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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)
☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended:						December 31, 2022
or
☐			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

27-0423711

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

599 Lexington Avenue

New York, New York 10022

(646) 562-1010

(Address, including zip code, and telephone number, including area code, of registrant's principal executive office)

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

Title of Each Class

Trading Symbol

Name of Exchange on Which Registered

Class A Common Stock, par value $0.01 per share

COWN

The Nasdaq Global Market

7.75% Senior Notes due 2033

COWNL

The Nasdaq Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐    No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐    No ☒

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 ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes  ☒    No ☐ 

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer (Do not check if a smaller reporting company)

☐

Smaller reporting company

☐

Emerging growth company

☐

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

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

The aggregate market value of Class A common stock held by non-affiliates of the registrant on June 30, 2022, the last business day of the registrant's most recently completed second fiscal quarter, based upon the closing sale price of the Class A common stock on the NASDAQ Global Market on that date was $621,959,226.

As of February 27, 2023 there were 28,242,343 shares of the registrant's Class A common stock outstanding.

Documents incorporated by reference:

Part III of this Annual Report on Form 10-K incorporates by reference information (to the extent specific sections are referred to herein) from the Registrant's Proxy Statement for its 2022 Annual Meeting of Stockholders.

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TABLE OF CONTENTS

Item No.												Page No.
PART I
			1.						Business			1
			1A.						Risk Factors			8
			1B.						Unresolved Staff Comments			33
			2.						Properties			34
			3.						Legal Proceedings			34
			4.						Mine Safety Disclosures			34
PART II
			5.						Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			35
			6.						[Reserved]			36
			7.						Management's Discussion and Analysis of Financial Condition and Results of Operations			37
			7A.						Quantitative and Qualitative Disclosures about Market Risk			77
			8.						Financial Statements and Supplementary Data			79
			9.						Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			79
			9A.						Controls and Procedures			80
			9B.						Other Information			80
PART III
			10.						Directors, Executive Officers and Corporate Governance			80
			11.						Executive Compensation			83
			12.						Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			94
			13.						Certain Relationships and Related Transactions			95
			14.						Principal Accounting Fees and Services			97
PART IV
			15.						Exhibits and Financial Statement Schedules			97
			16.						Form 10-K Summary			100
Consolidated Financial Statements and Notes												F-1
SIGNATURES

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Special Note Regarding Forward-Looking Statements

We have included or incorporated by reference into our Annual Report on Form 10-K (the "Annual Report"), and from time to time may make in our public filings, press releases or other public documents, certain statements, including (without limitation) those under Item 1—"Business," Item 1A—"Risk Factors," Item 3—"Legal Proceedings," Item 7—"Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 7A—"Quantitative and Qualitative Disclosures about Market Risk" that may constitute "forward-looking statements" within the meaning of the safe harbor provisions 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" or "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 outlined under Item 1A—"Risk Factors" in this Annual Report.

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.

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PART I

When we use the terms "we," "us," "Cowen" and the "Company," we mean Cowen Inc., a Delaware corporation, its consolidated subsidiaries and entities in which it has a controlling financial interest, taken as a whole, as well as any predecessor entities, unless the context otherwise indicates.

Item 1.    Business

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 banking, research, sales and trading, prime brokerage, global clearing, securities financing, commission management services and investment management through its two business segments: the Operating Company ("Op Co") and the Asset Company ("Asset Co").

Operating Company

The Op Co segment consists of four divisions: the Cowen Investment Management ("CIM") division, the Investment Banking division, the Markets division (which includes sales and trading, prime brokerage, global clearing, securities financing and commission management services) and the Research division. The Company refers to the Investment Banking division, the Markets division and the Research division collectively as its investment banking businesses. Op Co's CIM division includes advisers to investment funds (including private equity structures and privately placed hedge funds), and registered funds. Op Co's investment banking businesses offer industry focused investment banking for growth-oriented companies including 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 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 United States ("U.S.") Securities and Exchange Commission (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 healthcare investing, sustainable investing, healthcare royalties, merger arbitrage and activism. A portion of the Company’s capital is invested alongside the Company's investment management clients. The Company has also invested capital in its insurance and reinsurance businesses.

Op Co's investment banking businesses include investment banking, research, sales and trading, prime brokerage, global clearing, securities financing and commission management services provided primarily to companies and institutional investor clients. Sectors covered by Op Co's investment banking business include healthcare, technology, media and telecommunications, consumer, industrials, tech-enabled and business services, and energy. We provide research and brokerage services to over 6,000 domestic and international clients seeking to trade securities and other financial instruments, principally in our 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's private investments, private real estate investments and other legacy investment strategies. The focus of Asset Co is to drive future monetization of the invested capital of the segment.

Principal Business Lines

Investment Banking

Our investment banking department provides strategic advisory and capital raising services to U.S. and international public and private companies, private equity and venture capital firms, and family offices. Our clients are primarily focused on our sectors. Our strategic advisory services include, among other things, acquisitions, divestitures, fairness opinions, de-SPACs, spin-offs, and partnerships. Our capital markets group consists of two groups: (i) equity capital markets (including convertible securities), which focuses on raising equity capital in the public markets, and (ii) private capital solutions, which focuses on providing clients with alternative sources of capital, including private equity, venture capital, family offices, and various forms of non-dilutive financing. A significant amount of our investment banking revenue has been earned from high-growth small and mid-capitalization companies. From time to time, the Company invests in private capital raising transactions of its clients.

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Brokerage

Our team of brokerage professionals serves institutional investor clients in the U.S. and internationally. We trade common stocks, listed options, equity-linked securities and other financial instruments on behalf of our clients and offer a full-service suite of introduced prime brokerage services targeting emerging private fund managers. We provide our clients with an electronic execution suite. We provide global, multi-asset class algorithmic execution trading models to both buy side and sell side clients and also offer execution capabilities relating to these trading models through ATM Execution LLC ("ATM Execution"). We also provide our clients with commentary on political, economic and market conditions. We have relationships with over 6,000 institutional investor clients. Our brokerage team is comprised of experienced professionals dedicated to our sectors, which allows us to develop a level of knowledge and focus that we believe differentiates our brokerage capabilities from those of many of our competitors. We tailor our account coverage to the unique needs of our clients. We believe that our sector traders are able to provide superior execution because of their knowledge of the interests of our institutional investor clients in specific companies in our sectors.

In connection with the brokerage services we provide, our sales professionals also provide our institutional investor clients with corporate access to management teams of public and private companies outside the context of financing transactions. These meetings are commonly referred to as non-deal road shows. Non-deal road shows allow companies to increase their visibility within the institutional investor community while providing our institutional investor clients with the opportunity to further educate themselves on companies and industries through meetings with management. We believe our deep relationships with company management teams and our sector-focused approach provide us with broad access to management teams for the benefit of our institutional investor clients.

Research

As of December 31, 2022, we had a research team of more than 60 senior analysts covering about 975 stocks. Within our equity coverage universe, approximately 38% are healthcare companies, 24% are TMT (technology, media and telecom) companies, 12% are energy companies, 10% are capital goods, industrial and basic materials companies, and 15% are consumer companies. Our approach to research, underpinned by our marquee Ahead Of The Curve® Series reports, focuses our analysts' efforts toward delivering differentiated investment ideas and de-emphasizes maintenance research. We place significant emphasis on analyst collaboration, both within and between sectors. We sponsor a number of conferences every year that are focused on the sectors and sub-sectors our analysts cover. During these conferences we highlight our investment research and provide significant investor access to corporate management teams. We provide research through our broker-dealers in connection with our provision of brokerage services.

Investment Management Strategies

The Company's investment management business, within the Op Co segment, focuses on addressing the needs of institutional investors and high net worth individuals to preserve and grow allocated capital. The Company and its related investment advisors offer a variety of investment management products that provide access to a number of strategies, including healthcare investing, sustainable investing, healthcare royalties, merger arbitrage and activism.

The Company's investment management business, within the Asset Co segment, consists of the Company's private investments, private real estate investments and other legacy investment strategies. Certain multi-strategy hedge funds managed by the Company are currently in wind-down. The majority of assets remaining in these hedge funds include investments in private companies.

Information About Geographic Areas

We are principally engaged in providing investment management services to global institutional investors and investment banking sales and trading and research services to corporations and institutional investor clients primarily in the United States and Europe. We provide brokerage services to companies and institutional investor clients in Europe through our broker-dealers located in the United Kingdom ("U.K.") Cowen International Limited ("Cowen International Ltd") and Cowen Execution Services Limited ("Cowen Execution Ltd"). Cowen and Company (Asia) Limited ("Cowen Asia") is registered with and subject to the financial resources requirements of the Securities and Futures Commission ("SFC") of Hong Kong.

Human Capital

Our success depends on the talented, capable and dedicated team we have built, so we aim to attract and retain the best people by providing a strong, connected and inclusive culture. We strive to attract individuals who are smart, ambitious, work collaboratively and most importantly share our core values of vision, empathy, sustainability and tenacious teamwork.

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As of December 31, 2022, we employed 1,534 employees: 1,264 in the U.S., 259 in Europe, and 11 in Asia (or Hong Kong). Our values help ensure that collaboration is a standard operating procedure for our employees across the globe.

Attracting and retaining talented people

We believe our focus on inclusion expands our thinking. We believe employees and candidates are drawn to our culture of teamwork and collaboration. We strive to keep people engaged by helping them thrive and build fulfilling long-term careers.

We reward and recognize our colleagues with competitive benefits packages that promote financial and physical wellbeing for everyone. Our compensation philosophy is founded on two essential principles:

1.Pay fairly and competitively relative to the industry and local labor market

2.Reward exceptional performance against expectations

Our highly competitive Investment Banking Summer Analyst program is an important channel for sourcing talent. Successful candidates attend one week of formal training followed by nine weeks working within our Investment Banking division. This program then feeds into our Full-Time Investment Banking Analyst Program – at least 80% of those who attend the Investment Banking Summer Analyst program are expected to go on to the full-time program.

In addition to Cowen’s Investment Banking Summer Analyst program, our Markets division offers a series of summer programs. The Cowen's Markets Summer Analyst Program provides our interns with exposure to senior experienced professionals through on-the-job training and department rotations including Institutional Research Sales, Sales Trading, Trading, Electronic Trading, and Options and Event Strategies. In addition to Cowen’s Markets Summer Analyst Program, we offer individual group focused summer internship programs with our Cross Asset Summer Analyst Program and Commission Management Services Internship Program.

We also offer entry-level opportunities in our Business Operations division through programs for interns and apprentices. Our Multiverse program aims to create a channel for high-potential young people to join the organization by providing an outstanding alternative to university and corporate training. We also offer our Year Up program in partnership with a non-profit dedicated to creating job pathways for young adults.

Our efforts have been rewarded with strong engagement and loyalty from our team members. In 2022, employee turnover rate was just 15% at a time when the US saw a sharp increase in colleagues leaving their jobs.

Building fulfilling careers

To support continuous development, we provide high-quality programs that challenge and grow with our colleagues. People have opportunities to pursue job-related professional qualifications in financial analysis and are supported to gain and maintain the licenses needed to work in the securities industry. We also offer a range of job-related seminars and continuing education courses for colleagues at all levels, including career development, time management, and health and wellness. Colleagues can continue their education and take advantage of tuition reimbursement.

In 2021 and 2022, we issued shares of Cowen Class A common stock to every eligible colleague. By giving our colleagues an ownership stake in the firm, we not only recognized their contribution to our success but gave them the opportunity to share in our future success.

Promoting Health, Safety and Wellness

Our employee benefits program is built around physical, mental and financial wellbeing, and designed to be inclusive for all members of our community. In 2022, we introduced two wellness days as part of our leave offerings to support employees and encourage them to take care of their physical and emotional well-being. We believe that when employees are happy and healthy, we can be more productive, innovative, and resilient. Colleagues can access mental health services and support via our mental health programs, which include virtual sessions and other tools that help employees build personal resilience in the face of adversity and stress.

We provide 12 weeks of paid Parental Leave to all eligible employees in connection with the birth, adoption or foster care placement of a child. Employees who experience a period of disability in connection with pregnancy or childbirth are eligible for additional 6 – 8 weeks of paid leave depending on method of delivery. We also offer back-up child and elder care programs to help meet last-minute family needs. In addition, colleagues can claim commuter benefits, and we match employee contributions to their 401(k).

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We regularly examine our current benefit offering, consult with our benefits partners and solicit employee feedback to make sure our benefits package is meeting their needs. We also review various plan utilization analytics and any insights we capture are used to inform our employee benefits strategy.

Diversity, Equity & Inclusion

At Cowen, DE&I is a business imperative, built upon our core values – enabling us to excel and outperform. When it comes to DE&I, Cowen adopts a holistic approach, involving both systemic change to mitigate biases and advance inclusion through the use of metrics, governance, reporting, and accountability, as well as culture change to build awareness and to create an atmosphere of inclusion for all employees regardless of background.

Our empathetic and collaborative culture helps us harness the power of diversity to transform the status quo. We embrace different perspectives and recognize that inclusion expands our thinking to generate better outcomes for clients. We also know that if we are not actively including, then we may be accidentally excluding.

To that end, we are very intentional about our approach to diversity, equity and inclusion. We have embedded the principles of diversity, equity and inclusion throughout our HR policies and processes, actively engage our leaders in key initiatives, and promote diversity through recruitment initiatives, diversity programming and training and business resource groups.

This holistic approach to DE&I comprises three inter-connected focus areas: Talent, Culture, and Community.

Talent

Cowen is focused on building an inclusive talent pool through recruiting diverse talent and providing professional development, growth and visibility opportunities for diverse colleagues. We partner with an array of leading national organizations creating access to jobs in finance for underrepresented groups, and also offer mentoring programs and leadership development sessions.

Cowen’s 7 Business Resource Groups ("BRGs") bring together diverse colleagues and allies, providing opportunities for colleagues to foster cross-collaboration and partnerships across business units. Taken together, the Black, LGBTQ+, LatinX, Asian, Women, Veterans, and Volunteering communities engage 31% of Cowen employees. These employee-led business resource groups host a broad range of events to celebrate the power of diversity in all dimensions (race, gender, sexual orientation and identity) within our organization, including for Heritage Months. BRGs at Cowen are paired with executive sponsors from management and also partner with external organizations for networking and development purposes, and also support recruiting and volunteer programs

Culture

We pride ourselves on our empathetic and collaborative culture, where the power of diversity is harnessed to transform the status quo. Our focus on inclusion expands our thinking in order to generate better outcomes for clients, while striving to increase fairness and equity for our colleagues. We want our employees to feel that they can bring their full, authentic selves to work to make their fullest contribution to our business and to realize their aspirations. We measure the effectiveness of our DE&I efforts by listening and acting on feedback received from employees. Regular Inclusion Circles and Business Resource Group-hosted discussions provide a safe space for colleagues to learn, share and discuss current trends and themes around diversity and inclusion. We also monitor the diversity of our workforce to track our progress and identify opportunities for improvement.

We believe all individuals have a right to be treated with dignity and respect without discrimination or retaliation. An inclusive culture is one of Cowen’s hallmarks, and we our programs and initiative in DE&I are predicated on the belief that a culture of inclusion and belonging are fundamental to our performance.

We do not tolerate sexual harassment, offensive conduct or discrimination based on protected characteristics. We expect all colleagues to respect differences and strive to provide a work environment based on mutual respect that is free from harassment and discrimination. This expectation is communicated in detail via our Employee Handbook and a summarized on our website.

Community

We have an active Volunteer and Corporate Giving programs that encourage employee participation and contributions to causes aligned with Cowen’s DE&I strategy and organizational values. Cowen also supports partner organizations which advance social equity and justice causes aligned to our employee, corporate and client priorities. We also partner with a range of leading DE&I organizations to keep abreast of best practice and the latest thought leadership in the space.

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Competition

We compete with many other firms in all aspects of our business, including raising funds, seeking investment opportunities and hiring and retaining professionals, and we expect our business will continue to be highly competitive. The investment management and investment banking industries are currently undergoing contraction and consolidation, reducing the number of industry participants and generally resulting in the larger firms being better positioned to retain and gain market share. We compete in the United States and globally for investment opportunities, investor capital, client relationships, reputation and talent. We face competitors that are larger than we are and have greater financial, technical and marketing resources. Certain of these competitors continue to raise additional amounts of capital to pursue investment strategies that may be similar to ours. Some of these competitors may also have access to liquidity sources that are not available to us, which may pose challenges for us with respect to investment opportunities. In addition, some of these competitors may have higher risk tolerances or make different risk assessments than we do, allowing them to consider a wider variety of investments and establish broader networks of business relationships. Our competitive position depends on our reputation, our investment performance and processes, the breadth of our business platform and our ability to continue to attract and retain qualified employees while managing compensation and other costs. For additional information regarding the competitive risks that we face, see "Item 1A Risk Factors."

Regulation and Compliance

Our businesses, as well as the financial services industry generally, are subject to extensive regulation, including periodic examinations by governmental and self-regulatory organizations, in the United States and the jurisdictions in which we operate around the world. As a publicly traded company in the United States, we are subject to the U.S. federal securities laws and regulation by the SEC. Through our investment management and/or investment bank businesses we are subject to regulation by the SEC, the U.S. Commodity Futures Trading Commission ("CFTC"), the Financial Industry Regulatory Authority, Inc. ("FINRA") the National Futures Association ("NFA"), other self-regulatory organizations and exchanges related to the financial services industry and the fifty state securities commissions in the U.S. and by the U.K. Financial Conduct Authority ("FCA") and the Securities and Finance Commission ("SFC") of Hong Kong.

Virtually all aspects of our business are subject to various laws and regulations both inside and outside the U.S., some of which are summarized below. Regulatory bodies in the United States and the rest of the world are charged with safeguarding the integrity of the securities and other financial markets and protecting the interests of customers participating in those markets. Governmental authorities in the United States and in the other countries in which we operate from time to time propose additional disclosure requirements and regulations covering our broker-dealers and investment management businesses. The rules governing the regulation of the various aspects of our business are very detailed and technical. Accordingly, the discussion below is general in nature, does not purport to be complete and is current only as of the date of this report.

Our businesses have operated for many years within a legal framework that requires us to be able to monitor and comply with a broad range of legal and regulatory developments that affect our activities both in the United States and abroad. As noted above, certain of our businesses are subject to compliance with laws and regulations of United States federal and state governments, foreign governments, their respective agencies and/or various self-regulatory organizations or exchanges, and any failure to comply with these regulations could expose us to liability and/or reputational damage. Additional legislation, changes in rules promulgated by the SEC, our other regulators and self-regulatory organizations or changes in the interpretation or enforcement of existing laws and rules, either in the United States or elsewhere, may directly affect the mode of our operation and profitability. The United States and non-United States government agencies and self-regulatory organizations, as well as state securities commissions in the United States, are empowered to conduct administrative proceedings that can result in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion or deregulation of a broker-dealer, an investment advisor or its directors, officers or employees.

Rigorous legal and compliance analysis of our businesses and investments is important to our culture and risk management. We conduct regular training of our personnel regarding the laws and regulations governing our business and applicable to our clients as well as with our company's policies and procedures. In addition, we have adopted and implemented disclosure controls and procedures and internal controls over financial reporting, which have been documented, tested and assessed for design and operating effectiveness in compliance with the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Act"). We strive to maintain a culture of compliance through the use of policies and procedures such as oversight compliance, codes of conduct, compliance systems, communication of compliance guidance, conduct of annual compliance reviews and on-going employee education and training. Our corporate risk management function further analyzes our business, investment and other key risks, reinforcing their importance in our environment. We have a compliance group that monitors our compliance with all of the regulatory requirements to which we are subject and manages our compliance policies and procedures. Our General Counsel supervises our compliance group, which is responsible for addressing all regulatory and compliance matters that affect our activities. Our compliance policies and procedures address a variety of regulatory and compliance risks such as the handling of material non-public

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information, position reporting, personal securities trading, valuation of investments, document retention, potential conflicts of interest and the allocation of investment opportunities. Our compliance group also monitors the information barriers that we maintain between those of our different businesses that we are required to conduct separately or which present conflicts of interest, which we address through the use of physical and systematic information barriers. We believe that our various businesses' access to the intellectual capital, contacts and relationships benefit all of our businesses. However, in order to maximize that access without compromising our legal and contractual obligations, our compliance group oversees and monitors the communications between or among our different businesses to ensure that we maintain material non-public information, client information and other confidential information in strict confidence. All parts of our business from time to time are subject to regulatory exams, investigations and proceedings, and our broker-dealers have received fines and penalties for infractions of various regulations relating to our activities. For additional information regarding the regulatory and compliance risks that we face, see "Item 1A Risk Factors."

The investment advisers responsible for the Company's investment management businesses are all registered as investment advisers with the SEC or rely upon the registration of an affiliated adviser, and all are currently exempt from registration as Commodity Pool Operators and Commodity Trading Advisors.

Registered investment advisers are subject to the requirements of the Advisers Act and the regulations promulgated thereunder. Such requirements relate to, among other things, fiduciary duties to clients, maintaining an effective compliance program, operational and marketing requirements, disclosure obligations, conflicts of interest, fees and prohibitions on fraudulent activities.

The investment activities of our investment management businesses are also subject to regulation under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Securities Act of 1933, as amended, the Investment Company Act of 1940, as amended ("the Investment Company Act") and various other statutes, as well as the laws of the fifty states and the rules of various United States and non-United States securities exchanges and self-regulatory organizations, including laws governing trading on inside information, market manipulation and a broad number of technical requirements (e.g., options and futures position limits, execution requirements and reporting obligations) and market regulation policies in the United States and globally. Congress, regulators, tax authorities and others continue to explore and implement regulations governing all aspects of the financial services industry. Pursuant to systemic risk reporting requirements adopted by the SEC, the Company's affiliated registered investment advisers with private investment fund clients are required to report certain information about their investment funds to the SEC.

In addition, certain of our investment advisers may act as a "fiduciaries" under the Employee Retirement Income Security Act of 1974 ("ERISA") and similar state laws with respect to private and public benefit plan clients. As such, the advisers, and certain of the investment funds they advise, may be subject to ERISA and similar state law requirements and to regulations promulgated thereunder. ERISA, similar state laws and applicable provisions of the Internal Revenue Code of 1986 (the "IRC"), which regulate services provided to individual retirement accounts, impose duties on persons who are fiduciaries and other types of service providers to benefit plans and individual retirement accounts under ERISA, such state laws and the IRC, prohibit specified transactions involving IRA and benefit plan clients subject to ERISA or similar state laws (absent the availability of specified exemptions) and provide monetary penalties for violations of these prohibitions.

Enacted on July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") was expansive in scope and led to the adoption of extensive regulations by the CFTC, the prudential regulators, the SEC and other governmental agencies. Since its adoption, the Dodd-Frank Act has had an impact on the costs associated with derivatives trading by the Company and its clients, including as a result of requirements that transactions be margined and trade reported.

The Dodd-Frank Act established the Financial Services Oversight Council (the "FSOC") to identify threats to the financial stability of the United States, promote market discipline, and respond to emerging risks to the stability of the United States financial system. The FSOC is empowered to determine whether the material financial distress or failure of a non-bank financial company would threaten the stability of the United States financial system, and such a determination can subject a non-banking finance company to supervision by the Board of Governors of the Federal Reserve and the imposition of standards and supervision including stress tests, liquidity requirements and enhanced public disclosures including the authority to require the supervision and regulation of systemically significant non-bank financial companies. We do not believe we are at risk of being considered a systemically significant non-bank financial company.

The regulation of swaps and derivatives under the Dodd-Frank Act directly affects the manner by which our investment management businesses utilizes and trades swaps and other derivatives, and has generally increased the costs of derivatives trading conducted on behalf of our clients. The European Union ("EU") (and some other countries) are now in the process of implementing similar requirements that will affect derivatives transactions with a counterparty organized in that country or otherwise subject to that country's derivatives regulation. The mandatory minimum margin requirements for bilateral derivatives

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adopted by the U.S. government and the EU came into effect in March 2017 with respect to variation margin and was implemented through a phase-in compliance in respect to initial margin last September 1, 2022. Required margining of derivatives has affected our investment management businesses as these requirements generally increase costs associated with derivatives transactions and makes derivatives transactions more expensive.

Given our investment and insurance activities are carried out around the globe, we are subject to a variety of regulatory regimes that vary country by country. Our captive insurance companies are regulated by the New York State Department of Finance; our non-captive insurance company is regulated by the Malta Financial Services Authority and our reinsurance companies by the Luxembourg Commissariat aux Assurances and the Guernsey Financial Services Commission. Our captive insurance and reinsurance companies are regulated by both the New York State Department of Finance and the Luxembourg Commissariat aux Assurances, respectively. EU financial reforms included a number of initiatives to be reflected in new or updated directives and regulations, the most significant of which is the amendment to the pan-European regulatory regime, the Markets in Financial Instruments Directive ("MiFID II"), which went into effect in January 2018. MiFID II regulates the provision of investment services and activities throughout the European Economic Area. MiFID II requires that investment managers and investment advisers located in the EU "unbundle" research costs from commissions. As a result, investment firms subject to MiFID II may no longer pay for research using client commissions or "soft dollars." Going forward, such costs must be paid directly by the investment firm or through a research payment account funded by clients and governed by a budget that is agreed by the client. In the U.S., our investment management businesses expect to continue to pay for research using soft dollars consistent with applicable law. The change in regulations has also impacted the provisions of research by our U.S. broker-dealers. Because the acceptance of hard dollar payments would, under U.S. law, require registration as an investment adviser, our broker-dealers are requiring clients to continue to pay for research on a soft dollar basis unless the client is subject to MiFID II and we can rely on SEC no-action relief so as not to have to register as an investment adviser. The SEC no-action relief expires on July 3, 2023, unless further extended.

Cowen and Company, LLC ("Cowen and Company"), ATM Execution LLC ("ATM Execution"), and Westminster Research Associates LLC ("Westminster") are registered as broker-dealers with the SEC and are members in good standing with FINRA. All broker-dealers are registered with various U.S. states and territories except for ATM Execution. In addition to FINRA, some of these Cowen broker-dealers are also members of other self-regulatory organizations, including various registered securities exchanges. Self-regulatory organizations adopt and enforce rules governing the conduct and activities of their member firms. Accordingly, Cowen and Company, ATM Execution, and Westminster are subject to regulation and oversight by the SEC, the U.S. states and territories in which they are registered, and FINRA and the other self-regulatory organizations of which they are members. Cowen and Company is also registered with the CFTC and is a member of the NFA as an introducing broker and, consequently, is subject to regulation and oversight by them. Additionally, Cowen International Ltd and Cowen Execution Ltd are primarily regulated in the U.K. by the FCA and Cowen and Company Asia is registered with and subject to the financial resources requirements of the SFC of Hong Kong.

Broker-dealers are subject to regulations that cover all aspects of the securities business, including sales methods, trade practices among broker-dealers, use and safekeeping of customers' funds, conflicts of interest, securities and information, capital structure, research/banking interaction, record-keeping, the financing of customers' purchases and the conduct and qualifications of directors, officers and employees. In particular, as registered broker-dealers and members of various self-regulatory organizations, Cowen and Company, ATM Execution, and Westminster are subject to the SEC's uniform net capital rule 15c3-1 ("SEC Rule 15c3-1"). SEC Rule 15c3-1 specifies the minimum level of net capital a broker-dealer must maintain and also requires that a significant part of a broker-dealer's assets be kept in relatively liquid form. The SEC and various self-regulatory organizations impose rules that require notification when net capital falls below certain predefined criteria, limit the ratio of subordinated debt to equity in the regulatory capital composition of a broker-dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances. Additionally, SEC Rule 15c3-1 requires us to give prior notice to the SEC for certain withdrawals of capital. As a result, our ability to withdraw capital from our broker-dealer subsidiaries may be limited.

The Dodd-Frank Act contains provisions that require the registration of all swap dealers, major swap participants, security-based swap dealers, and/or major security-based swap participants. The CFTC has finalized rules establishing capital requirements and financial reporting requirements for CFTC registered swap dealers not subject to regulation by a banking regulator. The SEC has finalized rules establishing similar standards for an entity registering as a standalone securities-based swaps dealer. On October 6, 2021, Cowen Financial Products LLC (“CFP”) became subject to the SEC’s standalone securities-based swap regulatory requirements. CFP registered as a securities-based swap dealer with the SEC with an effective date of November 1, 2021. Under the rules there is a minimum net capital requirement for, among others, an entity that acts as a dealer in security-based swaps, which is the greater of $20 million or 2% of risk margin amount. The risk margin amount means the sum of (i) the total initial margin required to be maintained by the SEC securities-based swaps dealer at each clearing agency with respect to securities-based swaps transactions cleared for securities-based swap customers and (ii) the total initial margin amount calculated by the SEC securities-based swaps dealer swaps dealer with respect to non-cleared securities-based swaps under new SEC rules.

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The effort to combat money laundering and terrorist financing is a priority in governmental policy with respect to financial institutions. The Bank Secrecy Act ("BSA"), as amended by Title III of the USA PATRIOT Act of 2001 and its implementing regulations ("Patriot Act"), requires broker-dealers and other financial services companies to maintain an anti-money laundering compliance program that includes written policies and procedures, designated compliance officer(s), appropriate training, independent review of the program, standards for verifying client identity at account opening and obligations to report suspicious activities and certain other financial transactions. Through these and other provisions, the BSA and Patriot Act seek to promote the identification of parties that may be involved in financing terrorism or money laundering. We must also comply with sanctions programs administered by the U.S. Department of Treasury's Office of Foreign Asset Control, which may include prohibitions on transactions with designated individuals and entities and with individuals and entities from certain countries.

Anti-money laundering laws of certain countries outside the United States contain similar diligence and verification provisions. The obligation of financial institutions, including ours, to identify their customers, watch for and report suspicious transactions, respond to requests for information by regulatory authorities and law enforcement agencies, and share information with other financial institutions, has required the implementation and maintenance of internal practices, procedures and controls that have increased, and may continue to increase, our costs. Any failure with respect to our programs in this area could subject us to serious regulatory consequences, including substantial fines, and potentially other liabilities.

Certain of our businesses are subject to laws and regulations enacted by U.S. federal and state governments, the EU or other non-U.S. jurisdictions and/or enacted by various regulatory organizations or exchanges relating to the privacy of the information of clients, employees or others, including the European Union’s General Data Protection Regulation (the “GDPR”), the California Consumer Privacy Act (the “CCPA”), and the Gramm-Leach-Bliley Act (the “GLBA”). In the U.S. and elsewhere, additional privacy legislation has been proposed and may be passed, changes in existing regulations may be made or changes in the interpretation or enforcement of existing laws and rules may be made.

Available Information

We routinely file annual, quarterly and current reports, proxy statements and other information required by the Exchange Act with the SEC. Our SEC filings also are available to the public from the SEC's internet site at http://www.sec.gov.

We maintain a public internet site at http://www.cowen.com and make available free of charge through this site our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and Forms 3, 4 and 5 filed on behalf of directors and executive officers, as well as any amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also post on our website the charters for our Board of Directors' Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, as well as our Corporate Governance Guidelines, our Code of Business Conduct and Ethics governing our directors, officers and employees and other related materials. The information on or accessible through our website is not incorporated by reference into this Annual Report.

Item 1A.    Risk Factors

SUMMARY RISK FACTORS

Some of the factors that could materially and adversely affect our business, financial condition, results of operations or prospects include the following:

Market, Strategy and Industry Risk

a.Market volatility could have an adverse effect on our businesses, results of operations and financial condition.

b.Volatility in the value of our assets and liabilities could adversely affect our results of operations and statement of financial condition.

c.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.

d.Our Opnet (formerly known as Linkem) and Polysign investment may not be successful and may adversely affect our results of operations or financial condition.

Human Capital Risk

a.Our businesses have traditionally relied on collaboration among our employees. Accordingly, our business could be adversely affected by a prolonged period of employees working remotely.

b.The loss of key senior personnel would have a material adverse effect on our businesses.

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c.Employee misconduct could harm investor retention and could cause legal liability, reputational harm and loss of revenue.

Business Risks

a.Deteriorations in the business environment in sectors focused on by our investment banking businesses could materially affect our business and cause substantial fluctuations in financial results from period-to-period.

b.Our capital markets and strategic advisory engagements do not generally provide for subsequent engagements and can lead to payment risk.

c.Larger and more frequent capital commitments in our trading and underwriting businesses increase the potential for significant losses.

d.The market structure in which our market-making business operates may make sustained profitability difficult.

e.Electronic trading and new trading technology may adversely affect this business and may increase competition.

f.We are subject to potential losses and default risks as a result of our clearing and execution activities.

g.Our securities business and related global clearing operations expose us to material liquidity risk, including as a result of international market events, decreases in equity trading activity and declining securities prices.

h.Failures by our third-party clearing agents could materially impact our business and operating results.

i.Our ability to increase revenues and improve profitability will depend on increasing assets under management in existing investment strategies and marketing new investment products and strategies.

j.We may be unable cover our exposure if a counterparty defaults under one of our derivative or non-derivative contracts.

k.We may suffer losses in connection with the insolvency of agents whose services we use and who may hold our investment funds’ assets.

l.Risk management activities may materially adversely affect the return on our investment funds' investments.

m.Our third party reinsurance business could expose us to losses.

n.Investments made by investment funds, including the investments of the Company’s own capital in the Company’s investment funds, is subject to risks that may have a material adverse effect on our revenues, net income and cash flow.

Operational Risks

a.Operational risks relating to the failure of data processing systems and other information systems and technology or other infrastructure may disrupt our business and result in losses or limit our operations and growth.

b.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.

Liquidity Risks

a.We rely upon our subsidiaries for cash flows and servicing our debt and funding our necessary capital expenditures. We may not have sufficient cash flow to pay our substantial debt or to fund our necessary capital expenditures.

b.The terms of the credit agreement governing our revolving credit facility and term loan may restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

Litigation and Regulatory Risk

a.Our subsidiaries may become subject to additional regulations which could increase the costs and burdens of compliance or impose additional restrictions.

b.We are subject to third party litigation risk and regulatory risk which could result in significant liabilities and reputational harm.

c.A failure to appropriately identify and deal with conflicts of interest could adversely affect our businesses.

d.Increased regulatory focus could result in regulation that limits how we invest.

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Merger Risks

a.The consummation of the proposed Toronto-Dominion Bank merger (the "Merger")is subject to a number of conditions, many of which are largely outside of the control of the parties to the Merger Agreement.

b.Failure to complete the Merger could adversely affect our stock price and business, results of operations or financial condition.

c.While the Merger is pending, we are subject to business uncertainties and certain contractual restrictions that could adversely affect our business, results of operations or financial condition.

d.The Company will incur substantial transaction fees and Merger-related costs in connection with the Merger that could adversely affect the business and operations of the Company if the Merger is not completed.

e.The termination fee and restrictions on solicitation contained in the Merger Agreement may discourage other companies from trying to acquire the Company.

f.Litigation against the Company, TD or the members of their respective boards, could prevent or delay the completion of the Merger or result in the payment of damages following completion of the Merger.

g.Uncertainty about the Merger may adversely affect the relationships between us and our clients, vendors and employees.

h.If the Merger is not consummated by August 1, 2023, either we or TD may terminate the Merger Agreement.

Other Risks to Our Stockholders

a.We could change our existing dividend policy in the future.

b.The terms of our Series A Convertible Preferred Stock contain certain restrictions on our ability to pay dividends and repurchase our capital stock, and, under certain circumstances, provides the holders thereof the right to elect two additional directors to our Board of Directors.

c.Our failure to maintain effective internal controls over financial reporting could have a material adverse effect on our business.

Risks Related to the Company's Businesses and Industry

For purposes of the following risk factors, references made to the Company's investment funds include the various investment management products advised by the Company's investment management business and the investment funds through which the Company invests its own capital. The Company's investment banking businesses include the Investment Banking division, the Markets division and the Research division.

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 worldwide pandemic such as the COVID-19 pandemic. 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.

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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.

The ongoing effects of COVID-19 remain challenging to predict due to multiple uncertainties, including the transmissibility, severity, duration and resurgences of the outbreak; new virus variants and their spread; the application and effectiveness of health and safety measures that are voluntarily adopted by the public or required by government or public health authorities, including vaccines and treatments; the speed and strength of an economic recovery; and the impact to our employees and our operations, our clients’ operations, suppliers and business partners. 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

•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 businesses, particularly if the COVID-19 pandemic persists for a long period of time. 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 of security 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 adversely affect our revenues from investment management.

Any one or more of these developments could cause, contribute to or exacerbate the other risks and uncertainties discussed in this Annual Report. 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.

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 events 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. While our employees have been able to work remotely since March 2020, we do not know how a continuing and prolonged period of

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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 primarily working remotely since March 2020,we do not know how a continuing and prolonged period of remote working by our employees will impact our ability to collaborate. Accordingly, our businesses could be adversely affected by a continuing and prolonged period of employees working remotely.

The Company may be unable to successfully identify, manage and execute future acquisitions, investments and strategic alliances, which could adversely affect our results of operations.

We intend to continually evaluate potential acquisitions, investments and strategic alliances to expand our business. In the future, we may seek additional acquisitions, investments, strategic alliances or similar arrangements, which may expose us to risks such as:

•the difficulty of identifying appropriate acquisitions, investments, strategic allies or opportunities on terms acceptable to us;

•the possibility that senior management may be required to spend considerable time negotiating agreements and monitoring these arrangements;

•potential regulatory issues applicable to the financial services business;

•the loss or reduction in value of the capital investment;

•our inability to capitalize on the opportunities presented by these arrangements; and

•the possibility of insolvency of a strategic ally.

Furthermore, any future acquisitions of businesses could entail a number of risks, including:

•problems with the effective integration of operations;

•inability to maintain key pre-acquisition business relationships;

•increased operating costs;

•exposure to unanticipated liabilities; and

•difficulties in realizing projected efficiencies, synergies and cost savings.

There can be no assurance that we would successfully overcome these risks or any other problems encountered with these acquisitions, investments, strategic alliances or similar arrangements.

The Company's future results will suffer if the Company does not effectively manage its expanded operations.

The Company may continue to expand its operations through new product and service offerings and through additional strategic investments, acquisitions or joint ventures, some of which may involve complex technical and operational challenges. The Company's future success depends, in part, upon its ability to manage its expansion opportunities, which pose numerous risks and uncertainties, including the need to integrate new operations into its existing business in an efficient and timely manner, to combine accounting and data processing systems and management controls and to integrate relationships with customers and business partners. In addition, future acquisitions or joint ventures may involve the issuance of additional shares of common stock of the Company, which may dilute the ownership of the Company's stockholders.

Volatility in the value of the Company's investments and securities portfolios or other assets and liabilities, including investment funds, or negative returns from the investments made by the Company have in the past and could in the future adversely affect the Company's results of operations and statement of financial condition.

The Company invests a significant portion of its capital base to help drive results and facilitate growth of its investment management and investment bank businesses. As of December 31, 2022, the Company's invested capital amounted to a net value of $911.2 million (supporting a long market value of $1,048.1 million), representing approximately 86% of Cowen's stockholders' equity presented in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). In accordance with US GAAP, we define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. US GAAP also establishes a framework for measuring fair value and a valuation hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Changes in fair value are reflected in the statement of operations at each measurement period. Therefore, continued volatility in

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the value of the Company's investments and securities portfolios or other assets and liabilities, including investment funds, will result in volatility of the Company's results. We have experienced this type of volatility in prior periods. In addition, the investments made by the Company may not generate positive returns. As a result, changes in value or negative returns from investments made by the Company may have an adverse effect on the Company's financial condition or operations in the future.

Our investments in Opnet (formerly known as Linkem) and Polysign may not prove to be successful and may adversely affect our results of operations or financial condition.

As of December 31, 2022, we had an approximately $46.8 million investment in Opnet, the largest fixed wireless broadband service provider in Italy. Many factors, most of which are outside of our control, can affect Opnet's business, including the state of the Italian economy and capital markets in general, competition in the Italian telecommunications markets and other factors that directly and indirectly affect the results of operations, including the sales and profitability of Opnet, and consequently may adversely affect our results of operations or financial condition.

As of December 31, 2022, we had an approximately $57.2 million investment in PolySign, Inc., a company that develops state-of-the-art, secure, scalable infrastructure for financial institutions to fully leverage their digital assets. Many factors, most of which are outside of our control, can affect PolySign’s business, including the level of acceptance in the market of digital assets, regulation of digital assets, competition among companies vying to be the provider of choice for digital asset related infrastructure and other factors that directly and indirectly affect the results of operations, including the profitability of PolySign, and consequently may adversely affect our results of operations or financial condition.

The Company faces strong competition from larger firms.

The research, brokerage and investment banking industries are intensely competitive, and the Company expects them to remain so. The Company competes on the basis of a number of factors, including client relationships, reputation, the abilities of the Company's professionals, market focus and the relative quality and price of the Company's services and products. The Company has experienced intense price competition in some of its businesses, including trading commissions and spreads in its brokerage business. In addition, pricing and other competitive pressures in investment banking, including the trends toward multiple book runners, co-managers and financial advisors, and a larger share of the underwriting fees and discounts being allocated to the book-runners, could adversely affect the Company's revenues from its investment bank business.

The Company is a relatively small investment bank. Many of the Company's competitors in the research, brokerage and investment banking industries have a broader range of products and services, greater financial resources, larger customer bases, greater name recognition and marketing resources, a larger number of senior professionals to serve their clients' needs, greater global reach and more established relationships with clients than the Company has. These larger competitors may be better able to respond to changes in the research, brokerage and investment banking industries, to compete for skilled professionals, to finance acquisitions, to fund internal growth and to compete for market share generally.

The scale of our competitors in the investment banking industry has increased in recent years as a result of substantial consolidation among companies in the research, brokerage and investment banking industries. In addition, a number of large commercial banks and other broad-based financial services firms have established or acquired underwriting or financial advisory practices and broker-dealers or have merged with other financial institutions. These firms have the ability to offer a wider range of products than the Company does which may enhance their competitive position. They also have the ability to support their investment banking and advisory groups with commercial banking and other financial services in an effort to gain market share, which has resulted, and could further result, in pricing pressure in the Company's businesses. If we are unable to compete effectively with our competitors in the investment banking industry, the Company's business and results of operations may be adversely affected.

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 and the longer the pandemic persists the more significant the challenges could be to our employees' 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.

The Company depends on its key senior personnel and the loss of their services would have a material adverse effect on the Company's businesses and results of operations, financial condition and prospects.

The Company depends on the efforts, skill, reputations and business contacts of its principals and other key senior personnel, the information and investment activity these individuals generate during the normal course of their activities and the

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synergies among the diverse fields of expertise and knowledge held by the Company's senior professionals. Accordingly, the Company's continued success will depend on the continued service of these individuals. Key senior personnel may leave the Company in the future, and we cannot predict the impact that the departure of any key senior personnel will have on our ability to achieve our investment and business objectives. The loss of the services of any of them could have a material adverse effect on the Company's revenues, net income and cash flows and could harm our ability to maintain or grow assets under management in existing investment funds or raise additional funds in the future. Our senior and other key personnel possess substantial experience and expertise and have strong business relationships with the investors in its investment funds, clients and other members of the business community. As a result, the loss of such personnel could have a material adverse effect on the Company's businesses and results of operations, financial condition and prospects.

The Company's ability to retain its senior professionals is critical to the success of its businesses, and its failure to do so may materially affect the Company's reputation, business and results of operations.

Our people are our most valuable resource. Our success depends upon the reputation, judgment, business generation capabilities and project execution skills of our senior professionals. Our employees' reputations and relationships with our clients are critical elements in obtaining and executing client engagements. The Company may encounter intense competition for qualified employees from other companies inside and outside of their industries. From time to time, the Company has experienced departures of professionals. Losses of key personnel have occurred and may occur in the future. Moreover, if any of our client-facing employees or executive officers were to join an existing competitor or form a competing company, some of our clients could choose to use the services of that competitor instead of the services of the Company.

The success of our businesses is based largely on the quality of our employees and we must continually monitor the market for their services and seek to offer competitive compensation. In challenging market conditions, which occurred in recent years, it may be difficult to pay competitive compensation without the ratio of our compensation and benefits expense to revenues becoming higher. In addition, for our investment professionals whose performance-based compensation represents substantially all of the compensation the professional is entitled to receive in any year, negative performance which results in the professional not being entitled to receive any performance-based compensation could incentivize the professional to join a competitor.

Employee misconduct could harm the Company by, among other things, impairing the Company's ability to attract and retain investors and subjecting the Company to significant legal liability, reputational harm and the loss of revenue from its own invested capital.

It is not always possible to detect and deter employee misconduct. The precautions that the Company takes to detect and prevent this activity may not be effective in all cases, and we may suffer significant reputational harm and financial loss for any misconduct by our employees. The potential harm to the Company's reputation and to our business caused by such misconduct is impossible to quantify.

There is a risk that the Company's employees or partners could engage in misconduct that materially adversely affects the Company's business, including a decrease in returns on its own invested capital. The Company is subject to a number of obligations and standards arising from its businesses. The violation of these obligations and standards by any of the Company's employees could materially adversely affect the Company and its investors. For instance, the Company's businesses require that the Company properly deal with confidential information. If the Company's employees were to improperly use or disclose confidential information, we could suffer serious harm to our reputation, financial position and current and future business relationships. If one of the Company's employees were to engage in misconduct or were to be accused of such misconduct, the business and reputation of the Company could be materially adversely affected.

Business Risks

The Company's investment banking businesses focus principally on specific sectors of the economy, and deterioration in the business environment in these sectors or a decline in the market for securities of companies within these sectors could materially affect our investment banking businesses.

Volatility in the business environment in the Company's sectors or in the market for securities of companies within these sectors could substantially affect the Company's financial results. The business environment for companies in these sectors has been subject to substantial volatility, and the Company's financial results have consequently been subject to significant variations from year to year. The market for securities in each of the Company's sectors may also be subject to industry-specific risks. For example, changes in policies of the United States Food and Drug Administration, along with changes to Medicare and government reimbursement policies, may affect the market for securities of healthcare companies. In addition, increased antitrust enforcement, in both the United States and internationally, and changes to how governments review foreign acquisitions of domestic companies may calm merger and acquisition activity and may make executing merger and acquisition transactions more

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difficult. In addition, revenue generated by the Company in its consumer sector could be adversely affected by changes in law or regulatory action with respect to companies that are in cannabis related businesses.

As an investment bank which focuses primarily on specific growth sectors of the economy, the Company also depends significantly on private company transactions for sources of revenues and potential business opportunities. To the extent the pace of these private company transactions slows or the average size declines due to a decrease in private equity financings, difficult market conditions in the Company's sectors or other factors, the Company's business and results of operations may be adversely affected.

The financial results of the Company's investment banking businesses may fluctuate substantially from period to period.

The Company has experienced, and we expect the Company to experience in the future, significant periodic variations in its revenues and results of operations. These variations may be attributed in part to the fact that its investment banking revenues are typically earned upon the successful completion of a transaction, the timing of which is uncertain and beyond the Company's control. In most cases, the Company receives little or no payment for investment banking engagements that do not result in the successful completion of a transaction. As a result, our investment bank business is highly dependent on market conditions as well as the decisions and actions of its clients and interested third parties. For example, a client's acquisition transaction may be delayed or terminated because of a failure to agree upon final terms with the counterparty, failure to obtain necessary regulatory consents or board or stockholder approvals, failure to secure necessary financing, adverse market conditions or unexpected financial or other problems in the client's or counterparty's business. If the parties fail to complete a transaction on which the Company is advising or an offering in which the Company is participating, we will earn little or no revenue from the transaction, and we may incur significant expenses that may not be recouped. This risk may be intensified by the Company's focus on growth companies in its sectors as the market for securities of these companies has experienced significant variations in the number and size of equity offerings. Many companies initiating the process of an IPO are simultaneously exploring other strategic alternatives, such as a merger and acquisition transaction. The Company's investment bank revenues would be adversely affected in the event that an IPO for which it is acting as an underwriter is preempted by the company's sale if the Company is not also engaged as a strategic advisor in such sale. As a result, our investment banking businesses are unlikely to achieve steady and predictable earnings on a quarterly basis.

Pricing and other competitive pressures may impair the revenues of the Company's brokerage business.

The Company's brokerage business accounted for approximately 38.5% of the Company's revenues during 2022. Along with other firms, the Company has experienced price competition in this business in recent years. In particular, the ability to execute trades electronically and through alternative trading systems has increased the pressure on trading commissions and spreads. We expect to continue to experience competitive pressures in these and other areas in the future as some of our competitors in the investment banking industry seek to obtain market share by competing on the basis of price or use their own capital to facilitate client trading activities. In addition, the Company faces pressure from larger competitors, who may be better able to offer a broader range of complementary products and services to clients in order to win their trading or prime brokerage business. We are committed to maintaining and improving the Company's comprehensive research coverage to support its brokerage business and the Company may be required to make additional investments in the Company's research capabilities.

Further, fund investors and shareholders are increasingly focused on ESG matters and certain fund investors consider ESG factors in determining whether to invest in our funds and our common stock. In addition, some fund investors use third-party benchmarks or scores to measure our ESG practices and decide whether to invest in our funds, and capital commitments to us and may condition capital commitments on taking or refraining from taking certain actions. Investors and stockholders may choose not to invest in our funds or exclude our common stock from their investments if our ESG practices do not fit their investment profiles, or if we fail to demonstrate progress towards our ESG goals, which could adversely impact our reputation or our ability to raise capital and could cause the price of our common stock to decrease.

The Company's capital markets and strategic advisory engagements are singular in nature, do not generally provide for subsequent engagements and can lead to payment risk.

The Company's investment banking clients generally retain the Company on a short-term, engagement-by-engagement basis in connection with specific capital markets or mergers and acquisitions transactions, rather than on a recurring basis under long-term contracts. As these transactions are typically singular in nature and the Company's engagements with these clients may not recur, the Company must seek out new engagements when its current engagements are successfully completed or are terminated. As a result, high activity levels in any period are not necessarily indicative of continued high levels of activity in any subsequent period. If the Company is unable to generate a substantial number of new engagements that generate fees from new or existing clients, the Company's investment bank business and results of operations would likely be adversely affected. In addition, investment banking clients may on occasion refuse to pay investment banking fees owed pursuant to the terms of our engagement

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and we may need to expend resources to enforce our contracts. Any failure to pay the investment banking fees owed to us could adversely affect our results of operations.

Larger and more frequent capital commitments in the Company's trading and underwriting businesses increase the potential for significant losses.

There has been a trend toward larger and more frequent commitments of capital by financial services firms in many of their activities. For example, in order to compete for certain transactions, investment banks may commit to purchase large blocks of stock from publicly traded issuers or significant stockholders, instead of the more traditional marketed underwriting process in which marketing is completed before an investment bank commits to purchase securities for resale. To the extent the total net capital of the Company's broker-dealers allows it, the Company anticipates participating in this trend and, as a result, the Company will be subject to increased risk as it commits capital to facilitate business. Furthermore, the Company may suffer losses as a result of the positions taken in these transactions even when economic and market conditions are generally favorable for others in the industry.

The Company may enter into large transactions in which it commits its own capital as part of its trading business to facilitate client trading activities. The number and size of these large transactions may materially affect the Company's results of operations in a given period. Market fluctuations may also cause the Company to incur significant losses from its trading activities. To the extent that the Company owns assets (i.e., has long positions), a downturn in the value of those assets or in the markets in which those assets are traded could result in losses. Conversely, to the extent that the Company has sold assets it does not own (i.e., has short positions), in any of those markets, an upturn in the value of those assets or in markets in which those assets are traded could expose the Company's investment banking businesses to potentially large losses as they attempt to cover short positions by acquiring assets in a rising market.

The market structure in which our market-making business operates may make it difficult for this business to maintain profitability.

Market structure changes have had an adverse effect on the results of operations of our market-making business. These changes may make it difficult for us to maintain and/or predict levels of profitability of, or may cause us to generate losses in, our market-making business.

The growth of electronic trading and the introduction of new technology in the markets in which our market-making business operates may adversely affect this business and may increase competition.

The continued growth of electronic trading and the introduction of new technologies is changing our market-making business and presenting new challenges. Securities, futures and options transactions are increasingly occurring electronically, through alternative trading systems. It appears that the trend toward alternative trading systems will continue to accelerate. This acceleration could further increase program trading, increase the speed of transactions and decrease our ability to participate in transactions as principal, which would reduce the profitability of our market-making business. Some of these alternative trading systems compete with our market-making business and with our algorithmic trading platform, and we may experience continued competitive pressures in these and other areas. Significant resources have been invested in the development of our electronic trading systems, which includes our ATM business, but there is no assurance that the revenues generated by these systems will yield an adequate return on the investment, particularly given the increased program trading and increased percentage of stocks trading off of the historically manual trading markets.

We are subject to potential losses and default risks as a result of our clearing and execution activities.

As a clearing member firm providing services to certain of our brokerage customers, we are ultimately responsible for their financial performance in connection with various securities transactions. Our clearing operations require a commitment of our capital and involve risks of losses due to the potential failure of our customers to perform their obligations under these transactions. We are required to finance customers' unsettled positions from time to time, and we could be held responsible for the defaults of those customers. If customers default on their obligations, we remain financially liable for such obligations, and while some of these obligations may be collateralized, we are still subject to market risk in the liquidation of customer collateral to satisfy those obligations. While we have risk management procedures designed to mitigate certain risks, there can be no assurance that our risk management procedures will be adequate. Although we regularly review our credit exposure to customers, default risk may arise from events or circumstances that may be difficult to detect or foresee. Default by our customers may also give rise to the Company incurring penalties imposed by execution venues, regulatory authorities and clearing and settlement organizations. Any liability arising from clearing operations could have a material adverse effect on our business, financial condition and results of operations.

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We are also exposed to credit risk from third parties that owe us money, securities or other obligations, including our trading counterparties. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons, and we could be held responsible for such defaults. In addition, customer trading errors may cause us to incur financial losses, which customers may be unable or unwilling to cover. Volatile securities markets, credit markets and regulatory changes may increase our exposure to our customers' and counterparties' credit profiles, which could adversely affect our financial condition and operating results. Our review of the credit risk of customers and trading counterparties may not be adequate to provide sufficient protection from these risks.

Our securities business and related clearing operations expose us to material liquidity risk.

We may be required to provide considerable additional funds with clearing and settlement organizations of which we are members, such as the National Securities Clearing Corporation ("NSCC") or Depository Trust and Clearing Corporation in the U.S., especially during periods of high market volatility or when we are obligated to clear large notional amounts of securities that are not eligible for settlement through the NSCC's Continuous Net Settlement system and, consequently, may be subject to higher margin requirements. In addition, regulatory agencies have recently required these clearing and settlement organizations to increase the level of margin deposit requirements, and they may continue to do so in the future. We rely on our excess cash, certain established credit facilities and the use of outsourced clearing arrangements to meet or reduce these demands. While we have historically met requests for additional margin deposits, there is no guarantee that our excess cash and our established credit facilities and clearing arrangements will be sufficient for future needs, particularly if there is an increase in requirements. There is also no guarantee that these established credit facilities will be extended beyond their expiration.

As a clearing member firm of securities clearing houses in the U.S., we are also exposed to clearing member credit risk. Securities clearing houses require member firms to deposit cash and/or government securities to a clearing fund. If a clearing member defaults in its obligations to the clearing house in an amount larger than its own margin and clearing fund deposits, the shortfall is absorbed pro rata from the deposits of the other clearing members. The clearing houses of which we are members also have the authority to assess their members for additional funds if the clearing fund is depleted. A large clearing member default could result in a substantial cost to us if we are required to pay such assessments.

In certain jurisdictions we are dependent on third-party clearing agents and any failures by such clearing agents could materially impact our business and operating results.

In certain jurisdictions we are dependent on agents for the clearing and settlement of securities transactions. If our agents fail to properly facilitate the clearing and settlement of our customer trades, we could be subject to financial, legal and regulatory risks and costs that may impact our business and operating results. In addition, it could cause our clients to reduce or cease their trading with us, which would adversely affect our revenues and financial results.

Moreover, certain of the clearing agreements provide our clearing agents with rights to increase our deposit requirements or to terminate the agreements upon short notice. There is no guarantee we will be able to satisfy any increased deposit requirements within the time frames demanded by our clearing agents, and if we fail to satisfy such demands on a timely basis, it could constitute a default under our clearing agreements. If our clearing agents terminate a clearing agreement on short notice, there is no guarantee that we could obtain alternative services in a timely manner and any interruption of the normal course of our trading and clearing operations could have a material impact on our business and results of operations.

Our clearing and execution operations are global and international market events could adversely impact our financial results.

Because we offer brokerage products and services on a global basis, our revenues derived from non-U.S. operations are subject to risk of loss from social or political instability, changes in government policies or policies of central banks, downgrades in the credit ratings of sovereign countries, expropriation, nationalization, confiscation of assets and unfavorable legislative and political developments in such non-U.S. jurisdictions. Revenues from the trading of non-U.S. securities may be subject to negative fluctuations as a result of the above factors. The impact of these fluctuations on our results could be magnified because generally non-U.S. trading markets, particularly in emerging market countries, are smaller, less liquid and more volatile than U.S. trading markets.

Decreases in equity trading activity by active fund managers and declining securities prices could harm our business and profitability.

Declines in the trading activity of active fund managers generally result in lower revenues from our brokerage products and services. In addition, securities' price declines adversely affect our trading commissions outside North America, which are based on the value of transactions. The demand for our brokerage products and services is directly affected by factors such as economic, regulatory and political conditions that may lead to decreased trading activity and prices in the securities markets in the U.S. and

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in all of the foreign markets we serve. Significant flows of investments out of actively managed equity funds have curtailed their trading activity, which has weighed on our buy-side trading volumes and the use of some of our higher value services. Volatility levels also impact the amount of trading activity. Sustained periods of low volatility can result in lower levels of trading activity and trading activity tends to decline in periods following extreme levels of volatility. In addition, any substantial shift from active fund management to passive fund management could have an adverse effect on our trading commissions.

The Company's revenues and, in particular, its ability to earn incentive and investment income, would be adversely affected if there are reversals to previously accrued incentive fees or if its investment funds fall beneath their "high-water marks" as a result of negative performance.

For our private equity funds, the incentive fee crystallizes upon realization of the investment. In those circumstances, until the investment is realized, the accrued incentive fees are subject to reversal even if those accruals were made in prior years. The Company's incentive allocations are also subject, in some cases, to performance hurdles or benchmarks. To the extent the Company's investment funds experience negative investment performance, the investors in or beneficial owners of these investment funds would need to recover cumulative losses before the Company can earn investment income at the end of the performance period with respect to the investments of those who previously suffered losses. With respect to our hedge fund products, incentive income, is, in most cases, subject to "high-water marks" whereby incentive income is earned by the Company only to the extent that the net asset value of an investment advisory product at the end of a measurement period exceeds the highest net asset value as of the end of a preceding measurement period for which the Company earned incentive income. The Company recognizes incentive income charged to the Company's hedge funds based on the net profits of the hedge funds. 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. As a result, negative performance could adversely affect the Company’s incentive and investment income from both its private equity and hedge fund products.

The Company's ability to increase revenues and improve profitability will depend on increasing assets under management in existing investment strategies and developing and marketing new investment products and strategies, including identifying and hiring or affiliating with new investment teams.

The Company's investment management business generates management and incentive fee income based on its assets under management. If the Company is unable to increase its assets under management in its existing products it may be difficult to increase its revenues. The Company may launch new investment management products and hire or affiliate with new investment teams focusing on new investment strategies. If these products or strategies are not successful, or if the Company is unable to hire or affiliate with new investment teams, or successfully manage its relationships with its affiliated investment teams, the Company's profitability could be adversely affected.

Certain of the Company's investment funds may invest in relatively high-risk, illiquid assets, and the Company may fail to realize any profits from these activities for a considerable period of time or lose some or all of the principal amounts of these investments.

Certain of the Company's investment funds invest a significant portion of their assets in securities that are not publicly traded. In many cases, they may be prohibited by contract or by applicable securities laws from selling such securities for a period of time or there may not be a public market for such securities. Even if the securities are publicly traded, large holdings of securities can often be disposed of only over a substantial length of time, exposing the investment returns to risks of downward movement in market prices during the disposition period. Accordingly, under certain conditions, the Company's investment funds may be forced to either sell securities at lower prices than they had expected to realize or defer, potentially for a considerable period of time, sales that they had planned to make. Investing in these types of investments can involve a high degree of risk, and the Company's investment funds may lose some or all of the principal amount of such investments, including our own invested capital.

The due diligence process that the Company's investment management business undertakes in connection with investments by the Company's investment funds is inherently limited and may not reveal all facts that may be relevant in connection with making an investment.

Before making investments, particularly investments in securities that are not publicly traded, the Company endeavors to conduct a due diligence review of such investment that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company is often required to evaluate critical and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants, investment bankers and financial analysts may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company is limited to the resources available, including information provided by the target of the investment and, in some circumstances, third party investigations. The due diligence investigation that the Company conducts with respect to any investment opportunity

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may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful, which may adversely affect the performance of the Company's investment funds and the Company's ability to generate returns on its own invested capital from any such investment.

Investors and beneficial owners in the Company's hedge funds can generally redeem investments with prior notice. The rate of redemptions could accelerate at any time. Historically, redemptions have created difficulties in managing the liquidity of certain of the Company's hedge funds, reduced assets under management and adversely affected the Company's revenues, and may do so in the future.

Investors and beneficial owners in the Company's hedge funds may generally redeem their investments with prior notice, subject to certain initial holding periods. Investors may reduce the aggregate amount of their investments, or transfer their investments to other hedge funds or asset managers with different fee rate arrangements, for any number of reasons, including investment performance, changes in prevailing interest rates and financial market performance. Furthermore, investors in the Company's hedge funds may be investors in products managed by other asset managers where redemptions have been restricted or suspended. Such investors may redeem capital from Company's hedge funds, even if the Company's hedge funds' performance is superior, due to an inability to redeem capital from other managers. Increased volatility in global markets could accelerate the pace of redemptions. Redemptions of investments in the Company's hedge funds could also take place more quickly than assets may be sold by those hedge funds to meet the price of such redemptions, which could result in the relevant hedge funds and/or the Company being in breach of applicable legal, regulatory and contractual requirements in relation to such redemptions, resulting in possible regulatory and investor actions against the Company and/or the Company's hedge funds. If the Company's hedge funds underperform, existing investors may decide to reduce or redeem their investments or transfer asset management responsibility to other asset managers and the Company may be unable to obtain new investment management business. Any such action could potentially cause further redemptions and/or make it more difficult to attract new investors.

The redemption of investments in the Company's hedge funds could also adversely affect the revenues of the Company's investment management business, which are substantially dependent upon its assets under management. If redemptions of investments cause revenues to decline, they would likely have a material adverse effect on our business, results of operations or financial condition. If market conditions, negative performance or other factors cause an increased level of redemption activity returns, it could become more difficult to manage the liquidity requirements of the Company's hedge funds, making it more difficult or more costly for the Company's hedge funds to liquidate positions rapidly to meet redemption requests or otherwise. This in turn may negatively impact the Company's returns on its own invested capital.

In addition to the impact on the market value of assets under management, illiquidity and volatility of the global financial markets could negatively affect the ability of the Company's investment management business to manage inflows and outflows from the Company's hedge funds. A number of asset management firms, including the Company's investment management business, have in the past exercised, and may in the future exercise, their rights to limit, and in some cases, suspend, redemptions from the investment management products they advise. The Company's investment management business has also negotiated, and may in the future negotiate, with investors or exercise such rights in an attempt to limit redemptions or create a variety of other investor structures to bring assets and liquidity requirements into a more manageable balance. To the extent that the Company's investment management business has negotiated with investors to limit redemptions, it may be likely that such investors will continue to seek further redemptions in the future. Such actions may have an adverse effect on the ability of the Company's hedge funds to attract new capital or to develop new investment platforms. Poor performance relative to other asset management firms may result in reduced investments in the Company's hedge funds and increased redemptions. As a result, investment underperformance would likely have a material adverse effect on the Company's results of operations and financial condition.

Investments made by investment funds, including the investments of the Company's own capital in the Company's investment funds, are subject to other additional risks.

Investments by the Company's investment funds are subject to certain risks that may result in losses. Decreases to assets under management as a result of investment losses or client redemptions may have a material adverse effect on the Company's revenues, net income and cash flows and could harm our ability to maintain or grow assets under management in existing investment funds or raise additional funds in the future. Additional risks include the following:

•Generally, there are few limitations on investment funds' strategies, which are often subject to the sole discretion of the management company or the general partner of such funds.

•Investment funds may engage in short selling, which is subject to a theoretically unlimited risk of loss because there is no limit on how much the price of a security sold short may appreciate before the short position is closed out. An investment

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fund may be subject to losses if a security lender demands return of the lent securities and an alternative lending source cannot be found or if the investment fund is otherwise unable to borrow securities that are necessary to hedge its positions. Furthermore, the SEC and other regulatory authorities outside the United States have imposed reporting requirements on short selling, which in certain circumstances may impair an investment fund's ability to use short selling effectively.

•The efficacy of investment and trading strategies depend largely on the ability to establish and maintain an overall market position through a combination of financial instruments. An investment fund's trading orders may not be executed in a timely and efficient manner due to various circumstances, including systems failures or human error. In such event, the investment fund might only be able to acquire some but not all of the components of the position, or if the overall position were in need of adjustment, the investment fund might not be able to make such an adjustment. As a result, an investment fund would not be able to achieve the market position selected by the management company or general partner of such fund, and might incur a loss in liquidating its position.

•Credit risk may arise through a default by one of several large institutions that are dependent on one another to meet their respective liquidity or operational needs, so that a default by one institution causes a series of defaults by the other institutions. This "systemic risk" may adversely affect the financial intermediaries (such as clearing agencies, clearing houses, banks, securities firms, other counterparties and exchanges) with which the investment funds interact on a daily basis.

•Investment funds are subject to risks due to the potential illiquidity of assets. Investment funds may make investments or hold trading positions in markets that are volatile and which may become illiquid. The timely sale of trading positions can be impaired by decreased trading volume, increased price volatility, concentrated trading positions, limitations on the ability to transfer positions in highly specialized or structured transactions to which they may be a party, and changes in industry and government regulations. It may be impossible or highly costly for investment funds to liquidate positions rapidly to meet margin calls, redemption requests or otherwise, particularly if there are other market participants seeking to dispose of similar assets at the same time, if the relevant market is otherwise moving against a position or in the event of trading halts or daily price movement limitations on the market. In addition, increased levels of redemptions may result in increased illiquidity as more liquid assets are sold to fund redemptions.

•Investment fund assets are subject to risks relating to investments in commodities, futures, options and other derivatives, the prices of which are highly volatile and may be subject to the theoretically unlimited risk of loss in certain circumstances. Price movements of commodities, futures and options contracts and payments pursuant to swap agreements are influenced by, among other things, interest rates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments and national and international political and economic events and policies. The value of futures, options and swap agreements also depends upon the price of the commodities underlying them. In addition, investment funds' assets are subject to the risk of the failure of any of the exchanges on which their positions trade.

•Investment fund assets that are not denominated in the U.S. dollar are subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation and political developments. Officials in foreign countries may, from time to time, take actions in respect of their currencies that could significantly affect the value of an investment fund's assets denominated in those currencies or the liquidity of such investments. For example, a foreign government may unilaterally devalue its currency against other currencies, which would typically have the effect of reducing the U.S. dollar value of investments denominated in that currency. A foreign government may also limit the convertibility or repatriation of its currency or assets denominated in that currency. While the Company generally expects to hedge its exposure to currencies other than the U.S. dollar, and may do so through foreign currency futures contracts and options thereon, forward foreign currency exchange contracts, swaps or any combination thereof, but there can be no assurance that such hedging strategies will be implemented, or if implemented, will be effective. While an investment fund may enter into currency hedging transactions to seek to reduce risk, such transactions may result in a poorer overall performance than if it had not engaged in such hedging transactions. For a variety of reasons, the Company may not seek to establish a perfect correlation between the hedging instruments utilized and the portfolio holdings being hedged. Such an imperfect correlation may prevent the Company from achieving the intended hedge or expose an investment fund to risk of loss.

•Investment funds are also subject to the risk that war, terrorism, and related geopolitical events may lead to increased short-term market volatility and have adverse long-term effects on the U.S. and world economies and markets generally,

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as well as adverse effects on issuers of securities and the value of investments. War, terrorism, and related geopolitical events have led, and in the future may lead, to increased short-term market volatility and may have adverse long-term effects on U.S. and non-U.S. economies and markets generally. Those events, as well as other changes in U.S. and non-U.S. economic and political conditions, also could adversely affect individual issuers or related groups of issuers, securities markets, interest rates, credit ratings, inflation, investor sentiment and other factors affecting the value of the investment fund's assets.

If the Company's investment fund's counterparty for any of its derivative or non-derivative contracts defaults on the performance of those contracts, the Company may not be able to cover its exposure under the relevant contract.

The Company's investment funds enter into numerous types of financing arrangements with a wide array of counterparties around the world, including loans, hedge contracts, swaps, repurchase agreements and other derivative and non-derivative contracts. The terms of these contracts are generally complex and often customized and generally are not subject to regulatory oversight. The Company is subject to the risk that the counterparty to one or more of these contracts may default, either voluntarily or involuntarily, on its performance under the contract. Any such default may occur at any time without notice. Additionally, the Company may not be able to take action to cover its exposure if a counterparty defaults under such a contract, either because of a lack of the contractual ability or because market conditions make it difficult to take effective action. The impact of market stress or counterparty financial condition may not be accurately foreseen or evaluated and, as a result, the Company may not take sufficient action to reduce its risks effectively.

Counterparty risk is accentuated where the investment management product has concentrated its transactions with a single or small group of counterparties. Generally, investment funds are not restricted from concentrating any or all of their transactions with one counterparty. Moreover, the Company's internal review of the creditworthiness of their counterparties may prove inaccurate. The absence of a regulated market to facilitate settlement and the evaluation of creditworthiness may increase the potential for losses.

In addition, these financing arrangements often contain provisions that give counterparties the ability to terminate the arrangements if any of a number of defaults occurs with respect to the Company's investment funds, including declines in performance or assets under management and losses of key management personnel, each of which may be beyond our control. In the event of any such termination, the Company's investment funds may not be able to enter into alternative arrangements with other counterparties and our business may be materially adversely affected.

The Company may suffer losses in connection with the insolvency of prime brokers, custodians, administrators and other agents whose services the Company uses and who may hold assets of the Company's investment funds.

Most of the Company's investment funds use the services of prime brokers, custodians, administrators or other agents to carry out certain securities transactions and to conduct certain business of the Company's investment funds. In the event of the insolvency of a prime broker and/or custodian, the Company's investment funds might not be able to recover equivalent assets in full as they may rank among the prime broker's and custodian's unsecured creditors in relation to assets which the prime broker or custodian borrows, lends or otherwise uses. In addition, the Company's investment funds' cash held with a prime broker or custodian (if any) may not be segregated from the prime broker's or custodian's own cash, and the investment funds will therefore rank as unsecured creditors in relation thereto.

Risk management activities may materially adversely affect the return on the Company's investment funds' investments if such activities do not effectively limit exposure to decreases in investment values or if such exposure is overestimated.

When managing the Company's investment funds' exposure to market risks, the relevant investment management product may use forward contracts, options, swaps, caps, collars and floors or pursue other strategies or use other forms of derivative financial instruments to limit its exposure to changes in the relative values of investments that may result from market developments, including changes in interest rates, currency exchange rates and asset prices. The success of such derivative transactions generally will depend on the Company's ability to accurately predict market changes in a timely fashion, the degree of correlation between price movements of a derivative instrument, the position being hedged, the creditworthiness of the counterparty and other factors. As a result, these transactions may result in poorer overall investment performance than if they had not been executed. Such transactions may also limit the opportunity for gain if the value of a hedged position increases. A perfect correlation between the instruments used in a hedging or other derivative transaction and the position being hedged may not be attained. An imperfect correlation could give rise to a loss. Also, it may not be possible to fully or perfectly limit exposure against all changes in the value of an investment because the value of an investment is likely to fluctuate as a result of a number of factors, many of which will be beyond the Company's control or ability to hedge.

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Our third party reinsurance business could expose us to losses.

We provide third party reinsurance coverage through our Luxembourg subsidiary, Cowen Reinsurance S.A (formerly “Hollenfels Re S.A.”) ("Cowen Re") and through our Guernsey subsidiary, Kelvin Re Limited (“Kelvin Re”). We have written polices relating to property and casualty, workers' compensation, general liability and construction performance bonds and may issue reinsurance policies relating to other types of insurance. Because we write reinsurance, the success of our underwriting efforts depends, in part, upon the policies, procedures and expertise of the ceding companies making the original underwriting decisions. We face the risk that these ceding companies may fail to accurately assess the risks that they assume initially, which, in turn, may lead us to inaccurately assess the risks we assume. If we fail to establish and receive appropriate premium rates or the claims we receive exceed the premiums and retrocession recoverables we are able to collect, we will suffer losses.

We may be unable to purchase retrocession reinsurance and our retrocession agreements subject us to third-party credit risk.

We may enter into retrocession agreements with third parties in order to limit our exposure to losses from the reinsurance coverage provided by Cowen Re and Kelvin Re. Changes in the availability and cost of retrocession reinsurance, which are subject to market conditions that are outside of our control, may reduce to some extent our ability to use retrocession reinsurance to balance exposures across our reinsurance operations. Accordingly, we may not be able to obtain our desired amounts of retrocession reinsurance. In addition, even if we are able to obtain such reinsurance, we may not be able to negotiate terms that we deem appropriate or acceptable or obtain such reinsurance from entities with satisfactory creditworthiness. While we seek to do business with creditworthy counterparties, if the parties who provide us with retrocession are not able to meet their obligations to us or fail to make timely payments under the terms of our retrocession agreements, we could be materially and adversely affected because we may remain liable under the terms.

The Company may incur losses in the future.

The Company may incur losses in any of its future periods. Future losses may have a significant effect on the Company's liquidity as well as our ability to operate. In addition, we may incur significant expenses in connection with any expansion, strategic acquisition or investment with respect to our businesses. Specifically, we have invested, and will continue to invest in, and hire senior professionals to expand our investment banking businesses. Accordingly, the Company will need to increase its revenues at a rate greater than its expenses to achieve and maintain profitability. If the Company's revenues do not increase sufficiently, or even if its revenues increase but it is unable to manage its expenses, the Company will not achieve and maintain profitability in future periods. As an alternative to increasing its revenues, the Company may seek additional capital through the sale of additional common stock or other forms of debt or equity financing. The Company cannot be certain that it would have access to such financing on acceptable terms.

Operational Risks

We have taken steps to protect our businesses from cybersecurity attacks while our employees have been working remotely, but remote working environments may be less secure and more susceptible to cybersecurity attacks which could adversely affect our ability to securely process transactions and maintain confidential financial, personal and other information.

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 spending a substantial amount of time 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.

Our information and technology systems are critical components of our business and operations, and a failure of those systems or other aspects of our business operations may disrupt our business, cause financial loss, increase our legal liability and constrain our growth.

Our operations rely extensively on the secure processing, storage and transmission of confidential financial, personal and other information in our computer systems and networks. Although we take protective measures and devote significant resources to maintaining and upgrading our systems and networks with measures such as intrusion and detection prevention systems,

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monitoring firewalls to safeguard critical business applications and supervising third party providers that have access to our systems, our computer systems, software and networks may be vulnerable to unauthorized access, computer viruses or other malicious code, and other events that could have a security impact. Additionally, if a client's computer system, network or other technology is compromised by unauthorized access, we may face losses or other adverse consequences by unknowingly entering into unauthorized transactions. If one or more of such events occur, this potentially could jeopardize our or our clients' or counterparties' confidential and other information processed and stored in and transmitted through our computer systems and networks. Furthermore, such events may cause interruptions or malfunctions in our, our clients', our counterparties' or third parties' operations, including the transmission and execution of unauthorized transactions. We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are either not covered or not fully covered through our insurance. The increased use of smartphones, tablets and other mobile devices as well as cloud computing may also heighten these and other operational risks. Similar to other firms, we and our third party providers continue to be the subject of attempted unauthorized access, computer viruses and malware, and cyber attacks designed to disrupt or degrade service or cause other damage and denial of service. Additional challenges are posed by external parties, including foreign state actors. There can be no assurance that such unauthorized access or cyber incidents will not occur in the future, and they could occur more frequently and on a larger scale. We are also subject to laws and regulations relating to the privacy and security of the information of our clients, employees or others, and any failure to comply with these regulations could expose us to liability and/or reputational damage.

Operational risks relating to the failure of data processing systems and other information systems and technology or other infrastructure may disrupt the Company's business and result in losses or limit our operations and growth in the industry.

The Company's business is highly dependent on its 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. The inability of the Company's systems to accommodate an increasing volume of transactions could also constrain the Company's ability to expand its business. If any of these systems do not operate properly or are disabled, or if there are other shortcomings or failures in the Company's internal processes, people or systems, the Company could suffer impairments, financial loss, a disruption of its business, liability to clients, regulatory intervention or reputational damage.

The Company has outsourced certain aspects of its technology infrastructure including data centers and wide area networks, as well as some trading applications. The Company is dependent on its technology providers to manage and monitor those functions. A disruption of any of the outsourced services would be out of the Company's control and could negatively impact our business. The Company has experienced disruptions on occasion, none of which has been material to the Company's operations and results. However, there can be no guarantee that future material disruptions with these providers will not occur.

The Company also faces the risk of operational failure of or termination of relations with any of the clearing agents, exchanges, clearing houses or other financial intermediaries that the Company uses to facilitate its securities transactions. Any such failure or termination could adversely affect the Company's ability to effect transactions and to manage its exposure to risk.

In addition, the Company's ability to conduct its business may be adversely impacted by a disruption in the infrastructure that supports Company and the communities in which we are located. This may affect, among other things, the Company's financial, accounting or other data processing systems. This may include a disruption involving electrical, communications, transportation or other services used by us or third parties with which the Company conducts business, whether due to fire, other natural disaster, power or communications failure, act of terrorism or war or otherwise. Nearly all of our employees in our primary locations in New York, Boston, San Francisco and London work in close proximity to each other. Although the Company has a formal disaster recovery plan in place, if a disruption occurs in one location and our employees in that location are unable to communicate with or travel to other locations, the Company's ability to service and interact with its clients may suffer, and the Company may not be able to implement successfully contingency plans that depend on communication or travel.

Our business also relies on the secure processing, storage and transmission of confidential and other information in its computer systems and networks. The Company's computer systems, software and networks may be vulnerable to unauthorized access, computer viruses or other malicious code and other events that could have a security impact. If one or more of such events occur, this could jeopardize our or our clients' or counterparties' confidential and other information processed and stored in, and transmitted through, the Company's computer systems and networks, or otherwise cause interruptions or malfunctions in our business', its clients', its counterparties' or third parties' operations. The Company may be required to expend significant additional resources to modify its protective measures, to investigate and remediate vulnerabilities or other exposures or to make required notifications, and the Company may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance maintained by the Company.

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.

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Our operations rely heavily on the secure processing, storage and transmission of sensitive and confidential financial, personal and other information in our computer systems and networks. There have been several highly publicized cases involving financial services companies reporting the unauthorized disclosure of client or other confidential information in recent years, as well as cyber attacks involving theft, dissemination and destruction of corporate information or other assets, in some cases as a result of failure to follow procedures by employees or contractors or as a result of actions by third parties. Like other financial services firms, we have been the target of attempted cyber attacks. Cyber attacks can originate from a variety of sources, including third parties affiliated with foreign governments, organized crime or terrorist organizations and malicious individuals both outside and inside a targeted company. Malicious actors may also attempt to compromise or induce our employees, clients or other users of our systems to disclose sensitive information or provide access to our data, and these types of risks may be difficult to detect or prevent. Although cybersecurity incidents among financial services firms are on the rise, we are not aware of any material losses relating to cyber attacks or other information security breaches. However, the techniques used in these attacks are increasingly sophisticated, change frequently and are often not recognized until launched. Although we monitor the changing cybersecurity risk environment and seek to maintain a robust suite of authentication and layered information security controls, these controls could fail to detect, mitigate or remediate these risks in a timely manner. Despite our implementation of protective measures and endeavoring to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to human error, natural disasters, power loss, spam attacks, unauthorized access, distributed denial of service attacks, ransomware, computer viruses and other malicious code, and other events that could damage to our reputation, and have an ongoing impact on the security and stability of our operations and expose us to class action lawsuits and regulatory investigation, action and penalties and significant liability.

We also rely on numerous third-party service providers to conduct other aspects of our business operations, and we face similar risks relating to them. While we regularly conduct security assessments on these third-party vendors, we cannot be certain that their information security protocols are sufficient to withstand a cyber attack or other security breach. In addition, in order to access our products and services, our customers may use computers and other devices that are beyond our security control systems and processes.

Notwithstanding the precautions we take, if a cyber attack or other information security breach were to occur, this could jeopardize the information we confidentially maintain, or otherwise cause interruptions in our operations or those of our clients and counterparties, exposing us to liability. As attempted attacks continue to evolve in scope and sophistication, we may be required to expend substantial additional resources to modify or enhance our protective measures, to investigate and remediate vulnerabilities or other exposures or to communicate about cyber attacks to our customers. Though we have insurance against some cyber risks and attacks, we may be subject to litigation and financial losses that exceed our policy limits or are not covered under any of our current insurance policies. A technological breakdown could also interfere with our ability to comply with financial reporting and other regulatory requirements, exposing us to potential disciplinary action by regulators. Additionally, the SEC issued guidance in February 2018 stating that, as a public company, we are expected to have controls and procedures that relate to cybersecurity disclosure, and are required to disclose information relating to certain cyber attacks or other information security breaches in disclosures required to be made under the federal securities laws. Further, successful cyber attacks at other large financial institutions or other market participants, whether or not we are affected, could lead to a general loss of customer confidence in financial institutions that could negatively affect us, including harming the market perception of the effectiveness of our security measures or the financial system in general, which could result in a loss of business.

Further, in light of the high volume of transactions we process, the large number of our clients, partners and counterparties, and the increasing sophistication of malicious actors, a cyber attack could occur and persist for an extended period of time without detection. We expect that any investigation of a cyber attack would take substantial amounts of time and resources, and that there may be extensive delays before we obtain full and reliable information. During such time we would not necessarily know the extent of the harm or how best to remediate it, and certain errors or actions could be repeated or compounded before they are discovered. All of which would further increase the costs and consequences of such an attack.

We may also be subject to liability under various data protection laws including, the GDPR and the CCPA. We are subject to numerous laws and regulations designed to protect personal information. These laws and regulations are increasing in complexity and number. If any person, including any of our associates, vendors or other service providers, negligently disregards or intentionally breaches our established controls with respect to sensitive or confidential client, employee or other data, or otherwise mismanages or misappropriates such data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution. In addition, unauthorized disclosure of sensitive or confidential client, employee or other data, whether through system failure, vendor fault, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients and related revenue. Potential liability in the event of a security breach of sensitive or confidential data could be significant. Depending on the circumstances giving rise to the breach, this liability may not be subject to a contractual limit or an exclusion of consequential or indirect damages.

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Liquidity Risks

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 an adverse effect on Cowen’s financial condition and results of operations.

Higher volumes and price volatility in the markets due to COVID-19 and other factors could lead to higher cash requirements relating to our clearing activities, which could adversely affect our liquidity position.

Since the COVID-19 pandemic began, 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. Certain of these higher cash requirements have required us, and may continue to require us, to use more liquidity relating to our clearing activities and our overall liquidity could, in the future, be adversely affected as a result.

Limitations on access to capital by the Company and its subsidiaries could impair its liquidity and its ability to conduct its businesses.

Liquidity, or ready access to funds, is essential to the operations of financial services firms. Failures of financial institutions have often been attributable in large part to insufficient liquidity. Liquidity is of particular importance to our trading business and clearing activities and perceived liquidity issues may affect the willingness of the Company's clients and counterparties to engage in brokerage transactions with us. Our liquidity could be impaired due to circumstances that the Company may be unable to control, such as a general market disruption or an operational problem that affects the Company, its trading clients or third parties. Furthermore, the Company's ability to sell assets may be impaired if other market participants are seeking to sell similar assets at the same time.

The Company primarily depends on its subsidiaries to fund its operations. Cowen and Company, ATM Execution, CFP and Westminster are subject to the net capital requirements of the SEC and various self-regulatory organizations of which they are members. These requirements typically specify the minimum level of net capital a broker-dealer must maintain and also mandate that a significant part of its assets be kept in relatively liquid form. Cowen International Ltd, and Cowen Execution Ltd. are also subject to capital requirements in the U.K. by the FCA. Any failure to comply with these capital requirements could impair the Company's ability to conduct its investment banking businesses.

We are a holding company and rely upon our subsidiaries for cash flow to make payments of principal and interest on our outstanding indebtedness.

We are a holding company with no business operations or assets other than the capital stock of our direct and indirect subsidiaries. Consequently, we are dependent on dividends, distributions, loans and other payments from these subsidiaries to make payments of principal and interest on all of our indebtedness including our senior notes due 2024 (the "2024 Notes") and our senior notes due 2033 (the "2033 Notes") and together with the 2024 Notes, (the "Notes") and under our term loan B (“Term Loan”) under our Credit Agreement. The ability of our subsidiaries to pay dividends and make other payments to us will depend on their cash flows and earnings, which, in turn, will be affected by all of the factors discussed in this annual report. The ability of our direct and indirect subsidiaries to pay dividends and make distributions to us may be restricted by, among other things, applicable laws and regulations and by the terms of any debt agreements or other agreements into which they enter. If we are unable to obtain funds from our direct and indirect subsidiaries as a result of restrictions under their debt or other agreements, applicable laws and regulations or otherwise, we may not be able to pay cash interest or principal on the Notes or Term Loan when due.

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.

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Our ability to make scheduled payments of the principal and to pay interest on or to refinance our indebtedness, including the Notes and Term Loan 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 businesses are 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.

Despite our current consolidated debt levels, we may incur substantially more debt or take other actions which would intensify the risks discussed above.

We may be able to incur substantially more debt in the future, including secured debt. Although the Notes and the Credit Agreement contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions, including with respect to our ability to incur additional senior secured debt, securing existing or future debt or recapitalizing our debt. The additional debt we may incur in compliance with these restrictions could be substantial. Additionally, we have the option to raise incremental term loans or increase commitments under the Credit Agreement by certain amounts pursuant to the terms thereof. Any such increases would be secured debt. These actions that could diminish our ability to make payments on the Term Loan or the Notes, or to make repayments of any revolving borrowings under our Credit Agreement.

The terms of the credit agreement governing our revolving credit facility and term loan may restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

We are party to a credit agreement (the "Credit Agreement") pursuant to which the lenders party thereto made available to us an initial term loan B in an aggregate principal amount of $300 million (the “Initial Term Loan”), an incremental term loan B in an aggregate principal amount of $150 million, fungible with the Initial Term Loan (the “Incremental Term Loan” and, together with the Initial Term Loan, the “Term Loan”) and a revolving credit facility with aggregate commitments of $25 million (with a $5 million sub-limit for the issuance of letters of credit) . As of December 31, 2022, the revolving credit facility was unfunded and $450 million was drawn under the Term Loan. The terms of the Credit Agreement contain a number of restrictive covenants that impose significant operating and financial restrictions on us and our restricted subsidiaries and may limit our ability to engage in actions that may be in our long-term best interest. The restrictive covenants include (subject to customary exceptions, thresholds, qualifications and “baskets”) restrictions on our ability to:

•    incur additional indebtedness and guarantee indebtedness;

•    pay dividends or make other distributions or repurchase or redeem capital stock;

•    prepay, redeem or repurchase certain indebtedness;

•    issue certain preferred stock or similar equity securities;

•    make loans and investments;

•    dispose of assets;

•    incur liens;

•    enter into transactions with affiliates;

•    alter the businesses we conduct;

•    enter into agreements restricting our subsidiaries’ ability to pay dividends;

•    engage in sale and leaseback transactions; and

•    consolidate, merge or sell all or substantially all of our assets.

The restrictive covenants in the Credit Agreement also require us to comply with a financial maintenance covenant, consisting of a maximum total net leverage ratio of no greater than 3.35 to 1.00, measured as of the last day of each fiscal quarter on which outstanding borrowings under the revolving credit facility exceed 35.0% of the commitments thereunder (excluding certain letters of credit).

In addition, our obligations under the Credit Agreement are guaranteed by certain of our wholly-owned domestic subsidiaries (excluding our broker-dealer subsidiaries) (the “Guarantors”) and secured by substantially all of our and our Guarantors’ assets, subject in each case to certain customary exceptions.

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A breach of the covenants or restrictions under the Credit Agreement could result in an event of default. An event of default would allow the lenders to accelerate the indebtedness under the Credit Agreement, and could result in the acceleration of any other indebtedness to which a cross-acceleration or cross-default provision applies. In addition, an event of default would permit the lenders under our revolving credit facility to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under our Credit Agreement, those lenders could proceed against the collateral granted them to secure that indebtedness. In the event our lenders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. As a result of these restrictions, we may be:

•    limited in how we conduct our business;

•    unable to raise additional debt or equity financing to operate during general economic or business downturns; and

•    unable to compete effectively or to take advantage of new business opportunities.

In addition, our Term Loan and new revolving credit facility have a variable rate of interest, which increases our exposure to interest rate fluctuations, to the extent we elect not to hedge such exposures.

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, including the Credit Agreement, 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.

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.

We will be required to use a significant amount of cash to redeem our Series A Cumulative Perpetual Convertible Preferred Stock, which could adversely affect our liquidity position and could make it more difficult for us to elect to redeem these securities.

We have irrevocably elected to cash settle $1,000 of our obligation in respect of the redemption of any share of our 5.625% Series A Cumulative Perpetual Convertible Preferred Stock. As a result, the redemption of the Series A Cumulative Perpetual Convertible Preferred Stock would require us to use a significant amount of cash, which could adversely affect our liquidity position and could make it more difficult for us to elect to redeem these securities.

Litigation and Regulatory Risk

The Company's subsidiaries may become subject to additional regulations which could increase the costs and burdens of compliance or impose additional restrictions which could have a material adverse effect on the Company's businesses and the performance of the Company's investment funds.

Market disruptions like those experienced in 2008 have led to an increase in governmental as well as regulatory scrutiny from a variety of regulators, including the SEC, CFTC, FINRA, NFA, U.S. Treasury, the NYSE and state attorneys general. Penalties and fines sought by regulatory authorities have increased substantially over the last several years. In light of current conditions in the global financial markets and the global economy, regulators have increased their focus on the regulation of the financial services industry. The Company may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations. The Company also may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or foreign governmental regulatory authorities or self-regulatory organizations that supervise the financial markets. The Company could be fined, prohibited from engaging in some of its business activities or subjected to limitations or conditions on its business activities. In addition, the Company could incur significant expense associated with compliance with any such legislation or regulations or the regulatory and enforcement environment generally. Substantial legal liability or significant regulatory action against the Company could

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have a material adverse effect on the financial condition and results of operations of the Company or cause significant reputational harm to the Company, which could seriously affect its business prospects.

The activities of certain of the Company's subsidiaries and affiliates are regulated primarily within the U.S. by the SEC, FINRA, the NFA, the CFTC and other self-regulatory organizations, as well as various state agencies, and are also subject to regulation by other agencies in the various jurisdictions in which they operate and are offered, including the FCA, the European Securities and Markets Authority, or ESMA, and the SFC of Hong Kong. Certain legislation proposing greater regulation of the industry is regularly considered by the U.S. Congress - as well as by the governing bodies of non-U.S. jurisdictions - and from time to time adopted as in the case of the Dodd-Frank Act in the U.S. and MiFID II in the EU.

The investment advisers responsible for the Company's investment management business are all registered as investment advisers with the SEC or rely upon the registration of an affiliated adviser. Certain investment advisors and/or the investment funds they advise are also subject to regulation by various regulatory authorities outside the U.S., including the U.K. FCA and the ESMA and may indirectly be subject to MiFID II regulations. Moreover, certain non-U.S. regulatory bodies have imposed reporting requirements on short selling, which have impacted certain of the investment strategies implemented on behalf of the investment funds it manages, and continued restrictions on or further regulations of short sales could also negatively impact their performance.

These and other regulators in these jurisdictions have broad regulatory powers dealing with all aspects of financial services including, among other things, the authority to make inquiries of companies regarding compliance with applicable regulations, to grant permits and to regulate marketing and sales practices and the maintenance of adequate financial resources as well as significant reporting obligations to regulatory authorities. Under the EU Alternative Investment Fund Managers Directive, the Company will only be permitted to actively market its investment funds in the EU if certain disclosure and reporting obligations are met, and certain cooperation arrangements with the domicile of the investment vehicle are in place. As such, the Company may need to modify its strategies or operations, face increased constraints on its investment management business or incur additional costs in order to satisfy new regulatory requirements or to compete in a changed business environment. It is difficult to predict the impact of such legislative initiatives on the Company and the markets in which it operates and/or invests.

It is difficult to predict what other changes may be instituted in the future in the regulation of the Company or the markets in which they invest, or the counterparties with which it does business, in addition to those changes already proposed or adopted in the U.S. or other countries. Any such regulation could have a material adverse effect on the profit potential of the Company's operations.

Financial services firms are subject to numerous perceived or actual conflicts of interest, which have drawn and which we expect will continue to draw scrutiny from the SEC, other federal and state regulators, and self-regulatory organizations. For example, the research areas of investment banks have been and remain the subject of heightened regulatory scrutiny, which has led to increased restrictions on the interaction between equity research analysts and investment banking personnel at securities firms. Regulations have also been focusing on potential conflicts of interest or issues relating to impermissible disclosure of material nonpublic information. Appropriately dealing with conflicts of interest is complex and difficult, and our reputation could be damaged if it fails to do so. Such policies and procedures to address or limit actual or perceived conflicts may also result in increased costs, additional operational personnel and increased regulatory risk. Failure to adhere to these policies and procedures may result in regulatory sanctions or client litigation.

We are also subject to laws and regulations, such as the GDPR, the CCPA and the GLBA, relating to the privacy of the information of clients, employees or others, and any failure to comply with these laws and regulations could expose us to liability and/or reputational damage. As new privacy-related laws and regulations are implemented and as the interpretation and enforcement of existing requirements evolves, the time and resources needed for us to comply with such laws and regulations, as well as our potential liability for non-compliance and reporting obligations in the case of data breaches, may significantly increase.

The Company is subject to third party litigation risk and regulatory risk which could result in significant liabilities and reputational harm which, in turn, could materially adversely affect its business, results of operations and financial condition.

The Company depends to a large extent on its reputation for integrity and high-caliber professional services to attract and retain clients. As a result, if a client is not satisfied with the Company's services, it may be relatively more damaging to the Company than to other businesses. Moreover, the Company's role as advisor to clients on underwriting or merger and acquisition transactions involves complex analysis and the exercise of professional judgment, including rendering "fairness opinions" in connection with mergers and other transactions. Such activities may subject the Company to the risk of significant legal liabilities, not covered by insurance, to clients and aggrieved third parties, including stockholders of clients who could commence litigation against the Company. Moreover, many of the clients within the Company’s sectors tend to have higher risk profiles than more established companies, particularly healthcare and cannabis companies. Cowen currently is, and may in the future be, named as a

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defendant in securities-class action lawsuits alleging violations of the securities laws. Although the Company's investment banking engagements typically include broad indemnities from its clients and provisions to limit exposure to legal claims relating to such services, these provisions may not protect the Company, may not be enforceable, or may be with foreign companies requiring enforcement in foreign jurisdictions which may raise the costs and decrease the likelihood of enforcement. As a result, the Company may incur significant legal and other expenses in defending against litigation and may be required to pay substantial damages for settlements and/or adverse judgments. In addition, Cowen Prime Advisors, a registered investment advisor, provides advice to retail investors and retains discretion over some retail investment accounts. The Company could be exposed to potential litigation and liability if any of these clients are not satisfied with the investment advisory services being provided. Substantial legal liability or significant regulatory action against the Company could have a material adverse effect on our results of operations or cause significant reputational harm, which could seriously harm our business and prospects.

In general, the Company is exposed to risk of litigation by investors in its investment management business if the management of any of its investment funds is alleged to have been grossly negligent or fraudulent. Investors or beneficial owners of investment funds could sue to recover amounts lost due to any alleged misconduct, up to the entire amount of the loss. In addition, the Company faces the risk of litigation from investors and beneficial owners of any of its investment funds if applicable restrictions are violated. In addition, the Company is exposed to risks of litigation or investigation relating to transactions that presented conflicts of interest that were not properly addressed. In the majority of such actions the Company would be obligated to bear legal, settlement and other costs, which may be in excess of any available insurance coverage. In addition, although the Company is contractually entitled to indemnification from its investment funds, our rights to indemnification may be challenged. If the Company is required to incur all or a portion of the costs arising out of litigation or investigations as a result of inadequate insurance proceeds, if any, or is not wholly indemnified, our business, results of operations and financial condition could be materially adversely affected. In its investment management business, the Company is exposed to the risk of litigation if an investment fund suffers catastrophic losses due to the failure of a particular investment strategy or due to the trading activity of an employee who has violated market rules or regulations. Any litigation arising in such circumstances is likely to be protracted, expensive and surrounded by circumstances which are materially damaging to the Company's reputation and businesses.

The potential for conflicts of interest within the Company, and a failure to appropriately identify and deal with conflicts of interest could adversely affect our businesses.

Due to the combination of our investment management and investment banking businesses, we face an increased potential for conflicts of interest, including situations where our services to a particular client or investor or our own interests in our investments conflict with the interests of another client. Such conflicts may also arise if our investment banking businesses have access to material non-public information that may not be shared with our investment management business or vice versa. Additionally, our regulators have the ability to scrutinize our activities for potential conflicts of interest, including through detailed examinations of specific transactions.

Appropriately identifying and dealing with conflicts of interest is complex and difficult, and the willingness of clients to enter into transactions or engagements in which such a conflict might arise may be affected if we fail to identify and appropriately address potential conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or enforcement actions.

Increased regulatory focus could result in regulation that may limit the manner in which the Company and its investment management business invest, materially impacting the Company's business.

The Company's investment management business may be adversely affected if new or revised legislation or regulations are enacted, or by changes in the interpretation or enforcement of existing rules and regulations imposed by the SEC, other U.S. or foreign governmental regulatory authorities or self-regulatory organizations that supervise the financial markets and their participants. Such changes could place limitations on the type of investor that can invest in the Company's investment funds or on the conditions under which such investors may invest. Further, such changes may limit the scope of investing activities that may be undertaken by the Company's investment funds. It is impossible to determine the extent of the impact of any new or recently enacted laws or any other regulations or initiatives that may be proposed, or whether any proposed regulations or initiatives will become law. Compliance with any new laws or regulations could be difficult and expensive and affect the manner in which the Company's investment management business conducts itself, which may adversely impact its results of operations, financial condition and prospects.

Additionally, as a result of highly publicized financial scandals, investors, regulators and the general public have exhibited concerns over the integrity of both the U.S. financial markets and the regulatory oversight of these markets. As a result, the business environment in which Company's investment management business operates is subject to heightened regulation. With respect to the Company's investment funds, in recent years, there has been debate in both U.S. and foreign governments about new rules or regulations, including increased oversight or taxation, in addition to the recently enacted legislation described above. As calls for additional regulation have increased, there may be a related increase in regulatory investigations of the trading and

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other investment activities of investment funds, including the Company's investment funds. Such investigations may impose additional expenses on the Company, may require the attention of senior management and may result in fines if any of the Company's investment funds are deemed to have violated any regulations.

The U.K. exit from the EU could adversely impact our business, results of operations and financial condition.

The U.K. left the EU on January 31, 2020, with a transition period until December 31, 2020 during which time the U.K. followed EU rules and a U.K.-EU trade agreement was negotiated governing EU and U.K. relations from January 1, 2021 resulting in a Trade and Cooperation Agreement together with a Political Declaration covering a number of areas including financial services. The Trade and Cooperation Agreement does not include substantive provisions for financial services, in particular it does not allow U.K. investment firms to provide services into the EU under the Passporting regime.

We conduct business in Europe primarily through our U.K. subsidiaries. Under the Trade and Cooperation Agreement, our U.K. subsidiaries are currently not able to rely on "Passporting" that allows immediate access to the single EU market. If the U.K. and EU do not agree to a Passporting regime, we may need to establish one or more new regulated subsidiaries in the EU in order to provide our trading platform and certain post-trade services to clients in the EU.

In general, the potential impacts related to Brexit or the terms of the developing economic and security relationship between the U.K. and the EU on the movement of goods, services, people and capital between the U.K. and the EU, customer behavior, economic conditions, interest rates, currency exchange rates, availability of capital or other matters are unclear and could adversely affect our businesses, including our revenues from our trading activities, particularly in Europe, and our results of operations and financial condition.

If the Company were deemed an investment company under the U.S. Investment Company Act, applicable restrictions could make it impractical for the Company to continue its respective businesses as contemplated and could have a material adverse effect on the Company's businesses and prospects.

We are primarily engaged in a non-investment company business and believe the nature of our assets and the sources of our income exclude us from the definition of an investment company under the Investment Company Act.

The Investment Company Act and the rules thereunder contain detailed requirements for the organization and operation of investment companies. Among other things, the Investment Company Act and the rules thereunder limit transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose certain governance requirements. The Company intends to conduct its operations so that the Company will not be deemed to be an investment company under the Investment Company Act. If anything were to happen which would cause the Company to be deemed to be an investment company under the Investment Company Act, requirements imposed by the Investment Company Act, including limitations on its capital structure, ability to transact business with affiliates (including subsidiaries) and ability to compensate key employees, could make it impractical for the Company to continue its business as currently conducted, impair the agreements and arrangements between and among it, its subsidiaries and its senior personnel, or any combination thereof, and materially adversely affect its business, financial condition and results of operations. Accordingly, the Company may be required to limit the amount of investments that it makes as a principal or otherwise conduct its business in a manner that does not subject the Company to the registration and other requirements of the Investment Company Act.

Merger Risks

The consummation of the Merger is subject to a number of conditions, many of which are largely outside of the control of the parties to the Merger Agreement, and, if these conditions are not satisfied or waived on a timely basis, the Merger Agreement may be terminated and the Merger may not be completed.

The obligation of the parties to consummate the Merger is subject to various conditions, including: (i) the receipt of the Requisite Regulatory Approvals (as defined in the Merger Agreement), which include expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act of 1976, approval of the Superintendent of Financial Institutions, approval of the Financial Industry Regulatory Authority and approvals from certain other U.S., Canadian and foreign regulatory authorities (subject to TD not being obligated to close if there is a Materially Burdensome Regulatory Condition (as defined in the Merger Agreement)); and (ii) the absence of any legal restraint or legal prohibition preventing or prohibiting the consummation of the Merger. In addition, each of the Company’s and TD’s obligation to consummate the Merger is subject to: (i) the accuracy of the representations and warranties of the other party (subject to customary materiality qualifiers) and (ii) the other party’s performance in all material respects of its covenants and obligations contained in the Merger Agreement. The failure to satisfy all of the required conditions could delay the completion of the Merger by a significant period of time or prevent it from occurring. Any delay in completing the Merger could cause the parties to the Merger Agreement to not realize some or all of the benefits that are expected to be achieved if the Merger is successfully completed within the expected timeframe. There can be no assurance

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that the conditions to closing of the Merger will be satisfied or waived or that the Merger will be completed within the expected timeframe or at all.

Failure to complete the Merger could adversely affect our stock price and business, results of operations or financial condition.

There can be no assurance that the conditions to the closing of the Merger will be satisfied or waived or that the Merger will be completed. If the Merger is not completed within the expected timeframe or at all, our ongoing business could be adversely affected and we will be subject to a variety of risks and possible consequences associated with the failure to complete the Merger, including the following: (i) we will incur certain transaction costs, including legal, accounting, financial advisor, filing, printing and mailing fees, regardless of whether the Merger closes; (ii) under the Merger Agreement, we are subject to certain restrictions on the conduct of our business prior to the closing of the Merger, which may adversely affect our ability to execute certain of our business strategies; (iii) we may lose key employees during the period in which we and TD are pursuing the Merger, which may adversely affect us in the future if we are not able to hire and retain qualified personnel to replace departing employees; and (iv) the proposed Merger, whether or not it closes, will divert the attention of certain of our management and other key employees from ongoing business activities, including the pursuit of other opportunities that could be beneficial to us. If the Merger is not completed, these risks could materially affect our business, results of operations or financial condition and stock price, including to the extent that the current market price of our common stock is positively affected by a market assumption that the Merger will be completed.

While the Merger is pending, we are subject to business uncertainties and certain contractual restrictions that could adversely affect our business, results of operations or financial condition.

In connection with the pending Merger, some of our clients, vendors or other third parties may react unfavorably, including by delaying or deferring decisions concerning their business relationships or transactions with us, which could adversely affect our revenues, earnings, cash flows and expenses, regardless of whether the Merger is completed. In addition, due to certain restrictions in the Merger Agreement on the conduct of business prior to completing the Merger, we may be unable (without TD’s prior written consent), during the pendency of the Merger, to pursue certain strategic transactions, undertake significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions, even if such actions would prove beneficial and may cause us to forego certain opportunities we might otherwise pursue. In addition, the pendency of the Merger may make it more difficult for us to effectively retain and incentivize key personnel and may cause distractions from our strategy and day-to-day operations for our current employees and management.

The Company will incur substantial transaction fees and Merger-related costs in connection with the Merger that could adversely affect the business and operations of the Company if the Merger is not completed.

The Company expects to incur non-recurring transaction fees, which include legal and advisory fees and substantial Merger-related costs associated with completing the Merger, and which could adversely affect the business operations of the Company if the Merger is not completed.

The termination fee and restrictions on solicitation contained in the Merger Agreement may discourage other companies from trying to acquire the Company.

The Merger Agreement prohibits the Company from initiating, soliciting, knowingly encouraging or knowingly facilitating any competing acquisition proposals, subject to certain limited exceptions. The Merger Agreement also contains certain termination rights and provides that, if the Merger Agreement is terminated under certain circumstances, the Company will be required to pay TD a termination fee of $42,250,000 in cash. The termination fee and restrictions could discourage other companies from trying to acquire the Company even though those other companies might be willing to offer greater value to the Company’s stockholders than TD has offered in the Merger.

Litigation against the Company, TD or the members of their respective boards, could prevent or delay the completion of the Merger or result in the payment of damages following completion of the Merger.

It is a condition to the Merger that no order, injunction or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint or prohibition enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger shall be in effect. It is possible that lawsuits may be filed by our stockholders challenging the Merger. The outcome of such lawsuits cannot be assured, including the amount of costs associated with defending these claims or any other liabilities that may be incurred in connection with the litigation of these claims. If plaintiffs are successful in obtaining an injunction prohibiting the parties from completing the Merger on the agreed-upon terms, such an injunction may delay the consummation of the Merger in the expected timeframe, or may prevent the Merger from being consummated at all. Whether or not any plaintiff’s claim is successful, this type of litigation can result in significant costs and divert management’s attention and resources from the closing of the Merger and ongoing business activities, which could adversely affect our operations.

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Uncertainty about the Merger may adversely affect the relationships between us and our clients, vendors and employees, whether or not the Merger is completed.

In response to the announcement of the Merger, existing or prospective clients, vendors and other third party relationships of ours may delay, defer or cease providing goods or services, delay or defer other decisions concerning us, refuse to extend credit to us, or otherwise seek to change the terms on which they do business with us. Any such delays or changes to terms could materially harm our business.

In addition, as a result of the Merger, current and prospective employees could experience uncertainty about their future with us. These uncertainties may impair our ability to retain, recruit or motivate key management and other personnel.

If the Merger is not consummated by August 1, 2023, either we or TD may terminate the Merger Agreement, subject to certain exceptions.

Either we or TD may terminate the Merger Agreement if the Merger has not been consummated by August 1, 2023. However, this termination right will not be available to a party to the Merger Agreement if that party failed to comply with its obligations under the Merger Agreement and that failure was the principal cause of the failure to consummate the Merger on or prior to such date. In the event the Merger Agreement is terminated by either party due to the failure of the Merger to close by August 1, 2023 or for any other reason provided under the Merger Agreement, we will have incurred significant costs and will have diverted significant management focus and resources from other strategic opportunities and ongoing business activities without realizing the anticipated benefits of the Merger.

Other Risks to Our Stockholders

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 stockholders in accordance with our dividend policy, as described under the heading "Dividend Policy", 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 general economic and business conditions; our financial condition and operating results; our available cash and current and anticipated cash needs; capital requirements; contractual restrictions (including under agreements related to indebtedness to which we are a party), legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us; and such other factors as our board of directors may deem relevant. 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 in the future.

The terms of our Series A Convertible Preferred Stock contains certain restrictions on our operations.

The certificate of designations governing our Series A Convertible Preferred Stock contains certain restrictions on our and our subsidiaries' ability to, among other things, pay dividends on, redeem or repurchase our Class A common stock and, under certain circumstances, our Series A Convertible Preferred Stock, and to issue additional preferred stock. Additionally, if dividends on our Series A Convertible Preferred Stock are in arrears and unpaid for at least six or more quarterly periods, the holders (voting as a single class) of our outstanding Series A Convertible Preferred Stock will be entitled to elect two additional directors to our Board of Directors until paid in full.

The Company's failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on the Company's financial condition, results of operations and business and the price of our Class A common stock.

The Sarbanes-Oxley Act and the related rules require our management to conduct an annual assessment of the effectiveness of our internal control over financial reporting and require a report by our independent registered public accounting firm addressing our internal control over financial reporting. To comply with Section 404 of the Sarbanes-Oxley Act, we are required to document formal policies, processes and practices related to financial reporting that are necessary to comply with Section 404. Such policies, processes and practices are important to ensure the identification of key financial reporting risks, assessment of their potential impact and linkage of those risks to specific areas and activities within our organization.

If we fail for any reason to comply with the requirements of Section 404 in a timely manner, our independent registered public accounting firm may, at that time, issue an adverse report regarding the effectiveness of our internal control over financial reporting. Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis

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and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Any such event could adversely affect our financial condition, results of operations and business, and result in a decline in the price of our Class A common stock.

Certain provisions of the Company's amended and restated certificate of incorporation and bylaws and Delaware law may have the effect of delaying or preventing an acquisition by a third party.

The Company's amended and restated certificate of incorporation and bylaws contain several provisions that may make it more difficult for a third party to acquire control of the Company, even if such acquisition would be financially beneficial to the Company's stockholders. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in the Company's stockholders receiving a premium over the then-current trading price of our common stock. For example, the Company's amended and restated certificate of incorporation authorizes its board of directors to issue up to 10,000,000 shares of "blank check" preferred stock. Without stockholder approval, the board of directors has the authority to attach special rights, including voting and dividend rights, to this preferred stock. With these rights, preferred stockholders could make it more difficult for a third party to acquire the Company. In addition, the Company's amended and restated bylaws provide for an advance notice procedure with regard to the nomination of candidates for election as directors and with regard to business to be brought before a meeting of stockholders. The Company is also subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law. Under these provisions, if anyone becomes an "interested stockholder," the Company may not enter into a "business combination" with that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change of control. For the purposes of Section 203, "interested stockholder" means, generally, someone owning 15% or more of the Company's outstanding voting stock or an affiliate of the Company that owned 15% or more of our outstanding voting stock during the past three years, subject to certain exceptions as described in Section 203.

If securities analysts stop publishing research or reports about us or our business or if they downgrade our common stock, the market price of our common stock and, consequently, the trading price of our other securities could decline.

The market for our common stock relies in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. If any analyst who covers us downgrades our stock or lowers its future stock price targets or estimates of our operating results, our stock price could decline rapidly. Furthermore, if any analyst ceases to cover us, we could lose visibility in the market, which in turn could cause the market price of our securities to decline.

Future sales of our common stock in the public market could adversely impact the trading price of our securities.

In the future, we may sell additional shares of our common stock to raise capital. In addition, a substantial number of shares of our common stock are reserved for issuance upon vesting of restricted stock units and performance-linked restricted stock units and upon the conversion of the Convertible Preferred. We cannot predict the size of future issuances or the effect, if any, that they may have on the market price for our common stock. The issuance and sale of substantial amounts of common stock, or the perception that such issuances and sales may occur, could adversely affect the trading price of our securities and impair our ability to raise capital through the sale of additional equity securities.

The change in accounting guidance for our outstanding Series A Cumulative Perpetual Convertible Preferred Stock may have an adverse effect on our diluted earnings per share in future periods.

Accounting Standards Codification (the "Accounting Standards") 470-20, simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. The guidance requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of potential share settlement (if the effect is more dilutive) for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. The guidance requires new disclosures about events that occur during the reporting period and cause conversion contingencies to be met and about the fair value of a public business entity’s convertible debt at the instrument level. For public business entities, the guidance is effective for reporting periods beginning after December 15, 2021. The Company adopted the guidance as of January 1, 2022 under the modified retrospective method. With the adoption of this guidance, the Company is required to include the portion of the Series A Convertible Preferred Stock that can be settled in Class A common stock (the amount in excess of $1,000 per share of the Series A Convertible Preferred Stock) in the diluted earnings per share calculation. This adoption as of January 1, 2022 results in the inclusion of approximately 1,565,000 additional shares in the denominator of diluted earnings per share.

Item 1B.    Unresolved Staff Comments

None.

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Item 2.    Properties

Our principal offices, all of which are leased, are located in New York City, Boston, San Francisco, Stamford and the United Kingdom.  Our other offices, all of which are leased, are located throughout the United States, Europe and Asia.  Our corporate headquarters are located in New York, New York comprise approximately 150,357 square feet of leased space pursuant to a lease agreement through 2029. Our additional New York locations are comprised of approximately 19,000 square feet pursuant to lease agreements through 2032.  We lease approximately 19,100 square feet of space in Boston pursuant to lease agreements expiring through 2023.  In San Francisco, we lease approximately 34,700 square feet of space, pursuant to lease agreements expiring through 2025. In Stamford, we lease approximately 43,000 square feet of space, pursuant to lease agreements expiring through 2030. Our United Kingdom offices are subject to lease agreements expiring through 2034.

Item 3.    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 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. The Company is currently cooperating with the SEC in connection with an investigation of the Company’s business’ compliance with record preservation requirements relating to business communications and/or electronic messaging channels. The SEC is reportedly conducting similar investigations of record preservation practices at other broker-dealers and investment advisors.

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. For many legal and regulatory matters, we are unable to estimate a range of reasonably possible loss.

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 would include 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 consolidated statements of financial condition. Estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including, but not limited to, the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal counsel, the Company's defenses and its experience in similar cases or proceedings as well as its assessment of matters, including settlements, involving other defendants in similar or related cases or proceedings. The Company may increase or decrease its legal reserves in the future, on a matter-by-matter basis, to account for developments in such matters. The Company accrues legal fees as incurred.

Item 4. Mine Safety Disclosures

Not Applicable.

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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Stock Price Information and Stockholders

Our Class A common stock is listed and trades on the NASDAQ Global Market under the symbol "COWN." As of February 27, 2023, there were approximately 40 holders of record of our Class A common stock. This number does not include stockholders for whom shares were held in "nominee" or "street" name.

Dividend Policy

Though we currently expect that cash dividends paid by us during our most recently completed fiscal year will continue to be paid in the future, the declaration and payment of any future dividends will be at the sole discretion of our board of directors. Our board of directors will take into account: general economic and business conditions; our financial condition and operating results; our available cash and current and anticipated cash needs; capital requirements; contractual restrictions (including under agreements related to indebtedness to which we are a party), legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us; and such other factors as our board of directors may deem relevant.

We credit dividend equivalents on all unvested Restricted Stock Units and Performance Share Awards concurrently with the payment of dividends to the holders of Class A common stock. The dividend equivalents have the same vesting and delivery terms as the underlying award agreements relating to the Restricted Stock Units and Performance Share Awards.

Issuer Purchases of Equity Securities: Sales of Unregistered Securities

As of December 31, 2022, the Company's Board of Directors has approved a share repurchase program that authorizes the Company to purchase up to $466.4 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 year ended December 31, 2022, through the share repurchase program, the Company repurchased 1,069,002 shares of Cowen Class A common stock at an average price of $29.07 per share.

The table below sets forth the information with respect to purchases made by or on the behalf of the Company or any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act, as amended), of our Class A common stock during the year ended December 31, 2022.

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 Programs
Month 1 (January 1, 2022 – January 31, 2022)
Common stock repurchases(1)						379,002						$	33.23					379,002						$	43,526,497
Employee transactions(2)						—						$	—					—						—
Other (3)						—						$	—					—						—
Total						379,002						$	33.23					379,002
Month 2 (February 1, 2022 – February 28, 2022)
Common stock repurchases(1)						30,000						$	29.55					30,000						$	42,639,886
Employee transactions(2)						—						$	—					—						—
Other (3)						—						$	—					—						—
Total						30,000						$	29.55					30,000.00
Month 3 (March 1, 2022 – March 31, 2022)
Common stock repurchases(1)						389,300						$	27.38					389,300						$	31,979,581
Employee transactions(2)						374,149						$	32.83					—						—
Other (3)						—						$	—					—						—
Total						763,449						$	30.05					389,300
Month 4 (April 1, 2022 – April 30, 2022)
Common stock repurchases(1)						120,700						$	27.24					120,700						$	28,691,809
Employee transactions(2)						23						$	26.22					—						—
Other (3)						—						$	—					—						—
Total						120,723						$	27.24					—
Month 5 (May 1, 2022 – May 31, 2022)

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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 Programs
Common stock repurchases(1)						—						$	—					—						$	28,691,809
Employee transactions(2)						164,490						$	24.02					—						—
Other (3)						—						$	—					—						—
Total						164,490						$	24.02					—
Month 6 (June 1, 2022 – June 30, 2022)
Common stock repurchases(1)						—						$	—					—						$	28,691,809
Employee transactions(2)						12,537						$	26.06					—						—
Other (3)						—						$	—					—
Total						12,537						$	26.06					—
Month 7 (July 1, 2022 – July 31, 2022)
Common stock repurchases(1)						150,000						$	24.33					150,000						$	25,042,021
Employee transactions(2)						—						$	—					—						—
Other (3)						—						$	—					—						—
Total						150,000						$	24.33					150,000
Month 8 (August 1, 2022 – August 31, 2022)
Common stock repurchases(1)						—						$	—					—						$	—
Employee transactions(2)						—						$	—					—						—
Other (3)						—						$	—					—						—
Total						—						$	—					—
Month 9 (September 1, 2022 – September 30, 2022)
Common stock repurchases(1)						—						$	—					—						$	—
Employee transactions(2)						314,052						$	38.46					—						—
Other (3)						—						$	—					—						—
Total						314,052						$	38.46					—
Month 10 (October 1, 2022 – October 31, 2022)
Common stock repurchases(1)						—						$	—					—						$	—
Employee transactions(2)						—						$	—					—						—
Other (3)						—						$	—					—						—
Total						—						$	—					—
Month 11 (November 1, 2022 – November 30, 2022)
Common stock repurchases(1)						—						$	—					—						$	—
Employee transactions(2)						203						$	38.40					—						—
Total						203						$	—					—
Month 12 (December 1, 2022 – December 31, 2022)
Common stock repurchases(1)						—						$	—					—						$	—
Employee transactions(2)						193,479						$	38.42					—						—
Other (3)						—						$	—					—						—
Total						193,479						$	—					—
Total (January 1, 2022 – December 31, 2022)
Common stock repurchases(1)						1,069,002						$	29.07					1,069,002						$	25,042,024
Employee transactions(2)						1,058,933						$	34.07					—						—
Other (3)						—						$	—					—						—
Total						2,127,935						$	31.56					1,069,002

(1)    The Company's Board of Directors have authorized the repurchase, subject to market conditions, of up to $466.4 million of the Company's outstanding Class A 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.

Item 6.    [Reserved]

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Item 7.    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 in the sections titled “Risk Factors” in Item 1A of our Annual Report on Form 10-K, many of which risks are currently elevated by, and may or will continue to be elevated by, the COVID-19 pandemic. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and related notes of Cowen Inc. included elsewhere in this annual Report on Form 10-K. 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 banking, research, sales and trading, prime brokerage, global clearing, securities financing, commission management services and investment management through its two business segments: the Operating Company ("Op Co") and the Asset Company ("Asset Co").

Operating Company

The Op Co segment consists of four divisions: the Cowen Investment Management ("CIM") division, the Investment Banking division, the Markets division (which includes sales and trading, prime brokerage, global clearing, securities financing and commission management services) and the Research division. The Company refers to the Investment Banking division, the Markets division and the Research division collectively as its investment banking businesses. Op Co's CIM division includes advisers to investment funds (including private equity structures and privately placed hedge funds), and registered funds. Op Co's investment banking businesses offer industry focused investment banking for growth-oriented companies including 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 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 healthcare investing, sustainable investing, healthcare royalties, merger arbitrage and activism. A portion of the Company’s capital is invested alongside the Company's investment management clients. The Company has also invested capital in its insurance and reinsurance businesses.

Op Co's investment banking businesses include investment banking, research, sales and trading, prime brokerage, global clearing, securities financing and commission management services provided primarily to companies and institutional investor clients. Sectors covered by Op Co's investment banking business include healthcare, technology, media and telecommunications, consumer, industrials, tech-enabled and business services, and energy. We provide research and brokerage services to over 6,000 domestic and international clients seeking to trade securities and other financial instruments, principally in our 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's private investments, private real estate investments and other legacy investment 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:

•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.

•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.

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•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 ability to generate revenues relating to our equity research depends on the quality of our 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. 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.

•Commissions.  Our commission revenues depend for the most part on our customers' trading volumes and on the notional value of the non-U.S. securities traded by our customers.

•Investment performance.  Our revenues from incentive income and carried interest allocations are linked to the performance of the investment funds and accounts that we manage. Performance also affects assets under management ("AUM"), because AUM generally reflects, at least in part, the fair market value of the relevant assets. Additionally, performance may influence investors' decisions to make new allocations to our funds. Finally, performance can affect investor’s decisions to add or redeem capital from funds that allow for redemptions.

•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 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 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.  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.

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, stable inflation, stable interest rates, full employment, 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, such as the ongoing war in Ukraine, 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 could experience 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 from those funds or accounts that permit 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.

•The Federal Reserve ("FED") announced intentions to increase the Federal Funds Rate over future periods continuing a process it began in 2022. The FED’s stated goal is to tighten financial conditions in order to fight the risk of continued inflation. The FED has also signaled a desire to maintain interest rates at a level significantly higher than markets have been accustomed to post the Great Financial Crisis of 2008. These changes in policy are intended to reduce inflation by slowing economic activity possibly leading to a recession. In the event the U.S. economy enters a period of economic contraction, during such period our investment banking revenues could be depressed, fund raising for our investment management business could be impaired with low or no incentive fee accruals and our balance sheet investments could decrease in value. While our markets business might not be adversely affected by an economic recession, our overall our results of operation could be negatively affected during such period.

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

On August 1, 2022, the Company, The Toronto-Dominion Bank, a Canadian chartered bank (“TD”), and Crimson Holdings Acquisition Co., a Delaware corporation and an indirect wholly owned subsidiary of TD (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the merger as a wholly-owned subsidiary of TD.

The Board of Directors of the Company determined that it is in the best interests of the Company and its stockholders to consummate the transactions provided for in the Merger Agreement and, in furtherance thereof, adopted the Merger Agreement and approved the transactions contemplated thereby (including the Merger), and resolved to submit the Merger Agreement to the holders of the Class A common stock of the Company for adoption and to recommend that the holders of Class A common stock of the Company adopt the Merger Agreement and approve the transactions contemplated thereby (including the Merger).

Completion of the Merger is subject to customary closing conditions, including obtaining the Requisite Regulatory Approvals (as defined in the Merger Agreement) required to be obtained to consummate the transactions contemplated thereby (including the Merger) from the relevant U.S., Canadian and foreign regulatory authorities. Upon completion of the Merger, TD will become the owner of all the Company’s outstanding shares of Class A common stock, the Company will become a private company and the shares of Class A common stock of the Company will no longer be publicly listed or traded on the Nasdaq Global Market.

Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”) each share of Class A common stock of the Company and each share of Class B common stock of the Company issued and outstanding immediately prior to the Effective Time, (other than Exception Shares (as defined in the Merger Agreement)) will be converted into the right to receive an amount in cash equal to $39 per share (representing approximately $1.3 billion in the aggregate), payable to the holder thereof, without interest.

Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”), the Company prepared and filed with the SEC, and thereafter mailed to its stockholders, a Schedule 14A Proxy Statement where additional information about the Merger can be found. On November 15, 2022, the holders of a majority of the outstanding Class A common stock of the Company outstanding and entitled to vote on the matter approved the adoption of the Merger Agreement.

Basis of Presentation

The consolidated financial statements of the Company in this Form 10-K are prepared in accordance with Generally Accepted Accounting Principles in the United States ("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 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 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 consolidated financial statements reflect the assets, liabilities, income and expenses of these funds on a gross basis.

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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 consolidated financial statements appearing elsewhere in this Form 10-K. The management fees and incentive income earned by the Company from these funds are eliminated in consolidation.The consolidated financial statements of the Company in this Form 10-K are prepared in accordance with Generally Accepted Accounting Principles in the United States ("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 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.

Acquisition and Divestitures

On June 1, 2022, the Company completed its acquisition of Kelvin Re Limited (“Kelvin”) by acquiring all of the issued and outstanding ordinary shares in Kelvin from CS IRIS A Fund Limited. Kelvin is a general reinsurance company incorporated and domiciled in Guernsey whose principal activity was the provision of property and natural catastrophe reinsurance business. In December 2020, Kelvin ceased underwriting new business and has been operating as a run-off entity. Cowen acquired Kelvin to manage the outstanding reinsurance claims arising from its existing portfolio.

On December 16, 2021, the Company, through its indirect wholly owned subsidiary, Cowen PC Acquisition LLC, completed its previously announced acquisition of Portico Capital Advisors and certain assets and liabilities of its European operations (“Portico”). Portico was a privately-held mergers and acquisitions advisory firm focused on the software, data, and analytics sectors.

On February 26, 2021, the Company, through its indirect wholly owned subsidiary, Cowen Malta Holdings Ltd., completed the acquisition of all of the outstanding equity interests of Axeria Insurance Limited, an insurance company organized under the laws of Malta whose principal business activity is to provide insurance coverage to third parties. Axeria Insurance Limited was renamed Cowen Insurance Company Ltd upon acquisition.

On October 1, 2020, the Company, through its indirect wholly owned subsidiary, Cowen and Company LLC, completed its previously announced acquisition of certain assets and liabilities of MHT Partners, LP (“MHT Partners”). MHT Partners is an investment bank, based primarily in Dallas and San Francisco, focused on representing innovative companies in growing markets.

Expenses

The Company's expenses consist of compensation and benefits, insurance and 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.

•Insurance and Reinsurance claims, commissions and amortization of deferred acquisition costs. Insurance and reinsurance-related expenses reflect loss and claim reserves, acquisition costs and other expenses incurred with respect to our insurance and reinsurance operations.

•Operating, General and 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.  Depreciation 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 consolidated financial statements reflect the expenses of the Consolidated Funds and the portion attributable to other investors is allocated to a non-controlling interest.

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

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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.

Temporary Equity

Temporary equity consists of Redeemable 5.625% Series A cumulative perpetual convertible preferred stock ("Series A Convertible Preferred Stock"). The Company has irrevocably elected to cash settle $1,000.00 of each conversion of any share of the Series A Convertible Preferred Stock. As the holders can exercise the conversion option on their shares of Series A Convertible Preferred Stock at any time and require cash payment upon conversion, the Company has classified the Series A Convertible Preferred Stock preferred stock in temporary equity.

Non-Redeemable 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 other owners of such entities. When non-controlling interest holders do not have redemption features that can be exercised at the option of the holder currently or contingent upon the occurrence of future events, their ownership has been classified as a component of permanent equity. Ownership which has been classified in permanent equity are non-controlling interests for which the holder does not have the unilateral right to redeem its ownership interests.

Investment Fund Performance and Assets Under Management

For the year ended December 31, 2022, the Company's activist and merger arbitrage strategies had positive results. The Company's healthcare royalty strategy is now making allocations from the strategy's fourth fund and closed on a new vehicle that permits recycling of capital. The Company’s healthcare investments strategy is now deploying capital from its fourth fund. Finally, our sustainable investing strategy continues to deploy capital, with four investments made as of December 31, 2022. The liquidation of certain multi-strategy hedge funds advised by the Company also continues.

As of December 31, 2022, the Company had assets under management of $14.5 billion.

Strategy

Healthcare Investments

Healthcare Royalties

Activism

Merger Arbitrage

Sustainable Investments

Other (a)

(dollars in millions)

AUM

$1,136

$3,455

$7,399

$206

$1,190

$1,129

Team

Private Equity

ü

ü

ü

Hedge Fund

ü

ü

Managed Account

ü

ü

ü

ü

UCITS

ü

Other

ü

(a) Other strategies include legacy funds and other private investment 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, management allocates capital to three primary investment categories: (i) broker-dealer capital and related trading strategies; (ii) liquid alternative trading strategies; and (iii) public and private healthcare strategies. Broker-dealer capital and related trading strategies include capital investments in the Company's broker-dealers as well as securities finance and special purpose acquisition company trading strategies to grow liquidity and returns within operating businesses.  Much of the Company's public and private healthcare strategies and liquid alternative trading strategies portfolios are invested alongside the Company's investment management clients. The Company'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's private investments. Asset Co's private investments include the Company's investment in Italian wireless broadband provider Linkem, private equity funds Formation8 and Eclipse and legacy real estate investments.

As of December 31, 2022, the Company's invested capital amounted to a net value of $911.2 million (supporting a long market value of $1,048.1 million), representing approximately 86% 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

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stockholders' equity as of December 31, 2022. The total net values presented in the table below do not tie to Cowen's consolidated statement of financial condition as of December 31, 2022 because they represent only some of the line items in the accompanying consolidated statement of financial condition.

Strategy			Net Value						% of Stockholders' Equity
			(dollars in millions)
Op Co
Broker-dealer capital and related trading			$	713.2					67.0%
Public and Private Healthcare			32.1						3.0%
Liquid Alternative Trading			66.2						6.2%
Other			17.0						1.6%
Asset Co
Private Investments			82.7						7.8%
Total			911.2						85.6%
Cowen Inc. Stockholders' Equity			$	1,064.2

The allocations shown in the table above will change over time.

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.

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Year Ended December 31, 2022 Compared with Year Ended December 31, 2021

			Consolidated Statements of Operations
			Year Ended December 31,												Period to Period
			2022						2021						$ Change						% Change
			(dollars in thousands)
Revenues
Investment banking			$	494,842					$	1,067,162					$	(572,320)					(54)		%
Brokerage			592,292						585,162						7,130						1		%
Investment income (loss)
Securities principal transactions, net			112,829						122,110						(9,281)						(8)		%
Portfolio fund principal transactions, net			(4,442)						338						(4,780)						(1,414)		%
Carried interest allocations			(31,555)						5,059						(36,614)						(724)		%
Total investment income (loss)			76,832						127,507						(50,675)						(40)		%
Management fees			66,670						72,287						(5,617)						(8)		%
Incentive income			646						2,732						(2,086)						(76)		%
Interest and dividends			312,134						219,292						92,842						42		%
Insurance and reinsurance premiums			36,522						39,631						(3,109)						(8)		%
Other revenues, net			7,010						5,211						1,799						35		%
Consolidated Funds revenues			(49,225)						(6,185)						(43,040)						(696)		%
Total revenues			1,537,723						2,112,799						(575,076)						(27)		%
Interest and dividends expense			259,126						211,387						47,739						23		%
Total net revenues			1,278,597						1,901,412						(622,815)						(33)		%
Expenses
Employee compensation and benefits			771,386						1,046,371						(274,985)						(26)		%
Insurance and reinsurance claims, commissions and amortization of deferred acquisition costs			(12,260)						33,938						(46,198)						(136)		%
Operating, general, administrative and other expenses			424,470						430,250						(5,780)						(1)		%
Depreciation and amortization expense			27,725						19,004						8,721						46		%
Consolidated Funds expenses			248						630						(382)						(61)		%
Total expenses			1,211,569						1,530,193						(318,624)						(21)		%
Other income (loss)
Net gains (losses) on other investments			9,613						35,494						(25,881)						(73)		%
Bargain purchase gain, net of tax			—						3,855						(3,855)						NM
Gain/(loss) on debt extinguishment			—						(4,538)						4,538						NM
Total other income (loss)			9,613						34,811						(25,198)						(72)		%
Income (loss) before income taxes			76,641						406,030						(329,389)						(81)		%
Income tax expense (benefit)			10,786						102,039						(91,253)						(89)		%
Net income (loss)			65,855						303,991						(238,136)						(78)		%
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds			(10,603)						8,380						(18,983)						(227)		%
Net income (loss) attributable to Cowen Inc.			76,458						295,611						(219,153)						(74)		%
Preferred stock dividends			6,792						6,792						—						—		%
Net income (loss) attributable to Cowen Inc. common stockholders			$	69,666					$	288,819					$	(219,153)					(76)		%

Revenues

Investment Banking

Investment banking revenues decreased $572.4 million to $494.8 million for the year ended December 31, 2022 compared with $1,067.2 million in the prior year period. During the year ended December 31, 2022, the Company completed 48 underwriting transactions and 138 strategic advisory transactions, including 23 debt capital markets transactions. During the year ended December 31, 2021, the Company completed 190 underwriting transactions, 159 strategic advisory transactions and 20 debt capital markets transactions.

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Brokerage

Brokerage revenues increased $7.1 million to $592.3 million for the year ended December 31, 2022 compared with $585.2 million in the prior year period. This was attributable to increases in Options, Non-USD, and Prime Services commission offset by decreases in Special Situations commissions. Customer trading volumes across the industry (according to Bloomberg) increased 5% for the year ended December 31, 2022 compared to the prior year.

Investment Income (loss)

Securities principal transactions, net

Securities principal transactions, net decreased $9.3 million to $112.8 million for the year ended December 31, 2022 compared with $122.1 million in the prior year period. The decrease in securities principal transactions, net was primarily attributable to the decrease in event strategy market making activity and unrealized losses of our Linkem investment driven by lower projected future cash flows and a decline in market value of comparables offset partially by a mark-to-market gain on an interest rate swap used to offset interest on floating-rate debt and an increase in the value of our investments in our digital business.

Portfolio fund principal transactions, net

Portfolio fund investment income (loss) decreased $4.7 million to a loss of $4.4 million for the year ended December 31, 2022 compared with $0.3 million in the prior year period. The decrease is primarily related to losses in merchant banking, private investments as well as our activist investments.

Carried interest allocations

Carried interest allocations decreased $36.7 million to a loss of $31.6 million for the year ended December 31, 2022 compared with an income of $5.1 million in the prior year period. The primary driver of the decrease was a decrease in allocations from our sustainable funds partially as well as a decrease in allocations from our healthcare funds.

Management Fees

Management fees decreased $5.6 million to $66.7 million for the year ended December 31, 2022 compared with $72.3 million in the prior year period. This decrease in management fees was primarily related to management fees earned from new investors entering the Cowen Sustainable funds in the first quarter of 2021 when, during the quarter, the fund had multiple capital raises as well as a decrease in fees from the Cowen Healthcare investments funds.

Incentive Income

Incentive income decreased $2.1 million to $0.6 million for the year ended December 31, 2022 compared with $2.7 million in the prior year period. This decrease was related to lower income earned in our Ramius Merger Fund LLC. Due to revenue recognition accounting standards the Company recognizes the majority of incentive income allocated to the Company as carried interest allocations, included in investment income (loss).

Interest and Dividends

Interest and dividends increased $92.8 million to $312.1 million for the year ended December 31, 2022 compared with $219.3 million in the prior year period. The increase in interest and dividends is primarily attributable to dividends receivable from event strategy market making activity and securities finance activity. The increase in the securities finance activity is due to higher customer demand which has created more matched book opportunities for international securities.

Insurance and Reinsurance Premiums

Insurance and reinsurance premiums decreased $3.1 million to $36.5 million for the year ended December 31, 2022 compared with $39.6 million in the prior year period. This decrease is driven by a decrease in premiums (net of reinsurance) in Cowen Re. and run-off premium adjustments from Kelvin Re Limited offset by an increase in net premiums from Cowen Insurance Company.

Other Revenues, net

Other revenues increased $1.8 million to $7.0 million for the year ended December 31, 2022 compared with $5.2 million in the prior year period. This primarily related to foreign currency exchange rate fluctuations from our Non-US Dollar transactions.

Consolidated Funds Revenues

Consolidated Funds revenues decreased $43.0 million to a loss of $49.2 million for the year ended December 31, 2022 compared with a loss of $6.2 million in the prior year period. The decrease is due to the losses related the Enterprise LP fund primarily driven by unrealized losses of our Linkem investment driven by lower projected future cash flows and a decline in market value of comparables. The amounts shown under Consolidated Funds reflect the consolidated total performance for such

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investment funds, and the portion of those gains or losses that are attributable to other investors is allocated to non-controlling interests.

Interest and Dividends Expense

Interest and dividends expense increased $47.7 million to $259.1 million for the year ended December 31, 2022 compared with $211.4 million in the prior year period. Interest and dividends amounts are primarily attributable to securities finance activities. There was an increase in the securities finance activity due to higher customer demand which has created more matched book opportunities for international securities.

Expenses

Employee Compensation and Benefits

Employee compensation and benefits expenses decreased $275.0 million to $771.4 million for the year ended December 31, 2022 compared with $1,046.4 million in the prior year period. The decrease is primarily due to $575.1 million lower total revenues as well as a decrease of $25.2 million in net gains (losses) on other investments during 2022 as compared to 2021 and thus resulting in a lower compensation and benefits accrual. The compensation to revenue ratio, including net gains (losses) on other investments was 49.9% for the year ended December 31, 2022, compared with 48.7% in the prior year period.

Insurance and Reinsurance Claims and Commissions

Insurance and reinsurance-related expenses decreased $46.2 million to a benefit of $12.3 million for the year ended December 31, 2022 compared with $33.9 million the prior year period. The decrease was caused, in the main, by a reduction in the overall claims provision realized by Kelvin Re Limited.

Operating, General, Administrative and Other Expenses

Operating, general, administrative and other expenses decreased $5.8 million to $424.5 million for the year ended December 31, 2022 compared with $430.3 million in the prior year period. The decrease is primarily related to the fair market value adjustments to the contingent consideration liabilities for previous acquisitions as well as a decrease in underwriting fees.

Depreciation and Amortization Expenses

Depreciation and amortization expenses increased $8.7 million to $27.7 million for the year ended December 31, 2022 compared with $19.0 million in the prior year period. The increase is primarily related to two acquisitions which closed during 2021.

Consolidated Funds Expenses

Consolidated Funds expenses decreased $0.4 million to $0.2 million for the year ended December 31, 2022 compared with $0.6 million in the prior year period. During the first quarter of 2022, the Company deconsolidated Cowen Private Investments LP as the fund was liquidated. During the first quarter of 2021, the Company deconsolidated Cowen Sustainable Investments I, LP due to the Company's ownership being diluted through a capital equalization event. The amounts 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 non-controlling interests.

Other Income (Loss)

Other income (loss) decreased $25.2 million to $9.6 million for the year ended December 31, 2022 compared with $34.8 million in the prior year period. The decrease in other income (loss), which primarily represents our equity method investments, was primarily attributable to a decrease in performance in our activist investments and also the bargain purchase gain on an acquisition from the first quarter of 2021, offset partially by a loss on debt extinguishment.

Income Taxes

Income tax expense decreased $91.2 million to $10.8 million for the year ended December 31, 2022 compared with $102.0 million in the prior year period. This change is primarily attributable to the utilization of tax credits and the change in the Company’s income before income taxes in 2022 compared to 2021.

Net Income (Loss) Attributable to Non-controlling Interests

Net income (loss) attributable to non-controlling interests decreased $19.0 million to a loss of $10.6 million for the year ended December 31, 2022 compared with income of $8.4 million in the prior year period. The decrease is due to the losses related the Enterprise LP fund primarily driven by unrealized losses of our Linkem investment driven by lower projected future cash flows and a decline in market value of comparables. These losses are offset only partially by gains related to higher valuation in the Company's digital investment. 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. The Company accrued $6.8 million preferred stock dividends for the periods ended December 31, 2022, 2021 and 2020, respectively.

Year Ended December 31, 2021 Compared with the Year Ended December 31, 2020

			Consolidated Statements of Operations
			Year Ended December 31,												Period to Period
			2021						2020						$ Change						% Change
			(dollars in thousands)
Revenues
Investment banking			$	1,067,162					$	769,486					$	297,676					39		%
Brokerage			585,162						524,361						60,801						12		%
Investment income (loss)
Securities principal transactions, net			122,110						124,667						(2,557)						(2)		%
Portfolio fund principal transactions, net			338						20,434						(20,096)						(98)		%
Carried interest allocations			5,059						59,250						(54,191)						(91)		%
Investment income (loss)			127,507						204,351						(76,844)						(38)		%
Management fees			72,287						47,515						24,772						52		%
Incentive income			2,732						592						2,140						361		%
Interest and dividends			219,292						187,459						31,833						17		%
Reinsurance premiums			39,631						30,147						9,484						31		%
Other revenues, net			5,211						10,503						(5,292)						(50)		%
Consolidated Funds revenues			(6,185)						(18,488)						12,303						(67)		%
Total revenues			2,112,799						1,755,926						356,873						20		%
Interest and dividends expense			211,387						187,725						23,662						13		%
Total net revenues			1,901,412						1,568,201						333,211						21		%
Expenses
Employee compensation and benefits			1,046,371						860,531						185,840						22		%
Reinsurance claims, commissions and amortization of deferred acquisition costs			33,938						33,905						33						—		%
Operating, general, administrative and other expenses			430,250						369,840						60,410						16		%
Depreciation and amortization expense			19,004						22,677						(3,673)						(16)		%
Consolidated Funds expenses			630						5,409						(4,779)						(88)		%
Total expenses			1,530,193						1,292,362						237,831						18		%
Other income (loss)
Net gains (losses) on other investments			35,494						18,879						16,615						88		%
Bargain purchase gain, net of tax			3,855						—						3,855						NM
Gain/(loss) on debt extinguishment			(4,538)						2,719						(7,257)						NM
Total other income (loss)			34,811						21,598						13,213						61		%
Income (loss) before income taxes			406,030						297,437						108,593						37		%
Income tax expense (benefit)			102,039						90,373						11,666						13		%
Net income (loss)			303,991						207,064						96,927						47		%
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds			8,380						(9,299)						17,679						(190)		%
Net income (loss) attributable to Cowen Inc.			295,611						216,363						79,248						37		%
Preferred stock dividends			6,792						6,792						—						—		%
Net income (loss) attributable to Cowen Inc. common stockholders			$	288,819					$	209,571					$	79,248					38		%

Revenues

Investment Banking

Investment banking revenues increased $297.7 million to $1,067.2 million for the year ended December 31, 2021 compared with $769.5 million in the prior year period. During the year ended December 31, 2021, the Company completed 190 underwriting transactions, 159 strategic advisory transactions and 20 debt capital markets transactions. During the year ended

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December 31, 2020, the Company completed 165 underwriting transactions, 74 strategic advisory transactions and 12 debt capital markets transactions.

Brokerage

Brokerage revenues increased $60.8 million to $585.2 million for the year ended December 31, 2021 compared with $524.4 million in the prior year period. This was attributable to an increase in Institutional Brokerage, primarily Cash, Special Situations, and Non-Dollar commission revenue. Customer trading volumes across the industry (according to Bloomberg) increased 4% for the year ended December 31, 2021 compared to the prior year period.

Investment Income (loss)

Securities principal transactions, net

Securities principal transactions, net decreased $2.6 million to $122.1 million for the year ended December 31, 2021 compared with $124.7 million in the prior year period. The decrease in securities principal transactions, net was primarily attributable to a decrease in our merchant banking investments as prior period included a positive mark to market of our Nikola investment offset partially by an increase in our swaps business as the Company added both additional clients and increased activity with existing clients.

Portfolio fund principal transactions, net

Portfolio fund investment income (loss) decreased $20.1 million to $0.3 million for the year ended December 31, 2021 compared with $20.4 million in the prior year period. The decrease is primarily related to public positions in our healthcare fund investments.

Carried interest allocations

Carried interest allocations decreased $54.2 million to $5.1 million for the year ended December 31, 2021 compared with $59.3 million in the prior year period. The primary driver of the decrease was a decrease in allocations from our healthcare funds offset only partially from an increase in allocations from our sustainable funds.

Management Fees

Management fees increased $24.8 million to $72.3 million for the year ended December 31, 2021 compared with $47.5 million in the prior year period. This increase is primarily related to our healthcare and sustainable investments businesses.

Incentive Income

Incentive income increased $2.1 million to $2.7 million for the year ended December 31, 2021. This increase was related to income earned in our Merger Fund. Due to revenue recognition standards, effective January 1, 2018, the Company recognizes the majority of incentive income allocated to the Company as carried interest allocations, included in investment income (loss).

Interest and Dividends

Interest and dividends increased $31.8 million to $219.3 million for the year ended December 31, 2021 compared with $187.5 million in the prior year period. Interest and dividends amounts are primarily attributable to securities finance activity. The increase in the securities finance activity is due to higher customer demand which has created more matched book opportunities for international securities.

Insurance and Reinsurance Premiums

Insurance and reinsurance premiums increased $9.5 million to $39.6 million for the year ended December 31, 2021 compared with $30.1 million in the prior year period. This increase is driven by $8.8 million of premiums from the insurance entity acquired in the first quarter of 2021 and a small increase from our reinsurance entity.

Other Revenues, net

Other revenues decreased $5.3 million to $5.2 million for the year ended December 31, 2021 compared with $10.5 million in the prior year period. This primarily related to foreign currency exchange rate fluctuations from our Non-US Dollar transactions.

Consolidated Funds Revenues

Consolidated Funds revenues increased $12.3 million to a loss of $6.2 million for the year ended December 31, 2021 compared with a loss of $18.5 million in the prior year period. The increase is due to the losses in the prior period related to the UCITS fund as the merger strategy experienced significant challenges in Q1 2020. The UCITS fund was deconsolidated during the second quarter of 2020. Losses remaining during the year ended 2021 are primarily related to the Enterprise LP fund primarily driven by foreign revaluation of our Linkem investment. We have offset this revaluation risk outside the fund with

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foreign forwards. The amounts 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 non-controlling interests.

Interest and Dividends Expense

Interest and dividends expense increased $23.7 million to $211.4 million for the year ended December 31, 2021 compared with $187.7 million in the prior year period. Interest and dividends amounts are primarily attributable to securities finance activities. There was an increase in the securities finance activity due to higher customer demand which has created more matched book opportunities for international securities.

Expenses

Employee Compensation and Benefits

Employee compensation and benefits expenses increased $185.9 million to $1,046.4 million for the year ended December 31, 2021 compared with $860.5 million in the prior year period. The increase is primarily due to $356.9 million higher total revenues as well as an increase of $13.2 million in other income (loss) during 2021 as compared to 2020 and thus resulting in a higher compensation and benefits accrual. The compensation to revenue ratio, including other income (loss), was 49% for the year ended December 31, 2021, compared with 48% in the prior year period.

Insurance and Reinsurance Claims and Commissions

Insurance and reinsurance-related expenses remained fairly flat at $33.9 million for the year ended December 31, 2021 compared with the prior year period. An increase of $6.5 million of such expenses from an acquired insurance company was offset by a corresponding decrease in reinsurance-related expenses.

Operating, General, Administrative and Other Expenses

Operating, general, administrative and other expenses increased $60.5 million to $430.3 million for the year ended December 31, 2021 compared with $369.8 million in the prior year period. The increase is primarily related to higher brokerage and trade execution costs due to higher brokerage and investment banking revenues as well as an increase in professional, advisory and other fees.

Depreciation and Amortization Expenses

Depreciation and amortization expenses decreased $3.7 million to $19.0 million for the year ended December 31, 2021 compared with $22.7 million in the prior year period. The decrease is primarily related to certain intangible assets being fully amortized in the first quarter of 2021.

Consolidated Funds Expenses

Consolidated Funds expenses decreased $4.8 million to $0.6 million for the year ended December 31, 2021 compared with $5.4 million in the prior year period. The decrease is due to the deconsolidation of one fund during 2021 and two in 2020. The amounts 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 non-controlling interests.

Other Income (Loss)

Other income (loss) increased $13.2 million to $34.8 million for the year ended December 31, 2021 compared with $21.6 million in the prior year period. The increase in other income (loss), which primarily represents our equity method investments, was primarily attributable to an impairment of $11.3 million occurring in 2020 as well as an increase in performance in our activist investments and also the bargain purchase gain on an acquisition from the first quarter of 2021, offset partially by a loss on debt extinguishment.

Income Taxes

Income tax expense increased $11.6 million to $102.0 million for the year ended December 31, 2021 compared with $90.4 million in the prior year period. This change is primarily attributable to the increase in the Company’s income before income taxes in 2021 compared to 2020.

Net Income (Loss) Attributable to Non-controlling Interests

Net income (loss) attributable to non-controlling interests increased $17.7 million to $8.4 million for the year ended December 31, 2021 compared with a loss of $9.3 million in the prior year period. The increase was primarily the result losses in the first half of 2020 related to weaker performance in the UCITS fund, which was deconsolidated during the second quarter of 2020 as well as increased income allocated to the merchant SPVs. 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 Series A 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.

Segment Analysis, Economic Income (Loss) and related components

Economic Income (Loss) and related components

The Company presents supplemental financial measures that are not prepared in accordance with US GAAP. These Non-GAAP financial measures include (i) Pre-tax Economic Income (Loss) (ii) Economic Income (Loss), (iii) Economic Operating Income (Loss), (iv) Economic Proceeds and related components, (v) Net Economic Proceeds and related components, (vi) Economic Expenses and related components and (vii) related per share measures. The Company believes that these Non-GAAP financial measures, viewed in addition to, and not in lieu of, the Company’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 help better inform their analysis of the Company’s performance.

These Non-GAAP financial measures are an integral part of the Company’s internal reporting to measure the performance of its business segments, allocate capital and other strategic decisions as well as assess the overall effectiveness of senior management. The Company believes that presenting these Non-GAAP measures may provide expanded transparency into the Company’s business operations, growth opportunities and expense allocation decisions.

The Company’s primary Non-GAAP financial measures of profit or loss are Pre-tax Economic Income (Loss), Economic Income (Loss) and Economic Operating Income (Loss). Pre-tax Economic Income (Loss) is a pre-tax measure which (i) includes management reclassifications which the Company believes provide 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, as well as (v) certain costs associated with debt. Economic Income (Loss) is a similar measure, but after tax, which includes the Company’s income tax expense or benefit calculated on Pre-tax Economic Income (Loss) once all currently available net operating losses have been utilized (this occurred during tax year 2020) and is presented after preferred stock dividends. Economic Operating Income (Loss) is a similar measure to Economic Income (Loss), but before depreciation and amortization expenses. The Company believes that these Non-GAAP financial measures provide analysts and investors transparency into the measures of profit and loss management uses to evaluate the financial performance of and make operating decisions for the segments including determining appropriate compensation levels. Additionally, the measures provide investors and analysts with additional insight into the activities of the Company’s core businesses, taking into account, among other things, the impact of minority investment stakes, securities borrowing and lending activities and expenses from investment banking activities on US GAAP reported results. The Company presents Pre-tax Economic Income (Loss) in addition to Economic Income (Loss) and Economic Operating Income (Loss) to provide insight to investors and analysts on how the Company manages its tax position over time.

In addition to Pre-tax Economic Income (Loss), Economic Income (Loss) and Economic Operating Income (Loss), the Company also presents Economic Proceeds, Net Economic Proceeds, Economic Expenses, as well as their related components. These measures include management reclassifications and the elimination of the impact of the consolidation for Consolidated funds as described above. These adjustments are meant to provide comparability to our peers as well as to provide investors and analysts with transparency into how the Company manages its operating businesses and how analysts and investors review and analyze the Company’s and its peers’ similar lines of businesses. For example, among others, within the Company’s Op Co business segment, investors and analysts typically review and analyze the performance of investment banking revenues net of underwriting expenses and excluding the impact of reimbursable expenses. Additionally, the performance of the Company’s Markets business is typically analyzed as a unit incorporating commissions, interest from securities financing transactions and gains and losses from proprietary and facilitation trading. The Company’s investment management business performance is analyzed and reviewed by investors and analysts through investment income, incentive income and management fees. The presentation of Economic Proceeds, Net Economic Proceeds, Economic Expenses as well as their related components align with these and other examples of how the Company’s business activities and performance are reviewed by analysts and investors in addition to providing simplification related to legacy businesses and investments for which the Company maintains long-term monetization strategies. Additionally, the Company manages its operating businesses to an Economic Compensation-to-Proceeds ratio. Presentation of Economic Compensation Expense and Economic Proceeds provides transparency in addition to the Company’s US GAAP Compensation Expense.

Reconciliations to comparable US GAAP measures are presented along with the Company’s Non-GAAP financial measures. The Non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other public companies and are not identical to corresponding measures used in our various agreements or public filings.

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These Non-GAAP measures should not be considered in isolation or as a substitute for revenue, expenses, income (loss) before income taxes, 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 these Non-GAAP measures described below, these Non-GAAP measures have limitations in that they do not take into account certain items included or excluded under US GAAP, including its consolidated funds.

For a reconciliation of US GAAP net income (loss) to Pre-tax Economic Income (Loss), Economic Income (Loss) and Economic Operating Income (Loss) for the periods presented and additional information regarding the reconciling adjustments discussed above, see the following section "Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures".

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) are derived from activities in the following business segments. The Op Co and Asset Co segments do not conduct inter-segment transactions.

The Op Co segment generates revenue through several principal sources: investment banking revenue, brokerage revenue, management fees, incentive income, and investment income earned from the Company's own capital.

The Asset Co segment generates revenue through management fees, incentive income and investment income from the Company’s own capital.

Year Ended December 31, 2022 Compared with Year Ended December 31, 2021

Total Economic Operating Income (Loss) was $80.5 million for the year ended December 31, 2022, a decrease of $245.9 million compared to Economic Operating Income (Loss) of $326.4 million in the prior year period. Total Economic Income (Loss) was $60.0 million for the year ended December 31, 2022 compared to Economic Income (Loss) of $312.2 million in the prior year period. Total Pre-tax Economic Income (Loss) was $90.3 million for the year ended December 31, 2022, a decrease of $337.9 million compared to Pre-tax Economic Income (Loss) of $428.2 million in the prior year period.

Economic Proceeds included in total Economic Income (Loss) were $1,312.8 million for the year ended December 31, 2022, a decrease of $577.8 million compared to $1,890.6 million in the prior year period. This was primarily related to a decrease in investment banking and incentive fees.

Operating Company Segment

Economic Proceeds

			Year Ended December 31,												Total Period-to-Period
			2022						2021						$ Change						% Change
			(dollars in thousands)
Economic Proceeds
Investment banking			$	478,184					$	1,025,688					$	(547,504)					(53)		%
Brokerage			719,208						728,525						(9,317)						(1)		%
Management fees			82,681						79,255						3,426						4		%
Incentive income (loss)			(12,678)						34,579						(47,257)						(137)		%
Investment income (loss)			21,226						8,542						12,684						148		%
Other income (loss) economic proceeds			57,299						7,942						49,357						621		%
Total: Economic Proceeds			1,345,920						1,884,531						(538,611)						(29)		%
Economic Interest Expense / (Income)			5,233						23,914						(18,681)						(78)		%
Net Economic Proceeds			$	1,340,687					$	1,860,617					$	(519,930)					(28)		%

Economic Proceeds The Op Co segment economic proceeds included in Economic Income (Loss) were $1,345.9 million for the year ended December 31, 2022, a decrease of $538.6 million compared to $1,884.5 million in the prior year period.

Investment Banking Economic Proceeds decreased $547.5 million to $478.2 million for the year ended December 31, 2022 compared with $1,025.7 million in the prior year period. During the year ended December 31, 2022, the Company completed 48 underwriting transactions and 138 strategic advisory transactions, including 23 debt capital markets transactions. During the year ended December 31, 2021, the Company completed 190 underwriting transactions, 159 strategic advisory transactions and 20 debt capital markets transactions.

Brokerage Economic Proceeds decreased $9.3 million to $719.2 million for the year ended December 31, 2022, compared with $728.5 million in the prior year period. This was attributable to a decrease in Institutional Brokerage, primarily related to a decrease in Special Situations and Cross Asset Trading revenues offset by increases in Options, Non-US Dollar, and ADR revenues. Institutional Services revenues increased, primarily Prime Services and Securities

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Finance. Customer trading volumes across the industry (according to Bloomberg) increased 5% for the year ended December 31, 2022 compared to the prior year.

Management Fees Economic Proceeds for the segment increased $3.4 million to $82.7 million for the year ended December 31, 2022 compared with $79.3 million in the prior year period. This increase in management fees was primarily related to an increase management fees from the Cowen Healthcare investments funds and activist funds offset partially by a decrease in fees when, in the first quarter of 2021, new investors were entering the Cowen Sustainable funds through multiple capital raises.

Incentive Income (Loss) Economic Proceeds for the segment decreased $47.3 million to a loss of $12.7 million for the year ended December 31, 2022 compared with $34.6 million in the prior year period. This decrease was primarily related to a decrease in performance fees from our Cowen Sustainable funds partially offset by an increase in performance fees from our Cowen Healthcare investment funds.

Investment Income (Loss) Economic Proceeds for the segment increased $12.7 million to $21.2 million for the year ended December 31, 2022 compared with $8.5 million in the prior year period. The increase primarily relates to gains from our digital investments and portfolio hedges offset partially by decreases in the performance of investments across most of our strategies including activist, merchant banking, healthcare and merger.

Other Income (Loss) Economic Proceeds for the segment increased $49.4 million to $57.3 million for the year ended December 31, 2022 compared with income of $7.9 million in the prior year period. The increase is primarily driven by an improved insurance result and foreign currency exchange rate gains from our Non-US Dollar transactions.

Economic Interest Expenses / (Income) were $5.2 million for the year ended December 31, 2022, a decrease of expenses of $18.7 million compared with $23.9 million in the prior year period. The 2022 interest expense / (income) includes a gain from a mark-to-market adjustment on an interest rate swap used to offset interest on floating-rate debt.

Net Economic Proceeds were $1,340.7 million for the year ended December 31, 2022, a decrease of $519.9 million compared with $1,860.6 million in the prior year period.

Economic Expenses

			Year Ended December 31,												Total Period-to-Period
			2022						2021						$ Change						% Change
Economic Expenses			(dollars in thousands)
Employee compensation and benefits			$	772,202					$	1,046,730					$	(274,528)					(26)		%
Non-Compensation Expense			412,192						359,577						52,615						15		%
Depreciation & Amortization			27,702						18,982						8,720						46		%
Non-Controlling Interest			2,314						5,314						(3,000)						(56)		%
Total: Economic Expenses			$	1,214,410					$	1,430,603					$	(216,193)					(15)		%

Economic Expenses were $1,214.4 million for the year ended December 31, 2022, a decrease of $216.2 million compared with $1,430.6 million in the prior year period.

Economic Compensation Expenses were $772.2 million compared to $1,046.7 million in the prior year period. The decrease was due to lower revenues. The economic compensation-to-proceeds ratio increased to 57.4% compared to 55.5% in the prior year period.

Economic Non-compensation Expenses Fixed non-compensation expense increased $11.7 million to $171.8 million for the year ended December 31, 2022 compared with $160.1 million in the prior year period. The increase primarily related to an increase in professional and advisory fees and communication costs. Variable non-compensation expenses which primarily are comprised of expenses that are incurred as a direct result of the processing and soliciting of revenue generating activities, increased $40.9 million to $240.4 million for the year ended December 31, 2022 compared with $199.5 million in the prior year period. The increase is related to increased client services and business development costs, floor brokerage costs and an increase in costs from our insurance and reinsurance businesses.

Economic Depreciation and Amortization Expenses increased to $27.7 million for the year ended December 31, 2022 compared with $19.0 million in the prior year period. The increase is primarily related to two acquisitions which closed during 2021.

Economic Non-controlling interests decreased by $3.0 million to $2.3 million for the year ended December 31, 2022 compared with $5.3 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.

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Economic Income and Economic Operating Income

			Year Ended December 31,												Total Period-to-Period
			2022						2021						$ Change						% Change
			(dollars in thousands)
Pre-tax Economic Income (Loss)			$	126,277					$	430,014					$	(303,737)					(71)		%
Economic income tax expense			32,832						109,654						(76,822)						(70)		%
Preferred stock dividends			5,943						5,841						102						2		%
Economic Income (Loss)			87,502						314,519						(227,017)						(72)		%
Add back: Depreciation and amortization expense, net of taxes			20,500						14,142						6,358						45		%
Economic Operating Income (Loss)			$	108,002					$	328,661					$	(220,659)					(67)		%

Preferred Stock Dividends. On May 19, 2015, the Company completed its offering of 120,750 shares of Series A 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

			Year Ended December 31,												Total Period-to-Period
			2022						2021						$ Change						% Change
Economic Proceeds			(dollars in thousands)
Management fees			$	850					$	1,200					$	(350)					(29)		%
Incentive income (loss)			(13,143)						(1,153)						(11,990)						1,040		%
Investment income (loss)			(20,837)						6,014						(26,851)						(446)		%
Other income (loss) economic proceeds			7						(2)						9						(450)		%
Total: Economic Proceeds			(33,123)						6,059						(39,182)						(647)		%
Economic Interest Expense / (Income)			283						3,779						(3,496)						(93)		%
Net Economic Proceeds			$	(33,406)					$	2,280					$	(35,686)					(1,565)		%

Economic Proceeds The Asset Co segment proceeds included in Economic Income (Loss) were a loss of $33.1 million for the year ended December 31, 2022, a decrease of $39.2 million compared with an income of $6.1 million in the prior year period.

Management Fees Economic Proceeds for the segment remained fairly flat for the year ended December 31, 2022 compared with the prior year period.

Incentive Income (Loss) Economic Proceeds for the segment increased the loss by $12.0 million to a loss of $13.1 million for the year ended December 31, 2022 compared with a loss of $1.2 million in the prior year period. This incentive income loss increase was related to a decrease in performance fees from the Company's multi-strategy business.

Investment Income (Loss) Economic Proceeds for the segment decreased $26.8 million to a loss of $20.8 million for the year ended December 31, 2022, compared with income of $6.0 million in the prior year period. The decrease primarily relates to unrealized losses of our Linkem investment driven by lower projected future cash flows and a decline in market value of comparables.

Economic Interest Expenses / (Income) were $0.3 million for the year ended December 31, 2022, a decrease to expenses of $3.5 million compared with an income of $3.8 million in the prior year period. The 2022 interest expense included an allocation of a gain from a mark-to-market adjustment on an interest rate swap used to offset interest on floating-rate debt.

Net Economic Proceeds for the segment were a loss of $33.4 million for the year ended December 31, 2022, compared with income of $2.3 million in the prior year period.

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Economic Expenses

			Year Ended December 31,												Total Period-to-Period
			2022						2021						$ Change						% Change
			(dollars in thousands)
Economic Expenses
Employee compensation and benefits			$	2,330					$	3,871					$	(1,541)					(40)		%
Non-Compensation Expense			232						187						45						24		%
Depreciation & Amortization			23						22						1						5		%
Total: Economic Expenses			$	2,585					$	4,080					$	(1,495)					(37)		%

Economic Expenses were $2.6 million for the year ended December 31, 2022, a decrease of $1.5 million compared to $4.1 million in the prior year period.

Economic Compensation Expenses were $2.3 million for the year ended December 31, 2022, a decrease of $1.6 million compared to $3.9 million in the prior year period. The decrease was due to lower total economic proceeds related to investment income (loss).

Economic Non-compensation Expenses Fixed non-compensation expense remained consistent for the year ended December 31, 2022 compared with the prior year period. Variable non-compensation expenses, which remained consistent for the year ended December 31, 2022 compared with the prior year period, are comprised of expenses that are incurred as a direct result of the processing and soliciting of revenue generating activities.

Economic Depreciation and Amortization Expenses remained consistent for the year ended December 31, 2022 compared to the prior year period and relates to costs allocated from general company assets.

Economic Income and Economic Operating Income

			Year Ended December 31,												Total Period-to-Period
			2022						2021						$ Change						% Change
			(dollars in thousands)
Pre-tax Economic Income (Loss)			$	(35,991)					$	(1,800)					$	(34,191)					1,900		%
Economic income tax expense			(9,358)						(460)						(8,898)						1,934		%
Preferred stock dividends			849						951						(102)						(11)		%
Economic Income (Loss)			(27,482)						(2,291)						(25,191)						1,100		%
Add back: Depreciation and amortization expense, net of taxes			17						16						1						6		%
Economic Operating Income (Loss)			$	(27,465)					$	(2,275)					$	(25,190)					1,107		%

Preferred Stock Dividends. On May 19, 2015, the Company completed its offering of 120,750 shares of Series A 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.

Year Ended December 31, 2021 Compared with Year Ended December 31, 2020

Total Economic Operating Income (Loss) was $326.4 million for the year ended December 31, 2021, a decrease of $9.5 million compared to Economic Operating Income (Loss) of $335.9 million in the prior year period. Total Economic Income (Loss) was $312.2 million for the year ended December 31, 2021 compared to Economic Income (Loss) of $313.2 million in the prior year period. Total Pre-tax Economic Income (Loss) was $428.2 million for the year ended December 31, 2021, an increase of $108.2 million compared to Pre-tax Economic Income (Loss) of $320.0 million in the prior year period.

Economic Proceeds included in total Economic Income (Loss) were $1,890.6 million for the year ended December 31, 2021, an increase of $334.3 million compared to $1,556.3 million in the prior year period. This was primarily related to an increase in investment banking, brokerage revenues and management fees only partially offset by a decrease in investment income (loss) and incentive income.

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Operating Company Segment

Economic Proceeds

			Year Ended December 31,												Total Period-to-Period
			2021						2020						$ Change						% Change
			(dollars in thousands)
Economic Proceeds
Investment banking			$	1,025,688					$	729,180					$	296,508					41		%
Brokerage			728,525						652,647						75,878						12		%
Management fees			79,255						58,154						21,101						36		%
Incentive income (loss)			34,579						83,435						(48,856)						(59)		%
Investment income (loss)			8,542						37,786						(29,244)						(77)		%
Other income (loss) economic proceeds			7,942						775						7,167						925		%
Total: Economic Proceeds			1,884,531						1,561,977						322,554						21		%
Economic Interest Expense / (Income)			23,914						24,519						(605)						(2)		%
Net Economic Proceeds			$	1,860,617					$	1,537,458					$	323,159					21		%

Economic Proceeds The Op Co segment economic proceeds included in Economic Income (Loss) were $1,884.5 million for the year ended December 31, 2021, an increase of $322.5 million compared to $1,562.0 million in the prior year period.

Investment Banking Economic Proceeds increased $296.5 million to $1,025.7 million for the year ended December 31, 2021 compared with $729.2 million in the prior year period. During the year ended December 31, 2021, the Company completed 190 underwriting transactions, 159 strategic advisory transactions and 20 debt capital markets transactions. During the year ended December 31, 2020, the Company completed 165 underwriting transactions, 74 strategic advisory transactions and 12 debt capital markets transactions.

Brokerage Economic Proceeds increased $75.9 million to $728.5 million for the year ended December 31, 2021, compared with $652.6 million in the prior year period. This was attributable to an increase in Institutional Brokerage, primarily Cash, Special Situations, and Non-US Dollar commission revenue. Customer trading volumes across the industry (according to Bloomberg) increased 4% for the year ended December 31, 2021 compared to the prior year period.

Management Fees Economic Proceeds for the segment increased $21.1 million to $79.3 million for the year ended December 31, 2021 compared with $58.2 million in the prior year period. This increase in management fees was primarily related to an increase in management fees from the Cowen Healthcare investments and Cowen Sustainable funds.

Incentive Income (Loss) Economic Proceeds for the segment decreased $48.8 million to $34.6 million for the year ended December 31, 2021 compared with income of $83.4 million in the prior year period. This decrease was primarily related to a decrease in performance fees from our healthcare investments funds.

Investment Income (Loss) Economic Proceeds for the segment decreased $29.3 million to $8.5 million for the year ended December 31, 2021 compared with $37.8 million in the prior year period. The decrease primarily relates to a decrease in performance investments across most of our strategies including healthcare, merchant banking and portfolio hedge.

Other Income (Loss) Economic Proceeds for the segment increased $7.1 million to $7.9 million for the year ended December 31, 2021 compared with income of $0.8 million in the prior year period. The increase comes from a higher insurance result due to the acquisition of an insurance business in the first quarter of the year.

Economic Interest Expenses were $23.9 million for the year ended December 31, 2021, a decrease of $0.6 million compared with $24.5 million in the prior year period.

Net Economic Proceeds were $1,860.6 million for the year ended December 31, 2021, an increase of $323.1 million compared with $1,537.5 million in the prior year period.

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Economic Expenses

			Year Ended December 31,												Total Period-to-Period
			2021						2020						$ Change						% Change
			(dollars in thousands)
Economic Expenses
Employee compensation and benefits			$	1,046,730					$	860,753					$	185,977					22		%
Non-Compensation Expense			359,577						312,173						47,404						15		%
Depreciation & Amortization			18,982						22,655						(3,673)						(16)		%
Non-Controlling Interest			5,314						6,892						(1,578)						(23)		%
Total: Economic Expenses			$	1,430,603					$	1,202,473					$	228,130					19		%

Economic Expenses were $1,430.6 million for the year ended December 31, 2021, an increase of $228.1 million compared with $1,202.5 million in the prior year period.

Economic Compensation Expenses were $1,046.7 million compared to $860.8 million in the prior year period. The increase was due to higher revenues. The economic compensation-to-proceeds ratio increased to 55.5% compared to 55% in the prior year period.

Economic Non-compensation Expenses Fixed non-compensation expense increased $18.4 million to $160.1 million for the year ended December 31, 2021 compared with $141.7 million in the prior year period. The increase primarily related to an increase in professional and advisory fees and communication costs. Variable non-compensation expenses which primarily are comprised of expenses that are incurred as a direct result of the processing and soliciting of revenue generating activities, increased $29.0 million to $199.5 million for the year ended December 31, 2021 compared with $170.5 million in the prior year period. The increase is related to increased brokerage and trade execution costs and increased variable professional and advisory fees, which includes employment agency fees and legal fees directly related to revenues.

Economic Depreciation and Amortization Expenses decreased to $19.0 million for the year ended December 31, 2021 compared with $22.7 million in the prior year period. The decrease is primarily related to certain intangible assets being fully amortized in the first quarter of 2021.

Economic Non-controlling interests decreased by $1.6 million to $5.3 million for the year ended December 31, 2021 compared with $6.9 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.

Economic Income and Economic Operating Income

			Year Ended December 31,												Total Period-to-Period
			2021						2020						$ Change						% Change
			(dollars in thousands)
Pre-tax Economic Income (Loss)			$	430,014					$	334,985					$	95,029					28		%
Economic income tax expense *			109,654						—						109,654						NM
Preferred stock dividends			5,841						5,604						237						4		%
Economic Income (Loss)			$	314,519					$	329,381					$	(14,862)					(5)		%
Add back: Depreciation and amortization expense			14,142						22,655						(8,513)						(38)		%
Economic Operating Income (Loss)			$	328,661					$	352,036					$	(23,375)					(7)		%

* Economic Income (Loss) is presented net of associated taxes starting in the first quarter of 2021. The Company has utilized all available federal net operating losses not subject to limitation during 2020

Preferred Stock Dividends. On May 19, 2015, the Company completed its offering of 120,750 shares of Series A 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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Asset Co Segment

Economic Proceeds

			Year Ended December 31,												Total Period-to-Period
			2021						2020						$ Change						% Change
Economic Proceeds			(dollars in thousands)
Management fees			$	1,200					$	946					$	254					27		%
Incentive income (loss)			(1,153)						1,927						(3,080)						(160)		%
Investment income (loss)			6,014						(8,564)						14,578						170		%
Other income (loss) economic proceeds			(2)						5						(7)						(140)		%
Total: Economic Proceeds			6,059						(5,686)						11,745						(207)		%
Economic Interest Expense / (Income)			3,779						5,123						(1,344)						(26)		%
Net Economic Proceeds			$	2,280					$	(10,809)					$	13,089					(121)		%

Economic Proceeds The Asset Co segment proceeds included in Economic Income (Loss) were $6.1 million for the year ended December 31, 2021, an increase of $11.8 million compared with negative proceeds (due to losses) of $5.7 million in the prior year period.

Management Fees Economic Proceeds for the segment increased $0.3 million to $1.2 million for the year ended December 31, 2021 compared with $0.9 million in the prior year period. This increase was related to an increase in management fees from the Company's multi-strategy business.

Incentive Income (Loss) Economic Proceeds for the segment decreased $3.1 million to a loss of $1.2 million for the year ended December 31, 2021 compared with income of $1.9 million in the prior year period. This decrease was related to a decrease in performance fees from the Company's multi-strategy business.

Investment Income (Loss) Economic Proceeds for the segment increased $14.6 million to $6.0 million for the year ended December 31, 2021, compared with a loss of $8.6 million in the prior year period. The increase primarily relates to an impairment of an equity method investment during 2020 and increased performance of our multi-strategy funds in 2021.

Economic Interest Expenses were $3.8 million for the year ended December 31, 2021, a decrease of $1.3 million compared with $5.1 million in the prior year period.

Net Economic Proceeds for the segment were proceeds of $2.3 million for the year ended December 31, 2021, an increase of $13.1 million compared with negative proceeds (due to losses) of $10.8 million in the prior year period.

Economic Expenses

			Year Ended December 31,												Total Period-to-Period
			2021						2020						$ Change						% Change
			(dollars in thousands)
Economic Expenses
Employee compensation and benefits			$	3,871					$	3,767					$	104					3		%
Non-Compensation Expenses			187						350						(163)						(47)		%
Depreciation & Amortization			22						22						—						—		%
Total: Economic Expenses			$	4,080					$	4,139					$	(59)					(1)		%

Economic Expenses remained fairly flat at $4.1 million for the year ended December 31, 2021 compared to the prior year period.

Economic Compensation Expenses were $3.9 million for the year ended December 31, 2021, an increase of $0.1 million compared to $3.8 million in the prior year period. The increase was due to higher revenues related to investment income (loss).

Economic Non-compensation Expenses Fixed non-compensation expense decreased $0.2 million for the year ended December 31, 2021 compared with the prior year period. The decrease is primarily related to decreased professional, advisory and other fees. Variable non-compensation expenses, which remained consistent for the year ended December 31, 2021 compared with the prior year period, are comprised of expenses that are incurred as a direct result of the processing and soliciting of revenue generating activities.

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Economic Depreciation and Amortization Expenses remained consistent for the year ended December 31, 2021 compared to the prior year period and relates to costs allocated from general company assets.

Economic Income and Economic Operating Income

			(unaudited)
			Year Ended December 31,												Total Period-to-Period
			2021						2020						$ Change						% Change
			(dollars in thousands)
Pre-tax Economic Income (Loss)			$	(1,800)					$	(14,948)					13,148						(88)		%
Economic income tax expense *			(460)						—						(460)						NM
Preferred stock dividends			951						1,188						(237)						(20)		%
Economic Income (Loss)			$	(2,291)					$	(16,136)					$	13,845					(86)		%
Add back: Depreciation and amortization expense			16						22						(6)						(27)		%
Economic Operating Income (Loss)			$	(2,275)					$	(16,114)					$	13,839					(86)		%

* Economic Income (Loss) is presented net of associated taxes starting in the first quarter of 2021. The Company has utilized all available federal net operating losses not subject to limitation during 2020

Preferred Stock Dividends. On May 19, 2015, the Company completed its offering of 120,750 shares of Series A 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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Reconciliation of US GAAP to Non-GAAP Measures for the year ended December 31, 2022, 2021 and 2020

The following tables reconciles total US GAAP Revenues to total Economic Proceeds for the year ended December 31, 2022, 2021 and 2020:

						(unaudited)
						Year Ended December 31, 2022
(Dollar amounts in thousands)						Investment Banking						Brokerage						Investment Income						Management Fees						Incentive Income						Interest and Dividends												Reinsurance Premiums						Other Revenues, net						Consolidated Funds Revenues						Other Income (Loss)						Total
Total US GAAP Revenues and Other Income (Loss)						$	494,842					$	592,292					$	76,832					$	66,670					$	646					$	312,134											$	36,522					$	7,010					$	(49,225)					$	9,613					$	1,547,336
Management Presentation Reclassifications:
Underwriting expenses			a			(4,914)						—						—						—						—						—												—						—						—						—						(4,914)
Reimbursable client expenses			b			(11,744)						—						—						—						—						—												—						(1,101)						—						—						(12,845)
Securities financing interest expense			c			—						(10,363)						—						—						—						(103,924)												—						—						—						—						(114,287)
Fund start-up costs, distribution and other fees			d			—						—						—						(1,513)						—						—												—						(2,445)						—						—						(3,958)
Certain equity method investments			e			—						—						—						18,208						7,135						—												—						—						—						(16,040)						9,303
Carried interest			f			—						—						31,555						—						(28,781)						—												—						—						—						—						2,774
Proprietary trading, interest and dividends			g			—						(55,407)						(67,956)						—						(4,821)						(98,139)												—						5,060						—						92,981						(128,282)
Insurance related activities expenses			h			—						—						—						—						—						—												(36,522)						48,782						—						—						12,260
Facilitation trading gains and losses			i			—						192,686						(7,547)						—						—						(110,071)												—						—						—						(86,554)						(11,486)
Total Management Presentation Reclassifications:						(16,658)						126,916						(43,948)						16,695						(26,467)						(312,134)												(36,522)						50,296						—						(9,613)						(251,435)
Fund Consolidated Reclassifications			l			—						—						(32,495)						166						—						—												—						—						49,225						—						16,896
Total Economic Proceeds						$	478,184					$	719,208					$	389					$	83,531					$	(25,821)					$	—											$	—					$	57,306					$	—					$	—					$	1,312,797

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						(unaudited)
						Year Ended December 31, 2021
(Dollar amounts in thousands)						Investment Banking						Brokerage						Investment Income						Management Fees						Incentive Income									Interest and Dividends												Reinsurance Premiums						Other Revenues, net						Consolidated Funds Revenues						Other Income (Loss)						Total
Total US GAAP Revenues and Other Income (Loss)						$	1,067,162					$	585,162					$	127,507					$	72,287					$	2,732								$	219,292											$	39,631					$	5,211					$	(6,185)					$	34,811					$	2,147,610
Management Presentation Reclassifications:
Underwriting expenses			a			(24,978)						—						—						—						—									—												—						—						—						—						(24,978)
Reimbursable client expenses			b			(16,496)						—						—						—						—									—												—						(1,206)						—						—						(17,702)
Securities financing interest expense			c			—						8,006						—						—						—									(153,928)												—						—						—						—						(145,922)
Fund start-up costs, distribution and other fees			d			—						(361)						—						(9,190)						—									—												—						(2,633)						—						—						(12,184)
Certain equity method investments			e			—						—						—						15,142						25,802									—												—						—						—						(32,261)						8,683
Carried interest			f			—						—						(5,059)						—						5,486									—												—						—						—						—						427
Proprietary trading, interest and dividends			g			—						44,241						(92,900)						—						(494)									(19,233)												—						875						—						46,918						(20,593)
Insurance related activities expenses			h			—						—						—						—						—									—												(39,631)						5,693						—						—						(33,938)
Facilitation trading gains and losses			i			—						91,477						(11,034)						—						—									(46,131)												—						—						—						(50,151)						(15,839)
Total Management Presentation Reclassifications:						(41,474)						143,363						(108,993)						5,952						30,794									(219,292)												(39,631)						2,729						—						(35,494)						(262,046)
Fund Consolidated Reclassifications			l			—						—						(3,958)						2,216						(100)									—												—						—						6,185						—						4,343
Income Statement Adjustments:
Bargain purchase gain			n			—						—						—						—						—									—												—						—						—						(3,855)						(3,855)
Debt extinguishment loss			p			—						—						—						—						—									—												—						—						—						4,538						4,538
Total Income Statement Adjustments:						—						—						—						—						—									—												—						—						—						683						683
Total Economic Proceeds						$	1,025,688					$	728,525					$	14,556					$	80,455					$	33,426								$	—											$	—					$	7,940					$	—					$	—					$	1,890,590

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						(unaudited)
						Year Ended December 31, 2020
(Dollar amounts in thousands)						Investment Banking						Brokerage						Management Fees						Incentive Income						Investment Income						Interest and Dividends																		Reinsurance Premiums						Other Revenues, net						Consolidated Funds Revenues						Other Income Gain/Loss						Total
Total US GAAP Revenues and Other Income (Loss)						$	769,486					$	524,361					$	47,515					$	592					$	204,351					$	187,459																	$	30,147					$	10,503					$	(18,488)					$	21,598					$	1,777,524
Management Presentation Reclassifications:
Underwriting expenses			a			(22,565)						—						—						—						—						—																		—						—						—						—						(22,565)
Reimbursable client expenses			b			(17,741)						—						—						—						—						—																		—						(1,099)						—						—						(18,840)
Securities financing interest expense			c			—						14,499						—						—						—						(142,997)																		—						—						—						—						(128,498)
Fund start-up costs and distribution fees			d			—						(293)						(3,970)						—						—						—																		—						(2,529)						—						—						(6,792)
Certain equity method investments			e			—						—						12,540						24,121						—						—																		—						—						—						(28,347)						8,314
Carried interest			f			—						—						—						60,649						(61,367)						—																		—						—						—						—						(718)
Proprietary trading gains and losses			g			—						79,955						—						—						(102,381)						(17,443)																		—						(2,346)						—						9,468						(32,747)
Insurance related activities expenses			h			—						—						—						—						—						—																		(30,147)						(3,759)						—						—						(33,906)
Facilitation trading gains and losses			i			—						34,125						—						—						(13,342)						(27,019)																		—						—						—						—						(6,236)
Total Management Presentation Reclassifications:						(40,306)						128,286						8,570						84,770						(177,090)						(187,459)																		(30,147)						(9,733)						—						(18,879)						(241,988)
Fund Consolidated Reclassifications			l			—						—						3,015						—						1,961						—																		—						10						18,488						—						23,474
Income Statement Adjustments:
Debt extinguishment			p			—						—						—						—						—						—																		—						—						—						(2,719)						(2,719)
Total Income Statement Adjustments:						—						—						—						—						—						—																		—						—						—						(2,719)						(2,719)
Total Economic Proceeds						$	729,180					$	652,647					$	59,100					$	85,362					$	29,222					$	—																	$	—					$	780					$	—					$	—					$	1,556,291

The following table reconciles total US GAAP interest and dividends expense to total Economic Interest Expense for the year ended December 31, 2022, 2021 and 2020:

																		(unaudited)
												Year Ended December 31,
(Dollar amounts in thousands)																		2022						2021						2020
Total US GAAP Interest & Dividend Expense																		$	259,126					$	211,387					$	187,725
Management Presentation Reclassifications:
Securities financing interest expense			c															(114,287)						(145,922)						(128,498)
Fund start-up costs, distribution and other fees			d															(3,204)						(2,257)						—
Proprietary trading gains and losses			g															(124,324)						(12,515)						(18,850)
Facilitation trading gains and losses			i															(11,486)						(15,839)						(6,236)
Total Management Presentation Reclassifications:																		(253,301)						(176,533)						(153,584)
Income Statement Adjustments:
Accelerated debt costs			p															—						(5,557)						—
Amortization of discount/(premium) on debt			m															(309)						(1,604)						(4,499)
Total Income Statement Adjustments:																		(309)						(7,161)						(4,499)
Total Economic Interest Expense																		$	5,516					$	27,693					$	29,642

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The following tables reconcile total US GAAP Expenses and non-controlling interests to total Economic Expenses for the year ended December 31, 2022, 2021 and 2020:

						(unaudited)
						Year Ended December 31, 2022																								Year Ended December 31, 2021
(Dollar amounts in thousands)						Employee Compensation and Benefits						Non-compensation US GAAP Expenses						Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds						Total						Employee Compensation and Benefits						Non-compensation US GAAP Expenses												Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds						Total
Total US GAAP						$	771,386					$	440,183					$	(10,603)					$	1,200,966					$	1,046,371					$	483,822											$	8,380					$	1,538,573
Management Presentation Reclassifications:
Underwriting expenses			a			—						(4,914)						—						(4,914)						—						(24,978)												—						(24,978)
Reimbursable client expenses			b			—						(12,845)						—						(12,845)						—						(17,702)												—						(17,702)
Fund start-up costs, distribution and other fees			d			—						(754)						—						(754)						—						(9,927)												—						(9,927)
Certain equity method investments			e			—						9,303						—						9,303						—						8,683												—						8,683
Carried interest			f			—						2,774						—						2,774						—						427												—						427
Proprietary trading, interest and dividends			g			—						2,583						(6,541)						(3,958)						—						5,275												(13,353)						(8,078)
Insurance related activities expenses			h			—						12,260						—						12,260						—						(33,938)												—						(33,938)
Associated partner/banker compensation			j			4,509						(4,509)						—						—						5,621						(5,621)												—						—
Management company non-Controlling interest			k			(1,363)						(951)						2,314						—						(1,391)						(3,923)												5,314						—
Total Management Presentation Reclassifications:						3,146						2,947						(4,227)						1,866						4,230						(81,704)												(8,039)						(85,513)
Fund Consolidated Reclassifications			l			—						(248)						17,144						16,896						—						(630)												4,973						4,343
Income Statement Adjustments:
Acquisition related amounts			n			—						(16,293)						—						(16,293)						—						(6,593)												—						(6,593)
Contingent liability adjustments			n			—						13,560						—						13,560						—						(15,118)												—						(15,118)
Goodwill and/or other impairment			r			—						—						—						—						—						(1,009)												—						(1,009)
Total Income Statement Adjustments:						—						(2,733)						—						(2,733)						—						(22,720)												—						(22,720)
Total Economic Expenses						$	774,532					$	440,149					$	2,314					$	1,216,995					$	1,050,601					$	378,768											$	5,314					$	1,434,683

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																																				(unaudited)
												Year Ended December 31, 2020
(Dollar amounts in thousands)																																				Employee Compensation and Benefits						Non-compensation US GAAP Expenses												Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds						Total
Total US GAAP																																				$	860,531					$	431,831											$	(9,299)					$	1,283,063
Management Presentation Reclassifications:
Underwriting expenses			a																																	—						(22,565)												—						(22,565)
Reimbursable client expenses			b																																	—						(18,840)												—						(18,840)
Securities financing interest expense			c																																	—						—												—						—
Fund start-up costs and distribution fees			d																																	—						(6,792)												—						(6,792)
Certain equity method investments			e																																	—						8,314												—						8,314
Carried interest			f																																	—						(718)												—						(718)
Proprietary trading gains and losses			g																																	—						5,687												(19,584)						(13,897)
Insurance related activities expenses			h																																	—						(33,906)												—						(33,906)
Facilitation trading gains and losses			i																																	—						—												—						—
Associated partner/banker compensation			j																																	5,377						(5,377)												—						—
Management company non-Controlling interest			k																																	(1,388)						(5,504)												6,892						—
Total Management Presentation Reclassifications:																																				3,989						(79,701)												(12,692)						(88,404)
Fund Consolidated Reclassifications			l																																	—						(5,409)												28,883						23,474
Income Statement Adjustments:
Acquisition adjustments			n																																	—						(606)												—						(606)
Contingent liability adjustments			n																																	—						(8,492)												—						(8,492)
Goodwill and/or other impairment			r																																	—						(2,423)												—						(2,423)
Total Income Statement Adjustments:																																				—						(11,521)												—						(11,521)
Total Economic Expenses																																				$	864,520					$	335,200											$	6,892					$	1,206,612

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The following table reconciles US GAAP Net Income (loss) Attributable to Cowen Inc. Common Stockholders to Pre-tax Economic Income (Loss), Economic Income (loss), and Economic Operating Income (loss) for the year ended December 31, 2022, 2021 and 2020:

																														(unaudited)
																								Year Ended December 31,
(Dollar amounts in thousands)																														2022						2021						2020
US GAAP Net income (loss) attributable to Cowen Inc. common stockholders																														$	69,666					$	288,819					$	209,571
			Income Statement Adjustments:
			US GAAP Income tax expense (benefit)			o																								10,786						102,039						90,373
			Amortization of discount (premium) on debt			m																								309						1,604						4,499
			Goodwill and/or other impairment			r																								—						1,009						2,423
			Debt extinguishment gain (loss) and/or accelerated debt costs			p																								—						10,095						—
			Bargain purchase gain			n																								—						(3,855)						(2,719)
			Contingent liability adjustments			n																								(13,560)						15,118						8,492
			Acquisition related amounts			n																								16,293						6,593						606
			Preferred stock dividends			q																								6,792						6,792						6,792
			Pre-tax Economic Income (Loss)																											90,286						428,214						320,037
			Economic income tax expense																											(23,474)						(109,194)						—
			Preferred stock dividends																											(6,792)						(6,792)						(6,792)
			Economic Income (Loss)																											$	60,020					$	312,228					$	313,245
			Add back: Depreciation and amortization expense, net of taxes																											20,517						14,158						22,677
			Economic Operating Income (Loss)																											$	80,537					$	326,386					$	335,922

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Management Reclassifications
			Management reclassification adjustments and fund consolidation reclassification adjustments have no effect on Economic Operating Income (Loss). These adjustments are reclassifications to change the location of certain line items.
a			Underwriting expenses: Economic Proceeds presents investment banking revenues net of underwriting expenses.
b			Reimbursable client expenses: Economic Proceeds presents expenses reimbursed from clients and affiliates within their respective expense category but is included as a part of revenues under US GAAP.
c			Securities financing interest expense: Brokerage within Economic Proceeds included net securities borrowed and securities loaned activities which are shown gross in interest income and interest expense for US GAAP.
d			Fund start-up costs, distribution and other fees: Economic Proceeds and Economic Interest Expense are net of fund start-up costs and distribution fees paid to agents and other debt service costs.
e			Certain equity method investments: Economic Proceeds and Economic Expenses recognize the Company's proportionate share of management and incentive fees and associated share of expenses on a gross basis for equity method investments within the activist business, real estate operating entities and the healthcare royalty business. The Company applies the equity method of accounting to these entities and accordingly the results from these businesses are recorded within Other Income (Loss) for US GAAP.
f			Carried interest: The Company applies an equity ownership model to carried interest which is recorded in Investment income - Carried interest allocation for US GAAP. The Company presents carried interest as Incentive Income Economic Proceeds.
g			Proprietary trading, interest and dividends: Economic Proceeds presents interest and dividends from the Company's proprietary trading in investment income.
h			Insurance related activities expenses: Economic Proceeds presents underwriting income from the Company's insurance and reinsurance related activities, net of expenses, within other revenue. The costs are recorded within expenses for US GAAP reporting.
i			Facilitation trading gains and losses: Economic Brokerage Proceeds presents 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 while these are presented in Investment income - Securities principal transactions, net for US GAAP reporting.
j			Associated partner/banker compensation reclassification: Economic Compensation Expense presents certain payments to associated banking partners as compensation rather than non-compensation expenses.
k			Management company non-controlling interest: Economic Expenses non-controlling interest represents only operating entities that are not wholly owned by the Company. The Company also presents non-controlling interests within total expenses for Economic Income (Loss).
Fund Consolidation Reclassifications
l			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).
Income Statement Adjustments
m			Pre-tax Economic Income (Loss) excludes the amortization of discount (premium) on debt.
n			Pre-tax Economic Income (Loss) excludes acquisition related adjustments (including bargain purchase gain and contingent liability adjustments).
o			Pre-tax Economic Income (Loss) excludes US GAAP income taxes.
p			Pre-tax Economic Income (Loss) excludes gain/(loss) on debt extinguishment and accelerated debt costs.
q			Pre-tax Economic income (Loss) excludes preferred stock dividends.
r			Economic Income (Loss) excludes goodwill and other impairments.

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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 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 December 31, 2022, we had cash and cash equivalents of $1,139.7 million and net liquid investment assets of $1.5 billion, which includes cash and cash equivalents and short-term investments held by foreign subsidiaries as of December 31, 2022 of $258.8 million. The Company continues to permanently reinvest the capital and accumulated earnings of its subsidiaries in the United Kingdom, Malta, Germany, Switzerland, Israel, Canada, 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 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' trading activity and market volatility. At December 31, 2022, the Company had security deposits totaling $87.9 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.

The Company may 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.

Unfunded commitments

The following table summarizes unfunded commitments as of December 31, 2022:

Entity						Unfunded Commitments						Commitment term
						(dollars in thousands)
HealthCare Royalty Partners funds (a)						$	6,064					2.0 years
Eclipse Ventures Fund I, L.P.						$	28					2.0 years
Eclipse Fund II, L.P.						$	12					3.0 years
Eclipse Continuity Fund I, L.P.						$	10					4.0 years
Cowen Healthcare Investments III LP						$	1,552					4.0 years
Cowen Healthcare Investments IV LP						$	4,758					5.0 years
Cowen Sustainable Investments I LP						$	8,729					7.0 years

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

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 clearinghouse 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 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 paid a cash dividend in respect of the Series A Convertible Preferred Stock of $1.7 million and $6.8 million for the years ended December 31, 2022 and 2021.

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 dividend rights and rights upon the Company's involuntary liquidation, dissolution or winding down.

Upon issuance, each share of Series A Convertible Preferred Stock was 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 was able to elect to convert all outstanding shares of the Series A Convertible Preferred Stock into shares of the Company's Class A common stock, cash or a combination thereof, at the Company's election, in each case, based on the then-applicable conversion rate, if the last reported sale price of the Company'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.

On December 31, 2021, the Company irrevocably elected that, upon the conversion of any share of the outstanding Series A Convertible Preferred Stock, the Company will settle $1,000.00 of its conversion obligation in cash. With respect to each conversion, to the extent the conversion obligation per share of Series A Convertible Preferred Stock is greater than $1,000.00, the Company may satisfy its conversion obligation in respect of such excess using any settlement method permitted under the Certificate of Designations. As the holders can exercise the conversion option on their shares of Series A Convertible Preferred Stock at any time and require cash payment upon conversion, the Company reclassified the Series A Convertible Preferred Stock to temporary equity at December 31, 2021.

Regulation

Regulatory Capital

As registered broker-dealers with the United States Securities and Exchange Commission ("SEC"), Cowen and Company, ATM Execution and Westminster are subject to the Uniform Net Capital Rule 15c3-1, "SEA Rule 15c3-1," under the Securities Exchange Act ("SEA") of 1934, which requires the maintenance of minimum net capital. Each registered broker-dealer has elected to compute net capital under the alternative method permitted by that rule.

Under the alternative method, Cowen and Company's minimum net capital requirement, as defined in (a)(4) of SEA Rule 15c3-1, is equal to the greater of $1.5 million or 2% of aggregate debits arising from customer transactions. ATM Execution, and Westminster are required to maintain minimum net capital, as defined in (a)(1)(ii) of SEA 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 provisions of SEA Rule 15c3-1 and other regulatory bodies.

Cowen and Company is also subject to certain net capital rule requirements under the Regulation 1.17 of the Commodity Futures Trading Commission ("CFTC") under Commodities Exchange Act (“CEA”) as an introducing broker. Under Regulation 1.17, Cowen and Company is required to maintain net capital equal to or in excess of $45,000 or the amount of net capital required by SEA Rule 15c3-1, whichever is greater. Additionally, as an options clearing member of the Options Clearing Corporation ("OCC") under OCC Rule 302, Cowen and Company is required to maintain net capital equal to the greater of $2.0 million or 2% of aggregate debit items. At December 31, 2022, Cowen and Company had $478.3 million of net capital in excess of its minimum requirements under SEA Rule 15c3-1.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law on July 21, 2010. The Dodd-Frank Act contains provisions that require the registration of all swap dealers, major swap participants, security-based swap dealers, and/or major security-based swap participants. Cowen Financial Products, LLC ("Cowen Financial

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Products") registered only with the SEC with an effective date of November 1, 2021 as a securities-based swap dealer and is not using models to compute its net capital. Under the rules there is a minimum net capital requirement for, among others, an entity that acts as a dealer in security-based swaps, which is the greater of $20 million or 2% of risk margin amount. The risk margin amount means the sum of (i) the total initial margin required to be maintained by the SEC securities-based swaps dealer at each clearing agency with respect to securities-based swaps transactions cleared for securities-based swap customers and (ii) the total initial margin amount calculated by the SEC securities-based swaps dealer swaps dealer with respect to non-cleared securities-based swaps under SEC rules. At December 31, 2022, Cowen Financial Products had $44.7 million of net capital in excess of its minimum requirements under SEA Rule 18a-1.

Cowen International Ltd and Cowen Execution Ltd are subject to the capital requirements of the U.K. Financial Conduct Authority ("FCA"), as defined, and must exceed the minimum capital requirement set forth by the FCA. On 1 January 2022, the FCA adopted the Investment Firms Prudential Regime ("IFPR"). This is a new prudential regime which applies to MiFID investment firms authorized and regulated by the FCA in the UK. The IFPR refocuses prudential requirements and expectations away from the risks firms face, to also consider and look to manage the potential harm firms can pose to consumers and markets. Cowen International Ltd and Cowen Execution Ltd will both be designated as Class 2 firms under the new regime and will have a minimum capital requirement equal to the higher of; the Permanent minimum capital requirement, their respective Fixed Overhead requirement, and their Risk Responsive Computation ("K-factors").

Cowen 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") of Hong Kong. Financial Resources must exceed the Total Financial Resources requirement of the SFC.

As of December 31, 2022, the regulatory net capital, minimum net capital requirement and excess net capital of U.S. regulated broker dealers and swap dealer together with the equivalent of capital requirements and compliance information for foreign broker dealers registered with the FCA and the SFC are presented as follows:

Subsidiary						Net Capital (a)						Net Capital Requirement (b)						Excess Net Capital
						(dollars in thousands)
Cowen and Company						$	482,309					$	4,052					$	478,257
ATM Execution						$	5,775					$	250					$	5,525
Westminster						$	21,440					$	250					$	21,190
Cowen Financial Products						$	64,670					$	20,000					$	44,670
Cowen International Ltd (a)						$	48,554					$	13,592					$	34,962
Cowen Execution Ltd (a)						$	17,358					$	7,022					$	10,336
Cowen Asia (a)						$	2,710					$	384					$	2,326

(a)The equivalent of Net Capital under FCA rules is referred as “capital resources” and under SFC rules is referred as “net liquid capital.” The equivalent of Minimum Net Capital Requirement under FCA rules is referred as “minimum capital resources requirement" and under SFC rules is referred as “net liquid capital requirement."

Customer Protection

The Company's U.S. broker-dealers must also comply with the customer protection provisions under SEA Rule 15c3-3 which requires a computation of a reserve requirement for customer and maintenance of a deposit of cash or securities into a special reserve bank account for the exclusive benefit of customers; 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.

ATM Execution claims the (k)(2)(ii) exemption with regard to all of their customer accounts and transactions that are introduced on a fully-disclosed basis to their clearing agents for clearing, settlement and custody. Westminster claims the (k)(2)(i) exemption with regard 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"). Westminster also claims exemption for other business activities that are not covered under (k)(2)(i) contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 for receiving transaction-based compensation in return for providing commission management services.

In accordance with the requirements of SEA Rule 15c3-3, Cowen and Company may be required to deposit in a Special Reserve Account cash or acceptable qualified securities for the exclusive benefit of customers. As of December 31, 2022, Cowen and Company had segregated approximately $49.4 million of cash to satisfy the customer reserve provision of SEA Rule 15c3-3.

As a clearing and carrying broker-dealer, Cowen and Company is required to compute a reserve requirement for proprietary accounts of broker-dealers ("PAB"), as defined in SEA Rule 15c3-3. Cowen and Company performs a PAB reserve computation

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in order to determine the amount it is required to deposit in its PAB Reserve Bank Accounts pursuant to SEA Rule 15c3-3. This allows each correspondent firm that uses Cowen and Company as its clearing broker-dealer to classify its PAB account assets held at Cowen and Company as allowable assets in the correspondent's net capital calculation. At December 31, 2022, Cowen and Company had $40.4 million of cash on deposit in PAB Reserve Bank Accounts. Cowen and Company and ATM Execution 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 Financial Products, as a registered securities based swap dealer, claims Rule 18a-4(f) exemption under the Securities Exchange Act of 1934 (the “Act”) with regard to its swap counterparties on the basis that it has provided sufficient notice to its swap counterparties of their respective rights to require segregation of funds or other property used to secure uncleared security based swaps pursuant to section 3E(f)(1)(A)-(B) of the Act (15 U.S.C. 78c-5(f)(1)(A)). Any margin collateral received and held by the security-based swap dealer with respect to uncleared security-based swaps will not be subject to a segregation requirement. The notice outlines how a claim of those swap counterparties for the collateral would be treated in a bankruptcy or other formal liquidation proceeding of the security-based swap dealer.

Other Regulatory Requirements

Cowen Insurance Co and Cowen Re and Kelvin are individually required to maintain a solvency capital ratio as calculated by relevant European Commission directives and local regulatory rules in Malta, Luxembourg and Guernsey, respectively. Each company's individual solvency capital ratio calculated at the end of each regulatory determined period must exceed a minimum requirement. As of December 31, 2021, the last testing date for Cowen Re, the solvency capital ratio was in excess of the minimum regulatory requirement. As of September 30, 2022, the last testing date for Cowen Insurance Co and Kelvin, the solvency capital ratios were in excess of the minimum regulatory requirement.

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'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 December 31, 2022. RCG Insurance Company’s capital and surplus as of December 31, 2022 totaled $4.6 million.

Cash Flows Analysis

The Company's primary sources of cash are derived from its operating activities, realized returns on its own invested capital and borrowings on debt. The Company's primary uses of cash include compensation and general and administrative expenses.

Operating Activities.    Net cash provided by operating activities of $171.6 million for the year ended December 31, 2022 was primarily related to (i) an increase in proceeds from the sale of short investments offset by payments to cover short investments (ii) an increase from net income (iii) and an increase in stock loan partially offset by (iii) an increase in compensation payable and an increase in securities sold, not yet purchased, at fair value, held at broker-dealer. Net cash provided by operating activities of $306.6 million for the year ended December 31, 2021 was primarily related to (i) Company net income, (ii) a decrease in securities owned, at fair value, (iii) an increase in proceeds from sales of securities owned, at fair value, (iv) increase in payable to customers and (v) a decrease in stock loan. Net cash provided by operating activities of $513.2 million for the year ended December 31, 2020 was primarily related to (i) Company net income, (ii) proceeds from securities owned, at fair value, held at broker-dealers (iii) increase in payable to customers offset partially by the decrease in purchases of securities owned, at fair value, the decrease in securities borrowed, and the decrease in receivable from brokers, dealers and clearing organizations.

Investing Activities.    Net cash provided by investing activities of $175.2 million for the year ended December 31, 2022 was primarily related to purchase of assets through acquisition, net of cash acquired partially offset by a decrease in securities purchased under agreements to resell. Net cash used in investing activities of $75.5 million for the year ended December 31, 2021 was primarily related to (i) purchases of other investments only partially offset with the proceeds from sales of other investments and (ii) purchases of assets through acquisition, net of cash acquired. Net cash used in investing activities of $43.0 million for the year ended December 31, 2020 was primarily related to the purchases of other investments only partially offset by the proceeds from sales of other investments.

Financing Activities.    Net cash used in financing activities for the year ended December 31, 2022 of $55.4 million was primarily related to (i) purchase of treasury stock (net of re-issue) (ii) cash dividends paid (iii) a decrease in contingent liability as well as (iv) an increase in repayments on notes and other debt . Net cash used in financing activities for the year ended December 31, 2021 of $15.7 million was primarily related to (i) borrowings on notes and other debt partially offset by repayments on notes and other debt and (ii) purchase of treasury stock and (iii) repayments on convertible debt. Net cash provided by financing activities for the year ended December 31, 2020 of $25.6 million was primarily related to (i) capital contributions by non-controlling interests in Consolidated Funds offset only partially by capital withdrawals by non-controlling interests in Consolidated Funds and (ii) borrowings on notes and other debt offset only partially by repayments on notes and other debt.

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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% convertible senior notes due December 2022 (the “December 2022 Convertible Notes”). The December 2022 Convertible Notes have a final maturity date of 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 were issued with an initial conversion price of $17.375 per share of Cowen's Class A common stock. 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 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 consolidated statements of financial condition. 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.

During December 2020, the Company repurchased and extinguished $46.9 million of the outstanding principal amount of the December 2022 Convertible Notes for cash consideration of $70.5 million. In conjunction with the partial extinguishment of the December 2022 Convertible Notes, the Company accelerated the pro rata unamortized discount of $3.6 million and capitalized debt issuance costs of $0.4 million. The Company allocated $29.6 million of the cash consideration paid to the extinguishment of the equity component of the December 2022 Convertible Notes. The Company recognized $2.7 million of gain on debt extinguishment.

On March 24, 2021, the Company issued a redemption notice announcing that the Company would redeem all of the December 2022 Convertible Notes, and provided holders the option to elect to settle the as-converted value of the December 2022 Convertible Notes as allowed under the terms of the December 2022 Convertible Notes. As a result of the Company’s call for redemption of the December 2022 Convertible Notes, the December 2022 Convertible Notes were convertible, at the option of the holder at any time prior to June 22, 2021, the second business day prior to the December 2022 Convertible Notes' Redemption Date. On June 24, 2021 (the "Redemption Date"), the Company redeemed all of the outstanding principal amount of the December 2022 Convertible Notes. The redemption amount was determined based on the holders election to convert, which allowed for either 100.00% of the principal amount thereof plus accrued and unpaid interest on such principal amount up to June 15, 2021, to, but not including the Redemption Date of the December 2022 Convertible Notes, or the value of the Company's Class A common stock to be issued on conversion. The settlement method for the December 2022 Convertible Notes was $88.1 million in cash, (the outstanding principal amount of the December 2022 Convertible Notes) and 2,938,841 shares of the Company’s Class A common stock, (the remainder of the conversion obligation in excess of the principal amount). The conversion rate on the December 2022 Convertible Notes on the Redemption Date was 33.35 shares of the Company’s Class A common stock per $1,000.00 principal amount of December 2022 Convertible Notes converted. In conjunction with the redemption of the remaining December 2022 Convertible Notes, the Company accelerated the pro rata unamortized discount of $5.1 million and capitalized debt issuance costs of $0.5 million.

Amortization on the discount, included within interest and dividends expense in the accompanying consolidated statements of operations is $6.7 million and $4.6 million for the years ended December 31, 2021 and 2020, 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 was amortized over the life of the December 2022 Convertible Notes in interest and dividends expense in the accompanying consolidated statements of operations. The Company recorded interest expense of $1.2 million and $4.0 million for the years ended December 31, 2021 and 2020, respectively.

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 consolidated statement of financial condition. To date the May 2024 Notes have maintained their initial private rating. Interest on the May 2024 Notes is payable semi-annually in arrears on May 6

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and November 6. The Company recorded interest expense of $5.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company capitalized debt issuance costs of approximately $1.5 million in May 2019 and $0.6 million in September 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 in interest and dividends expense in the accompanying 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 2033 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 $7.7 million, $7.7 million and $7.7 million for the years ended December 31, 2022, 2021 and 2020, 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 in interest and dividends expense in the accompanying 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 2027 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 $10.1 million for the years ended December 31, 2021 and 2020, 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 in interest and dividends expense in the accompanying 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.

On March 24, 2021, the Company delivered payment of and discharged all $138.0 million outstanding aggregate principal of the December 2027 Notes plus accrued and unpaid interest through the effective redemption date of April 23, 2021. In conjunction with the extinguishment of the December 2027 Notes, the Company accelerated the pro-rata capitalized debt issuance costs. For the year ended December 31, 2021, the Company recognized $4.4 million of loss on debt extinguishment.

Term Loan

March 2028 Term Loan

On March 24, 2021, the Company borrowed $300 million of first lien term loan due March 24, 2028. On December 15, 2021, the Company borrowed an additional $150 million first lien term loan under the same terms and conditions as, and fungible with, the initial first lien term loan (collectively, the “March 2028 Term Loan”). The aggregate amount borrowed under the March 2028 Term Loan is $450 million. The March 2028 Term Loan bears interest at an annual rate equal to, at the option of the Company, either the (a) London Inter-bank Offered Rate ("LIBOR") (adjusted for reserves and subject to a floor of 0.75%) plus a margin of 3.25% or (b) an alternate base rate plus a margin of 2.25%. The Company is required to pay amortization of approximately 1.00% per annum of the original principal amount of the March 2028 Term Loan. Additionally, the Company has entered into an interest rate swap to offset the floating interest rate of the March 2028 Term Loan (See Note 6). The obligations of the Company for the March 2028 Term Loan are guaranteed by certain of the Company’s wholly-owned domestic subsidiaries (excluding its broker-dealer subsidiaries) (the “Guarantors”) and secured by substantially all of the assets of the Company and the Guarantors, subject in each case to certain customary exceptions. The terms of the March 2028 Term Loan contain customary affirmative and negative covenants, subject to certain customary exceptions, thresholds, qualifications and “baskets”. Proceeds from the March 2028 Term Loan were used to (i) satisfy and discharge and redeem the Company’s 2027 Senior Notes, (ii) redeem the Company’s December 2022 Convertible Notes that remained outstanding as of March 31, 2021 and pay the cash settlement amount in connection with the conversion of December 2022 Convertible Notes prior to that redemption date, and (iii) for the payment of fees, commissions, premiums, expenses and other transaction costs (including original issue discount or upfront fees) payable in connection with the transactions related thereto. As of December 31, 2022, the outstanding principal amount of the March 2028 Term Loan was $442.1 million.

Interest expense for the March 2028 Term Loan was $22.8 million and $9.7 million for the years ended December 31, 2022 and 2021, based on an effective interest rate of 4.46%. In March 2021, the Company capitalized debt issuance costs of approximately $6.6 million and initial unamortized discount of $1.5 million related to the March 2028 Term Loan which is a direct deduction from the carrying value of the debt and will be amortized over the life of the March 2028 Term loan in interest and dividends expense in the accompanying consolidated statements of operations. In December 2021, the Company capitalized debt issuance costs of approximately $2.7 million and unamortized discount of $1.5 million related to the additional borrowing of

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$150 million which is a direct deduction from the carrying value of the debt and will be amortized over the life of the March 2028 Term loan in interest and dividends expense in the accompanying consolidated statements of operations.

The U.K. Financial Conduct Authority, which regulates LIBOR, has announced that all US Dollar LIBOR settings will either cease to be provided by any administrator or no longer be representative as of June 30, 2023. As the March 2028 Term Loan represents the Company’s only significant exposure to LIBOR, the transition to an alternative Inter-bank Offer Rate is not expected to have a material impact on Company's consolidated financial statements.

Other Notes Payable

During January 2022, the Company borrowed $4.0 million to fund insurance premium payments. This note had an effective interest rate of 2.01% and was due in December 2022, with monthly payment requirements of $0.4 million. As of December 31, 2022, the note was fully repaid. Interest expense for the year ended December 31, 2022 was immaterial.

On September 30, 2020, the Company borrowed $72.0 million from Purple Protected Asset S-81 ("PPA S-81"), a Luxembourg entity unrelated to Cowen. The Company repaid $60.0 million of the PPA S-81 loan in June 2021. The loan is payable on September 30, 2023, had an initial interest rate of 1.4 times the Secured Overnight Financing Rate ("SOFR") plus 6.07% until December 31, 2020 and 1.4 times the SOFR plus 5.8% until June 30, 2021 and 3.65 times the SOFR plus 4.0% thereafter with quarterly interest payments. The loan obligation, as well as a loan issued by Cowen to The Military Mutual Ltd (a United Kingdom company unrelated to Cowen) with principal of $28.4 million that was sold by Cowen Re to PPA S-81 at fair value for no gain or loss on September 30, 2020, are fully cash collateralized through a reinsurance policy provided by Cowen Re which is reflected in cash collateral pledged in the consolidated statements of financial condition as of December 31, 2020 (see Notes 4 and 22). The Company capitalized debt issuance costs of approximately $1.7 million which is a direct deduction from the carrying value of the loan and will be amortized over the life of the loan in interest and dividends expense shown in the accompanying consolidated statements of operations. The Company recorded interest expense of $2.5 million, $3.0 million and $1.2 million for the years ended December 31, 2022, 2021 and 2020, respectively, related to its loan payable to PPA S-81.

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 December 31, 2022, the outstanding balance on this note was $1.1 million. Interest expense for the years ended December 31, 2022, 2021 and 2020 was $0.1 million, respectively.

Finance Lease Obligations

The Company has entered into various finance leases for computer equipment. These finance lease obligations are included in notes payable and other debt in the accompanying consolidated statements of financial condition.

For the years ended December 31, 2022, 2021 and 2020, quantitative information regarding the Company's finance lease obligations reflected in the accompanying consolidated statements of operations, the supplemental cash flow information and certain other information related to finance leases were as follows:

									Year Ended December 31,
															2022						2021						2020
															(dollars in thousands)
Lease cost
Finance lease cost:
Amortization of finance lease right-of-use assets															$	1,109					$	1,274					$	1,232
Interest on lease liabilities															58						116						171
Weighted average remaining lease term - operating leases (in years)															2.05						1.71						3.21
Weighted average discount rate - operating leases															5.39		%				4.70		%				4.88		%

Letters of Credit

As of December 31, 2022, the Company has the following 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 $119.5 million, as of December 31, 2022, and $44.1 million, as of December 31, 2021, which are expected to be released periodically as per the terms of the reinsurance policy.

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Location

Amount

Maturity

(dollars in thousands)

New York

$

2,309

December 2023

Boston

382

November 2023

San Francisco

455

November 2023

$

3,146

To the extent any letter of credit is drawn upon, interest will be assessed at the prime commercial lending rate. As of December 31, 2022 and 2021 there were no amounts due related to these letters of credit.

Contractual Obligations

The following tables summarize the Company's contractual cash obligations as of December 31, 2022:

			Total						< 1 Year						1-3 Years						3-5 Years						More Than 5 Years
			(dollars in thousands)
Equipment, Service and Facility Leases
Real Estate and Other Facility Rental			$	93,702					$	24,653					$	34,231					$	15,820					$	18,998
Service Payments			68,477						32,919						24,930						6,528						4,100
Operating Equipment Leases			1,795						523						994						278						—
Total			163,974						58,095						60,155						22,626						23,098
Debt
Notes Payable			267,858						13,405						96,328						15,500						142,625
Term Loan			612,021						37,700						74,471						73,020						426,830
Finance Lease Obligation			721						458						185						78						—
Other Notes Payable			14,046						13,503						543						—						—
Total			$	894,646					$	65,066					$	171,527					$	88,598					$	569,455

Minimum payments for all debt outstanding

Annual scheduled maturities of debt and minimum payments for all debt outstanding as of December 31, 2022, are as follows:

									Notes Payable												Term Loan												Other Notes Payable						Finance Lease Obligation
									(dollars in thousands)
2023									$	13,405											$	37,700											$	13,503					$	458
2024									88,578												37,451												543						104
2025									7,750												37,020												—						81
2026									7,750												36,680												—						50
2027									7,750												36,340												—						28
Thereafter									142,625												426,830												—						—
Subtotal									267,858												612,021												14,046						721
Less (a)									(93,334)												(179,756)												(1,347)						(48)
Total									$	174,524											$	432,265											$	12,699					$	673

(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.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements as of December 31, 2022. 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 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 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 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 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

The Company's 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's investment funds are not subject to these consolidation provisions with respect to their investments pursuant to their specialized accounting.

The Company's 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'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'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.

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

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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 determines 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.

The VIEs the Company has invested in act as investment managers and/or investment companies that may be managed by the Company. The VIEs are financed through their operations and/or loan agreements with the Company.

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 Company consolidates these investment funds when its variable interest is potentially significant to the entity (see Note 6 for additional disclosures on VIEs).

The Company consolidates investment funds for which it acts as the managing member/general partner and investment manager. At December 31, 2022, the Company consolidated Ramius Enterprise LP (“Enterprise LP”), an investment fund. At December 31, 2021, the Company consolidated the following investment funds: Enterprise LP and Cowen Private Investments LP ("Cowen Private").

During the first quarter of 2022, the Company deconsolidated Cowen Private as the fund was liquidated. During the first quarter of 2021, the Company deconsolidated Cowen Sustainable Investments I, LP ("CSI I LP") due to the Company's ownership being diluted through a capital equalization event.

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 consolidated statements of financial condition. The Company's share of earnings or losses from equity method investees is included in Net gains (losses) on other investments in the accompanying 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 its investment in such entity (primarily consisting of securities of such entity which are purchased and held principally for the purpose of selling them in the near term and classified as trading securities), at fair value with unrealized gains (losses) resulting from changes in fair value reflected within Investment income (loss) - Securities principal transactions, net or Investment income (loss) - portfolio fund investment income (loss) in the accompanying consolidated statements of operations.

Retention of Specialized Accounting— The Consolidated Funds and certain other consolidated companies are investment companies and apply specialized industry accounting. The Company reports its investments on the consolidated statements of financial condition at their estimated fair value, with unrealized gains (losses) resulting from changes in fair value reflected within Consolidated Funds - Principal transactions, net in the accompanying consolidated statements of operations. Accordingly, the accompanying consolidated financial statements reflect different accounting policies for investments depending on whether or not they are held through a consolidated investment company.

Certain portfolio fund investments qualify as equity method investments and are investment companies that apply specialized industry accounting. In applying equity method accounting guidance, the Company retains the specialized accounting of the investees and reports its investments on the consolidated statements of financial condition at their estimated fair value, with unrealized gains (losses) resulting from changes in fair value reflected within Investment Income - portfolio fund principal transactions, net in the accompanying consolidated statements of operations.

In addition, the Company's broker-dealer subsidiaries apply the specialized industry accounting for brokers and dealers in securities, which the Company retains 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

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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;

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. 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 investment is based on their proportional rights of the underlying portfolio company and are valued using market quotations when readily available. When market quotations are unavailable or deemed not representative, the level 3 investments are valued using a market approach, an income approach, or a combination of both approaches. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future cash flows to a single present value. In following these approaches, the significant inputs and assumptions include the timing and expected amount of cash flows, the appropriateness of discount rates used, the premium ascribed to a controlling financial interest, selected equity volatilities 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 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 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.

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.

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

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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, are classified as level 2 when their inputs can be corroborated by market data. OTC derivatives, such as swaps and options, with significant inputs that cannot be corroborated by readily available or observable market data are classified as level 3.

Other investments—Other investments consist primarily of portfolio funds, 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 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 practical expedient 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. 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.

iii. 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 consolidated statements of financial condition. The Company's share of earnings or losses from equity method investees is included in Net gains (losses) on other investments in the accompanying 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 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 requirements for testing for impairment of 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.

Intangible assets

Intangible assets with finite lives are amortized over their estimated average useful 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

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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 consolidated statements of operations if the sum of the estimated undiscounted cash flows from the use or disposition of 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.

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 consolidated statements of operations. See Note 27 in our accompanying consolidated financial statements for the quarter ended December 31, 2022 for further discussion.

Recently adopted and future adoption of accounting pronouncements

        For a detailed discussion, see Note 2aa "Recent pronouncements" in our accompanying consolidated financial statements for the year ended December 31, 2022.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

The Company's primary exposure to market risk is a function of our role as investment manager for our funds and managed accounts, our role as a financial intermediary in customer trading and market-making activities, as well as the fact that a significant portion of our own capital is invested in securities. Adverse movements in the prices of securities that are either owned or sold short may negatively impact the Company's management fees and incentive income, as well as the value of our own invested capital.

The market value of the assets and liabilities in our investment funds and managed accounts, as well as the Company's own securities, may fluctuate in response to changes in equity prices, interest rates, credit spreads, currency exchange rates, commodity prices, implied volatility, dividends, prepayments, recovery rates and the passage of time. The net effect of market value changes caused by fluctuations in these risk factors will result in gains (losses) for our investment funds and managed accounts which will impact our management fees and incentive income and for the Company's securities which will impact the value of our own invested capital as well as the capital utilized in facilitating customer trades. Some of the Company's investments are in private companies and other investments are in securities that are subject, from time to time, to contractual lock-up agreements or other resale restrictions. The private investments we have made generally have no established trading market or are generally subject to restrictions on resale. Our inability to liquidate these securities when it may be otherwise advantageous for us to do so could lead to volatility in the market value ascribed to these investments and securities which could adversely affect our investment income.

The Company's risk measurement and risk management processes are an integral part of our proprietary investment process as well as market making and customer facilitation trading activities. These processes are implemented at the individual position, strategy and total portfolio levels and are designed to provide a complete picture of the risks of the Company's balance sheet. The key elements of our risk reporting include sensitivities, exposures, stress testing and profit and loss attribution. As a result of our views of levels of risk being taken, the Company may undertake to hedge out some or all of any or all risks at either the individual position, strategy or total portfolio levels.

Impact on Management Fees

The Company's management fees are generally based on the net asset value of the Company's investment funds and managed accounts. Accordingly, management fees will change in proportion to changes in the market value of investments held by the Company's investment funds and managed accounts.

Impact on Incentive Income

The Company's incentive income is generally based on a percentage of the profits of the Company's various investment funds and managed accounts, which is impacted by global economies and market conditions as well as other factors. Consequently, incentive income cannot be readily predicted or estimated.

Custody and prime brokerage risks

There are risks involved in dealing with the custodians or prime brokers who settle trades. Under certain circumstances, including certain transactions where the Company's assets are pledged as collateral for leverage from a non-broker-dealer custodian or a non-broker-dealer affiliate of the prime broker, or where the Company's assets are held at a non-U.S. prime broker, the securities and other assets deposited with the custodian or broker may be exposed to credit risk with regard to such parties. In

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addition, there may be practical or timing problems associated with enforcing the Company's rights to its assets in the case of an insolvency of any such party.

Market risk

Market risk represents the risk of loss that may result from the change in value of a financial instrument due to fluctuations in its market price. Market risk may be exacerbated in times of trading illiquidity when market participants refrain from transacting in normal quantities and/or at normal bid-offer spreads. Our exposure to market risk is primarily related to the fluctuation in the fair values of securities owned and sold, but not yet purchased in the Company's investment funds and our role as a financial intermediary in customer trading and to our market making and investment activities. Market risk is inherent in financial instruments and risks arise in options, warrants and derivative contracts from changes in the fair values of their underlying financial instruments. Securities sold, but not yet purchased, represent obligations of the Company's investment funds to deliver specified securities at contracted prices and thereby create a liability to repurchase the securities at prevailing future market prices. We trade in equity securities as an active participant in both listed and over-the-counter markets. We typically maintain securities in inventory to facilitate our market making activities and customer order flow. We may use a variety of risk management techniques and hedging strategies in the ordinary course of our trading business to manage our exposures. In connection with our trading business, management also reviews reports appropriate to the risk profile of specific trading activities. Typically, market conditions are evaluated and transaction details and securities positions are reviewed. These activities are intended to ensure that our trading strategies are conducted within acceptable risk tolerance parameters, particularly when we commit our own capital to facilitate client trading. Activities include price verification procedures, position reconciliations and reviews of transaction booking. We believe these procedures, which stress timely communications between traders, trading management and senior management, are important elements of the risk management process.

A 10% change in the fair value of the investments held by the Company's investment funds as of December 31, 2022 would result in a change of approximately $1.1 billion in our assets under management and would impact management fees by approximately $4.4 million on an annual basis. This number is an estimate. The amount would be dependent on the fee structure of the particular investment fund or funds that experienced such a change.

Currency risk

The Company is also exposed to foreign currency fluctuations. Currency risk arises from the possibility that fluctuations in foreign currency exchange rates will affect the value of such financial instruments, including direct or indirect investments in securities of non-U.S. companies. A 10% weakening or strengthening of the U.S. dollar against all or any combination of currencies to which the Company's investments or the Company's investment funds have exposure to exchange rates would not have a material effect on the Company's revenues, net loss or Economic Income.

Inflation risk

Because our assets are, to a large extent, liquid in nature, they are not significantly affected by inflation. However, the rate of inflation affects such expenses as employee compensation and communications charges, which may not be readily recoverable in the prices of services we offer. To the extent inflation results in rising interest rates and has other adverse effects on the securities markets, it may adversely affect our financial condition and results of operations in certain businesses.

Leverage and interest rate risk

There is no guarantee that the Company's borrowing arrangements or other arrangements for obtaining leverage will continue to be available, or if available, will be available on terms and conditions acceptable to the Company. Unfavorable economic conditions also could increase funding costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Company. In addition, a decline in market value of the Company's assets may have particular adverse consequences in instances where we have borrowed money based on the market value of those assets. A decrease in market value of those assets may result in the lender (including derivative counterparties) requiring the Company to post additional collateral or otherwise sell assets at a time when it may not be in the Company's best interest to do so.

Credit risk

The Company clears all of its securities transactions through clearing brokers on a fully disclosed basis. Pursuant to the terms of the agreements between the Company and the clearing brokers, the clearing brokers have the right to charge the Company for losses that result from a counterparty's failure to fulfill its contractual obligations. As the right to charge the Company has no maximum amount and applies to all trades executed through the clearing brokers, we believe there is no maximum amount assignable to this right. Accordingly, at December 31, 2022, the Company had recorded no liability.

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Credit risk is the potential loss the Company may incur as a result of the failure of a counterparty or an issuer to make payments according to the terms of a contract. The Company's exposure to credit risk at any point in time is represented by the fair value of the amounts reported as assets at such time.

In the normal course of business, our activities may include trade execution for our clients as well as agreements to borrow or lend securities. These activities may expose us to risk arising from price volatility which can reduce clients' ability to meet their obligations. To the extent investors are unable to meet their commitments to us, we may be required to purchase or sell financial instruments at prevailing market prices to fulfill clients' obligations.

In accordance with industry practice, client trades are settled generally two business days after trade date. Should either the client or the counterparty fail to perform, we may be required to complete the transaction at prevailing market prices.

We manage credit risk by monitoring the credit exposure to and the standing of each counterparty, requiring additional collateral where appropriate, and using master netting agreements whenever possible.

Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. We outsource all or a portion of certain critical business functions, such as clearing. Accordingly, we negotiate our agreements with these firms with attention focused not only on the delivery of core services but also on the safeguards afforded by back-up systems and disaster recovery capabilities. We make specific inquiries on any relevant exceptions noted in a service provider's System and Organization Controls (SOC) report on the state of its internal controls, when available.

Our service offerings in electronic and algorithmic trading require us to maintain consistent levels of speed and accuracy in the management of orders generated by our models. We monitor these activities on a continuous basis and do not believe that they comprise a material risk.

Our Internal Audit department oversees, monitors, measures, analyzes and reports on operational risk across the Company. The scope of Internal Audit encompasses the examination and evaluation of the adequacy and effectiveness of the Company's system of internal controls and is sufficiently broad to help determine whether the Company's network of risk management, control and governance processes, as designed by management, is adequate and functioning as intended. Internal Audit works with the senior management to help ensure a transparent, consistent and comprehensive framework exists for managing operational risk within each area, across the Company and globally.

We are focused on maintaining our overall operational risk management framework and minimizing or mitigating these risks through a formalized control assessment process to ensure awareness and adherence to key policies and control procedures. Primary responsibility for management of operational risk is with the businesses and the business managers therein. The business managers, generally, maintain processes and controls designed to identify, assess, manage, mitigate and report operational risk. As new products and business activities are developed and processes are designed and modified, operational risks are considered.

Legal risk

Legal risk includes the risk of non-compliance with applicable legal and regulatory requirements and standards. Legal risk also includes contractual and commercial risk such as the risk that a counterparty's performance obligations will be unenforceable. The Company has established procedures based on legal and regulatory requirements that are designed to achieve compliance with applicable statutory and regulatory requirements. The Company, principally through the Legal and Compliance Division, also has established procedures that are designed to require that the Company's policies relating to conduct, ethics and business practices are followed. In connection with its businesses, the Company has and continuously develops various procedures addressing issues such as regulatory capital requirements, sales and trading practices, new products, potential conflicts of interest, use and safekeeping of customer funds and securities, money laundering, privacy, cybersecurity, and recordkeeping. In addition, the Company has established procedures to mitigate the risk that a counterparty's performance obligations will be unenforceable, including consideration of counterparty legal authority and capacity, adequacy of legal documentation, the permissibility of a transaction under applicable law and whether applicable bankruptcy or insolvency laws limit or alter contractual remedies. The legal and regulatory focus on the financial services industry presents a continuing business challenge for the Company.

Item 8.    Financial Statements and Supplementary Data

The financial statements and supplementary data required by this item are listed in Item 15—"Exhibits and Financial Statement Schedules" of this Annual Report on Form 10-K.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

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Item 9A.    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 December 31, 2022.

Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of December 31, 2022, 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'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 occurred during the Company's fiscal year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting for such period.

Item 9B. Other Information

None.

PART III

Item 10.    Directors, Executive Officers and Corporate Governance

DIRECTORS OF THE COMPANY

The number of directors currently serving on our Board of Directors is nine. The members of our Board of Directors are elected to serve a one-year term.

Set forth below is biographical information for each of the members of our Board of Directors. All ages are as of February 27, 2023.

Jeffrey M. Solomon. Age 56. Mr. Solomon is Chair and Chief Executive Officer of the Company and Chief Executive Officer of Cowen and Company, LLC, or Cowen and Company, and was appointed a director of the Company in December 2011. Previously, Mr. Solomon served as President of the Company, after serving in the roles of Chief Operating Officer and Head of Investment Banking. Mr. Solomon serves as a member of the Management Committee of Cowen. Mr. Solomon joined Cowen Investment Management (formerly Ramius) when it was founded in 1994 and was the co-portfolio manager responsible for the development, management and oversight of the multi-strategy investment portfolio. Currently, Mr. Solomon is Vice Chair and an inaugural member of the Securities and Exchange Commission’s Small Business Capital Formation Advisory Committee which provides advice and recommendations on the Securities and Exchange Commission’s rules, regulations and policy matters related to small businesses, including smaller public companies. Mr. Solomon serves on the Board of Directors of the American Securities Association and serves on the Executive Committee of the Partnership for NYC. Mr. Solomon is on the Board of Directors of the UJA-Federation of New York and is the Co-Chair of the King David Society. Mr. Solomon is also on the Board of Directors of the Foundation for Jewish Camp. Previously, Mr. Solomon was a member of the Committee on Capital Markets Regulation, an independent and nonpartisan 501(c)(3) research organization dedicated to improving the regulation of U.S. capital markets. Mr. Solomon graduated from the University of Pennsylvania in 1988 with a B.A. in Economics. Mr. Solomon provides the board with institutional knowledge of all aspects of the Company’s businesses and, as Chief Executive Officer, he is able to provide in-depth knowledge of the Company’s business and affairs, management’s perspective on those matters and an avenue of communication between the Board and senior management.

Brett H. Barth. Age 51. Mr. Barth was elected to our Board on June 26, 2018. Mr. Barth co-founded BBR Partners in 2000 and is a Co-CEO, co-managing the firm and overseeing all investment and client activity. He has extensive experience vetting investment opportunities across the asset class spectrum and through a range of market environments, working with both traditional and alternative investment managers. Mr. Barth is also a member of BBR’s Executive Committee and Investment Committee. Prior to founding BBR, Mr. Barth was in the Equities Division of Goldman Sachs. Previously, he served in Goldman’s Equity Capital Markets groups in New York and Hong Kong. He began his career in Goldman Sachs’ Corporate Finance Department. Mr. Barth is an independent director of Golden Arrow Acquisition Corp (“GAMC”) and serves on GAMC’s Audit Committee. Mr. Barth is a trustee of the University of Pennsylvania as well as a member of the Board of Overseers of the Graduate School of Education. He previously served as both the Chair of the Penn Fund, the University of Pennsylvania’s undergraduate annual giving program, and as the Inaugural Chair of the Undergraduate Financial Aid Leadership Council. He is a member of the board and executive committee of the UJA-Federation of New York, he co-chairs the Annual Campaign and he

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serves on the endowment’s Investment Committee. Mr. Barth was awarded the Alan C. Greenberg Young Leadership Award by UJA-Federation of New York, Wall Street & Financial Services Division. In addition, Mr. Barth is a member of the Investment Advisory Counsel for Waycrosse, Inc., a premier multi-generational, single-family office based in Minneapolis, MN. Mr. Barth graduated summa cum laude with concentrations in Finance and Accounting from the Wharton School of the University of Pennsylvania. Mr. Barth provides the Board with extensive investment and wealth management expertise.

Katherine E. Dietze. Age 65. Ms. Dietze was appointed to our Board in June 2011 upon the completion of Cowen’s acquisition of LaBranche & Co., Inc., or LaBranche. Ms. Dietze was a member of LaBranche’s board of directors since January 2007. Ms. Dietze served as the Audit Committee Chair at LaBranche. Ms. Dietze spent over 20 years in the financial services industry prior to her retirement in 2005. From 2003 to 2005, Ms. Dietze was Global Chief Operating Officer for the Investment Banking Division of Credit Suisse First Boston. From 1996 to 2003, she was a Managing Director in Credit Suisse First Boston’s Telecommunications Group. Prior to that, Ms. Dietze was a Managing Director and Co-Head of the Telecommunications Group in Salomon Brothers Inc’s Investment Banking Division. Ms. Dietze began her career at Merrill Lynch Money Markets after which she moved to Salomon Brothers Inc. to work on money market products and later became a member of the Investment Banking Division. Ms. Dietze is a director, a member of the Governance Committee and Chair of the Finance Committee of Matthews International Corporation (MATW), a designer, manufacturer and marketer of memorialization products and brand solutions. Ms. Dietze was a member of the Board of Trustees for Liberty Property Trust, which was purchased by Prologis. Ms. Dietze holds a B.A. from Brown University and an M.B.A. from Columbia Graduate School of Business. Ms. Dietze provides the Board with extensive experience in Investment Banking management and corporate governance expertise as a public company director.

Gregg A. Gonsalves. Age 55. Mr. Gonsalves was appointed to our Board in April 2020. Mr. Gonsalves has been an advisory partner with Integrated Capital LLC, a leading, hotel-focused, private real estate advisory and investment firm since 2013. Prior to joining Integrated Capital, Mr. Gonsalves was a managing director at Goldman Sachs and was the partner responsible for the Real Estate Mergers & Acquisition business. In his 20-year career at Goldman Sachs, Mr. Gonsalves completed over 50 M&A transactions worth approximately $100 billion in deal value, working with a variety of companies in a wide range of industries. Mr. Gonsalves also serves on the public Boards of timberland REIT Rayonier Inc., and real estate REIT RREEF Property Trust, Inc., and recently served as Chairman of the Board of Cedar Realty Trust, a grocery anchored, publicly traded REIT, until its sale in 2022; he also serves on the private Boards of real estate REIT RREEF America REIT II, and POP Tracker LLC, a private start-up company focused on providing third party proof of performance to the out of home advertising industry. He began his career as a sales engineer at Mobil Oil Corporation from 1989 to 1991. Mr. Gonsalves received a B.S. from Columbia University and received an M.B.A. from Harvard Business School. Mr. Gonsalves is presently Chairman of the Board of Directors of the Jackie Robinson Foundation, where he has served as a Board member for approximately the past ten years. Mr. Gonsalves provides the Board with extensive investment banking and real estate investment experience.

Lorence H. Kim M.D.. Dr. Kim was appointed to our Board on February 15, 2022. Dr. Kim is currently the co-founder and managing partner of Ascenta Capital, a biotech venture capital firm. Previously, he was a Venture Partner at Third Rock Ventures. From April 2014 until June 2020, he served as Chief Financial Officer of Moderna, leading efforts to raise $4.4 billion of capital to build the company’s mRNA platform and a pipeline of novel medicines. At the time of his departure, Moderna had raised the three largest private financings and the largest IPO in biotech history. Dr. Kim joined Moderna after spending 14 years at Goldman Sachs, most recently as a Managing Director and co-head of the U.S. biotechnology investment banking effort. Dr. Kim currently serves as a member of the Boards of Directors of Revolution Medicines, a precision oncology company focused on developing targeted therapies to inhibit frontier targets in RAS-addicted cancers, AmerisourceBergen, a global pharmaceutical solutions leader, Flare Therapeutics, a biotechnology company targeting transcription factors to discover precision medicines for cancer and other diseases, and Abata Therapeutics, a company focused on translating the biology of regulatory T cells (Tregs) into transformational medicines for patients living with severe autoimmune and inflammatory diseases, and on the Board of Governors of the American Red Cross. He previously served on the Board of Seres Therapeutics. Dr. Kim graduated magna cum laude from Harvard University with a bachelor’s degree in biochemical sciences. He earned an M.B.A. in healthcare management as a Palmer Scholar from the Wharton School of the University of Pennsylvania and an M.D. from the University of Pennsylvania School of Medicine. Dr. Kim provides the Board with expertise and insight into matters such as investment banking, biotechnology corporate finance, oversight and strategy.

Steven Kotler. Age 76. Mr. Kotler was elected to our Board on June 7, 2010. Mr. Kotler currently serves as Vice Chairman of the private equity firm Gilbert Global Equity Partners, which he joined in 2000. Prior to joining Gilbert Global, Mr. Kotler, for 25 years, was with the investment banking firm of Schroder & Co. and its predecessor firm, Wertheim & Co., where he served in various executive capacities including President & Chief Executive Officer, and Group Managing Director and Global Head of Investment and Merchant Banking. Mr. Kotler is a director of CPM Holdings, an international agricultural process equipment company; and Co-Chairman of Birch Grove Capital, an asset management firm. Mr. Kotler is a member of the Council on Foreign Relations; and, from 1999 to 2002, was Council President of The Woodrow Wilson International Center for Scholars. Mr. Kotler has previously served as a Governor of the American Stock Exchange, The New York City Partnership and Chamber of Commerce’s Infrastructure and Housing Task Force, The Board of Trustees of Columbia Preparatory School; and, the Board of Overseers of the California Institute of the Arts. Mr. Kotler also previously served as a director of Cowen Holdings from

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September 2006 until June 2007. Mr. Kotler provides the Board with extensive experience in leading an international financial institution and expertise in private equity.

Lawrence E. Leibowitz. Age 62. Mr. Leibowitz was elected to our Board on June 26, 2018. Mr. Leibowitz is a finance and technology entrepreneur who specializes in business transformation and capital markets. Mr. Leibowitz serves as Vice Chairman of XCHG Xpansiv, an intelligent commodities exchange focusing on renewable energy products. Mr. Leibowitz also serves on the board of various other private companies in the data management and digital law businesses. Most recently, Mr. Leibowitz served as Chief Operating Officer, Head of Global Equities Markets and as a Member of the board of directors of NYSE Euronext, holding such positions from 2007 to 2013. Prior to that, Mr. Leibowitz served as Chief Operating Officer of Americas Equities at UBS, Co-head of Schwab Soundview Capital Markets, and CEO of Redibook. Mr. Leibowitz was formerly a founding partner at Bunker Capital, and Managing Director and Head of Quantitative Trading and Equities technology at CS First Boston. Mr. Leibowitz provides the Board with extensive capital markets knowledge, including trading microstructure, regulation, asset management and quantitative methods.

Margaret L. Poster. Age 70. Ms. Poster was appointed to our Board in April 2019. Ms. Poster is a Principal at MSP Advisors LLC. Ms. Poster served as Executive Managing Director, Co-Lead Legal Sector Advisory Group from 2019 through 2022. Ms. Poster served as Chief Operating Officer and Managing Director of Willkie Farr & Gallagher LLP from 1991 through 2018. Ms. Poster formerly served as President of Workbench, Inc., Chief Financial Officer of Barnes & Noble Bookstores Inc. and Chief Financial Officer of the Jewelry & Sporting Good Division at W.R. Grace & Co. Ms. Poster began her career as an auditor at PricewaterhouseCoopers LLP. Ms. Poster was a Director of Generation Citizen, where she was the Chair of the Finance Committee and Audit Committee, and was a trustee of Blythedale Children’s Hospital from 1992 until 2011. Ms. Poster is a certified public accountant and received a Masters of Business Administration from Harvard Business School. Ms. Poster provides the Board with comprehensive operating and public accounting experience.

Douglas A. Rediker. Age 62. Mr. Rediker was appointed to our Board in April 2015. Mr. Rediker is the Managing Partner of International Capital Strategies, LLC, a policy and markets advisory boutique based in Washington, D.C. Until 2012, he was a member of the Executive Board of the International Monetary Fund representing the United States. He has held senior and visiting fellowships at Brookings, the Peterson Institute for International Economics and at the New America Foundation. He has written extensively and testified before Congress on the subject of state capitalism, global finance, Sovereign Wealth Funds and other issues surrounding the relationship between international economic policy, financial markets, global capital flows and foreign policy. Mr. Rediker previously served as a senior investment banker and private equity investor for a number of investment banks, including Salomon Brothers, Merrill Lynch and Lehman Brothers. Mr. Rediker began his career as an attorney with Skadden Arps in New York and Washington, D.C. Mr. Rediker’s experience on global macro issues provides the Board with expertise relating to capital markets, the economy and global governance.

EXECUTIVE OFFICERS OF THE COMPANY

Biographies of the current executive officers of the Company are set forth below, excluding Mr. Solomon’s biography, which is included under “Directors of the Company” above. Each executive officer serves at the discretion of the Board.

John Holmes. Age 59. Mr. Holmes serves as Chief Operating Officer and serves as a member of the Management Committee of Cowen. Mr. Holmes previously served as the Company’s Chief Administrative Officer and was appointed an executive officer in May 2013. Mr. Holmes was the Head of Technology and Operations at Cowen following the merger between Cowen and Company and Cowen Investment Management (formerly Ramius). Mr. Holmes joined Cowen Investment Management in June 2006 as Global Head of Operations. Prior to joining Cowen Investment Management, Mr. Holmes was Global Head of the Equity Product Team at Bank of America Securities. Mr. Holmes has also held senior operations management positions at Deutsche Bank, Credit Lyonnais and Kidder Peabody. His experience includes treasury, foreign exchange, equity, fixed income & derivative operations. Mr. Holmes is NASD licensed as a General Securities Representative, General Securities Principal and a Financial & Operations Principal.

Stephen A. Lasota. Age 60. Mr. Lasota serves as Chief Financial Officer of Cowen and serves as a member of the Management Committee of Cowen. Mr. Lasota was appointed Chief Financial Officer in November 2009. Prior to the consummation of the business combination of Cowen Holdings and Cowen Investment Management (formerly Ramius) in November 2009, Mr. Lasota was the Chief Financial Officer of Cowen Investment Management and a Managing Director of the company. Mr. Lasota began working at Cowen Investment Management in November 2004 as the Director of Tax and was appointed Chief Financial Officer in May 2007. Prior to joining Cowen Investment Management, Mr. Lasota was a Senior Manager at PricewaterhouseCoopers LLP.

Owen S. Littman. Age 50. Mr. Littman serves as General Counsel and Secretary of Cowen and serves as a member of the Management Committee of Cowen. Mr. Littman was appointed General Counsel and Secretary in July 2010. Following the consummation of the business combination of Cowen Holdings and Cowen Investment Management (formerly Ramius) in November 2009, Mr. Littman was appointed Deputy General Counsel, Assistant Secretary and Managing Director of Cowen and General Counsel and Secretary of Cowen Investment Management. Mr. Littman began working at Cowen Investment Management in October 2005 as its senior transactional attorney and was appointed General Counsel in February 2009. Prior to

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joining Cowen Investment Management, Mr. Littman was an associate in the Business and Finance Department of Morgan, Lewis & Bockius LLP.

CODE OF BUSINESS CONDUCT AND ETHICS

We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy of the code on our website, www.cowen.com. In addition, we intend to post on our website all disclosures that are required by law or NASDAQ Stock Market listing standards concerning any amendments to, or waivers from, any provision of the code. You may also request a copy of the code by writing to Cowen Inc., Attn: Secretary, 599 Lexington Avenue, New York, NY 10022.

AUDIT COMMITTEE

Our Board has established a separately-designated standing Audit Committee which operates under a charter that has been approved by our Board.

Our Board has determined that all of the members of the Audit Committee are independent as defined under the rules of the Nasdaq Stock Market, and the independence requirements contemplated by Rule 10A-3 under the Exchange Act.

The current members of our Audit Committee are Ms. Dietze (Chairperson), Mr. Gonsalves, Dr. Kim, Mr. Kotler and Mr. Leibowitz. The Board has determined that Dr. Kim is an “audit committee financial expert” as defined by applicable SEC rules.

Item 11.    Executive Compensation

COMPENSATION DISCUSSION AND ANALYSIS

Our Compensation Committee, which is composed entirely of independent directors, determined the 2022 compensation of our named executive officers:

•Jeffrey M. Solomon, Chief Executive Officer;

•Stephen A. Lasota, Chief Financial Officer;

•John Holmes, Chief Operating Officer; and

•Owen S. Littman, General Counsel and Secretary.

The above named executive officers represented all of our executive officers as of December 31, 2022.

Compensation Philosophy and Objectives

Our compensation programs, including compensation of our named executive officers, are designed to achieve the following objectives:

•Pay for Performance. A significant portion of the total compensation paid to each named executive officer is variable and is directly tied to the Company’s Economic Operating Income. The amount of compensation available to be paid to our named executive officers is determined based on: (i) the management committee compensation pool based on the Company’s performance as described in more detail below; (ii) the performance of the Company on an absolute basis and through a comparison of our results to competitor firms; (iii) an evaluation of each named executive officer’s contribution to the Company, including contributions related to the revenue and profitability of the Company as well as leadership in alignment with our core values of Vision, Empathy, Sustainability and Tenacious Teamwork; and (iv) specific performance against individual qualitative goals.

•Align Named Executive Officers’ Interests with Stockholders’ Interests. Our Compensation Committee reviews each named executive officer’s performance as well as the Company’s financial results in the context of the market environment when determining year-end, performance-related compensation allotted from the management committee compensation pool. In addition, our Compensation Committee evaluated the Company’s performance compared to the performance of its peers and also considered an analysis of competitive compensation levels of named executive officers at the Company’s peer firms that was conducted by Pay Governance LLC, the independent compensation consultant to the Compensation Committee. Our Compensation Committee believes year-end, performance-related compensation should be delivered in a combination of short-term and long-term instruments.

•Recruiting and Retention. We operate in an intensely competitive industry, and we believe that our success is closely related to our recruiting and retention of highly talented employees and a strong management team. We try to keep our

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compensation program generally competitive with industry practices so that we can continue to recruit and retain talented executive officers and employees.

2022 Compensation Determinations

As noted above, compensation for our named executive officers comes from our management committee compensation pool. The following is a summary of the process for determining the 2022 management committee compensation pool:

Actions Taken at the Beginning of 2022

•In consultation with the Compensation Committee, at the beginning of 2022, the Company established a targeted Economic Income compensation-to-revenue ratio for the year of between 56% and 57%.

•The Company has set a goal of achieving mid-teens after-tax ROCE on a consistent basis and this objective was reviewed with the Compensation Committee at the beginning of 2022. ROCE is calculated by taking the sum of the Company’s Adjusted Economic Operating Income divided by the average Common Equity of the Company during the fiscal year (with the average Common Equity for the fiscal year calculated by adding the Common Equity at the beginning of the fiscal year and the Common Equity at the end of the fiscal year and dividing by two).

Actions Taken During the Course of 2022

•Following the signing of the Merger Agreement with TD Bank, the Company determined that it would limit the 2022 compensation to revenue ratio to the lesser of a 56% value given compensation to revenue ratio or a 59% economic income to revenue ratio.

Actions Taken at the End of 2022 to Determine Compensation

•At the end of 2022, compensation pools for investment banking, markets and investment management were finalized based on the revenue guidelines established at the beginning of the year, with some modifications made based on the Company’s overall strong performance for the year in each of these areas.

•Once the compensation pools for the various revenue generating and non-revenue generating departments were finalized, the Compensation Committee considered the amount of compensation to be included in the pool for the members of the Company’s management committee, which includes the Company’s named executive officers. This pool was determined with reference to (i) the Economic Income compensation-to-revenue ratio and (ii) the overall Economic Operating Income to Stockholders.

–The Compensation Committee approved a value given compensation-to-revenue ratio for 2022 of 56%.

–Management and the Compensation Committee believe that the compensation pool for members of the Company’s management committee, which includes the Company’s named executive officers, should be directly tied to the Company’s operating performance. Accordingly, the Compensation Committee has determined guidelines that the management committee’s participation in the Company’s Economic Operating Income should be a percentage of the total amount of Economic Operating Income, with the management committee’s incremental participation decreasing as Economic Operating Income increases.

•The Company’s ROCE for the 2022 fiscal year was approximately 16%.

•After the Compensation Committee determined the management compensation pool for 2022 as described above, the Compensation Committee then considered certain other facts in determining compensation for our named executive officers, including, without limitation, individual contributions, historical compensation, our financial performance compared to comparable companies and other market data.

Collective and Individual Factors Considered to Determine Compensation

•The Compensation Committee considered collective and individuals factor in determining the compensation for each named executive officer in 2022. Although our named executive officers are not compensated directly based on the revenue they generate or, with respect to Messrs. Holmes, Lasota and Littman, the profitability directly attributable to their teams’ in business operations, the Compensation Committee does take this into account when determining compensation for the named executive officers since each of our named executive officers plays an important role in revenue generation and driving profitability. The Compensation Committee also considered certain individual factors in its determination of 2022 compensation for each named executive officer, including, without limitation, each named executive officer’s integral role in the negotiations of the proposed merger with TD Bank and their significant contributions and continued leadership to their respective teams (or, in the case of Mr. Solomon, the Company).

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2022 Compensation Program and Payments

Base Salary

The purpose of base salary is to provide a set amount of cash compensation for each named executive officer that is not variable in nature and is generally competitive with market practices. This was consistent with standard practice within the securities and asset management industries and we believe this allowed us to reward performance.

In 2022 Mr. Solomon received a base salary of $1,000,000 and each of Messrs. Lasota, Holmes and Littman received a base salary of $725,000.

Annual Cash Bonus

The Compensation Committee approved annual cash bonus amounts for each of our named executive officers after review and consideration of the above factors and within the scope and confines of the established management committee compensation pool.

Annual cash bonuses are determined based on an informed judgment with final amounts determined at the discretion of the Committee within the confines of the established management committee compensation pool. This is consistent with our view that a significant portion of compensation paid is to be based on the performance of the Company and of each named executive officer.

In 2022, Mr. Solomon received a cash bonus of $4,500,000, and Messrs. Holmes, Lasota and Littman each received a cash bonus of $1,965,000.

Deferred Compensation

The annual bonus is typically paid partially in cash, partially in deferred cash and partially in equity. In 2022, deferred compensation was paid entirely in deferred cash as a result of the cash merger with TD Bank. The Compensation Committee believes that the practice of paying a portion of each named executive officer’s annual bonus in the form of deferred compensation is a useful tool to continue aligning the long-term interests of our named executive officers with the interest of our stockholders. After determining the aggregate cash values of annual bonuses payable to each of our named executive officers in respect of fiscal 2022, the Compensation Committee considered the percentage of the annual bonus compensation that each of our named executive officers would receive in the form of deferred cash. Jeffrey Solomon, our Chief Executive Officer, developed a proposal for the allocation of annual bonus compensation among the cash and deferred cash awarded to Messrs. Holmes, Lasota and Littman. The Compensation Committee discussed and ultimately approved the proposal and established an allocation of annual bonus compensation delivered through cash and deferred cash awarded to Mr. Solomon.

Deferred Cash Awards

Deferred cash awards relating to fiscal 2022 annual bonuses were awarded to our named executive officers in February 2023. Mr. Solomon received a deferred cash award of $4,500,000. Messrs. Holmes, Lasota and Littman each received a deferred cash award of $1,310,000. The deferred cash awards will vest with respect to 10% on August 15, 2023, 15% on November 15, 2023, 25% on August 15, 2024, 25% on August 15, 2025, and 25% on August 15, 2026.

Setting Compensation

The Compensation Committee is responsible for approving the compensation paid to our named executive officers as well as certain other highly compensated employees. In making compensation determinations, the Compensation Committee reviews information presented to them by the Company’s management, compensation peer group information and the recommendations of an independent compensation consultant engaged by the Compensation Committee. The Compensation Committee also reviews our compensation-to-revenue ratio on a quarterly basis and may adjust the targeted compensation-to-revenue ratio in order to maintain the Company’s compensation philosophy of aligning the interests of our named executive officers and our stockholders.

Involvement of Executive Officers

Mr. Solomon, our Chief Executive Officer, in consultation with our Chief Financial Officer, our General Counsel, our Chief Operating Officer and employees in our Human Resources department, assist the Compensation Committee in making compensation determinations. These individuals prepare information that is provided to, and reviewed by, the Compensation Committee, and the Chief Executive Officer makes recommendations to the Compensation Committee for their consideration. Our Chief Executive Officer is often invited to participate in Compensation Committee meetings; however, he recuses himself from all discussions regarding his own compensation.

Compensation Consultants

The Compensation Committee exercised its sole authority pursuant to its charter to directly engage Pay Governance LLC. Pay Governance LLC was retained by the Compensation Committee to provide advice, analysis, and assessment of alternatives related to the amount and form of executive compensation. Pay Governance LLC prepared certain Compensation Committee presentation materials (including the peer group data described below) during December 2022 and early 2023 at the request of the

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Compensation Committee. The Compensation Committee meets with Pay Governance LLC from time to time without management present.

The Compensation Committee has assessed the independence of Pay Governance LLC pursuant to SEC and NASDAQ rules and concluded that no conflict of interest exists that would prevent Pay Governance LLC from independently representing the Compensation Committee. The Compensation Committee reviewed and was satisfied with Pay Governance LLC’s policies and procedures to prevent or mitigate conflicts of interest and that there were no business or personal relationships between members of the Compensation Committee and the individuals at Pay Governance LLC supporting the Compensation Committee.

Compensation Peer Group

The Compensation Committee, with the assistance of its independent compensation consultant, annually identifies a compensation peer group of firms with which we compete for executive talent. Our peer group includes investment banks with revenues and market capitalizations similar to ours as well as companies with significant asset management operations. In making compensation decisions for 2022, our Compensation Committee reviewed compensation information for similarly titled individuals at comparable companies gathered from public filings made in 2022 related to 2021 annual compensation and from subscriptions for other market data. For 2022, Pay Governance provided the Compensation Committee with peer group compensation data of B. Riley Financial, Evercore Partners Inc., Greenhill & Co., Inc., Houlihan Lokey, Inc., Jefferies Group, Lazard Ltd., Moelis & Company, Oppenheimer & Co. Inc., Perella Weinberg Partners, Piper Sandler Companies, PJT Partners Inc., Raymond James Financial, and Stifel Financial Corp. The Compensation Committee believes that information regarding pay practices at comparable companies is useful in two respects. First, as discussed above, we recognize that our pay practices must be competitive in our marketplace. By understanding the compensation practices and levels of the Company’s peer group, we enhance our ability to attract and retain highly skilled and motivated executives, which is fundamental to the Company’s success. Second, this data is one of the many factors the Compensation Committee considers in assessing the reasonableness of compensation. Accordingly, the Compensation Committee reviewed trends among these peer firms and considered this data when determining our named executive officers’ 2022 annual bonuses and other compensation, but did not utilize the peer firm compensation as a sole benchmark for determining executive compensation.

Relationship of Compensation Policies and Practices to Risk Management

The Board has discussed whether our compensation policies are reasonably likely to have a material adverse effect on our results. The Board noted that, consistent with our performance-based model, many of our employees receive a significant portion of their compensation through discretionary compensation tied to their individual or business unit performance, or a combination thereof. The Board noted that a lower portion of the Company’s revenues are derived from proprietary trading businesses and that a significant portion of many employees’ compensation is provided in the form of deferred compensation that vests over time, which has the effect of tying the individual employee’s long-term financial interest to the firm’s overall success. The Board believes that this helps mitigate the risks inherent in our business.

The Board noted that our risk management team continuously monitors our various business groups, the level of risk they are taking and the efficacy of potential risk mitigation strategies. Senior management also monitors risk and the Board is provided with data relating to risk at each of its regularly scheduled meetings. The Head of Risk meets regularly with the Board to present his views and to respond to questions. For these reasons, the Board believes that our overall compensation policies and practices are not likely to have a material adverse effect on us.

Clawback Policy

In March 2015, the Company adopted a clawback policy that allows the Company to recover incentive compensation from any executive officer if that executive officer engages in intentional misconduct that caused or contributed to a restatement of the Company’s financial results. In the event of a restatement, a committee consisting of the non-management members of the Board (the “Independent Director Committee”) will review the performance-based compensation and annual bonus compensation paid in the form of both cash and equity under the Company’s equity and incentive plans to any such executive (the “Awarded Compensation”). If the Independent Director Committee determines, in good faith, that the amount of such performance-based compensation or annual bonus actually paid or awarded to any such executive officer would have been a lower amount had it been calculated based on such restated financial statements (the “Actual Compensation”) then the Independent Director Committee shall, subject to certain exceptions, seek to recover for the benefit of the Company the after-tax portion of the difference between the Awarded Compensation and the Actual Compensation.

Executive Officer Stock Ownership Guidelines

The Company adopted stock ownership guidelines on March 18, 2015 that require the Company’s executive officers to hold Company stock or RSUs within the later of the adoption of the policy or five years of being designated as an executive officer. All named executive officers are in compliance with the stock ownership guidelines, which are set forth below.

Chief Executive Officer			8× Base Salary			$8,000,000
Other Named Executive Officers			3× Base Salary			$2,175,000

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Anti-Hedging Policy

In order to support alignment between the interests of stockholders and employees, the Company maintains an anti-hedging policy that prohibits the “short sale” of Company securities. The policy prohibits employees from trading in options, warrants, puts and calls or similar instruments on Company securities. We allow directors and executive officers to hold up to 50% of their Company stock in a margin account. During 2022, all named executive officers were in compliance with this policy.

Employment Agreements

Each of our named executive officers was party to an employment agreement with the Company in 2022. The Compensation Committee views the employment agreements as an important tool in achieving our compensation objective of recruiting and retaining talented employees and a strong management team. The severance and change-in-control arrangements provided by the employment agreements are intended to retain our named executive officers and to provide consideration for certain restrictive covenants that apply following a termination of employment. None of our named executive officers have minimum guaranteed bonuses in their employment agreements.

Tax and Accounting Impact and Policy

The financial and income tax consequences (including the effects of Section 162(m) of the Code) to the Company of individual executive compensation elements are important considerations for the Compensation Committee when analyzing the overall design and mix of compensation. The Compensation Committee seeks to balance an effective compensation package for our named executive officers with an appropriate impact on reported earnings and other financial measures.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and has recommended to the Board the inclusion of the Compensation Discussion and Analysis in this Form 10-K.

Compensation Committee of the Board of Directors of Cowen Inc.

Brett H. Barth, Chair

Lawrence E. Leibowitz

Margaret L. Poster

Douglas A. Rediker

Summary Compensation Table

The following table sets forth compensation information for our named executive officers in 2022.

Name & Principal Position			Year			Salary ($)			Bonus ($)(1)			Stock Awards ($)(2)			All Other Compensation ($)(3)			Total ($)
Jeffrey M. Solomon Chief Executive Officer			2022			1,000,000			4,500,000			6,388,083			3,605,888			15,493,973
			2021			1,000,000			16,000,000			8,383,130			3,176,410			28,559,540
			2020			1,000,000			13,000,000			3,157,115			1,833,388			18,990,503
Stephen A. Lasota Chief Financial Officer			2022			725,000			1,965,000			849,759			357,603			3,897,362
			2021			700,000			4,613,000			595,292			384,635			6,292,927
			2020			700,000			4,847,295			899,110			373,870			6,820,275
John Holmes Chief Operating Officer			2022			725,000			1,965,000			935,322			401,503			4,026,825
			2021			700,000			5,056,000			595,292			405,860			6,757,152
			2020			700,000			5,347,295			927,220			386,842			7,361,357
Owen S. Littman General Counsel and Secretary			2022			725,000			1,965,000			849,759			369,384			3,909,143
			2021			700,000			4,613,000			595,292			389,075			6,299,141
			2020			700,000			4,847,295			899,110			366,686			6,818,910

(1) The amounts in this column reflect cash bonuses paid to the named executive officers in 2023 from the bonus pool established in respect of performance during the 2022 year.

(2)The entries in the stock awards column reflect the aggregate grant date value of the RSU and PSA awards granted in 2022 in connection with 2021 performance in accordance with FASB ASC 718, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions. The value of the PSA awards reflects the grant date value of the awards based on the target level of performance, which is less than the maximum possible value. The grant date value of the PSA awards assuming that the highest level of the applicable performance conditions will be achieved

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is $5,731,198 for Mr. Solomon, $1,094,525 for Mr. Lasota, $1,215,241 for Mr. Holmes and $1,094,525 for Mr. Littman. For information on the valuation assumptions with respect to awards made, refer to the Company’s Share-Based Compensation and Employee Ownership Plans Note in the financial statements to this Form 10-K.

(3)Other compensation includes:

Other Compensation ($)			Jeffrey M. Solomon			Stephen A. Lasota			John Holmes			Owen S. Littman
Vested Deferred Cash Awards			3,425,963			293,995			330,440			305,402
Dividend Equivalents			179,925			63,608			71,063			63,982

Grants of Plan Based Awards

The following table provides information regarding grants of compensation-related, plan based awards made to the named executive officers during fiscal year 2022. These awards are also included in the Summary Compensation Table above.

Estimated Future Payouts Under Equity Incentive Plan Awards(1)
			Grant Date			Corporate Action Date			Threshold (#)			Target (#)			Maximum (#)			All Other Stock Awards: Number of Shares of Stock or Units (#)(2)			Grant Date Fair Value of Stock Awards ($)(3)
Jeffrey M. Solomon			2/18/22			1/13/22						—			—			112,360			3,522,486
			3/1/22			2/25/22			49,993			99,986			199,972			—			2,865,599
Stephen A. Lasota			2/18/22 3/1/22			1/13/22 2/25/22			9,548			— 19,095			— 38,190			9,649  —			302,496 547,263
John Holmes			2/18/22 3/1/22			1/13/22 2/25/22			10,601			—  21,201			—  42,402			10,453  —			327,702 607,621
Owen S. Littman			2/18/22 3/1/22			1/13/22 2/25/22			9,548			— 19,095			— 38,190			9,649  —			302,496 547,263

(1)The amounts reported in these columns represent Performance RSUs that are scheduled to vest on December 31, 2024 based on the attainment of AROE targets, subject to the named executive officer’s continued employment through the applicable vesting date. These columns represent the number of Performance RSUs that vest at threshold achievement, target achievement and maximum achievement of the performance metrics applicable to such awards. At or below the threshold performance level, no shares will be paid out. At the maximum performance level, payout in excess of 120% will be settled in cash.

(2)RSUs will vest with respect to 12.5% on September 1, 2022; 12.5% on June 1, 2023; 25% on June 1, 2024; 25% on June 1, 2025; and 25% on June 1, 2026.

(3)The entries in the “Grant Date Fair Value of Stock Awards” column reflect the aggregate grant date fair value of the awards granted in 2022 computed in accordance with FASB ASC 718, disregarding for this purpose the estimate of forfeitures related to service based vesting conditions. The value of the PSA awards reflects the grant date value of the awards based on the target level of performance, which is less than the maximum possible value. The grant date value of the PSA awards assuming that the highest level of the applicable performance conditions will be achieved is $5,731,198 for Mr. Solomon, $1,094,525 for Mr. Lasota, $1,215,241 for Mr. Holmes and $1,094,525 for Mr. Littman. For information on the valuation assumptions with respect to awards made, refer to Note 23 in the Financial Statements.

Narrative Disclosure Relating to Summary Compensation Table and Grants of Plan-Based Awards Table

Employment Agreements

In January 2020, the Company entered into amended and restated employment agreements with Messrs. Solomon, Holmes, Lasota and Littman (the “Employment Agreements”). The Employment Agreements provide for the following material terms:

•An initial term that expired December 31, 2020. Following the expiration of the initial term, the terms of the agreements automatically extend for successive one-year terms, unless either party elects not to extend the term.

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•A minimum annual base salary of $1,000,000 for Mr. Solomon and $700,000 for Messrs. Holmes, Lasota, and Littman. Each named executive officer is also eligible to receive an annual performance-based bonus as determined by the Compensation Committee.

•Pursuant to Mr. Solomon’s Employment Agreement, if Mr. Solomon’s employment is terminated by the Company without Cause or Mr. Solomon resigns for Good Reason (as such terms are defined in the Solomon Agreement) prior to, in connection with or following a Change in Control (as described in the Solomon Agreement), then subject to Mr. Solomon executing and not revoking a release of claims, he will be entitled to a lump sum severance payment equal to two and one-half times the sum of (x) Mr. Solomon’s base salary on the date of termination plus (y) the average of the highest annual bonuses paid to Mr. Solomon in two of the three calendar years preceding his date of termination, except that the foregoing severance amount will not be less than $3,250,000 or greater than $5,000,000 if Mr. Solomon’s termination occurs prior to a Change in Control.

•If Mr. Solomon elects to transition to Senior Advisor status upon reaching age 55, the terms of Mr. Solomon’s service as a Senior Advisor will be governed by the Senior Advisor Agreement. In particular, Mr. Solomon’s service as a Senior Advisor will continue until the earliest of (i) 15 days following Mr. Solomon’s written notice that he is terminating as a Senior Advisor, (ii) the second anniversary of the date he commences Senior Advisor status, (iii) the date of Mr. Solomon’s death or disability and (iv) the date Mr. Solomon is terminated by the Company for Cause. In consideration for providing Senior Advisor services, Mr. Solomon will receive a base salary at an annualized rate of $150,000 and will be entitled to secretarial and administrative support. Mr. Solomon will also be entitled to receive certain additional benefits while a Senior Advisor, including office space (or, at the Company’s election, payment of up to $60,000 per year for office space), financial planning services at the Company’s expense and continued payment by the Company of life insurance premiums.

•Pursuant to the Executive Agreements with Messrs. Holmes, Lasota and Littman (collectively, the “Executive Agreements”), if the executive’s employment is terminated by the Company without Cause or the executive resigns for Good Reason (each as described in the Executive Agreements) prior to a Change in Control (as described in the Executive Agreements), the executive will receive a lump sum cash payment equal to one and one-half times the sum of (x) the executive’s base salary in effect at the end of the calendar year immediately preceding termination plus (y) the average of the highest annual bonuses paid to the executive in two of the three calendar years preceding his date of termination (such sum, the “Severance Amount”), except that the foregoing severance amount will not be greater than $1,500,000. Pursuant to the Executive Agreements, if the executive’s employment is terminated by the Company without Cause or the executive resigns for Good Reason in connection with or following a Change in Control, the executive will receive a lump sum cash payment equal to two and one-half times the Severance Amount, which lump sum will not be subject to a cap.

•In the event that the executive retires after attaining age 57.5 (or age 55, in the case of Mr. Solomon) and provides the Company with at least 90 days’ advance notice, all outstanding equity awards and unvested deferred compensation then held by the executive will continue to vest in accordance with their terms as if the executive had continued to be an active employee of the Company, provided he does not engage in competitive activity at any time prior to the applicable vesting date and refrains from interfering with the Company’s employees and customers for 12 months following his retirement. Messrs. Holmes, Lasota and Solomon have reached the Executive Agreement retirement age.

•The executives have agreed not to compete with, or solicit customers or employees of, the Company during the term of the employment agreement and for a period of 180 days for Mr. Solomon and 120 days for Messrs. Holmes, Lasota and Littman.

2020 Equity Incentive Plan

The Company maintains the 2020 Equity Incentive Plan, as amended (the “2020 Plan”). The 2020 Plan provides that generally, unless otherwise determined by the Compensation Committee or as set forth in an award or employment agreement, in the event of a change in control (as defined in the 2020 Plan), all outstanding awards shall become fully vested and exercisable and all restrictions, forfeiture conditions or deferral periods on any outstanding awards shall immediately lapse, and payment under any awards shall become due. The Compensation Committee has determined that all awards to our named executive officers under the 2020 Plan will vest on a double-trigger basis in the event of a change in control.

Outstanding Equity Awards at 2022 Fiscal Year End

The following table contains certain information regarding equity awards held by the named executive officers as of December 31, 2022.

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						Stock Awards
						Number of Shares that Have Not Vested (#)						Market Value of Shares that Have Not Vested ($)(1)						Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#)						Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested ($)(1)
Jeffrey M. Solomon
2019 RSU Award(2)						40,219						1,533,258						—						—
2020 RSU Award(3)						64,967						2,509,026						—						—
2021 RSU Award(4)						87,859						3,393,115						—						—
2021 PSA Award(5)						—						—						33,250						1,284,115
2022 RSU Award(6)						98,315						3,796,925						—
2022 PSA Award(7)						—						—						49,993						1,930,730
Stephen A. Lasota
2019 RSU Award(2)						4,708						181,823						—						—
2020 RSU Award(3)						9,746						376,391						—						—
2021 PSA Award(5)						—						—						8,600						332,132
2022 RSU Award(6)						8,443						326,069						—
2022 PSA Award(7)						—						—						9,548						368,724
John Holmes
2019 RSU Award(2)						5,773						222,953						—						—
2020 RSU Award(3)						10,551						407,480						—						—
2021 PSA Award(5)						—						—						8,600						332,132
2022 RSU Award(6)						9,147						353,257						—
2022 PSA Award(7)						—						—						10,601						409,391
Owen S. Littman
2019 RSU Award(2)						5,238						202,292						—						—
2020 RSU Award(3)						9,746						376,391						—						—
2021 PSA Award(5)						—						—						8,600						332,132
2022 RSU Award(6)						8,443						326,069						—						—
2022 PSA Award(7)						—						—						9,548						368,724

(1)The values in the column are based on the $38.62 closing price of our Class A common stock on the NASDAQ Global Select Market on December 30, 2022.

(2)RSUs awarded on February 20, 2019 vest with respect to 12.5% on September 1, 2019, 12.5% on May 15, 2020, 25% on May 15, 2021, 25% on May 15, 2022 and 25% on May 15, 2023.

(3)RSUs awarded on February 19, 2020 vest with respect to 12.5% on December 1, 2020, 12.5% on September 1, 2021, 25% on September 1, 2022, 25% on September 1, 2023 and 25% on September 1, 2024.

(4)RSUs awarded on February 17, 2021 vest with respect to 25% on December 1, 2021, 25% on December 1, 2022, 25% on December 1, 2023 and 25% on December 1, 2024.

(5)PSAs awarded on February 17, 2021 will, to the extent earned, vest on December 31, 2023. These PSAs are scheduled to vest based on the attainment of AROCE target for the applicable performance period, subject to the named executive officer’s continued employment through the applicable vesting date. In accordance with SEC rules, the number of unearned PSAs is reported in the “Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested” column based on achieving threshold performance goals (i.e., 50% of target).

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(6)RSUs awarded on February 18, 2022 vest with respect to 12.5% on September 1, 2022, 12.5% on June 1, 2023, 25% on June 1, 2024, 25% on June 1, 2025 and 25% on June 1, 2026.

(7)PSAs awarded on March 1, 2022 will, to the extent earned, vest on December 31, 2024. These PSAs are scheduled to vest based on the attainment of AROCE target for the applicable performance period, subject to the named executive officer’s continued employment through the applicable vesting date. In accordance with SEC rules, the number of unearned PSAs is reported in the “Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested” column based on achieving threshold performance goals (i.e., 50% of target).

Option Exercises and Stock Vested

The following table sets forth certain information concerning stock vested during the year ended December 31, 2022. No stock options were exercised by any of the named executive officers in 2022.

Name			Number of Shares Acquired on Vesting			Value Realized on Vesting ($)(1)
Jeffrey M. Solomon			242,722			8,495,163
Stephen A. Lasota			89,826			3,113,594
John Holmes			100,386			3,396,977
Owen S. Littman			90,359			3,126,397

(1)The value realized upon vesting of the stock awards is based on the $36.10 closing sale price of our Class A common stock on March 10, 2022, the $24.02 closing sale price of our Class A common stock on May 15, 2022, the $38.46 closing sale price of our Class A common stock on September 1, 2022 and the $38.59 closing sale price of our Class A common stock on December 1, 2022, the applicable vesting dates of the awards.

Potential Payments Upon Termination or Change in Control

Pursuant to the employment agreements with our named executive officers, upon certain terminations of employment or a change in control of the Company, our named executive officers are entitled to certain payments of compensation and benefits as described above under “Narrative Disclosure Relating to Summary Compensation Table and Grants of Plan-Based Awards Table — Employment Agreements.” The table below reflects the amount of compensation and benefits that would have been payable to each named executive officer in the event that the named executive officer had experienced the following events as of December 31, 2022: (i) a termination for cause or resignation, or voluntary termination, (ii) involuntary termination, (iii) an involuntary termination that occurs in connection with a change in control, (iv) termination by reason of an executive’s death, or (v) termination by reason of an executive’s disability.

									Triggering Events
Name			Type of Payment			Voluntary Termination ($)			Involuntary Termination ($)			Involuntary Termination in Connection with a Change in Control(4)(5) ($)			Death ($)			Disability ($)
Jeffrey M. Solomon			Cash Severance(1)			—			41,907,227			62,907,207			34,407,227			34,407,227
			Equity Acceleration(2)			—			17,682,013			17,682,013			17,682,013			17,682,013
			Total			—			59,589,240			80,589,220			52,089,240			52,089,240
Stephen A. Lasota			Cash Severance(3)			—			7,795,897			13,989,395			6,476,617			6,476,617
			Equity Acceleration(2)			—			2,285,995			2,285,995			2,285,995			2,285,995
			Total			—			10,261,892			16,275,390			8,762,612			8,762,612
John Holmes			Cash Severance(3)			—			8,565,196			15,104,447			7,066,947			7,066,947
			Equity Acceleration(2)			—			2,446,737			2,446,737			2,446,737			2,446,737
			Total			—			11,031,933			17,571,184			9,533,684			9,533,684
Owen S. Littman			Cash Severance(3)			—			8,010,153			14,012,401			6,510,153			6,510,153
			Equity Acceleration(2)			—			2,306,464			2,306,464			2,306,464			2,306,464
			Total			—			10,316,617			16,318,865			8,816,617			8,816,617

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(1)Includes the value of a cash payment equal to the sum of  (i) the average of Mr. Solomon’s 2021 and 2020 annual bonuses (the highest annual bonuses paid to Mr. Solomon in two of the three calendar years), comprised of cash bonus, deferred cash and deferred equity ($25,999,980), (ii) two and one-half times the sum of Mr. Solomon’s 2020 base salary ($1,000,000) and the average of Mr. Solomon’s 2020 and 2021 annual bonuses (subject to a $3.25 million minimum and a $5 million limit), (iii) a cash payment equal to 24 months of COBRA premiums, and (iv) the value of acceleration of unvested deferred cash compensation ($8,302,430, including interest accrued through December 31, 2022), which is payable to Mr. Solomon pursuant to the terms of his employment agreement. In connection with an involuntary termination following a change in control, the $5 million cash limit would not apply to the Cash Severance payment. Had Mr. Solomon experienced a termination by reason of death or disability, he would have been entitled to a cash payment equal to the sum of the amounts described under clauses (i), (iii), and (iv) above.

(2)Includes the value of acceleration of all unvested shares of restricted stock and all performance share and PSA awards, based on a price of $38.62 per share, which was the closing price of our Class A common stock on the NASDAQ Global Select Market on December 30, 2022. Pursuant to their employment agreements and the applicable award agreements, the executives are entitled to immediate vesting of outstanding equity awards upon an involuntary termination or a termination by reason of death or disability, except for the PSAs granted in February 2021, which will, upon an involuntary termination, remain outstanding until the completion of the applicable performance period without regard to the continued service requirement and will vest based on the actual level of the attainment of the applicable performance goals. For reporting purposes, target level performance was assumed.

(3)Includes the value of a cash payment equal to the sum of  (i) the average of the 2020 and 2021 annual bonus comprised of cash bonus, deferred cash and deferred equity ($5,763,498, $6,287,500 and $5,763,498) for Messrs. Lasota, Holmes and Littman, respectively, (ii) one and one-half times the 2021 base salary and the average of the 2020 and 2021 annual bonuses for Messrs. Lasota, Holmes and Littman, respectively (subject to a $1.5 million limit), (iii) a cash payment equal to 24 months of COBRA premiums ($48,086 for Mr. Lasota, $46,335 for Mr. Holmes and $71,092 for Mr. Littman), and (iv) the value of acceleration of unvested deferred cash compensation ($664,314, $731,361 and $675,564) for each of Mr. Lasota, Mr. Holmes and Mr. Littman, respectively, including interest accrued through December 31, 2022, which is payable to Messrs. Lasota, Holmes and Littman pursuant to the terms of their employment agreements. Had Mr. Lasota, Mr. Holmes or Mr. Littman experienced a termination by reason of death or disability, each executive would have been entitled to a cash payment equal to the sum of the amounts described under clauses (i), (iii), and (iv) above.

(4)Includes the value of the same cash severance payments that would have been payable to Messrs. Lasota, Holmes and Littman in connection with an involuntary termination of employment (as described above), except that the applicable multiplier for the 2022 base salary and the average of the 2020 and 2021 annual bonuses for Messrs. Lasota, Holmes and Littman, respectively will be two and one-half times instead of one and one-half times and will not be subject to the $1.5 million limit. Pursuant to their employment agreements, Messrs. Lasota, Holmes and Littman will be entitled to receive this enhanced cash severance payment in the event of an involuntary termination of employment in connection with or following a change in control. In addition, pursuant to the terms of the applicable award agreements, each executive’s unvested deferred cash compensation will vest in the event that a change in control occurs and, following such change in control, the executive’s compensation or job responsibilities are reduced materially or the equity securities of the Company cease to trade on a national securities exchange.

(5)Under the employment agreements with Messrs. Solomon, Lasota, Holmes and Littman, severance payable following a change in control would have been subject to a so-called “modified golden parachute cutback” provision pursuant to which “excess parachute payments” would be reduced to the extent such reduction would result in greater after-tax benefits. The amounts disclosed above represent the full amounts payable, without application of any cutback.

PAY RATIO

Pursuant to Item 402(u) of Regulation S-K, presented below is the ratio of annual total compensation of Mr. Solomon, our Chief Executive Officer as of December 31, 2022, to the median annual total compensation of all our employees (excluding our Chief Executive Officer).

To determine the median annual total compensation of all our employees (excluding our Chief Executive Officer), a median employee was identified from the population of our 1,626 employees as of December 31, 2022. We did not include independent contractors in our determination.

In order to identify our median employee, we ranked each of our employees (other than our Chief Executive Officer) based on 2022 awarded compensation. For this purpose, 2022 awarded compensation was composed of each employee’s (i) salary earned during 2022, (ii) annual cash bonus paid in respect of 2022 performance, and (iii) deferred cash awards granted in respect of 2022 performance. In determining 2022 awarded compensation, we did not apply any cost-of-living adjustments or annualize any partial-year compensation.

Once we identified the median employee, we determined that individual’s annual total compensation in accordance with the requirements for determining total compensation in the Summary Compensation Table.

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The 2022 annual total compensation for Mr. Solomon, our Chief Executive Officer, as reported in the Summary Compensation Table in this proxy statement, was $15,493,973. The 2022 annual total compensation for our median employee, determined in accordance with the requirements for determining total compensation in the Summary Compensation Table, was $215,000. The ratio of our Chief Executive Officer’s annual total compensation to the annual total compensation of our median employee for 2022 is 72 to 1. We believe that this ratio represents a reasonable estimate calculated in a manner consistent with Item 402(u).

The information disclosed in this section was developed and is provided solely to comply with specific legal requirements. We do not use this information in managing our Company. We do not believe this information provides stockholders with a useful mechanism for evaluating our management’s effectiveness, operating results, or business prospects, nor for comparing our company with any other company in any meaningful respect.

COMPENSATION PROGRAM FOR NON-EMPLOYEE DIRECTORS FOR 2022

Director Compensation Table

The following table sets forth compensation information for our non-employee directors for the year ended December 31, 2022.

Director						Fees Earned Paid in Cash ($)						Stock Awards ($)(1)						All Other Compensation ($)						Total
Brett H. Barth						162,500						162,500						2,477			(2)			327,477
Katherine E. Dietze						142,500						142,500						—						285,000
Gregg A. Gonsalves						125,000						125,000						—						250,000
Lorence Kim						133,334			(3)			200,000						—						333,334
Steven Kotler						135,000						135,000						—						270,000
Lawrence E. Leibowitz						62,500						187,500						—						250,000
Margart L. Poster						125,000						125,000						—						250,000
Douglas A. Rediker(4)						—						250,000						—						250,000

			(1)			Represents the aggregate grant date fair value calculated in accordance with generally accepted accounting principles, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions. For information on the valuation assumptions with respect to awards made, refer to the Company’s Share-Based Compensation and Employee Ownership Plans Note __ in the Financial Statements. As of December 31, 2022, all outstanding stock awards held by our directors are fully vested.

			(2)			Represents dividend equivalent shares awarded on delivered RSUs.

			(3)			Dr. Kim received $83,334 for his Board service from February through June 2022.

			(4)			In 2022, Mr. Rediker elected to receive 100% of his director compensation in RSUs. Please see “Narrative Disclosure Relating to Director Compensation Table” below for additional information regarding non-employee director compensation in 2022.

Narrative Disclosure Relating to Director Compensation Table

In 2022, each of our non-employee directors received annual compensation of $250,000. Mr. Barth, the Company’s Lead Director, received additional compensation of $50,000. Ms. Dietze, the Chair of the Audit Committee received additional compensation of $35,000 per annum. Mr. Barth, the Chair of the Compensation Committee received additional compensation of $25,000 per annum, and Mr. Kotler, the Chair of the Nominating and Corporate Governance Committee received additional compensation of $20,000 per annum. For 2022, a minimum of 50% of a director’s compensation was paid in the form of RSUs. In addition, each director was entitled to elect to receive any amount in excess of 50% of 2022 compensation in the form of RSUs. The RSUs were valued using the volume-weighted average price for the 30-day period prior to our 2022 annual meeting of stockholders. RSUs are vested and not subject to forfeiture; however, except in the event of death, the underlying shares of Class A common stock will not be delivered to the holder for at least one year from the date of grant. Beginning in 2022, cash dividend equivalent payments are converted to additional RSUs and will be delivered to each director upon the delivery of the underlying shares of Class A common stock. These equity awards are intended to further align the interests of our directors with those of our stockholders. Directors who also are employed as executive officers of the Company receive no additional compensation for their service as a director.

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Compensation Committee Interlocks and Insider Participation

The Compensation Committee is comprised entirely of non-employee directors, none of whom has ever been an officer or employee of the Company and none of whom had any related person transaction involving the Company. None of our executive officers (1) served as a member of the board of directors or compensation committee of any other entity that had one or more of its executive officers serving as a member of our Compensation Committee or (2) served as a member of the compensation committee of any other entity that had one or more of its executive officers serving as a member of our Board during 2022.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Beneficial Ownership of Directors, Nominees and Executive Officers

The following table shows how many shares of our Class A common stock were beneficially owned as of February 27, 2023, by each of our directors and named executive officers and by all of our directors and named executive officers as a group. Unless otherwise noted, the stockholders listed in the table have sole voting and investment power with respect to the shares owned by them.

Beneficial Owner						Amount and Nature of Beneficial Ownership						Percent of Class
Brett H. Barth						69,944			(1)			*
Katherine E. Dietze						12,007			(2)			*
Gregg A. Gonsalves						0			(3)			*
Lorence Kim						30,000			(4)			*
Steven Kotler						2,500			(5)			*
Lawrence E. Leibowitz						8,000			(6)			*
Margaret L. Poster						13,547			(7)			*
Douglas A. Rediker						0			(8)			*
Jeffrey M. Solomon						603,687						2.1%
John Holmes						220,131						*
Stephen A. Lasota						257,055						*
Owen S. Littman						199,292			(9)			*
All directors and executive officers as a group (12 persons)						1,438,663						5.0%

* corresponds to less than 1% of Cowen Inc. Class A common stock,

(1)The amount presented does not include 13,382 fully-vested RSUs that will be delivered to Mr. Barth upon his one-year anniversary of the grant date.

(2)The amount presented does not include 73,512 fully-vested RSUs that will be delivered to Ms. Dietze upon her retirement from the Board.

(3)The amount presented does not include 15,664 fully-vested RSUs that will be delivered to Mr. Gonsalves upon his retirement from the Board.

(4)The amount presented does not include 8,236 fully-vested RSUs that will be delivered to Dr. Kim upon his retirement from the Board.

(5)The amount presented does not include 70,347 fully-vested RSUs that will be delivered to Mr. Kotler upon his retirement from the Board.

(6)The amount presented does not include the 42,098 fully-vested RSUs that will be delivered to Mr. Leibowitz upon his retirement from the Board.

(7)The amount presented does not include 10,927 fully-vested RSUs that will be delivered to Ms. Poster upon her retirement from the Board.

(8)The amount presented does not include 72,384 fully-vested RSUs that will be delivered to Mr. Rediker upon his retirement from the Board.

(9)Includes 275 shares held in custodial accounts on behalf of Mr. Littman’s children.

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Beneficial Owners of More than Five Percent of Our Class A Common Stock

Based on filings made under Section 13(d) and Section 13(g) of the Securities Exchange Act of 1934, as of February 27, 2023, the persons known by us to be beneficial owners of more than 5% of our Class A common stock were as follows:

Name and Address of Beneficial Owner

Amount and Nature of Beneficial Ownership

Percent of Class

BlackRock, Inc.(1)     55 East 52nd Street     New York, NY 10055

2,334,921

8.27%

(1)This information is based on a Schedule 13G filed with SEC on February 7, 2023 by BlackRock, Inc. Blackrock reported that it has sole voting power as to 2,493,395 and sole dispositive power as to 2,334,921 shares. The beneficial ownership indicated above represents the aggregate beneficial ownership of BlackRock, Inc., and its subsidiaries, BlackRock Life Limited, Aperio Group, LLC, BlackRock (Netherlands) B.V., BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Japan Co., Ltd, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Fund Managers Ltd., BlackRock Institutional Trust Company, N.A., BlackRock Investment Management, LLC, BlackRock Investment Management (Australia) Limited and BlackRock Investment Management (UK) Limited.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors to file initial reports of ownership of our securities and reports of changes in ownership of our securities with the Securities and Exchange Commission.

Based on a review of copies of such reports and on written representations from our executive officers and directors, we believe that all Section 16(a) filing and disclosure requirements applicable to our executive officers and directors for 2022 have been satisfied.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table summarizes, as of December 31, 2022, the number of shares of our common stock to be issued upon exercise of outstanding options granted under our 2020 Equity and Incentive Plan, the weighted-average exercise price of such options, and the number of shares remaining available for future issuance under the plans for all awards as of December 31, 2022.

Plan Category

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights

Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights

Number of Securities Remaining Available for Future Issuance Under the Equity Compensation Plan (Excluding Shares in First Column)

Equity compensation plans approved by security holders

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3,672,530

Equity compensation plans not approved by security holders

None

N/A

None

(1)This number is based on the 31,207,533 shares authorized for issuance under the Company’s Equity and Incentive Plans as of December 31, 2022. As of January 31, 2023, we had 3,672,530 shares remaining under the equity plans, which exclude shares reserved for issuance based on certain performance criteria in existing agreements.

Item 13.    Certain Relationships and Related Transactions

Director Independence

Under applicable Nasdaq Stock Market Rules, a director will only qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Our Corporate Governance Guidelines require that a majority of the Board be composed of directors who meet the independence criteria establish by NASDAQ Stock Market, Inc. Marketplace Rules. Under applicable NASDAQ Stock Market rules, a director will only qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making its determination, the Board considers all relevant facts and circumstances, both with respect to the director and with respect to any persons or organizations with which the director has an affiliation, including immediate family members.

Our Board has determined that none of Mses. Dietze or Poster nor Messrs. Barth, Gonsalves, Kim, Kotler, Leibowitz or Rediker currently has a relationship that would interfere with the exercise of independent judgment in carrying out the

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responsibilities of a director and that each of these directors is an “independent director” as defined under Rule 4200(a)(15) of the NASDAQ Stock Market, Inc. Marketplace Rules.

Mr. Solomon cannot be considered an independent director under NASDAQ Stock Market rules because Mr. Solomon currently serves as our Chief Executive Officer. Therefore, the Board has determined that seven of our eight directors are independent.

Related Transactions Involving Our Executive Officers

Side-by-Side Investments

To the extent permissible by applicable law, our executive officers, directors and certain eligible employees, as well as such individuals’ immediate family members and other investors they refer to us, have historically been permitted to invest their own capital either directly in, or in side-by-side investments or managed accounts with, our alternative investment management funds and certain proprietary investment vehicles established by our broker-dealer segment. Side-by-side investments are investments in assets substantially similar to the investments of the applicable fund and the managed accounts are accounts that invest in the asset classes covered by our alternative investment business. Direct investment in managed accounts or side-by-side investments with, our funds by such individuals are generally made on the same terms and conditions as the investments made by other third party investors in the funds, except that such investments are subject to discounted management and performance fees.

Employment Arrangements

Kyle Solomon, the brother of Jeffrey M. Solomon, is a Managing Director of Cowen and Company and earned approximately $1,155,009 in 2022, which amount includes Kyle Solomon’s base salary, cash bonus paid in 2022 relating to 2021 performance and approximately $125,939 of deferred cash awards, RSUs granted in prior years that vested during 2022 and cash dividend equivalent payments. Kristy Holmes, the daughter of John Holmes, is a Vice President of the Company and earned approximately $160,000 in 2022. Ashley Lasota, the daughter of Stephen Lasota, is a Vice President of the Company and earned approximately $160,000 in 2022.

Review and Approval of Transactions with Related Persons

To minimize actual and perceived conflicts of interests, the Board has adopted a written policy governing transactions in which the Company is a participant, the aggregate amount involved is reasonably expected to exceed $120,000, and any of the following persons has or may have a direct or indirect material interest in the transaction: (a) our executive officers, directors (including nominees) and certain other highly compensated employees, (b) stockholders who own more than 5% of our Class A common stock, and (c) any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law or person (other than a tenant or employee) sharing the same household of any person described in (a) or (b) above. These transactions will be considered “related person transactions.”

Unless exempted from such policy as described below, the policy requires that related person transactions must be reported to our General Counsel or Chief Compliance Officer who will then submit the related person transaction for review by our Audit Committee. The Audit Committee will review all relevant information available to it and will approve or ratify only those related person transactions that it determines are not inconsistent with the best interests of the Company. If our General Counsel or Chief Compliance Officer determines that advance approval of a related person transaction is not practicable under the circumstances, the Audit Committee will review, and, in its discretion, may ratify the related person transaction at its next meeting, or at the next meeting following the date that the related person transaction comes to the attention of our General Counsel or Chief Compliance Officer. However, the General Counsel or Chief Compliance Officer may present a related person transaction that arises between Audit Committee meetings to the Chair of the Audit Committee, who will review and may approve the related person transaction, subject to the Audit Committee’s ratification at its next meeting.

It is anticipated that any related person transaction previously approved by the Audit Committee or otherwise already existing that is ongoing will be reviewed annually by the Audit Committee to ensure that such transaction has been conducted in accordance with the previous approval granted by the Audit Committee, if any, and that all required disclosures regarding the related person transaction are made.

In addition to the transactions that are excluded by the instructions to the SEC’s related person transaction disclosure rule, the board anticipates it will determine that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of the policy:

			•			interests arising solely from the related person’s position as an executive officer of another entity (whether or not the person is also a director of such entity), that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction, (c) the amount involved in the transaction equals less than the greater of  $200,000 or 5% of the annual gross revenues of the company receiving payment under the transaction;

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			•			a transaction with a significant stockholder, or such stockholder’s immediate family members, who has a current Schedule 13G filed with the SEC with respect to such stockholder’s ownership of our securities; and

			•			a transaction that is specifically contemplated by provisions of our charter or bylaws.

The policy provides that transactions involving compensation of executive officers shall be reviewed and approved by the Compensation Committee in the manner specified in its charter.

Item 14.    Principal Accounting Fees and Services

Independent Registered Public Accounting Firm Fees and Other Matters

The following table presents the aggregate fees billed for services rendered by KPMG LLP, our independent registered public accounting firm for the fiscal years ended December 31, 2022 and December 31, 2021.

			2022						2021
Audit Fees(1)			$6,911,001						$6,221,827
Audit-Related Fees(2)			39,569						50,156
Tax Fees(3)			973,673						1,096,363
All Other Fees(4)			49,023						235,422
Total			7,973,266						7,603,768

			(1)			Audit fees reflect audit fees incurred for the Cowen Inc. integrated audit and quarterly reviews as well as the financial statement audits of its consolidated subsidiaries.
			(2)			Audit-Related Fees reflect fees for attestation procedures required by local regulations for consolidated subsidiaries.
			(3)			Tax fees reflect tax compliance and tax advisory services.
			(4)			All Other Fees relate to due diligence and other non-tax advisory and consulting services.

KPMG LLP also provided services to entities affiliated with Cowen Inc. that were billed directly to those entities and, accordingly, were not included in the amounts disclosed above. These amounts included $1,035,280 and $1,470,715 for the audits of private equity funds, hedge funds and other fund structures within the Cowen Investment Management business for the years ended December 31, 2022 and December 31, 2021, respectively, as well as $93,000 for tax compliance services for fund structures within the Cowen Investment Management business for the year ended December 31, 2022.

Auditor Services Pre-Approval Policy

The Audit Committee has adopted an Audit Committee Policy Regarding Outside Auditor Services which includes a pre-approval policy that applies to services performed for the Company by our independent registered public accounting firm. In accordance with this policy, we may not engage our independent registered public accounting firm to render any audit or non-audit service unless the service was approved in advance by the Audit Committee or the engagement is entered into pursuant to the pre-approval policies and procedures described below.

The pre-approval policy delegates to the Chair of the Audit Committee the authority to pre-approve any audit or non-audit services, provided that any approval by the Chair is reported to the Audit Committee at the Audit Committee’s next regularly scheduled meeting. The Audit Committee may also pre-approve services that are expected to be provided to the Company by the independent registered public accounting firm during the next 12 months and at each regularly scheduled meeting of the Audit Committee, management or the independent registered public accounting firm must report to the Audit Committee each service actually provided to the Company pursuant to the pre-approval.

Our Audit Committee has determined that the provision of the non-audit services described in the table above was compatible with maintaining the independence of our independent registered public accounting firm. The Audit Committee reviews each non-audit service to be provided and assesses the impact of the service on the registered public accounting firm’s independence.

PART IV

Item 15.    Exhibits and Financial Statement Schedules

(a)Documents filed as part of this Annual Report on Form 10-K:

1.    Consolidated Financial Statements

The consolidated financial statements required to be filed in the Annual Report on Form 10-K are listed on page F-1 hereof. The required financial statements appear on pages F-1 through F-74 hereof.

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2.    Financial Statement Schedules

Separate financial statement schedules have been omitted either because they are not applicable or because the required information is included in the consolidated financial statements.

3.    Exhibits

Exhibit No.						Description
2.1						Agreement and Plan of Merger dated as of August 1, 2022 by and among Cowen Inc., The Toronto Dominion Bank and Crimson Holdings Acquisition Co. (previously filed as Exhibit 2.1 to Form 8-K filed August 2, 2022.)
2.2						Securities Purchase Agreement, dated as of April 2, 2017, by and among Convergex Holdings LLC, Convergex Group, LLC, GTCR Convergex Holdings LLC, Cowen CV Acquisition LLC and Cowen Inc. (previously filed as Exhibit 2.1 to the Form 8-K filed on April 6, 2017)
2.3						Purchase Agreement, dated as of November 20, 2018, by and among Cowen Inc., Cowen International Limited, Cowen QN Acquisition LLC, the Sellers signatory thereto, the Beneficial Owners signatory thereto and the Seller Representatives signatory thereto (previously filed as Exhibit 2.1 to the Form 8-K filed on November 21, 2018).
3.1						Amended and Restated Certificate of Incorporation of Cowen Inc. (previously filed as Exhibit 3.1 to the Form 10-Q filed November 25, 2009).
3.2						Third Amended and Restated By-Laws of Cowen Inc. (previously filed as Exhibit 3.2 to the Form 10-Q filed on August 2, 2022).
3.3						Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Cowen Inc. (previously filed as Exhibit 3.3 to the Form 10-Q filed November 25, 2009).
3.4						Certificate of Designations of the Company for its Series A Cumulative Perpetual Preferred Stock (previously filed as Exhibit 3.1 to Form 8-K filed May 20, 2015).
3.5						Amendment to the Amended and Restated Certificate of Incorporation of Cowen Inc. (previously filed as Exhibit 3.1 to the Form 8-K filed December 5, 2016).
3.6						Certificate of Amendment of Amended and Restated Certificate of Incorporation of Cowen Inc. (previously filed as Exhibit 3.1 to the Form 8-K filed on May 16, 2017)
3.7						Certificate of Amendment to Amended and Restated Certificate of Incorporation of Cowen Inc. (previously filed as Exhibit 3.1 to the Form 8-K filed June 28, 2022.)
4.1						Form of Class A Common Stock Certificate (previously filed as Exhibit 4.1 to Amendment No. 2 to Form S-1 filed on December 14, 2009).
4.2						Indenture, dated March 10, 2014 by and between Cowen Inc., as Issuer and The Bank of New York Mellon, as Trustee (previously filed as Exhibit 4.1 to Form 8-K filed on March 11, 2014).
4.3						First Supplemental Indenture by and between Cowen Inc., as Issuer and The Bank of New York Mellon, as Trustee (previously filed as Exhibit 4.1 to the Form 10-Q filed May 8, 2014).
4.4						Senior Notes Indenture dated October 10, 2014, by and between Cowen Inc. and The Bank of New York Mellon (previously filed as Exhibit 4.1 to Form 8-K filed on October 10, 2014).
4.5						First Supplemental Indenture dated October 10, 2014, by and between Cowen Inc. and The Bank of New York Mellon (previously filed as Exhibit 4.2 to Form 8-K filed on October 10, 2014).
4.6						Indenture, dated as of December 14, 2017 between Cowen Inc. and The Bank of New York Mellon (previously filed as Exhibit 4.1 to Form 8-K filed on December 14, 2017).
4.7						Second Supplemental Indenture, dated as of December 8, 2017, by and between Cowen Inc. and The Bank of New York Mellon, as Trustee. (previously filed as Exhibit 4.2 to Form 8-K filed on December 8, 2017).
4.8						Third Supplemental Indenture, dated June 11, 2018, by and between Cowen Inc. and The Bank of New York Mellon (previously filed as Exhibit 4.2 to the Form 8-K filed June 11, 2018).
4.9						Form of Note Purchase Agreement including Form of Note attached thereto (previously filed as Exhibit 4.1 to the Form 8-K filed April 29, 2019).
4.10						Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (filed herewith).
10.1						Lease, dated as of June 22, 2007 by and between 599 Lexington Avenue LLC and Cowen Investment Management LLC (as successor in interest to RCG Holdings LLC (f/k/a Ramius Capital Group, LLC)), as amended by the First Amendment to Lease, dated as of June 9, 2008, by and between BP 599 Lexington Avenue LLC and Cowen Investment Management LLC (as successor in interest to RCG Holdings LLC (f/k/a Ramius LLC)) (previously filed as Exhibit 10.14 to Amendment No. 2 to Form S-1 filed on December 14, 2009).

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Exhibit No.						Description
10.2						Cowen Inc. 2010 Equity and Incentive Plan (incorporated by reference to Appendix A to the Definitive Proxy Statement of Cowen Inc., on Schedule 14A for the year ended December 31, 2009, as filed on April 30, 2010).*
10.3						Second Amendment to Lease dated August 20, 2010 between BP 599 Lexington Avenue and the Company, amending that certain Lease dated as of June 22, 2007 by and between 599 Lexington Avenue LLC and Cowen Investment Management LLC (as successor in interest to RCG Holdings LLC (f/k/a Ramius Capital Group, LLC)), as amended by the First Amendment to Lease, dated as of June 9, 2008, by and between BP 599 Lexington Avenue LLC and Ramius LLC (previously filed as Exhibit 10.2 to Form 8-K filed August 24, 2010).
10.4						Initial capped call confirmation, dated as of May 13, 2015, by and between Nomura Global Financial Products Inc. and the Company (previously filed as Exhibit 10.1 to Form 8-K filed May 20, 2015).
10.5						Additional capped call confirmation, dated as of May 19, 2015, by and between Nomura Global Financial Products Inc. and the Company (previously filed as Exhibit 10.2 to Form 8-K filed May 20, 2015).
10.6						Underwriting Agreement, dated as of December 5, 2017, by and between Cowen Inc. and with Morgan Stanley & Co. LLC and UBS Securities LLC, as representatives of the several Underwriters named therein. (previously filed as Exhibit 1.1 to the Form 8-K filed December 8, 2017).
10.7						Underwriting Agreement, dated as of June 6, 2018, by and between Cowen Inc. and with Morgan Stanley & Co. LLC and UBS Securities LLC, as representatives of the several Underwriters named therein (previously filed as Exhibit 1.1 to the Form 8-K filed June 11, 2018).
10.8						Credit Agreement dated December 2, 2019 (previously filed as Exhibit 10.1 to the Form 8-K filed December 4. 2019).
10.9						Form of Restricted Stock Unit and Deferred Cash Award (previously filed as Exhibit 10.22 to the Form 10-K filed March 4, 2020).*
10.10						Amended and Restated Employment Agreement between the Company and Jeffrey Solomon dated January 31, 2020 (previously filed as Exhibit 10.1 to Form 8-K filed February 3, 2020). *
10.11						Amended and Restated Employment Agreement between the Company and John Holmes dated January 31, 2020 (previously filed as Exhibit 10.2 to Form 8-K filed February 3, 2020). *
10.12						Amended and Restated Employment Agreement between the Company and Stephen Lasota dated January 31, 2020 (previously filed as Exhibit 10.3 to Form 8-K filed February 3, 2020).*
10.13						Amended and Restated Employment Agreement between the Company and Owen Littman dated January 31, 2020 (previously filed as Exhibit 10.4 to Form 8-K filed February 3, 2020).*
10.14						2020 Equity Incentive Plan (previously filed as Appendix A to the Definitive Proxy Statement of Cowen Inc. on Schedule 14A for the year ended December 31, 2019, as filed on May 22, 2020).*
10.15						Form of 2020 Performance Share Award Agreement (previously filed as Exhibit 10.20 to the Form 10-K filed March 3, 2021). *
10.16						Form of 2020 Restricted Stock Unit and Deferred Cash Award Agreement (previously filed as Exhibit 10.21 to the Form 10-K filed March 3, 2021). *
10.17						Credit Agreement, dated as of March 24, 2021 among the Company, as borrower, the financial institutions from time to time party thereto, as lenders and Morgan Stanley Senior Funding Inc., as administrative agent and collateral agent (previously filed as Exhibit 10.1 to the Form 8-K filed on March 30, 2021).
10.18						Cowen Inc. 2020 Equity Incentive Plan (as amended and restated) (Incorporated by reference to Appendix A to the Definitive Proxy Statement of Cowen Inc. on Schedule 14A for the year ended December 31, 2020, as filed on May 21, 2021).*
10.19						Amendment No. 1 to Credit Agreement dated as of December 15, 2021, among Cowen Inc., as borrower, the Loan Guarantors party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent and each 2021 Incremental Term Lender (previously filed as Exhibit 10.1 to the Form 8-K filed on December 21, 2021).
10.20						Form of Director RSU Award Agreement (previously filed as Exhibit 10.24 to the Form 10-K filed March 1, 2022).
10.21						Form of Restricted Stock Unit and Deferred Cash Award Agreement (previously filed as Exhibit 10.1 to the Form 10-Q filed May 2, 2022).*
10.22						Form of Performance Share Award Agreement (previously filed as Exhibit 10.2 to the Form 10-Q filed on May 2, 2022).*
10.23						Cowen Digital Holdings 2022 Equity Unit Incentive Plan (previously filed as Exhibit 10.3 to the Form 10-Q filed on May 2, 2022).*

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Exhibit No.						Description
10.24						Form of Award Agreement Cowen Digital Holdings 2022 Equity Incentive Plan (previously filed as Exhibit 10.4 to the Form 10-Q filed on May 2, 2022).*
10.25						Cowen Inc. 2020 Equity Incentive Plan (as amended and restated May 16, 2022) (Incorporated by Reference to Appendix A to the Definitive Proxy Statement of Cowen In. on Schedule A for the year ended December 31, 2021 as filed on May 27, 2022.)*
10.26						Form of Deferred Cash Award Agreement (filed herewith)*
21.1						Subsidiaries of Cowen Inc. (filed herewith).
23.1						Consent of Independent Registered Public Accounting Firm (filed herewith).
31.1						Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (filed herewith).
31.2						Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (filed herewith).
32						Certification of CEO and CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (furnished herewith).
101.INS						XBRL INSTANCE DOCUMENT
101.SCH						XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
101.CAL						XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT
101.DEF						XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT
101.LAB						XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT
101.PRE						XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT
104						Cover Page Interactive Data File - (formatted as inline XBRL and contained in Exhibit 101)

*    Signifies management contract or compensatory plan or arrangement.    

Item 16. Form 10-K Summary

Not Applicable.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements						Page
Management's Report on Internal Control over Financial Reporting						F-2
Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY , Auditor Firm ID: 185)						F-3
Consolidated Statements of Financial Condition						F-5
Consolidated Statements of Operations						F-7
Consolidated Statements of Comprehensive Income (Loss)						F-9
Consolidated Statements of Changes in Equity						F-10
Consolidated Statements of Cash Flows						F-12
Notes to Consolidated Financial Statements						F-14
			Note 1—Organization and Business			F-14
			Note 2—Significant Accounting Policies			F-14
			Note 3—Acquisition			F-28
			Note 4—Cash Collateral Pledged			F-32
			Note 5— Segregated Cash			F-33
			Note 6—Investments of Operating Entities and Consolidated Funds			F-33
			Note 7—Fair Value Measurements for Operating Entities and Consolidated Funds			F-41
			Note 8—Deposits with Clearing Organizations, Brokers and Banks			F-47
			Note 9—Receivable from and Payable to Brokers and Clearing Organizations			F-47
			Note 10—Receivable From and Payable to Customers			F-47
			Note 11—Fixed Assets			F-48
			Note 12—Goodwill and Intangible Assets			F-48
			Note 13—Other Assets			F-50
			Note 14—Commission Management Payable			F-50
			Note 15—Accounts Payable, Accrued Expenses and Other Liabilities			F-51
			Note 16—Convertible Debt and Notes Payable			F-51
			Note 17—Redeemable Preferred Stock			F-55
			Note 18—Stockholder's Equity			F-55
			Note 19—Non-Controlling Interests in Consolidated Subsidiaries and Investment Funds			F-57
			Note 20—Accumulated Other Comprehensive Income (Loss)			F-57
			Note 21—Revenue from Contracts with Customers			F-58
			Note 22—Insurance and reinsurance			F-58
			Note 23—Share-Based and Deferred Compensation and Employee Ownership Plans			F-60
			Note 24—Defined Contribution Plans			F-62
			Note 25—Income Taxes			F-62
			Note 26—Earnings Per Share			F-65
			Note 27—Commitments and Contingencies			F-66
			Note 28—Segment Reporting			F-69
			Note 29—Regulatory Requirements			F-70
			Note 30—Related Party Transactions			F-72
			Note 31—Guarantees and Off-Balance Sheet Arrangements			F-73
			Note 32—Subsequent Events			F-74

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Management's Report on Internal Control over Financial Reporting

Management of Cowen Inc. (the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process designed under the supervision of the Company's principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

As of the end of the Company's 2022 fiscal year, management conducted an assessment of the Company's internal control over financial reporting based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the Company's internal control over financial reporting as of December 31, 2022 was effective.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on our financial statements.

The Company's internal control over financial reporting as of December 31, 2022 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report included herein, which expresses an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2022.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Cowen Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated statements of financial condition of Cowen Inc. and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

F-3

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of fair value of certain level 3 financial assets measured on a recurring basis

As discussed in Notes 2f and 7 to the consolidated financial statements, the Company has recorded financial assets measured at fair value on a recurring basis classified as level 3 in the fair value hierarchy of $278.0 million as of December 31, 2022. Certain of these financial assets are valued based on their proportional rights of the underlying portfolio companies and are valued using market quotations when readily available. When market quotations are unavailable for these level 3 financial assets or deemed not representative of fair value, such investments are valued using a market approach, an income approach, or a combination of both approaches. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future cash flows to a single present value. In following these approaches, the significant inputs and assumptions include the premium ascribed to a controlling financial interest and selected equity volatilities.

We identified the assessment of the fair value measurement of certain financial assets classified as level 3 in the fair value hierarchy as a critical audit matter. These fair value measurements involved a high degree of measurement uncertainty and subjectivity, which required specialized skills and knowledge to evaluate. Specifically, the assessment of these fair value measurements encompassed the evaluation of the Company’s valuation methodologies and certain unobservable inputs and assumptions used in these fair value estimates, such as the premium ascribed to a controlling financial interest and selected equity volatilities.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the fair value measurement process, including controls related to the (1) development of the valuation methodologies (2) identification and determination of unobservable inputs and assumptions, including the premium ascribed to a controlling financial interest and selected equity volatilities, and (3) monitoring of changes to the methodology or inputs and assumptions.

We evaluated the Company’s process to develop the fair value measurement of certain financial assets classified as level 3 in the fair value hierarchy by testing certain sources of data and assumptions that the Company used and considered the relevance and reliability of such data and assumptions. We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the reasonableness of the fair value measurement for a selection of level 3 financial assets through developing an independent estimate of the fair value of the financial asset and comparing the results of our estimate of fair value to the Company's fair value measurement. As part of this independent estimate, the valuation professionals developed independent pricing inputs, such as the premium ascribed to a controlling financial interest and selected equity volatilities.

    

/s/ KPMG LLP     

    

We have served as the Company’s auditor since 2017.

New York, New York

February 28, 2023

F-4

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Cowen Inc. Consolidated Statements of Financial Condition (dollars in thousands, except share and per share data)
			As of December 31, 2022						As of December 31, 2021
Assets
Cash and cash equivalents			$	1,139,652					$	914,343
Cash collateral pledged			122,687						47,494
Segregated cash			185,872						194,701
Securities owned, at fair value ($1,766,033 and $1,764,853 were pledged to various parties)			2,424,194						2,660,742
Securities purchased under agreements to resell			121,718						—
Receivable on derivative contracts, at fair value			494,691						286,135
Securities borrowed			1,298,056						1,704,603
Other investments ($132,285 and $137,986 at fair value, respectively)			225,183						274,111
Deposits with clearing organizations, brokers and banks			87,932						111,857
Receivable from brokers, dealers and clearing organizations, net of allowance of $62 and $636, respectively			1,864,825						1,614,347
Receivable from customers, net of allowance of $605 and $687, respectively			41,671						159,418
Fees receivable, net of allowance of $7,799 and $886, respectively			113,217						145,809
Insurance and reinsurance assets			133,786						30,073
Due from related parties			22,293						31,449
Fixed assets, net of accumulated depreciation and amortization of $52,816 and $50,017, respectively			23,407						25,976
Operating lease right-of-use assets			78,565						93,655
Goodwill			234,005						234,005
Intangible assets, net of accumulated amortization of $38,926 and $33,219, respectively			31,337						44,167
Deferred tax asset, net			50,810						21,765
Other assets, net of allowance of $1,583 and $0 respectively			84,963						54,755
Consolidated Funds
Cash and cash equivalents			30						296
Other investments			49,832						99,067
Other assets			48						46
Total Assets			$	8,828,774					$	8,748,814
Liabilities, Temporary Equity and Permanent Equity
Liabilities
Securities sold, not yet purchased, at fair value			$	913,574					$	1,201,448
Securities sold under agreements to repurchase			133,130						63,469
Payable for derivative contracts, at fair value			69,665						60,163
Securities loaned			1,199,838						1,586,572
Payable to brokers, dealers and clearing organizations			783,909						586,553
Payable to customers			2,663,414						2,432,612
Commission management payable			115,853						102,990
Insurance and reinsurance liabilities			317,547						71,269
Compensation payable			398,477						443,580
Operating lease liabilities			85,222						98,883
Notes payable and other debt			620,161						623,371
Fees payable			26,062						16,483
Accounts payable, accrued expenses and other liabilities			153,915						164,819
Consolidated Funds
Due to related parties			—						23
Accounts payable, accrued expenses and other liabilities			162						225
Total Liabilities			$	7,480,929					$	7,452,460

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Cowen Inc. Consolidated Statements of Financial Condition (dollars in thousands, except share and per share data)
			As of December 31, 2022						As of December 31, 2021
(continued)
Commitments and Contingencies (Note 27)
Redeemable Series A Convertible Preferred stock, par value $0.01 per share: 10,000,000 shares authorized, 120,750 shares issued and outstanding as of December 31, 2022 (aggregate liquidation preference of $120,750) and 10,000,000 shares authorized, 120,750 shares issued and outstanding as of December 31, 2021 (aggregate liquidation preference of $120,750)			$	120,750					$	120,750
Permanent Equity
Class A common stock, par value $0.01 per share: 62,500,000 shares authorized, 58,410,153 shares issued and 28,234,289 outstanding as of December 31, 2022 and 62,500,000 shares authorized, 55,826,893 shares issued and 27,778,964 outstanding as of December 31, 2021, respectively (including 950,919 and 901,374 restricted shares, respectively)			334						334
Class B common stock, par value $0.01 per share: 62,500,000 authorized, no shares issued and outstanding as of December 31, 2022 and 2021, respectively			—						—
Additional paid-in capital			1,162,714						1,100,667
Retained earnings			515,395						461,982
Accumulated other comprehensive income (loss)			1						(2)
Less: Class A common stock held in treasury, at cost, 30,175,864 and 28,047,929 shares as of December 31, 2022 and 2021, respectively			(614,272)						(547,112)
Total Cowen Inc. Stockholders' Equity			1,064,172						1,015,869
Nonredeemable non-controlling interests			162,923						159,735
Total Permanent Equity			$	1,227,095					$	1,175,604
Total Liabilities, Redeemable Preferred Stock and Permanent Equity			$	8,828,774					$	8,748,814

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

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Cowen Inc. Consolidated Statements of Operations (in thousands, except per share data)
									Year Ended December 31,
															2022						2021						2020
Revenues
Investment banking															$	494,842					$	1,067,162					$	769,486
Brokerage															592,292						585,162						524,361
Investment income (loss)
Securities principal transactions, net															112,829						122,110						124,667
Portfolio fund principal transactions, net															(4,442)						338						20,434
Carried interest allocations															(31,555)						5,059						59,250
Total investment income (loss)															76,832						127,507						204,351
Management fees															66,670						72,287						47,515
Incentive income															646						2,732						592
Interest and dividends															312,134						219,292						187,459
Insurance and reinsurance premiums															36,522						39,631						30,147
Other revenues, net															7,010						5,211						10,503
Consolidated Funds
Principal transactions, net															(49,234)						(6,194)						(24,338)
Interest and dividends															—						9						5,218
Other revenues															9						—						632
Total revenues															1,537,723						2,112,799						1,755,926
Interest and dividends expense															259,126						211,387						187,725
Total net revenues															1,278,597						1,901,412						1,568,201
Expenses
Employee compensation and benefits															771,386						1,046,371						860,531
Brokerage and trade execution costs															162,598						153,831						139,034
Underwriting expenses															4,914						24,978						22,565
Professional, advisory and other fees															80,564						80,849						59,990
Service fees															29,942						25,768						25,378
Communications															38,041						37,499						32,593
Occupancy and equipment															41,669						40,692						36,559
Depreciation and amortization															27,725						19,004						22,677
Client services and business development															39,333						29,607						20,526
Insurance and reinsurance claims, commissions and amortization of deferred acquisition costs															(12,260)						33,938						33,905
Change in fair value of contingent consideration															(13,560)						15,119						8,492
Other expenses															40,969						21,907						24,703
Consolidated Funds
Interest and dividends															—						—						2,064
Professional, advisory and other fees															121						273						2,087
Brokerage and trade execution costs															—						—						37
Other expenses															127						357						1,221
Total expenses															1,211,569						1,530,193						1,292,362
Other income (loss)
Net gains (losses) on other investments															9,613						35,494						18,879
Bargain purchase gain, net of tax															—						3,855						—
Gain/(loss) on debt extinguishment															—						(4,538)						2,719
Total other income (loss)															9,613						34,811						21,598
Income (loss) before income taxes															76,641						406,030						297,437
Income tax expense (benefit)															10,786						102,039						90,373
Net income (loss)															65,855						303,991						207,064

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Cowen Inc. Consolidated Statements of Operations (in thousands, except per share data)
									Year Ended December 31,
															2022						2021						2020
(continued)
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds															(10,603)						8,380						(9,299)
Net income (loss) attributable to Cowen Inc.															76,458						295,611						216,363
Preferred stock dividends															6,792						6,792						6,792
Net income (loss) attributable to Cowen Inc. common stockholders															$	69,666					$	288,819					$	209,571
Weighted average common shares outstanding:
Basic															28,183						27,721						27,790
Diluted (See Note 26)															31,544						32,628						29,519
Earnings (loss) per share:
Basic															$	2.47					$	10.42					$	7.54
Diluted (See Note 26)															$	2.21					$	8.85					$	7.10

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

F-8

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Table of Contents

Cowen Inc.

Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

									Year Ended December 31,
															2022												2021												2020
Net income (loss)																																	$	65,855											$	303,991											$	207,064
Other comprehensive income (loss), net of tax:
Foreign currency translation																											3												5												(2)
Total other comprehensive income (loss), net of tax																																	3												5												(2)
Comprehensive income (loss)																																	$	65,858											$	303,996											$	207,062
Less: Comprehensive income (loss) attributable to non-controlling interests																																	(10,603)												8,380												(9,299)
Comprehensive income (loss) attributable to Cowen Inc.																																	$	76,461											$	295,616											$	216,361

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

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Table of Contents

Cowen Inc.

Consolidated Statements of Changes in Equity

(dollars in thousands, except share data)

															Year Ended December 31,
																					2022						2021						2020
Permanent Equity Shares																					(in shares)
			Common Shares Outstanding
			Beginning balance																		27,778,964						26,845,628						28,610,357
			Restricted stock awards issued																		2,524,673						2,710,719						2,174,859
			Common stock issuance for purchase of investment																		—						68,980						—
			Common stock issuance for partial settlement of contingent liability from prior acquisition																		58,587						642,862						74,694
			Purchase of treasury stock, at cost																		(2,127,935)						(5,428,066)						(4,014,282)
			Share settlement of convertible notes (See Note 18)																		—						2,938,841						—
			Ending balance																		28,234,289						27,778,964						26,845,628
			Series A Convertible Preferred Shares Outstanding
			Beginning balance																		—						120,750						120,750
			Reclassification of Series A Convertible Preferred Stock (See Note 17)																		—						(120,750)						—
			Ending balance																		—						—						120,750
Permanent Equity																					(in dollars)
			Total Cowen Inc. Stockholders' Equity (beginning of period)																		$	1,015,869					$	969,497					$	809,855
			Class A Common stock
			Beginning balance																		334						334						334
			Ending balance																		334						334						334
			Series A Convertible Preferred stock
			Beginning balance																		—						1						1
			Reclassification of Series A Convertible Preferred Stock (See Note 17)																		—						(1)						—
			Ending balance																		—						—						1
			Treasury stock
			Beginning balance																		(547,112)						(346,870)						(284,301)
			Purchase of treasury stock, at cost																		(67,160)						(200,242)						(62,569)
			Ending balance																		(614,272)						(547,112)						(346,870)
			Additional Paid-in Capital
			Beginning balance																		1,100,667						1,130,138						1,110,635
			Reclassification of Series A Convertible Preferred Stock (See Note 17)																		—						(120,749)						—
			Common stock issuance for purchase of investment																		—						2,500						—
			Common stock issuance for partial settlement of contingent liability from prior acquisition																		1,881						23,060						926
			Equity portion of convertible note extinguishment (See Note 18)																		—						—						(29,645)
			Amortization of share based awards																		60,166						65,718						48,222
			Ending balance																		$	1,162,714					$	1,100,667					$	1,130,138

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Table of Contents

															Year Ended December 31,
																					2022						2021						2020
																					(in dollars)
			Accumulated Other Comprehensive Income (Loss)
			Beginning balance																		(2)						(7)						(5)
			Foreign currency translation																		3						5						(2)
			Ending balance																		$	1					$	(2)					$	(7)
			Retained Earnings/ (Accumulated deficit)
			Beginning balance																		$	461,982					$	185,901					$	(16,809)
			Cumulative effect of the adoption of the new revenue recognition standard (See Note 2w)																		—						—						(10)
			Net income (loss) attributable to Cowen Inc.																		76,458						295,611						216,363
			Preferred stock dividends (See Note 17)																		(6,792)						(6,792)						(6,792)
			Cash dividends to common stockholders (See Note 18)																		(16,253)						(12,738)						(6,851)
			Ending balance																		515,395						461,982						185,901
			Total Cowen Inc. Stockholders' Equity (end of period)																		1,064,172						1,015,869						969,497
			Nonredeemable Non-controlling Interests
			Beginning balance																		$	159,735					$	199,624					$	94,320
			Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds																		(10,603)						8,380						23,625
			Capital contributions																		24,417						55,556						201,223
			Capital distributions																		(10,626)						(29,012)						(78,251)
			Consolidation of entity																		—						—						48,596
			Deconsolidation of entity																		—						(74,813)						(89,889)
			Ending balance																		162,923						159,735						199,624
Total Permanent Equity																					$	1,227,095					$	1,175,604					$	1,169,121

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

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Table of Contents

Cowen Inc. Consolidated Statements of Cash Flows (dollars in thousands)
			Year Ended December 31,
			2022						2021						2020
Cash flows from operating activities:
Net income (loss)			$	65,855					$	303,991					$	207,064
Adjustments to reconcile net income (loss) to net cash provided by / (used in) operating activities:
Bargain purchase gain, net of tax			—						(3,855)						—
Depreciation and amortization			27,725						19,004						22,677
Amortization of debt issuance costs			2,473						2,563						1,512
Amortization of debt discount (premium)			309						6,727						4,490
Noncash lease expense			1,429						734						(561)
Asset impairment			—						—						2,425
(Gain) / loss on extinguishment of debt			—						3,890						(2,719)
Share-based awards			60,272						65,718						48,222
Change in deferred taxes			(29,045)						(14,095)						70,136
Net loss (gain) on disposal of fixed assets			216						—						—
Contingent liability adjustment			—						(614)						—
Purchases of securities owned, at fair value			(1,202,243)						(1,136,928)						(1,682,598)
Proceeds from sales of securities owned, at fair value			999,934						1,007,261						1,793,934
Proceeds from sales of securities sold, not yet purchased, at fair value			6,621,546						257,142						821,829
Payments to cover securities sold, not yet purchased, at fair value			(6,240,064)						(262,362)						(850,608)
Proceeds from sales of other investments			28,894						27,477						22,453
Investment income (loss) principal transactions, net			(157,798)						(66,219)						(161,699)
Consolidated Funds
Purchases of securities owned, at fair value			—						(4,000)						(1,912,137)
Proceeds from sales of securities owned, at fair value			—						13,748						1,793,528
Purchases of other investments			—						—						(2,090)
Proceeds from other investments			—						14,130						6,734
Investment income (loss) principal transactions, net			49,235						5,990						21,597
(Increase) decrease in operating assets:
Securities owned, at fair value, held at broker-dealer			450,760						(496,443)						(335,510)
Receivable on derivative contracts, at fair value			(208,556)						(234,653)						11,394
Securities borrowed			406,547						203,584						(1,153,746)
Deposits with clearing organizations, brokers and banks			23,925						(6,905)						(13,197)
Securities purchased under agreement to resell			(121,718)						191						(191)
Receivable from brokers, dealers and clearing organizations			(250,478)						115,397						(1,048,049)
Receivable from customers, net of allowance			117,747						(55,455)						1,684
Fees receivable, net of allowance			32,592						16,919						(33,991)
Insurance and reinsurance assets			7,717						(9,465)						(18,498)
Due from related parties			9,156						(10,088)						5,498
Other assets			(30,125)						(7,273)						82,124
Consolidated Funds
Receivable on derivative contracts, at fair value			—						(2,917)						(19,710)
Receivable from brokers			—						—						(961)
Other assets			—						13						564
Increase (decrease) in operating liabilities:
Securities sold, not yet purchased, at fair value, held at broker-dealer			(503,565)						473,516						286,105
Securities sold under agreement to repurchase			69,661						58,433						(18,208)
Payable for derivative contracts, at fair value			9,502						(15,997)						15,399
Securities loaned			(386,734)						(889,842)						874,548
Payable to brokers, dealers and clearing organizations			197,356						171,410						144,125
Payable to customers			230,802						752,286						1,250,102
Commission management payable			12,863						(13,997)						45,367
Insurance and reinsurance liabilities			(51,147)						4,041						63,856
Compensation payable			(81,185)						29,833						134,522
Fees payable			9,579						(27,350)						22,293
Due to related parties			(43)						(51)						254
Accounts payable, accrued expenses and other liabilities			(1,714)						11,666						(7,977)

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Table of Contents

Cowen Inc. Consolidated Statements of Cash Flows (dollars in thousands)
			Year Ended December 31,
			2022						2021						2020
Consolidated Funds
Contributions received in advance			—						—						450
Payable to brokers			—						—						8,560
Payable for derivative contracts, at fair value			—						—						11,967
Due to related parties			(23)						16						(386)
Accounts payable, accrued expenses and other liabilities			(63)						(353)						436
Net cash provided by / (used in) operating activities			171,594						306,818						513,013
Cash flows from investing activities:
Purchases of other investments			(63,875)						(98,375)						(48,634)
Purchase of business and/or asset acquisition			187,613						(63,246)						(5,647)
Cash at deconsolidated entity			—						(5,620)						(22,382)
Proceeds from sales of other investments			64,017						99,142						44,371
Purchase of fixed assets and intangibles			(12,537)						(11,819)						(10,721)
Sale of fixed assets			—						4,183						—
Net cash provided by / (used in) investing activities			175,218						(75,735)						(43,013)
Cash flows from financing activities:
Repayments on convertible debt			—						(88,119)						(69,842)
Deferred debt issuance cost			(72)						(9,312)						(1,700)
Borrowings on notes and other debt			4,175						450,286						159,821
Repayments on notes and other debt			(10,095)						(206,433)						(121,472)
Purchase of treasury stock			(31,078)						(159,822)						(47,314)
Cash dividends paid			(15,152)						(11,373)						(5,710)
Preferred stock dividends paid			(6,792)						(6,792)						(6,792)
Contingent liability payment			(10,076)						(10,698)						(5,653)
Capital contributions by non-controlling interests in operating entities			24,311						36,539						9,730
Capital distributions to non-controlling interests in operating entities			(10,626)						(7,601)						(5,605)
Consolidated Funds
Capital contributions by non-controlling interests in Consolidated Funds			—						19,017						375,716
Capital distributions to non-controlling interests in Consolidated Funds			—						(21,411)						(255,597)
Net cash provided by / (used in) financing activities			(55,405)						(15,719)						25,582
Change in cash and cash equivalents			291,407						215,364						495,582
Cash and cash equivalents, including cash collateral pledged and segregated cash, beginning of period			1,156,834						941,470						445,888
Cash and equivalents at end of period:
Cash and cash equivalents			1,139,652						914,343						645,169
Cash collateral pledged			122,687						47,494						110,743
Segregated cash			185,872						194,701						185,141
Cash and cash equivalents, Consolidated Funds			30						296						417
Cash and cash equivalents, including cash collateral pledged and segregated cash, end of period			$	1,448,241					$	1,156,834					$	941,470
Supplemental information
Cash paid during the year for interest			$	187,628					$	214,909					$	153,653
Cash paid during the year for taxes			$	50,988					$	119,050					$	4,783
Supplemental non-cash information
Purchase of treasury stock, at cost, through net settlement (See Note 18)			$	36,082					$	40,392					$	15,147
Preferred stock dividends declared (See Note 18)			$	6,792					$	6,792					$	6,792
Cash dividends declared (See Note 18)			$	16,253					$	12,738					$	6.851
Net assets (liabilities) acquired upon acquisition (net of cash)			$	(187,613)					$	23,128					$	9,865
Net increase in non-controlling interests due to consolidation of operating entity			$	—					$	—					$	48,596
Net decrease in non-controlling interests in Consolidated Fund due to deconsolidation of Consolidated Fund (See Note 2)			$	—					$	74,813					$	450,600
Common stock issuance for purchase of investment			$	—					$	2,500					$	—
Common stock issuance in relation to acquisitions			$	1,881					$	23,060					$	926

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

F-13

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Table of Contents

Cowen Inc.

Notes to Consolidated Financial Statements

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 banking, research, sales and trading, prime brokerage, global clearing, securities financing, commission management services and investment management through its two business segments: the Operating Company ("Op Co") and the Asset Company ("Asset Co").

The Op Co segment consists of four divisions: the Investment Banking division, the Markets division, the Research division and the Cowen 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, tech-enabled and business services, and energy. Op Co’s CIM division includes advisers to investment funds (including private equity structures and privately placed hedge funds) and registered funds. The Company has also invested capital in its insurance and reinsurance businesses.

The Asset Co segment consists of certain of the Company's private investments, private real estate investments and other legacy investment strategies. The focus of Asset Co is to drive future monetization of the invested capital of the segment.

On August 1, 2022, the Company, The Toronto-Dominion Bank, a Canadian chartered bank (“TD”), and Crimson Holdings Acquisition Co., a Delaware corporation and an indirect wholly owned subsidiary of TD (“Merger Sub”), entered into an Agreement and Plan of Merger pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of TD.

2. Significant Accounting Policies

a. Basis of presentation

These 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 the Accounting Standards Codification (the "Accounting Standards" or "ASC") 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 on consolidation. Certain investment funds that are consolidated in these accompanying consolidated financial statements, as further discussed below, are not subject to the consolidation provisions with respect to their own controlled investments pursuant to specialized industry accounting.

The Company serves as the managing member/general partner and/or investment manager to investment funds which it sponsors and manages. Investment funds in which the Company has a controlling financial interest are consolidated with the Company. Consequently, the Company's 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 consolidated financial statements. The management fees and incentive income earned by the Company from these investment funds are eliminated in consolidation.

With respect to the Company'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 consolidated statements of financial condition and employee compensation and benefits expense in the accompanying consolidated statements of operation based on the probable and estimable payments under the terms of the awards.

During the first quarter of 2021, the Company changed the presentation of certain income streams on its consolidated statements of operations by moving the income streams from Other income - net gains (losses) on securities, derivatives and other investments to Revenues. Additionally, the Company moved proprietary trading gains and losses generated by the Company’s broker-dealer entities from Brokerage revenue to Investment income (loss) – securities principal transactions, net. The specified

F-14

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Table of Contents

Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

presentation changes included the following:

From

To

Income Streams

Other income - net gains (losses) on securities, derivatives and other investments

Investment income (loss) – securities principal transactions, net

proprietary trading gains and losses generated outside of the Company’s broker-dealer entities

Other income - net gains (losses) on securities, derivatives and other investments

Investment income (loss) – portfolio fund principal transactions, net

gains and losses from portfolio funds

Other income - net gains (losses) on securities, derivatives and other investments

Investment income (loss) – carried interest allocations

carried interest allocations

Other income - net gains (losses) on securities, derivatives and other investments

Other revenue, net

net gains and losses on foreign currency transactions

Brokerage revenue

Investment income (loss) – securities principal transactions, net

proprietary trading gains and losses generated by the Company’s broker-dealer entities

Other income – Consolidated Funds – net realized and unrealized gains (losses) on investments and other transactions and other income – Consolidated Funds – net realized and unrealized gains (losses) on derivatives

Consolidated Funds – principal transactions, net

proprietary trading gains and losses generated from the Consolidated Funds

Other income – Consolidated Funds – net gains (losses) on foreign currency transactions

Consolidated Funds – other revenue

net gains and losses on foreign currency transactions generated by the Consolidated Funds

The Company believes that these presentation changes provide a better representation of the Company’s operating results as it is used by management to monitor the Company’s financial performance and is consistent with industry practice. The changes in presentation have no impact on net income and prior period amounts have been recast to reflect such changes in presentation.

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.

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 determines 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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Table of Contents

Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

The VIEs the Company has invested in act as investment managers and/or investment companies that may be managed by the Company. The VIEs are financed through their operations and/or loan agreements with the Company.

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 Company consolidates these investment funds when its variable interest is potentially significant to the entity (see Note 6 for additional disclosures on VIEs).

As of December 31, 2022 and 2021, the total assets of the consolidated VIEs were $289.3 million and $304.1 million, respectively, and total liabilities of the consolidated VIEs were $4.2 million and $9.8 million, respectively.

The Company consolidates investment funds for which it acts as the managing member/general partner and investment manager. At December 31, 2022, the Company consolidated Ramius Enterprise LP (“Enterprise LP”), an investment fund. At December 31, 2021, the Company consolidated the following investment funds: Enterprise LP and Cowen Private Investments LP ("Cowen Private").

During the first quarter of 2022, the Company deconsolidated Cowen Private as the fund was liquidated. During the first quarter of 2021, the Company deconsolidated Cowen Sustainable Investments I, LP ("CSI I LP") due to the Company's ownership being diluted through a capital equalization event.

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 consolidated statements of financial condition. The Company's share of earnings or losses from equity method investees is included in Net gains (losses) on other investments in the accompanying 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 its investment in such entity (primarily consisting of securities of such entity which are purchased and held principally for the purpose of selling them in the near term and classified as trading securities), at fair value with unrealized gains (losses) resulting from changes in fair value reflected within Investment income (loss) - Securities principal transactions, net or Investment income (loss) - portfolio fund investment income (loss) in the accompanying consolidated statements of operations.

Retention of Specialized Accounting— The Consolidated Funds and certain other consolidated companies are investment companies and apply specialized industry accounting. The Company reports its investments on the consolidated statements of financial condition at their estimated fair value, with unrealized gains (losses) resulting from changes in fair value reflected within Consolidated Funds - Principal transactions, net in the accompanying consolidated statements of operations. Accordingly, the accompanying consolidated financial statements reflect different accounting policies for investments depending on whether or not they are held through a consolidated investment company.

Certain portfolio fund investments qualify as equity method investments and are investment companies that apply specialized industry accounting. In applying equity method accounting guidance, the Company retains the specialized accounting of the investees and reports its investments on the consolidated statements of financial condition at their estimated fair value, with unrealized gains (losses) resulting from changes in fair value reflected within Investment Income - portfolio fund principal transactions, net in the accompanying consolidated statements of operations.

In addition, the Company's broker-dealer subsidiaries, Cowen and Company, LLC ("Cowen and Company"), Westminster Research Associates LLC ("Westminster"), Cowen Execution Services Limited ("Cowen Execution Ltd"), ATM Execution LLC ("ATM Execution"), Cowen and Company (Asia) Limited ("Cowen Asia"), and Cowen International Limited ("Cowen International Ltd"), apply the specialized industry accounting for brokers and dealers in securities, which the Company retains upon consolidation.

c.    Use of estimates

The preparation of the accompanying 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, and the disclosure of contingent assets and liabilities at the date of the accompanying consolidated financial statements, as well as the accounting for goodwill and identifiable intangible assets and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

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Table of Contents

Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

d.    Cash and cash equivalents

The Company considers investments in money market funds and other highly liquid investments with original maturities of three months or less which are deposited with a bank or prime broker to be cash equivalents. Cash and cash equivalents held at Consolidated Funds, although not legally restricted, are not available to fund the general liquidity needs of the Company. The Company may also be exposed to credit risk as a result of cash being held at several banks.

e.    Allowance for credit losses

ASC Topic 326, Financial Instruments – Credit Losses (“ASC 326”) prescribes 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 guidance, 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 applies the guidance in ASC 326 to securities borrowed and fees and other receivables carried at amortized cost (including, but not limited to, receivables related to securities transactions, underwriting fees, strategic/financial advisory fees and placement and sales agent fees, management fees and incentive fees receivable).

The allowance for credit losses is based on the Company's expectation of the collectability of financial instruments, fees and other 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 may affect the Company’s expectation of the collectability in determining the allowance for credit losses. 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 applies a practical expedient to measure the allowance for credit losses based on the fair value of the collateral. If the fair value of the collateral held exceeds the amortized cost of the borrowing 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 consolidated statements of operations.

f.    Valuation of investments and derivative contracts and other investments

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;

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. 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

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Notes to Consolidated Financial Statements (Continued)

of these investment is based on their proportional rights of the underlying portfolio company and are valued using market quotations when readily available. When market quotations are unavailable or deemed not representative, the level 3 investments are valued using a market approach, an income approach, or a combination of both approaches. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future cash flows to a single present value. In following these approaches, the significant inputs and assumptions include the timing and expected amount of cash flows, the appropriateness of discount rates used, the premium ascribed to a controlling financial interest, selected equity volatilities 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 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 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.

    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.

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, are classified as level 2 when their inputs can be corroborated by market data. OTC derivatives, such as swaps and options, with significant inputs that cannot be corroborated by readily available or observable market data are classified as level 3.

Other investments—Other investments consist primarily of portfolio funds, 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 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 practical expedient 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. 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

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Notes to Consolidated Financial Statements (Continued)

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.

iii. 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 consolidated statements of financial condition. The Company's share of earnings or losses from equity method investees is included in Net gains (losses) on other investments in the accompanying consolidated statements of operations.

See Notes 6 and 7 for further information regarding the Company's investments, including equity method investments and fair value measurements.

Accounts payable, accrued expenses and other liabilities—Accounts payable, accrued expenses and other liabilities include contingent consideration liabilities related to terms of the purchase agreements of the Company's previous acquisitions. In each instance the Company is required to pay the sellers of such entities a portion of future net income and/or revenues of the acquired business if certain targets are met through December 24, 2024. For each acquisition the Company has estimated the contingent consideration liabilities using a combination of Monte Carlo and Discounted Cash Flow methods which require the Company to make estimates and assumptions regarding the future cash flows and profits related to the ongoing operations of these acquired businesses. The Company updates its estimates and assumptions each reporting period and the associated change in fair value is shown in the accompanying consolidated statements of operations.

g.    Offsetting of derivative contracts

To reduce credit exposures on derivatives, the Company may enter into master netting agreements with counterparties that permit the Company the right, in the event of a default by a counterparty, to offset the counterparty’s rights and obligations under the agreement and to liquidate and offset any collateral against any net amount owed by the counterparty. Derivatives are reported on a net-by-counterparty basis (i.e., the net payable or receivable for derivative assets and liabilities for a given counterparty) in the consolidated statements of financial condition when a legal right of offset exists under an enforceable netting agreement. Additionally, derivatives are reported net of cash collateral received and posted under enforceable credit support agreements in the consolidated statements of financial condition, provided a legal right of offset exists. See Note 6 for further information about offsetting of derivative financial instruments.

h.    Due from related parties

The Company may advance amounts and pay certain expenses on behalf of employees of the Company or other affiliates of the Company. These amounts settle in the ordinary course of business. Such amounts are included in due from related parties on the accompanying consolidated statements of financial condition.

i.    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 and are reported net of an allowance for credit losses.

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 accounts of brokers and dealers.

Receivables and payables with brokers, dealers and clearing organizations arising from unsettled regular-way transactions 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 with multiple financial institutions.

j.    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 and prepaid research, net of allowance for credit losses. For prepaid research, a prepaid research asset is established for research and related services disbursed in advance of anticipated client commission volumes.

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Notes to Consolidated Financial Statements (Continued)

Payable to customers primarily consists of amounts owed to customers relating to securities transactions not completed on settlement date, recorded on a settlement-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.

k.    Fees receivable

Fees receivable primarily relate to securities transactions and are reported net of an allowance for credit losses.  Fees receivable also include amounts due to the Company for underwriting fees, strategic/financial advisory fees and placement and sales agent fees. Additionally, management and incentive fees due to the Company 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 2w).

l.    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 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 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. See Note 2e 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 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 consolidated statements of financial condition.

m.     Securities purchased under agreement to resell and securities sold under agreements to repurchase

Securities purchased under agreement to resell and securities sold under agreements to repurchase ("repurchase agreements") are accounted for as collateralized financing transactions and are recorded at their contracted resale or repurchase amount plus accrued interest. A repo is a transaction in which a firm buys or sells financial instruments from/to a counterparty, typically in exchange for cash, and simultaneously enters into an agreement to resell or repurchase the same or substantially the same financial instruments to/from such counterparty at a stated price plus accrued interest at a future date. 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 approximates or is greater than the market value of securities purchased or sold in the transaction. The Company typically enters into repurchase transactions with counterparties that prefer repurchase transactions to securities borrowed and securities loaned transactions. The Company has executed master repurchase agreements with such counterparties and utilizes such counterparties to finance its own positions, or replace a securities lending transaction with a repurchase for matched book purposes. The Company monitors the market value of repurchases on a daily basis, with additional collateral obtained or returned, as necessary. Repurchases may also result in credit exposures for the Company in an event that the counterparties are unable to fulfill their 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 repurchase contracts in place with the counterparties.

Interest paid is recorded in interest and dividends expense in accordance with US GAAP on repurchase agreement transactions on an accrual basis in the accompanying consolidated statements of operations.

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Notes to Consolidated Financial Statements (Continued)

n.    Fixed assets

Fixed assets are stated 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. When the Company commits to a plan to abandon fixed assets or leasehold improvements before the end 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 depreciated on a straight-line basis over their estimated useful lives.

Asset			Depreciable Lives						Depreciation and/or Amortization Method
Telecommunication and computer equipment			3 - 5 years						Straight-line
Computer software			3 - 4 years						Straight-line
Furniture and fixtures			5 years						Straight-line
Leasehold improvements			Term of Lease						Straight-line
Finance lease right-of-use asset			Term of Lease						Straight-line

o.    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 accordance with US GAAP requirements for testing for impairment of 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 12 for the impact of the goodwill impairment test.

Intangible assets

Intangible assets with finite lives are amortized over their estimated average useful 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 consolidated statements of operations if the sum of the estimated undiscounted cash flows from the use or disposition of 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.

p.    Debt

Long-term debt is carried at the principal amount borrowed net of any unamortized discount/premium. The discount or premium is accreted to interest expense using the effective interest method over the remaining life of the underlying debt obligations. Accrued but unpaid coupon interest is included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated statements of financial condition.

q.    Legal reserves

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 reserve nor disclosure is required for losses that are deemed remote.

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Notes to Consolidated Financial Statements (Continued)

r.    Temporary Equity

Temporary equity consists of Redeemable 5.625% Series A cumulative perpetual convertible preferred stock ("Series A Convertible Preferred Stock"). The Company has irrevocably elected to cash settle $1,000.00 of each conversion of any share of the Series A Convertible Preferred Stock. As the holders can exercise the conversion option on their shares of Series A Convertible Preferred Stock at any time and require cash payment upon conversion, the Company has classified the Series A Convertible Preferred Stock preferred stock in temporary equity.

s.    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 do not have redemption features that can be exercised at the option of the holder currently or contingent upon the occurrence of future events, their ownership has been classified as a component of permanent equity. Ownership which has been classified in permanent equity are non-controlling interests for which the holder does not have the unilateral right to redeem its ownership interests.

t.    Treasury stock

In accordance with US GAAP relating to repurchases of an entity's own outstanding common stock, the Company records the purchases of stock held in treasury at cost and reports them separately as a deduction from total stockholders' equity on the accompanying consolidated statements of financial condition and changes in equity.

u.    Comprehensive income (loss)

Comprehensive income (loss) consists of net income and other comprehensive income (loss). The Company's other comprehensive income (loss) is comprised of foreign currency cumulative translation adjustments.

v.    Right-of-use assets and lease liabilities

The Company accounts for leases in accordance with ASC Topic 842, Leases ("ASC 842"). The guidance requires the recognition of right-of-use assets and lease liabilities on the accompanying consolidated statements of financial condition.

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. On an ongoing basis the Company performs an analysis of new/modified 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 determination of the associated discount rates. 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 non-lease components for its real estate and facility leases. Right-of-use assets represent the Company's 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 non-lease 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 a 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 uses 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.

The Company reconciles the operating lease expense with operating lease payments by presenting the amortization of the operating Right-of-use 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 Consolidated Statements of Cash Flows.

Please refer to Note 16 for information on the Company's finance leases.

w.    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

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Notes to Consolidated Financial Statements (Continued)

(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's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events.

The Company's principal sources of revenue are generated within two segments. The Op Co segment generates revenue through five principal sources: investment banking revenue, brokerage revenue, management fees, investment income (loss) and incentive income. Investment income is excluded from ASC Topic 606. The Asset Co segment generates revenue through investment income (loss), management fees and incentive income. 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 with financial instruments, interest income and expense, leasing and insurance contracts. The following is a description of principal activities, from which the Company generates its revenue. For more detailed information about reportable segments, see Note 28.

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 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 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-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 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"), 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

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Notes to Consolidated Financial Statements (Continued)

Company is contractually entitled to reimbursement. The related expenses are presented gross within their respective expense category in the accompanying consolidated statements of operations.

Brokerage

Brokerage revenue consists of commissions, principal transactions, equity 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 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. Commission 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.

•Equity research fees. Equity research fees are paid to the Company for providing access to equity 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 Markets in Financial Instruments Directive ("MiFID II"), the international customers of the Company's broker-dealers have executed equity research contracts 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 research fees are recognized over the contract period as the customer is benefiting from the research throughout the contract term. When the equity 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 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") 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.

Investment Income

•Securities principal transactions, net. Principal transactions, net includes realized gains and losses from transactions in financial instruments and unrealized gains and losses from ongoing changes in the fair value of the Company’s positions.

Principal transactions, net generated by the Company's broker-dealers include 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.

With respects to the Company's proprietary trading strategies, purchases and sales of securities, net of commissions, derivative contracts, and the related revenues and expenses are recorded on a trade-date basis with net trading gains and losses included as a component of Investment income - Securities principal transactions, net, in the accompanying consolidated statements of operations.

•Portfolio Fund principal transactions, net. 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

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

guidance relating to investments in certain entities that calculate NAV per share (or its equivalent). The practical expedient permits an entity holding certain investments that calculates NAV per share or its equivalent for which the fair value is not readily determinable and is considered an investment company under ASC 946 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. Realized and unrealized gains (losses) resulting from changes in NAV per share are reflected within Investment income – portfolio fund principal transactions, net in the accompanying consolidated statements of operations.

•Carried interest allocations. The Company is allocated carried interest based on net profits (as defined in the respective investment management or partnership agreement) related to certain of the Company's private equity investment funds. For the private equity fund products the Company offers, the carried interest earned is typically up to 30% of the distributions made to investors after return of their contributed capital and generally a preferred return. The Company recognizes carried interest allocated to the Company under an equity ownership model as investment income - carried interest allocations in the accompanying consolidated statements of operations accordance with ASC Topic 323, Investments - Equity Method and Joint Ventures. Under the equity method of accounting the Company recognizes its allocations of incentive income or carried interest within Investment Income - Carried interest allocations in the accompanying consolidated statements of operations along with the allocations proportionate to the Company's ownership interests in the investment funds. Generally, carried interest is recognized after the investor has received a full return of its 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.

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 or invested capital for private equity funds and net asset value for hedge funds. The Company has determined that the primary drivers of management fees are committed and invested capital relating to private equity funds and assets under management relating to hedge 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.

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:

•Private equity funds. Management fees for the Company's private equity funds are generally charged at an annual rate of 1% 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 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 net asset value. Management fees are generally calculated monthly at the end of each month.

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 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. 

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 crystallized. For certain  hedge funds, the incentive fee crystallizes annually when the high-water mark for such hedge funds is reset, which delays

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Notes to Consolidated Financial Statements (Continued)

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 is earned after the investor has received a full return of its invested capital, plus a preferred return.

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 in 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.

Insurance and reinsurance

    Premiums for insurance and reinsurance 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 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 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 consolidated statements of financial condition.

All of the items above are reported net of any Outward Reinsurance (see Note 22), which is determined as the portion of the Company’s premiums, liabilities for losses and loss adjustment expenses, provisions for losses and loss adjustment expenses, and costs of acquiring new policies that are ceded to providers of such Outward Reinsurance pursuant to their terms and conditions. These ceded amounts are calculated based on the same principles outlined above.

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.

x.    Share-based compensation

The Company accounts for its share-based awards granted to individuals as payment for employee services and values such awards based on grant date fair value. Unearned compensation associated with share-based awards is amortized over the vesting period of the option or award. The Company estimates forfeiture for equity-based awards that are not expected to vest. See Note 23 for further information regarding the Company's share-based compensation plans.

y.    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 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

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

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 realized.

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 accordance with federal, state and local tax laws, the Company 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 be submitted on a stand-alone or combined basis. These foreign subsidiaries are subject to taxation in their respective resident countries, and the Company is responsible for, and therefore reports, all taxes incurred by these subsidiaries in the consolidated statements of operations. The foreign jurisdictions where the Company owns subsidiaries and has tax filing obligations are the United Kingdom, Luxembourg, Malta, Guernsey, Germany, Switzerland, Israel, South Africa, Canada and Hong Kong.

z.    Foreign currency transactions

The Company consolidates certain foreign subsidiaries that have designated a foreign currency as their functional currency. For entities that have designated a foreign currency as their functional currency, assets and liabilities are translated into U.S. dollars based on current rates, which are the spot rates prevailing at the end of each statement of financial condition date, and revenues and expenses are translated at historical rates, which are the average rates for the relevant periods. The resulting translation gains and losses, and the tax effects of such gains and losses, are recorded in accumulated other comprehensive income (loss), a separate component of stockholders' equity.

For subsidiaries that have designated the U.S. Dollar as their functional currency, securities and other assets and liabilities denominated in foreign currencies are translated into U.S. Dollar amounts at the date of valuation. Purchases and sales of securities and other assets and liabilities and the related income and expenses denominated in foreign currencies are translated into U.S. Dollar amounts on the respective dates of the transactions. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on these balances from fluctuations arising from changes in market prices of securities and other assets/liabilities held or sold. Such fluctuations are included in the accompanying consolidated statements of operations as a component of net gains (losses) on securities, derivatives and other investments. Gains and losses primarily relating to foreign currency broker balances are included in other income (loss) in the accompanying consolidated statements of operations.

aa.    Recent pronouncements

Recently issued

In August 2020, the FASB issued guidance simplifying an issuer’s accounting for convertible instruments by eliminating two of the three models in ASC 470-20 that require separate accounting for embedded conversion features; separate accounting is still required in certain cases. The guidance also simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. The guidance requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of potential share settlement (if the effect is more dilutive) for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. The guidance requires new disclosures about events that occur during the reporting period and cause conversion contingencies to be met and about the fair value of a public business entity’s convertible debt at the instrument level. For public business entities, the guidance is effective for reporting periods beginning after December 15, 2021 and interim periods within those fiscal years with early adoption permitted. The Company adopted the guidance as of January 1, 2022 under the modified retrospective method. With the adoption of this guidance, the Company is required to include the portion of the Series A Convertible Preferred Stock that can be settled in Class A common stock (the amount in excess of $1,000.00 per share of the Series A Convertible Preferred Stock) in the diluted earnings per share calculation. See Note 26 for the calculation of diluted earnings per share.

In August 2018, the FASB issued guidance prescribing targeted improvements to financial services – insurance industry accounting guidance for long-duration contracts. The new guidance (i) prescribes the discount rate to be used in measuring the liability for future policy benefits for traditional and limited payment long-duration contracts, and requires assumptions for those liability valuations to be updated after contract inception, (ii) requires more market-based product guarantees on certain separate account and other account balance long-duration contracts to be accounted for at fair value, (iii) simplifies the amortization of

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

deferred acquisition costs for virtually all long-duration contracts, and (iv) introduces certain financial statement presentation requirements, as well as significant additional quantitative and qualitative disclosures. For all entities, the guidance is effective for reporting periods beginning after December 15, 2022 and interim periods within those fiscal years with early adoption permitted. The Company is evaluating the impact of adopting the new guidance and has determined that the impact is not expected to be material to the consolidated financial statements.

In June 2022, the FASB issued guidance that amends ASC 820 to clarify that when evaluating the fair value of an equity security a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security's unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security’s fair value. The guidance further prohibits an entity from recognizing a contractual sale restriction as a separate unit of account and requires specific disclosures related to the fair value; the nature and duration of the restrictions; and circumstances that could cause the restrictions to lapse on such an equity security. For public business entities, the guidance is effective for reporting periods beginning after December 15, 2023 and interim periods within those fiscal years with early adoption permitted. The Company is currently evaluating the impact of the new guidance.

3. Acquisition

Kelvin Re Limited

On June 1, 2022 (the "Kelvin Acquisition Date"), the Company completed its acquisition of Kelvin Re Limited (“Kelvin”) by acquiring all of the issued and outstanding ordinary shares in Kelvin from CS IRIS A Fund Limited (the "Kelvin Acquisition"). Kelvin is a general reinsurance company incorporated and domiciled in Guernsey whose principal activity was the provision of property and natural catastrophe reinsurance business. In December 2020, Kelvin ceased underwriting new business and has been operating as a run-off entity. Cowen acquired Kelvin to manage the outstanding reinsurance claims arising from its existing portfolio. (See Note 22).

In accordance with US GAAP and SEC Regulation S-X Rule 11-01(d), the Kelvin Acquisition is accounted for as an asset acquisition because the assets and liabilities of Kelvin do not meet the definition of a business, and accordingly the assets and liabilities acquired as part of the Kelvin Acquisition were measured based on their cost allocated to assets on a relative fair value basis, which included transaction costs of $1.6 million.

The aggregate purchase price of the Kelvin Acquisition after transaction costs is $221.0 million. The purchase price was paid in cash by Kelvin on behalf of Cowen. The results of Kelvin are integrated within the Company's insurance business as of the Kelvin Acquisition Date, which is reported in the Company’s Operating Company segment.

The table below summarizes the net tangible and intangible assets acquired and liabilities assumed as of June 1, 2022:

			(dollars in thousands)
Cash and cash equivalents			$	92,589
Cash collateral pledged			316,049
Premiums receivable from cedants			58,904
Claims recoverable from reinsurers			52,526
Insurance and reinsurance assets			111,430
Other assets			94
Premiums and other costs payable to reinsurers			(5,400)
Claims liabilities			(292,026)
Insurance and reinsurance liabilities			(297,426)
Accounts payable, accrued expenses and other liabilities			(1,711)
Total net assets acquired			$	221,025

Portico

On December 16, 2021 (the "Portico Acquisition Date"), the Company, through its indirect wholly owned subsidiary, Cowen PC Acquisition LLC, completed its previously announced acquisition (the "Portico Acquisition") of Portico Capital Advisors and certain assets and liabilities of its European operations (“Portico”). Portico was privately-held and was a leading mergers and acquisitions advisory firm focused on the verticalized software, data, and analytics sectors. The Portico Acquisition was completed for a combination of 75% cash and 25% stock. In the aggregate, the purchase price, specified assets acquired and liabilities assumed were not significant and the near-term impact to the Company and its consolidated results of operations and cash flows was not significant.

The Portico Acquisition was accounted for under the acquisition method of accounting in accordance with US GAAP. Accordingly, the Portico assets purchased and liabilities assumed were recorded on the Company's books at fair value as of the

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Notes to Consolidated Financial Statements (Continued)

Portico Acquisition Date, and Portico's post-acquisition results were included in the Company's consolidated financial statements. Additionally, following the acquisition, the business acquired is included in the Investment Bank reporting unit within the Operating Company segment.

The aggregate estimated purchase price of the Portico Acquisition was $112.0 million. On the Portico Acquisition Date the Company paid upfront consideration of $91.3 million subject to certain net working capital and other customary adjustments, with additional maximum contingent consideration of $58.0 million that will become payable dependent on the achievement of certain milestones by Portico in each of the first three years (four years if certain conditions are met) following the Portico Acquisition Date subject to a $19.3 million maximum in each year and a $58.0 million cumulative maximum, with the opportunity for additional consideration payable in each of the fourth and fifth years following the Portico Acquisition Date upon the achievement of certain additional milestones. The Company estimated the contingent consideration at $20.7 million using a 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 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 $4.4 million, as a reserve for any future claims against the sellers of Portico. The upfront consideration and contingent consideration, consists of a combination of 75% cash and 25% shares of the Company's Class A common stock and the potential additional consideration payable in each of the fourth and fifth years following the Portico Acquisition Date would be paid in cash. Shares issued on the Portico Acquisition Date of 586,061 were valued based on the 20-trading day volume-weighted average price per share of $37.11 as of December 13, 2021. 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's shares on the Portico Acquisition Date. Any shares of Class A common stock issued in connection with any such contingent payments will be valued based on the 20-trading day volume-weighted average price per share as of the date that in two business days immediately prior to the date on which such shares are to be issued.

In addition, Portico and the Company have established a retention bonus pool, for Portico employees that remain employed at the end of each year there is a contingent payment which will be settled in a combination of 75% cash and 25% shares of the Company's Class A common stock based on Portico meeting certain economic performance hurdles. Part of the award is time based (60%) and part is performance and time based (40%). The time based portion of the award is accrued within compensation payable in the accompanying consolidated statements of financial condition utilizing a graded vesting attribution method over the three year vesting period. The total consideration payable under the time based portion of the award is $6 million in aggregate, and will not exceed $3.6 million in any annual period if all service conditions are met. The performance based portion of the award is accrued within compensation payable in the accompanying consolidated statements of financial condition based on a Monte Carlo simulation of the probability that the performance hurdles are met for each discrete year. Updates to the accrual will be made at each reporting period. The total consideration payable will not exceed $4 million if each of the economic performance hurdles are met. The Company is recognizing the retention bonus over each contingent payment period based upon the Company's revenue projections for Portico. The aggregate bonus pool has an aggregate maximum of $10.0 million over a four-year period.

The table below summarizes the purchase price allocation of net tangible and intangible assets acquired and liabilities assumed as of December 16, 2021:

			(dollars in thousands)
Cash			$	5,089
Operating lease right-of-use assets			2,707
Fixed assets			8
Intangible assets			19,900
Other assets			514
Operating lease liabilities			(2,707)
Other liabilities			(401)
Total net identifiable assets acquired and liabilities assumed			25,110
Goodwill			86,921
Total estimated purchase price			$	112,031

As of the Portico Acquisition Date, the estimated fair value of the Company's intangible assets, as acquired through the Portico Acquisition, was $19.9 million and had a weighted average useful life of 3.02 years. The allocation of the intangible assets is shown within the following table:

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Notes to Consolidated Financial Statements (Continued)

			Estimated intangible assets acquired						Estimated average remaining useful lives
			(dollars in thousands)						(in years)
Intangible asset class
Trade name			$	400					1
Customer relationships			13,400						4
Backlog			6,100						1
Total intangible assets			$	19,900

Amortization expense for the year ended December 31, 2022 and 2021 was $9.5 million and $0.4 million, respectively, and is included in depreciation and amortization in the accompanying consolidated statements of operations. The estimated amortization expense related to these intangible assets in future periods is as follows:

			(dollars in thousands)
2023			$	3,376
2024			3,376
2025			3,235
2026			—
2027			—
Thereafter			—
			$	9,987

In addition to the purchase price consideration, for the year ended December 31, 2021, the Company had incurred acquisition-related expenses of $4.2 million, including financial advisory, legal and valuation services, which are included in professional, advisory and other fees in the accompanying consolidated statements of operations.

Malta Holdings

On February 26, 2021 (the "Malta Holdings Acquisition Date"), the Company, through its indirect wholly owned subsidiary, Cowen Malta Holdings Ltd. (“Malta Holdings”), completed the acquisition of all of the outstanding equity interest of Axeria Insurance Limited (the “Acquisition”), an insurance company organized under the laws of Malta whose principal business activity is to provide insurance coverage to third parties (see Note 22). Axeria Insurance Limited was renamed Cowen Insurance Company Ltd (“Cowen Insurance Co”) upon acquisition. The Acquisition was completed for a combination of cash and deferred consideration. In the aggregate, the purchase price, assets acquired, and liabilities assumed were not significant and near-term impact to the Company and its consolidated results of operations and cash flows was not significant.

The aggregate estimated purchase price of the Acquisition was $12.7 million. On the Malta Holdings Acquisition Date, the Company paid upfront consideration of $12.5 million, with additional deferred consideration of $0.2 million which was paid during the second quarter of 2021.

The Acquisition was accounted for under the acquisition method of accounting in accordance with US GAAP. As such, the results of operations of the business acquired is included in the accompanying consolidated statements of operations since the date of the Acquisition and the assets acquired, liabilities assumed recorded at their fair values within their respective line items on the accompanying consolidated statement of financial condition. The Company has recognized a bargain purchase gain of $5.2 million related to the Acquisition and is shown net of associated tax of $1.3 million in the consolidated statement of operations. The bargain purchase gain is primarily driven by the recognition of the customer relationships intangible asset and a contractual discount on the closing equity balance at the Malta Holdings Acquisition Date. Additionally, following the Acquisition, the business acquired is included in the Cowen Investment Management reporting unit within the Operating Company segment.

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

The table below summarizes the purchase price allocation of net tangible and intangible assets acquired and liabilities assumed as of February 26, 2021:

			(dollars in thousands)
Cash			$	14,844
Securities owned, at fair value			1,571
Fixed assets			30
Intangible assets			4,794
Other assets			12,828
Compensation payable			(17)
Other liabilities			(16,099)
Total net identifiable assets acquired and liabilities assumed			17,951
Bargain purchase gain			(5,216)
Total estimated purchase price			$	12,735

As of the Malta Holdings Acquisition Date, the estimated fair value of the Company's intangible assets, which are primarily broker relationships, was $4.6 million and had a weighted average useful life of 10 years. The licenses of $0.2 million have indefinite life. Amortization expense for the years ended December 31, 2022 and 2021, was $0.4 million, respectively.

As of December 31, 2022, the estimated amortization expense related to these intangible assets in future periods is as follows:

			(dollars in thousands)
2023			466
2024			466
2025			466
2026			466
2027			466
Thereafter			1,693
			$	4,023

In addition to the purchase price consideration, for the year ended December 31, 2022, the Company had incurred acquisition-related expenses of $0.2 million, including financial advisory, legal and valuation services, which are included in professional, advisory and other fees in the accompanying consolidated statements of operations.

MHT

On October 1, 2020 (the "MHT Acquisition Date"), the Company, through its indirect wholly owned subsidiary, Cowen and Company, completed its previously announced acquisition (the "MHT Acquisition") of certain assets and liabilities of MHT Partners, LP (“MHT Partners”). MHT Partners was an investment bank, based primarily in Dallas and San Francisco, focused on representing innovative companies in growing markets. The Acquisition was completed for a combination of cash and contingent consideration. In the aggregate, the purchase price, specified assets acquired and liabilities assumed were not significant and near-term impact to the Company and its consolidated results of operations and cash flows was not significant.

The MHT Acquisition was accounted for under the acquisition method of accounting in accordance with US GAAP. As such, results of operations for the MHT Acquisition are included in the accompanying consolidated statements of operations since the Acquisition Date, and the assets acquired and liabilities assumed were recorded at their fair value as of the Acquisition Date. Subsequent to the Acquisition, the operations of the MHT Acquisition were integrated within the Company's existing businesses. Additionally, following the acquisition, the business acquired from MHT Partners is included in the Investment Bank reporting unit within the Operating Company segment.

The aggregate estimated purchase price of the MHT Acquisition was $9.9 million. On the acquisition date, the Company paid an upfront consideration of $5.7 million, with additional contingent consideration to be paid after December 2023 valued based on a multiple of three-year average annual revenues of the acquired business less certain expenses. The Company estimated the fair value of the contingent consideration at $4.2 million using a combination of Monte Carlo and Discounted Cash Flow methods which require 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 consolidated statements of financial condition. Changes in these estimates and assumptions could have a significant impact on the amounts

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Notes to Consolidated Financial Statements (Continued)

recognized. In addition, the Company has established deferred compensation for specified previous MHT Partners employees which will be settled in cash over a three-year period.

The table below summarizes the purchase price allocation of net tangible and intangible assets acquired and liabilities assumed as of October 1, 2020:

			(dollars in thousands)
Fixed assets			$	101
Operating lease right-of-use assets			1,120
Intangible assets			1,224
Other assets			43
Compensation payable			(533)
Operating lease liabilities			(1,446)
Total net identifiable assets acquired and liabilities assumed			509
Goodwill			9,356
Total estimated purchase price			$	9,865

As of the MHT Acquisition Date, the estimated fair value of the Company's intangible assets, as acquired through the MHT Acquisition, was $1.2 million and had a weighted average useful life of 4.17 years . The allocation of the intangible assets is shown within the following table:

			Estimated intangible assets acquired						Estimated average remaining useful lives
			(dollars in thousands)						(in years)
Intangible asset class
Trade name			$	131					3
Customer relationships			749						4
Non-compete agreements			344						5
Total intangible assets			$	1,224

Amortization expense for the year ended December 31, 2022, 2021 and 2020 was $0.3 million, $0.3 million, and $0.1 million, respectively, and is included in depreciation and amortization in the accompanying consolidated statements of operations. The estimated amortization expense related to these intangible assets in future periods is as follows:

			(dollars in thousands)
2023			$	289
2024			209
2025			52
2026			—
2027			—
Thereafter			—
			$	550

In addition to the purchase price consideration, for the year ended December 31, 2020, the Company had incurred acquisition-related expenses of $0.8 million, including financial advisory, legal and valuation services, which are included in professional, advisory and other fees in the accompanying consolidated statements of operations.

4. Cash Collateral Pledged    

As of December 31, 2022 and 2021, the Company pledged cash collateral in the amount of $3.1 million and $3.4 million respectively, which relates to letters of credit issued to the landlords of the Company's premises in various locations. The Company also has pledged cash collateral for reinsurance agreements which amounted to $119.5 million (of which $24.4 million was in the form of letters of credit), as of December 31, 2022, and $44.1 million, as of December 31, 2021, which are expected to be released periodically as per the terms of the reinsurance policy (see Notes 16 and 22).

As of December 31, 2022, the Company has the following 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.

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Notes to Consolidated Financial Statements (Continued)

Location

Amount

Maturity

(dollars in thousands)

New York

$

2,309

December 2023

Boston

382

November 2023

San Francisco

455

November 2023

$

3,146

To the extent any letter of credit is drawn upon, interest will be assessed at the prime commercial lending rate. As of December 31, 2022 and 2021 there were no amounts due related to these letters of credit.

5. Segregated Cash

As of December 31, 2022 and 2021, cash segregated under federal regulations and other restricted deposits of $185.9 million and $194.7 million, respectively, consisted of cash deposited in Special Reserve Bank Accounts for the exclusive benefit of customers under SEC Rule 15c3-3 and cash deposited in Special Reserve Bank Accounts for the exclusive benefit of Proprietary Accounts of Broker-Dealers ("PAB") under SEC Rule 15c3-3 (see Note 29).

6. Investments of Operating Entities and Consolidated Funds

a.    Operating entities

Securities owned, at fair value

Securities owned, at fair value are held by the Company and are considered held for trading. Certain securities owned, at fair value, are pledged to external clearing brokers under terms which permit the external clearing broker to sell or re-pledge the securities to others subject to certain limitations.

As of December 31, 2022 and 2021, securities owned, at fair value consisted of the following:

			As of December 31,
			2022						2021
			(dollars in thousands)
Common stock			$	1,802,082					$	2,425,993
Preferred stock			196,807						137,757
Warrants and rights			59,051						46,459
Government bonds			113,529						16,002
Corporate bonds			219,316						21,468
Convertible bonds			13,479						5,250
Term loan (*)			12,468						4,121
Trade claims (*)			5,440						2,988
Private investments			2,022						704
			$	2,424,194					$	2,660,742

(*)The Company has elected the fair value option for securities owned, at fair value with a fair value of $7.9 million and $7.1 million as of December 31, 2022 and 2021, respectively.

Receivable on and Payable for derivative contracts, at fair value

The Company predominantly enters into derivative transactions to satisfy client needs and to manage its own exposure to market and credit risks resulting from its trading activities. The Company’s direct exposure to derivative financial instruments includes futures, currency forwards, equity swaps, interest rate swaps and options. The Company's derivatives trading activities

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

expose the Company to certain risks, such as price and interest rate fluctuations, volatility risk, credit risk, counterparty risk, foreign currency movements and changes in the liquidity of markets.

The Company's long and short exposure to derivatives is as follows:

Receivable on derivative contracts			As of December 31,
			2022												2021
			Number of contracts / Notional Value						Fair value						Number of contracts / Notional Value						Fair value
			(dollars in thousands)
Currency forwards			$	7,817					$	44					$	10,727					$	80
Equity swaps			$	1,460,575					644,912						$	1,950,181					305,370
Options (a)			116,707						31,385						217,393						61,219
Interest rate swap (c)			$	—					—						$	285,000					1,208
Netting - swaps (b)									(181,650)												(81,742)
									$	494,691											$	286,135

Payable for derivative contracts			As of December 31,
			2022												2021
			Number of contracts / Notional Value						Fair value						Number of contracts / Notional Value						Fair value
			(dollars in thousands)
Futures			$	—					$	—					$	9,378					$	266
Currency forwards			$	212,485					2,915						$	149,575					1,346
Equity swaps			$	1,377,169					218,747						$	988,329					114,689
Interest rate swaps (c)			$	400,000					218						$	—					—
Options (a)			98,069						9,466						182,440						36,192
Netting - swap (b)									(161,681)												(92,330)
									$	69,665											$	60,163

(a) Includes the volume of contracts for index, equity, commodity future and cash conversion options.

(b) Derivatives are reported on a net basis, by counterparty, when a legal right of offset exists under an enforceable netting agreement as well as net of cash collateral received or posted under enforceable credit support agreements. See Note 2f for further information on offsetting of derivative financial instruments.

(c) Interest rate swap offsetting the Company's floating rate debt on the Company's term loan. See Note 16.

The following tables present the gross and net derivative positions and the related offsetting amount, as of December 31, 2022 and 2021. This table does not include the impact of over-collateralization.

									Gross amounts offset on the Consolidated Statements of Financial Condition (a)						Net amounts included on the Consolidated Statements of Financial Condition						Gross amounts not offset in the Consolidated Statements of Financial Condition
			Gross amounts recognized																		Financial instruments (a)						Cash Collateral pledged (a)						Net amounts
			(dollars in thousands)
As of December 31, 2022
Receivable on derivative contracts, at fair value			$	676,341					$	181,650					$	494,691					$	8,227					$	426,168					$	60,296
Payable for derivative contracts, at fair value			231,346						161,681						69,665						2,922						—						66,743
As of December 31, 2021
Receivable on derivative contracts, at fair value			$	367,877					$	81,742					$	286,135					$	1,421					$	211,442					$	73,272
Payable for derivative contracts, at fair value			152,493						92,330						60,163						2,839						—						57,324

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

(a)Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.

The realized and unrealized gains/(losses) related to derivatives trading activities were $(149.5) million, $(205.5) million and $(146.9) million for the years ended December 31, 2022, 2021 and 2020, respectively, and are included in Investment income- Securities principal transactions, net in the accompanying consolidated statements of operations. The net gains (losses) on derivative contracts in the table above are one of a number of activities comprising the Company's business activities and are calculated before consideration of economic hedging transactions, which generally offset the net gains (losses) included above.

Pursuant to the various derivatives transactions discussed above, except for exchange traded derivatives and certain options, the Company is required to post/receive collateral. These amounts are recognized in receivable from brokers, dealers and clearing organizations and payable to brokers, dealers and clearing organizations respectively. As of December 31, 2022 and 2021, all derivative contracts were with major financial institutions.

Other investments

As of December 31, 2022 and 2021, other investments included the following:

			As of December 31,
			2022						2021
			(dollars in thousands)
Portfolio funds, at fair value (1)			$	132,285					$	137,986
Carried interest (2)			65,892						88,925
Equity method investments (3)			27,006						47,200
			$	225,183					$	274,111

(1) Portfolio funds, at fair value

The portfolio funds, at fair value as of December 31, 2022 and 2021, included the following:

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

			As of December 31,
			2022						2021
			(dollars in thousands)
HealthCare Royalty Partners LP (a)(*)			$	578					$	832
HealthCare Royalty Partners II LP (a)(*)			1,256						1,259
Eclipse Ventures Fund I, L.P. (b)			5,361						5,829
Eclipse Ventures Fund II, L.P. (b)			2,441						2,354
Eclipse Continuity Fund I, L.P. (b)			1,587						1,641
Starboard Value and Opportunity Fund LP (c)(*)			43,958						49,252
Starboard Value and Opportunity Fund Ltd (c) (*)			2,434						2,732
Lagunita Biosciences, LLC (d)			2,264						5,671
Starboard Leaders Fund LP (e)(*)			2,882						2,823
Formation8 Partners Fund I, L.P. (f)			16,379						20,992
BDC Fund I Coinvest 1, L.P. (g)			1,250						1,250
Difesa Partners, LP (h)			919						1,017
Cowen Sustainable Investments I LP (i)(*)			17,004						13,102
Cowen Healthcare Investments II LP (i) (*)			11,645						13,055
Cowen Healthcare Investments III LP (i)(*)			7,680						8,426
Cowen Healthcare Investments IV LP (i)(*)			3,397						1,071
Eclipse SPV I, LP (j)(*)			1,445						1,445
TriArtisan ES Partners LLC (k)(*)			2,083						1,805
TriArtisan PFC Partners LLC (l)(*)			1,163						1,112
Ramius Merger Fund LLC (m)(*)			1,711						1,692
Gaingels 10X Capital Diversity Fund I, LP (n)(*)			600						—
HCRX Holdings, L.P. (o)(*)			3,829						—
Other private investment (p)(*)			121						303
Other affiliated funds (q)(*)			298						323
			$	132,285					$	137,986

* These portfolio funds are affiliates of the Company.

The Company has no unfunded commitments regarding the portfolio funds held by the Company except as noted in Note 27.

(a)HealthCare Royalty Partners, L.P. and HealthCare Royalty Partners II, L.P. are private equity funds and therefore distributions will be made when cash flows are received from the underlying investments, typically on a quarterly basis.

(b)Each of Eclipse Ventures Fund I, L.P., Eclipse Ventures Fund II, L.P. and Eclipse Continuity Fund I, L.P. are venture capital funds which invests in early stage and growth stage hardware companies. Distributions will be made when the underlying investments are liquidated.

(c)Starboard Value and Opportunity Fund LP and Starboard Value and Opportunity Fund Ltd are hedge funds with a focused and fundamental approach to investing in publicly traded US companies. Both funds permit quarterly withdrawals upon 90 days' notice.

(d)Lagunita Biosciences, LLC, is a healthcare investment company that creates and grows early stage companies to commercialize impactful translational science that addresses significant clinical needs, is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.

(e)Starboard Leaders Fund LP does not permit withdrawals, but instead allows terminations with respect to capital commitments upon 30 days' prior written notice at any time following the first anniversary of an investor's initial capital contribution.

(f)Formation8 Partners Fund I, L.P. is a private equity fund which invests in early stage and growth transformational information and energy technology companies. Distributions will be made when the underlying investments are liquidated.

(g)BDC Fund I Coinvest 1, L.P. is a private equity fund focused on investing in growth companies in industries disrupted by digitization. Distributions will be made when the underlying investments are liquidated.

(h)Difesa Partners, LP permits semi-annual withdrawals occurring on or after the anniversary of initial contribution upon 90 days written notice.

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

(i)Cowen Sustainable Investments I LP, Cowen Healthcare Investments II LP, Cowen Healthcare Investments III LP and Cowen Healthcare Investments IV LP are private equity funds.  Distributions are made from the fund when cash flows or securities are received from the underlying investments. Investors do not have redemption rights.

(j)Eclipse SPV I, L.P. is a co-investment vehicle organized to invest in a private company focused on software-driven automation projects.  Distributions will be made when the underlying investments are liquidated.

(k)TriArtisan ES Partners LLC is a co-investment vehicle organized to invest in a privately held nuclear services company. Distributions will be made when the underlying investment is liquidated.

(l)TriArtisan PFC Partners LLC is a co-investment vehicle organized to invest in a privately held casual dining restaurant chain. Distributions will be made when the underlying investment in liquidated.

(m)Ramius Merger Fund LLC permits monthly withdrawals on 45 days prior notice.

(n)Gaingels 10X Capital Diversity Fund I, LP is a venture capital fund that primarily invests in portfolio companies embracing diversity and inclusion. Distributions will be made when the underlying investments are liquidated.

(o)HCRX Holdings, L.P. is a private operating company focusing primarily on healthcare royalty investments. Distributions upon realization will be made upon an investor's election subsequent to January 1st, 2026.

(p)Other private investment represents the Company's closed end investment in a portfolio fund that invests in a wireless broadband communication provider in Italy.

(q)The majority of these investment funds are affiliates of the Company or are managed by the Company and the investors can redeem from these funds as investments are liquidated.

(2)Carried interest

The Company applies an accounting policy election to recognize incentive income allocated to the Company under an equity ownership model in other investments in the accompanying consolidated statements of financial condition (see Note 2w). Carried interest allocated to the Company from certain portfolio funds represents Cowen's general partner capital accounts from those funds. These balances are subject to change upon cash distributions, additional allocations or reallocations back to limited partners within the respective funds. All carried interest balances are earned from affiliates of the Company.

A portion of the Company's carried interest is granted to employees through profit sharing awards designed to more closely align compensation with the overall realized performance of the Company. These arrangements enable certain employees to earn compensation based on performance revenue earned by the Company and are recorded within compensation payable in the accompanying consolidated statements of financial condition and employee compensation and benefits expense in the accompanying consolidated statements of operation based on the probable and estimable payments under the terms of the awards. 

The carried interest as of December 31, 2022 and 2021, included the following:

			As of December 31,
			2022						2021
			(dollars in thousands)
Cowen Healthcare Investments II LP			$	19,112					$	23,327
Cowen Healthcare Investments III LP			25,671						18,523
Cowen Sustainable Investments I LP			—						7,436
Cowen Sustainable Investments Offshore I LP			—						9,196
CSI I Prodigy Co-Investment LP			1,000						2,436
CSI PRTA Co- Investment LP			3,677						9,535
TriArtisan TGIF Partners LLC			4,290						4,047
TriArtisan ES Partners LLC			4,475						3,401
TriArtisan PFC Partners LLC			7,277						9,394
TriArtisan SBE Partners LLC			358						—
Ramius Multi-Strategy Fund LP			—						587
Ramius Merger Fund LLC			32						861
RCG IO Renergys Sarl			—						136
Other affiliated funds			—						46
			$	65,892					$	88,925

F-37

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

(3) Equity method investments

Equity method investments include investments held by the Company in several operating companies. The operating agreement that governs the management of day-to-day operations and affairs of these entities stipulates that certain decisions require support and approval from other members in addition to the support and approval of the Company. As a result, all operating decisions made in these entities requires the support of both the Company and an affirmative vote of a majority of the other managing members who are not affiliates of the Company. As the Company does not possess control over any of these entities, the presumption of consolidation has been overcome pursuant to current Accounting Standards and the Company accounts for these investments under the equity method of accounting. Included in equity method investments are the investments in (a) HealthCare Royalty Partners General Partners (b) Starboard Value (and certain related parties) which serves as an operating company whose operations primarily include the day-to-day management (including portfolio management) of several activist investment funds and related managed accounts and (c) operating companies whose operations primarily include the day-to-day management of real estate entities. The Company recorded no impairment charges in relation to its equity method investments for the year ended December 31, 2022, 2021 and 2020.

The Company elected to use the cumulative earnings approach for the distributions it receives from its equity method investments. Under the cumulative earnings approach, any distributions received up to the amount of cumulative earnings are treated as return on investment and classified in operating activities within the cash flows. Any excess distributions would be considered as return of investments and classified in investing activities.

The following table summarizes equity method investments held by the Company:

			As of December 31,
			2022						2021
			(dollars in thousands)
Starboard Value LP			$	20,806					$	36,889
HealthCare Royalty GP III, LLC			1,631						1,957
HCR Canary Fund GP, LLC			319						458
HealthCare Royalty GP IV, LLC			1,923						1,716
RCG Longview Debt Fund IV Management, LLC			391						331
HCR Overflow Fund GP, LLC			578						839
HCRP MGS Account Management, LLC			472						598
HCR Stafford Fund GP, LLC			—						2,955
HCR Potomac Fund, L.P.			—						925
HCRX Master GP			375						—
Other			511						532
			$	27,006					$	47,200

The Company's income (loss) from equity method investments was December 31, 2022, 2021 and 2020 and $9.6 million, $35.5 million and $18.9 million, respectively, and is included in net gains (losses) on other investments on the accompanying consolidated statements of operations.

Securities sold, not yet purchased, at fair value

Securities sold, not yet purchased, at fair value represent obligations of the Company to deliver a specified security at a contracted price and, thereby, create a liability to purchase that security at prevailing prices. The Company's liability for securities to be delivered is measured at their fair value as of the date of the consolidated financial statements. However, these transactions result in off-balance sheet risk, as the Company's ultimate cost to satisfy the delivery of securities sold, not yet purchased, at fair value may exceed the amount reflected in the accompanying consolidated statements of financial condition. As of December 31, 2022 and 2021, securities sold, not yet purchased, at fair value consisted of the following:

			As of December 31,
			2022						2021
			(dollars in thousands)
Common stock			$	910,458					$	1,192,396
Corporate bonds			31						37
Preferred stock			3,085						9,009
Warrants and rights			—						6
			$	913,574					$	1,201,448

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Table of Contents

Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

Securities purchased under agreements to resell/securities sold under agreements to repurchase and securities lending and borrowing transactions

The following tables present the contractual gross and net securities borrowing and lending agreements and securities sold under agreements to repurchase and the related offsetting amount as of December 31, 2022 and 2021.

																					Gross amounts not offset on the Consolidated Statements of Financial Condition
			Gross amounts recognized, net of allowance						Gross amounts offset on the Consolidated Statements of Financial Condition (a)						Net amounts included on the Consolidated Statements of Financial Condition						Additional Amounts Available						Financial instruments						Cash Collateral pledged (b)						Net amounts
			(dollars in thousands)
As of December 31, 2022
Securities borrowed			$	1,298,056					$	—					$	1,298,056					$	—					$	1,244,834					$	—					$	53,222
Securities loaned			1,199,838						—						1,199,838						—						1,199,838						—						—
Securities purchased under agreements to resell			121,718						—						121,718						—						120,953						—						765
Securities sold under agreements to repurchase			133,130						—						133,130						—						133,130						—						—
As of December 31, 2021
Securities borrowed			1,704,603						—						1,704,603						—						1,652,007						—						52,596
Securities loaned			1,586,572						—						1,586,572						—						1,586,572						—						—
Securities sold under agreements to repurchase			$	63,469					$	—					$	63,469					$	—					$	63,469					$	—					$	—

(a)Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.

(b)Includes the amount of cash collateral held/posted.

The following tables present gross obligations for securities loaned and securities sold under agreements to repurchase by remaining contractual maturity and class of collateral pledged as of December 31, 2022 and 2021:

			Open and Overnight						Up to 30 days						31 - 90 days						Greater than 90 days						Total
			(dollars in thousands)
As of December 31, 2022
Securities loaned
Common stock			$	992,173					$	—					$	—					$	—					$	992,173
Corporate bonds			207,665						—						—						—						207,665
Securities purchased under agreements to resell
Corporate bonds			121,718						—						—						—						121,718
Securities sold under agreements to repurchase
Corporate bonds			72,474						60,656						—						—						133,130
As of December 31, 2021
Securities loaned
Common stock			1,570,835						—						—						—						1,570,835
Corporate bonds			15,737						—						—						—						15,737
Securities sold under agreements to repurchase
Common stock			$	—					$	20,906					$	42,563					$	—					$	63,469

Variable Interest Entities

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Table of Contents

Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

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 $8.9 billion and $444.5 million as of December 31, 2022 and $9.7 billion and $744.5 million as of December 31, 2021, respectively. The carrying value of the Company's exposure to loss for these variable interest entities as of December 31, 2022 was $137.0 million, and as of December 31, 2021 was $165.5 million, all of which is included in other investments, at fair value in the accompanying consolidated statements of financial condition. Additionally, the Company's maximum exposure to loss for the variable interest entities noted above as of December 31, 2022 and 2021, was $215.0 million and $233.6 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

Other investments, at fair value

Investments in portfolio funds, at fair value

As of December 31, 2022 and 2021, investments in portfolio funds, at fair value, included the following:

			As of December 31,
			2022						2021
			(dollars in thousands)
Investments of Enterprise LP			$	49,832					$	99,067
			$	49,832					$	99,067

Consolidated portfolio fund investments of Enterprise LP    

On May 12, 2010, the Company announced its intention to close its master fund, Ramius Enterprise Master Fund Ltd ("Enterprise Master"). Enterprise LP operated under a "master-feeder" structure up until January 1, 2019, when Enterprise Master distributed its capital to each feeder and was liquidated. As of December 31, 2022 and 2021, the consolidated investments in portfolio funds include Enterprise LP's investment in RCG Special Opportunities Fund, Ltd which is a portfolio fund that invests in a limited number of private equity investments directly as well as through affiliated portfolio funds.

Indirect Concentration of the Underlying Investments Held by Consolidated Funds

From time to time, either directly held by the Company, indirectly through the Company's consolidated entities or indirectly through its investments in the Consolidated Funds, the Company may maintain exposure to a particular issue or issuer (both long and/or short) which may account for 5% or more of the Company's equity. Based on information that is available to the Company as of December 31, 2022 and 2021, 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 were two indirect concentrations that exceeded 5% of the Company's equity as of December 31, 2022 and one that exceeded 5% of the Company's equity at December 31, 2021.

Through its investments in a Consolidated Fund and combined with direct Company investments, the Company maintained exposure to Linkem S.p.A which accounted for 5% or more of the Company's equity as of both December 31, 2021 and December 31, 2022. As of December 31, 2022, through its investments in a consolidated special purpose vehicle, the Company maintained exposure to Polysign, Inc which accounted for 5% or more of the Company's equity.

Investment's percentage of the Company's stockholders' equity

Issuer

Security Type

Country

Industry

Percentage of Stockholders' Equity

Market Value

(dollars in thousands)

As of December 31, 2022

Polysign, Inc

Preferred - Series B and C

United States of America

Financial Technology

5.37

%

$

57,165

As of December 31, 2021

Linkem S.p.A.

Equity and warrants

Italy

Wireless Broadband

8.22

%

$

83,537

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Table of Contents

Cowen Inc.

Notes to 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 consolidated statements of financial condition by caption and by level within the valuation hierarchy as of December 31, 2022 and 2021:

			Assets at Fair Value as of December 31, 2022
			Level 1						Level 2						Level 3						Netting (c)						Total
									(dollars in thousands)
Operating Entities
Securities owned, at fair value
Government bonds			$	113,529					$	—					$	—					$	—					$	113,529
Preferred stock			7						3,496						193,304						—						196,807
Common stock			1,775,689						1,566						24,827						—						1,802,082
Convertible bonds			—						1,511						11,968						—						13,479
Corporate bonds			—						215,907						3,409						—						219,316
Trade claims			—						—						5,440						—						5,440
Term loan			—						2,502						9,966						—						12,468
Warrants and rights			32,114						—						26,937						—						59,051
Private investments			—						884						1,138						—						2,022
Receivable on derivative contracts, at fair value
Currency forwards			—						44						—						—						44
Equity swaps			—						644,033						879						(181,650)						463,262
Options			30,781						461						143						—						31,385
			$	1,952,120					$	870,404					$	278,011					$	(181,650)					$	2,918,885
Portfolio funds measured at net asset value (a)																											132,285
Consolidated Funds' portfolio funds measured at net asset value (a)																											49,832
Carried interest (a)																											65,892
Equity method investments (a)																											27,006
Total investments																											$	3,193,900

			Liabilities at Fair Value as of December 31, 2022
			Level 1						Level 2						Level 3						Netting (c)						Total
			(dollars in thousands)
Operating Entities
Securities sold, not yet purchased, at fair value
Common stock			$	910,458					$	—					$	—					$	—					$	910,458
Corporate bonds			—						31						—						—						31
Preferred stock			4						3,081						—						—						3,085
Warrants and rights			—						—						—						—						—
Payable for derivative contracts, at fair value
Currency forwards			—						2,915						—						—						2,915
Equity swaps			—						218,747						—						(161,681)						57,066
Interest rate swaps			—						218						—						—						218
Options			8,746						—						720						—						9,466
Accounts payable, accrued expenses and other liabilities
Contingent consideration liability (b)			—						—						38,648						—						38,648
			$	919,208					$	224,992					$	39,368					$	(161,681)					$	1,021,887

(a) In accordance with US GAAP, portfolio funds are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient are not classified in the fair value hierarchy. Carried interest and equity method investments presented in the table above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statement of financial condition.

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

(b) In accordance with the terms of the purchase agreements for acquisitions that closed during the first quarter of 2019 (the acquisition of Quarton International AG "Quarton"), the fourth quarter of 2020 (the acquisition of MHT Partners, LP "MHT") and the fourth quarter of 2021 (the acquisition of Portico Capital Advisors "Portico"), 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 through December 31, 2024. For all acquisitions the Company estimated the contingent consideration liabilities using a combination of Monte Carlo and Discounted Cash Flow methods which require the Company to make estimates and assumptions regarding the future cash flows and profits. Changes in these estimates and assumptions could have a significant impact on the amounts recognized. The undiscounted amounts for the Quarton acquisition can range from $12.5 million to $14.9 million. The undiscounted amounts for the MHT acquisition have no minimum or maximum as it is calculated based on revenue. The undiscounted amounts for the Portico acquisition can range from zero to $58.0 million.

(c) Derivatives are reported on a net basis, by counterparty, when a legal right of offset exists under an enforceable netting agreement as well as net of cash collateral received or posted under enforceable credit support agreements. See Note 2f for further information on offsetting of derivative financial instruments.

			Assets at Fair Value as of December 31, 2021
			Level 1						Level 2						Level 3						Netting (c)						Total
									(dollars in thousands)
Operating Entities
Securities owned, at fair value
Government bonds			$	16,002					$	—					$	—					$	—					$	16,002
Preferred stock			12,299						—						125,458						—						137,757
Common stock			2,396,041						121						29,831						—						2,425,993
Convertible bonds			—						—						5,250						—						5,250
Corporate bonds			—						19,049						2,419						—						21,468
Trade claims			—						—						2,988						—						2,988
Term loan			—						4,121						—						—						4,121
Private investments			—						—						704						—						704
Warrants and rights			31,056						—						15,403						—						46,459
Receivable on derivative contracts, at fair value
Currency forwards			—						80						—						—						80
Equity swaps			—						305,370						—						(81,742)						223,628
Options			60,985						—						234						—						61,219
Interest rate swap			—						1,208						—						—						1,208
			$	2,516,383					$	329,949					$	182,287					$	(81,742)					$	2,946,877
Portfolio funds measured at net asset value (a)																											137,986
Consolidated Funds' portfolio funds measured at net asset value (a)																											99,067
Carried interest (a)																											88,925
Equity method investments (a)																											47,200
Total investments																											$	3,320,055

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

			Liabilities at Fair Value as of December 31, 2021
			Level 1						Level 2						Level 3						Netting (c)						Total
			(dollars in thousands)
Operating Entities
Securities sold, not yet purchased, at fair value
Common stock			$	1,192,396					$	—					$	—					$	—					$	1,192,396
Corporate bonds			—						37						—						—						37
Preferred stock			9,009						—						—						—						9,009
Warrants and rights			6						—						—						—						6
Payable for derivative contracts, at fair value
Futures			266						—						—						—						266
Currency forwards			—						1,346						—						—						1,346
Equity swaps			—						114,689						—						(92,330)						22,359
Options			32,773						—						3,419						—						36,192
Accounts payable, accrued expenses and other liabilities
Contingent consideration liability (b)			—						—						62,223						—						62,223
			$	1,234,450					$	116,072					$	65,642					$	(92,330)					$	1,323,834

(a) In accordance with US GAAP, portfolio funds are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient are not classified in the fair value hierarchy. Carried interest and equity method investments presented in the table above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statement of financial condition.

(b) In accordance with the terms of the purchase agreements for acquisitions that closed during the first quarter of 2019 (the Quarton acquisition), the fourth quarter of 2020 (the MHT acquisition) and the fourth quarter of 2021 (the Portico acquisition), 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 through December 31, 2024. For all acquisitions the Company estimated the contingent consideration liabilities using a combination of Monte Carlo and Discounted Cash Flow methods which require the Company to make estimates and assumptions regarding the future cash flows and profits. Changes in these estimates and assumptions could have a significant impact on the amounts recognized. The undiscounted amounts for the Quarton acquisition can range from $10.1 million to $25.0 million. The undiscounted amounts for the MHT acquisition have no minimum or maximum as it is calculated based on revenue. The undiscounted amounts for the Portico acquisition can range from zero  to $58.0 million.

(c) Derivatives are reported on a net basis, by counterparty, when a legal right of offset exists under an enforceable netting agreement as well as net of cash collateral received or posted under enforceable credit support agreements. See Note 2f for further information on offsetting of derivative financial instruments.

The following table includes a roll forward of the amounts for the year ended December 31, 2022 and 2021 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.

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

			Year Ended December 31, 2022
			Balance at December 31, 2021						Transfers in						Transfers out						Purchases/(covers)						(Sales)/shorts						Realized and Unrealized gains/losses						Balance at December 31, 2022						Change in unrealized gains/losses relating to instruments still held (1)
			(dollars in thousands)
Operating Entities
Preferred stock			$	125,458					$	—					$	—					$	26,164					$	(1,347)					$	43,029					$	193,304					$	43,029
Common stock			29,831						893			(c)			—						5,031						(950)						(9,978)						24,827						(13,736)
Convertible bonds			5,250						—						—						6,636						—						82						11,968						—
Corporate bond			2,419						1,082			(c)			—						620						(460)						(252)						3,409						64
Options, asset			234						—						—						—						—						(91)						143						(90)
Options, liability			3,419						—						—						—						—						(2,699)						720						(2,699)
Equity swap			—						—						—						—						—						879						879						879
Term loan			—						—						—						9,700						—						266						9,966						267
Warrants and rights			15,403						—						(719)			(a)(c)			2,274						(1,212)						11,191						26,937						14,614
Trade claims			2,988						—						—						4,304						(647)						(1,205)						5,440						(1,561)
Private investments			704						—						—						8,311						(8,978)						1,101						1,138						405
Contingent consideration liability			62,223						—						—						—						(29,169)						5,594						38,648						5,594

			Year Ended December 31, 2021
			Balance at December 31, 2020						Transfers in						Transfers out						Purchases/(covers)						(Sales)/shorts						Realized and Unrealized gains/losses						Balance at December 31, 2021						Change in unrealized gains/losses relating to instruments still held (1)
			(dollars in thousands)
Operating Entities
Preferred stock			$	59,967					$	—					$	(1,531)		(a)			$	78,389					$	(9,828)					$	(1,539)					$	125,458					$	(2,570)
Common stock			23,786						3,409			(b)			(7,357)			(a)(d)			16,245						(13,582)						7,330						29,831						5,517
Convertible bonds			6,040						—						(4,031)			(d)			11,802						(11,159)						2,598						5,250						(975)
Corporate Bond, asset			135						—						—						2,414						(103)						(27)						2,419						6
Options, asset			251						—						—						—						—						(17)						234						(17)
Options, liability			3,915						—						—						—						—						(496)						3,419						(496)
Warrants and rights			6,547						3,806			(b) (c)			—						10,706						(1,610)						(4,046)						15,403						(2,812)
Term Loan			12,623						—						—						638						(12,162)						(1,099)						—						—
Trade claim			8,713						—						(2,145)			(c)			3,056						(4,946)						(1,690)						2,988						(2,757)
Private investments			642						543			(c)			—						707						(1,462)						274						704						—
Corporate bond, liability			704						—						—						—						(399)						(305)						—						—
Government bonds, liability			1,500						—						—						—						(1,569)						69						—						—
Contingent consideration liability			36,718						—						—						20,729						(10,077)						14,853						62,223						14,853
Consolidated Funds
Common stock			2,951						(4,000)			(b)			—						—						—						1,049						—						—
Warrants and rights			5,806						—						—						—						(4,447)						(1,359)						—						—

(1) Unrealized gains/losses are reported in Investment income - Securities principal transactions, net in the accompanying consolidated statements of operations.

(a) The entity in which the Company is invested completed an initial public offering.

(b) Fair market value derived using models and private transactions.

(c) The transfers between level 1, level 2 and level 3 are due to the change in the availability of observable inputs.

(d) The Company deconsolidated an investment fund.

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.

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.

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

The following table includes quantitative information as of December 31, 2022 and 2021 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 December 31, 2022

Valuation Techniques

Unobservable Inputs

Range

Weighted Average

Level 3 Assets

(dollars in thousands)

Common and preferred stocks

$

61,807

Discounted cash flows Guideline companies

Discount rate EBITDA Market Multiples

11.5% - 12.5% 3.7x - 9.5x

12% 7.55x

Options

1,022

Discounted cash flows Guideline companies Option pricing model

Discount rate EBITDA Market Multiples Volatility

11.5% - 12.5% 7.25x - 7.75x 45%

12% 7.5x 45%

Trade claims

1,876

Discounted cash flows

Discount rate

54%

54%

Warrants and rights

10,351

Discounted cash flows Guideline companies Option pricing model

Discount rate EBITDA Market Multiples Volatility

11.5% - 12.5% 7.25x - 7.75x 45% - 170%

12.0% 7.5x 71.1%

Corporate, convertible bonds and term loan

4,570

Discounted cash flows Guideline companies

Discount rate EBITDA Market Multiples

11.5% - 12.5% 7.25x - 7.75x

12% 7.5x

Other level 3 assets (a)

198,385

Total level 3 assets

$

278,011

Level 3 Liabilities

Options

720

Option pricing model

Discount rate Volatility

4.01% 35%

4.01% 35%

Contingent consideration liability

38,648

Discounted cash flows Monte Carlo simulation

Discount rate Volatility

6.8% - 18.5% 21% - 24%

11% 22%

Total level 3 liabilities

$

39,368

Quantitative Information about Level 3 Fair Value Measurements

Fair Value at December 31, 2021

Valuation Techniques

Unobservable Inputs

Range

Weighted Average

Level 3 Assets

(dollars in thousands)

Common and preferred stocks

$

76,491

Discounted cash flows Guideline companies

Discount rate EBITDA Market Multiples

12.5% - 20% 6.25x - 6.75x

13% 6.5x

Trade claims

2,376

Discounted cash flows

Discount rate

40%

40%

Warrants and rights

4,483

Discounted cash flows Guideline companies Option pricing model

Discount rate EBITDA Market Multiples Volatility

12.5% - 13.5% 6.25x - 6.75x 90% - 100%

13% 6.5x 95%

Options

234

Discounted cash flows Guideline companies

Discount rate EBITDA Market Multiples

12.5% - 13.5% 6.25x - 6.75x

13% 6.5x

Other level 3 assets (a)

98,703

Total level 3 assets

$

182,287

Level 3 Liabilities

Options

3,419

Option pricing model

Volatility

35%

35%

Contingent consideration liability

62,223

Discounted cash flows Monte Carlo simulation

Discount rate Volatility

7% - 15% 20% - 24%

12% 22%

Total level 3 liabilities

$

65,642

(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, procedures and internal control infrastructure over the fair value measurement of financial instruments. In the event that observable inputs are not available, the control processes are designed to ensure that the valuation approach utilized is applicable, reasonable and consistently applied. Where a pricing model is used to determine fair value, these control processes include reviews of the methodology and inputs for both reasonableness and applicability. Recently executed comparable transactions and other observable market data are used for the purposes of validating

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Table of Contents

Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

both the model and the assumptions used to calculate fair value. Independent of trading and valuation functions, the Company’s valuation committee in conjunction with its price verification team, plays an important role in determining that financial instruments are appropriately valued and that fair value measurements are both reasonable and reliable. This is particularly important where prices or valuations that require inputs are less observable. 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.

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 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 regularly reviews a profit and loss report, as well as other periodic reports, and analyzes material changes from period 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-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-standard models representing standard valuation metrics such as: discounted cash flows, market multiples, comparative transactions, consideration for rounds of financing, capital rates, the premium ascribed to a controlling financial interest, selected equity volatilities, 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. 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 December 31, 2022 and 2021, 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 Note 2f).

			December 31, 2022												December 31, 2021												Fair Value Hierarchy
			Carrying Amount						Fair Value						Carrying Amount						Fair Value
									(dollars in thousands)
Financial Assets
Operating companies
Cash and cash equivalents			$	1,139,652					$	1,139,652					$	914,343					$	914,343					Level 1
Cash collateral pledged			122,687						122,687						47,494						47,494						Level 2
Segregated cash			185,872						185,872						194,701						194,701						Level 1
Securities purchased under agreements to resell			121,718						121,718						—						—						Level 2
Securities borrowed			1,298,056						1,298,056						1,704,603						1,704,603						Level 2
Loans receivable			5,254						5,254			(b)			4,858						4,858			(b)			Level 3
Consolidated Funds
Cash and cash equivalents			30						30						296						296						Level 1
Financial Liabilities
Securities sold under agreements to repurchase			133,130						133,130						63,469						63,469						Level 2
Securities loaned			1,199,838						1,199,838						1,586,572						1,586,572						Level 2
Notes payable and other debt			620,161			(c)			642,701			(a)			623,371			(c)			655,229			(a)			Level 2

(a)Notes payable and other debt are based on the last broker quote available.

(b)The fair market value of level 3 loans is calculated using discounted cash flows where applicable.

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

(c)The carrying amount of the notes payable and other debt includes an unamortized discount and unamortized premium of $2.4 million and $0.2 million as of December 31, 2022, respectively, and unamortized discount and unamortized premium of $2.8 million and $0.3 million as of December 31, 2021, 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's cash and securities balances. As of December 31, 2022 and 2021, the Company had a total of $87.9 million and $111.9 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's activities, if such losses were to occur.

9. Receivable From and Payable To 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 December 31, 2022 and 2021, amounts receivable from brokers, dealers and clearing organizations include:

			As of December 31,
			2022						2021
			(dollars in thousands)
Broker-dealers			$	1,789,526					$	1,533,713
Securities failed to deliver			25,031						17,851
Clearing organizations			43,915						56,075
Securities borrowed/loaned interest receivable			6,353						6,708
			$	1,864,825					$	1,614,347

As of December 31, 2022 and 2021, amounts payable to brokers, dealers and clearing organizations include:

			As of December 31,
			2022						2021
			(dollars in thousands)
Broker-dealers			$	720,138					$	483,112
Securities failed to receive			26,984						57,894
Clearing organizations			27,956						37,925
Securities borrowed/loaned interest payable			8,831						7,622
			$	783,909					$	586,553

10. Receivable From and Payable To Customers

As of December 31, 2022 and 2021, receivable from customers of $41.7 million and $159.4 million, respectively, consist of amounts owed by customers relating to securities transactions not completed on settlement date and receivables arising from prepaid research.

As of December 31, 2022 and 2021, payable to customers of $2.7 billion and $2.4 billion, 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 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 does not have 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.

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Table of Contents

Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

11. Fixed Assets

As of December 31, 2022 and 2021, fixed assets consisted of the following:

			As of December 31,
			2022						2021
			(dollars in thousands)
Telecommunication and computer equipment			$	10,545					$	9,379
Computer software			13,684						13,715
Furniture and fixtures			4,026						3,607
Leasehold improvements			44,193						42,749
Finance lease right-of-use asset (See Note 16)			3,737						6,468
Other			38						75
			76,223						75,993
Less: Accumulated depreciation and amortization			(52,816)						(50,017)
			$	23,407					$	25,976

Depreciation and amortization expense related to fixed assets was $11.5 million, $11.0 million and $9.6 million for the years ended December 31, 2022, 2021, and 2020, respectively, and are included in depreciation and amortization expense in the accompanying consolidated statements of operations.

During the fourth quarter of 2020 the Company purchased an aircraft and related equipment of $4.5 million. This aircraft was subsequently sold during the fourth quarter of 2021 for a gain of $0.3 million, within the accompanying consolidated statement of operations.

Assets acquired under finance leases were $3.7 million and $6.5 million as of December 31, 2022 and 2021, respectively. If the assets acquired under finance leases transfer title at the end of the lease term or contain a bargain purchase option, the assets are amortized over their estimated useful lives; otherwise, the assets are amortized over the respective lease term. The depreciation of assets capitalized under finance leases is included in depreciation and amortization expenses and was $1.1 million, $1.3 million, and $1.2 million for the years ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022 and 2020, accumulated depreciation related to assets acquired under finance leases was $3.0 million and $4.7 million, respectively.

12. Goodwill and Intangible Assets

Goodwill

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.

Annual goodwill impairment test

During the third quarter of 2021, the Company changed the date of its annual goodwill impairment test from December 31 to July 1. The Company believes the change in goodwill impairment date does not result in a material change in the method of applying the accounting principle. This change provides the Company additional time to complete the annual impairment test of goodwill in advance of our year end reporting. This change does not result in a delay, acceleration, or avoidance of an impairment charge. This change has been applied prospectively as retrospective application is deemed impracticable due to the inability to objectively determine the assumptions and significant estimates used in earlier periods without the benefit of hindsight.

The Company performed its annual impairment test at July 1, 2022 through a quantitative impairment test which involved 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 annual impairment analysis at July 1, 2021, the Company did not recognize a goodwill impairment relating to any of the Company's reporting units.

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

The following table presents the changes in the Company's goodwill balance, by reporting unit for the periods ended December 31, 2022 and 2021:

									Investment Bank						Cowen Investment Management												Total
									(dollars in thousands)
Beginning balance - December 31, 2020
Goodwill									$	141,843					$	22,705											164,548
Accumulated impairment charges									(9,485)						(7,979)												(17,464)
Net									132,358						14,726												147,084
Activity: 2021
Recognized goodwill (See note 3)									86,921						—												86,921
Goodwill impairment charges									—						—												—
Beginning balance: December 31, 2021
Goodwill									228,764						22,705												251,469
Accumulated impairment charges									(9,485)						(7,979)												(17,464)
Net									219,279						14,726												234,005
Activity: 2022
Recognized goodwill (See note 3)									—						—												—
Goodwill impairment charges									—						—												—
Ending balance: December 31, 2022
Goodwill									228,764						22,705												251,469
Accumulated impairment charges									(9,485)						(7,979)												(17,464)
Net									$	219,279					$	14,726											$	234,005

In connection with the Portico transaction (see Note 3), in December 2021, the Company recognized goodwill of $86.9 million and intangible assets (including customer relationships, trade name, and backlog) with an estimated fair value of $19.9 million which are included within intangible assets in the consolidated statements of financial condition with the expected useful lives ranging from 1 to 4 years with a weighted average useful life of 3.02 years. Amortization expense related to intangibles from the Portico Acquisition for the year ended December 31, 2021 is $0.4 million. 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).

In connection with the MHT transaction (see Note 3), in October 2020, the Company recognized goodwill of $9.4 million and intangible assets (including customer relationships, trade name, and non-compete) with an estimated fair value of $1.2 million which are included within intangible assets, net in the consolidated statements of financial condition with the expected useful lives ranging from 3 to 5 years with a weighted average useful life of 4.17. Amortization expense related to intangibles from the MHT acquisition for the year ended December 31, 2022 totaled $0.3 million. Goodwill primarily relates to expected synergies from combining the acquired operations with our 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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Table of Contents

Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

Intangible assets

Information for the Company's intangible assets that are subject to amortization is presented below as of December 31, 2022 and 2021.

									December 31, 2022																		December 31, 2021
			Amortization Period						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
			(in years)						(in thousands)																		(in thousands)
Trade names			1 - 3						$	531					$	(491)					$	40					$	1,431					$	(970)					$	461
Customer relationships			4 - 14						53,920						(29,854)						24,066						57,634						(25,121)						32,513
Backlog			1						6,100						(6,100)						—						6,100						(254)						5,846
Non-compete agreements and covenants with limiting conditions acquired			5						344						(155)						189						344						(86)						258
Intellectual property			8						9,368						(2,326)						7,042						6,020						(1,061)						4,959
Acquired software			3 - 10						—						—						—						5,857						(5,727)						130
									$	70,263					$	(38,926)					$	31,337					$	77,386					$	(33,219)					$	44,167

The Company tests intangible assets for impairment if events or circumstances suggest that the asset groups carrying value may not be fully recoverable. For the years ended December 31, 2022 and 2021, no impairment charge for intangible assets was recognized. The Company recognized impairment charges of $2.4 million during the year ended December 31, 2020. The impairment charges primarily related the Company’s decision to limit the activities of its clearing business, resulting in a $1.9 million impairment of a) intangible assets relating to customer lists and b) capitalized internally developed software costs.

Amortization expense related to intangible assets was $16.2 million, $8.0 million, and $13.0 million for the years ended December 31, 2022, 2021 and 2020 , respectively, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. All of the Company's intangible assets have finite lives.

The estimated future amortization expense for the Company's intangible assets placed in service as of December 31, 2022 is as follows:

			(dollars in thousands)
2023			$	8,368
2024			8,114
2025			6,953
2026			3,017
2027			1,705
Thereafter			3,180
			$	31,337

13. Other Assets

Other assets in Operating Entities are as follows:

			As of December 31,
			2022						2021
			(dollars in thousands)
Prepaid expenses			$	28,305					$	21,349
Tax receivables			11,806						6,971
Interest and dividends receivable			15,210						2,147
Receivable on sale of investment			4,000						—
Other (b)			25,642						24,288
			$	84,963					$	54,755

14. Commission Management Payable

The Company receives a gross commission from various 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

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Notes to Consolidated Financial Statements (Continued)

recapture payable of $115.9 million and $103.0 million, as of December 31, 2022 and 2021, respectively, are classified as commission management payable in the accompanying consolidated statements of financial condition.

15. Accounts Payable, Accrued Expenses and Other Liabilities

Accounts payable, accrued expenses and other liabilities in Operating Entities are as follows:

			As of December 31,
			2022						2021
			(dollars in thousands)
Contingent consideration payable (see Note 3)			$	38,648					$	62,223
Interest and dividends payable			34,224						28,948
Professional fees payable			21,394						11,229
Fees payable			1,577						7,740
Accrued tax liabilities			18,426						20,540
Deferred income			3,785						6,051
SEC fees payable			14,850						10,804
Technology costs and software contracts payable			8,583						6,263
Litigation reserve			—						1,082
Accrued expenses and accounts payable			12,428						9,939
			$	153,915					$	164,819

16. Convertible Debt and Notes Payable

As of December 31, 2022 and 2021, the Company's outstanding debt was as follows:

			As of December 31,
			2022						2021
			(dollars in thousands)
Notes payable			$	174,524					$	174,015
Term loan			432,265						435,147
Other notes payable			12,699						12,537
Finance lease obligations			673						1,672
			$	620,161					$	623,371

Convertible Debt

December 2022 Convertible Notes

The Company, on December 14, 2017, issued $135.0 million aggregate principal amount of 3.00% convertible senior notes due December 2022 (the “December 2022 Convertible Notes”). The December 2022 Convertible Notes have a final maturity date of 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 were issued with an initial conversion price of $17.375 per share of Cowen's Class A common stock. 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 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 consolidated statements of financial condition. 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.

During December 2020, the Company repurchased and extinguished $46.9 million of the outstanding principal amount of the December 2022 Convertible Notes for cash consideration of $70.5 million. In conjunction with the partial extinguishment of the December 2022 Convertible Notes, the Company accelerated the pro rata unamortized discount of $3.6 million and capitalized debt issuance costs of $0.4 million. The Company allocated $29.6 million of the cash consideration paid to the extinguishment of

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Notes to Consolidated Financial Statements (Continued)

the equity component of the December 2022 Convertible Notes. The Company recognized $2.7 million of gain on debt extinguishment.

On March 24, 2021, the Company issued a redemption notice announcing that the Company would redeem all of the December 2022 Convertible Notes, and provided holders the option to elect to settle the as-converted value of the December 2022 Convertible Notes as allowed under the terms of the December 2022 Convertible Notes. As a result of the Company’s call for redemption of the December 2022 Convertible Notes, the December 2022 Convertible Notes were convertible, at the option of the holder at any time prior to June 22, 2021, the second business day prior to the December 2022 Convertible Notes' Redemption Date. On June 24, 2021 (the "Redemption Date"), the Company redeemed all of the outstanding principal amount of the December 2022 Convertible Notes. The redemption amount was determined based on the holders election to convert, which allowed for either 100.00% of the principal amount thereof plus accrued and unpaid interest on such principal amount up to June 15, 2021, to, but not including the Redemption Date of the December 2022 Convertible Notes, or the value of the Company's Class A common stock to be issued on conversion. The settlement method for the December 2022 Convertible Notes was $88.1 million in cash, (the outstanding principal amount of the December 2022 Convertible Notes) and 2,938,841 shares of the Company’s Class A common stock, (the remainder of the conversion obligation in excess of the principal amount). The conversion rate on the December 2022 Convertible Notes on the Redemption Date was 33.35 shares of the Company’s Class A common stock per $1,000.00 principal amount of December 2022 Convertible Notes converted. In conjunction with the redemption of the remaining December 2022 Convertible Notes, the Company accelerated the pro rata unamortized discount of $5.1 million and capitalized debt issuance costs of $0.5 million.

Amortization on the discount, included within interest and dividends expense in the accompanying consolidated statements of operations is $6.7 million and $4.6 million for the years ended December 31, 2021 and 2020, 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 was amortized over the life of the December 2022 Convertible Notes in interest and dividends expense in the accompanying consolidated statements of operations. The Company recorded interest expense of $1.2 million and $4.0 million for the years ended December 31, 2021 and 2020, respectively.

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 consolidated statement of financial condition. To date the May 2024 Notes have maintained their initial private rating. Interest on the May 2024 Notes is payable semi-annually in arrears on May 6 and November 6. The Company recorded interest expense of $5.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company capitalized debt issuance costs of approximately $1.5 million in May 2019 and $0.6 million in September 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 in interest and dividends expense in the accompanying 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 2033 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 $7.7 million, $7.7 million and $7.7 million for the years ended December 31, 2022, 2021 and 2020, 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 in interest and dividends expense in the accompanying 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 2027 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 $10.1 million for the years ended December 31, 2021 and 2020, 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 in interest and dividends expense in the accompanying consolidated statements of operations. The net

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Notes to Consolidated Financial Statements (Continued)

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.

On March 24, 2021, the Company delivered payment of and discharged all $138.0 million outstanding aggregate principal of the December 2027 Notes plus accrued and unpaid interest through the effective redemption date of April 23, 2021. In conjunction with the extinguishment of the December 2027 Notes, the Company accelerated the pro-rata capitalized debt issuance costs. For the year ended December 31, 2021, the Company recognized $4.4 million of loss on debt extinguishment.

Term Loan

March 2028 Term Loan

On March 24, 2021, the Company borrowed $300 million of first lien term loan due March 24, 2028. On December 15, 2021, the Company borrowed an additional $150 million first lien term loan under the same terms and conditions as, and fungible with, the initial first lien term loan (collectively, the “March 2028 Term Loan”). The aggregate amount borrowed under the March 2028 Term Loan is $450 million. The March 2028 Term Loan bears interest at an annual rate equal to, at the option of the Company, either the (a) London Inter-bank Offered Rate ("LIBOR") (adjusted for reserves and subject to a floor of 0.75%) plus a margin of 3.25% or (b) an alternate base rate plus a margin of 2.25%. The Company is required to pay amortization of approximately 1.00% per annum of the original principal amount of the March 2028 Term Loan. Additionally, the Company has entered into an interest rate swap to offset the floating interest rate of the March 2028 Term Loan (See Note 6). The obligations of the Company for the March 2028 Term Loan are guaranteed by certain of the Company’s wholly-owned domestic subsidiaries (excluding its broker-dealer subsidiaries) (the “Guarantors”) and secured by substantially all of the assets of the Company and the Guarantors, subject in each case to certain customary exceptions. The terms of the March 2028 Term Loan contain customary affirmative and negative covenants, subject to certain customary exceptions, thresholds, qualifications and “baskets”. Proceeds from the March 2028 Term Loan were used to (i) satisfy and discharge and redeem the Company’s 2027 Senior Notes, (ii) redeem the Company’s December 2022 Convertible Notes that remained outstanding as of March 31, 2021 and pay the cash settlement amount in connection with the conversion of December 2022 Convertible Notes prior to that redemption date, and (iii) for the payment of fees, commissions, premiums, expenses and other transaction costs (including original issue discount or upfront fees) payable in connection with the transactions related thereto. As of December 31, 2022, the outstanding principal amount of the March 2028 Term Loan was $442.1 million.

Interest expense for the March 2028 Term Loan was $22.8 million and $9.7 million for the years ended December 31, 2022 and 2021, based on an effective interest rate of 4.46%. In March 2021, the Company capitalized debt issuance costs of approximately $6.6 million and initial unamortized discount of $1.5 million related to the March 2028 Term Loan which is a direct deduction from the carrying value of the debt and will be amortized over the life of the March 2028 Term loan in interest and dividends expense in the accompanying consolidated statements of operations. In December 2021, the Company capitalized debt issuance costs of approximately $2.7 million and unamortized discount of $1.5 million related to the additional borrowing of $150 million which is a direct deduction from the carrying value of the debt and will be amortized over the life of the March 2028 Term loan in interest and dividends expense in the accompanying consolidated statements of operations.

The U.K. Financial Conduct Authority, which regulates LIBOR, has announced that all US Dollar LIBOR settings will either cease to be provided by any administrator or no longer be representative as of June 30, 2023. As the March 2028 Term Loan represents the Company’s only significant exposure to LIBOR, the transition to an alternative Inter-bank Offer Rate is not expected to have a material impact on Company's consolidated financial statements.

Other Notes Payable

During January 2022, the Company borrowed $4.0 million to fund insurance premium payments. This note had an effective interest rate of 2.01% and was due in December 2022, with monthly payment requirements of $0.4 million. As of December 31, 2022, the note was fully repaid. Interest expense for the year ended December 31, 2022 was insignificant.

On September 30, 2020, the Company borrowed $72.0 million from Purple Protected Asset S-81 ("PPA S-81"), a Luxembourg entity unrelated to Cowen. The Company repaid $60.0 million of the PPA S-81 loan in June 2021. The loan is payable on September 30, 2023, had an initial interest rate of 1.4 times the Secured Overnight Financing Rate ("SOFR") plus 6.07% until December 31, 2020 and 1.4 times the SOFR plus 5.8% until June 30, 2021 and 3.65 times the SOFR plus 4.0% thereafter with quarterly interest payments. The loan obligation, as well as a loan issued by Cowen to The Military Mutual Ltd (a United Kingdom company unrelated to Cowen) with principal of $28.4 million that was sold by Cowen Re to PPA S-81 at fair value for no gain or loss on September 30, 2020, are fully cash collateralized through a reinsurance policy provided by Cowen Re which is reflected in cash collateral pledged in the consolidated statements of financial condition as of December 31, 2020 (see Notes 4 and 22). The Company capitalized debt issuance costs of approximately $1.7 million which is a direct deduction from the carrying value of the loan and will be amortized over the life of the loan in interest and dividends expense shown in the

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Notes to Consolidated Financial Statements (Continued)

accompanying consolidated statements of operations. The Company recorded interest expense of $2.5 million, $3.0 million and $1.2 million for the years ended December 31, 2022, 2021 and 2020, respectively, related to its loan payable to PPA S-81.

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 December 31, 2022, the outstanding balance on this note was $1.1 million. Interest expense for the years ended December 31, 2022, 2021 and 2020 was $0.1 million, respectively.

Finance Lease Obligations

The Company has entered into various finance leases for computer equipment. These finance lease obligations are included in notes payable and other debt in the accompanying consolidated statements of financial condition.

For the years ended December 31, 2022, 2021 and 2020, quantitative information regarding the Company's finance lease obligations reflected in the accompanying consolidated statements of operations, the supplemental cash flow information and certain other information related to finance leases were as follows:

									Year Ended December 31,
															2022						2021						2020
															(dollars in thousands)
Lease cost
Finance lease cost:
Amortization of finance lease right-of-use assets															$	1,109					$	1,274					$	1,232
Interest on lease liabilities															$	58					$	116					$	171
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases															$	58					$	116					$	171
Financing cash flows from finance leases															$	1,206					$	1,532					$	1,033
Weighted average remaining lease term - operating leases (in years)															2.05						1.71						2.24
Weighted average discount rate - operating leases															5.39		%				4.70		%				4.89		%

Annual scheduled maturities of debt and minimum payments (of principal and interest) for all debt outstanding as of December 31, 2022, are as follows:

									Notes Payable												Term Loan												Other Notes Payable						Finance Lease Obligation
									(dollars in thousands)
2023									$	13,405											$	37,700											$	13,503					$	458
2024									88,578												37,451												543						104
2025									7,750												37,020												—						81
2026									7,750												36,680												—						50
2027									7,750												36,340												—						28
Thereafter									142,625												426,830												—						—
Subtotal									267,858												612,021												14,046						721
Less (a)									(93,334)												(179,756)												(1,347)						(48)
Total									$	174,524											$	432,265											$	12,699					$	673

(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 December 31, 2022, the Company has four 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 (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 December 31, 2022 and 2021, there were no amounts due related to these letters of credit.

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Notes to Consolidated Financial Statements (Continued)

17. Redeemable Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.01 per share. Subject to the rights of holders of any outstanding preferred stock, the number of authorized shares of preferred stock may be increased or decreased by the affirmative vote of the holders of a majority of the shares entitled to vote on such matters, but in no instance can the number of authorized shares be reduced below the number of shares then outstanding. The Company's amended and restated certificate of incorporation permits the Company to issue up to 10,000,000 shares of preferred stock in one or more series with such designations, titles, voting powers, preferences and rights and such qualifications, limitations and restrictions as may be fixed by the board of directors of the Company without any further action by the Company's stockholders. The Company's board of directors may increase or decrease the number of shares of any series of preferred stock following the issuance of that series of preferred stock, but in no instance can the number of shares of a series of preferred stock be reduced below the number of shares of the series then outstanding.

On May 19, 2015, the Company completed its offering of 120,750 shares of 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 paid a cash dividend in respect of the Series A Convertible Preferred Stock of $1.7 million and $6.8 million for the years ended December 31, 2022 and 2021. 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 dividend rights and rights upon the Company's involuntary liquidation, dissolution or winding down.

Upon issuance, each share of Series A Convertible Preferred Stock was 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 $1,000.00 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 was able to elect to convert all outstanding shares of the Series A Convertible Preferred Stock into shares of the Company's Class A common stock, cash or a combination thereof, at the Company's election, in each case, based on the then-applicable conversion rate, if the last reported sale price of the Company'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.

On December 31, 2021, the Company irrevocably elected that, upon the conversion of any share of the outstanding Series A Convertible Preferred Stock, the Company will settle $1,000.00 of its conversion obligation in cash. With respect to each conversion, to the extent the conversion obligation per share of Series A Convertible Preferred Stock is greater than $1,000.00, the Company may satisfy its conversion obligation in respect of such excess using any settlement method permitted under the Certificate of Designations. As the holders can exercise the conversion option on their shares of Series A Convertible Preferred Stock at any time and require cash payment upon conversion, the Company reclassified the Series A Convertible Preferred Stock to temporary equity at December 31, 2021.

18. Stockholder's Equity

The Company is authorized to issue 125,000,000 shares of common stock, which shall consist of 62,500,000 shares of Class A common stock, par value $0.01 per share, and 62,500,000 shares of Class B common stock, par value $0.01 per share. Subject to the rights of holders of any outstanding preferred stock, the number of authorized shares of common stock may be increased or decreased by the affirmative vote of the holders of a majority of the shares entitled to vote on such matters, but in no instance can the number of authorized shares be reduced below the number of shares then outstanding.

The certificate of incorporation of the Company provides for two classes of common stock, and for the conversion of each class into the other, to provide a mechanism by which holders of Class A common stock of the Company who may be limited in the amount of voting common stock of the Company they can hold pursuant to federal, state or foreign bank laws, to convert their shares into non-voting Class B common stock to prevent being in violation of such laws. Each holder of Class A common stock is entitled to one vote per share in connection with the election of directors and on all other matters submitted to a stockholder vote, provided, however, that, except as otherwise required by law, holders of Class A common stock are not entitled to vote on any amendment to the Company's amended and restated certificate of incorporation that relates solely to the terms of one or more

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Notes to Consolidated Financial Statements (Continued)

outstanding series of the Company's preferred stock, if holders of the preferred stock series are entitled to vote on the amendment under the Company's certificate of incorporation or Delaware law. No holder of Class A common stock may accumulate votes in voting for directors of the Company.

No holder of Class B common stock is entitled to vote except as otherwise provided by law, provided however that the Company must obtain the consent of a majority of the holders of Class B common stock to effect any amendment, alteration or repeal of any provision of the Company's amended and restated certificate of incorporation or amended and restated by-laws that would adversely affect the voting powers, preferences or rights of holders of Class B common stock. Except as otherwise provided by law, Class B common stock shares will not be counted as shares held by stockholders for purposes of determining whether a vote or consent has been approved or given by the requisite percentage of shares.

Each share of Class A common stock is convertible at the option of the holder and at no cost into one share of Class B common stock, and each share of Class B common stock is convertible at the option of the holder and at no cost into one share of Class A common stock. The conversion ratios will be adjusted proportionally to reflect any stock split, stock dividend, merger, reorganization, recapitalization or other change in the Class A common stock and Class B common stock. Upon conversion, converted shares resume the status of authorized and unissued shares.

Subject to the preferences of the holders of any of the Company's preferred stock that may be outstanding from time to time, each share of Class A common stock and Class B common stock will have an equal and ratable right to receive dividends and other distributions in cash, property or shares of stock as may be declared by the Company's board of directors out of assets or funds legally available for the payment of dividends and other distributions.

In the event of the liquidation, dissolution or winding up of the Company, subject to the preferences of the holders of any preferred stock of the Company that may be outstanding from time to time, holders of Class A common stock and Class B common stock will be entitled to share equally and ratably in the assets available for distribution to the Company's stockholders. There are no redemption or sinking fund provisions applicable to the Class A or the Class B common stock.

Embedded Cash Conversion Option on the December 2022 Convertible Notes

Upon issuance of the December 2022 Convertible Notes (see Note 16), 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. The Company allocated $29.6 million of the cash consideration paid on the December 2020 partial extinguishment of the Convertible Notes (see Note 16) to this equity component. The Company redeemed all of the remaining December 2022 Convertible Notes on June 24, 2021.

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 February 2021, the Company's Board of Directors declared a cash dividend of $0.08 per share of Class A common stock. During April 2021, July 2021 and October 2021, the Company's Board of Directors declared a cash dividend of $0.10 per share of Class A common stock. During February 2022, April 2022, July 2022, and October 2022, the Company's Board of Directors declared a cash dividend of $0.12 per share of Class A common stock. Dividends are payable on all outstanding shares of Class A common stock and on granted but unvested shares of Class A common stock under the Equity Plans on the date of record (See Note 23). During the year ended December 31, 2022, the Company paid $15.2 million of cash dividends to its holders of Class A common stock.

Treasury Stock

Treasury stock of $614.3 million as of December 31, 2022, compared to $547.1 million as of December 31, 2021, resulted from $36.1 million acquired through repurchases of shares to cover employee minimum tax withholding obligations related to stock compensation vesting events under the Equity Plans or other similar transactions and $31.1 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 year ended December 31, 2022:

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Notes to Consolidated Financial Statements (Continued)

			Treasury Stock Shares						Cost (dollars in thousands)						Average Cost per Share
Balance outstanding at December 31, 2021			28,047,929						$	547,112					$	19.51
Shares purchased for minimum tax withholding under the 2010 and 2020 Equity Plans or other similar transactions			1,058,933						36,082						34.07
Purchase of treasury stock			1,069,002						31,078						29.07
Balance outstanding at December 31, 2022			30,175,864						$	614,272					$	20.36

19. 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 non-controlling interests in consolidated subsidiaries and investment funds are comprised as follows:

			As of December 31,
			2022						2021						2020
			(dollars in thousands)
Redeemable non-controlling interests in consolidated subsidiaries and investment funds
Consolidated Funds
Beginning balance			$	—					$	—					$	391,275
Capital contributions			—						—						184,223
Capital distributions			—						—						(181,863)
Deconsolidation of entity			—						—						(360,711)
Income (loss) attributable to non-controlling interests			—						—						(32,924)
Ending balance			—						—						—
Nonredeemable non-controlling interests in consolidated subsidiaries and investment funds
Operating companies
Beginning balance			$	126,105					$	83,818					11,513
Capital contributions			24,417						36,539						9,730
Capital distributions			(10,626)						(7,601)						(5,605)
Consolidation of entity									—						48,596
Income (loss) attributable to non-controlling interests			6,540						13,349						19,584
Ending balance			146,436						126,105						83,818
Consolidated Funds
Beginning balance			33,630						115,806						82,807
Capital contributions			—						19,017						191,493
Capital distributions			—						(21,411)						(72,646)
Deconsolidation of entity			—						(74,813)						(89,889)
Income (loss) attributable to non-controlling interests			(17,143)						(4,969)						4,041
Ending balance			16,487						33,630						115,806
Total Nonredeemable non-controlling interests in consolidated subsidiaries and investment funds			$	162,923					$	159,735					$	199,624

20. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income includes the after tax change in Other revenues in the accompanying consolidated statement of operations. During the periods presented, the Company did not have material reclassifications out of other comprehensive income.

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Notes to Consolidated Financial Statements (Continued)

									Year Ended December 31,
															2022						2021						2020
															(dollars in thousands)
Beginning balance															$	(2)					$	(7)					$	(5)
Foreign currency translation															3						5						(2)
Ending balance															$	1					$	(2)					$	(7)

21. Revenue from Contracts with Customers

For the year ended December 31, 2022, 2021 and 2020, the following tables presents revenues from contracts with customers disaggregated by fee type and segment.

																		Year Ended December 31,
																								2022						2021						2020
																								(dollars in thousands)
Revenue from contracts with customers																								Operating Company
Investment banking
Underwriting fees																								$	114,201					$	421,081					$	427,670
Strategic/financial advisory fees																								248,268						433,909						190,958
Placement and sales agent fees																								120,629						195,676						133,171
Expense reimbursements from clients																								11,744						16,496						17,687
			Total investment banking revenue																					494,842						1,067,162						769,486
Brokerage
Commissions																								522,670						530,927						479,762
Trade conversion revenue																								30,233						24,098						21,389
Equity research fees																								24,111						21,015						19,757
			Total brokerage revenue from customers																					577,014						576,040						520,908
Management fees																								65,986						71,374						46,556
Incentive income																								646						2,732						592
Total revenue from contracts with customers - Op Co																								$	1,138,488					$	1,717,308					$	1,337,542
																								Asset Company
Management fees																								684						913						959
Total revenue from contracts with customers - Asset Co																								684						913						959
Total revenue from contracts with customers																								$	1,139,172					$	1,718,221					$	1,338,501

22. Insurance and reinsurance

Cowen Insurance Co is a wholly owned Malta-based insurance company that reinsures a significant proportion of its portfolio (“Outward Reinsurance”). The Company's wholly owned subsidiaries, Cowen Reinsurance S.A. (based in Luxembourg) (“Cowen Re”) and Kelvin (based in Guernsey, see Note 3) provide reinsurance to third party insurance and reinsurance companies (“Inward Reinsurance”). Cowen Insurance Co's, Cowen Re's, and Kelvin's share of claims incurred and paid during the periods below, as well as the change in claims outstanding and claims incurred but not reported ("IBNR") during years ended December 31, 2022, 2021 and 2020, net of reinsurance, were as follows:

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Notes to Consolidated Financial Statements (Continued)

									Year Ended December 31,
															2022						2021						2020
															(dollars in thousands)
Paid claims
Insurance (net of Outward Reinsurance)															$	4,496					$	3,285					$	—
Inward Reinsurance															28,615						17,140						14,838
Total															$	33,111					$	20,425					$	14,838
Change in claims outstanding and claims IBNR
Insurance (net of Outward Reinsurance)															$	533					$	112					$	—
Inward Reinsurance															(55,803)						3,304						11,599
Total															$	(55,270)					$	3,416					$	11,599

As of December 31, 2022 and 2021, insurance and reinsurance assets and liabilities consisted of the following:

			As of December 31,
			2022						2021
Insurance and reinsurance assets
Reinsurance recoverable on paid claims			$	66,303					$	9,072
Deferred acquisition costs			4,610						5,672
Cash advances held by cedants			2,684						3,523
Reinsurance recoverable on claims reserves			60,189						11,806
Total			$	133,786					$	30,073
Insurance and reinsurance liabilities
Reinsurance payables on paid claims			$	27,030					$	3,837
Unearned Premium reserve			27,294						23,241
Loss reserves (incurred claims and IBNR)			263,223						44,191
Total			$	317,547					$	71,269

Cowen Insurance Co, Cowen Re, and Kelvin utilize several methods to determine their claims IBNR. Cowen Insurance Co and Cowen Re generally employ 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, Cowen Insurance Co and Cowen Re employ a method to determine average claims ratios derived through different actuarial calculation methods. 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 Cowen Insurance Co's and Cowen Re's IBNR provision. As Kelvin is in run-off Kelvin determines its IBNR liabilities based on figures provided by insurance companies that Kelvin reinsures as well as industry-wide information about claims development related to known events in the past, such as hurricanes, typhoons, earthquakes, etc. All entities utilize recognized actuarial methods and assumptions which are regularly reviewed through catastrophe models, own loss experience, historical industry loss experience, underwriter and originator experience, pricing adequacy trends and management’s professional judgement. During the year ended December 31, 2022, claims liability and claim adjustment expenses were calculated using the above-mentioned methods consistent with prior years.

Cowen Insurance Co, Cowen Re, and Kelvin typically settle their premiums and claim payments on a quarterly basis. Cowen Insurance Co, Cowen Re, and Kelvin write contracts on both a proportional and non-proportional basis. The contracts contain inspection rights to allow the companies to inspect the policy documents that provide the source for the underlying data provided by the cedant. This negates the need for them to collect and hold the documents themselves which would be impracticable. Cowen Insurance Co, Kelvin, and Cowen Re do not discount any of its reserves and manage their exposure to insurance risk from higher than expected claims via the purchase of outward reinsurance. Cowen Insurance Co purchases such reinsurance on a program by program basis while Cowen Re and Kelvin have purchased whole account reinsurance which extends to their entire business.

Cowen Insurance Co, Cowen Re and Kelvin have entered into insurance and reinsurance agreements that require them to post collateral of cash or U.S. government bonds to cover certain exposures as defined in the respective insurance and reinsurance agreements. As of December 31, 2022, Cowen Re had pledged $53.0 million of collateral towards such reinsurance obligations, of

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Notes to Consolidated Financial Statements (Continued)

which $43.0 million was in cash and $10.1 million was in U.S. government bonds. As of December 31, 2021, total collateral pledged was $60.1 million, of which $44.1 million was cash and $16.0 million was U.S. government bonds. The collateral pledged as of December 31, 2022 was $7.1 million lower than the amounts pledged at December 31, 2021. This change is due to a release of collateral on three of its cedant contracts. Cowen Re expects $40.5 million of the cash collateral pledged to be released on September 30, 2023. The remaining collateral of $12.5 million is expected to be released periodically between December 31, 2022 and December 31, 2029 in accordance with the terms of the underlying insurance and reinsurance agreements. As of December 31, 2022, Kelvin had pledged $76.6 million of collateral towards its reinsurance obligations, of which $52.2 million was in cash and $24.4 million was in the form of letters of credit from major banks. As of December 31, 2022 and December 31, 2021, Cowen Insurance Co had no pledged collateral.

			As of December 31,
			2022						2021
Insurance and reinsurance assets
Beginning balance at January 1			$	44,191					$	37,036
Increase/(Decreases) reinsurance recoverables			(11,806)						—
Total			$	32,385					$	37,036
Incurred related to:
Current Years			$	2,436					$	13,262
Prior Years			(36,200)						1,414
Total			$	(33,764)					$	14,676
Paid related to:
Current Years			$	3,941					$	6,874
Prior Years			29,170						13,551
Total			$	33,111					$	20,425
Acquired insurance and reinsurance liabilities net of reinsurance assets and liabilities			$	237,524					$	1,009
Balance at December 31			$	203,035					$	32,385
Increase/(Decreases) reinsurance recoverables			60,189						$	11,806
Ending balance at December 31			$	263,224					$	44,191

23. Share-Based Payments, Deferred Compensation and Employee Ownership Plans

The Company has issued share-based compensation under the 2010 and 2020 Equity Incentive Plan (the "Equity Plans"). The Equity Plans permit the grant of options, restricted shares, restricted stock units, and other equity-based awards to the Company's employees and directors. Stock options granted generally vest over two 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-year period. Awards are subject to the risk of forfeiture, inclusive of accrued dividend equivalents. As of December 31, 2022, there were 3.7 million shares available for future issuance under only the 2020 Equity Incentive Plan.

Under the Equity Plans, the Company awarded $50.1 million of deferred cash awards to its employees during the year ended December 31, 2022. These awards vest over a four-year period and accrue interest at 0.70% per year. As of December 31, 2022, the Company had unrecognized compensation expense related to the Equity Plans' deferred cash awards of $61.5 million.

The Company measures compensation cost for equity classified share-based awards on grant date and amortizes the unearned compensation associated with such 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 Plan, the Company recognized compensation expense of $66.7 million, $85.0 million and $48.1 million for the years ended December 31, 2022, 2021 and 2020, respectively. The income tax effect recognized for the Equity Plans was a benefit of $24.3 million, $33.5 million and $13.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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Notes to Consolidated Financial Statements (Continued)

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 years ended December 31, 2022 and 2021:

			Year Ended December 31, 2022												Year Ended December 31, 2021
			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 outstanding			4,595,342						$	24.33					5,450,191						$	17.56
Granted			2,054,563						31.62						2,092,904						35.31
Vested			(2,134,692)						21.46						(2,785,535)						19.46
Canceled			—						—						—						—
Forfeited			(71,717)						21.96						(162,218)						22.23
Ending balance outstanding			4,443,496						$	29.12					4,595,342						$	24.33

Included in the restricted share and restricted stock unit activity are performance-linked restricted stock units of 1,974,217 which were awarded from March 2016 through March 2022. Certain of the awards granted have the ability to be cash settled when the attained award exceeds a certain percentage of granted amount. The cash portion of the award has been bifurcated from the equity component and recorded as a compensation payable in the accompanying consolidated statement of financial condition. Of the awards granted, 712,652 have vested and 320,681 have been canceled, as they did not meet the performance criteria, through December 31, 2022. Included in vested units are 233,333 units that had an attainable share value of 420,000, and were delivered in March 2021. Of this attainable share value 350,000 shares were settled in the issuance of the Company's Class A common stock and were delivered in March 2021 with the remaining 70,000 shares being settled in cash at the volume weighted average price on settlement date. Also included in vested units are 333,333 units that had an attainable share value of 666,666, due to reaching certain performance goals. Of this attainable value 528,800 shares were settled in the Company's Class A common stock and were delivered in March 2022 with the remaining 137,866 shares being settled in cash at the volume weighted average price of the Company's Class A common stock on settlement date. The remaining awards, included in the outstanding balance as of December 31, 2022, vest December 2023 and December 2024 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 attained shares ultimately earned could vary from zero, if performance goals are not met, to as much as 240% of the targeted award. 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 is determined based on the number of shares granted and the quoted price of the Company's common stock on the date of grant.

As of December 31, 2022, there was $77.9 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 restricted shares and restricted stock units granted to employees is expected to be recognized over a weighted-average period of 1.64 years.

Restricted Shares and Restricted Stock Units Granted to Non-Employee Board Members

There were 64,370 and 28,463 restricted stock units awarded to non-employee board members during the year ended December 31, 2022 and 2021. The Company delivered 4,156 and 41,667 restricted stock units to non-employee board members during the year ended December 31, 2022 and 2021. As of December 31, 2022 and 2021, there were 306,547 and 246,333 restricted stock units outstanding for non-employee board members, respectively.

Other Share Based Payments and Awards

In certain circumstances, the Company grants carried interest in consolidated managing member/general partner subsidiaries to third parties through the grant of equity awards in exchange for professional, advisory and other services. The equity awards are recorded within additional paid in capital in the accompanying consolidated statements of financial condition and professional, advisory and other fees expense in the accompanying consolidated statements of operations based on the fair value of the award granted and expensed over the terms of the award. In addition, the equity awards provide the third parties profit points aligned to the allocated carried interest distributions. Upon vesting of the awards, the third parties' allocation of carried interest is determined by applying an equity ownership model. Accordingly, the Company accrues carried interest allocations based on the fair value of the underlying investments assuming hypothetical liquidation at book value upon vesting as nonredeemable non-controlling interest.

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Notes to Consolidated Financial Statements (Continued)

On March 1, 2022, Cowen Digital Holdings LLC (“CDIG”) authorized 2,000,000 Class B Units, of which 1,487,500 Class B Units and an additional 29,250 on July 15, 2022, were issued to an affiliate, for which a subsidiary of the Company is the Managing Member, on behalf of the Company’s employees as incentive awards (the "Digital Awards") under the 2022 Equity Unit Incentive Plan. The Class B Units will, upon vesting, represent a 20% ownership of CDIG, a consolidated subsidiary of the Company upon vesting. Once the vesting conditions of the Digital Awards have been met, such awards will be presented as nonredeemable non-controlling interest in the accompanying consolidated statements of financial condition. Half of the Digital Awards vest over a period of time and are tied to service (time based) and the other half vest when a qualifying event as stipulated in the Digital Award documents occurs (performance based). Once vested, Class B units will not be entitled to distributions unless and until a profit distribution hurdle has been met. The Company recognized compensation expense of $0.8 million related to the time based Digital Awards for the year ended December 31, 2022. At December 31, 2022, there was $0.8 million of unrecognized compensation expense related to the time based Digital Awards which will be recognized over their five year vesting period. The fair value of time based Digital Awards is determined based on the fair market value of CDIG and its consolidated subsidiaries. The fair market value of CDIG and its consolidated subsidiaries is calculated utilizing recent transactions, discounted cash flows, and market multiples. The Digital Awards are then using a standard Black Scholes options pricing model. The primary input in determining the fair market value on grant date was recent/pending transactions in CDIG’s underlying investments. The expense related to the performance based component of the Digital Awards will be recognized when the qualifying event is considered to be probable. The income tax effect recognized for the Digital Awards was a benefit of $0.2 million for the year ended December 31, 2022.

24. Defined Contribution Plans

The Company sponsors a Retirement and Savings Plan which is a defined contribution plan pursuant to Section 401(k) of the Internal Revenue Code (the "401(k) Plans"). All full-time employees of the Company can contribute on a tax deferred basis and an after-tax basis to the 401(k) Plans up to federal contribution limits or up to 100% of their annual compensation, subject to certain limitations. The Company provides matching and profit sharing contributions to employees that are equal to a specified percentage of the eligible participant's contribution as defined by the 401(k) Plans. For the years ended December 31, 2022, 2021 and 2020, the Company's contributions to the 401(k) Plans were $3.0 million, $3.9 million, and $2.9 million, respectively.

25. 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 be submitted on a stand-alone or combined 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 with tax filing obligations are the United Kingdom, Luxembourg, Malta, Guernsey, Germany, Switzerland, Israel, South Africa, Canada and Hong Kong.

The Company is subject to U.S. tax on its Global Intangible Low Taxed Income ("GILTI"). The Company elected to account for taxes on GILTI inclusions in U.S. taxable income as incurred on the current year basis and not included any related amounts in deferred taxes.

The components of the Company's income tax expense for the years ended December 31, 2022, 2021 and 2020 are as follows:

			Year ended December 31,
			2022						2021						2020
			(dollars in thousands)
Current tax expense/(benefit)
Federal			$	32,574					$	92,390					$	13,840
State and local			2,799						21,842						5,060
Foreign			4,358						1,867						1,355
Total			$	39,731					$	116,099					$	20,255
Deferred tax expense/(benefit)
Federal			$	(23,194)					$	(9,860)					$	53,231
State and local			(5,705)						(4,861)						17,337
Foreign			(46)						661						(450)
Total			(28,945)						(14,060)						70,118
Total tax expense/(benefit)			$	10,786					$	102,039					$	90,373

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Notes to Consolidated Financial Statements (Continued)

Consolidated U.S. income/(loss) before income taxes was $60.5 million in 2022, $385.1 million in 2021, and $289.6 million in 2020. The corresponding amounts for non-U.S.-based income/(loss) were $16.1 million in 2022, $20.9 million in 2021, and $7.9 million in 2020.

The reconciliations of the Company's federal statutory rate to the effective income tax rate for the years ended December 31, 2022, 2021, and 2020 are as follows:

			Year ended December 31,
			2022						2021						2020
Pre-tax net income at U.S. statutory rate			21.0		%				21.0		%				21.0		%
Nondeductible expenses			11.3						2.6						1.5
Change in valuation allowance			(3.2)						—						—
Tax credits			(4.6)						—						—
Stock compensation			(7.4)						(2.3)						(0.3)
State and foreign tax			(4.4)						5.0						7.3
Reversal of income attributable to non-controlling interests			2.9						(0.4)						0.7
Other, net			(1.5)						(0.8)						0.2
Total			14.1		%				25.1		%				30.4		%

As of December 31, 2022, the Company has income taxes receivable of approximately $10.9 million representing state tax overpayments, which is included in other assets on the accompanying consolidated statements of financial condition. The Company also has income taxes payable of $13.2 million representing federal, state and foreign payables, which is included in other liabilities on the accompany consolidated statements of financial condition.

The components of the Company's deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows:

			As of December 31,
			2022						2021
			(dollars in thousands)
Deferred tax assets, net of valuation allowance
Net operating loss			$	12,061					$	14,649
Deferred compensation			29,967						34,342
Intangible assets			4,894						2,732
Bad debt reserves			2,929						759
Section 174 capitalization			9,460						—
Tax credits			1,057						3,241
Lease liability			17,871						24,373
Other			5,926						3,643
Total deferred tax assets			84,165						83,739
Valuation allowance			(1,932)						(4,226)
Deferred tax assets, net of valuation allowance			82,233						79,513
Deferred tax liabilities
Right-of-use on certain assets			(16,498)						(22,568)
Goodwill			(7,594)						(1,425)
Unrealized gains on investments			(5,070)						(30,393)
Other			(2,261)						(3,362)
Total deferred tax liabilities			(31,423)						(57,748)
Deferred tax assets/(liabilities), net			$	50,810					$	21,765

Deferred tax assets, net of valuation allowance, are reported in the accompanying consolidated statements of financial condition. In addition to the deferred tax balances in the table above, the Company records balances related to its operating losses in Luxembourg, which are discussed below.

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

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Notes to Consolidated Financial Statements (Continued)

purposes in the foreseeable future. The Company recorded approximately $1.9 million valuation allowance against its deferred tax assets of $84.2 million as of December 31, 2022 and recorded approximately $4.2 million valuation allowance against its deferred tax assets of $83.7 million as of December 31, 2021. Separately, the Company has deferred tax liabilities of $31.4 million as of December 31, 2022 and $57.7 million as of December 31, 2021.

For tax year 2022, the Company's total deferred tax benefit of $28.9 million was derived by the recognition of Section 174 expenses and the reversal of timing differences in the normal course of business. The deferred tax benefit of $14.1 million in 2021 was derived by the reversal of timing differences in the normal course of business. The deferred tax expense of $70.1 million in 2020 was derived by the utilization of net operating losses and the reversal of timing differences in the normal course of business.

As of December 31, 2022, the Company has foreign tax credit carryforwards of $1.1 million which expire between 2023 and 2030. Valuation allowance of $0.6 million was established against foreign tax credit carryforward as the Company determined that it is not more likely than not that the credits will be utilized.

The Company has the following net operating loss carryforwards at December 31, 2022:

Jurisdiction:			Federal						New York State						New York City						Hong Kong
Net operating loss (in millions)			$15.2						$16.0						$24.7						$11.7
Year of expiration			2030						2034						2034						Indefinite

In addition to the net operating loss carryforwards in the table above, the Company also has net operating loss carryforwards in Luxembourg. These loss carryforwards are only accessible to the extent of taxable income generated by the Luxembourg reinsurance companies, including any deferred income that will be generated in the future. Consequently, the Company recorded a deferred tax asset of $176.7 million, net of deferred tax liabilities of $39.7 million in connection with future taxable income, and an offsetting valuation allowance of $176.7 million against its Luxembourg net operating loss carryforwards that are in excess of such taxable income.

In June 2011, the Company acquired a subsidiary with net operating loss carryovers that underwent a change of control under Section 382 of the Internal Revenue Code due to the acquisition. Accordingly, a portion of the Company’s deferred tax assets, are subject to an annual limitation under Section 382. The deduction limitation is approximately $6.7 million annually and applies to approximately $10.2 million of net operating losses. The Company is not expected to lose any deferred tax assets due to these limitations.

As a result of the enactment of the Inflation Reduction Act signed on August 16, 2022, the Company is required to assess the tax impact of the Act in the quarter the law was enacted. Based on management’s analysis, there was no material impact on the Company's financial statements as of December 31, 2022.

The components of unrecognized tax benefits are as follows:

			As of December 31,
			2022						2021
			(dollars in thousands)
Beginning balance at January 1			$	—					$	299
Settlement of positions			—						(64)
Increases/(Decreases) due to prior year positions			—						(235)
Ending balance at December 31			$	—					$	—

The Company did not record any additions to its unrecognized tax benefit balances as a result of current or prior year tax positions in the consolidated statement of operations for the year ended December 31, 2022. No unrecognized tax benefit was recorded in the consolidated statement of financial condition as of December 31, 2022.

The following are the major jurisdictions in which the Company has significant business operations and the earliest open tax year subject to examination in these jurisdictions:

Jurisdiction:			Federal						New York State						New York City						United Kingdom						Luxembourg						Malta						Germany						Switzerland
Tax Year			2018						2019						2019						2019						2018						2017						2018						2018

The Company continues to permanently reinvest the capital and accumulated earnings of its subsidiaries in the United Kingdom, Malta, Germany, Switzerland, Israel, Canada, and Hong Kong.

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Notes to Consolidated Financial Statements (Continued)

26. Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to the Company's common stockholders by the weighted average number of shares of Class A common stock outstanding for the period. As of December 31, 2022, there were 28,234,289 shares of Class A common stock outstanding. As of December 31, 2022, the Company has included 310,426 fully vested, unissued restricted stock units and restricted shares in its calculation of basic earnings per share. As of December 31, 2021, there were 27,778,964 shares of Class A common stock outstanding. As of December 31, 2021, the Company has included 972,732 fully vested, unissued restricted stock units and restricted shares in its calculation of basic earnings per share.

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 unvested restricted shares and restricted stock units. 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, 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 previously concluded that it had the intent and ability to settle the December 2022 Convertible Notes in cash and, as a result, the convertible notes did not have an impact on the Company's diluted earnings per share calculation. On March 24, 2021, the Company issued a redemption notice announcing that the Company would redeem all of the December 2022 Convertible Notes (See Note 16). On June 24, 2021, the Company cash settled the December 2022 Convertible Notes up to the principal amount of the December 2022 Convertible Notes and share settled through the delivery of shares of the Company’s Class A common stock for the remainder of the conversion obligation in excess of the principal amount. The shares of the Company’s Class A common stock issued are within basic earnings per share subsequent to June 24, 2021. Prior to that date, the Company has applied the if-converted method to the portion of the December 2022 notes above the principal amount that settled in shares upon a conversion in dilutive earnings per share.

On December 31, 2021, the Company irrevocably elected to cash settle $1,000.00 of its obligation in respect of each conversion of any share of the Series A Convertible Preferred Stock. Prior to this date, the Company could elect to settle the Series A Convertible Preferred Stock in shares, cash, or a combination of both. Effective January 1, 2022, the Company adopted ASC 470-20, which requires the Company to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of potential share settlement (if the effect is more dilutive) for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. With the adoption of this guidance, the Company is required to include the portion of the Series A Convertible Preferred Stock that can be settled in Class A common stock (amount in excess of $1,000.00 per share of the Series A Convertible Preferred Stock) in the diluted earnings per share calculation. As a result, the Series A Convertible Preferred Stock impacts the Company’s diluted earnings per share calculation for the period ended December 31, 2022 (See Note 2).

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The computation of earnings per share is as follows:

									Year Ended December 31,
															2022						2021						2020
															(dollars and share data in thousands, except per share data)
Net income (loss)															$	65,855					$	303,991					$	207,064
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds															(10,603)						8,380						(9,299)
Net income (loss) attributable to Cowen Inc.															76,458						295,611						216,363
Preferred stock dividends															6,792						6,792						6,792
Net income (loss) attributable to Cowen Inc. common stockholders for basic earnings per share															69,666						288,819						$	209,571
Change in fair value of contingently issuable shares															55						—						—
Net income (loss) attributable to Cowen Inc. common stockholders for diluted earnings per share															$	69,721					$	288,819					$	209,571
Shares for basic and diluted calculations:
Weighted average shares used in basic computation															28,183						27,721						27,790
Performance based restricted stock															430						755						—
Contingently issuable common stock in connection with acquisitions															50						—						85
December 2022 Convertible Notes															—						1,404						—
Series A Convertible Preferred Stock															949						—						—
Restricted stock															1,932						2,748						1,644
Weighted average shares used in diluted computation															31,544						32,628						29,519
Earnings (loss) per share:
Basic															$	2.47					$	10.42					$	7.54
Diluted															$	2.21					$	8.85					$	7.10

27. 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 applicable lease term. The Company does not include renewal options in the lease term for calculating the Company's lease liability as the renewal options allow the Company operational flexibility and the Company is not reasonably certain to exercise these renewal options at this time. The Company records the expenses related to occupancy and equipment on a straight-line basis over the lease term and these expenses are included in occupancy and equipment expense and client services and business development expense in the accompanying consolidated statements of operations.

For the year ended December 31, 2022 and 2021, quantitative information regarding the Company's operating lease obligations reflected in the accompanying consolidated statements of operations were as follows:

									Year Ended December 31,
															2022						2021						2020
															(dollars in thousands)
Lease cost
Operating lease cost															$	25,495					$	25,268					$	22,759
Short-term lease cost															225						150						207
Variable lease cost															2,527						3,526						3,550
Sublease income															(470)						(583)						(781)
Total lease costs															$	27,777					$	28,361					$	25,735

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The following table summarizes the supplemental cash flow information and certain other information related to operating leases for the years ended December 31, 2022 and 2021:

			Year Ended December 31,
			2022						2021
			(dollars in thousands)
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	26,046					$	27,429
Weighted average remaining lease term - operating leases (in years)			5.35						5.27
Weighted average discount rate - operating leases			4.23		%				4.06		%

As of December 31, 2022, maturities of the outstanding operating lease liabilities for the Company were as follows:

			Equipment Leases (operating)						Real Estate and Other Facility Rental (a) (b) (c)
			(dollars in thousands)
2023			$	523					$	24,653
2024			515						22,450
2025			479						11,781
2026			278						8,607
2027			—						7,213
Thereafter			—						18,998
Total operating leases			1,795						93,702
Less discount			41						10,097
Less short-term leases			—						137
Total lease liability			$	1,754					$	83,468

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

(b)During the year ended December 31, 2022, the Company recognized an increase of $12.3 million of operating right-of-use assets and leases liabilities related to facility leases.

(c)The Company has assigned a lease but has remained as the guarantor for performance of the assignee's rent payment obligations for the remainder of the term of the assigned lease at the maximum amount of $0.5 million.

Other Commitments

As of December 31, 2022, future minimum annual service payments for the Company were as follows:

						Service Payments
						(dollars in thousands)
2023						$	32,919
2024						18,761
2025						6,169
2026						3,271
2027						3,257
Thereafter						4,100
Total service payment commitments						$	68,477

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Notes to Consolidated Financial Statements (Continued)

Unfunded Commitments

The following table summarizes unfunded commitments as of December 31, 2022:

Entity						Unfunded Commitments						Commitment Term
						(dollars in thousands)
HealthCare Royalty Partners funds (a)						$	6,064					2.0 years
Eclipse Ventures Fund I, L.P.						$	28					2.0 years
Eclipse Fund II, L.P.						$	12					3.0 years
Eclipse Continuity Fund I, L.P.						$	10					4.0 years
Cowen Healthcare Investments III LP						$	1,552					4.0 years
Cowen Healthcare Investments IV LP						$	4,758					5.0 years
Cowen Sustainable Investments I LP						$	8,729					7.0 years

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

Litigation

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

In the ordinary course of business, the Company and Related Parties are also subject to governmental and regulatory examinations, information gathering requests (both formal and informal), certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. Certain of the Company's affiliates and subsidiaries are registered broker-dealers, futures commission merchants, investment advisers or other regulated entities and, in those capacities, are subject to regulation by various U.S., state and foreign securities, commodity futures and other regulators. In connection with formal and informal inquiries by these regulators, the Company receives requests and orders seeking documents and other information in connection with various aspects of the Company's regulated activities. The Company is currently cooperating with the SEC in connection with an investigation of the Company’s business’ compliance with record preservation requirements relating to business communications and/or electronic messaging channels. The SEC is reportedly conducting similar investigations of record preservation practices at other broker-dealers and investment advisors.

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. For many legal and regulatory matters, we are unable to estimate a range of reasonably possible loss.

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 would include 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 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

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its experience in similar cases or proceedings as well as its assessment of matters, including settlements, involving other defendants in similar or related cases or proceedings. The Company may increase or decrease its legal reserves in the future, on a matter-by-matter basis, to account for developments in such matters. The Company accrues legal fees as incurred.

28. Segment Reporting

The Company has two reportable business segments: Op Co and Asset Co. The Op Co segment consists of Cowen Investment Management ("CIM"), Investment Banking, Markets and Research. The Asset Co segment consists of the Company's private investments, private real estate investments and other legacy investment strategies.

Segment Measures

The measure of profit or loss 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 an after tax measure (which represents the Company’s income tax expense or benefit calculated on Pre-tax Economic Income (Loss) once all currently available net operating losses have been utilized) and is presented after preferred stock dividends. Economic Income (Loss) (i) includes management reclassifications which the Company believes provides additional insight into the performance of the Company’s core businesses and divisions (ii) eliminates the impact of consolidation for Consolidated Funds and (iii) excludes goodwill and certain other impairments, certain other transaction-related adjustments and/or reorganization expenses and certain costs associated with debt.

The Company does not disclose total asset information for its business segments as the information is not reviewed by the Chief Operating Decision Maker ("CODM"). The Op Co and Asset Co segments do not conduct inter-segment transactions.

The following table sets forth operating results for the Company's consolidated US GAAP net income (loss) and related reclassifications and adjustments necessary to reconcile to the Company's Economic Income (Loss) measure which represents the Company's Op Co and Asset Co segments' results:

									Year Ended December 31,
															2022						2021						2020
															(dollars in thousands)
Economic Income
Op Co															$	87,502					$	314,519					$	329,381
Asset Co															(27,482)						(2,291)						(16,136)
Adjustments applied to arrive at Net Income (loss)
Income attributable to non-controlling interest															(10,603)						8,380						(9,299)
Preferred stock dividends															6,792						6,792						6,792
Amortization of (discount)/premium on convertible debt															(309)						(1,604)						(4,499)
Acquisition related amounts															(16,293)						(6,593)						(606)
Contingent liability adjustments															13,560						(15,118)						(8,492)
Debt extinguishment gain (loss) and accelerated debt costs															—						(10,095)						2,719
Bargain purchase gain															—						3,855						—
Goodwill and other impairment															—						(1,009)						(2,423)
US GAAP Income tax expense															(10,786)						(102,039)						(90,373)
Economic income tax expense															23,474						109,194						—
Net income (loss)															$	65,855					$	303,991					$	207,064

Economic Income (Loss) information provided and reviewed by the CODM includes (i) non-interest revenue, (ii) interest revenue, (iii) interest expense, (iv) depreciation and amortization expense and (v) income taxes presented on an Economic Income (Loss) basis by Segment. The following table sets forth the included segment information on a US GAAP basis with reconciliations to consolidated amounts.

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									Year Ended December 31,
															2022						2021						2020
															(dollars in thousands)
Op Co
Non-Interest Revenue															$	1,442,022					$	1,917,406					1,564,710
Interest Revenue															153,050						192,756						169,358
Interest Revenue, Consolidated funds															—						—						2,683
Total Revenues															1,595,072						2,110,162						1,736,751
Interest Expense															180,983						199,570						173,537
Interest Expense, Consolidated funds															—						—						1,376
Depreciation and Amortization															27,700						18,982						22,655
Income Taxes															21,635						103,149						90,373
Asset Co
Non-Interest Revenue															(57,756)						2,163						18,396
Interest Revenue															407						465						770
Interest Revenue, Consolidated funds															—						9						9
Total Revenues															(57,349)						2,637						19,175
Interest Expense															5,100						5,035						6,120
Interest Expense, Consolidated funds															—						—						—
Depreciation and Amortization															25						22						22
Income Taxes															(10,849)						(1,110)						—
Total Segment
Non-Interest Revenue *															1,384,266						1,919,569						1,583,106
Interest Revenue															153,457						193,221						170,128
Interest Revenue, Consolidated funds															—						9						2,692
Total Revenues															$	1,537,723					$	2,112,799					1,755,926
Interest and Dividend Expense (includes dividend expense of $73.0 million, $6.8 million, and $8.1 million for the years ended December 31, 2022, 2021 and 2020, respectively)															259,126						211,387						187,725
Interest and Dividend Expense, Consolidated funds (includes dividend expense of $0 million, $— million and $0.7 million for the years ended December 31, 2022, 2021 and 2020, respectively)															—						—						2,064
Depreciation and Amortization															27,725						19,004						22,677
Income Taxes															10,786						102,039						90,373

* Includes dividend revenue of $158.7 million, $26.0 million and $17.3 million for the year ended December 31, 2022, 2021 and 2020, respectively. Dividend revenue, consolidated funds, was $0.0 million, $0.0 million and $2.5 million for the year ended December 31, 2022, 2021 and 2020, respectively.

29. Regulatory Requirements

Regulatory Capital

As registered broker-dealers with the United States Securities and Exchange Commission ("SEC"), Cowen and Company, ATM Execution and Westminster are subject to the Uniform Net Capital Rule 15c3-1, "SEA Rule 15c3-1," under the Securities Exchange Act ("SEA") of 1934, which requires the maintenance of minimum net capital. Each registered broker-dealer has elected to compute net capital under the alternative method permitted by that rule.

Under the alternative method, Cowen and Company's minimum net capital requirement, as defined in (a)(4) of SEA Rule 15c3-1, is equal to the greater of $1.5 million or 2% of aggregate debits arising from customer transactions. ATM Execution, and Westminster are required to maintain minimum net capital, as defined in (a)(1)(ii) of SEA 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 provisions of SEA Rule 15c3-1 and other regulatory bodies.

Cowen and Company is also subject to certain net capital rule requirements under the Regulation 1.17 of the Commodity Futures Trading Commission ("CFTC") under Commodities Exchange Act (“CEA”) as an introducing broker. Under Regulation 1.17, Cowen and Company is required to maintain net capital equal to or in excess of $45,000 or the amount of net capital

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required by SEA Rule 15c3-1, whichever is greater. Additionally, as an options clearing member of the Options Clearing Corporation ("OCC") under OCC Rule 302, Cowen and Company is required to maintain net capital equal to the greater of $2.0 million or 2% of aggregate debit items. At December 31, 2022, Cowen and Company had $478.3 million of net capital in excess of its minimum requirements under SEA Rule 15c3-1.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law on July 21, 2010. The Dodd-Frank Act contains provisions that require the registration of all swap dealers, major swap participants, security-based swap dealers, and/or major security-based swap participants. Cowen Financial Products, LLC ("Cowen Financial Products") registered only with the SEC with an effective date of November 1, 2021 as a securities-based swap dealer and is not using models to compute its net capital. Under the rules there is a minimum net capital requirement for, among others, an entity that acts as a dealer in security-based swaps, which is the greater of $20 million or 2% of risk margin amount. The risk margin amount means the sum of (i) the total initial margin required to be maintained by the SEC securities-based swaps dealer at each clearing agency with respect to securities-based swaps transactions cleared for securities-based swap customers and (ii) the total initial margin amount calculated by the SEC securities-based swaps dealer swaps dealer with respect to non-cleared securities-based swaps under SEC rules. At December 31, 2022, Cowen Financial Products had $44.7 million of net capital in excess of its minimum requirements under SEA Rule 18a-1.

Cowen International Ltd and Cowen Execution Ltd are subject to the capital requirements of the U.K. Financial Conduct Authority ("FCA"), as defined, and must exceed the minimum capital requirement set forth by the FCA. On 1 January 2022, the FCA adopted the Investment Firms Prudential Regime ("IFPR"). This is a new prudential regime which applies to MiFID investment firms authorized and regulated by the FCA in the UK. The IFPR refocuses prudential requirements and expectations away from the risks firms face, to also consider and look to manage the potential harm firms can pose to consumers and markets. Cowen International Ltd and Cowen Execution Ltd will both be designated as Class 2 firms under the new regime and will have a minimum capital requirement equal to the higher of; the Permanent minimum capital requirement, their respective Fixed Overhead requirement, and their Risk Responsive Computation ("K-factors").

Cowen 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") of Hong Kong. Financial Resources must exceed the Total Financial Resources requirement of the SFC.

As of December 31, 2022, the regulatory net capital, minimum net capital requirement and excess net capital of U.S. regulated broker dealers and swap dealer together with the equivalent of capital requirements and compliance information for foreign broker dealers registered with the FCA and the SFC are presented as follows:

Subsidiary						Net Capital						Minimum Net Capital Requirement						Excess Net Capital
						(dollars in thousands)
Cowen and Company						$	482,309					$	4,052					$	478,257
ATM Execution						$	5,775					$	250					$	5,525
Westminster						$	21,440					$	250					$	21,190
Cowen Financial Products						$	64,670					$	20,000					$	44,670
Cowen International Ltd (a)						$	48,554					$	13,592					$	34,962
Cowen Execution Ltd (a)						$	17,358					$	7,022					$	10,336
Cowen Asia (a)						$	2,710					$	384					$	2,326

(a)The equivalent of Net Capital under FCA rules is referred as “capital resources” and under SFC rules is referred as “net liquid capital.” The equivalent of Minimum Net Capital Requirement under FCA rules is referred as “minimum capital resources requirement" and under SFC rules is referred as “net liquid capital requirement."

Customer Protection

The Company's U.S. broker-dealers must also comply with the customer protection provisions under SEA Rule 15c3-3 which requires a computation of a reserve requirement for customer and maintenance of a deposit of cash or securities into a special reserve bank account for the exclusive benefit of customers; 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.

ATM Execution claims the (k)(2)(ii) exemption with regard to all of their customer accounts and transactions that are introduced on a fully-disclosed basis to their clearing agents for clearing, settlement and custody. Westminster claims the (k)(2)(i) exemption with regard 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"). Westminster also claims exemption for other business activities that are not covered under (k)(2)(i) contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 for receiving transaction-based compensation in return for providing commission management services.

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In accordance with the requirements of SEA Rule 15c3-3, Cowen and Company may be required to deposit in a Special Reserve Account cash or acceptable qualified securities for the exclusive benefit of customers. As of December 31, 2022, Cowen and Company had segregated approximately $49.4 million of cash to satisfy the customer reserve provision of SEA Rule 15c3-3.

As a clearing and carrying broker-dealer, Cowen and Company is required to compute a reserve requirement for proprietary accounts of broker-dealers ("PAB"), as defined in SEA Rule 15c3-3. Cowen and Company performs a PAB reserve computation in order to determine the amount it is required to deposit in its PAB Reserve Bank Accounts pursuant to SEA Rule 15c3-3. This allows each correspondent firm that uses Cowen and Company as its clearing broker-dealer to classify its PAB account assets held at Cowen and Company as allowable assets in the correspondent's net capital calculation. At December 31, 2022, Cowen and Company had $40.4 million of cash on deposit in PAB Reserve Bank Accounts. Cowen and Company and ATM Execution 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 Financial Products, as a registered securities based swap dealer, claims Rule 18a-4(f) exemption under the Securities Exchange Act of 1934 (the “Act”) with regard to its swap counterparties on the basis that it has provided sufficient notice to its swap counterparties of their respective rights to require segregation of funds or other property used to secure uncleared security based swaps pursuant to section 3E(f)(1)(A)-(B) of the Act (15 U.S.C. 78c-5(f)(1)(A)). Any margin collateral received and held by the security-based swap dealer with respect to uncleared security-based swaps will not be subject to a segregation requirement. The notice outlines how a claim of those swap counterparties for the collateral would be treated in a bankruptcy or other formal liquidation proceeding of the security-based swap dealer.

Other Regulatory Requirements

Cowen Insurance Co and Cowen Re and Kelvin are individually required to maintain a solvency capital ratio as calculated by relevant European Commission directives and local regulatory rules in Malta, Luxembourg and Guernsey, respectively. Each company's individual solvency capital ratio calculated at the end of each regulatory determined period must exceed a minimum requirement. As of December 31, 2021, the last testing date for Cowen Re, the solvency capital ratio was in excess of the minimum regulatory requirement. As of September 30, 2022, the last testing date for Cowen Insurance Co and Kelvin, the solvency capital ratios were in excess of the minimum regulatory requirement.

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'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 December 31, 2022. RCG Insurance Company’s capital and surplus as of December 31, 2022 totaled $4.6 million.

30. 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 December 31, 2022 and 2021, $15.8 million and $16.6 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 years ended December 31, 2022 and 2021, 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.

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 consolidated statements of financial condition. As of December 31, 2022 and 2021, loans to employees of $11.8 million and $8.8 million, respectively, were included in due from related parties on the accompanying consolidated statements of financial condition. Of these amounts $6.1 million and $3.8 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 $4.5 million, $5.7 million and $3.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. This expense is included in employee compensation and benefits in the accompanying consolidated statements of operations. For the years ended December 31, 2022, 2021 and 2020 the interest income was $0.1 million, for these related party loans and advances, and are included in the interest and dividends in the accompanying consolidated statements of operations.

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The remaining balance included in due from related parties of $10.4 million and $22.6 million as of December 31, 2022 and 2021, respectively, relates to amounts due to the Company from affiliated investment funds and real estate entities due to expenses paid on their behalf.

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 December 31, 2022 and 2021, such investments aggregated $53.5 million and $53.9 million, respectively, were included in non-controlling interests on the accompanying consolidated statements of financial condition. Their share of the net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds aggregated $24.7 million, $14.9 million and $21.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company may, at times, have unfunded commitment amounts pertaining to related parties. See Note 27 for amounts committed as of December 31, 2022.

31. 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.

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 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 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 December 31, 2022 and December 31, 2021. 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.

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Cowen Inc.

Notes to Consolidated Financial Statements (Continued)

The Company'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' or 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.

The Company'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' financial condition and credit ratings. The Company seeks to manage 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 December 31, 2022.

Lender						Contractual Amount						Available Amount						Maturity Date						Description
Pledge Lines						(dollars in thousands)
BMO Harris Bank						$	25,000					$	25,000					None						Unsecured Broker Loan
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						250,000						250,000
Spike Line
BMO Harris Bank      Canadian Imperial Bank      of Commerce, in syndication						150,000						150,000						May 19, 2023						Unsecured committed spike line facility to cover short term increases in National Securities Clearing Corporation margin deposit requirements
Revolving Credit Facility
Morgan Stanley						25,000						25,000						March 24, 2026						Unsecured Corporate Revolver
Total Credit Lines						$	425,000					$	425,000

32. Subsequent Events

On February 14, 2023, the Board of Directors declared a cash dividend of $0.12 per common share. The dividend will be payable on March 15, 2023, to stockholders of record as of the close of trading on March 1, 2023. If the TD Merger is consummated prior to the close of trading on March 1, 2023, no dividend will be paid to stockholders of Cowen who hold common shares prior to the closing of the TD Merger (See Note 1).

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 consolidated financial statements.

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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

Date:

February 28, 2023

Title:

Chair and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities indicated and on the dates indicated.

Signature

Title

Date

/s/ JEFFREY M. SOLOMON

Chair and Chief Executive Officer (Principal Executive Officer)

Jeffrey M. Solomon

February 28, 2023

/s/ STEPHEN A. LASOTA

Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Stephen A. Lasota

February 28, 2023

/s/ BRETT H. BARTH

Brett H. Barth

Director

February 28, 2023

/s/ KATHERINE E. DIETZE

Katherine E. Dietze

Director

February 28, 2023

/s/ GREGG A. GONSALVES

Gregg A. Gonsalves

Director

February 28, 2023

/s/ LORENCE KIM

Lorence Kim

Director

February 28, 2023

/s/ STEVEN KOTLER

Steven Kotler

Director

February 28, 2023

/s/ LAWRENCE E. LEIBOWITZ

Lawrence E. Leibowitz

Director

February 28, 2023

/s/ MARGARET L. POSTER

Margaret L. Poster

Director

February 28, 2023

/s/ DOUGLAS A. REDIKER

Douglas A. Rediker

Director

February 28, 2023