 35 %
Brokerage111,382
 103,285
 8,097
 8 %
Management fees7,039
 7,373
 (334) (5)%
Incentive income8
 48
 (40) (83)%
Interest and dividends40,047
 25,109
 14,938
 59 %
Reimbursement from affiliates254
 336
 (82) (24)%
Aircraft lease revenue—
 419
 (419) (100)%
Reinsurance premiums14,331
 9,226
 5,105
 55 %
Other revenues930
 876
 54
 6 %
Consolidated Funds revenues3,468
 3,075
 393
 13 %
Total revenues292,164
 234,573
 57,591
 25 %
Interest and dividends expense39,528
 24,306
 15,222
 63 %
Total net revenues252,636
 210,267
 42,369
 20 %
        
Expenses       
Employee compensation and benefits135,984
 131,845
 4,139
 3 %
Reinsurance claims, commissions and amortization of deferred acquisition costs10,782
 9,924
 858
 9 %
Operating, general, administrative and other expenses89,063
 75,304
 13,759
 18 %
Depreciation and amortization expense4,952
 3,194
 1,758
 55 %
Goodwill impairment4,100
 —
 4,100
 NM
Consolidated Funds expenses2,231
 3,149
 (918) (29)%
Total expenses247,112
 223,416
 23,696
 11 %
Other income (loss)       
Net gains (losses) on securities, derivatives and other investments3,910
 16,719
 (12,809) (77)%
Gain/(loss) on debt extinguishment—
 (556) 556
 NM
Consolidated Funds net gains (losses)5,782
 30,985
 (25,203) (81)%
Total other income (loss)9,692
 47,148
 (37,456) (79)%
Income (loss) before income taxes15,216
 33,999
 (18,783) (55)%
Income tax expense (benefit)5,073
 3,993
 1,080
 27 %
Net income (loss)10,143
 30,006
 (19,863) (66)%
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds4,331
 24,607
 (20,276) (82)%
Net income (loss) attributable to Cowen Inc.5,812
 5,399
 413
 8 %
Preferred stock dividends1,698
 1,698
 —
 — %
Net income (loss) attributable to Cowen Inc. common stockholders$4,114
 $3,701
 $413
 11 %

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Condensed Consolidated Statements of Operations
 Three Months Ended June 30,Period to Period
 20202019$ Change% Change
 (dollars in thousands)
(unaudited)
Revenues    
Investment banking$203,982  $114,705  $89,277  78 %
Brokerage147,224  111,382  35,842  32 %
Management fees11,653  7,039  4,614  66 %
Incentive income—  8  (8) (100)%
Interest and dividends47,918  40,047  7,871  20 %
Reimbursement from affiliates247  254  (7) (3)%
Reinsurance premiums5,967  14,331  (8,364) (58)%
Other revenues1,490  930  560  60 %
Consolidated Funds revenues359  3,468  (3,109) (90)%
Total revenues418,840  292,164  126,676  43 %
Interest and dividends expense49,304  39,528  9,776  25 %
Total net revenues369,536  252,636  116,900  46 %
Expenses    
Employee compensation and benefits305,282  136,409  168,873  124 %
Reinsurance claims, commissions and amortization of deferred acquisition costs6,434  10,782  (4,348) (40)%
Operating, general, administrative and other expenses92,027  89,063  2,964  3 %
Depreciation and amortization expense6,200  4,952  1,248  25 %
Goodwill impairment—  4,100  (4,100) (100)%
Consolidated Funds expenses1,585  2,231  (646) (29)%
Total expenses411,528  247,537  163,991  66 %
Other income (loss)    
Net gains (losses) on securities, derivatives and other investments196,502  3,910  192,592  (4,926)%
Consolidated Funds net gains (losses)37,370  5,782  31,588  (546)%
Total other income (loss)233,872  9,692  224,180  (2,313)%
Income (loss) before income taxes191,880  14,791  177,089  (1,197)%
Income tax expense (benefit)44,932  5,073  39,859  (786)%
Net income (loss)146,948  9,718  137,230  (1,412)%
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds33,113  3,906  29,207  748 %
Net income (loss) attributable to Cowen Inc.113,835  5,812  108,023  (1,859)%
Preferred stock dividends1,698  1,698  —  — %
Net income (loss) attributable to Cowen Inc. common stockholders$112,137  $4,114  $108,023  (2,626)%
Revenues
Investment Banking
Investment banking revenues increased $29.9$89.3 million to $114.7$204.0 million for the three months ended June 30, 20192020 compared with $84.8$114.7 million in the prior year period. During the three months ended June 30, 2020, the Company completed 48 underwriting transactions, 14 strategic advisory transactions, and two debt capital markets transactions. During the three months ended June 30, 2019, the Company completed 43 underwriting transactions, 10 strategic advisory transactions and three debt capital markets transactions. During the three months ended June 30, 2018, the Company completed 30 underwriting transactions, 10 strategic advisory transactions, and one debt capital markets transaction. The average underwriting fee per transaction was 2.7% lower52.8% greater for the three months ended June 30, 20192020 as compared to the prior year period.
Brokerage
Brokerage revenues increased $8.1$35.8 million to $111.4$147.2 million for the three months ended June 30, 20192020 compared with $103.3$111.4 million in the prior year period. This was attributable to increasedan increase in cash, electronic, options trading commission revenue and an increase in our securities finance and special situations businesses.institutional services revenues. Customer trading volumes across the industry (according to Bloomberg) increased 1%78% for the three months ended June 30, 20192020 compared to the prior year period.
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Management Fees
Management fees decreased $0.3increased$4.7 million to $7.0$11.7 million for the three months ended June 30, 20192020 compared with $7.4$7.0 million in the prior year period. This increase in management fees was primarily related to an increase in management fees from the healthcare royalty and healthcare investments businesses.
Incentive Income
Incentive income remained fairly flat at less than $0.1 million for the three months ended June 30, 2019, compared with the prior year period. RevenueDue to revenue recognition standards, effective January 1, 2018, requires the Company to recognizerecognizes the majority of incentive income allocated to the Company as net gains (losses) on securities, derivatives and other investments or as incentive income when the fees are no longer subject to reversal or are crystalized.investments.
Interest and Dividends
Interest and dividends increased $14.9 $7.9 million to $40.0$47.9 million for the three months ended June 30, 20192020 compared with $25.1 million in the prior year period. This is primarily attributable to securities financing activities.
Reimbursements from Affiliates
Reimbursements from affiliates decreased $0.1 million to $0.3 million for the three months ended June 30, 2019 compared with $0.3 million in the prior year period.
Aircraft Lease Revenue
Aircraft lease revenue decreased $0.4 million for the three months ended June 30, 2019 from $0.4 million in the prior year period. This decrease was related to our exit from the aviation business at the end of 2018.
Reinsurance Premiums
Reinsurance premiums increased $5.1 million to $14.3 million for the three months ended June 30, 2019 compared with $9.2 million in the prior year period.This increase reflects premiums earned during the quarter from additional reinsurance policies in force as well as higher premium volume generated from renewed policies compared to the same period in 2018.
Other Revenues
Other revenues increased $0.1 million to $0.9 million for the three months ended June 30, 2019 compared with $0.9 million in the prior year period.
Consolidated Funds Revenues
Consolidated Funds revenues increased $0.4 million to $3.5 million for the three months ended June 30, 2019 compared with $3.1 million in the prior year period. This is due to an increase in interest and dividend income in our consolidated funds.
Interest and Dividends
Interest and dividend expenses increased $15.2 million to $39.5 million for the three months ended June 30, 2019 compared with $24.3$40.0 million in the prior year period. This is primarily attributable to securities finance activities. activity. The increase in the securities finance activity is due to customer demand which has created greater matched book opportunities for both domestic and international securities.

Reimbursements from Affiliates
79Reimbursements from affiliates remained fairly flat at$0.2 million for the three months ended June 30, 2020 and June 30, 2019, respectively.

Reinsurance Premiums
TableReinsurance premiums decreased $8.3 million to $6.0 million for the three months ended June 30, 2020 compared with $14.3 million in the prior year period. This decrease is because quarterly premiums from policies that were not renewed in 2020 outweighed quarterly premiums from new policies in 2020 and because of Contents
lower activity in certain existing contracts due to COVID-19.

Other Revenues
ExpensesOther revenues increased$0.6 million to $1.5 million for the three months ended June 30, 2020 compared with $0.9 million in the prior year period. The increase is primarily related to consulting fee income.
Employee Compensation and BenefitsConsolidated Funds Revenues
Employee compensation and benefits expenses increased $4.2Consolidated Funds revenues decreased $3.1 million to $136.0$0.4 million for the three months ended June 30, 20192020 compared with $131.8$3.5 million in the prior year period. The decrease is due to a decrease in interest and dividend income during the quarter in two of our consolidated funds.
Expenses
Employee Compensation and Benefits
Employee compensation and benefits expenses increased$168.9 million to $305.3 million for the three months ended June 30, 2020 compared with $136.4 million in the prior year period. The increase is primarily due to $57.6$126.7 million higher revenues (offset partially by a $37.5and $224.2 million decrease inhigher other income (loss)) during the second quarter of 20192020 as compared to 20182019 and thus resulting in a higher compensation and benefits accrual. The compensation to revenue ratio, including other income (loss), was 45.0%47% for the three months ended June 30, 2019,2020, compared with 46.8%45% for the prior year period.
Interest and Dividends
Interest and dividend expenses increased$9.8 million to $49.3 million for the three months ended June 30, 2020 compared with $39.5 million in the prior year period. This is primarily attributable to securities finance activity. The increase in the securities finance activity is due to customer demand which has created greater matched book opportunities for both domestic and international securities.
Reinsurance Claims, Commissions and Amortization of Deferred Acquisition Costs
Reinsurance related expenses increased $0.9decreased $4.4 million to $10.8$6.4 million for the three months ended June 30, 20192020 compared with $9.9$10.8 million in the prior year period. This increasedecrease is due to reinsurance-related expenses incurred from additional reinsurancefewer policies in force during 2019.in the second quarter of 2020 compared to the same period in 2019 with lower loss ratios and because of less claim activity due to COVID-19.
Operating, General, Administrative and Other Expenses
General, administrative and other expenses increased $13.8$2.9 million to $89.1$92.0 million for the three months ended June 30, 20192020 compared with $75.3$89.1 million in the prior year period. The increase is primarily related to increasedhigher brokerage and trade
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execution costs as well as higher underwriting fees, due to higher brokerage and investment banking revenues, offset only partially by decreased marketing and business development expenses and professional fees offset partially by decreased brokerage and trade executionoccupancy costs.
Depreciation and Amortization Expenses
Depreciation and amortization expenses increased $1.8$1.2 million to $6.2 million for the three months ended June 30, 2020 compared with $5.0 million in the prior year period. The increase is primarily related to an increase in tangible and intangible assets related to software purchases and recent acquisitions.
Consolidated Funds Expenses
Consolidated Funds expenses decreased $0.6 million to $5.0$1.6 million for the three months ended June 30, 20192020 compared with $3.2$2.2 million for the prior year period. The decrease is due to decreased interest and dividend expense in one of our consolidated funds.
Other Income (Loss)
Other income (loss) increased$224.2 million to $233.9 million for the three months ended June 30, 2020 compared with $9.7 million in the prior year period. The increase in amortization expense primarily related to intangibles acquired through the Quarton acquisition in January of 2019.
Goodwill impairment
In conjunction with the Company’s change in segments, the Company restructured its historical investment management reporting unit between the Op Co’s CIM division reporting unit and the Asset Co reporting unit. Based on the change in segments and restructuring of reporting units, the Company determined that it was necessary to perform a quantitative impairment test. The Company estimated the fair value of its reporting units immediately before and after the change in segments and restructuring of reporting units using the income and market approach which involves estimates of future cash flows, discount rates, economic forecast and other assumptions which are then used in the market approach (earnings and / or transactions multiples) and / or income approach (discounted cash flow method). Based on the results of the impairment analysis as of June 30, 2019, the Company recognized a goodwill impairment in the amount of $4.1 million within the Asset Co reporting unit.
Consolidated Funds Expenses
Consolidated Funds expenses decreased $0.9 million to $2.2 million for the three months ended June 30, 2019 compared with $3.1 million for the prior year period.
Other Income (Loss)
Other income (loss) decreased $37.5 million to $9.7 million for the three months ended June 30, 2019 compared with other income (loss) of $47.1 millionwas primarily attributable to the increase in the prior year period. The decrease primarilyNet gains (losses) on securities, derivatives and other investments which relates to a decreasean increase in performance in our investment in electric truck maker Nikola, Cowen Healthcare (the healthcare investment strategy), merger strategies and our activist investments. The liquid strategy increases were partially offset by the Company's own invested capital.impairment of our Surfside real estate investment. The increase is also attributable to the Other Income (loss) from Consolidated Funds which increased in the second quarter of 2020 due to strong performance of the UCITs Fund which recouped in the second quarter of 2020 after first quarter losses. The gains and losses shown under Consolidated Funds reflect the consolidated total performance for such funds, and the portion of those gains or losses that are attributable to other investors is allocated to redeemable non-controlling interests.
Income Taxes
Income tax expense increased $1.1$39.8 million to $5.1$44.9 million for the three months ended June 30, 20192020 compared with $4.0$5.1 million in the prior year period. This change is primarily attributable to the impact ofchange in the Tax Cuts and Jobs Act of 2017.Company’s income before income taxes for the respective periods.
Income (Loss) Attributable to Redeemable Non-controlling Interests
Income (loss) attributable to redeemable non-controlling interests decreasedincreased by $20.3$29.2 million to $4.3$33.1 million for the three months ended June 30, 20192020 compared with income of $24.6$3.9 million in the prior year period. The decreaseincrease was primarily the result of a decreasegains in income earned by the Consolidated Fundsone of our consolidated funds in the current year period. Non-controlling interests represent the pro rata share of the income or loss of the non-wholly owned consolidated entities attributable to the other owners of such entities.

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Preferred Stock Dividends
On May 19, 2015, the Company completed its offering of 120,750 shares of the Company's 5.625% Series A cumulative perpetual convertible preferred stock. Each share of the Series A Convertible Preferred Stock is entitled to dividends at a rate of 5.625% per annum. The Company may, at its option, pay dividends in cash, common stock or a combination thereof.
76
Six Months Ended June 30, 20192020 Compared with Six Months Ended June 30, 2018
2019
Condensed Consolidated Statements of OperationsCondensed Consolidated Statements of Operations
(unaudited)(unaudited)
Six Months Ended June 30, Period to Period Six Months Ended June 30,Period to Period
2019 2018 $ Change % Change 20202019$ Change% Change
(dollars in thousands) (dollars in thousands)
Revenues       Revenues    
Investment banking$194,811
 $182,814
 $11,997
 7 %Investment banking$309,010  $194,811  $114,199  59 %
Brokerage208,845
 209,018
 (173) — %Brokerage286,586  208,845  77,741  37 %
Management fees14,180
 14,790
 (610) (4)%Management fees23,257  14,180  9,077  64 %
Incentive income23
 64
 (41) (64)%Incentive income—  23  (23) (100)%
Interest and dividends69,139
 51,063
 18,076
 35 %Interest and dividends89,995  69,139  20,856  30 %
Reimbursement from affiliates542
 713
 (171) (24)%Reimbursement from affiliates508  542  (34) (6)%
Aircraft lease revenue—
 1,134
 (1,134) (100)%
Reinsurance premiums20,922
 17,873
 3,049
 17 %Reinsurance premiums16,438  20,922  (4,484) (21)%
Other revenues1,991
 2,212
 (221) (10)%Other revenues3,340  1,991  1,349  68 %
Consolidated Funds revenues5,808
 6,276
 (468) (7)%Consolidated Funds revenues3,515  5,808  (2,293) (39)%
Total revenues516,261
 485,957
 30,304
 6 %Total revenues732,649  516,261  216,388  42 %
Interest and dividends expense68,612
 48,846
 19,766
 40 %Interest and dividends expense88,096  68,612  19,484  28 %
Total net revenues447,649
 437,111
 10,538
 2 %Total net revenues644,553  447,649  196,904  44 %
Expenses       Expenses    
Employee compensation and benefits266,172
 266,985
 (813) — %Employee compensation and benefits429,710  268,291  161,419  60 %
Reinsurance claims, commissions and amortization of deferred acquisition costs16,944
 18,655
 (1,711) (9)%Reinsurance claims, commissions and amortization of deferred acquisition costs16,864  16,944  (80) — %
Operating, general, administrative and other expenses167,064
 151,523
 15,541
 10 %Operating, general, administrative and other expenses180,166  167,064  13,102  8 %
Depreciation and amortization expense9,908
 6,419
 3,489
 54 %Depreciation and amortization expense11,642  9,908  1,734  18 %
Goodwill impairment4,100
 —
 4,100
 NM
Goodwill impairment—  4,100  (4,100) NM
Consolidated Funds expenses3,713
 5,580
 (1,867) (33)%Consolidated Funds expenses4,299  3,713  586  16 %
Total expenses467,901
 449,162
 18,739
 4 %Total expenses642,681  470,020  172,661  37 %
Other income (loss)       Other income (loss)    
Net gains (losses) on securities, derivatives and other investments42,994
 32,688
 10,306
 32 %Net gains (losses) on securities, derivatives and other investments152,519  42,994  109,525  255 %
Gain/(loss) on debt extinguishment—
 (556) 556
 NM
Consolidated Funds net gains (losses)7,640
 48,850
 (41,210) (84)%Consolidated Funds net gains (losses)(35,795) 7,640  (43,435) (569)%
Total other income (loss)50,634
 80,982
 (30,348) (37)%Total other income (loss)116,724  50,634  66,090  131 %
Income (loss) before income taxes30,382
 68,931
 (38,549) (56)%Income (loss) before income taxes118,596  28,263  90,333  320 %
Income tax expense (benefit)8,250
 10,916
 (2,666) (24)%Income tax expense (benefit)43,759  8,250  35,509  430 %
Net income (loss)22,132
 58,015
 (35,883) (62)%Net income (loss)74,837  20,013  54,824  274 %
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds6,537
 35,763
 (29,226) (82)%
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment fundsNet income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds(29,075) 4,418  (33,493) (758)%
Net income (loss) attributable to Cowen Inc.15,595
 22,252
 (6,657) (30)%Net income (loss) attributable to Cowen Inc.103,912  15,595  88,317  566 %
Preferred stock dividends3,396
 3,396
 —
 — %Preferred stock dividends3,396  3,396  —  — %
Net income (loss) attributable to Cowen Inc. common stockholders$12,199
 $18,856
 $(6,657) (35)%Net income (loss) attributable to Cowen Inc. common stockholders$100,516  $12,199  $88,317  724 %
Revenues
Investment Banking
Investment banking revenues increased $12.0$114.2 million to $194.8$309.0 million for the six months ended June 30, 20192020 compared with $182.8$194.8 million in the prior year period. During the six months ended June 30, 2020, the Company completed 72 capital markets transactions, 30 strategic advisory transactions and five debt capital markets transactions. During the six months ended June 30, 2019, the Company completed 71 capital markets transactions, 19 strategic advisory transactions and five debt capital marketmarkets transactions. During the six months ended June 30, 2018, the Company completed 66 underwriting transactions, 15 strategic advisory transactions and two debt capital

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market transaction. The implied average underwriting fee per transaction was 6.8% lower49.1% greater for the six months ended June 30, 20192020 as compared to the prior year period.period .
77
Brokerage
Brokerage revenues decreased $0.2increased $77.8 million to $208.8$286.6 million for the six months ended June 30, 20192020 compared with $209.0$208.8 million in the prior year period. This was attributable to decreasesan increase in cash, equity commissions, prime services revenue,electronic, and options trading commission management revenue and non-US commissions offset by increasesan increase in securities finance revenues and special situations commissions.institutional services revenues. Customer trading volumes across the industry (according to Bloomberg) were flatincreased 62% for the six months ended June 30, 20192020 compared to the prior year period.
Management Fees
Management fees decreased $0.6increased$9.1 million to $14.2$23.3 million for the six months ended June 30, 20192020 compared with $14.8$14.2 million in the prior year period. This increase is primarily related to the healthcare royalty business and our healthcare investments business.
Incentive Income
Incentive income remained fairly flat at less than $0.1 million for the six months ended June 30, 2019, compared with the prior year period. Revenue recognition standards, effective January 1, 2018, requiresrequire the Company to recognize the majority of incentive income allocated to the Company as net gains (losses) on securities, derivatives and other investments or as incentive income when the fees are no longer subject to reversal or are crystalized.crystallized.
Interest and Dividends
Interest and dividends increased $18.1$20.9 million to $69.1$90.0 million for the six months ended June 30, 20192020 compared with $51.1$69.1 million in the prior year period. This is primarily attributable to securities financing activities.finance activity. The increase in the securities finance activity is due to customer demand which has created greater matched book opportunities for both domestic and international securities.
Reimbursements from Affiliates
Reimbursements from affiliates decreased $0.2 million toremained fairly flat at $0.5 million for the six months ended June 30, 20192020 compared with $0.7$0.5 million in the prior year period. The decrease is primarily related
Reinsurance Premiums
Reinsurance premiums decreased $4.5 million to a decrease in reimbursements from the activist business.
Aircraft Lease Revenue
Aircraft lease revenue decreased 1.1$16.4 million for the six months ended June 30, 2019 from 1.12020 compared with $20.9 million in the prior year period. This decrease was relatedis because premiums from policies that were not renewed in 2020 outweighed premiums from new policies in 2020 and because of lower activity in certain existing contracts due to our exit from the aviation business at the end of 2018.COVID-19.
Reinsurance PremiumsOther Revenues
Reinsurance premiumsOther revenues increased $3.0$1.3 million to $20.9$3.3 million for the six months ended June 30, 20192020 compared with $17.9 million in the prior year period. The increase is due to premiums earned from additional reinsurance policies in force as well as higher premium volume generated from renewed policies compared to the same period in 2018.
Other Revenues
Other revenues decreased $0.2 million to $2.0 million for the six months ended June 30, 2019 compared with $2.2 million in the prior year period.
Consolidated Funds Revenues
Consolidated Funds revenues decreased $0.5$2.3 million to $5.8$3.5 million for the six months ended June 30, 20192020 compared with $6.3$5.8 million in the prior year period. The decrease is due to earning lessa decrease in interest and dividendsdividend income fromduring the Consolidated Funds.period in two of our consolidated funds.
Interest and Dividends ExpensesExpense
Interest and dividends expenses expense increased $19.8$19.5 million to $68.6$88.1 million for the six months ended June 30, 20192020 compared with $48.8$68.6 million in the prior year period. This is primarily attributable to securities finance activities. The increase in the securities finance activity is due to customer demand which has created greater matched book opportunities for both domestic and international securities.
Expenses
Employee Compensation and Benefits
Employee compensation and benefits expenses decreased $0.8expenses increased $161.4 million to $266.2$429.7 million for the six months ended June 30, 20192020 compared with $267.0$268.3 million in the prior year period. The decreaseincrease is primarily due to $30.3$216.4 million higher total revenues offset completely by $30.4and $66.1 million lowerhigher other income (loss) during 2019the 2020 as compared to 20182019 and thus resulting in a slightly lowerhigher compensation and benefits accrual. The compensation to revenue ratio, including other income (loss), was 47%51% for the six months ended June 30, 2019,2020, compared with 47% in the prior year period.

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78


Reinsurance Claims Commissions and Amortization of Deferred Acquisition CostsCommissions
Reinsurance relatedReinsurance-related expenses decreased $1.8 million toremained virtually the same at $16.9 million for the six months ended June 30, 2019 compared with $18.7 million in the prior year period. This decrease is due to better claims experience on existing policies during the first two quarters of 2019 compared to the same period in 2018.2020 and 2019.
Operating, General, Administrative and Other Expenses
Operating, general, administrative and other expenses increased $15.6$13.1 million to $167.1$180.2 million for the six months ended June 30, 20192020 compared with $151.5$167.1 million in the prior year period. The increase is primarily related to increasedhigher brokerage and trade execution costs as well as higher underwriting fees, due to higher brokerage and investment banking revenues, offset only partially by decreased marketing and business development expenses and professional fees offset partially by decreased brokerage and trade execution costs.occupancy costs
Depreciation and Amortization Expenses
Depreciation and amortization expenses increased $3.5$1.7 million to $9.9$11.6 million for the six months ended June 30, 20192020 compared with $6.4$9.9 million in the prior year period. The increase is primarily related to an increase in tangible and intangible assets related to software purchases and recent acquisitions.
Consolidated Funds Expenses
Consolidated Funds expenses increased$0.6 million to $4.3 million for the six months ended June 30, 2020 compared with $3.7 million in the prior year period. The increase is due to increased professional, advisory and other fees expenses in the Consolidated Funds.
Other Income (Loss)
Other income (loss) increased$66.1 million to $116.7 million for the six months ended June 30, 2020 compared with $50.6 million in the prior year period. The increase in amortization expenseother income (loss) was primarily relatedattributable to intangibles acquired through the Quarton acquisitionincrease in January of 2019.
Goodwill impairment
In conjunction with the Company’s change in segments, the Company restructured its historical investment management reporting unit between the Op Co’s CIM division reporting unit and the Asset Co reporting unit. BasedNet gains (losses) on the change in segments and restructuring of reporting units, the Company determined that it was necessary to perform a quantitative impairment test. The Company estimated the fair value of its reporting units immediately before and after the change in segments and restructuring of reporting units using the income and market approach which involves estimates of future cash flows, discount rates, economic forecastsecurities, derivatives and other assumptionsinvestments which are then usedrelates to increase in performance in our investment in electric truck maker Nikola, Cowen Healthcare (the healthcare investment strategy), merger strategies and our activist investments. The liquid strategy increases were partially offset by the impairment of our Surfside real estate investment. . The increase was partially offset by a decrease in Other Income (loss) from Consolidated Funds which decreased during 2020 due to strong performance of our UCITS Fund offset by losses in the market approach (earnings and / or transactions multiples) and / or income approach (discounted cash flow method). Based on the results of the impairment analysis as of June 30, 2019, the Company recognized a goodwill impairment in the amount of  $4.1 million within the Asset Co reporting unit.
Consolidated Funds Expenses
Consolidated Funds expenses decreased $1.9 millionRamius Merger Fund LLC compared to $3.7 million for the six months ended June 30, 2019 compared with $5.6 million in the prior year period. The decrease is due to decreased interest and dividends expense in the Consolidated Funds.
Other Income (Loss)
Other income (loss) decreased $30.4 million to $50.6 million for the six months ended June 30, 2019 compared with $81.0 million in the prior year period. The decrease primarily relates to a decrease in performance in the Company's own invested capital. The gains and losses shown under Consolidated Funds reflect the consolidated total performance for such investment funds, and the portion of those gains or losses that are attributable to other investors is allocated to redeemable non-controlling interests.
Income Taxes
Income tax expense decreased $2.6increased $35.5 million to $8.3$43.8 million for the six months ended June 30, 20192020 compared with an income tax expense of $10.9$8.3 million in the prior year period. This change is primarily attributable to the change in the Company’s income before income taxes for the respective periods, partially offset by the impact of the Tax Cuts and Jobs Act of 2017.periods.
Net Income (Loss) Attributable to Redeemable Non-controlling Interests
Net income (loss) attributable to redeemable non-controlling interests decreased $29.3 $33.5 million to $6.5a loss of $29.1 million for the six months ended June 30, 20192020 compared with $35.8income of $4.4 million in the prior year period. The decrease was primarily the result of a decrease in income earned by thetwo Consolidated Funds in the current year period. Non-controlling interests represent the pro rata share of the income or loss of the non-wholly owned consolidated entities attributable to the other owners of such entities.
Preferred Stock Dividends
On May 19, 2015, the Company completed its offering of 120,750 shares of the Company's 5.625% Series A cumulative perpetual convertible preferred stock. Each share of the Series A Convertible Preferred Stock is entitled to dividends at a rate of 5.625% per annum. The Company may, at its option, pay dividends in cash, common stock or a combination thereof.

79
83


Segment Analysis and Economic Income (Loss)
Segments
The Company conducts its operations through two segments: Op Co and Asset Co. For a more detailed discussion regarding the Company's recent change in segments, see Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations "Overview" and "Recent Developments" sections.
Economic Income (Loss)
The performance measure used byIn addition to our results which are shown in accordance with US GAAP, the Company for each segment is Economic Income (Loss), which management usespresents supplemental financial measures that are non-GAAP measures. The Company believes that these non-GAAP measures, viewed in addition to, evaluateand not in lieu of, the financialCompany’s reported US GAAP results, provide useful information to investors and analysts regarding its performance and overall results of operations as it presents investors and analysts with a supplemental operating view of the Company’s financials to make operating decisions forhelp better inform their analysis of the Company as a whole and each segment. Accordingly, management assesses its business by analyzingCompany’s performance.  These metrics are an integral part of the Company’s internal reporting to measure the performance of each segmentits business segments, allocate capital and believes that investors should reviewother strategic decisions as well as assess the same performance measure that it usesoverall effectiveness of senior management. Reconciliations to analyze its segment and business performance. In addition, management believes that Economic Income (Loss) is helpful to gain an understanding of its segment results of operations because it reflects such results on a consistent basis for all periods presented. comparable US GAAP measures are available in the accompanying schedules. 
Our Economic Income (Loss) may not be comparable to similarly titled measures used by other public companies. We use Economic Income (Loss) as a measure of each segment's operating performance, not as a measure of liquidity. Economic Income (Loss) should not be considered in isolation or as a substitute for operating income, net income, operating cash flows, investing and financing activities, or other income or cash flow statement data prepared in accordance with US GAAP. As a result of the adjustments made to arrive at Economic Income (Loss), described below, Economic Income (Loss) has limitations in that it does not take into account certain items included or excluded under US GAAP, including our Consolidated Funds.its consolidated funds.
In general, Economic Income (Loss) is considered bya pre-tax measure that (i) includes management asreclassifications which the Company believes provides additional insight on the performance of the Company’s core businesses and divisions (ii) eliminates the impact of consolidation for Consolidated Funds and excludes (iii) goodwill and intangible impairment (iv) certain other transaction-related adjustments and/or reorganization expenses and (v) certain costs associated with debt. Economic Operating Income (Loss) is a supplementalsimilar measure to the US GAAP results to provide a more complete understanding of each segment's performance as measured by management. but before depreciation and amortization expenses.
For a reconciliation of Economic Income (Loss) to US GAAP net income (loss) to Economic Income (Loss) for the periods presented and additional information regarding the reconciling adjustments discussed above, see Note 22 to the Company's condensed consolidated financial statements included elsewhere in this Form 10-Q.
In general,The Company conducts its operations through two segments: Op Co and Asset Co. The Company's principle sources of revenues included in Economic Income (Loss) is a pre-tax measure that (i) eliminates the impact of consolidation for Consolidated Funds and excludes (ii) goodwill and intangible impairment (iii) certain other transaction-related adjustments and/or reorganization expenses and (iv) certain costs associated with debt. Economic Operating Income (Loss) represents Economic Income (Loss) before depreciation and amortization expenses. In addition, Economic Income (Loss) revenues include investment income that represents the income the Company has earned in investing its own capital, including realized and unrealized gains and losses, interest and dividends, net of associated investment related expenses. For US GAAP purposes, these items are included in each of their respective line items. Economic Income (Loss) revenues also include management fees, incentive income and investment income earned through the Company's investment as a general partner in certain real estate entities and the Company's investment in the activist business and certain investment funds. For US GAAP purposes, all of these items, are recorded in other income (loss). Economic Income (Loss) recognizes (a) incentive fees during periods when the fees are not yet crystallized for US GAAP reporting and (b) retainer fees, relating to investment banking activities, earned during the period that would otherwise be deferred until closing for US GAAP reporting. In addition, Economic Income (Loss) expenses are reduced by reimbursement from affiliates, which for US GAAP purposes is presented gross as part of revenue.
Economic Income (Loss) Revenues
The Company's principal sources of Economic Income (Loss) revenues are derived from activities in the following business segments:segments.
The Op Co segment generates revenue through five principle sources: investment banking revenue, brokerage revenue, management fees, incentive income and investment income from the Company's own capital. Investment income is excluded from ASC Topic 606.
The Asset Co segment generates revenue through three principle sources: management fees, incentive income and investment income from the Company'sCompany’s own capital. Investment income is excluded from ASC Topic 606.
Economic Income (Loss) Expenses
The Company's Economic Income (Loss) expenses consist of non-interest expenses and interest expense. Non-interest expenses consist of compensation and benefits and non-compensation expenses (fixed and variable), less reimbursement from affiliates.
Non-controlling Interests
Non-controlling interests represent the pro rata share of the income or loss of the non-wholly owned consolidated entities attributable to the partners of such entities.

84


Three Months Ended June 30, 20192020 Compared with Three Months Ended June 30, 2018
2019
 (unaudited)
 Three Months Ended June 30, Total
Period-to-Period
 2019 2018 
 Operating Company Asset Company Total Operating Company Asset Company Total $ Change % Change
 (dollars in thousands)
Economic Income Revenues               
Investment banking$104,216
 $—
 $104,216
 $80,042
 $—
 $80,042
 $24,174
 30 %
Brokerage120,672
 —
 120,672
 113,186
 —
 113,186
 7,486
 7 %
Management fees9,968
 500
 10,468
 10,938
 1,548
 12,486
 (2,018) (16)%
Incentive income (loss)2,633
 1,596
 4,229
 12,321
 (2,958) 9,363
 (5,134) (55)%
Investment income (loss)(3,141) 3,626
 485
 18,476
 1,478
 19,954
 (19,469) (98)%
Other income (loss)4,304
 15
 4,319
 (811) 90
 (721) 5,040
 (699)%
Total economic income revenues238,652
 5,737
 244,389
 234,152
 158
 234,310
 10,079
 4 %
Interest expense5,298
 1,408
 6,706
 3,134
 990
 4,124
 2,582
 63 %
Total net revenues$233,354
 $4,329
 $237,683
 $231,018
 $(832) $230,186
 $7,497
 3 %
Economic Income (Loss)
Total Economic Operating Income (Loss) (which is Economic Income (Loss) before depreciation and amortization) was $20.4$166.9 million for the three months ended June 30, 2019, a decrease2020, an increase of $2.6$146.5 million compared to Economic Operating Income (Loss) of $23.0$20.4 million in the prior year period. Total Economic Income (Loss) was $15.5$161.3 million for the three months ended June 30, 2019, a decrease2020, an increase of $4.6$145.8 million compared to Economic Income (Loss) which was $20.0of $15.5 million in the prior year period.
Total Economic Income (Loss) included revenues were $244.4of $558.7 million for the three months ended June 30, 2019, 2020, an increase of $10.1$314.3 million compared to Economic Income (Loss) revenues of $234.3$244.4 million in the prior year period. This was primarily related to an increase in investment banking and brokerage activity offset partially by a decrease inrevenues as well as investment income.







80
Operating Company Segment Revenues
(unaudited)
Three Months Ended June 30,Total Period-to-Period
20202019$ Change% Change
(dollars in thousands)
Economic Income Revenues
Investment banking$190,430  $104,216  $86,214  83 %
Brokerage167,067  124,044  43,023  35 %
Management fees14,234  9,968  4,266  43 %
Incentive income (loss)45,392  2,633  42,759  1,624 %
Investment income (loss)142,379  (6,513) 148,892  (2,286)%
Other revenues(62) 4,304  (4,366) (101)%
Total economic income revenues559,440  238,652  320,788  134 %
Interest expense6,102  5,298  804  15 %
Total net revenues553,338  233,354  319,984  137 %
Economic Income Expenses
Employee compensation and benefits304,644  134,454  170,190  127 %
Fixed non-compensation expense34,755  37,171  (2,416) (6)%
Variable non-compensation expense40,817  39,428  1,389  4 %
Depreciation & Amortization5,657  4,945  712  14 %
Non-Controlling Interest1,739  1,258  481  38 %
Total expenses387,612  217,256  170,356  78 %
Income (loss) attributable to Cowen Inc.165,726  16,098  149,628  929 %
Preferred stock dividends1,387  1,341  46  3 %
Economic income (loss) attributable to Cowen Inc. common stockholders164,339  14,757  149,582  1,014 %
Add back: Depreciation and amortization expense5,657  4,945  712  14 %
Economic operating income (loss)$169,996  $19,702  150,294  763 %

The Op Co segment revenues included in Economic Income (Loss) revenues were $238.7$559.4 million for the three months ended June 30, 2019, 2020, an increase of $4.5$320.7 million compared with Economic Income (Loss) revenues of $234.2to $238.7 million in the prior year period.
Investment Banking.    Investment banking revenues increased $86.2 million to $104.2$190.4 million for the three months ended June 30, 20192020 compared with $80.0$104.2 million in the prior year period. During the three months ended June 30, 2020, the Company completed 48 underwriting transactions, 14 strategic advisory transactions, and two debt capital markets transactions. During three months ended June 30, 2019, the Company completed 43 underwriting transactions, 10 strategic advisory transactions and three debt capital markets transactions. During the three months ended June 30, 2019, the Company completed 30 underwriting transactions, 10 strategic advisory transactions, and one debt capital markets transaction. The average underwriting fee per transaction was 2.7% lower52.8% greater for the three months ended June 30, 20192020 as compared to the prior year period.
Brokerage.    Brokerage revenues increased $7.5$43.1 million to $120.7$167.1 million for the three months ended June 30, 2019,2020, compared with $113.2$124.0 million in the prior year period. This was attributable to increasedan increase in cash, electronic, options trading commission revenue and an increase in our securities finance and special situations businesses.institutional services revenues. Customer trading volumes across the industry (according to Bloomberg) increased 1%78% for the three months ended June 30, 20192020 compared to the prior year periodperiod.
Management Fees.    Management fees for the segment decreased $0.9increased $4.2 million to $10.0$14.2 million for the three months ended June 30, 20192020 compared with $10.9$10.0 million in the prior year period. This decrease in management fees wasincrease is primarily related to a decrease in management fees from the real estatehealthcare royalty business and our healthcare investments business.
Incentive Income (Loss).    Incentive income for the segment decreased $9.7increased $42.8 million to $2.6$45.4 million for the three months ended June 30, 20192020 compared with $12.3 million in the prior year period. This decrease was related to the activist business.
Investment Income (Loss).    Investment income for the segment decreased $21.6 million to $3.1 million for the three months ended June 30, 2019, compared with $18.5 million in the prior year period.
Other Income (Loss).    Other income (loss) for the segment increased $5.1 million to $4.3 million for the three months ended June 30, 2019, compared with income of $0.8 million in the prior year period. The increase primarily relates to an increase in income from the Company's reinsurance business.

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Asset Company Segment Revenues
The Asset Co segment Economic Income (Loss) revenues were $5.7 million for the three months ended June 30, 2019, an increase of $5.5 million compared to Economic Income (Loss) revenues of $0.2 million in the prior year period.
Management Fees.    Management fees for the segment decreased $1.0 million to $0.5 million for the three months ended June 30, 2019 compared with $1.5 million in the prior year period. This decrease in management fees was primarily related to a decrease in management fees from the real estate business.
Incentive Income (Loss).    Incentive income for the segment increased $4.6 million to $1.6 million for the three months ended June 30, 2019 compared with $3.0$2.6 million in the prior year period. This increase was related to an increase in performance fees from the multi-strategy business.our activist and healthcare investments businesses.
Investment Income (Loss).    Investment income for the segment increased $2.1$148.9 million to $3.6$142.4 million for the three months ended June 30, 20192020 compared with $1.5a loss of $6.5 million in the prior year period. The increase primarily relates to an increasea performance in performanceour investment in electric truck maker Nikola, Cowen Healthcare (the healthcare investment strategy), merger
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strategies and our activist investments. The liquid strategy increases were partially offset by the Company's own invested capital.impairment of our Surfside real estate investment. .
Interest expense
Interest expense increased $2.6Other Income (Loss).    Other income (loss) for the segment decreased$4.4 million to $6.7$0.1 million for the three months ended June 30, 20192020 compared with $4.1$4.3 million in the prior year period. The decrease is due to lower premiums caused by the COVID-19 pandemic.
Interest expense. Interest expense increased$0.8 million to $6.1 million for the three months ended June 30, 2020 compared with $5.3 million in the prior year period. Interest expense primarily relates to debt issued. The increase is primarily related to new debt issued in June of 2018 and May of 2019.2019 and recent borrowings on short term debt that have since been repaid.
Non-Interest Expenses
Non-interestCompensation and benefits expenses.    Total non-interest Compensation and benefits expenses increased $12.9$170.1 million to $218.8$304.6 million for the three months ended June 30, 2019,2020 compared with $206.0 million in the prior year period.
Compensation and benefits expenses. Compensation and benefits expenses, included within non-interest expenses, increased $4.2 million to $135.5 million for the three months ended June 30, 2019 compared with $131.3$134.5 million in the prior year period. The increase is due to $10.1 million higher revenues during the second quarter of 2019 as compared to 2018, which resulted inoverall revenue only partially offset by a higher compensation and benefits accrual. Thelower compensation to revenue ratio which was 55%54% for the three months ended June 30, 20192020 compared with 56% in the prior year period.
Non-compensation Expenses—Fixed.    Fixed non-compensation expenses included within non-interest expenses, increased $3.9decreased $2.4 million to $38.4$34.8 million for the three months ended June 30, 20192020 compared with $34.5$37.2 million in the prior year period. The increasedecrease is primarily related to increased professional, advisorydecreased occupancy and equipment and other fees offset partially by lower expenses from equity investments.expenses.
The following table shows the components of the non-compensation expenses—fixed, for the three months ended June 30, 20192020 and 2018:
2019:
Three Months Ended June 30, Period-to-Period Three Months Ended June 30,Period-to-Period
2019 2018 $ Change % Change 20202019$ Change% Change
(dollars in thousands) (dollars in thousands)
Non-compensation expenses—fixed:       Non-compensation expenses—fixed:    
Communications$7,692
 $7,105
 $587
 8 %Communications$7,286  $7,660  $(374) (5)%
Professional, advisory and other fees7,413
 5,280
 2,133
 40 %Professional, advisory and other fees6,722  6,549  173  3 %
Occupancy and equipment10,113
 9,923
 190
 2 %Occupancy and equipment8,647  10,006  (1,359) (14)%
Service fees5,653
 4,809
 844
 18 %Service fees6,703  5,624  1,079  19 %
Expenses from equity investments2,097
 2,781
 (684) (25)%Expenses from equity investments1,253  2,092  (839) (40)%
Reimbursement from affiliates(270) (401) 131
 (33)%Reimbursement from affiliates(32) (67) 35  (52)%
Other5,717
 4,967
 750
 15 %Other4,176  5,307  (1,131) (21)%
Total$38,415
 $34,464
 $3,951
 11 %Total$34,755  $37,171  $(2,416) (6)%
Depreciation and amortization expenses.  Depreciation and amortization expenses increased $2.0 million to $5.0 million for the three months ended June 30, 2019 compared with $3.0 million in the prior year period. The increase in amortization expense primarily related to intangibles acquired through the Quarton acquisition in January of 2019.
Non-compensation Expenses—Variable.    Variable non-compensation expenses, included within non-interest expenses which primarily are comprised of expenses whichthat are incurred as a direct result of the processing and soliciting of revenue generating activities, increased $2.7$1.4 million to $39.9$40.8 million for the three months ended June 30, 20192020 compared with $37.2

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$39.4 million in the prior year period. The increase is primarily related to an increase inincreased brokerage and trade execution costs partially offset by lower marketing and business development offset partially by lower brokerage and trade execution costs.
The following table shows the components of the non-compensation expenses—variable, for the three months ended June 30, 20192020 and 2018:2019:
 Three Months Ended June 30,Period-to-Period
 20202019$ Change% Change
 (dollars in thousands)
Non-compensation expenses—Variable:    
Brokerage and trade execution costs$34,795  $26,837  $7,958  30 %
HealthCare Royalty Partners syndication costs—  132  (132) (100)%
Expenses related to Luxembourg companies2,450  669  1,781  266 %
Marketing and business development1,820  11,091  (9,271) (84)%
Other1,752  699  1,053  151 %
Total$40,817  $39,428  $1,389  4 %
 Three Months Ended June 30, Period-to-Period
 2019 2018 $ Change % Change
 (dollars in thousands)
Non-compensation expenses—Variable:       
Brokerage and trade execution costs$26,860
 $28,310
 $(1,450) (5)%
Healthcare Royalty Partners syndication costs132
 132
 —
 — %
Expenses related to Luxembourg reinsurance companies669
 924
 (255) (28)%
Marketing and business development11,044
 7,556
 3,488
 46 %
Other1,244
 315
 929
 295 %
Total$39,949
 $37,237
 $2,712
 7 %
Non-Controlling Interest
Income (loss) attributableDepreciation and amortization expenses.  Depreciation and amortization expenses increased to redeemable non-controlling interests decreased by $0.8$5.7 million to $1.7 million for the three months ended June 30, 20192020 compared with $2.5$4.9 million in the prior year period.
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Non-Controlling Interests. Net income (loss) attributable to non-controlling interests increased by $0.4 million to $1.7 million for the three months ended June 30, 2020 compared with $1.3 million in the prior year period. Non-controlling interest represents the portion of the net income or loss attributable to certain non-wholly owned subsidiaries that is allocated to our partners in those subsidiaries.
Six Months Ended June 30, 2019 Compared with Six Months Ended June 30, 2018
 (unaudited)
 Six Months Ended June 30, 
Total
Period-to-Period
 2019 2018 
 Operating Company Asset Company Total Operating Company Asset Company Total $ Change % Change
 (dollars in thousands)
Economic Income Revenues               
Investment banking$187,212
 $—
 $187,212
 $173,966
 $—
 $173,966
 $13,246
 8 %
Brokerage225,829
 —
 225,829
 227,257
 —
 227,257
 (1,428) (1)%
Management fees19,695
 1,203
 20,898
 22,217
 3,396
 25,613
 (4,715) (18)%
Incentive income (loss)19,270
 1,706
 20,976
 15,360
 (801) 14,559
 6,417
 44 %
Investment income (loss)13,001
 4,467
 17,468
 36,710
 (2,454) 34,256
 (16,788) (49)%
Other income (loss)5,427
 51
 5,478
 (147) 313
 166
 5,312
 3,200 %
Total economic income revenues470,434
 7,427
 477,861
 475,363
 454
 475,817
 2,044
 — %
Interest expense10,615
 2,655
 13,270
 7,661
 2,420
 10,081
 3,189
 32 %
Total net revenues$459,819
 $4,772
 $464,591
 $467,702
 $(1,966) $465,736
 $(1,145) — %
Economic Income (Loss)
Total Economic Operating Income (Loss) (which is Economic Income (Loss) before depreciation and amortization) was $40.7 million for the six months ended June 30, 2019, a decrease of $7.7 million compared to Economic Operating Income (Loss) of $48.3 million in the prior year period. Total Economic Income (Loss) was $30.8 million for the six months ended June 30, 2019, a decrease of $11.6 million compared to Economic Income (Loss) of $42.4 million in the prior year period.
Total Economic Income (Loss) revenues were $477.9 million for the six months ended June 30, 2019, an increase of $2.1 million compared to Economic Income (Loss) revenues of $475.8 million in the prior year period. This was primarily related to an increase in investment banking activity, incentive fees and other income offset partially by a decrease in investment income.
Operating Company Segment Revenues
The Op Co segment Economic Income (Loss) revenues were $470.4 million for the six months ended June 30, 2019, a decrease of $5.0 million compared to Economic Income (Loss) revenues of $475.4 million in the prior year period.

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Investment Banking.    Investment banking revenues increased $13.2 million to $187.2 million for the six months ended June 30, 2019 compared with $174.0 million in the prior year period. During the six months ended June 30, 2019, the Company completed 71 capital markets transactions, 19 strategic advisory transactions and five debt capital market transactions. During the six months ended June 30, 2018, the Company completed 66 underwriting transactions, 15 strategic advisory transactions and two debt capital market transaction. The implied average underwriting fee per transaction was 6.8% lower for the six months ended June 30, 2019 as compared to the prior year period.
Brokerage.    Brokerage revenues decreased $1.5 million to $225.8 million for the six months ended June 30, 2019, compared with $227.3 million in the prior year period. This was attributable to decreases in cash equity commissions, prime services revenue, commission management revenue, and non-US commissions offset by increases in securities finance revenues and special situations commissions.  Customer trading volumes across the industry (according to Bloomberg) were flat for the six months ended June 30, 2019 compared to the prior year period.
Management Fees.    Management fees for the segment decreased $2.5 million to $19.7 million for the six months ended June 30, 2019 compared with $22.2 million in the prior year period. This decrease in management fees was primarily related to a decrease in management fees from our activist business.
Incentive Income (Loss).    Incentive income for the segment increased $3.9 million to $19.3 million for the six months ended June 30, 2019 compared with $15.4 million in the prior year period. This increase was related to an increase in performance fees from the activist business offset partially by a decrease in performance fees from the merger arbitrage business.
Investment Income (Loss).    Investment income for the segment decreased $23.7 million to $13.0 million for the six months ended June 30, 2019 compared with $36.7 million in the prior year period. The decrease primarily relates to a decrease in performance of the Company's own invested capital.
Other Income (Loss).    Other income (loss) for the segment increased $5.5 million to $5.4 million for the six months ended June 30, 2019 compared with income of $0.1 million in the prior year period.
Asset Company Segment Revenues
The Asset Company segment Economic Income (Loss) revenues were $7.4 million for the six months ended June 30, 2019, an increase of $6.9 million compared with Economic Income (Loss) revenues of $0.5 million in the prior year.
Management Fees.    Management fees for the segment decreased $2.2 million to $1.2 million for the six months ended June 30, 2019 compared with $3.4 million in the prior year period. This decrease in management fees was primarily related to a decrease in management fees from the real estate business.
Incentive Income (Loss).    Incentive income for the segment increased $2.5 million to $1.7 million for the six months ended June 30, 2019 compared with a loss of $0.8 million in the prior year period. This increase was related to an increase in performance fees from the multi-strategy business.
Investment Income (Loss).    Investment income for the segment increased $7.0 million to $4.5 million for the six months ended June 30, 2019, compared with $2.5 million in the prior year period. The increase primarily relates to an increase in performance of the Company's own invested capital.
Other Income (Loss).    Other income (loss) for the segment increased $0.3 million to $0.1 million for the six months ended June 30, 2019, compared with $0.3 million in the prior year period.
Interest expense
Interest expense increased $3.2 million to $13.3 million for the six months ended June 30, 2019 compared with $10.1 million in the prior year period. Interest expense primarily relates to debt issued. The increase is primarily related to new debt issued in June of 2018 and May of 2019.
Non-Interest Expenses
Non-interest expenses.    Total non-interest expenses increased $10.7 million to $426.0 million for the six months ended June 30, 2019, compared with $415.3 million in the prior year period.
Compensation and benefits expenses. Compensation and benefits expenses, included within non-interest expenses, decreased $0.2 million to $265.2 million for the six months ended June 30, 2019 compared with $265.4 million in the prior year period. The decrease is due to a slightly lower compensation to revenue ratio which was 55% for the six months ended June 30, 2019 compared with 56% in the prior year period.

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Non-compensation Expenses—Fixed.    Fixed non-compensation expenses, included within non-interest expenses, increased $4.6 million to $73.3 million for the six months ended June 30, 2019 compared with $68.7 million in the prior year period. The increase is primarily related to increased professional, advisory and other fees offset partially by lower expenses from equity investments.
The following table shows the components of the non-compensation expenses—fixed, for the six months ended June 30, 2019 and 2018:
 Six Months Ended June 30, Period-to-Period
 2019 2018 $ Change % Change
 (dollars in thousands)
Non-compensation expenses—fixed:       
Communications$15,394

$14,653
 $741
 5 %
Professional, advisory and other fees14,184
 11,033
 3,151
 29 %
Occupancy and equipment19,691
 19,404
 287
 1 %
Service fees11,308
 9,975
 1,333
 13 %
Expenses from equity investments3,620
 5,657
 (2,037) (36)%
Reimbursement from affiliates(600) (844) 244
 (29)%
Other9,693
 8,821
 872
 10 %
Total$73,290
 $68,699
 $4,591
 7 %
Depreciation and amortization expenses.  Depreciation and amortization expenses increased to $9.9 million for the six months ended June 30, 2019 compared with $5.9 million in the prior year period. The increase in amortization expense primarily related to intangibles acquired through the Quarton acquisition in January of 2019.
Non-compensation Expenses—Variable.    Variable non-compensation expenses, included within non-interest expenses, which primarily are comprised of expenses that are incurred as a direct result of the processing and soliciting of revenue generating activities, increased $2.4 million to $77.6 million for the six months ended June 30, 2019 compared with $75.2 million in the prior year period. The increase is related to increased marketing and business development costs offset partially by lower brokerage and trade execution costs.
The following table shows the components of the non-compensation expenses—variable, for the six months ended June 30, 2019 and 2018:
 Six Months Ended June 30, Period-to-Period
 2019 2018 $ Change % Change
 (dollars in thousands)
Non-compensation expenses—Variable:       
Brokerage and trade execution costs$52,292
 $56,936
 $(4,644) (8)%
HealthCare Royalty Partners syndication costs264
 264
 —
 — %
Expenses related to Luxembourg companies1,498
 1,695
 (197) (12)%
Marketing and business development22,047
 15,447
 6,600
 43 %
Other1,523
 882
 641
 73 %
Total$77,624
 $75,224
 $2,400
 3 %
Non-Controlling Interests
Net income (loss) attributable to redeemable non-controlling interests decreased by $0.2 million to $4.4 million for the six months ended June 30, 2019 compared with $4.6 million in the prior year period. Non-controlling interest represents the portion of the net income or loss attributable to certain non-wholly owned subsidiaries that is allocated to our partners in those subsidiaries.
Preferred Stock Dividends
Dividends.On May 19, 2015, the Company completed its offering of 120,750 shares of the Company's 5.625% Series A cumulative perpetual convertible preferred stock. Each share of the Series A Convertible Preferred Stock is entitled to dividends at a rate of 5.625% per annum. The Company may, at its option, pay dividends in cash, common stock or a combination thereof.

Asset Co Segment
(unaudited)
Three Months Ended June 30,Total Period-to-Period
20202019$ Change% Change
(dollars in thousands)
Economic Income Revenues
Management fees$168  $500  $(332) (66)%
Incentive income (loss)983  1,596  (613) (38)%
Investment income (loss)(1,893) 3,626  (5,519) (152)%
Other revenues2  15  (13) (87)%
Total economic income revenues(740) 5,737  (6,477) (113)%
Interest expense1,469  1,408  61  4 %
Total net revenues(2,209) 4,329  (6,538) (151)%
Economic Income Expenses
Employee compensation and benefits438  1,955  (1,517) (78)%
Fixed non-compensation expense105  1,244  (1,139) (92)%
Variable non-compensation expense5  40  (35) (88)%
Depreciation & Amortization6  7  (1) (14)%
Total expenses554  3,246  (2,692) (83)%
Income (loss) attributable to Cowen Inc.(2,763) 1,083  (3,846) (355)%
Preferred stock dividends311  357  (46) (13)%
Economic income (loss) attributable to Cowen Inc. common stockholders(3,074) 726  $(3,800) (523)%
Add back: Depreciation and amortization expense6  7  (1) (14)%
Economic operating income (loss)$(3,068) $733  $(3,801) (519)%

The Asset Co segment revenues included in Economic Income (Loss) were a loss of $0.7 million for the three months ended June 30, 2020, a decrease of $6.5 million compared with $5.7 million in the prior year.
Management Fees.    Management fees for the segment decreased$0.3 million to $0.2 million for the three months ended June 30, 2020 compared with $0.5 million in the prior year period. This decrease in management fees was primarily related to a decrease in management fees from the real estate investments.
Incentive Income (Loss).    Incentive income for the segment decreased$0.6 million to $1.0 million for the three months ended June 30, 2020 compared with income of $1.6 million in the prior year period. This decrease was related to a decrease in performance fees from the real estate investments and the multi-strategy business.
Investment Income (Loss).    Investment income for the segment decreased$5.5 million to a loss of $1.9 million for the three months ended June 30, 2020, compared with income of $3.6 million in the prior year period. The decrease primarily relates to a decrease in valuation of our legacy real estate investments.
Interest expense. Interest expense increased$0.1 million to $1.5 million for the three months ended June 30, 2020 compared with $1.4 million in the prior year period. Interest expense primarily relates to debt issued. The increase is primarily related to new debt issued in May of 2019 and recent borrowings on short-term debt that have since been repaid.
Compensation and benefits expenses. Compensation and benefits expenses decreased$1.6 million to $0.4 million for the three months ended June 30, 2020 compared with $2.0 million in the prior year period. The decrease is due to lower overall
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revenue . The compensation to revenue ratio was (59)% for the three months ended June 30, 2020 compared with 34% in the prior year period.
Non-compensation Expenses—Fixed.    Fixed non-compensation expenses decreased $1.1 million to$0.1 million for the three months ended June 30, 2020 compared with $1.2 million in the prior year period. The decrease is primarily related to decreased professional, advisory and other fees.
The following table shows the components of the non-compensation expenses—fixed, for the three months ended June 30, 2020 and 2019:
 Three Months Ended June 30,Period-to-Period
 20202019$ Change% Change
 (dollars in thousands)
Non-compensation expenses—fixed:    
Communications$15  $32  $(17) (53)%
Professional, advisory and other fees228  864  (636) (74)%
Occupancy and equipment32  107  (75) (70)%
Service fees39  29  10  34 %
Reimbursement from affiliates(240) (226) (14) 6 %
Other31  438  (407) (93)%
Total$105  $1,244  $(1,139) (92)%
Non-compensation Expenses—Variable.    Variable non-compensation expenses are comprised of expenses that are incurred as a direct result of the processing and soliciting of revenue generating activities.
Preferred Stock Dividends.On May 19, 2015, the Company completed its offering of 120,750 shares of the Company's 5.625% Series A cumulative perpetual convertible preferred stock. Each share of the Series A Convertible Preferred Stock is entitled to dividends at a rate of 5.625% per annum. The Company may, at its option, pay dividends in cash, common stock or a combination thereof.
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Six Months Ended June 30, 2020 Compared with Six Months Ended June 30, 2019
Total Economic Operating Income (Loss) (which is Economic Income (Loss) before depreciation and amortization) was $159.8 million for the six months ended June 30, 2020, an increase of $119.1 million compared to Economic Operating Income (Loss) of $40.7 million in the prior year period. Total Economic Income (Loss) was $148.7 million for the six months ended June 30, 2020, an increase of $117.9 million compared to Economic Income (Loss) of $30.8 million in the prior year period.
Revenues included in total Economic Income (Loss) were $769.3 million for the six months ended June 30, 2020, an increase of $291.4 million compared to $477.9 million in the prior year period. This was primarily related to an increase in investment banking and brokerage revenues as well as investment income.
Operating Company Segment
(unaudited)
 Six Months Ended June 30,Total Period-to-Period
 20202019$ Change% Change
 (dollars in thousands)
Economic Income Revenues   
Investment banking$289,627  $187,212  $102,415  55 %
Brokerage299,739  235,916  63,823  27 %
Management fees27,351  19,695  7,656  39 %
Incentive income (loss)43,449  19,270  24,179  125 %
Investment income (loss)122,931  2,914  120,017  4,119 %
Other income (loss)498  5,427  (4,929) (91)%
Total economic income revenues783,595  470,434  313,161  67 %
Interest expense12,445  10,615  1,830  17 %
Total net revenues771,150  459,819  311,331  68 %
Economic Income Expenses
Employee compensation and benefits429,650  264,703  164,947  62 %
Fixed non-compensation expense72,094  71,428  666  1 %
Variable non-compensation expense84,109  76,514  7,595  10 %
Depreciation & Amortization11,085  9,884  1,201  12 %
Non-Controlling Interest3,479  2,283  1,196  52 %
Total expenses600,417  424,812  175,605  41 %
Income (loss) attributable to Cowen Inc.170,733  35,007  135,726  388 %
Preferred stock dividends2,745  2,717  28  1 %
Economic Income (Loss) attributable to Cowen Inc. common stockholders167,988  32,290  135,698  420 %
Add back: Depreciation and amortization expense11,085  9,884  1,201  12 %
Economic operating income (loss)$179,073  $42,174  $136,899  325 %

The Op Co segment revenues included in Economic Income (Loss) were $783.6 million for the six months ended June 30, 2020, an increase of $313.2 million compared to $470.4 million in the prior year period.
Investment Banking.    Investment banking revenues increased102.4 million to 289.6 million for the six months ended June 30, 2020 compared with $187.2 million in the prior year period. During the six months ended June 30, 2020, the Company completed 72 capital markets transactions, 30 strategic advisory transactions and five debt capital markets transactions. During the six months ended June 30, 2019, the Company completed 71 capital markets transactions, 19 strategic advisory transactions and five debt capital markets transactions. The average underwriting fee per transaction was 49.1% greater for the six months ended June 30, 2020 as compared to the prior year period .
Brokerage.    Brokerage revenues increased $63.8 million to $299.7 million for the six months ended June 30, 2020, compared with $235.9 million in the prior year period. This was attributable to an increase in cash, electronic, and options trading commission revenue and an increase in institutional services revenues. Customer trading volumes across the industry (according to Bloomberg) increased 62% for the six months ended June 30, 2020 compared to the prior year period.
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Management Fees.    Management fees for the segment increased $7.7 million to $27.4 million for the six months ended June 30, 2020 compared with $19.7 million in the prior year period. This increase is primarily related to the healthcare royalty business and our healthcare investments business.
Incentive Income (Loss).    Incentive income for the segment increased $24.2 million to $43.4 million for the six months ended June 30, 2020 compared with $19.3 million in the prior year period. This increase was related to an increase in performance fees from our activist and healthcare investments businesses.
Investment Income (Loss).    Investment income for the segment increased $120.0 million to $122.9 million for the six months ended June 30, 2020 compared with income of $2.9 million in the prior year period. The increase primarily relates to a performance in our investment in electric truck maker Nikola, Cowen Healthcare (the healthcare investment strategy), merger strategies and our activist investments. The liquid strategy increases were partially offset by the impairment of our Surfside real estate investment.
Other Income (Loss).    Other income (loss) for the segment decreased $4.9 million to $0.5 million for the six months ended June 30, 2020 compared with $5.4 million in the prior year period. The decrease is due to lower premiums caused by the COVID-19 pandemic as well as higher claims and claims related reserves from our reinsurance business in the first quarter of 2020 compared to 2019.
Interest expense increased $1.8 million to $12.4 million for the six months ended June 30, 2020 compared with $10.6 million in the prior year period. Interest expense primarily relates to debt issued. The increase is primarily related to new debt issued in May of 2019 and recent borrowings on short term debt that have since been repaid.
Compensation and benefits expenses. Compensation and benefits expenses increased $164.9 million to $429.7 million for the six months ended June 30, 2020 compared with $264.7 million in the prior year period. The increase is due to higher overall revenue only partially offset by a lower compensation to revenue ratio which was 55% for the six months ended June 30, 2020 compared with 56% in the prior year period.
Non-compensation Expenses—Fixed.    Fixed non-compensation expenses increased $0.7 million to $72.1 million for the six months ended June 30, 2020 compared with $71.4 million in the prior year period. The increase is primarily related to increased service fees, professional, advisory and other fees offset partially by lower occupancy and equipment expenses.
The following table shows the components of the non-compensation expenses—fixed, for the six months ended June 30, 2020 and 2019:
 Six Months Ended June 30,Period-to-Period
 20202019$ Change% Change
 (dollars in thousands)
Non-compensation expenses—fixed:    
Communications$15,033  $15,314  $(281) (2)%
Professional, advisory and other fees13,874  13,171  703  5 %
Occupancy and equipment17,808  19,420  (1,612) (8)%
Service fees13,511  11,222  2,289  20 %
Expenses from equity investments3,626  3,620  6  — %
Reimbursement from affiliates(72) (113) 41  (36)%
Other8,314  8,794  (480) (5)%
Total$72,094  $71,428  $666  1 %

Non-compensation Expenses—Variable.    Variable non-compensation expense which primarily are comprised of expenses that are incurred as a direct result of the processing and soliciting of revenue generating activities, increased $7.6 million to $84.1 million for the six months ended June 30, 2020 compared with $76.5 million in the prior year period. The increase is related to increased brokerage and trade execution costs partially offset by lower marketing and business development costs.
The following table shows the components of the non-compensation expenses—variable, for the six months ended June 30, 2020 and 2019:
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 Six Months Ended June 30,Period-to-Period
 20202019$ Change% Change
 (dollars in thousands)
Non-compensation expenses—Variable:    
Brokerage and trade execution costs$67,460  $52,246  $15,214  29 %
HealthCare Royalty Partners syndication costs—  264  (264) (100)%
Expenses related to Luxembourg companies3,107  1,498  1,609  107 %
Marketing and business development11,185  20,992  (9,807) (47)%
Other2,357  1,514  843  56 %
Total$84,109  $76,514  $7,595  10 %

Depreciation and amortization expenses.  Depreciation and amortization expenses increased to $11.1 million for the six months ended June 30, 2020 compared with $9.9 million in the prior year period.
Non-Controlling Interests. Net income (loss) attributable to non-controlling interests increased by $1.2 million to $3.5 million for the six months ended June 30, 2020 compared with $2.3 million in the prior year period. Non-controlling interest represents the portion of the net income or loss attributable to certain non-wholly owned subsidiaries that is allocated to our partners in those subsidiaries.
Preferred Stock Dividends. On May 19, 2015, the Company completed its offering of 120,750 shares of the Company's 5.625% Series A cumulative perpetual convertible preferred stock. Each share of the Series A Convertible Preferred Stock is entitled to dividends at a rate of 5.625% per annum. The Company may, at its option, pay dividends in cash, common stock or a combination thereof.
Asset Co Segment
(unaudited)
 Six Months Ended June 30,Total Period-to-Period
 20202019$ Change% Change
 (dollars in thousands)
Economic Income Revenues  
Management fees372  1,203  (831) (69)%
Incentive income (loss)(1,161) 1,706  (2,867) (168)%
Investment income (loss)(13,548) 4,467  (18,015) (403)%
Other income (loss)2  51  (49) (96)%
Total economic income revenues(14,335) 7,427  (21,762) (293)%
Interest expense2,904  2,655  249  9 %
Total net revenues$(17,239) $4,772  $(22,011) (461)%
Economic Income Expenses
Employee compensation and benefits1,136  3,652  (2,516) (69)%
Fixed non-compensation expense251  1,862  (1,611) (87)%
Variable non-compensation expense12  85  (73) (86)%
Depreciation & Amortization12  24  (12) (50)%
Total expenses1,411  5,623  (4,212) (75)%
Income (loss) attributable to Cowen Inc.(18,650) (851) (17,799) 2,092 %
Preferred stock dividends651  679  (28) (4)%
Economic Income (Loss) attributable to Cowen Inc. common stockholders(19,301) (1,530) (17,771) 1,162 %
Add back: Depreciation and amortization expense12  24  (12) (50)%
Economic operating income (loss)$(19,289) $(1,506) $(17,783) 1,181 %

The Asset Co segment revenues included in Economic Income (Loss) were a loss of $14.3 million for the six months ended June 30, 2020, a decrease of $21.8 million compared with $7.4 million in the prior year.
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Management Fees.    Management fees for the segment decreased $0.8 million to $0.4 million for the six months ended June 30, 2020 compared with $1.2 million in the prior year period. This decrease in management fees was primarily related to a decrease in management fees from the real estate investments.
Incentive Income (Loss).    Incentive income for the segment decreased $2.9 million to a loss of $1.2 million for the six months ended June 30, 2020 compared with income of $1.7 million in the prior year period. This decrease was related to a decrease in performance fees from the real estate investments and the multi-strategy business.
Investment Income (Loss).    Investment income for the segment decreased $18.0 million to a loss of $13.5 million for the six months ended June 30, 2020, compared with income of $4.5 million in the prior year period. The decrease primarily relates to a decrease in valuation of our legacy real estate investments.
Interest expense. Interest expense increased $0.2 million to $2.9 million for the six months ended June 30, 2020 compared with $2.7 million in the prior year period. Interest expense primarily relates to debt issued. The increase is primarily related to new debt issued in May of 2019 and recent borrowings on short term debt that have since been repaid.
Compensation and benefits expenses. Compensation and benefits expenses decreased $2.5 million to $1.1 million for the six months ended June 30, 2020 compared with $3.7 million in the prior year period. The decrease is due to lower overall revenue. The compensation to revenue ratio was 8% for the six months ended June 30, 2020 compared with 49% in the prior year period.
Non-compensation Expenses—Fixed.    Fixed non-compensation expenses decreased $1.6 million to $0.3 million for the six months ended June 30, 2020 compared with $1.9 million in the prior year period. The decrease is primarily related to decreased service fees, professional, advisory and other fees.
The following table shows the components of the non-compensation expenses—fixed, for the six months ended June 30, 2020 and 2019:
 Six Months Ended June 30,Period-to-Period
 20202019$ Change% Change
 (dollars in thousands)
Non-compensation expenses—fixed:    
Communications$29  $79  $(50) (63)%
Professional, advisory and other fees508  1,014  (506) (50)%
Occupancy and equipment71  271  (200) (74)%
Service fees54  86  (32) (37)%
Reimbursement from affiliates(487) (487) —  — %
Other76  899  (823) (92)%
Total$251  $1,862  $(1,611) (87)%

Non-compensation Expenses—Variable.    Variable non-compensation expenses are comprised of expenses that are incurred as a direct result of the processing and soliciting of revenue generating activities.
Preferred Stock Dividends. On May 19, 2015, the Company completed its offering of 120,750 shares of the Company's 5.625% Series A cumulative perpetual convertible preferred stock. Each share of the Series A Convertible Preferred Stock is entitled to dividends at a rate of 5.625% per annum. The Company may, at its option, pay dividends in cash, common stock or a combination thereof.
Liquidity and Capital Resources
We continually monitor our liquidity position. The working capital needs of the Company's business have been met through current levels of equity capital, current cash and cash equivalents, and anticipated cash generated from our operating activities, including management fees, incentive income, returns on the Company's own capital, investment banking fees and brokerage commissions. The Company expects that its primary working capital liquidity needs over the next twelve months will be:
•to pay our operating expenses, primarily consisting of compensation and benefits, interest on debt and other general and administrative expenses; and
•to provide capital to facilitate the growth of our existing business.
Based on our historical results, management's experience, our current business strategy and current assets under management, the Company believes that its existing cash resources will be sufficient to meet its anticipated working capital and
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capital expenditure requirements for at least the next twelve months. However, the company’s assessment could be affected by various risks and uncertainties, including but not limited to, the effects of the COVID-19 pandemic. Our cash reserves include cash, cash equivalents and assets readily convertible into cash such as our securities held in inventory. Securities inventories are stated at fair value and are generally readily marketable. As of June 30, 2019,2020, we had cash and cash equivalents of $182.4$340.1 million and net liquid investment assets of $486.7$808.4 million, which includes cash and cash equivalents and short-term investments held by foreign subsidiaries as of June 30, 20192020 of $28.2$52.6 million. The Company continues to permanentlypermanently reinvest the capital and accumulated earnings of its subsidiaries in the United Kingdom, Germany, Switzerland, Canada, South Africa and Hong Kong.
The timing of cash bonus payments to our employees may significantly affect our cash position and liquidity from period to period. While our employees are generally paid salaries semi-monthly during the year, cash bonus payments, which can make up a significant portion of total compensation, are generally paid once a year by March 15th.
As a clearing member firm providing services to certain of our brokerage customers, we are subject to cash deposit requirements with clearing organizations, brokers and banks that may be large in relation to total liquid assets and may fluctuate significantly based upon the nature and size of customers’customers' trading activity and market volatility. At June 30, 2019, we2020, the firm had security deposits totaling $97.7$103.8 million with clearing organizations in the U.S. for the settlement of equity trades. In the normal course of our U.S. settlement activities, we may also need to temporarily finance customer securities positions from short settlements or delivery failures.
Unfunded commitments
The following table summarizes unfunded commitments as of June 30, 2019:
2020:
Entity Unfunded Commitments Commitment term
  (dollars in thousands)  
Real estate (a) $23,749
 (a)
HealthCare Royalty Partners funds (b) 5,665
 2 years
Eclipse Ventures Fund I, L.P. (formerly Formation8 Partners Hardware Fund I, L.P.) 119
 5 years
Lagunita Biosciences, LLC 500
 3 years
Eclipse Fund II, L.P. 225
 6 years
Eclipse Continuity Fund I, L.P. 210
 7 years
Cowen Healthcare Investments II LP 6,891
 2 years
EntityUnfunded CommitmentsCommitment term
(dollars in thousands)
HealthCare Royalty Partners funds (a)$7,971 4.5 years
Eclipse Ventures Fund I, L.P.$81 4.5 years
Lagunita Biosciences, LLC$250 3.3 years
Eclipse Fund II, L.P.$120 5.5 years
Eclipse Continuity Fund I, L.P.$68 6.5 years
Cowen Healthcare Investments II LP$1,201 1.5 years
Cowen Healthcare Investments III LP$8,035 6.5 years
Cowen Sustainable Investments I LP$12,989 9.5 years
(a) The Company had unfunded commitments pertaining to capital commitments in five real estate investments held by the Company, all of which pertain to related party investments. Such commitments can be called at any time between two to four years, subject to advance notice.
(b) The Company is a limited partner of the HealthCare Royalty Partners funds (which are managed by Healthcare Royalty Management) and is a member of HealthCare Royalty Partners General Partners. The Company will make its pro-rata investment in the HealthCare Royalty Partners funds along with the other limited partners.
Due to the nature of the securities business and our role as a market-maker and execution agent, the amount of our cash and short-term investments, as well as operating cash flow, may vary considerably due to a number of factors, including the dollar value of our positions as principal, whether we are net buyers or sellers of securities, the dollar volume of executions by our customers and clearing house requirements, among others. Certain regulatory requirements constrain the use of a portion of our liquid assets for financing, investing or operating activities. Similarly, due to the nature of our business lines, the capital necessary to maintain current operations and our current funding needs subject our cash and cash equivalents to different requirements and uses.

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Preferred Stock and Purchase of Capped Call Option
On May 19, 2015, the Company completed its offering of 120,750 shares of the Company's 5.625% Series A cumulative perpetual convertible preferred stock ("Series A Convertible Preferred Stock") that provided $117.2 million of proceeds, net of underwriting fees and issuance costs of $3.6 million. Each share of the Series A Convertible Preferred Stock is entitled to dividends at a rate of 5.625% per annum which will be payable, when and if declared by the board of directors of the Company, quarterly, in arrears, on February 15, May 15, August 15 and November 15 of each year. The Company may, at its option, pay dividends in cash, common stock or a combination thereof. The Company declared and accrued a cash dividend of $1.7 million and $1.7 million for the three months ended June 30, 2020 and 2019 and $3.4 million and $3.4 million for the six months ended June 30, 2020 and 2019, respectively.
Each share of Series A Convertible Preferred Stock is non-voting and has a liquidity preference over the Company's Class A common stock and ranks senior to all classes or series of the Company's Class A common stock, but junior to all of the Company's existing and future indebtedness with respect to divideddividend rights and rights upon the Company's involuntary liquidation, dissolution or winding down.
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Each share of Series A Convertible Preferred Stock is convertible, at the option of the holder, into a number of shares of ourthe Company's Class A common stock equal to the liquidation preference of $1,000 divided by the conversion rate. The initial conversion rate (subsequent to the December 5, 2016 reverse stock split) is 38.0619 shares (which equates to $26.27 per share) of the Company's Class A common stock for each share of the Series A Convertible Preferred Stock. At any time on or after May 20, 2020, when the Company's capped call option expired, the Company may elect to convert all outstanding shares of the Series A Convertible Preferred Stock into shares of the Company’sCompany's Class A common stock, cash or a combination thereof, at the Company’sCompany's election, in each case, based on the then-applicable conversion rate, if the last reported sale price of the Company’sCompany's Class A common stock equals or exceeds 150% of the then-current conversion price on at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days (including on the last trading day of such period) immediately prior to such election. At the time of conversion, the conversion rate may be adjusted based on certain events including but not limited to the issuance of cash dividends or Class A common stock as dividends to the Company's Class A common shareholders or a share split or combination.
In connection with The Company has the issuanceintent and sale ofability to settle the Series A Convertible Preferred Stock,preferred shares in cash and, as a result, the Company entered into a capped call option transaction (the “Capped Call Option Transaction”) with Nomura Global Financial Products Inc. (the “option counterparty”) for $15.9 million. The Capped Call Option Transaction is expected generally to reducepreferred shares do not have an impact on the potential dilution to the Company’s Class A common stock (if the Company elects to convert to common shares) and/or offset any cash payments that the Company is required to make upon conversion of any Series A Convertible Preferred Stock. The Capped Call Option Transaction has an initial effective strike price of $26.27Company's diluted earnings per share which matches the initial conversion price of the Series A Convertible Preferred Stock, and a cap price of $33.54 per share. However, to the extent that the market price of Class A common stock, as measured under the terms of the Capped Call Option Transaction, exceeds the cap price thereof, there would nevertheless be dilution and/or such cash payments would not be offset. As the Capped Call Option Transaction is a free standing derivative that is indexed to the Company's own stock price and the Company controls if it is settled in cash or stock it qualifies for equity classification as a reduction to additional paid in capital.calculation (See Note 21).
The Company may also incur additional indebtedness or raise additional capital under certain circumstances to respond to market opportunities and challenges. Current market conditions may make it more difficult or costly to borrow additional funds or raise additional capital.
Regulation
As registered broker-dealers, Cowen and Company, Cowen Execution, ATM Execution, Cowen Prime and Westminster are subject to the SEC's Uniform Net Capital Rule 15c3-1 (“("SEC Rule 15c3-1”15c3-1"), which requires the maintenance of minimum net capital. Each registered broker-dealer has elected to compute net capital under the alternative method permitted by the Rule.that rule. Under the alternative method, Cowen and Company's minimum net capital requirement, as defined in (a)(4) of theSEC Rule 15c3-1, is $1.0 million. Cowen Execution,and Company, ATM Execution, Cowen Prime and Westminster are required to maintain minimum net capital, as defined in (a)(1)(ii) of theSEC Rule 15c3-1, equal to the greater of $250,000 or 2% of aggregate debits arising from customer transactions. Advances to affiliates, repayment of borrowings, distributions, dividend payments and other equity withdrawals are subject to certain notification and other requirementsprovisions of theSEC Rule 15c3-1 and other regulatory bodies.
On February 7, 2019, FINRA approved the transfer of all of Cowen Securities’ business and personnel toMay 1, 2020, Cowen and Company.Company completed its merger with Cowen Securities subsequently filed a Form BDW, pursuantExecution. Cowen and Company is the surviving entity. The merger had no impact to Section 15(b) of the Securities Exchange Act of 1934, with FINRA to withdraw its status as a broker-dealer given that it will no longer conduct a securities business. On May 21, 2019, Cowen Securities Form BDW was approved and officially deregistered with the SEC.Company’s financial results.
Cowen Prime is also subject to Commodity Futures Trading Commission Regulation 1.17 (“("Regulation 1.17”1.17"). Regulation 1.17 requires net capital equal to or in excess of $45,000 or the amount of net capital required by SEC Rule 15c3-1, whichever is greater. Cowen Executionand Company is also subject to Options Clearing Corporation ("OCC") Rule 302. OCC Rule 302 requires maintenance of net capital equal to the greater of $2,000,000$2.0 million or 2% of aggregate debit items. At June 30, 2019,2020, Cowen Executionand Company had $114.4$296.4 million of net capital in excess of this minimum requirement.

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Cowen International Ltd and Cowen Execution Ltd are subject to the capital requirements of the FCA, as defined, and must exceed the minimum capital requirement set forth by the FCA. Effective June 1, 2018, the FCA approved Ramius UK’s application to cancel all of its FCA authorization permissions. Accordingly, Ramius UK is no longer an FCA regulated and authorized firm. Ramius UK sought the cancellation. Cowen Execution Ltd was formally approved to trade in a principal capacity conditional upon the completion, and communication to the Wholesale Supervision, of the implementation of its order management system.
Cowen and Company (Asia) Limited (“Cowen Asia”),Asia, a previously established entity, was re-registered with regulatory approval on May 17, 2019. Cowen Asia is subject to the financial resources requirements of the Securities and Futures Commission (“SFC”("SFC") of Hong Kong. Financial Resources must exceed the Total Financial Resources requirement of the SFC.
As of June 30, 2019,2020, these regulated broker-dealers had regulatory net capital or financial resources, regulatory net capital requirements or minimum FCA or SFC requirement and excess as follows:
Subsidiary Net Capital Net Capital Requirement Excess Net CapitalSubsidiaryNet CapitalNet Capital RequirementExcess Net Capital
 (dollars in thousands) (dollars in thousands)
Cowen and Company $95,807
 $1,000
 $94,807
Cowen and Company$300,725  $4,287  $296,438  
Cowen Execution $116,967
 $2,541
 $114,426
ATM Execution $5,375
 $250
 $5,125
ATM Execution$5,154  $250  $4,904  
Cowen Prime $12,091
 $250
 $11,841
Cowen Prime$20,238  $250  $19,988  
Westminster $21,602
 $250
 $21,352
Westminster$29,402  $250  $29,152  
Cowen International Ltd $15,479
 $8,562
 $6,917
Cowen International Ltd$22,388  $12,104  $10,284  
Cowen Execution Ltd $5,158
 $3,087
 $2,071
Cowen Execution Ltd$11,044  $2,781  $8,263  
Cowen and Company (Asia) Limited $1,092
 $384
 $708
Cowen AsiaCowen Asia$1,329  $387  $942  
The Company’sCompany's U.S. broker-dealers must also comply with SEC’s Customer Protection Rule (“SEC Rule 15c3-3”)15c3-3 or claim an exemption pursuant to subparagraphs (k)(2)(i) (the “(k)(2)(i) exemption”) or (k)(2)(ii) (the “(k)(2)(ii) exemption”) of that rule. Firms can rely on more than one exemption. Cowen and Company, Cowen Prime Cowen Execution and ATM Execution claim the (k)(2)(ii) exemption with regardsregard to some or all of their customer accounts and transactions that are introduced on a fully-disclosed basis to their clearing agents for clearing, settlement and custody. Cowen and Company, Cowen Prime and Westminster claim the (k)(2)(i)
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exemption with regards to customer transactions and balances that are cleared, settled and custodied in bank accounts designated as Special Accounts for the Exclusive Benefit of Customers (“("Special Bank Account”Accounts").
In accordance with the requirements of SEC Rule 15c3-3, Cowen Executionand Company may be required to deposit in a Special Reserve Account cash or acceptable qualified securities for the exclusive benefit of customers. As of June 30, 2019,2020, Cowen Executionand Company had nosegregated approximately $25.7 million of cash, while its required deposit in accordance with the SEC Rule 15c3-3. However, Cowen Execution had approximately $15.6was $24.3 million of cash segregated..
As a clearing broker-dealer, Cowen Executionand Company is required to compute a reserve requirement for proprietary accounts of broker-dealers (“PAB accounts”("PAB"), as defined in SEC Rule 15c3-3. Cowen Executionand Company conducts PAB reserve computations in order to determine the amount it is required to deposit in its PAB Reserve Bank Accounts pursuant to SEC Rule 15c3-3. This allows each correspondent firm that uses Cowen Executionand Company as its clearing broker-dealer to classify its PAB account assets held at Cowen Executionand Company as allowable assets in the correspondent's net capital calculation. At June 30, 2019,2020, Cowen Executionand Company had $27.7$37.7 million of cash on deposit in PAB Reserve Bank Accounts, which was more than its required deposit of $21.9 million.
Cowen$25.9 million.Cowen and Company, ATM Execution, Cowen Prime and Cowen ExecutionPrime also maintain certain assets in PAB accounts held at their respective clearing brokers. Each treats its assets held in those PAB accounts at the respective clearing brokers as allowable assets for net capital purposes.
Cowen’sCowen's Luxembourg reinsurance companies, Vianden RCG Re SCA and Hollenfels, individually and their Luxembourg parent holding company, Ramius Enterprise Luxembourg Holdco S.à r.l., on a combined basis with the reinsurance companies, are required to maintain a solvency capital ratio as calculated by relevant European Commission directives and local regulatory rules in Luxembourg. Each reinsurance company’scompany's individual solvency capital ratio as well as the combined solvency capital ratio of the holding and reinsurance companies calculated as of December 31 of each year June 30, 2019 must exceed a minimum requirement. As of the last testing date, December 31, 2018,2019, all of these entities were in excess of this minimum requirement. The companies are currently, and Managementmanagement expects they will be at the next testing date of December 31, 2019,2020, in compliance with these requirements.
Based on minimum capital and surplus requirements pursuant to the laws of the state of New York that apply to captive insurance companies, RCG Insurance Company, Cowen’sCowen's captive insurance company incorporated and licensed in the state of

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New York, was required to maintain capital and surplus of approximately $0.3 million as of June 30, 2019.2020. RCG Insurance Company’s capital and surplus as of June 30, 20192020 totaled approximately $32.5 million. $31.3 million.
Cash Flows Analysis
The Company's primary sources of cash are derived from its operating activities, fees and realized returns on its own invested capital. The Company's primary uses of cash include compensation and general and administrative expenses.
Operating Activities.    Net cash provided by operating activities of $146.2 million for the six months ended June 30, 2020 was primarily related to (i) purchases of securities owned, at fair value in consolidated funds offset partially by proceeds from sales of securities owned, at fair value in consolidated funds, (ii) proceeds from securities owned, at fair value, held at broker dealers, (iii) purchases of securities owned, at fair value offset partially by proceeds from sales of securities owned, at fair value and (iv) offset by stock borrow activity. Net cash used in operating activities of $225.8 million for the six months ended June 30, 2019 was primarily related to the (i) purchases of securities owned, at fair value in consolidated funds offset partially by proceeds from sales of securities owned, at fair value in consolidated funds, (ii) cash used in securities financing activities (securities borrowed partially offset by securities loaned), and (iii) purchases of securities owned, at fair value offset partially by proceeds from sales of securities owned, at fair value .value.
Investing Activities.    Net cash used by operatingin investing activities of $29.0$11.9 million for the six months ended June 30, 20182020 was primarily related to the proceeds from salespurchase of securities owned, at fair value offset by the purchases of securities owned, at fair value.
Investing Activities.other investments. Net cash used in investing activities of $48.9 million for the six months ended June 30, 2019 was primarily related to the purchase of Quarton and other investments.
Financing Activities.    Net cash used in investingprovided by financing activities of $8.3 million for the six months ended June 30, 20182020 of $24.2 million was primarily related to purchases of(i) capital contributions by non-controlling interests offset only partially by capital withdrawals by non-controlling interests in Consolidated Funds and (ii) repayments on notes and other investmentsdebt offset partially offset by proceeds from sales of
borrowings on notes and other investments.
Financing Activities.debt.  Net cash provided by financing activities for the six months ended June 30, 2019 of $161.1 million was primarily related to capital contributions by non-controlling interests in Consolidating Funds. Net cash provided by financing activities for the six months ended June 30, 2018
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Debt
Convertible Debt
December 2022 Convertible Notes
The Company, on December 14, 2017, issued $135.0 million aggregate principal amount of 3.00%3.0% convertible senior notes due December2022 (the “December 2022 Convertible Notes”). The December 2022 Convertible Notes are due on December 15, 2022 unless earlier repurchased by the Company or converted by the holder in accordance with their terms prior to such date. The interest on the December 2022 Convertible Notes is payable semi-annually on December 15 and June 15 of each year. The December 2022 Convertible Notes are senior unsecured obligations of Cowen. The December 2022 Convertible Notes may be converted into cash or shares of Class A common stock at the Company's election based on the current conversion price. The December 2022 Convertible Notes were issued with an initial conversion price of $17.375 per share of Cowen’sCowen's Class A common stock.
The Company used the net proceeds, together with cash on hand, from the offering for general corporate purposes, including the repurchase or repayment of $115.1 million of the Company’s outstanding 3.0% cash convertible senior notes due March 2019 (the "March 2019 Convertible Notes") and the repurchase of approximately $19.5 million of the Company’s shares of its Class A common stock, which were consummated substantially concurrently with the closing of the offering. As of June 30, 2019,2020, the outstanding principal amount of the December 2022 Convertible Notes was $135.0 million. On June 26, 2018, the Company received shareholder approval for the Company to settle the December 2022 Convertible NoteNotes entirely in classClass A common shares.stock. Upon receiving shareholder approval, the Company reclassified the separately recognized conversion option from a derivative liability to equity. Pursuant to the indenture governing the December 2022 Convertible Notes, conversions of the December 2022 Convertible Notes will be settled by the delivery and/or payment, as the case may be, of Cowen’s Class A Common Stock, cash, or a combination thereof, at the Company's election. The Company has the intent and ability to settle the convertible notes in cash and, as a result, the convertible notes do not have an impact on the Company's diluted earnings per share calculation (See Note 21).
The Company recorded interest expense of $1.0 million and $1.0 million for the three months ended June 30, 20192020 and 2018,2019, and $2.0 million and $2.0 million for the six months ended June 30, 20192020 and 2018,2019, respectively. The Company recognized the embedded cash conversion option at issuance date fair value, which also represents the initial unamortized discount on the December 2022 Convertible Notes of $23.4 million and is shown net in convertible debt in the accompanying condensed consolidated statements of financial condition. Amortization on the discount, included within interest and dividends expense in the accompanying condensed consolidated statements of operations is $1.1 million and $1.0$1.1 million for the three months ended June 30, 2020 and 2019, and 2018,$2.3 million and $2.1 million and $2.0 million for the six months ended June 30, 20192020 and 2018,2019, respectively, based on an effective interest rate of 7.13%. The Company capitalized the debt issuance costs in the amount of $2.2 million, which is a direct deduction from the carrying value of the debt and will be amortized over the life of the December 2022 Convertible Notes.

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March 2019 Convertible Notes
On March 10, 2014, the Company issued $149.5 million of 3.0% cash convertible senior notes (the "March 2019 Convertible Notes"). The March 2019 Convertible Notes matured on March 15, 2019 and were fully repaid by the Company. The Company recorded interest expense of $0.2 million for the three months ended June 30, 2018, and $0.1 million and $0.7 million for the six months ended June 30, 2019 and 2018, respectively. Amortization on the discount, included withinin interest and dividends expense in the accompanying condensed consolidated statements of operations was $0.4 million for the three months ended June 30, 2018, and $0.3 million and $0.9 million for the six months ended June 30, 2019 and 2018, respectively, based on an effective interest rate of 8.89%.operations.
Notes Payable
May 2024 Notes
On May 7, 2019, the Company completed its private placement of $53.0 million aggregate principal amount of 7.25% senior notes due May 2024 (the "May 2024 Notes") with certain institutional investors. On September 30, 2019, the Company issued an additional $25.0 million of the same series of notes. The additional May 2024 Notes were purchased at a premium of $0.5 million, which is shown net in notes payable in the accompanying condensed consolidated statement of financial condition. To date the May 2024 Notes have maintained their initial private rating, and the interest rate has remained unchanged. Interest on the May 2024 Notes is payable semi-annually in arrears on May 6 and November 6. The Company recorded interest expense of $1.4 million and $0.6 million for three months ended June 30, 2020 and 2019, and $2.8 million and $0.6 million for the three and six months ended June 30, 2020 and 2019, respectively. The Company capitalized debt issuance costs of approximately $1.5 million in May 2019 and $0.6 million in December 2019, which is a direct deduction from the carrying value of the debt and will be amortized over the life of the May 2024 Notes. Notes in interest and dividends expense in the accompanying condensed consolidated statements of operations.
June 2033 Notes
On June 11, 2018, the Company completed its public offering of $90.0 million of 7.75% senior notes due June 2033 (the “June"June 2033 Notes”Notes") and subsequently the underwriters exercised in full their option to purchase an additional $10.0 million principal amount of the June 2033 Notes. Interest on the June 2033 Notes is payable quarterly in arrears on March 15, June 15, September 15 and December 15. The Company recorded interest expense of $2.0$1.9 million and $0.4$2.0 million for the three months ended June 30, 20192020 and 2018,2019, and $3.9 million and $0.4$3.9 million for the six months ended June 30, 20192020 and 2018,2019, respectively. The Company capitalized debt issuance costs of approximately $3.6 million which is a direct deduction from the carrying value of the debt and will be amortized over the life of the June 2033 Notes. Notes in interest and dividends expense in the accompanying condensed consolidated statements of operations.
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December 2027 Notes
On December 8, 2017, the Company completed its public offering of $120.0 million of 7.35% senior notes due December 2027 (the “December"December 2027 Notes”Notes") and subsequently the underwriters exercised in full their option to purchase an additional $18.0 million principal amount of the December 2027 Notes. Interest on the December 2027 Notes is payable quarterly in arrears on March 15, June 15, September 15 and December 15. The Company recorded interest expense of $2.5 million and $2.5 million for the three months ended June 30, 20192020 and 2018, 2019,and $5.1 million and $5.1 million for the six months ended June 30, 20192020 and 2018,2019, respectively. The Company capitalized debt issuance costs of approximately $5.0 million which is a direct deduction from the carrying value of the debt and will be amortized over the life of the December 2027 Notes.Notes in interest and dividends expense in the accompanying condensed consolidated statements of operations. The net proceeds of the offering, after deducting the underwriting discount and estimated offering expenses payable by the Company were used to redeem all of its 8.25% senior notes due October 2021 and for general corporate purposes.
Term Loan
On June 30, 2017, a subsidiary of the Company borrowed $28.2 million to fund general corporate purposes. This term loan has an effective interest rate of LIBOR plus 3.75% with a lump sum paymentIn July 2019, the subsidiary of the entire principal amount due (as amended) on June 26, 2020. TheCompany borrowed separately, from the same lender, $4.0 million to fund general corporate purposes. Each loan iswas secured by the value of the Company's limited partnership interests in two affiliated investment funds. The Company hashad provided a guarantee for this loan.these loans. Both loans had an effective interest rate of LIBOR plus 3.75% with a lump sum payment of the entire combined principal amount due (as amended) on June 26, 2020 when they were both fully repaid. The Company recorded interest expense of $0.4$0.3 million and $0.4 million for the three months ended June 30, 2020 and 2019, and 2018, and $0.9$0.8 million and $0.8$0.9 million for the six months ended June 30, 2020 and 2019, and 2018, respectively.
Other Notes Payable
During January 2019,2020, the Company borrowed $2.2$2.9 million to fund insurance premium payments. This note had an effective interest rate of 2.51%2.01% and was due onin December 31, 2019,2020, with monthly payment requirements of $0.2$0.3 million. As of June 30, 2019,2020, the outstanding balance on this note was $1.2$1.5 million. Interest expense for the three and six months ended June 30, 2020 and 2019 was insignificant.

During November 2019, the Company borrowed $2.6 million to fund general corporate capital expenditures. This note had an effective interest rate of 6% and is due in November 2024, with monthly payment requirements of $0.1 million. As of June 30, 2020, the outstanding balance on this note was $2.2 million. Interest expense for the six months ended June 30, 2020 was $0.1 million.
Spike Line
In August 2019, Cowen Execution Services LLC ("Cowen Execution") renewed a one-year committed spike line facility to cover short term increases in National Securities Clearing Corporation margin deposit requirements. In connection with the merger of Cowen Execution into Cowen and Company, the spike line facility was amended in May 2020. Pursuant to that amendment, Cowen and Company replaced Cowen Execution as the borrower and accepted, reaffirmed and assumed all of Cowen Execution’s rights, duties, obligations and liabilities under the spike line facility and the related loan documents. The spike line facility has a capacity of $70 million. This facility has (i) an effective interest rate equal to the Federal Funds rate plus 2.50% on any money drawn from the liquidity facility and (ii) a commitment or unused line fee that is 50 basis points on the undrawn amount. All amounts outstanding under this facility were fully repaid during the second quarter of 2020. Interest expense for the three and six months ended June 30, 2020 was $0.1 million and $0.2 million, respectively.
Revolving Credit Facility
In December 2019, the Company entered into a two-year committed corporate credit facility with a capacity of $25 million. This credit facility has (i) an effective interest rate equal to LIBOR plus 3.25% on any money drawn from the credit facility and (ii) a commitment or unused line fee that is 50 basis points on the undrawn amount. All amounts oustanding under this corporate credit facility were fully repaid during the second quarter of 2020. Interest expense for the three and six months ended June 30, 2020 was $0.2 million and $0.3 million, respectively.
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Finance Lease Obligations
The Company has entered into various finance leases for computer equipment. The Company's finance lease right-of-use asset amounted to $6.0 million and is recorded in fixed assets in the accompanying condensed consolidated statements of financial condition. These finance lease obligations are included in notes payable and other debt in the accompanying condensed consolidated statements of financial condition, and have a weighted average lease term of 3.7 years and weighted average interest rate of 4.93% as of June 30, 2019.
As of June 30, 2019 and December 31, 2018, the remaining balance on these finance leases was $4.4 million and $5.0 million, respectively.condition.
For the threesix months ended June 30, 2020 and 2019, quantitative information regarding the Company's finance lease obligations reflected in the accompanying condensed consolidated statementstatements of operations, the supplemental cash flow information and certain other information related to finance leases were as follows:
Three Months Ended June 30,Six Months Ended June 30,
Three Months Ended June 30, Six Months Ended June 30,2020201920202019
2019 2018 2019 2018(dollars in thousands)
(dollars in thousands)
Lease Cost       
Finance Lease Cost:       
Lease costLease cost
Finance lease cost:Finance lease cost:
Amortization of finance lease right-of-use assets$299
 $363
 $667
 $715
 Amortization of finance lease right-of-use assets$308  $299  $615  $667  
Interest on lease liabilities56
 52
 118
 97
 Interest on lease liabilities43  56  92  118  
Other Information       
Other informationOther information
Cash paid for amounts included in the measurement of lease liabilities:       Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases    118
 97
 Operating cash flows from finance leases92  118  
Financing cash flows from finance leases    $668
 $1,133
 Financing cash flows from finance leases$604  $668  
Weighted average remaining lease term - operating leases (in years)Weighted average remaining lease term - operating leases (in years)2.723.70
Weighted average discount rate - operating leasesWeighted average discount rate - operating leases4.88 %4.93 %
Letters of Credit
As of June 30, 2019,2020, the Company has the following sevensix irrevocable letters of credit, related to leased office space, for which there is cash collateral pledged, which the Company pays a fee on the stated amount of the letter of credit. The Company also has pledged cash collateral for reinsurance agreements which amounted to $1.9$3.0 million, as of June 30, 2019,2020, and $1.0$2.0 million, as of December 31, 2018,2019, which isare expected to be released annuallyperiodically as per the terms of the reinsurance policy between MarchDecember 31, 2020 and March 2023 based on the policy periods covered by the reinsurance agreements.31, 2024.
Location Amount Maturity
  (dollars in thousands)  
Boston $390
 March 2020
New York $356
 April 2020
New York $71
 October 2019
New York $398
 October 2019
New York $1,687
 October 2019
New York $1,617
 November 2019
San Francisco $711
 October 2025
LocationAmountMaturity
(dollars in thousands)
New York$358 April 2021
New York$1,424 October 2020
New York$1,636 November 2020
Boston$385 March 2021
San Francisco$712 October 2025
To the extent any letter of credit is drawn upon, interest will be assessed at the prime commercial lending rate. As of June 30, 20192020 and 2018,December 31, 2019 there were no amounts due related to these letters of credit.

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Contractual Obligations
The following tables summarize the Company's contractual cash obligations as of June 30, 2019:
2020:
 Total < 1 Year 1-3 Years 3-5 Years More Than
5 Years
 (dollars in thousands)
Equipment, Aircraft, Service and Facility Leases         
Real Estate and Other Facility Rental$122,752
 $11,893
 $47,506
 $37,428
 $25,925
Service Payments42,673
 11,827
 15,744
 8,771
 6,331
Operating Equipment Leases544
 202
 337
 5
 —
Aircraft Lease105
 105
 —
 —
 —
   Total166,074
 24,027
 63,587
 46,204
 32,256
Debt         
Convertible Debt149,175
 2,025
 8,100
 139,050
 —
Notes Payable504,930
 10,868
 43,472
 43,472
 407,118
Finance Lease Obligation4,788
 571
 2,716
 1,501
 —
Term Loan29,897
 863
 29,034
 —
 —
Other Notes Payable1,214
 1,214
 —
 —
 —
   Total$690,004
 $15,541
 $83,322
 $184,023
 $407,118
Clawback obligations
For financial reporting purposes, the general partners of a real estate fund have recorded a liability for potential clawback obligations to the limited partners, due to changes in the unrealized value of the real estate fund's remaining investments and where the real estate fund's general partner has previously received carried interest distributions.
The clawback liability, however, is not realized until the end of the real estate fund's life. The real estate fund is currently in a winding-up phase whereby the remaining assets of the real estate fund are being liquidated as promptly as possible so as to maximize value. However a final date for liquidation has not been set.
The clawback obligations for the real estate fund were $6.5 million at June 30, 2019 and December 31, 2018 (see Note 6 to the Company's condensed consolidated financial statements).
Total< 1 Year1-3 Years3-5 YearsMore Than
5 Years
 (dollars in thousands)
Equipment, Service and Facility Leases    
Real Estate and Other Facility Rental$98,275  $10,597  $45,228  $32,370  $10,080  
Service Payments60,003  15,183  33,280  7,139  4,401  
Operating Equipment Leases499  182  314  3  —  
   Total158,777  25,962  78,822  39,512  14,481  
Debt    
Convertible Debt145,125  2,025  143,100  —  —  
Notes Payable515,443  11,774  47,096  122,269  334,304  
Finance Lease Obligation3,568  589  2,557  422  —  
Other Notes Payable4,139  1,817  1,186  1,136  —  
   Total$668,275  $16,205  $193,939  $123,827  $334,304  
Minimum payments for all debt outstanding
Annual scheduled maturities of debt and minimum payments for all debt outstanding as of June 30, 2019,2020, are as follows:
Convertible DebtNotes PayableOther Notes PayableFinance Lease
Obligation
 (dollars in thousands)
2020$2,025  $11,774  $1,817  $589  
20214,050  23,548  593  1,394  
2022139,050  23,548  593  1,163  
2023—  23,548  593  411  
2024—  98,721  543  11  
Thereafter—  334,304  —  —  
Subtotal145,125  515,443  4,139  3,568  
Less (a)(23,930) (208,216) (354) (251) 
Total$121,195  $307,227  $3,785  $3,317  
 Convertible Debt Notes Payable Term Loan Other Notes Payable Finance Lease
Obligation
 (dollars in thousands)
2019$2,025
 $10,868
 $863
 $1,214
 $571
20204,050
 21,736
 29,034
 —
 1,358
20214,050
 21,736
 —
 —
 1,358
2022139,050
 21,736
 —
 —
 1,127
2023—
 21,736
 —
 —
 374
Thereafter—
 407,118
 —
 —
 —
Subtotal149,175
 504,930
 29,897
 1,214
 4,788
Less (a)(32,902) (223,386) (1,697) (25) (431)
Total$116,273
 $281,544
 $28,200
 $1,189
 $4,357
(a)Amount necessary to reduce net minimum payments to present value calculated at the Company's implicit rate at inception. This amount also includes capitalized debt costs and the unamortized discount on the Company's convertible debt.
(a)Amount necessary to reduce net minimum payments to present value calculated at the Company's implicit rate at inception. This amount also includes capitalized debt costs and the unamortized discount on the convertible debt.
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements as of June 30, 2019.2020. However, through indemnification provisions in our clearing agreements, customer activities may expose us to off-balance-sheet credit risk. Pursuant to the clearing agreements, we are required to reimburse our clearing broker, without limit, for any losses incurred due to a counterparty's failure to satisfy its contractual obligations. However, these transactions are collateralized by the underlying security, thereby reducing the associated risk to changes in the market value of the security through the settlement date.

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Cowen and Company, Cowen Prime, Cowen Execution and ATM Execution are members of various securities exchanges and clearing organizations. Under the standard membership agreement, members are required to guarantee the performance of other members and, accordingly, if another member becomes unable to satisfy its obligations to the various securities exchanges and clearing organizations, all other members would be required to meet the shortfall. The Company's liability under these arrangements is not quantifiable. Accordingly, no contingent liability is carried in the accompanying condensed consolidated statements of financial condition for these arrangements.
Cowen and Company temporarily loans securities to other brokers in connection with its securities lending activities. Cowen and Company receives cash as collateral for the securities loaned. Increases in securities prices may cause the market value of the securities loaned to exceed the amount of cash received as collateral. In the event that counterparty to these transactions does not return the loaned securities, Cowen and Company may be exposed to the risk of acquiring the securities at
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prevailing market prices in order to satisfy its client obligations. Cowen and Company controls this risk by requiring credit approvals for counterparties, by monitoring the market value of securities loaned on a daily basis, and by requiring additional cash as collateral or returning collateral when necessary.
Cowen and Company temporarily borrows securities from other brokers in connection with its securities borrowing activities. Cowen and Company deposits cash as collateral for the securities borrowed. Decreases in securities prices may cause the market value of the securities borrowed to fall below the amount of cash deposited as collateral. In the event that counterparty to these transactions does not return collateral, Cowen and Company may be exposed to the risk of selling the securities at prevailing market prices. Cowen and Company controls this risk by requiring credit approvals for counterparties, by monitoring the collateral values on a daily basis, and by depositing additional collateral with counterparties or receiving cash when deemed necessary.
Critical Accounting Policies and Estimates
Critical accounting policies are those that require the Company to make significant judgments, estimates or assumptions that affect amounts reported in its condensed consolidated financial statements or the notes thereto. The Company bases its judgments, estimates and assumptions on current facts, historical experience and various other factors that the Company believes to be reasonable and prudent. Actual results may differ materially from these estimates.
The following is a summary of what the Company believes to be its most critical accounting policies and estimates.
Consolidation
TheseThe Company's condensed consolidated financial statements include the accounts of the Company, its subsidiaries, and entities in which the Company has a controlling financial interest, including the Consolidated Funds, in which the Company has a controlling general partner interest. All material intercompany transactions and balances have been eliminated in consolidation. The Company’sCompany's investment funds are not subject to these consolidation provisions with respect to their investments pursuant to their specialized accounting.
The Company’sCompany's condensed consolidated financial statements reflect the assets, liabilities, revenues, expenses and cash flows of the Consolidated Funds on a gross basis. The management fees and incentive income earned by the Company from the Consolidated Funds were eliminated in consolidation; however, the Company’sCompany's allocated share of net income from these investment funds was increased by the amount of this eliminated income. Hence, the consolidation of these investment funds had no net effect on the Company’sCompany's net earnings.
The Company consolidates all entities that it controls through a majority voting interest or otherwise, including those investment funds in which the Company either directly or indirectly has a controlling financial interest. In addition, the Company consolidates all variable interest entities for which it is the primary beneficiary.
In accordance with these standards, theThe Company consolidates four investment funds for which it acts as the managing member/general partner and investment manager. As ofAt June 30, 2019,2020, the Company consolidated the following investment funds: Ramius Enterprise LP (“Enterprise LP”), Ramius Merger Fund LLC (the "Merger Fund"), Cowen Private Investments LP ("Cowen Private"), Cowen Sustainable Investments I LP ("CSI I LP") and Ramius Merger Arbitrage UCITS FundCSI I Golden Holdco LP ("UCITS Fund"Golden HoldCo") (each a "Consolidated Fund" and collectively the "Consolidated Funds").
During the second quarter of 2020, the Company deconsolidated Ramius Merger Fund LLC (the "Merger Fund") and UCITS Fund ("UCITS Fund") due to a partial redemption of the Company’s direct portfolio fund investment in Merger Fund and a partial termination of the notional value of UCITS Fund units referenced in a total return swap with a third party. The Company continues to hold a direct retained portfolio fund investment in the Merger Fund and continues to have economic exposure to the returns of UCITS Fund through a total return swap with a third party. Both Merger Fund and UCITS Fund continue to be related parties of the Company after deconsolidation.
The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting operating entity ("VOE") or a variable interest entity ("VIE") under US GAAP.
Voting Operating Entities—VOEs are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently, (ii) the equity holders at risk have the obligation to absorb losses, the right to receive residual returns and the right to direct the activities of the entity that most significantly impact the entity's economic performance and (iii) voting rights of equity holders are proportionate to their obligation to absorb losses or the right to receive returns.
Under US GAAP consolidation requirements, the usual condition for a controlling financial interest in a VOE is ownership of a majority voting interest. Accordingly, the Company consolidates all VOEs in which it owns a majority of the entity's voting shares or units.
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Variable Interest Entities—VIEs are entities that lack one or more of the characteristics of a VOE. In accordance with US GAAP, an enterprise must consolidate all VIEs of which it is the primary beneficiary. Under the US GAAP consolidation model for VIEs, an enterprise that (1) has the power to direct the activities of a VIE that most significantly impacts the VIE's economic performance, and (2) has an obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE, is considered to be the primary beneficiary of the VIE and thus is required to consolidate it.
The Company reconsidersdetermines whether it is the primary beneficiary of a VIE upon its initial involvement with the VIE and reassesses whether it is the primary beneficiary on an ongoing basis as long as it has any continuing involvement with the VIE by performing a periodic qualitative and/or quantitative analysis of the VIE that includes a review of, among other things, its capital structure, contractual agreements between the Company and the VIE, the economic interests that create or absorb variability, related party relationships and the design of the VIE.

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In the ordinary course of business, the Company also sponsors various other entities that it has determined to be VIEs. These VIEs are primarily investment funds for which the Company serves as the general partner, managing member and/or investment manager with decision-making rights.
The reason that the Company does not consolidate certainthe Unconsolidated Master Fund or real estate funds that are VIEs is due to the Company's conclusion that it is not the primary beneficiary of these funds in each instance. Investment fund investors are entitled to all of the economics of these VIEs with the exception of the management fee and incentive income, if any, earned by the Company. The companyCompany has equity interests in the funds as both GPa general partner and Limiteda limited partner. In these instances the Company has concluded that the variable interests are not potentially significant to the VIE. Although the Company may advance amounts and pay certain expenses on behalf of the investment funds that it considers to be VIEs, it does not provide, nor is it required to provide, any type of substantive financial support to these entities outside of regular investment management services.services
Equity Method Investments—For operating entities over which the Company exercises significant influence but which do not meet the requirements for consolidation as outlined above, the Company uses the equity method of accounting. The Company's investments in equity method investees are recorded in other investments in the accompanying condensed consolidated statements of financial condition. The Company's share of earnings or losses from equity method investees is included in net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations.
The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. The difference between the carrying value of the equity method investment and its estimated fair value is recognized as an impairment charge when the loss in value is deemed other than temporary.
Other—If the Company does not consolidate an entity or apply the equity method of accounting, the Company accounts for such entities (primarily, all securities of such entity which are bought and held principally for the purpose of selling them in the near term as trading securities) in accordance with US GAAP,, at fair value with unrealized gains (losses) resulting from changes in fair value reflected within net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations.
Retention of Specialized Accounting—The Consolidated Funds and certain other consolidated companies are investment companies and apply specialized industry accounting for investment companies. The Company has retained this specialized accounting for these investment funds pursuant to US GAAP.accounting. The Company reports its investments on the condensed consolidated statements of financial condition at their estimated fair value, with unrealized gains (losses) resulting from changes in fair value reflected within net realized and unrealized gains (losses) on investments and other transactions. Accordingly, the accompanying condensed consolidated financial statements reflect different accounting policies for investments depending on whether or not they are held through a consolidated investment company.
In addition, the Company's broker-dealer subsidiaries apply the specialized industry accounting for brokers and dealers in securities also prescribed under US GAAP.securities. The Company also retains specialized accounting upon consolidation.
Valuation of investments and derivative contracts
US GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). Thethreelevels of the fair value hierarchy are as follows:
Level 1Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has
the ability to access at the measurement date;date
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Level 2Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including
inputs in markets that are not considered to be active; and
Level 3Fair value is determined based on pricing inputs that are unobservable and includes situations where there is little,
if any, market activity for the asset or liability. The determination of fair value for assets and liabilities in this
category requires significant management judgment or estimation.
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable”"observable" requires significant judgment by the Company. The Company considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by

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independent sources that are actively involved in the relevant market. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Company's perceived risk of that instrument. For additional information regardingInputs reflect unadjusted quoted prices in active markets for identical assets or liabilities that the use of unobservable inputsCompany has the ability to fair value assets and liabilities see Note 7 inaccess at the accompanying condensed consolidated financial statement in Part 1 Item 1.measurement date.
The Company and its operating subsidiaries act as the manager for the Consolidated Funds. Both the Company and the Consolidated Funds hold certain investments which are valued by the Company, acting as the investment manager. The fair value of these investments is generally estimated based on proprietary models developed by the Company, which include discounted cash flow analysis, public market comparables, and other techniques and may be based, at least in part, on independently sourced market information. The material estimates and assumptions used in these models include the timing and expected amount of cash flows, the appropriateness of discount rates used, and, in some cases, the ability to execute, timing of, and estimated proceeds from expected financings. Significant judgment and estimation impact the selection of an appropriate valuation methodology as well as the assumptions used in these models, and the timing and actual values realized with respect to investments could be materially different from values derived based on the use of those estimates. The valuation methodologies applied impact the reported value of the Company's investments and the investments held by the Consolidated Funds in the condensed consolidated financial statements. Certain of the Company's investments are relatively illiquid or thinly traded and may not be immediately liquidated on demand if needed. Fair values assigned to these investments may differ significantly from the fair values that would have been used had a ready market for the investments existed and such differences could be material.
The Company primarily uses the “market approach”"market approach" to value its financial instruments measured at fair value. In determining an instrument's level within the hierarchy, the Company categorizes the Company's financial instruments intothreecategories: securities, derivative contracts and other investments. To the extent applicable, each of these categories can further be divided between those held long or sold short.
The Company has the option to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The election is made on an instrument by instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument.  The Company has elected the fair value option for certain of its investments held by its operating companies.  This option has been elected because the Company believes that it is consistent with the manner in which the business is managed, as well as the way that financial instruments in other parts of the business are recorded.
Securities—Securities with values based on quoted market prices in active markets for identical assets are classified within level 1 of the fair value hierarchy. These securities primarily include active listed equities, certain U.S. government and sovereign obligations, Exchange Traded Funds ("ETFs"), mutual funds and certain money market securities. The Company does not adjust the quoted price for such instruments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.
Certain positions for which trading activity may not be readily visible, consisting primarily of convertible debt, corporate debt and loans and restricted equities, are stated at fair value and classified within level 2 of the fair value hierarchy. The estimated fair values assigned by management are determined in good faith and are based on available information considering trading activity, broker quotes, quotations provided by published pricing services, counterparties and other market participants, and pricing models using quoted inputs, and do not necessarily represent the amounts which might ultimately be realized. As level 2 investments include positions that are not always traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability.
Derivative contracts—Derivative contracts can be exchange-traded or privately negotiated over-the-counter (“OTC”). Exchange-traded derivatives, such as futures contracts and exchange-traded option contracts, are typically classified within level 1 or level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. OTC derivatives, such as generic forwards, swaps and options, have inputs which can generally be corroborated by market data and are therefore classified
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within level 2. OTC derivatives, such as swaps and options where market data is not readily available or observable are classified as level 3.
Other investments—Other investments consist primarily of investmentportfolio funds, real estate investments, carried interest and equity method investments, which are valued as follows:
i.
Portfolio funds—Portfolio funds include interests in private investment partnerships, foreign investment companies and other collective investment vehicles which may be managed by the Company or its affiliates. The Company follows US GAAP regarding fair value measurements and disclosures relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). The guidance permits, as a practical expedient, an entity holding investments in certain entities that either are investment companies as defined by the American Institute of Certified Public Accountants ("AICPA") Audit and Accounting Guide, Investment Companies, or have attributes

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i. Portfolio funds—Portfolio funds (“Portfolio Funds”) include interests in private investment partnerships, foreign investment companies and other collective investment vehicles which may be managed by the Company or its affiliates. The Company applies the practical expedient provided by the US GAAP fair value measurements and disclosures guidance relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). The guidance permits an entity holding investments in certain entities that either are investment companies or have attributes similar to an investment company, and calculate net asset valueNAV per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment. In accordance with US GAAP, investmentsInvestments which are valued using NAV per share as a practical expedient are not categorized within the fair value hierarchy.
ii.
ii. Real estate investments—Real estate debt and equity investments are measured at fair value. The fair value of real estate investments is estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Real estate investments without a public market are valued based on assumptions and valuation techniques used by the Company. Such valuation techniques may include discounted cash flow analysis, prevailing market capitalization rates or earnings multiples applied to earnings from the investment, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties, consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence, as well as independent external appraisals. In general, the Company considers several valuation techniques when measuring the fair value of a real estate investment. However, in certain circumstances, a single valuation technique may be appropriate. Real estate investments are reviewed on a quarterly basis by the Company for significant changes at the property level or a significant change in the overall market which would impact the value of the real estate investment resulting in unrealized appreciation or depreciation.
Real estate investments—Real estate debt and equity investments are valued at fair value. The fair value of real estate investments is estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Real estate investments without a public market are valued based on assumptions and valuation techniques used by the Company. Such valuation techniques may include discounted cash flow analysis, prevailing market capitalization rates or earnings multiples applied to earnings from the investment, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties, consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence, as well as independent external appraisals. In general, the Company considers several valuation techniques when measuring the fair value of a real estate investment. However, in certain circumstances, a single valuation technique may be appropriate. Real estate investments are reviewed on a quarterly basis by the Company for significant changes at the property level or a significant change in the overall market which would impact the value of the real estate investment resulting in unrealized appreciation or depreciation.
Real estate and capital markets are cyclical in nature. Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates and interest and inflation rates. In addition, the Company invests in real estate and real estate relatedestate-related investments for which no liquid market exists. The market prices for such investments may be volatile and may not be readily ascertainable. Amounts ultimately realized by the Company from investments sold may differ from the fair values presented, and the differences could be material.

The Company's real estate investments are typically categorized as level 3 investments within the fair value hierarchy as management uses significant unobservable inputs in determining their estimated fair value.
iii. Carried Interest—For the private equity and debt fund products the Company offers, the Company is allocated incentive income by the investment funds based on the extent by which the investment funds performance exceeds predetermined thresholds. Carried interest allocations are generally structured from a legal standpoint as an allocation of capital in the Company’s capital account. The Company accounts for carried interest allocations by applying an equity ownership model. Accordingly, the Company accrues performance allocations quarterly based on the fair value of the underlying investments assuming hypothetical liquidation at book value.
iv. Equity Method Investments—For operating entities over which the Company exercises significant influence but which do not meet the requirements for consolidation as outlined above, the Company applies the equity method of accounting. The Company's investments in equity method investees are recorded in other investments in the accompanying condensed consolidated statements of financial condition. The Company's share of earnings or losses from equity method investees is included in net gains (losses) on securities, derivatives and other investments in the accompanying condensed consolidated statements of operations.
Goodwill and Intangible Assets
Goodwill
Goodwill represents the excess of the purchase price consideration of acquired companies over the estimated fair value assigned to the individual assets acquired and liabilities assumed. Goodwill is allocated to the Company's reporting units at the date the goodwill is initially recorded. Once goodwill has been allocated to the reporting units, it generally no longer retains its
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identification with a particular acquisition, but instead becomes identifiable with the reporting unit. As a result, all of the fair value of each reporting unit is available to support the value of goodwill allocated to the unit.
In accordance with US GAAP inclusiverequirements for testing for impairment of the newly adopted amendments,goodwill, the Company tests goodwill for impairment on an annual basis or at an interim period if events or changed circumstances would more likely than not reduce the fair value of a reporting unit below its carrying amount. In testing for goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances led to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company concludes that fair value exceeds its carrying amount, then performing a quantitative impairment test is not necessary. If the Company concludes otherwise, the Company is required to perform a quantitative impairment test that requires a comparison of the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit exceeds its carrying value, the related goodwill is not considered impaired and no further analysis is required. If the carrying value of the reporting unit exceeds its fair value, then the Company recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.
The Company’s evaluation of goodwill for potential impairment is sensitive to the Company’s forecasts of future profitability and market conditions. At this time, the impact of COVID-19 on the Company’s forecasts is uncertain and increases the subjectivity that will be involved in evaluating goodwill for potential impairment going forward. Based on the ultimate impact of COVID-19, there may be materially negative impacts to the assumptions made with respect to goodwill that could result in an impairment.
Intangible assets
Intangible assets with finite lives are amortized over their estimated average useful lives. The Company does not have any intangible assets deemed to have indefinite lives. Intangible assets are tested for potential impairment whenever events or changes in circumstances suggest that an asset or asset group's carrying value may not be fully recoverable. An impairment loss, calculated as the difference between the estimated fair value and the carrying value of an asset or asset group, is recognized in the accompanying condensed consolidated statements of operations if the sum of the estimated undiscounted cash flows relating to the asset or asset group is less than the corresponding carrying value. The Company continually monitors the estimated average useful lives of existing intangible assets.
Income taxes
The Company accounts for income taxes in accordance with US GAAP which requires the recognition of tax benefits or expenses based on the estimated future tax effects of temporary differences between the financial statement and tax basis of its

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assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. Valuation allowances are established to reduce deferred tax assets to an amount that is more likely than not to be realized. We evaluate our deferred tax assets for recoverability considering negative and positive evidence, including ourits historical financial performance, projections of future taxable income, future reversals of existing taxable temporary differences, and tax planning strategies. We record a valuation allowance against our deferred tax assets to bring them to a level that it is more likely than not to be utilized. In evaluating the need for a valuation allowance, we estimate future taxable income based on management approved business plans. This process involves significant management judgment about assumptions that are subject to change from period to period. Because the recognition of deferred tax assets requires management to make significant judgments about future earnings, the periods in which items will impact taxable income and the application of inherently complex tax laws, we have identified the assessment of deferred tax assets and the need for any related valuation allowance as a critical accounting estimate.
Legal Reserves
The Company estimates potential losses that may arise out of legal and regulatory proceedings and records a reserve and takes a charge to income when losses with respect to such matters are deemed probable and can be reasonably estimated, in accordance with US GAAP. These amounts are reported in other expenses, net of recoveries, in the condensed consolidated statements of operations. See Note 17 "Commitments and Contingencies" in our accompanying condensed consolidated financial statements for the quarter ended June 30, 20192020 for further discussion.
Recently adopted and future adoption of accounting pronouncements
        For a detailed discussion, see Note 22o "Recent pronouncements" in our accompanying condensed consolidated financial statements for the quarterthree and six months ended June 30, 2019.2020.
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Item 3.    Quantitative and Qualitative Disclosures about Market Risk
During the six months ended June 30, 2019,2020, there were no material changes in our quantitative and qualitative disclosures about market risks from those disclosed in our Annual Report on2019 Form 10-K for the year ended December 31, 2018.10-K. For a more detailed discussion concerning our market risk, see Item 7A “Quantitative"Quantitative and Qualitative Disclosures about Market Risk”Risk" in our Annual Report on2019 Form 10-K.
Item 4.    Controls and Procedures
Our management, with the participation of the Chief Executive Officer and the Chief Financial Officer (the principal executive officer and principal financial officer, respectively), evaluated our disclosure controls and procedures as of June 30, 2019.2020.
Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of June 30, 2019,2020, our disclosure controls and procedures are effective to provide a reasonable assurance that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’sSEC's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer of the Company, as appropriate, to allow timely decisions regarding required disclosure.
There have been no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the six months ended June 30, 2019.2020.
PART II. OTHER INFORMATION
Item 1.    Legal Proceedings
In the ordinary course of business, the Company and its affiliates, subsidiaries and current and former officers, directors and employees (the "Company and Related Parties") are named as defendants in, or as parties to, various legal actions and proceedings. Certain of these actions and proceedings assert claims or seek relief in connection with alleged violations of securities, banking, anti-fraud, anti-money laundering, employment and other statutory and common laws. Certain of these actual or threatened legal actions and proceedings include claims for substantial or indeterminate compensatory or punitive damages, or for injunctive relief.
In the ordinary course of business, the Company and Related Parties are also subject to governmental and regulatory examinations, information gathering requests (both formal and informal), certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. Certain of our affiliates and subsidiaries are registered broker-dealers, futures commission merchants, investment advisers or other regulated entities and, in those capacities, are subject to regulation

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by various U.S., state and foreign securities, commodity futures and other regulators. In connection with formal and informal inquiries by these regulators, we receive requests and orders seeking documents and other information in connection with various aspects of our regulated activities.
Due to the global scope of our operations, and presence in countries around the world, the Company and Related Parties may be subject to litigation, governmental and regulatory examinations, information gathering requests, investigations and proceedings (both formal and informal), in multiple jurisdictions with legal and regulatory regimes that may differ substantially, and present substantially different risks, from those to which the Company and Related Parties are subject in the United States.
The Company seeks to resolve all litigation and regulatory matters in the manner management believes is in the best interests of the Company and its shareholders, and contests liability, allegations of wrongdoing and, where applicable, the amount of damages or scope of any penalties or other relief sought as appropriate in each pending matter.
In accordance with US GAAP, the Company establishes reserves for contingencies when the Company believes that it is probable that a loss has been incurred and the amount of loss can be reasonably estimated. The Company discloses a contingency if there is at least a reasonable possibility that a loss may have been incurred and there is no reserve for the loss because the conditions above are not met. The Company's disclosure includes an estimate of the reasonably possible loss or range of loss for those matters, for which an estimate can be made. Neither a reserve nor disclosure is required for losses that are deemed remote.
The Company appropriately reserves for certain matters where, in the opinion of management, the likelihood of liability is probable and the extent of such liability is reasonably estimable. Such amounts are included within accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated statements of financial condition. Estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including, but not limited to, the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal counsel, the Company's defenses and its experience in similar cases or proceedings as well as its assessment of matters, including settlements, involving
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other defendants in similar or related cases or proceedings. The Company may increase or decrease its legal reserves in the future, on a matter-by-matter basis, to account for developments in such matters. The Company accrues legal fees as incurred.
The following information reflects developments with respect to the Company’s legal proceedings that occurred during the quarter ended June 30, 2019.
On December 27, 2013, Landol Fletcher filed a putative class action lawsuit against Convergex Holdings, LLC, Convergex Group, LLC, Cowen Execution, Convergex Global Markets Limited and G-Trade Services LLC (collectively, “Convergex”) in the United States District Court for the Southern District of New York (Landol Fletcher and all others similarly situated v. Convergex Group LLC, Cowen Execution, Convergex Global Markets Ltd., Convergex Holdings LLC, G-Trade Services LLC, & Does 1-10, No. 1:13-CV-09150-LLS). The suit alleges breaches of fiduciary duty and prohibited transactions under ERISA and seeks to maintain a class action on behalf of all ERISA plan participants, beneficiaries and named fiduciaries whose plans were impacted by net trading by Convergex Global Markets Limited from October 2006 to December 2011. On April 11, 2014, Landol Fletcher and Frederick P. Potter Jr., filed an amended complaint raising materially similar allegations. This matter was assumed by the Company as a result of the Company’s previously announced acquisition of Convergex Group, which was completed on June 1, 2017. On February 17, 2016, the District Court granted Convergex’s motion to dismiss the amended complaint. Plaintiffs filed an appeal to the Second Circuit, and the AARP and Department of Labor filed amicus briefs on plaintiffs' behalf. The appeal was argued on December 12, 2016. On February 10, 2017, the Second Circuit Court of Appeals (1) reversed the District Court, finding that plaintiff has constitutional standing in a “representative” capacity to sue for damages to the ERISA defined benefit plan in which he is a participant, and (2) remanded to the District Court to reconsider, in light of the Circuit Court’s decision, the issue whether plaintiff has standing to pursue claims on behalf of ERISA plans in which plaintiff is not a participant. Convergex filed a petition for rehearing, and the Court of Appeals denied the petition. On June 30, 2017, the Company filed a notice of motion and memorandum of law in support of a motion to stay the proceedings in the District Court pending resolution of its petition for writ of certiorari, which the Company intended to file with the U.S. Supreme Court. On August 16, 2017, the District Court granted the Company’s motion to stay the proceedings in the District Court pending resolution of the Company’s petition for writ of certiorari. On September 1, 2017, the Company filed a petition with the United States Supreme Court for a writ of certiorari requesting review of the decision of the Court of Appeals. On January 8, 2018, the U.S. Supreme Court denied the Company’s petition for a writ of certiorari. The previously granted stay of the proceedings in the District Court was lifted, and the case proceeded in the District Court. Status conferences were held on April 6, 2018, October 12, 2018, and December 4, 2018. On March 15, 2019, the Company filed a motion to dismiss the plaintiff’s amended complaint. The District Court granted the Company’s motion on July 2, 2019. The status of the case going forward will depend on whether the plaintiffs appeal the District Court’s decision. We are indemnified against losses arising from this matter pursuant to, and subject to, the provisions of the purchase agreement relating to the acquisition of Convergex Group. While it is not possible to determine the ultimate outcome or duration of such litigation, based on current knowledge, the Company does not currently expect this case to have a material effect on its financial position or its results of operations.

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Item 1A.    Risk Factors

The discussion of our business and operations should be read together with the risk factors contained in Item 1A of our 2019 Form 10-K as well as those set forth below. These risk factors describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our businesses, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner.
We could change our existing dividend policy in the future and there can be no assurance that we will continue to declare cash dividends.
We began paying quarterly cash dividends to holders of record of our Class A common stock in March 2020. Although we expect to continue to pay dividends to our shareholders in accordance with our dividend policy, as described under the heading "Dividend Policy" in our Annual Report on Form 10-K for the year ended December 31, 2018.2019, we have no obligation to pay any dividend, and our dividend policy may change at any time without notice. The declaration and payment of dividends on our Class A common stock is at the discretion of our Board of Directors in accordance with applicable law after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and capital uses, legal requirements, contractual restrictions (including under agreements related to indebtedness to which we are a party) and other factors that our Board of Directors deems relevant in its sole discretion. For example, in the event that there is deterioration in our financial performance and/or our liquidity position, a downturn in global economic conditions or disruptions in the credit markets and our ability to obtain financing, our Board of Directors could decide to suspend dividend payments in the future. As a Delaware corporation, we are required to meet certain surplus thresholds for our Board of Directors to declare a dividend in accordance with the Delaware General Corporation Law. As a result, we may not pay dividends at all.
Market, Strategy and Industry Risk
Difficult market conditions, market disruptions and volatility have adversely affected, and may in the future adversely affect, the Company's businesses, results of operations and financial condition.
The Company's businesses, by their nature, do not produce predictable earnings, and all of the Company's businesses have in the past been, and may in the future be affected by conditions in the global financial markets and by global economic conditions, such as interest rates, the availability of credit, inflation rates, economic uncertainty, changes in laws, commodity prices, asset prices (including real estate), currency exchange rates and controls and national and international political circumstances (including wars, terrorist acts, protests or security operations). Challenging market conditions have in the past affected and in the future could affect the level and volatility of securities prices and the liquidity and the value of investments in the Company's investment funds or other investments in which the Company has investments of its own capital, and the Company may not be able to effectively manage its investment management business's exposure to challenging market conditions. Challenging market conditions have in the past adversely affected and in the future could also adversely affect the Company's investment banking business as increased volatility and lower stock prices can make companies less likely to conduct transactions.
In addition, global economic conditions and global financial markets remain vulnerable to the potential risks posed by certain events, which could include, among other things, political and financial uncertainty in the United States and the European Union, renewed concern about China's economy, complications involving terrorism and armed conflicts around the world, or other challenges to global trade or travel, such as have occurred or might occur in the event of a wide pandemic such as the COVID-19. More generally, because our businesses are closely correlated to the general economic outlook, a significant deterioration in that outlook or realization of certain events would likely have an immediate and significant negative impact on our businesses and overall results of operations.
The effects of the outbreak of COVID-19 have negatively affected the global economy, the United States economy and the global financial markets, and have disrupted and may further disrupt our operations and our clients' operations. The effects of the COVID-19 pandemic could in future periods have an adverse effect on our business, financial condition and results of operations.
On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability. Impacts to our businesses could include the following:
•Employees contracting COVID-19
•Reductions in our operating effectiveness as our employees work from home or disaster-recovery locations
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•Unavailability of key personnel necessary to conduct our business activities
•Unprecedented volatility in global financial markets
•Reductions in revenue across our operating businesses
•Declines in collateral value
•Declines in demand for our products or services
•Unavailability of critical services provided to us by third parties
•Operational failures due to changes in our normal business practices
•Credit losses
We are taking precautions to protect the safety and well-being of our employees. However, no assurance can be given that the steps being taken will be deemed to be adequate or appropriate, nor can we predict the level of disruption which will occur to our employee's ability to service our clients and provide support for our business. Furthermore, our future success and profitability substantially depends on the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years. The unanticipated loss or unavailability of key employees due to the COVID-19 pandemic could harm our ability to operate our businesses or execute our business strategy. We may not be successful in finding and integrating suitable successors in the event of key employee loss or unavailability.
In the event that the COVID-19 pandemic persists and leads to increased volatility and lower stock prices for many companies, our investment banking activity could be materiality disrupted.
In addition, a sustained and continuing market downturn could lead to or exacerbate declines in the number ofsecurity transactions executed for customers and, therefore, to a decline in the revenues we receive from commissions and spreads.
In addition, revenues from our investment management businesses could be negatively impacted by decreased securities prices, as well as widely fluctuating securities prices. Because our investment management businesses hold long and short positions in securities, changes in the prices of these securities, as well as any decrease in the liquidity of these securities, may materially and adversely affect our revenues from investment management.
Any one or more of these developments could cause, contribute to or exacerbate the risks and uncertainties enumerated in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the period ended March 31, 2020 could have a material adverse effect on our business, operations, consolidated financial condition, and results of operations. Furthermore, such developments may remain prevalent for a significant period of time and may in the future adversely affect our business, financial condition and results of operations even after the COVID-19 pandemic has subsided.
Business Risks
We may incur losses as a result of unforeseen or catastrophic events, including the emergence of a pandemic, terrorist attacks, extreme weather events or other natural disasters.
The occurrence of unforeseen or catastrophic events, including the emergence of a pandemic, such as COVID-19, or other widespread health emergency (or concerns over the possibility of such an emergency), terrorist attacks, extreme terrestrial or solar weather events or other natural disasters, could create, and in the case of COVID-19 have created, and may continue to create, economic and financial disruptions, and in the case of COVID-19 have led to, and other future event could lead to, operational difficulties (including travel limitations) that may impair our ability to manage our businesses.
Our businesses have traditionally relied on collaboration among our employees, particularly in our markets business. We do not know how remote working by our employees will impact our ability to collaborate. Accordingly, our business could be adversely affected by a prolonged period of employees working remotely.
Our business has traditionally relied on collaboration among our employees. In particular, the trading floor environment in our markets business facilitates idea generation and is more conducive to active trading. While we have been able to continue to operate all of our businesses, including our markets business, with our employees working remotely, we do not know how a prolonged period of remote working by our employees will impact our ability to collaborate. Accordingly, our businesses could be adversely affected by a prolonged period of employees working remotely.
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Human Capital Risk
Our businesses are heavily dependent on our personnel so any adverse effects on their well-being or morale could adversely affect our business.
COVID-19 presents a significant threat to our employees’ well-being and morale. While we have implemented a business continuity plan to protect the health of our employees, our business continuity plan cannot anticipate all scenarios and we may experience potential loss of productivity or a delay in the roll out of certain strategic plans as a result of the COVID-19 pandemic.
Operational Risks
An extended period of remote working by our employees could strain our technology resources and introduce operational risks, including heightened cybersecurity risk.
Our operations rely extensively on the secure processing, storage and transmission of confidential financial, personal and other information in our computer systems and networks. In addition, the Company's businesses are highly dependent on our ability to process, on a daily basis, a large number of transactions across diverse markets, and the transactions that the Company processes have become increasingly complex. As a result of the COVID-19 pandemic virtually all of our employees, including those who process our transactions, are working remotely. While we have implemented risk management and contingency plans and taken other precautions with respect to the COVID-19 pandemic, such measures may not adequately protect our businesses from the full impact of the COVID-19 pandemic as remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic. Accordingly, if our systems are breached as a result of a cybersecurity attack that takes advantage of the COVID-19 pandemic our ability to securely process transactions and maintain confidential financial, personal and other information could be adversely affected.
In addition, the effects of the COVID-19 pandemic, including remote working arrangements for employees, may also impact our financial reporting systems and internal control over financial reporting, disclosure controls and procedures, however, to date, these arrangements have not materially affected our ability to maintain our business operations. For further discussion, see Part 1 - Item 1A. Risk Factors - "Any cyber attack or other security breach of or vulnerability in our technology systems, or those of our clients or other third party vendors we rely on, could have operational impacts, subject us to significant liability and harm our reputation" in our 2019 Form 10-K.
Liquidity Risks
Servicing our debt and funding our necessary capital expenditures requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt or to fund our necessary capital expenditures.
Our ability to make scheduled payments of the principal and to pay interest on or to refinance our indebtedness, including our senior notes due 2024, our senior notes due 2027, our senior notes due 2033 and our convertible notes due 2022, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
Furthermore, to the extent that our business is unable to generate cash flows sufficient to fund necessary capital expenditures during the COVID-19 pandemic, we may be required to seek additional capital through issuances of debt or equity securities; however, we may be unable to complete any such transactions on favorable terms to us, or at all.
Any substantial and sustained downturn in our operations due to the COVID-19 pandemic or other factors may cause us to be in breach of our debt covenants which would limit our ability to incur additional indebtedness.
The instruments governing our existing indebtedness require us to comply with certain restrictive covenants and any substantial and sustained downturn in our operations due to the COVID-19 pandemic or other factors may cause us to be in breach of such covenants. If we breach these covenants our ability to incur additional indebtedness would be limited. In addition, to the extent we borrow under our $25 million revolving credit facility a breach of the maintenance covenants under that facility could constitute an event of default and cause our outstanding indebtedness under the revolving credit facility to be declared immediately due and payable. If applicable, such acceleration of our outstanding indebtedness could cause our secured lenders to foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation. Any inability to obtain additional liquidity as and when needed, or to maintain compliance with the instruments governing our indebtedness, would have a material adverse effect on our financial condition and results of operations.
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In addition, the current uncertain condition of the capital markets and their actual or perceived effects on our business, financial condition and results of operations, along with the current unfavorable economic environment in the United States and much of the world resulting from the COVID-19 pandemic, may increase the likelihood that one or more of the major independent credit agencies would downgrade our credit ratings, which could have a negative effect on our access to capital and the cost of any future debt financing. In addition, the terms of future debt agreements could include more restrictive covenants or require incremental collateral, which may further restrict our business operations.
The soundness of other financial institutions may adversely affect Cowen.
Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. Cowen has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and institutional clients. Many of these transactions expose Cowen to credit risk in the event of a default by a counterparty or client. In the past, defaults by, or even speculation about, one or more financial services institutions or the financial services industry generally during moments of economic crisis have led to market-wide liquidity problems. The economic volatility resulting from the current COVID-19 pandemic could, as similar events in the past have, result in similar defaults and, as a result, impair the confidence of our counterparties and ultimately affect our ability to effect transactions. In addition, Cowen’s credit risk may be exacerbated when the collateral held by Cowen cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit exposure due to Cowen. Any such losses could have a material adverse effect on Cowen’s financial condition and results of operations.
Higher volumes and price volatility in the markets due to COVID-19 could lead to higher cash requirements in our clearing businesses, which could adversely affect our liquidity position.
Since February 29, 2020, the capital markets have experienced a higher level of stress due to the global COVID-19 pandemic. Higher volumes and price volatility have led to increased margin requirements at clearing corporations and exchanges, along with increased levels of fails due to operational friction in the financial system. These higher cash requirements could have required us, and may continue to require us, to use more liquidity for our clearing businesses and our overall liquidity could be adversely affected as a result.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
As of June 30, 2019,2020, the Company's Board of Directors has a share repurchase program that authorizes the Company to purchase up to $198.3$251.8 million of Cowen Class A common stock from time to time through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. The specific timing and amount of repurchases will vary depending on various factors, including, among others, market conditions and competing needs for the use of our capital.  We may elect to conduct future share repurchases through open market purchases, private transactions or automatic share repurchase programs under SEC Rule 10b5-1. During the three months ended June 30, 2019,2020, the Company repurchased 461,830446,800 shares, at an average price of $15.93$14.67 per share, of Cowen Class A common stock through the share repurchase program.
The table below sets forth the information with respect to purchases made by or on the behalf of the Company or any “affiliated purchaser”"affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act, as amended), of our common stock during the three months ended June 30, 2019.2020. Board approval of repurchases is based on dollar amount. As a result, the Company cannot estimate the number of shares that may yet be purchased.
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Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or ProgramsPeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
        
Month 4 (April 1, 2019 – April 30, 2019)        
Month 4 (April 1, 2020 – April 30, 2020)Month 4 (April 1, 2020 – April 30, 2020)
Common stock repurchases(1) —
 $—
 —
 $25,000,000
Common stock repurchases(1)—  $—  —  6,981,750  
Employee transactions(2) 8,961
 14.65
 —
 —
Employee transactions(2)25,014  9.66  —  —  
Other (3) —
 —
 —
 —
Other (3)—  —  —  —  
Total 8,961
 $14.48
 —
  Total25,014  $9.66  
        
Month 5 (May 1, 2019 – May 31, 2019)        
Month 5 (May 1, 2020 – May 31, 2020)Month 5 (May 1, 2020 – May 31, 2020)
Common stock repurchases(1) —
 $—
 —
 $25,000,000
Common stock repurchases(1)—  $—  —  6,981,750  
Employee transactions(2) 8,903
 15.87
 —
 —
Employee transactions(2)105,347  11.77  —  —  
Other (3) 4,737
 15.40
 —
 —
Other (3)2,138  10.33  —  —  
Total 13,640
 $15.71
 —
  Total107,485  $11.74  
        
Month 6 (June 1, 2019 – June 30, 2019)        
Month 6 (June 1, 2020 – June 30, 2020)Month 6 (June 1, 2020 – June 30, 2020)
Common stock repurchases(1) 461,830
 $15.93
 461,830
 $17,643,131
Common stock repurchases(1)446,800  $14.67  446,800  24,165,575  
Employee transactions(2) 201,353
 15.57
 —
 —
Employee transactions(2)131,799  13.07  —  —  
Other (3) —
 —
 —
 —
Other (3)—  —  —  —  
Total 663,183
 $15.82
 461,830
  Total578,599  $14.30  
        
Total (April 1, 2019 – June 30, 2019)        
Total (April 1, 2020 – June 30, 2020)Total (April 1, 2020 – June 30, 2020)
Common stock repurchases(1) 461,830
 $15.93
 461,830
 $17,643,131
Common stock repurchases(1)446,800  $14.67  446,800  $24,165,575  
Employee transactions(2) 219,217
 15.55
 —
 —
Employee transactions(2)262,160  12.22  —  —  
Other (3) 4,737
 15.40
 —
 —
Other (3)2,138  10.33  —  —  
Total 685,784
 $15.80
 461,830
  Total711,098  $12.93  446,800  
(1)The Company's Board of Directors have authorized the repurchase, subject to market conditions, of up to $198.3 million of the Company's outstanding common stock.
(2)Represents shares of common stock withheld in satisfaction of tax withholding obligations upon the vesting of equity awards or other similar transactions.
(3)Represents shares of common stock distributed to the Company from an escrow account established to satisfy the Company’s indemnification claims arising under the terms of the purchase agreement entered into in connection with the Company’s acquisition of Convergex Group, LLC.
(1) The Company's Board of Directors have authorized the repurchase, subject to market conditions, of up to $251.8 million of the Company's outstanding Class A common stock.
(2) Represents shares of the Company's Class A common stock withheld in satisfaction of tax withholding obligations upon the vesting of equity awards or other similar transactions.
(3) Represents shares of common stock distributed to the Company from an escrow account established to satisfy the Company's indemnification claims arising under the terms of the purchase agreement entered into in connection with the Company's acquisition of Convergex Group, LLC.
Item 3. Defaults Upon Senior Securities
None.

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Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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Item 6.    Exhibits


Exhibit No.Description
10.13.1

10.2
FormIncorporation of Note Purchase Agreement, Including the form of Note attached theretoCowen Inc. (previously filed as Exhibit 4.13.1 to the Form 10-Q filed November 25, 2009).
3.2
3.3
3.4
3.5
3.6
10.1
31.1
31.2
32
101.INSXBRL INSTANCE DOCUMENT
101.SCHXBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
101.CALXBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT
101.DEFXBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT
101.LABXBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT
101.PREXBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT
104 Cover Page Interactive Data File - (formatted as inline XBRL and contained in Exhibit 101)
* Signifies management contract or compensatory plan or arrangement.










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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
COWEN INC.
By:/s/ JEFFREY M. SOLOMON
Name:Jeffrey M. Solomon
Title:Chief Executive Officer
COWEN INC.By:
By:/s/ JEFFREY M. SOLOMON
Name:Jeffrey M. Solomon
Title:Chief Executive Officer
By:/s/ STEPHEN A. LASOTA
Name:Stephen A. Lasota
Date:August 1, 2019July 30, 2020Title:Chief Financial Officer (principal financial officer and principal accounting officer)



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