4. INVESTMENTS

The Company's investments and securities sold, not yet purchased, consist of the following at June 30, 2011 and December 31, 2010:


	June 30, 2011		December 31, 2010
	June 30, 2011		December 31, 2010
Debt:
U.S. Government and agencies	$	31,889	$	31,900
Fixed income funds (a)		40,403		33,951
Corporate and other debt and interest-bearing deposits		26,868		29,693

		99,160		95,544

Equities (a)		110,634		88,437

Other:
Interests in LAM alternative asset management funds		39,360		58,656
Private equity		174,704		163,482
Equity method investments		11,281		11,291

		225,345		233,429

Total investments		435,139		417,410
Less:
Interest-bearing deposits		7,660		7,754
Equity method investments		11,281		11,291

Investments, at fair value	$	416,198	$	398,365

Securities sold, not yet purchased, at fair value (included in "other liabilities")	$	1,262		$2,897

(a)

At June 30, 2011 fixed income funds and equities include investments with fair values of $2,051 and $23,051, respectively, held in connection with previously granted Lazard Fund Interest awards ("Lazard Fund Interests"), which will serve to satisfy the Company's liability upon vesting. Lazard Fund Interests represent grants by the Company to eligible employees of actual or notional interests in several Lazard managed fixed income and equity investment funds (see Note 13 of Notes to Condensed Consolidated Financial Statements).

The Company's debt securities included in the table above are categorized as trading securities. Fixed income funds primarily consist of amounts seeding products of our Asset Management segment, as well as amounts held in connection with Lazard Fund Interests. Corporate and other debt primarily consist of United Kingdom (the "U.K.") government and U.S. state and municipal debt securities.

Equities principally represent the Company's investments in marketable equity securities of large-, mid- and small-cap domestic, international and global companies to seed new Asset Management products and includes investments in public and private asset management funds managed both by LAM and third-party asset managers, as well as amounts held in connection with Lazard Fund Interests.

Interests in LAM alternative asset management funds represent (i) GP interests owned by Lazard in LAM-managed alternative asset management funds and (ii) GP interests consolidated by the Company pertaining to noncontrolling interests in LAM alternative asset management funds, the latter of which aggregated $5,735 and $8,219 at June 30, 2011 and December 31, 2010, respectively. Such noncontrolling interests in LAM alternative asset management funds, which represent GP interests held directly by certain of our LAM managing directors or employees of the Company, are deemed to be controlled by, and therefore consolidated by, the Company in accordance with U.S. GAAP. Noncontrolling interests are presented within "stockholders' equity" on the consolidated statements of financial condition (see Note 12 of Notes to Condensed Consolidated Financial Statements).

Private equity investments include those owned by Lazard and those consolidated but not owned by Lazard. Private equity investments owned by Lazard are primarily comprised of investments in private equity funds and direct private equity interests. Such investments primarily include (i) a mezzanine fund, which invests in mezzanine debt of a diversified selection of small- to mid-cap European companies; (ii) Corporate Partners II Limited ("CP II"), a private equity fund targeting significant noncontrolling-stake investments in established public and private companies and (iii) Lazard Senior Housing Partners LP ("Senior Housing"), which acquires companies and assets in the senior housing, extended-stay hotel and shopping center sectors. Private equity investments consolidated but not owned by Lazard relate solely to Lazard's establishment of a private equity business with the Edgewater Funds ("Edgewater"), a Chicago-based private equity firm, through the acquisition of Edgewater's management vehicles on July 15, 2009, and aggregated $74,505 and $67,206 at June 30, 2011 and December 31, 2010, respectively. The economic interests that the Company does not own are owned by the leadership team and other investors in the Edgewater management vehicles (see Note 8 of Notes to Condensed Consolidated Financial Statements).

On January 24, 2008, Sapphire Industrials Corp. ("Sapphire"), a then newly-organized special purpose acquisition company formed by the Company, completed an initial public offering (the "Sapphire IPO"). Sapphire had been included in equity method investments prior to its dissolution discussed below. Sapphire was formed for the purpose of effecting a business combination within a 24-month period (the "Business Combination") and net proceeds from the Sapphire IPO were placed in a trust account by Sapphire (the "Trust Account") pending consummation of the Business Combination. In connection with the Sapphire IPO, the Company purchased warrants from Sapphire for a total purchase price of $12,500 and Sapphire common stock for an aggregate purchase price of $50,000. The Company's investment in Sapphire had been accounted for using the equity method of accounting. On January 6, 2010, Sapphire announced it had not completed the Business Combination and it would dissolve and distribute the funds in the Trust Account to all of its public shareholders, to the extent they were holders of shares issued in the Sapphire IPO. Pursuant to such dissolution, on January 26, 2010, Sapphire made an initial distribution to the Company aggregating $50,319. All Sapphire warrants expired without value.

During the three month and six month periods ended June 30, 2011 and 2010, the Company recognized gross investment gains and losses in "revenue-other" on its condensed consolidated statements of operations as follows:


	Three Month Period Ended June 30,				Six Month Period Ended June 30,
	2011		2010		2011		2010
Gross investment gains	$	8,830	$	3,724	$	15,205	$	13,482
Gross investment losses	$	2,235	$	6,368	$	3,251	$	11,129
The table above includes gross unrealized investment gains and losses pertaining to "trading" securities as follows:
	Three Month Period Ended June 30,				Six Month Period Ended June 30,
	2011		2010		2011		2010
Gross unrealized investment gains	$	641	$	–	$	1,214	$	101
Gross unrealized investment losses	$	193	$	1,497	$	313	$	1,325

During the six month period ended June 30, 2010, the Company recorded within "accumulated other comprehensive loss, net of tax" ("AOCI") gross pre-tax unrealized investment gains of $5,456 and gross pre-tax unrealized investment losses of $6,013 pertaining to debt securities held at LFB that were designated as "available-for-sale." With respect to adjustments for items reclassified to earnings, the average cost basis was utilized for purposes of calculating realized investment gains and losses. There were no other-than-temporary impairment charges recognized during the six month period ended June 30, 2010.

During the fourth quarter of 2010, the Company sold its remaining "available-for-sale" debt securities. Accordingly, there were no gross pre-tax investment gains or losses recorded within AOCI during the six month period ended June 30, 2011.