Cohen & Co Inc.

Notes to Consolidated Financial Statements

(Dollars in Thousands, except share and per share information)

(Unaudited) 

1. ORGANIZATION AND NATURE OF OPERATIONS

Organizational History

Cohen Brothers, LLC (“Cohen Brothers”) was formed on* October7,* 2004 by Cohen Bros. Financial, LLC (“CBF”). Cohen Brothers was established to acquire the net assets of CBF’s subsidiaries (the “Formation Transaction”): Cohen Bros. & Company Inc.; Cohen Frères SAS; Dekania Investors, LLC; Emporia Capital Management, LLC; and the majority interest in Cohen Bros. & Toroian Investment Management, Inc. The Formation Transaction was accomplished through a series of transactions occurring between* March4,* 2005 and* May**31,* 2005.

From its formation until* December16,* 2009, Cohen Brothers operated as a privately owned limited liability company. On* December16,* 2009, Cohen Brothers completed its merger (the “AFN Merger”) with a subsidiary of Alesco Financial Inc. (“AFN”), a publicly traded real estate investment trust ("REIT").

As a result of the AFN Merger, AFN contributed substantially all of its assets into Cohen Brothers in exchange for newly issued units of membership interests directly from Cohen Brothers. In addition, AFN received additional Cohen Brothers membership interests directly from its members in exchange for AFN common stock. In accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), the AFN Merger was accounted for as a reverse acquisition, and Cohen Brothers was deemed to be the accounting acquirer. As a result, all of AFN’s assets and liabilities were required to be revalued at fair value as of the acquisition date. The remaining units of membership interests of Cohen Brothers that werenot held by AFN were included as a component of non-controlling interest in the consolidated balance sheets.

Subsequent to the AFN Merger, AFN was renamed Cohen & Company Inc. In* January 2011,Cohen & Company Inc. was renamed again as Institutional Financial Markets, Inc. (“IFMI”) and on September 1, 2017was renamed again as Cohen & Company Inc. Effective January**1,* 2010, the Company ceased to qualify as a REIT.

The Company

The Company is a financial services company specializing in an expanding range of capital markets and asset management services. As of* September 30, 2024*, the Companyhad $2.4 billion in assets under management (“AUM”) of which $1.0 billion was in collateralized debt obligations (“CDOs”). The remaining portion of AUM was from a diversified mix of Investment Vehicles (as defined herein).

In these financial statements, the “Company” refers to Cohen & Company Inc. and its subsidiaries on a consolidated basis. Cohen & Company, LLC or the “Operating LLC” refers to the main operating subsidiary of the Company. “Cohen Brothers” refers to the pre-AFN Merger Cohen Brothers, LLC and its subsidiaries. “AFN” refers to the pre-merger Alesco Financial Inc. and its subsidiaries. When the term “Cohen & Company Inc.” is used, it refers to the parent company itself. “JVB Holdings” refers to J.V.B. Financial Holdings, LP, a wholly owned subsidiary of the Operating LLC. “JVB” refers to J.V.B. Financial Group, LLC, a wholly owned broker-dealer subsidiary of JVB Holdings. "CCFESA" refers to Cohen & Company Financial (Europe) S.A., a consolidated subsidiary regulated by the Autorite de Controle Prudentiel et de Resolution ("ACPR") in France. "CCM," a division of JVB, refers to Cohen & Company Capital Markets, the Company's full-service boutique investment bank, which focuses on M&A, underwriting, capital markets and SPAC advisory services.

The Company’s business is organized into the following three business segments.

Capital Markets: The Company’s Capital Markets business segment consists primarily of fixed income sales, trading, gestation repo financing, new issue placements in corporate and securitized products, and advisory services. The Company’s fixed income sales and trading group provides trade execution to corporate investors, institutional investors, mortgage originators, and other smaller broker-dealers. The Company specializes in a variety of products, including butnot limited to: corporate bonds, asset backed securities (“ABS”), mortgage-backed securities (“MBS”), residential mortgage-backed securities (“RMBS”), CDOs, collateralized loan obligations (“CLOs”), collateralized bond obligations (“CBOs”), collateralized mortgage obligations (“CMOs”), municipal securities, to-be-announced securities (“TBAs”) and other forward agency MBS contracts, Small Business Administration ("SBA") loans, U.S. government bonds, U.S. government agency securities, brokered deposits and certificates of deposit (“CDs”) for small banks, and hybrid capital of financial institutions including trust preferred securities (“TruPS”), whole loans, and other structured financial instruments. The Company operates its capital markets activities primarily through its subsidiaries: JVB in the United States and CCFESA in Europe. A division of JVB, Cohen & Company Capital Markets ("CCM") is the Company's full-service boutique investment bank, which focuses on M&A, underwriting, capital markets and SPAC advisory services.

Asset Management: The Company’s Asset Management business segment manages assets within CDOs, managed accounts, joint ventures, and investment funds (collectively referred to as “Investment Vehicles”). A CDO is a form of secured borrowing. The borrowing is secured by different types of fixed income assets such as corporate or mortgage loans or bonds. The borrowing is in the form of a securitization, which means that the lenders are actually investing in notes backed by the assets. In the event of default, the lenders will have recourse only to the assets securing the loan. The Company’s Asset Management business segment includes its fee-based asset management operations, which include ongoing base and incentive management fees.

Principal Investing: The Company’s Principal Investing business segment is comprised of investments that the Company holds related to its SPAC franchise and other investments the Company has made for the purpose of earning an investment return rather than investments made to support the Company’s trading and other Capital Markets business segment activities. In addition, the Company has received financial instruments as consideration for advisory services provided by its Capital Markets business segment, which are included in this segment. These investments are included in the Company’s other investments, at fair value; other investments sold,not yet purchased; and investments in equity method affiliates in the Company’s consolidated balance sheets.

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The Company generates its revenue by business segment primarily through the following activities.

Capital Markets

Asset Management

Principal Investing

2. BASIS OF PRESENTATION

The financial statements of the Company included herein were prepared in conformity with U.S. GAAP for interim financial information and with the instructions to Form10-Q and Article10 of Regulation S-X. Accordingly, they donot include all of the information and footnotes required by U.S. GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim month periods. All intercompany accounts and transactions have been eliminated in consolidation. The results for thenine months ended* September 30, 2024and2023* arenot necessarily indicative of the results for the entire year or any subsequent interim period. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form10-K for the year ended* December 31, 2023*.

The Company’s management has evaluated subsequent events through the date of issuance of the Consolidated Financial Statements included herein. There have beenno subsequent events, except as already disclosed, that occurred during such period that would require disclosure in this Form10-Q or would be required to be recognized in the Consolidated Financial Statements as of and for thethree andnine months ended* September 30, 2024*.

Capitalized terms used herein without definition have the meanings ascribed to them in the Annual Report on Form10-K for the year ended* December 31, 2023*.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Adoption of New Accounting Standards

In* March 2020,the FASB issued ASU2020*-04*, Reference Rate Reform (Topic848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.* Certain aspects of this topic were later enhanced and clarified in* January 2021when the FASB issued ASU2021*-01, Reference Rate Reform (Topic848*).* These ASUs provide temporary optional guidance to ease the burden in accounting for reference rate reform by providing optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, which reference the London Interbank Offer Rate ("LIBOR") or another reference rate expected to be discontinued. These ASUs are intended to help stakeholders during the global market-wide reference rate transition period and were to be in effect for a limited time through* December 31, 2022.In December 2022,FASB issued ASU2022*-06 (Topic848**) and deferred the sunset date from* December 31, 2022to December 31, 2024.The Company’s adoption of the provisions of ASU2020*-04 and ASU2021-01, effective* March 12, 2020,was on a prospective basis. The adoption of these ASUs didnot* have a material impact on the Company's consolidated financial statements. See note20.

 

In* March**2022,* the FASB issued ASU2022-02, Financial Instruments—Credit Losses (Topic326*): Troubled Debt Restructurings ("TDRs") and Vintage Disclosures.The amendments in this ASU eliminate TDR recognition and measurement guidance and instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The Company's adoption of the provisions of ASU2022*-02, effective* January 1, 2023,didnot* have an effect on the Company’s consolidated financial statements.

In* August**2020,* the FASB issued ASU2020-06, Debt—Debt with Conversion and Other Options (Subtopic470*-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.* This ASU simplifies accounting for convertible instruments by removing major separation models currently required. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception. The ASU also simplifies the diluted earnings per share (EPS) calculation in certain areas. The Company's adoption of the provisions of ASU2020-06, effective* January 1, 2024,didnot* have an effect on the Company’s consolidated financial statements.

In* June 2022,the FASB issued ASU2022*-03, Fair Value Measurement (Topic820*): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions*. The amendments clarify that a contractual restriction on the sale of an equity security isnot considered part of the unit of account of the equity security and, therefore, isnot considered in measuring fair value. Early adoption is permitted. The Company's adoption of the provisions of ASU2022-03, effective* January 1, 2024,didnot* have an effect on the Company’s consolidated financial statements.

In* March 2023,the FASB issued ASU2023*-02,* Investments—Equity Method and Joint Ventures (Topic323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The ASU responds to stakeholder feedback that the proportional amortization method provides investors and other allocators of capital with a better understanding of the returns from investments that are made primarily for the purpose of receiving income tax credits and other income tax benefits. The Company's adoption of the provisions of ASU2032*-02, effective* January 1, 2024,didnot* have an effect on the Company’s consolidated financial statements.

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B. Recent Accounting Developments

In* August 2023,the FASB issued ASU2023*-05, Business Combinations— Joint Venture Formations (Subtopic805*-60): Recognition and Initial Measurement.The ASU applies to the formation of entities that meet the definition of a joint venture (or a corporate joint venture) as defined in the FASB Accounting Standards Codification Master Glossary. The amendments in the ASU require that a joint venture apply a new basis of accounting upon formation. As a result, a newly formed joint venture, upon formation, would initially measure its assets and liabilities at fair value. The ASU is effective on a prospective basis for all joint ventures with a formation date on or after January 1, 2025.Early adoption of ASUNo.* 2023-05 is permitted in any interim or annual period in which financial statements havenot yet been issued. The Company is currently evaluating the new guidance to determine the impact it* may*have on its consolidated financial statements.

In* October 2023,the FASB issued ASU2023*-06*, Disclosure Improvements*—Codification Amendments in Response to the Securities and Exchange Commission (“SEC’”) Disclosure Update and Simplification Initiative. These amendments clarify or improve disclosure and presentation requirements of a variety of topics and align the requirements in the FASB accounting standard codification with the SEC’s regulations. The ASU will be effective on the date the related disclosure requirements are removed from Regulation S-X or Regulation S-K by the SEC and willno longer be effective if the SEC hasnot removed the applicable disclosure requirement by* June 30, 2027.Early adoption isnot* permitted. The Company is currently evaluating the new guidance to determine the impact it* may*have on its consolidated financial statements.

In* November 2023,the FASB issued ASU2023*-07, Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures.* The amendments in this ASU are designed to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU is effective for fiscal years beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024.Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it may*have on its consolidated financial statements.

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740**). The amendments in this ASU address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU are effective for annual periods beginning after* December 15, 2024and should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the new guidance to determine the impact it may*have on its consolidated financial statements.

In* March 2024,the FASB issued ASU2024*-01, Compensation—Stock Compensation (Topic718*): Scope Application of Profits Interest and Similar Awards*. The ASU provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for as share-based payment arrangements in accordance with FASB Accounting Standards Codification (FASB ASC)718, Compensation-Stock Compensation. The ASU is effective for public business entities for annual periods beginning after* December 15, 2024and interim periods with those annual periods. The Company is currently evaluating the new guidance to determine the impact it may*have on its consolidated financial statements.

In* March 2024,the FASB issued ASU2024*-02, Codification Improvements — Amendments to Remove References to the Concepts Statements.The ASU amends the Codification to remove references to various concepts statements. In most instances, the references are extraneous andnot required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. The ASU is effective for public business entities for annual periods beginning after* December 15, 2024.The Company is currently evaluating the new guidance to determine the impact it may*have on its consolidated financial statements.

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C. Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments. These determinations were based on available market information and appropriate valuation methodologies. Considerable judgment is required to interpret market data to develop the estimates and, therefore, these estimates* may**not* necessarily be indicative of the amount the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies* mayhave a material effect on the estimated fair value amounts. Refer to note8* for a discussion of the valuation hierarchy with respect to investments-trading; other investments, at fair value; other investments sold,not yet purchased; and derivatives held by the Company.

Cash and cash equivalents: Cash and cash equivalents are carried at historical cost, which is assumed to approximate fair value. The estimated fair value measurement of cash and cash equivalents is classified within level1 of the valuation hierarchy.

Investments-trading: These amounts are carried at fair value. The fair value is based on quoted market prices of an active exchange, independent broker market quotations, market price quotations fromthird- party pricing services, or valuation models when quotations arenot available.

Other investments, at fair value: These amounts are carried at fair value. The fair value is based on quoted market prices of an active exchange, independent broker market quotations, or valuation models when quotations arenot available. In the case of investments in alternative investment funds, fair value is generally based on the reported net asset value of the underlying fund.

Receivables under resale agreements: Receivables under resale agreements are carried at their contracted resale price, have short-term maturities, and are repriced frequently or bear market interest rates and, accordingly, these contracts are at amounts that approximate fair value. The estimated fair value measurements of receivables under resale agreements are based on observations of actual market activity and are generally classified within level2 of the valuation hierarchy.

Trading securities sold,not yet purchased: These amounts are carried at fair value. The fair value is based on quoted market prices of an active exchange, independent market quotations, market price quotations fromthird party pricing services, or valuation models when quotations arenot available.

Other investments sold,not yet purchased: These amounts are carried at fair value. The fair value is based on quoted market prices of an active exchange, independent broker market quotations, or valuation models when quotations arenot available.

Securities sold under agreements to repurchase: The liabilities for securities sold under agreements to repurchase are carried at their contracted repurchase price, have short-term maturities, and are repriced frequently or bear market interest rates and, accordingly, these contracts are carried at amounts that approximate fair value. The estimated fair value measurements of securities sold under agreements to repurchase are based on observations of actual market activity and are generally classified within level2 of the valuation hierarchy.

Redeemable financial instruments: The liabilities for redeemable financial instruments are carried at their redemption value, which approximates fair value. The estimated fair value measurement of the redeemable financial instruments is classified within level3 of the valuation hierarchy.

Debt: These amounts are carried at outstanding principal less unamortized discount and deferred financing costs. However, a substantial portion of the Company's debt was assumed in the AFN Merger and recorded at fair value as of that date. As of* September 30, 2024* and* December 31, 2023*, the fair value of the Company’s debt was estimated to be$43,559 and$37,474, respectively. The estim ated fair value measurements of the debt are generally based on discounted cash flow models prepared by the Company’s management primarily using discount rates for similar instruments issued to companies with similar credit risks to the Company and are generally classified within level3 of the valuation hierarchy.

Derivatives: These amounts are carried at fair value. Derivatives* maybe included as a component of investments-trading; trading securities sold,not yet purchased; other investments, at fair value; and other investments, soldnot* yet purchased. The fair value is generally based on quoted market prices on an exchange that is deemed to be active for derivative instruments such as foreign currency forward contracts and Eurodollar futures. For derivative instruments, such as TBAs and other extended settlement trades, the fair value is generally based on market price quotations fromthird party pricing services.

 

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4. OTHER RECENT BUSINESS TRANSACTIONS OR EVENTS

JKD Investor

On* October 3, 2016,the Operating LLC entered into an investment agreement (the “JKD Investment Agreement”) as amended, by and between the Operating LLC and JKD Capital Partners I LTD ("JKD Investor"), pursuant to which JKD Investor agreed to invest up to $12,000 in the Operating LLC (the “JKD Investment”), $6,000 of which was invested upon the execution of the JKD Investment Agreement, an additional $1,000 was invested in January 2017,and an additional $1,268 was invested in January**2019.* The JKD Investor is owned by Jack J. DiMaio, the vice chairman of the board of directors, and his spouse. The Company recorded the JKD Investment as a redeemable financial instrument on the consolidated balance sheets.

In exchange for the JKD Investment, the Operating LLC agreed to pay to JKD Investor during the term of the JKD Investment Agreement an amount (“JKD Investment Return”) equal to50% of the difference between (i) the revenues generated during a quarter by the activities of the Institutional Corporate Trading Business of JVB (as defined in the JKD Investment Agreement) and (ii) certain expenses incurred by such Institutional Corporate Trading Business (the “Institutional Corporate Trading Business Net Revenue”). This JKD Investment Return was recorded monthly as interest expense or (interest income) with the related accrued interest recorded in accounts payable and other accrued liabilities. If the return was negative in an individual quarter, it would reduce the balance of the JKD Investment. Payments on the JKD Investment Return were made on a quarterly basis.

Pursuant to the JKD Investment Agreement, upon the termination of the JKD Investment Agreement, the Operating LLC would pay to the JKD Investor an amount equal to the Investment Balance (as is defined in the JKD Investment Agreement) as of the day prior to such termination.

Effective* September 1, 2024the Operating LLC and the JKD Investor entered into a Redemption Agreement (the “Redemption Agreement”), pursuant to which, the JKD Investment Agreement was redeemed and terminated in its entirety. As of September 1, 2024,*the JKD Investment balance under the JKD Investment Agreement was $7,719.

Pursuant to the terms and conditions of the Redemption Agreement, the Operating LLC (i) paid to JKD Investor $2,573 of the outstanding amount in cash; and (ii) the Company issued to JKD Investor a senior promissory note (the*“2024* Note”) in the aggregate principal amount of $5,146 representing the remaining balance of the JKD Investment. See note15.

2024 Note

EffectiveSeptember1, 2024, as is noted immediately above, the Company issued to JKD Investor the2024 Note pursuant to the Redemption Agreement. The2024 Note evidences the Operating LLC’s obligation to repay to the JKD Investor the original principal amount of $5,146. Pursuant to the2024 Note, the unpaid principal amount and all accrued but unpaid interest thereunder will be due and payable as follows: (i) $2,573 of the principal amount will be due and payable on* August 31, 2025,and (ii) $2,573 will be due and payable on August 31, 2026.*

The2024 Note accrues interest on the unpaid principal amount from* September 1, 2024until maturity at a rate equal to 12% per year. Interest on the2024* Note is payable in cash quarterly on each* January 1,** April 1,** July 1,and October 1,commencing on October 1, 2024.Under the2024* Note, upon the occurrence or existence of any “Event of Default” thereunder, the outstanding principal amount is (or in certain instances, at the option of the holder thereof,* maybe) immediately accelerated. Further, upon the occurrence of any Event of Default under the2024* Note and for so long as such Event of Default continues, all principal, interest and other amounts payable under the2024 Note will bear interest at a rate equal to 13% per year.

The2024 Note* may**not* be prepaid in whole or in part prior to* January 31, 2025.The2024* Note* may,with at least31* days’ prior written notice from the Operating LLC to the holder of the2024 Note, be prepaid in whole or in part at any time following* January 31, 2025without the prior written consent of the holder of the2024* Note and without penalty or premium. See note16.

Consolidation of the SPAC Fund

Prior to* March 31, 2023,the general partner of the SPAC Fund (“Vellar GP”) had an investment in the SPAC Fund, the potential to earn incentive fees, and didnot* consolidate the SPAC Fund. Effective* April 1, 2023,all of the investors in the SPAC Fund, other than Vellar GP, redeemed all of their interests in the SPAC Fund. Therefore, effective April 1, 2023,Vellar GP became the sole owner of the SPAC Fund and began consolidating it. The Company owns an interest in and consolidates Vellar GP. Effective April 1, 2023,*the Company began consolidating the SPAC Fund as well. The Company recorded the following entry upon consolidation.

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5. NET TRADING



Net trading consisted of the following in the periods presented.





Trading inventory includes investments classified as investments-trading as well as trading securities sold,not yet purchased. See note7. For discussion of margin payable, see note6. Other trading revenue includes revenue earned from our agency repo business (see note10).



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6. RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS, AND CLEARING AGENCIES

Amounts receivable from brokers, dealers, and clearing agencies consisted of the following.

RECEIVABLES FROM BROKERS, DEALERS, AND CLEARING AGENCIES

Amounts payable to brokers, dealers, and clearing agencies consisted of the following.



PAYABLES TO BROKERS, DEALERS, AND CLEARING AGENCIES



Deposits with clearing agencies represent contractual amounts the Company is required to deposit with its clearing agents.



Securities transactions that settle in the regular way are recorded on the trade date, as if they had settled. The related amounts receivable and payable for unsettled securities transactions are recorded net in receivables from or payables to brokers, dealers, and clearing agencies on the Company’s consolidated balance sheets.



Receivables from clearing agencies are primarily comprised of cash received by the Company upon execution of short trades that is restricted from withdrawal by the clearing agent.



Margin payable represents amounts borrowed from Pershing, LLC to finance the Company’s trading portfolio. See note5 for interest expense incurred on margin payable. All of the Company's securities included in investments-trading and a portion of the Company's securities included in other investments, at fair value serve as collateral for this margin loan. See note7.



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7. FINANCIAL INSTRUMENTS

Investments—Trading

Investments-trading consisted of the following.

INVESTMENTS - TRADING



Substantially all of the Company's investments-trading serve as collateral for the Company's margin loan payable. See note6.

Trading Securities Sold,Not Yet Purchased

Trading securities sold,not yet purchased consisted of the following.

TRADING SECURITIES SOLD,NOT YET PURCHASED

The Company manages its exposure to changes in interest rates for the interest rate sensitive securities it holds by entering into offsetting short positions for similar fixed rate securities. See note5 for realized and unrealized gains recognized on investments-trading.

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Other Investments, at Fair Value

Other investments, at fair value consisted of the following.

OTHER INVESTMENTS, AT FAIR VALUE

As of* September 30, 2024*, $1,452 of equity securities represented long positions related to share forward arrangements ("SFAs") entered into by the Company. As of* December 31, 2023,$26,079 of unrestricted equity securities, $1,447 of equity derivatives, and $6,278 of fair value receivables represented long positions related to SFAs entered into by the Company. See note9.* *** ***

Fair value receivables represent receivables (including receivables that are convertible into equity shares) from various counterparties in connection with the Company's advisory and SFA business. These receivables are carried at fair value.

Interests in SPVs represents the consideration the Company has received for services provided by CCM, rather than cash. The SPVs hold convertible notes receivable interests in the counterparties. The Company doesnot consolidate the SPVs and carries its interests in the SPVs at fair value. See note9 for discussion of the determination of fair value.

A total of $996 and $946 of the amounts shown as other investments, at fair value above served as collateral for the Company's margin loan payable as of* September 30, 2024* and* December 31, 2023*, respectively. See note6.

Other Investments Sold,Not Yet Purchased, at Fair Value

Other investments sold,not yet purchased, at fair value consisted of the following:

OTHER INVESTMENTS SOLD,NOT YET PURCHASED, AT FAIR VALUE

Share forward liabilities represent derivative positions related to SFAs entered into by the Company. See description of SFAs in note9.

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8. FAIR VALUE DISCLOSURES

Fair Value Option

The Company has elected to account for certain of its other financial assets at fair value under the fair value option provisions of FASB ASC825. The primary reason for electing the fair value option was to reduce the burden of monitoring the differences between the cost and the fair value of the Company’s investments, previously classified as available for sale securities, including the assessment as to whether the declines are temporary in nature, and to further remove an element of management judgment.

Such financial assets accounted for at fair value include:

The changes in fair value (realized and unrealized gains and losses) of these instruments for which the Company has elected the fair value option are recorded in principal transactions and other income in the consolidated statements of operations. All of the investments for which the Company has elected the fair value option are included as a component of other investments, at fair value in the consolidated balance sheets.

The Company recognized net gains (losses) of($10,644) and($24,981), related to changes in fair value of investments that were included as a component of other investments, at fair value during thethree months ended* September 30, 2024and2023*, respectively. The Company recognized net gains (losses) of ($58,704) and ($38,960), related to changes in fair value of investments that were included as a component of other investments, at fair value during thenine months ended* September 30, 2024and2023*, respectively.

The Company recognized net gains (losses) of $7,591 and $25,218 related to changes in fair value of investments that were included as a component of other investments sold,not yet purchased during thethree months ended* September 30, 2024and2023*, respectively. The Company recognized net gains (losses) of $28,590 and $48,269 related to changes in fair value of investments that were included as a component of other investments sold,not yet purchased during thenine months ended* September 30, 2024and2023*, respectively.

Fair Value Measurements

In accordance with FASB ASC820, the Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into athree-level valuation hierarchy. The valuation hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level1 measurement) and the lowest priority to unobservable inputs (level3 measurement). Thethree levels of the valuation hierarchy under FASB ASC820 are described below.

Level1 Financial assets and liabilities with values that are based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level2 Financial assets and liabilities with values that are based onone or more of the following:

Level3 Financial assets and liabilities with values that are based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

In certain cases, the inputs used to measure fair value* may*fall into different levels of the valuation hierarchy. In such cases, the level in the valuation hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Both observable and unobservable inputs* maybe used to determine the fair value of positions that the Company has classified within the level3* category. As a result, the unrealized gains and losses for assets and liabilities within the level3 category that* maybe presented in the tables below may*include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

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The following tables present information about the Company’s assets and liabilities measured at fair value as of* September 30, 2024* and* December 31, 2023*, and indicate the valuation hierarchy of the valuation techniques utilized by the Company to determine such fair value.

FAIR VALUE MEASUREMENTS ON A RECURRING BASIS

• September 30, 2024*



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FAIR VALUE MEASUREMENTS ON A RECURRING BASIS

(Dollars in Thousands)



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The following provides a brief description of the types of financial instruments the Company holds, the methodology for estimating fair value, and the level within the valuation hierarchy of the estimate. The discussion that follows applies regardless of whether the instrument is included in investments-trading; other investments, at fair value; other investments sold,not yet purchased; or trading securities sold,not yet purchased.

CLOs and CDOs: CLOs and CDOs are interests in securitizations. When the Company is able to obtain independent market quotations from at leasttwo broker-dealers and where a price within the range of at leasttwo broker-dealers is used or market price quotations fromthird party pricing services is used, these interests in securitizations will generally be classified within level2 of the valuation hierarchy. These valuations are based on a market approach. The independent market quotations from broker-dealers are generally nonbinding. The Company seeks quotations from broker-dealers that historically have actively traded, monitored, issued, and been knowledgeable about the interests in securitizations. The Company generally believes to the extent that it (i) receivestwo quotations in a similar range from broker-dealers knowledgeable about these interests in securitizations and (ii) considers the broker-dealers gather and utilize observable market information such as new issue activity in the primary market, trading activity in the secondary market, credit spreads versus historical levels, bid-ask spreads, and price consensus among market participants and sources, then classification within level2 of the valuation hierarchy is appropriate. In the absence oftwo broker-dealer market quotations, a single broker-dealer market quotation* maybe used without corroboration of the quote, in which case the Company generally classifies the fair value within level3* of the valuation hierarchy.

If quotations are unavailable, prices observed by the Company for recently executed market transactions or valuation models prepared by the Company’s management* maybe used, which are based on an income approach. These models prepared by the Company’s management include estimates, and the valuations derived from them could differ materially from amounts realizable in an open market exchange. Each CLO and CDO position is evaluated independently taking into consideration available comparable market levels, underlying collateral performance and pricing, deal structures, and liquidity. Fair values based on internal valuation models prepared by the Company’s management are generally classified within level3* of the valuation hierarchy.

Establishing fair value is inherently subjective (given the volatile and sometimes illiquid markets for certain interests in securitizations) and requires management to make a number of assumptions, including assumptions about the future of interest rates, discount rates, and the timing of cash flows. The assumptions the Company applies are specific to each security. Although the Company* mayrely on internal calculations to compute the fair value of certain interests in securitizations, the Company requests and considers indications of fair value fromthird* party pricing services to assist in the valuation process.

Certificates of Deposit: The fair value of certificates of deposit is estimated using valuations provided bythird party pricing services. The Company classifies the fair value of certificates of deposit within level2 of the valuation hierarchy.

Corporate Bonds and Redeemable Preferred Stock: The Company uses recently executed transactions orthird-party quotations from independent pricing services to arrive at the fair value of its investments in corporate bonds and redeemable preferred stock. These valuations are based on a market approach. The Company generally classifies the fair value of these bonds within level2 of the valuation hierarchy. In instances where the fair values of securities are based on quoted prices in active markets (for example with redeemable preferred stock), the Company classifies the fair value of these securities within level1 of the valuation hierarchy.

Equity Securities: The fair value of equity securities that represent unrestricted investments in publicly traded companies (common or preferred shares, options, warrants, and other equity investments) is determined using the closing price of the security as of the reporting date. These are securities that are traded on a recognized liquid exchange and the Company classifies their fair value within level1 of the valuation hierarchy. The fair value of equity securities that represent investments in privately held companies is generally determined either (i) based on a valuation model or (ii) based on recently observed transactions in the same instrument or similar instrument that the Company holds. These valuations are generally classified within either level2 or level3 of the valuation hierarchy.

Equity Securities Without Readily Determinable Fair Value: From time to time, the Company invests in equity securities that donot have a readily determinable fair value that also donot qualify for equity method accounting or the practical expedient for investments in investment companies, which are measured at NAV. In those cases, the Company utilizes the measurement alternative of ASC321-10-35-2. This alternative allows the Company to carry the investment at cost minus impairment. If the Company observes a market transaction for an identical or similar instrument, it will adjust the carrying value of the equity security. These securities are included as a component of other investments, at fair value. When measured at fair value using an orderly observable market transaction, it will generally be classified as level1 in the valuation hierarchy. Otherwise, it will be classified as level2 in the valuation hierarchy.

Restricted Equity Securities: Restricted equity securities are investments in publicly traded companies. However, they are restricted from re-sale until either (a) the share price trades above a certain threshold for a certain period of time or (b) a certain period of time elapses, or both. The Company determines the fair value by utilizing a model that starts with the publicly traded share price but then applies a discount based on a Monte Carlo simulation. The inputs to this model are observable so the Company generally classifies these securities within level2 of the valuation hierarchy. If the restriction is short and deemed immaterial, the Company will determine fair value to be equal to the publicly traded share price without discount and will classify the securities within level1 of the hierarchy. The Company isnot allowed to sell these shares during the restriction period and there isno certainty as to when these hurdles will be met or if they will be met at all.

Fair value receivables: Fair value receivables represent amounts receivable fromthird parties in connection with the Company's SFAs and CCM business. See note9. The Company values these instruments using a model. The main input to these models is the risk-based cash flow discount rates. In the case where the receivable is convertible into counterparty equity, additional inputs include the counterparty’s share price, volatility, and the risk-free rate of return. The inputs to this model are observable so the Company classifies these securities within level2 of the valuation hierarchy.

Foreign Government Bonds: The fair value of foreign government bonds is estimated using valuations provided bythird party pricing services and classifies the fair value within level2 of the valuation hierarchy.

Interests in SPVs: The Company values these instruments using a model. The modelfirst determines the value of the SPV's financial instruments and then determines what portion of that fair value is allocable to the Company’s interest in the SPV. If appropriate, the Company determines the fair value of the financial instruments held by the SPV using a model, which* mayinclude a Monte Carlo simulation. The main inputs are the counterparty’s share price, volatility, risk-free rate of return, and risk-based cash flow discount rates. The inputs to this model are observable so the Company classifies these securities within level2* of the hierarchy.

Municipal Bonds: Municipal bonds, which include obligations of U.S. states, municipalities, and political subdivisions, primarily include bonds or notes issued by U.S. municipalities. The Company generally values these securities usingthird party quotations such as market price quotations fromthird party pricing services. The Company generally classifies the fair value of these bonds within level2 of the valuation hierarchy. The valuations are based on a market approach. In instances where the Company is unable to obtain reliable market price quotations fromthird party pricing services, the Company will use its own internal valuation models. In these cases, the Company will classify such securities as level3 within the valuation hierarchy until it is able to obtainthird party pricing.

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Residential Mortgage Loans: The Company generally values these loans using a model. The model’s main inputs are current market quotations for pooled mortgage loan securities with similar characteristics. The Company considers the inputs to be observable and, therefore, classifies the fair value of these loans within level2 of the valuation hierarchy.

RMBS: The Company generally values these securities usingthird party quotations such as unadjusted broker-dealer quoted prices or market price quotations fromthird party pricing services. These valuations are based on a market approach. The Company generally classifies the fair value of these securities based onthird party quotations within level2 of the valuation hierarchy.

SBA Loans: SBA loans include loans and SBA interest only strips. In the case of loans, the Company generally values these securities usingthird party quotations such as unadjusted broker-dealer quoted prices, internal valuation models using observable inputs, or market price quotations fromthird party pricing services. The Company generally classifies these investments within level2 of the valuation hierarchy. These valuations are based on a market approach. SBA interest only strips donot trade in an active market with readily available prices. Accordingly, the Company generally uses valuation models to determine fair value and classifies the fair value of the SBA interest only strips within level2 or level3 of the valuation hierarchy depending on whether the model inputs are observable ornot.

U.S. Government Agency Debt Securities: Callable and non-callable U.S. government agency debt securities are measured primarily based on quoted market prices obtained fromthird party pricing services. Non-callable U.S. government agency debt securities are generally classified within level1 and callable U.S. government agency debt securities are classified within level2 of the valuation hierarchy.

U.S. Government Agency MBS and CMOs: These are securities that are generally traded over the counter. The Company generally values these securities usingthird party quotations such as unadjusted broker-dealer quoted prices or market price quotations fromthird party pricing services. These valuations are based on a market approach. The Company classifies the fair value of these securities within level2 of the valuation hierarchy.

U.S. Treasury Securities: U.S. Treasury securities include U.S. Treasury bonds and notes, and the fair values of the U.S. Treasury securities are based on quoted prices or market activity in active markets. Valuation adjustments arenot applied. The Company classifies the fair value of these securities within level1 of the valuation hierarchy.

Derivatives* *

TBAs and Other Forward Agency MBS Contracts

The Company generally values these securities usingthird party quotations such as unadjusted broker-dealer quoted prices or market price quotations fromthird party pricing services. TBAs and other forward agency MBS contracts are generally classified within level2 of the valuation hierarchy. If there is limited transaction activity or less transparency to observe market-based inputs to valuation models, TBAs and other forward agency MBS contracts are classified within level3 of the valuation hierarchy. U.S. government agency MBS and CMOs include TBAs and other forward agency MBS contracts. Unrealized gains on TBAs and other forward agency MBS contracts are included in investments-trading on the Company’s consolidated balance sheets and unrealized losses on TBAs and other forward agency MBS contracts are included in trading securities sold,not yet purchased on the Company’s consolidated balance sheets. See note9.

Other Extended Settlement Trades

When the Company buys or sells a financial instrument that willnot be settled in the regular timeframe, the Company will account for that purchase or sale on the settlement date rather than the trade date. In those cases, the Company accounts for the transaction between trade date and settlement date as a derivative (as either a purchase commitment or sale commitment). The Company will record an unrealized gain or unrealized loss on the derivative for the difference between the fair value of the underlying financial instrument as of the reporting date and the agreed upon transaction price. The Company will determine the fair value of the financial instrument using the methodologies described above.

Equity Derivatives

The Company* mayenter into equity derivatives, which include listed options as well as other derivative transactions with an underlying equity instrument. Listed options are traded on a recognized liquid exchange and the Company classifies the fair value of these securities within level1* of the valuation hierarchy. Other equity derivatives (where the underlying equity instrument is publicly traded but the derivative itself isnot) are classified within level2 of the valuation hierarchy.

Foreign Currency Forward Contracts

Foreign currency forward contracts are exchange-traded derivatives, which transact on an exchange that is deemed to be active. The fair value of the foreign currency forward contracts is based on current quoted market prices. Valuation adjustments arenot applied. These are classified within level1 of the valuation hierarchy. See note9.

Share forward liabilities

Share forward liabilities are included as a component of other investments sold,not yet purchased in the Company's consolidated balance sheets. The Company considers these derivatives as level2 within the fair value hierarchy. See note9.

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Investments in Certain Entities that Calculate NAV Per Share (or its Equivalent)

The following table presents additional information about investments in certain entities that calculate NAV per share (regardless of whether the “practical expedient” provisions of FASB ASC820 have been applied), which were measured at fair value on a recurring basis at* September 30, 2024* and* December 31, 2023*.



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9. DERIVATIVE FINANCIAL INSTRUMENTS

FASB ASC815, Derivatives and Hedging (“ASC815”), provides for optional hedge accounting. When a derivative is deemed to be a hedge and certain documentation and effectiveness testing requirements are met, reporting entities can record all or a portion of the change in the fair value of a designated hedge as an adjustment to AOCI rather than as a gain or loss in the statements of operations. To date, the Company hasnot designated any derivatives as hedges under the provisions included in ASC815.

All of the derivatives that the Company enters into contain master netting arrangements. If certain requirements are met, the offsetting provisions included in FASB ASC210, Balance Sheet (“ASC210”), allow (but donot require) the reporting entity to net the asset and liability on the consolidated balance sheets. It is the Company’s policy to present the derivative assets and liabilities on a net basis if the conditions of ASC210 are met. However, in general, the Company doesnot enter into offsetting derivatives with the same counterparties. Therefore, in all periods presented,no derivatives are presented on a net basis.

Derivative financial instruments are recorded at fair value. If the derivative was entered into as part of the Company’s broker-dealer operations, it will be included as a component of investments-trading or trading securities sold,not yet purchased. If it was entered into as a hedge for another financial instrument included in other investments, at fair value, then the derivative will be included as a component of other investments, at fair value.

The Company* may,from time to time, enter into derivatives to manage its risk exposures arising from (i) fluctuations in foreign currency rates with respect to the Company’s investments in foreign currency denominated investments; (ii) the Company’s investments in interest sensitive investments; (iii) the Company's investment in equities; and (iv) the Company’s facilitation of mortgage-backed trading. Derivatives entered into by the Company, from time to time, may*include (a) foreign currency forward contracts; (b) purchase and sale agreements of TBAs and other forward agency MBS contracts; (c) other extended settlement trades; and (d) SFAs.

Derivatives involve varying degrees of off-balance sheet risk, whereby changes in the level or volatility of interest rates or market values of the underlying financial instruments* may*result in changes in the value of a particular financial instrument in excess of its carrying amount. Depending on the Company’s investment strategy, realized and unrealized gains and losses are recognized in principal transactions and other income or in net trading in the Company’s consolidated statements of operations on a trade date basis.

The Company* may,*from time to time, enter into the following derivative instruments.

Equity Derivatives

A significant portion of the Company’s equity holdings are carried at fair value. From time to time, the Company hedges a portion of this exposure by entering into equity derivatives such as puts and short call options. These derivative positions are held at fair value as a component of other investments, at fair value and other investments sold,not yet purchased in the Company’s consolidated balance sheets. As of* September 30, 2024* and* December 31, 2023*, the Company hadno options. From time to time, the Company* may*also enter into forward purchase commitments for equity securities.

In addition, the Company* mayengage in advisory transactions that result in a receivable that can be paid in cash or a variable number of equity instruments. In such instances, the Company would record the receivable as a component of other assets in its consolidated balance sheets and record the equity component as an embedded derivative. All equity derivatives are carried at fair value as a component of other investments, at fair value or other investments sold,not yet purchased in the Company’s consolidated balance sheets. As of September 30, 2024* and* December 31, 2023*, the Company had equity derivatives included in other investments, at fair value of $72 and $1,447, respectively.

The Company* mayhedge a portion of the exposure from these equity investments by entering into short trades. These short trades arenot* treated as derivatives and are carried as a component of other investments sold,not yet purchased in the Company’s consolidated balance sheets. See note7.

TBAs and Other Forward Agency MBS Contracts

TBAs are forward contracts to purchase or sell MBS with collateral that remains “to be announced” until just prior to the trade settlement date. In addition to TBAs, the Company sometimes enters into forward purchases or sales of agency MBS where the underlying collateral has been identified. These transactions are referred to as other forward agency MBS contracts. TBAs and other forward agency MBS contracts are accounted for as derivatives by the Company under ASC815. The settlement of these transactions isnot expected to have a material effect on the Company’s consolidated financial statements.

In addition to TBAs and other forward agency MBS contracts as part of the Company’s broker-dealer operations, the Company* may,from time to time, enter into other securities or loan trades that donot* settle within the normal securities settlement period. In those cases, the purchase or sale of the security or loan isnot recorded until the settlement date. However, from the trade date until the settlement date, the Company’s interest in the security is accounted for as a derivative as either a forward purchase commitment or forward sale commitment. The Company will classify the related derivative either within investments-trading or other investments, at fair value, depending on where it intends to classify the investment once the trade settles.

The Company enters into TBAs and other forward agency MBS transactions forthree main reasons.

The Company carries TBAs and other forward agency MBS contracts at fair value and includes them as a component of investments-trading or trading securities sold,not yet purchased in the Company’s consolidated balance sheets. At* September 30, 2024*, the Company had open TBAs and other forward MBS purchase agreements in the notional amount of $1,143,600 and open TBAs and other forward MBS sale agreements in the notional amount of $1,165,260. At* December 31, 2023*, the Company had open TBAs and other forward agency MBS purchase agreements in the notional amount of $592,000 and open TBAs and other forward agency MBS sale agreements in the notional amount of $618,425.

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Other Extended Settlement Trades****

When the Company buys or sells a financial instrument that willnot be settled in the regular timeframe, the Company will account for that purchase or sale on the settlement date rather than the trade date. In those cases, the Company accounts for the transaction between trade date and settlement date as either a forward purchase commitment or a forward sale commitment, which are both considered derivatives. The Company will record an unrealized gain or unrealized loss on the derivative for the difference between the fair value of the underlying financial instrument as of the reporting date and the agreed upon transaction price. As of* September 30, 2024* and* December 31, 2023*, the Company hadno open forward purchase or sales commitments.



Foreign Currency Forward Contracts

The Company invests in foreign currency denominated investments that expose it to fluctuations in foreign currency rates, and, therefore, the Company* may,from time to time, hedge such exposure by using foreign currency forward contracts. The Company carries foreign currency forward contracts at fair value and includes them as a component of other investments, at fair value in the Company’s consolidated balance sheets. As of September 30, 2024* and* December 31, 2023*, the Company hadno outstanding foreign currency forward contracts.

The following table presents the Company’s derivative financial instruments and the amount and location of the fair value (unrealized gain / (loss)) recognized in the consolidated balance sheets as of* September 30, 2024* and* December 31, 2023*.

DERIVATIVE FINANCIAL INSTRUMENTS-BALANCE SHEET INFORMATION



The following tables present the Company’s derivative financial instruments, and the amount and location of the net gain (loss) recognized in the consolidated statements of operations.

DERIVATIVE FINANCIAL INSTRUMENTS-STATEMENT OF OPERATIONS INFORMATION



The share forward liabilities offset certain long positions included as a component of other investments, at fair value. The offsetting long positions had income / (loss) of ($20,038) and ($32,229) for thenine months ended* September 30, 2024* and2023, respectively.

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SFAs

The Company has engaged in several transactions known as SFAs. In a typical SFA transaction, the Company acquires an interest in a publicly traded company (referred to as the "SFA Counterparty") through open-market purchases, direct acquisitions from the SFA Counterparty, or a combination thereof. These interests can take the form of unrestricted common shares, restricted common shares, equity derivatives, or fair value receivables.

Upon acquiring these interests, the Company enters into an SFA derivative arrangement with the SFA Counterparty. In cases where the Company acquires its interests in the SFA Counterparty through open-market purchases, the SFA generally requires an up-front payment to the Company from the SFA Counterparty. The amount of this payment equals the cost paid by the Company for those interests, less a shortfall amount in certain cases. To fund the shortfall portion of the initial investment, the Company will utilize available cash on hand or available financing.

The SFA stipulates that the Company must make a payment to the SFA Counterparty on a certain maturity date. Depending on the terms of the SFA, this payment* may*be made in cash, by returning the acquired interests in kind, or through a combination of both. In some cases, the SFA requires the payment to be made exclusively in cash.

Importantly, the SFA doesnot obligate the Company to hold the interests that it acquired in the SFA Counterparty. Following the execution of the SFA, the Company is free to sell the interests in the SFA Counterparty (assuming the interests themselves arenot restricted from transfer). Additionally, SFAs generally include a feature whereby if the Company holds the interests in the SFA Counterparty that it acquired until maturity or another agreed-upon date, the Company becomes eligible to receive an additional payment from the SFA Counterparty, either in cash or in additional interests in the SFA Counterparty. Such a payment is known as the "Maturity Consideration."

Furthermore, SFAs usually include a provision allowing the Company to terminate the SFA, either in whole or in part, before its maturity by making an agreed-upon payment based on an amount defined in the SFA (the “Reset Price”). The Reset Price* may*either remain fixed throughout the term of the SFA or fluctuate based on certain calculations within the SFA.

SFAs also impose various obligations on the SFA Counterparty that* mayinclude registering a predetermined number of the interests in the SFA Counterparty (subject to the SFA) with the SEC, maintaining a listing of the SFA Counterparty securities on a national exchange, and/or that the closing price of the SFA Counterparty's shares on the public exchange doesnot* fall below a predetermined price for a specific period of time. If any of these SFA Counterparty obligations are breached ornot satisfied, the Company* may*have the right to terminate the SFA early and accelerate the payment of the Maturity Consideration upon termination. The SFAs provide the right of set off in the case of Maturity Consideration thereby allowing the Company to keep the interests it holds in the SFA Counterparty and offset the Maturity Consideration it is owed following termination of the applicable SFA.

The Company accounts for SFA transactions as follows:

The following table shows the carrying value of the assets and liabilities of SFA transactions as of the reporting period dates.

SHARE FORWARD ARRANGEMENTS

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10. COLLATERALIZED SECURITIES TRANSACTIONS

Gestation Repo

Gestation repo involves entering into repo and reverse repo transactions where the underlying collateral security represents a pool of newly issued mortgage loans. The borrowers (the reverse repo counterparties) are generally mortgage originators. The lenders (the repo counterparties) are a diverse group of the counterparties comprised of banks, insurance companies, and other financial institutions. The Company self-clears its gestation repo transactions.

Gestation trades can be structured intwo ways:

On Balance Sheet: The Company executes a reverse repo with the borrower and a matching repo (with the same collateral and maturity date) with the lender. In this case, the Company is a principal to each trade and is borrowing fromone counterparty and lending to another and earning net interest margin. These transactions are referred to by the Company as on balance sheet gestation repo trades.

Agency Repo: Similar to the on balance sheet repo, the Companyfirst executes a reverse repo with the borrower and a matching repo (with the same collateral and maturity date) with the lender. However, in this case, allthree parties (the borrower, the lender, and the Company) simultaneously enter into an assignment agreement. The effect of this assignment is to remove the Company as principal to the reverse repo and repo and have the lender and borrower directly face each other in a repo trade. The Company receives a fee for its role in arranging the financing. These transactions are referred to by the Company as agency gestation repo trades.

Bankruptcy of Gestation Repo Counterparty

As of* June 30, 2022,the Company had an outstanding reverse repo balance with First Guaranty Mortgage Corporation (“FGMC”) totaling $269,228. Effective June 30, 2022,FGMC filed for bankruptcy. Subsequent to June 30, 2022,the Company issued a default notice to FGMC under the reverse repo. The Company took possession of the collateral and began liquidating it. As of September 30, 2024* and* December 31, 2023*, the Company had liquidated all of the collateral with the exception of $0 and $3,113, respectively, of residential mortgage loans. These loans were carried at fair value and were included in investments-trading in the consolidated balance sheets. During thenine months ended* September 30, 2024and2023*, the Company recorded a gain of $4 and a loss of ($1,787), respectively, which are included as a component of net trading revenue and are related to the change in the fair value of the remaining collateral.

Other Repo Transactions

In addition to the Company’s gestation repo business, the Company* mayalso enter into reverse repos to acquire securities to cover short positions or as an investment. Additionally, the Company may*enter into repos to finance the Company’s securities positions held in inventory. These repo and reverse repo agreements are generally cleared on a bilateral or triparty basis;no clearing broker is involved.

Repo Information

As of* September 30, 2024* and* December 31, 2023*, the Company held reverse repos of $543,783 and $408,408, respectively, and the fair value of collateral received under reverse repos was $550,846 and $415,057, respectively.

As of* September 30, 2024* and* December 31, 2023*, the Company held repos of $545,993 and $408,203, respectively, and the fair value of securities and cash pledged as collateral under repos was $550,846 and $415,057, respectively. These amounts include collateral for reverse repos that were re-pledged as collateral for repos.

Concentration



In the gestation repo business, the demand for borrowed funds is generated by the reverse repo counterparty and the supply of funds is provided by the repo counterparty.



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The gestation repo business has been and continues to be concentrated with respect to reverse repurchase counterparties. The Company conducts this business with a limited number of reverse repo counterparties. As of* September 30, 2024* and* December 31, 2023*, the Company’s gestation reverse repos shown in the tables below represented balances from 7 and 7 counterparties, respectively. The Company also has a limited number of repo counterparties in the gestation repo business. However, this is primarily a function of the limited number of reverse repo agreement counterparties with whom the Company conducts this business rather than a reflection of a limited supply of funds. Therefore, the Company considers the gestation repo business to be concentrated on the demand side.

The total net revenue earned by the Company on its gestation repo business (net interest margin and fee revenue) was $3,843 and $10,992 for thethree andnine months ended* September 30, 2024*, respectively. The total net revenue earned by the Company on its gestation repo business was $4,060 and $12,456 for thethree andnine months ended* September 30, 2023*, respectively.



Detail

ASC210 provides the option to present reverse repo and repo on a net basis if certain netting conditions are met. The Company presents all repo and reverse repo transactions, as well as counterparty cash collateral (see note13), on a gross basis even if the underlying netting conditions are met. The amounts in the table below are presented on a gross basis.

The following tables summarize the remaining contractual maturity of the gross obligations under repos accounted for as secured borrowings segregated by the underlying collateral pledged as of each date shown. All amounts as well as counterparty cash collateral (see note13) are subject to master netting arrangements.

SECURED BORROWINGS

• September 30, 2024*

The weighted average interest rate of the repurchase agreements outstanding as of* September 30, 2024* was 5.85%. The weighted average interest rate of the reverse repurchase agreements outstanding as of* September 30, 2024* was 6.45%.

SECURED BORROWINGS





The weighted average interest rate of the repurchase agreements outstanding as of* December 31, 2023was 6.10%. The weighted average interest rate of the reverse repurchase agreements outstanding as of December 31, 2023*was 6.87%.

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11. INVESTMENTS IN EQUITY METHOD AFFILIATES** **

Equity method accounting requires that the Company record its investments in equity method affiliates on the consolidated balance sheets and recognize its share of the equity method affiliates’ net income as earnings each reporting period. 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 statement of cash flows. Any excess distributions would be considered as return of investment and classified in investing activities.

The Company has certain equity method affiliates for which it has elected the fair value option. Those investees are excluded from the table below. Those investees are included as a component of other investments, at fair value in the consolidated balance sheets. All gains and losses (unrealized and realized) from securities classified as other investments, at fair value in the consolidated balance sheets are recorded as a component of principal transactions and other income in the consolidated statement of operations. See notes8 and24.



The following table summarizes the activity and earnings in the Company’s investments that are accounted for under the equity method.

INVESTMENTS IN EQUITY METHOD AFFILIATES

Dutch Real Estate Entities include: (i) Amersfoort Office Investment I Cooperatief U. A. (“AOI”), a company based in the Netherlands that invests in real estate, and (ii) CK Capital Partners B.V. (“CK Capital”), a company based in the Netherlands that manages investments in real estate. See note24. The amounts included as SPAC Sponsor Entities and Other represent the Company's investment in SPAC sponsor entities that havenot yet completed a business combination or from SPAC sponsor entities that have completed business combinations but havenot yet distributed shares to sponsor investors and other equity method investments. If these SPAC sponsor entities are unsuccessful in completing a business combination and the underlying SPAC liquidates, the Company will likely receiveno distributions in kind or in cash related to these investments and the remaining balances will be recorded as a component of loss from equity method investments in the consolidated statement of operations.

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12. LEASES



The Company leases office space and certain computers and related equipment. From time to time, the Company subleases office space to other tenants. Under the requirements of ASC842, the Company determines if an arrangement is a lease at the inception date of the contract. Then, the Company measures the lease liability using an incremental borrowing rate that was calculated for each operating lease based on the term of the lease, the U.S. Treasury term interest rate, and an estimated spread to borrow on a secured basis.



Rent expense is recognized on a straight-line basis over the lease term and is included in business development, occupancy, and equipment expense.



As of* September 30, 2024*, all of the leases to which the Company was a party were operating leases. The weighted average remaining term of the leases was 4.9 years. The weighted average discount rate for the leases was 4.95%.



Maturities of operating lease liability payments consisted of the following.

FUTURE MATURITY OF LEASE LIABILITIES

During thenine months ended* September 30, 2024and2023*, total cash payments of $1,693 and $2,017, respectively, were recorded as a reduction in the operating lease obligation.No cash payments were made to acquire right of use assets.

For thethree andnine months ended* September 30, 2024*, rent expense, net of sublease income of $22 and $68, respectively, was $687 and $1,969, respectively. For thethree andnine months ended* September 30, 2023*, rent expense, net of sublease income of $23 and $71, respectively, was $638 and $1,902, respectively.

In* December 2023,the Company executed asecond* amendment (“Second Lease Amendment”) to its original lease agreement for the Company’s offices located at3 Columbus Circle, New York, New York. The Second Lease Amendment provides for the Company to lease additional office space on the premises, while surrendering other areas of the premises that are currently occupied by the Company. The Second Lease Amendment provides for the landlord, at its sole cost and expense and without charge to the Company, to perform certain improvements to the premises. The Second Lease Amendment will become effective on the date upon which the landlord delivers to the Company the additional office space with the landlord’s improvements thereon substantially completed, which is anticipated to be prior to* December 31, 2024.The cash flow payments and related lease liability pertaining to the Second Lease Amendment arenot* included in the table and amounts presented above.

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13. OTHER RECEIVABLES, OTHER ASSETS, ACCOUNTS PAYABLE AND OTHER LIABILITIES



Other receivables consisted of the following.

OTHER RECEIVABLES



Asset management fees receivable are of a routine and short-term nature. These amounts are generally accrued monthly and paid on a monthly or quarterly basis.

New issue fee receivable represents fees due for new issue and advisory services.

Accrued interest and dividends receivable represent interest and dividends accrued on the Company’s investment securities included as a component of investments-trading or other investments, at fair value. Interest payable on securities sold,not yet purchased is included as a component of accounts payable and other liabilities in the table entitled Accounts Payable and Other Liabilities below.

Revenue share receivable represents the amount due to the Company for the Company’s share of a revenue arrangement generated from an entity in which the Company receives a share of the entity’s revenue.

Agency repo income receivable represents income receivable on gestation repo trades. See note10.

Miscellaneous other receivables represent other receivables that are of a short-term nature.



Other assets consisted of the following.

OTHER ASSETS



Prepaid expenses represent amounts paid for services that are being amortized over their expected period of use and benefit. They are all routine and short-term in nature. Deposits are amounts held by landlords or other parties that will be returned or offset upon satisfaction of a lease or other contractual arrangement. See note16 to the Company’s consolidated financial statements included in its Annual Report on Form10-K for the year ended* December 31, 2023* for further discussion of the Company’s furniture, equipment, and leasehold improvements. Intangible assets represent the carrying value of the JVB broker-dealer license.



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Accounts payable and other liabilities consisted of the following.

ACCOUNTS PAYABLE AND OTHER LIABILITIES

The redeemable financial instrument accrued interest represents accrued interest on the JKD Investor redeemable financial instrument. See note15.

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14. VARIABLE INTEREST ENTITIES



As a general matter, a reporting entity must consolidate a variable interest entity (“VIE”) when it is deemed to be the primary beneficiary. The primary beneficiary is the entity that has both (a) the power to direct the matters that most significantly impact the VIE’s financial performance and (b) a significant variable interest in the VIE.



Consolidated VIEs

The Company determined it was the primary beneficiary of several VIEs and, therefore, has consolidated them. The following table provides certain information regarding the consolidated VIEs.

CARRYING VALUE OF CONSOLIDATED VARIABLE INTEREST ENTITIES

The maximum potential loss the Company could incur related to the consolidated VIEs is the investment in consolidated VIEs shown in the table above, plus the Company has to fund additional working capital to the equity method investees of certain of the consolidated VIEs.

The Company’s Principal Investing Portfolio



Included in other investments, at fair value in the consolidated balance sheets, are investments in several VIEs. In each case, the Company determined it wasnot the primary beneficiary. The maximum potential financial statement loss the Company would incur if the VIEs were to default on all their obligations would be the loss of the carrying value of these investments as well as any future investments the Company were to make. As of* September 30, 2024* and* December 31, 2023*, there were $11,543 and $11,150, respectively, of unfunded commitments to VIEs in which the Company had invested. Other than its investment in these entities, the Company didnot provide financial support to these VIEs during thethree andnine months ended* September 30, 2024and2023* and hadno liabilities, contingent liabilities, or guarantees (implicit or explicit) related to these VIEs at* September 30, 2024* and* December 31, 2023*. See the table below.



For each investment management contract entered into by the Company, the Company assesses whether the entity being managed is a VIE and if the Company is the primary beneficiary. Certain of the Investment Vehicles managed by the Company are VIEs. Under the current guidance of ASU2015-12, the Company has concluded that its asset management contracts arenot variable interests. Currently, the Company hasno other interests in the entities it manages that are considered variable interests and are considered significant. Therefore, the Company isnot the primary beneficiary of any VIEs that it manages.



The Company’s Trading Portfolio



From time to time, the Company* mayacquire an interest in a VIE through the investments it makes as part of its trading operations, which are included as investments-trading or securities sold,not yet purchased in the consolidated balance sheets. Due to the high volume of trading activity in which the Company engages, the Company doesnot* perform a formal assessment of each individual investment within its trading portfolio to determine if the investee is a VIE and if the Company is a primary beneficiary. Even if the Company were to obtain a variable interest in a VIE through its trading portfolio, the Company wouldnot be deemed to be the primary beneficiary fortwo main reasons: (a) the Company doesnot usually obtain the power to direct activities that most significantly impact any investee’s financial performance and (b) a scope exception exists within the consolidation guidance for cases where the reporting entity is a broker-dealer and any control (either as the primary beneficiary of a VIE or through a controlling interest in a voting interest entity) was deemed to be temporary. In the unlikely case that the Company obtained the power to direct activities and obtained a significant variable interest in an investee in its trading portfolio that was a VIE, any such control would be deemed to be temporary due to the rapid turnover of the Company’s trading portfolio.



The following table presents the carrying amounts of the assets in the Company’s consolidated balance sheets related to the Company’s variable interests in identified VIEs with the exception of (i) thetwo trust VIEs that hold the Company’s junior subordinated notes (see note16) and (ii) any security that represents an interest in a VIE that is included in investments-trading or securities sold,not yet purchased in the Company’s consolidated balance sheets. The table below shows the Company’s maximum exposure to loss associated with these identified nonconsolidated VIEs in which it holds variable interests at* September 30, 2024* and* December 31, 2023*.

CARRYING VALUE OF VARIABLE INTERESTS IN NON-CONSOLIDATED VARIABLE INTEREST ENTITIES

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15. REDEEMABLE FINANCIAL INSTRUMENTS



Redeemable financial instruments consisted of the following.

REDEEMABLE FINANCIAL INSTRUMENTS



On* October 3, 2016,the Operating LLC entered into an investment agreement (the “JKD Investment Agreement”), by and between the Operating LLC and JKD Investor, pursuant to which JKD Investor agreed to invest up to $12,000 in the Operating LLC (the “JKD Investment”), $6,000 of which was invested upon the execution of the JKD Investment Agreement, an additional $1,000 was invested in January 2017,and an additional $1,268 was invested in January**2019.* The JKD Investor is owned by Jack J. DiMaio, the vice chairman of the board of directors, and his spouse. The JKD Investment Agreement was amended on* March 6, 2019and again on February 13, 2023.*

In exchange for the JKD Investment, the Operating LLC agreed to pay to JKD Investor during the term of the JKD Investment Agreement an amount (“JKD Investment Return”) equal to 50% of the difference between (i) the revenues generated during a quarter by the activities of the Institutional Corporate Trading Business of JVB (as defined in the JKD Investment Agreement, as amended) and (ii) certain expenses incurred by such Institutional Corporate Trading Business. This JKD Investment Return was recorded monthly as interest expense or (interest income) with the related accrued interest recorded in accounts payable and other accrued liabilities. If the return was negative in an individual quarter, it would reduce the balance of the JKD Investment. Payments on the JKD Investment Return were made on a quarterly basis.

Pursuant to the JKD Investment Agreement, upon the termination of the JKD Investment Agreement, as amended, the Operating LLC would pay to the JKD Investor an amount equal to the Investment Balance (as such term is defined in the JKD Investment Agreement, as amended) as of the day prior to such termination.

Effective* September 1, 2024,the Operating LLC and the JKD Investor entered into the Redemption Agreement, pursuant to which the JKD Investment Agreement was redeemed and terminated in its entirety. As of September 1, 2024,*the JKD Investment balance under the JKD Investment Agreement was $7,719.

Pursuant to the terms and conditions of the Redemption Agreement, the Operating LLC (i) paid to JKD Investor $2,573 of the outstanding amount in cash, and (ii) the Company issued to JKD Investor a senior promissory note (the*“2024* Note”) in the aggregate principal amount of $5,146 representing the remaining balance of the JKD Investment.

The Redemption Agreement contains customary representations and warranties on the part of each of the Operating LLC and JKD Investor.

See Note4 for additional information regarding the Redemption Agreement and2024 Note.

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16. DEBT



The Company had the following debt outstanding.

DETAIL OF DEBT



The2024* Note*

On* September 1, 2024,pursuant to the Redemption Agreement, the Operating LLC issued to JKD Investor the2024* Note, which evidences the Operating LLC’s obligation to repay to the JKD Investor the original principal amount of $5,146. Pursuant to the2024 Note, the unpaid principal amount and all accrued but unpaid interest thereunder will be due and payable as follows: (i) $2,573 of the principal amount will be due and payable on* August 31, 2025,and (ii) $2,573 will be due and payable on August 31, 2026.*

The2024 Note accrues interest on the unpaid principal amount from* September 1, 2024until maturity at a rate equal to 12% per year. Interest on the2024* Note is payable in cash quarterly on each* January 1,** April 1,** July 1,and October 1,commencing on October 1, 2024.Under the2024* Note, upon the occurrence or existence of any “Event of Default” thereunder, the outstanding principal amount is (or in certain instances, at the option of the holder thereof,* maybe) immediately accelerated. Further, upon the occurrence of any “Event of Default” under the2024* Note and for so long as such Event of Default continues, all principal, interest and other amounts payable under the2024 Note will bear interest at a rate equal to 13% per year.

The2024 Note* may**not* be prepaid in whole or in part prior to* January 31, 2025.The2024* Note* may,with at least31* days’ prior written notice from the Operating LLC to the holder thereof, be prepaid in whole or in part at any time following* January 31, 2025*without the prior written consent of the holder and without penalty or premium.

The2024 Note and the payment of all principal, interest and any other amounts payable thereunder are senior obligations of the Operating LLC and will be senior to any Indebtedness (as defined in the2024 Note) of the Operating LLC outstanding as of and issued following* September 1, 2024.Pursuant to the2024* Note, following* September 1, 2024,the Operating LLC may**not* incur any Indebtedness that is a senior obligation to the2024 Note. See notes4 and15.

The2020* Note*

On* January 5, 2024,the Operating LLC and JKD Investor entered into an amendment to the2020* Note, pursuant to which the2020 Note was amended to (a) extend (i) the maturity date thereof from* January 31, 2024to January 31, 2026, (ii) the date following which the2020* Note* maybe redeemed by JKD Investor from January 31, 2023to January 31, 2025,and (iii) the date following which the2020* Note* maybe prepaid by the Operating LLC from January 31, 2023to January 31, 2025;and (b) increase the interest rate payable under the2020* Note from 10% per annum to 12% per annum effective as of* January 31, 2024.*

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Junior Subordinated Notes

The Company assumed $49,614 aggregate principal amount of junior subordinated notes outstanding at the time of the AFN Merger. The Company recorded the debt at fair value on the acquisition date. Any difference between the fair value of the junior subordinated notes on the AFN Merger date and the principal amount of debt is amortized into earnings over the estimated remaining life of the underlying debt as an adjustment to interest expense.

The junior subordinated notes are payable totwo special purpose trusts:

Alesco Capital Trust I and Sunset Financial Trust (collectively, the “Trusts”) described above are VIEs pursuant to variable interest provisions included in ASC810 because the holders of the equity investment at risk donot have adequate decision making ability over the Trusts’ activities. The Company isnot the primary beneficiary of the Trusts as it doesnot have the power to direct the activities of the Trusts. The Trusts arenot consolidated by the Company and, therefore, the Company’s consolidated financial statements include the junior subordinated notes issued to the Trusts as a liability, and the investment in the Trusts’ common securities as an asset. The common securities were deemed to have a fair value of $0 as of the AFN Merger date. These are accounted for as cost method investments; therefore, the Company doesnot adjust the value at each reporting period. Any income generated on the common securities is recorded as interest income, a component of interest expense, net, in the consolidated statement of operations.

The junior subordinated notes have several financial covenants. Since the AFN Merger, Cohen & Company Inc. has been in violation ofone covenant of Alesco Capital Trust I. As a result of this violation, Cohen & Company Inc. is prohibited from issuing additional debt that is either subordinated to or pari passu with the Alesco Capital Trust I debt. This violation doesnot prohibit Cohen & Company Inc. from issuing senior debt or the Operating LLC from issuing debt of any kind. Cohen & Company Inc. is in compliance with all other covenants of the junior subordinated notes. The Company doesnot consider this violation to have a material adverse impact on its operations or on its ability to obtain financing in the future.

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Byline Credit Facility

On* October 28, 2020,the Company entered into an unsecured line of credit with Byline Bank, as lender, and JVB, as borrower (the "Byline Credit Facility"). From October 28, 2020to June 2024,the Company and Byline Bank entered into several amendments that changed certain terms of the Byline Credit Facility such as: (i) interest rate; (ii) total line of credit; (iii) financial covenants; and (iv) maturity dates. During that period, the Company complied with all financial covenants and all payment terms of the Byline Credit Facility and there wereno* defaults or events of default thereunder during the period.

Effective as of* June 30, 2024,the Byline Credit Facility consisted of a single $15,000 unsecured line of credit under which JVB is the borrower and which is guaranteed by the Company, the Operating LLC, JVB Holdings, JVB, and C&Co PrinceRidge Holdings, LP. On June18,* 2024, the Operating LLC and Byline Bank entered into the Second Amendment to Third Amended and Restated Loan Agreement, pursuant to which both the maturity date and the final date upon which loans can be made under the Byline Credit Facility were extended from* June 18, 2024to June18,* 2025.

Loans under the Byline Credit Facility bear interest at a per annum rate equal to Term SOFR plus 6.0%, provided that inno event can the interest rate be less than 7.0%. The Company is required to pay on a quarterly basis an undrawn commitment fee at a per annum rate equal to 0.50% of the undrawn portion of Byline Bank’s*$15,000* commitment under the Byline Credit Facility.

The Company is also required to pay on each anniversary a commitment fee at a per annum rate equal to 0.50% of the $15,000 commitment under the Byline Credit Facility. Loans under the Byline Credit Facility must be used by the Company for working capital purposes and general liquidity. The Company* mayrequest a reduction in Byline Bank’s$15,000* commitment in a minimum amount of $1,000 and multiples of $500 thereafter uponnot less thanfive days’ prior notice to Byline Bank. The Company* maydraw on the facility until June 18, 2025.Loans (both principal and interest) made by Byline Bank under the amended and restated agreement are scheduled to mature and become immediately due and payable in full on June 18, 2025.*

The Company is subject to the following financial covenants in the Byline Credit Facility. As of* September 30, 2024* and* December 31, 2023*, the Company was in compliance with all of the following financial covenants.

1. JVB's tangible net worth as defined must exceed$70,000;

2. JVB's excess net capital as defined in Rule15c3-1 of the Exchange Act must exceed$40,000; and

3. The total amount drawn on the facility mustnot exceed 25% of JVB's tangible net worth as defined.

As of* September 30, 2024* and* December 31, 2023*, no amounts were outstanding under the Byline Credit Facility, and the Company was in compliance with all financial covenants thereunder.





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17. EQUITY

Stockholders’ Equity

Common Equity: The following table reflects the activity for thenine months ended* September 30, 2024* related to the number of shares of unrestricted Common Stock that the Company had issued.

Series E Voting Non-Convertible Preferred Stock: Each share of the Company’s Series E Voting Non-Convertible Preferred Stock (“Series E Preferred Stock”) hasno economic rights but entitles the holders thereof to vote the Series E Preferred Stock on all matters presented to the Company’s stockholders. For everyten shares of Series E Preferred Stock, the holders are entitled toone vote on any such matter. Daniel G. Cohen, the Company’s chairman, is the sole holder of all 4,983,557 shares of Series E Preferred Stock issued and outstanding as of* September 30, 2024*. For a more detailed description of these shares see note21 to the Company’s Annual Report on Form10-K for the year ended* December 31, 2023*.



Series F Voting Non-Convertible Preferred Stock: On* December 23, 2019,the Company’s board of directors adopted a resolution that reclassified 25,000,000 authorized but unissued shares of Preferred Stock, par value $0.001 per share, of the Company as a series of Preferred Stock designated as Series F Voting Non-Convertible Preferred Stock (“Series F Preferred Stock”). Pursuant to the Securities Purchase Agreement, dated December 30, 2019,by and among the Company, the Operating LLC, Daniel G. Cohen, and the DGC Trust, the Company issued 12,549,273 Series F Preferred Stock to Daniel G. Cohen and 9,880,268 Series F Preferred Stock to the DGC Trust. The Series F Preferred Stock has substantially the same rights as the Series E Preferred Stock. The holders of the Series F Preferred Stock arenot* entitled to receive any dividends or distributions (whether in cash, stock, or property of the Company). The holders of Series F Preferred Stock and Common Stock are required to vote together as a single class on all matters with respect to which a vote of the stockholders of the Company is required or permitted. Each outstanding share of Series F Preferred Stock entitles the holder toone vote for everyten shares of Series F Preferred Stock on each matter submitted to the holders for their vote. As of* September 30, 2024*, there were 22,429,541 shares of Series F Preferred Stock issued and outstanding*.For a more detailed description of these shares see note21* to the Company’s Annual Report on Form10-K for the year ended* December 31, 2023*.

Stockholder Rights Plan

On* January 2, 2024,the Company entered into a Section382* Rights Agreement (the “Rights Agreement”) between the Company and Computershare Inc., as rights agent (the “Rights Agent”).

The Rights Agreement provides for a distribution ofone preferred stock purchase right (each, a “Right,” and collectively, the “Rights”) for each share of the Company’s Common Stock outstanding to stockholders of record at the close of business on* January 16, 2024 (the “Record Date”). Each Right entitles the registered holder thereof to purchase from the Company a unit (each, a “Unit”) consisting ofone ten*-thousandth of a share of the Company’s Series C Junior Participating Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”), at a purchase price of $100.00 per Unit (the “Purchase Price”), subject to adjustment. The description and terms of the Rights are set forth in the Rights Agreement.

The Company’s board of directors adopted the Rights Agreement in an effort to protect stockholder value by attempting to protect against a possible limitation on the Company’s ability to use its carryforward (net operating loss, "NOL," and net capital loss, "NCL") deferred tax assets (the “deferred tax assets”) to reduce potential future federal income tax obligations. The Company has experienced substantial operating and capital losses, and under the Internal Revenue Code of1986, as amended (the “Code”), and rules promulgated by the Internal Revenue Service, the Company* may*“carry forward” these losses in certain circumstances to offset any current and future earnings and thus reduce the Company’s federal income tax liability, subject to certain requirements and restrictions. To the extent that the deferred tax assets donot otherwise become limited, the Company believes that it will be able to carry forward a significant amount of deferred tax assets, and therefore these deferred tax assets could be a substantial asset to the Company. However, if the Company experiences an “Ownership Change,” as such term is defined in Section382 of the Code, its ability to use the deferred tax assets will be substantially limited, and the timing of the usage of the deferred tax assets could be substantially limited and/or delayed, which could therefore significantly impair the value of those assets.

The Rights attached to all Common Stock certificates representing shares then outstanding and, in the case of uncertificated shares of Common Stock registered in book entry form (“Book Entry Shares”) by notation in book entry (which certificates for Common Stock and Book Entry Shares shall be deemed also to be certificates for Rights), andno separate Rights certificates will be distributed.

Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the Common Stock and a “Distribution Date” will occur upon the earlier of (i)10 days following a public announcement that a person or group of affiliated or associated persons has become an “Acquiring Person” (as defined below) (the “Stock Acquisition Date”) and (ii)10 business days following the commencement of a tender offer or exchange offer that would result in a person or group becoming an Acquiring Person. Pursuant to the Rights Agreement, an “Acquiring Person” means any person or entity who or which, together with all affiliates and associates of such person or entity, is the beneficial owner of 4.95% or more of the shares of Common Stock then outstanding, but doesnot include the Company or any “Exempted Person” (as defined below). Until the Distribution Date, (i) the Rights will be evidenced by the Common Stock certificates and will be transferred with and only with such Common Stock certificates, (ii) new Common Stock certificates after the Record Date will contain a notation incorporating the Rights Agreement by reference, and (iii) the surrender for transfer of any certificates for Common Stock outstanding will also constitute the transfer of the Rights associated with the Common Stock represented by such certificate.

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Pursuant to the Rights Agreement, an “Exempted Person” is any person or entity who, together with all affiliates and associates of such person or entity, is or* maybecome, as of January 2, 2024,the beneficial owner of Common Stock and/or other securities exercisable for shares of Common Stock representing 4.95% or more of the shares of Common Stock outstanding as of January 2, 2024.However, any such person or entity willno* longer be deemed to be an Exempted Person and shall be deemed an Acquiring Person under the Rights Agreement if such person or entity, together with all affiliates and associates of such person or entity, becomes the beneficial owner (and so long as such person continues to be the beneficial owner of4.95% or more of the then outstanding shares of Common Stock) of additional shares of Common Stock, except (x) pursuant to equity compensation awards granted to such person or entity by the Company or options or warrants outstanding and beneficially owned by such person or entity as of* January 2, 2024,or as a result of an adjustment to the number of shares of Common Stock represented by such equity compensation award pursuant to the terms thereof; or (y) as a result of a stock split, stock dividend or the like. In addition, any person or entity who, together with all affiliates and associates of such person or entity, becomes the beneficial owner of Common Stock and/or other securities exercisable for shares of Common Stock representing4.95%* or more of the shares of Common Stock then outstanding as a result of a purchase by the Company or any of its subsidiaries of shares of Common Stock will also be an “Exempted Person.” However, any such person willno longer be deemed to be an Exempted Person and will be deemed to be an Acquiring Person if such person, together with all affiliates and associates of such person, becomes the beneficial owner, at any time after the date such person became the beneficial owner of4.95% or more of the then outstanding shares of Common Stock, of additional shares of Common Stock, except if such additional securities are acquired (x) pursuant to the exercise of options or warrants to purchase Common Stock outstanding and beneficially owned by such person as of the date such person became the beneficial owner of4.95% or more of the then outstanding shares of Common Stock or as a result of an adjustment to the number of shares of Common Stock for which such options or warrants are exercisable pursuant to the terms thereof, or (y) as a result of a stock split, stock dividend or the like.

In addition, the Rights Agreement defined the term “Exempted Person” to also include any person or entity who, together with all affiliates and associates of such person or entity, is the beneficial owner of Common Stock and/or other securities exercisable for shares of Common Stock representing4.95% or more of the shares of Common Stock outstanding, and whose beneficial ownership wouldnot, as determined by the Company’s board of directors, jeopardize or endanger the availability of the Company of its deferred tax assets. However, any such person or entity will cease to be an Exempted Person if (x) such person or entity ceases to beneficially own4.95% or more of the shares of the then outstanding Common Stock or (y) the Company’s board of directors makes a contrary determination with respect to the effect of such person’s or entity’s beneficial ownership (together with all affiliates and associates of such person) with respect to the availability to the Company of its deferred tax assets.

Pursuant to the Rights Agreement, a purchaser, assignee or transferee of the shares of Common Stock (or options or warrants exercisable for Common Stock) from an Exempted Person willnot be considered an Exempted Person, except that a transferee from the estate of an Exempted Person who receives Common Stock as a bequest or inheritance from an Exempted Person will be an Exempted Person so long as such transferee continues to be the beneficial owner of4.95% or more of the then outstanding shares of Common Stock.

The Rights arenot exercisable until the Distribution Date and will expire on the earliest of (i) the close of business on* December 31, 2026, (ii) the time at which the Rights are redeemed pursuant to the Rights Agreement, (iii) the time at which the Rights are exchanged pursuant to the Rights Agreement, (iv) the repeal of Section382* of the Code or any successor statute if the Company’s board of directors determines that the Rights Agreement isno longer necessary or desirable for the preservation of certain tax benefits, and (v) the beginning of a taxable year of the Company to which the Company’s board of directors determines that certain tax benefits* may**not* be carried forward. Atno time will the Rights have any voting power.

Except as otherwise determined by the Company’s board of directors, only shares of Common Stock issued prior to the Distribution Date will be issued with Rights.

Pursuant to the Rights Agreement, in the event that a person or entity becomes an Acquiring Person, each other holder of a Right will thereafter have the right to receive, upon exercise, Common Stock (or, in certain circumstances, cash, property or other securities of the Company), having a value equal totwo times the exercise price of the Right. The exercise price is the Purchase Price times the number of Units associated with each Right (initially,one). For example, at an exercise price of*$100.00* per Right, each Rightnot owned by an Acquiring Person (or by certain related parties) following an event set forth in the preceding paragraph would entitle its holder to purchase $200.00 worth of Common Stock (or other consideration, as noted above) for*$100.00.* If the Common Stock at the time of exercise had a market value per share of $20.00, the holder of each valid Right would be entitled to purchaseten (10) shares of Common Stock for $100.00.

Notwithstanding any of the foregoing, following the occurrence of a person or entity becoming an Acquiring Person (a “Flip-In Event”), all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by such Acquiring Person will be null and void.

In the event that, at any time following the Stock Acquisition Date, (i) the Company engages in a merger or other business combination transaction in which the Company isnot the surviving corporation; (ii) the Company engages in a merger or other business combination transaction in which the Company is the surviving corporation and the Common Stock is changed or exchanged; or (iii)50% or more of the Company’s assets, cash flow or earning power is sold or transferred, each holder of a Right (except Rights which have previously been voided as set forth above) will thereafter have the right to receive, upon exercise of the Right, common stock of the acquiring company having a value equal totwo times the exercise price of the Right.

However, Rights arenot exercisable following the occurrence of a Flip-In Event until such time as the Rights areno longer redeemable by the Company as set forth below.

The Purchase Price payable, and the number of Units of Series C Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Series C Preferred Stock, (ii) if holders of the Series C Preferred Stock are granted certain rights or warrants to subscribe for Series C Preferred Stock or convertible securities at less than the current market price of the Series C Preferred Stock, or (iii) upon the distribution to holders of the Series C Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above).

With certain exceptions,no adjustments in the Purchase Price will be required until cumulative adjustments amount to at least 1% of the Purchase Price. No fractional Units will be issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the Series C Preferred Stock on the last trading date prior to the date of exercise.

At any time after the Stock Acquisition Date, the Company* mayexchange all or part of the Rights (other than Rights owned by an Acquiring Person) for Common Stock at an exchange ratio equal to (i) a number of shares of Common Stock per Right with a value equal to the spread between the value of the number of shares of Common Stock for which the Rights maythen be exercised and the Purchase Price or (ii) if prior to the acquisition by the Acquiring Person of50%* or more of the then outstanding shares of Common Stock,one share of Common Stock per Right (subject to adjustment).

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At any time untilten days following the Stock Acquisition Date, the Company* mayredeem the Rights in whole, butnot* in part, at a price of $0.001 per Right. Immediately upon the action of the Company’s board of directors ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the $0.001 redemption price.

Until a Right is exercised, the holder thereof, as such, will haveno rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. While the distribution of the Rights willnot be taxable to shareholders or to the Company, stockholders* may,*depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Common Stock (or other consideration) of the Company as set forth above or in the event the Rights are redeemed.

Other than those provisions relating to the principal economic terms of the Rights, any of the provisions of the Rights Agreement* maybe amended by the Company’s board of directors prior to the Distribution Date. After the Distribution Date, the provisions of the Rights Agreement maybe amended by the Company’s board of directors in order to cure any ambiguity, to make changes which donot* adversely affect the interests of holders of Rights (excluding the interests of any Acquiring Person), or to shorten or lengthen any time period under the Rights Agreement; provided, however, thatno amendment to adjust the time period governing redemption shall be made at such time as the Rights arenot redeemable.

Cash Dividends

On each of* March 6, 2024,** May 6, 2024,and August 5,2024, the Company's board of directors declared a quarterly cash dividend of $0.25 per share on its Common Stock. The dividends were paid on April 5, 2024,** June 5,2024, and September 5, 2024,respectively, to stockholders of record on March 22, 2024,** May 20, 2024,and August 22, 2024,respectively. Pro rata distributions were made to the other members of the Operating LLC upon payment of dividends to the Company's stockholders. On November 4,2024, the Company's board of directors declared a quarterly cash dividend of $0.25 per share on its Common Stock. The dividends are payable on December 5, 2024to shareholders of record as of November 20, 2024.*

During thenine months ended* September 30, 2024*, Cohen & Company Inc. received and surrendered units of the Operating LLC. The following table displays the number of units received (net of surrenders) by Cohen & Company Inc.

The Company recognized a net increase in additional paid in capital of $645 and a net decrease in AOCI of $14 with an offsetting decrease in non-controlling interest of $631 in connection with the acquisition and surrender of additional units of the Operating LLC during thenine months ended* September 30, 2024*. The following schedule presents the effects of changes in Cohen & Company Inc.’s ownership interest in the Operating LLC on the equity attributable to Cohen & Company Inc. for thenine months ended* September 30, 2024and2023*.





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Equity Distribution Agreement

On* October 5, 2023,the Company entered into an equity distribution agreement (the “Equity Agreement”) with Northland Securities, Inc. (trade name Northland Capital Markets), as sales agent (the “Sales Agent”), relating to the issuance and sale from time to time by the Company (the “ATM Program”), through the Sales Agent, of shares of the Company's Common Stock, having an aggregate offering price of up to $75,000 (collectively the “Shares”). Sales of the Shares, if any, under the Equity Agreement will be made in sales deemed to be “at-the-market offerings” as defined in Rule415* under the Securities Act as agreed with the Sales Agent. In accordance with the applicable rules of the SEC, the Company is permitted to sell an aggregate of up to $4,712 in Shares under the Equity Agreement, which representsone-third of the value of the Common Stock held by non-affiliates.

The Equity Agreement includes customary representations, warranties, and covenants by the Company and customary obligations of the parties and termination provisions. The Company has agreed to indemnify the Sales Agent against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the Sales Agent* may*be required to make with respect to any of those liabilities. The Company will pay the Sales Agent a commission of 2.5% of the gross offering proceeds of the Shares sold through the Sales Agent pursuant to the Equity Agreement.

The offering of the Common Stock pursuant to the Equity Agreement will terminate upon the sale of all of the Shares pursuant to the Equity Agreement, unless sooner terminated in accordance with the terms and conditions of the Equity Agreement.

During thethree andnine months ended* September 30, 2024*, the Company sold 0 and 13,500 shares of Common Stock, respectively, in the open market pursuant to the Equity Agreement for a total net sale price of $0 and $154, respectively.

Detail of Non-Controlling Interest

The Company hastwo major categories of non-controlling interest. Convertible non-controlling interest represents the portion of the Operating LLCnot owned by the Company. The convertible non-controlling interest is exchangeable in certain circumstances into Common Stock. Non-convertible non-controlling interest represents the portion of various subsidiaries of the Operating LLC that arenot owned by the Operating LLC. The non-convertible non-controlling interest isnot exchangeable into Common Stock.

ROLLFORWARD OF NON-CONTROLLING INTERESTS

The Operating LLC non-controlling interest is included as convertible non-controlling interest in the consolidated statement of operations. The other components of non-controlling interest are included as non-convertible non-controlling interest in the statement of operations. See note21 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form10-K for the year ended* December 31, 2023*, for a discussion of the Company’s non-controlling interests.

Partial redemption of convertible non-controlling interests

On* February 1, 2024,Daniel G. Cohen, the Company’s executive chairman, in accordance with the Operating LLC operating agreement, redeemed 443,474 LLC Units for which the Company paid to Mr. Cohen an aggregate of $315, or $0.711 per LLC Unit. The LLC Units were redeemed by Mr. Cohen in order to fund certain tax liabilities incurred by Mr. Cohen in connection with the vesting, on January 31, 2024,of 940,669 restricted LLC Units that had been previously granted to Mr. Cohen under the2020* Long-Term Incentive Plan. On* February 1, 2023,Daniel G. Cohen, in accordance with the Operating LLC operating agreement, redeemed 479,380 LLC Units for which the Company paid to Mr. Cohen an aggregate of $421, or $0.878 per LLC Unit. The LLC Units were redeemed by Mr. Cohen in order to fund certain tax liabilities incurred by Mr. Cohen in connection with the vesting, on January 31, 2023,of 967,830 restricted LLC Units that had been previously granted to Mr. Cohen under the2020* Long-Term Incentive Plan.

On* February 1, 2024,Lester Brafman, the Company’s chief executive officer, in accordance with the Operating LLC operating agreement, redeemed 483,301 LLC Units for which the Company paid to Mr. Brafman an aggregate of $344, or $0.711 per LLC Unit. The LLC Units were redeemed by Mr. Brafman in order to fund certain tax liabilities incurred by Mr. Brafman in connection with the vesting, on January 31, 2024,of 540,633 restricted LLC Units and 40,000 restricted shares of the Company’s Common Stock, all of which had been previously granted to Mr. Brafman under the2020* Long-Term Incentive Plan. On* February 1, 2023,Lester Brafman, in accordance with the Operating LLC operating agreement, redeemed 470,330 LLC Units for which the Company paid to Mr. Brafman an aggregate of $413, or $0.878 per LLC Unit. The LLC Units were redeemed by Mr. Brafman in order to fund certain tax liabilities incurred by Mr. Brafman in connection with the vesting, on January 31, 2023,of 470,330 restricted LLC Units and 49,750 restricted shares of the Company’s Common Stock, all of which had been previously granted to Mr. Brafman under the2020* Long-Term Incentive Plan.

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18. INCOME TAXES

Cohen & Company Inc. is treated as a “C” corporation for United States federal income tax purposes. A U.S. "C" corporation is subject to a federal tax rate of 21%. The Company's effective tax rate is significantly different than this rate for the following reasons.

1. Cohen & Company Inc. consolidates the Operating LLC but only owns a minority economic interest in the Operating LLC. For thenine months ended* September 30, 2024*, Cohen & Company Inc. owned 28.4% of the economic interests of the Operating LLC (on average) and was allocated the same percentage of income/(loss) generated by the Operating LLC. To the extent Cohen & Company Inc. incurs tax obligations on this, the related tax expense is recognized in these consolidated financial statements. The remaining 71.6% that is allocated to the non-controlling members of the Operating LLC is subject to taxation on such members' tax returns.

2. The Operating LLC itself consolidates certain pass-through entities. Therefore, the income/(loss) of these entities is included in the Company's consolidated results butno tax expense/(benefit) related to the unowned portion is included.

3 There are state, local, and foreign taxes to which the Operating LLC or its subsidiaries are subject to, which are included in the effective tax rate.

4. The Company also has valuation allowances applied against its carryforward NOL and NCL deferred tax assets as well as its tax over book basis in the Operating LLC. Valuation allowances are applied to deferred tax assets when management determines that the assets* may**not* be fully realized. This determination requires significant judgement and is primarily based on management's expectations regarding the generation of future taxable income. ASC740 indicates that all available evidence should be considered when assessing the need for and the appropriate level of a valuation allowance. All available evidence includes historical information supplemented by all currently available information about future periods.

The following table presents the components on the Company's consolidated provision for income tax for the periods presented.

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19**. NET CAPITAL REQUIREMENTS**

JVB is subject to the net capital provision of Rule15c3-1 under the Exchange Act, which requires the maintenance of minimum net capital, as defined therein. As of* September 30, 2024*, JVB's minimum required net capitalwas $250, and actual net capital was $51,106, which exceeded the minimum requirements by $50,856. CCFESA, a subsidiary of the Company, is regulated by the ACPR in France. CCFESA is subject to certain regulatory capital requirements in accordance with ArticlesL.533-2 et seq.of the French Financial and Monetary Code, implementing the new framework set out in the Investment Firm Regulation ("IFR") and the Investment Firm Directive ("IFD"). As of September 30, 2024, the total minimum required net liquid capital was $692 and actual net liquid capital in CCFESA was $2,273, which exceeded the minimum requirement by $1,581.

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20**. EARNINGS / (LOSS) PER COMMON SHARE**

The following table presents a reconciliation of basic and diluted earnings / (loss) per common share for the periods indicated.

EARNINGS / (LOSS) PER COMMON SHARE

(Dollars in Thousands, except share or per share information)

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21. COMMITMENTS AND CONTINGENCIES

Legal and Regulatory Proceedings



One of the Company's investment advisers, Cohen & Company Financial Management LLC ("CCFM"), is currently subject to an investigation by the SEC’s enforcement division, which is reviewing its disclosure practices around conflicts of interest and other issues. As is the Company's current practice, it is cooperating with the SEC staff and is in the process of responding to their requests for information. The Company cannot predict the outcome of this investigation. The costs related to responding to and cooperating with the SEC staff* may*be material and could continue to be material at least through the completion of the SEC investigation.

From time to time, the Company is a party to various routine legal proceedings, claims, and regulatory inquiries arising out of the ordinary course of the Company’s business. Management believes that the results of these routine legal proceedings, claims, and regulatory matters willnot have a material adverse effect on the Company’s financial condition, or on the Company’s operations and cash flows. However, the Company cannot estimate the legal fees and expenses to be incurred in connection with these routine matters and, therefore, is unable to determine whether these future legal fees and expenses will have a material impact on the Company’s operations and cash flows. It is the Company’s policy to expense legal and other fees as incurred.

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22. SEGMENT AND GEOGRAPHIC INFORMATION** **

The Company operates within three business segments: Capital Markets, Asset Management, and Principal Investing. See note1. The Company’s business segment information was prepared using the following methodologies and generally represents the information that is relied upon by management in its decision- making processes: (a) revenues and expenses directly associated with each business segment are included in determining net income / (loss) by segment and (b) indirect expenses (such as general and administrative expenses including executive and indirect overhead costs)not directly associated with specific business segments arenot allocated to the business segments’ statements of operations. Accordingly, the Company presents segment information consistent with internal management reporting. See note (1) in the table below for more detail on unallocated items. The following tables present the financial information for the Company’s segments for the periods indicated.

Nine Months Ended* September 30, 2024*

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Nine Months Ended* September 30, 2023*

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Three Months Ended* September 30, 2024*

50

Three Months Ended* September 30, 2023*

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BALANCE SHEET DATA

As of* September 30, 2024*



BALANCE SHEET DATA



Geographic Information

The Company conducts its business activities through offices in the following locations: (1) United States and (2) Europe. Total revenues by geographic area are summarized as follows.

GEOGRAPHIC DATA

Long-lived assets attributable to an individual country, other than the United States, arenot material.



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23**. SUPPLEMENTAL CASH FLOW DISCLOSURE**

Cash flows from investments (including derivatives) classified as investments-trading or trading securities sold,not yet purchased, are presented on a net basis as a component of cash flows from operations. Cash flows from investments (including derivatives) classified as other investments, at fair value or other investments sold,not yet purchased, are presented on a gross basis as a component of cash flows from investing.

Interest paid by the Company on its debt and redeemable financial instruments was $4,633 and $4,139 for thenine months ended* September 30, 2024and2023*, respectively.

The Company paid income taxes of $60 and $433 for thenine months ended* September 30, 2024and2023*, respectively. The Company received income tax refunds of $240 and $0 for thenine months ended* September 30, 2024and2023*, respectively.

For thenine months ended* September 30, 2024*, the Company had the following significant non-cash transactions that arenot reflected on the statement of cash flows:

For thenine months ended* September 30, 2023*, the Company had the following significant non-cash transactions that arenot reflected on the statement of cash flows:

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24**. RELATED PARTY TRANSACTIONS**

Certain terms in this footnote are defined in the Company’s Annual Report on Form10-K for the year ended* December 31, 2023*. The Company has identified the following related party transactions for thenine months ended* September 30, 2024and2023*. The transactions are listed by the related party and, unless otherwise noted in the text of the description, the amounts are disclosed in the tables at the end of this section.

A. JKD Investor

The JKD Investor is an entity owned by Jack J. DiMaio, the vice chairman of the board of directors and vice chairman of the Operating LLC’s board of managers, and his spouse. On* October 3, 2016,the Operating LLC and JKD Investor entered into the JKD Investment Agreement. The interest expense incurred relating to the JKD Investment Agreement is disclosed in the table below. See notes4* and15.

Effective* September 1, 2024,JKD Investor and the Operating LLC entered into the Redemption Agreement which terminated the JKD Investment Agreement in its entirety and resulted in the full redemption of the redeemable financial instrument. Pursuant to the Redemption Agreement, the Company issued to JKD Investor the2024* Note in the principal amount of $5,146. The interest incurred on the2024 Note is disclosed in the table below. See notes4 and16.

On* January 31, 2020,JKD Investor purchased $2,250 of the2020* Notes. On* January**31,* 2022, the Operating LLC and JKD Investor entered into the2022 Note Purchase Agreement, pursuant to which, among other things, on such date, (i) JKD Investor paid to the Operating LLC an additional $2,250 and (ii) in consideration for such funds, the Operating LLC issued to JKD Investor the2020 Note in the aggregate principal amount of $4,500.See note16. The Company incurred interest expense on this debt, which is disclosed in the table below.



B. Duane Morris, LLP (“Duane Morris”)



Duane Morris is an international law firm and serves as legal counsel to the Company. Duane Morris is considered a related party because a partner at Duane Morris is a member of the same household as a director of the Company. The expense incurred by the Company for services provided by Duane Morris is included within professional fees and operating expense in the consolidated statements of operations and comprehensive income and is disclosed in the table below.



C. Cohen Circle, LLC ("Cohen Circle")

The Company has a sublease agreement as sub-lessor for certain office space with Cohen Circle. The Company received payments under this sublease agreement, in which payments are recorded as a reduction in rent and utility expenses. This sublease agreement commenced on* August 1, 2018and has a term that automatically renews forone*-year periods ifnot cancelled by either party upon90 days’ notice prior to the end of the then-existing term. The income earned pursuant to this sublease agreement is included as a reduction in rent expense in the consolidated statements of income and is disclosed in the table below.



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D. Investment Vehicle and Other



Stoa USA Inc. / FlipOS

Stoa USA Inc. / FlipOS was a private company in which the Company owned common equity. It was considered a related party because Daniel G. Cohen was a member of the board of directors. During the year ended* December 31, 2023*, Stoa USA Inc. / FlipOS announced that it had ceased operations. As of* September 2023,the Company made cumulative investments of $847 in Stoa USA Inc. / FlipOS. The Company wrote-off this investment during thethird* quarter of2023 and recorded a principal transactions loss of $6,847. The fair value of this investment was included in other investments, at fair value on the consolidated balance sheets. Any realized and unrealized gains or losses on these investments were included in principle transactions and other income on the consolidated statements of operations and comprehensive income. As of* September* 30, 2024, the Company hadno remaining investment in Stoa USA Inc. / FlipOS.

CK Capital and AOI



CK Capital and AOI are related parties as they are equity method investments of the Company. In* December 2019,the Company acquired a 45% interest in CK Capital. The Company purchased this interest for $18 (of which $17 was paid to an entity controlled by Daniel G. Cohen). In addition, in December 2019,the Company also acquired a 10% interest in AOI, a real estate holding company, for $1 from entities controlled by Daniel G. Cohen. Income earned or loss incurred by the Company on the equity method investments in CK Capital and AOI is included in the tables below. In accordance with the CK Capital shareholders agreement, the Company mayreceive fees for consulting services provided by the Company to CK Capital. Any fees earned for such consulting services are included in principal transactions and other income in the table below. See note11.*

SPAC Fund



The SPAC Fund was considered a related party because it was an equity method investment of the Company prior to its consolidation effective* April 1, 2023 (see note4*). The Company had an investment in and a management contract with the SPAC Fund. Income earned or loss incurred on the investment prior to consolidation is included as part of principal transactions and other income in the tables below. Revenue earned on the management contract prior to consolidation is included as part of asset management in the table below.



U.S. Insurance JV



U.S. Insurance JV is considered a related party because it is an equity method investment of the Company. The Company has an investment in and a management contract with the U.S. Insurance JV. Income earned or loss incurred on the investment is included as part of principal transactions and other income in the tables below. Revenue earned on the management contract is included as part of asset management and is shown in the table below. As of* September 30, 2024*, the Company owned 1.86% of the equity of the U.S. Insurance JV.

CREO JV

CREO JV is considered a related party because it is an equity method investment of the Company. The Company has an investment in and a management contract with CREO JV. Income earned or loss incurred on the investment is included as part of principal transactions and other income in the table below. As of* September 30, 2024*, the Company owned 7.5% of the equity of CREO JV.

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Sponsor Entities of Other SPACs

In general, a SPAC is initially funded by a sponsor and that sponsor invests in and receives private placement and founders shares of the SPAC. The sponsor* maybe organized as a single legal entity or multiple entities under common control. In either case, the entity (or entities) is referred to in this section as the sponsor of the applicable SPAC. The Company has had the following transactions with various sponsors of SPACs that are related parties, which the Company doesnot* consolidate.

FTAC Athena Acquisition Corp. ("FTAC Athena") was a SPAC. The sponsor of FTAC Athena ("FTAC Athena Sponsor") was a related party as it was an equity method investment of the Company. On* February 26, 2021,the Operating LLC entered into a letter agreement with FTAC Athena Sponsor whereby the Operating LLC would provide personnel to serve as the chief financial officer as well as other accounting and administrative services to FTAC Athena Sponsor for a periodnot* longer than24 months. As consideration for these services, the Company received an allocation of 35,000 founders shares of FTAC Athena stock to the Operating LLC and recorded an equity method investment of $40 for the valuation of these services. The revenue earned on this arrangement is disclosed in principal transactions and other income, other SPAC entities in the table below. FTAC Athena liquated in2023.

FTAC Zeus Acquisition Corp. ("FTAC Zeus") was a SPAC. The sponsor of FTAC Zeus ("FTAC Zeus Sponsor") was a related party as it was an equity method investment of the Company. On* November 24,*2021, the Operating LLC entered into a letter agreement with FTAC Zeus Sponsor whereby the Operating LLC would provide personnel to serve as the chief financial officer as well as other accounting and administrative services to FTAC Zeus Sponsor for a periodnot longer than24 months. As consideration for these services, the Company received an allocation of 35,000 founders shares of FTAC Zeus stock to the Operating LLC and recorded an equity method investment of $40 for the valuation of these services. The revenue earned on this arrangement is disclosed in principal transactions and other income, other SPAC entities in the table below. FTAC Zeus liquidated in2023.

FTAC Emerald Acquisition Corp. ("FTAC Emerald") is a SPAC. The sponsor of FTAC Emerald ("FTAC Emerald Sponsor") is a related party as it is an equity method investment of the Company. On* December 20,*2021, the Operating LLC entered into a letter agreement with FTAC Emerald Sponsor whereby the Operating LLC would provide personnel to serve as the chief financial officer as well as other accounting and administrative services to FTAC Emerald Sponsor for a periodnot longer than24 months. As consideration for these services, the Company received an allocation of 35,000 founders shares of FTAC Emerald stock to the Operating LLC and recorded an equity method investment of $40 for the valuation of these services. The revenue earned on this arrangement is disclosed in principal transactions and other income, other SPAC entities in the table below.

As of* September 30, 2024*, FTAC Athena and FTAC Zeus have liquidated. FTAC Emerald is in the process of completing a merger with an operating company. Subsequent to the liquidation or merger of the SPAC, there isno further income or loss recorded on the above transactions.

Other

The Company invests in sponsor entities of SPACs, either directly or through its interest in the SPAC Series Funds, that arenot otherwise affiliated with the Company but are considered related parties because they are accounted for under the equity method. As of* September 30, 2024*, the Company owned10.66% of these entities in the aggregate. Income earned or loss incurred on the equity method investments is disclosed in other SPAC entities in the table below.

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The following tables display the routine transactions recognized in the consolidated statements of operations from the identified related parties that are described above.

The following related party transactions arenot included in the tables above.

E. Directors and Employees

On* October 1, 2024,the Company assumed the final year obligation of athree*-year corporate aircraft program arrangement from the Company's Executive Chairman, Daniel G. Cohen. The cost of the final year's obligation is $1,200. The arrangement allows for an allotted number of hours of air travel on selected aircraft. The Company intends to use the air travel for general business purposes.

The Company has entered into employment agreements with Daniel G. Cohen and Joseph W. Pooler, Jr., the Company's chief financial officer. The Company has entered into its standard indemnification agreement with each of its directors and executive officers.

The Company maintains a401(k)-savings plan covering substantially all of its employees. The Company matches 50% of employee contributions for all participantsnot to exceed 3% of their eligible compensation. Contributions made on behalf of the Company were $98 and $343, respectively, for thethree andnine months ended* September 30, 2024*. Contributions made on behalf of the Company were $95 and $321, respectively, for thethree andnine months ended* September 30, 2023.*

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25**. DUE FROM / DUE TO RELATED PARTIES**

Amounts due to related parties associated with redeemable financial instruments and outstanding debt are included as components of those balances in the consolidated balance sheets. In addition, interest or investment return owed on those balances are included as a component of accounts payable and other in the consolidated balance sheets. Any investment made in an equity method affiliate for which the Company doesnot elect the fair value option is included as a component of investments in equity method affiliates in the consolidated balance sheets. Any investment made in an equity method affiliate for which the Company elected the fair value option is included as a component of other investments, at fair value in the consolidated balance sheets.

The following table summarizes amounts due from / to related parties as of each date shown. These amounts* mayresult from normal operating advances, employee advances, or from timing differences between the transactions disclosed in note24* and final settlement of those transactions in cash. All amounts are primarily non-interest bearing.

DUE FROM RELATED PARTIES

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