2.2.0.7 false Summary of Significant Accounting Policies 0202 - Disclosure - Summary of Significant Accounting Policies true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Summary of Significant Accounting Policies [Abstract] 0 glg_SummaryOfSignificantAccountingPoliciesAbstract glg false na duration Summary of significant accounting policies. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string Summary of significant accounting policies. false 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1 us-gaap_SignificantAccountingPoliciesTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div align="left" style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Included below are excerpts of the Company’s significant accounting policies, including those that have been revised in 2010. For the Company’s significant accounting policies, please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Principles of combination and consolidation</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Upon consummation of the Acquisition, the GLG Entities became wholly owned subsidiaries of the Company and from that date the financial statements have been prepared on a consolidated basis and consolidate those entities over which the legal parent, the Company, has control over significant operating, financial or investing decisions. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company consolidates certain entities it controls through a majority voting interest or otherwise in which the Company is presumed to have control. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company has determined that the majority of GLG Funds that it manages are Variable Interest Entities in that the management contract cannot be terminated by a simple majority of unrelated investors. The Company has determined that it is not the Primary Beneficiary and so does not consolidate any of these GLG Funds. The Company earns substantially all of its revenue from the GLG Funds and managed accounts. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Non-controlling Interests in Consolidated Subsidiaries</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>FA Sub 2 Limited Exchangeable Shares</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Upon consummation of the Acquisition, Noam Gottesman and the Gottesman GLG Trust received, in exchange for their interests in the GLG Entities, 58,904,993 exchangeable Class B ordinary shares of FA Sub 2 Limited (the “Exchangeable Shares”) and 58,904,993 shares of the Company’s Series A voting preferred stock (the “Series A preferred stock”), in addition to their proportionate share of the cash consideration. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Exchangeable Shares are exchangeable for an equal number of shares of the Company’s common stock at any time for no cash consideration at the holder’s option. Upon exchange of the Exchangeable Shares, an equivalent number of shares of the Company’s Series A preferred stock will be concurrently redeemed. The shares of Series A preferred stock are entitled to one vote per share and to vote with the common stockholders as a single class but have no economic rights. The Exchangeable Shares carry dividend rights but no voting rights except with respect to certain limited matters which will require the majority vote or written consent of the holders of Exchangeable Shares. The combined ownership of the Exchangeable Shares and the Series A preferred stock provides the holders of these shares with voting rights that are equivalent to those of the Company’s common stockholders. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The holders of the Exchangeable Shares receive a cumulative dividend based on the Company’s estimate of the net taxable income of FA Sub 2 Limited allocable to such holders multiplied by an assumed tax rate of 44.38%. The cumulative dividend rights of the holders of the Exchangeable Shares are in excess of those of the Company’s common stockholders, and these rights are presented as an expense within non-controlling interest in the condensed consolidated statements of operations. The amount recorded in respect of the cumulative dividends for the three months ended June 30, 2010 and 2009, were $1,057 and $10,552, respectively, and for the six months ended June 30, 2010 and 2009, were $1,057 and $11,147, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     At the FA Sub 2 Limited level, the Exchangeable Shares have the same liquidation and income rights as other ordinary shareholders of FA Sub 2 Limited, and consequently the non-controlling interest is calculated as the Exchangeable Shareholder’s proportionate share of net assets. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Proposed Acquisition Transaction</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On May 17, 2010, the Company announced a transaction to be acquired by Man Group plc (“Man”) through two concurrent transactions: a cash merger under a merger agreement with Man and Escalator Sub 1 Inc. (“Merger Sub”), pursuant to which (i) Merger Sub will merge with and into the Company, (ii) the separate corporate existence of Merger Sub will thereupon cease, and (iii) the Company will be the surviving corporation in the merger and a wholly owned subsidiary of Man; and a share exchange under a share exchange agreement among Man and Noam Gottesman, Pierre Lagrange and Emmanuel Roman, together with their related trusts and affiliated entities and two limited partnerships that hold shares for the benefit of key personnel who are participants in the Company’s equity participation plans. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The completion of the pending acquisition transaction is subject to certain conditions, including, among others (i) the approval of the merger by GLG stockholders, including the affirmative vote by the holders of a majority of the outstanding shares of GLG common stock and preferred stock and the non-waivable affirmative vote by the holders of a majority of the outstanding shares of GLG common stock (other than shares held by the selling stockholders and their affiliates, Man and its affiliates, GLG and GLG’s affiliates (other than directors on the special committee of GLG’s board of directors) and GLG’s employees), (ii) the affirmative vote by the holders of a majority of Man’s outstanding ordinary shares, (iii) the absence of certain legal impediments to the consummation of the merger, (iv) subject to certain materiality exceptions, the accuracy of the representations and warranties made by GLG, Man, Merger Sub and the selling stockholders, respectively, compliance by GLG, Man and Merger Sub with GLG’s and their respective obligations under the merger agreement and compliance by Man and the selling stockholders with their respective obligations under the share exchange agreement, (v) the transactions contemplated by the share exchange agreement having been consummated and (vi) the non-occurrence of a Company Material Adverse Effect (as defined in the merger agreement) on the Company. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     If the acquisition transaction is consummated, the common stock of the Company will be delisted from the New York Stock Exchange and deregistered under the Securities Exchange Act of 1934, as amended, and the Company will no longer file periodic reports with the SEC. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Legal, accounting and advisory transaction costs associated with the proposed acquisition of $9,818 have been included in General, Administrative and Other costs within the consolidated statement of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Contingent upon the closure of the transaction, additional advisory costs of $7,500 plus 0.6% of the implied equity value greater than $4.50 per share are payable to the Company’s financial advisors. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Use of Estimates</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the combined and consolidated financial statements and the reported amounts of revenues, expenses and other income during the reporting periods. Actual results could differ materially from those estimates. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Revenue Recognition</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Management fees are calculated as a percentage of net assets under management based upon the contractual terms of investment advisory and related agreements and recognized as earned as the related services are performed. These fees are generally payable monthly in arrears. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Performance fees are calculated as a percentage of investment gains (which includes both realized and unrealized gains) less management and administration fees, subject in certain cases to performance hurdles, over a measurement period, generally six months. The Company has elected to not recognize performance fee revenues and related compensation until the end of the measurement period when the amounts are contractually payable, or crystallized. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The majority of the investment funds and accounts managed by the Company have contractual measurement periods that end on each of June 30 and December 31. As a result, the performance fee revenues for the first and third fiscal quarters do not reflect revenues from uncrystallized performance fees during these three-month periods and will be reflected instead at the end of the fiscal quarter in which such fees crystallize. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In certain cases, the Company may rebate a portion of its gross management and performance fees in order to compensate third-party institutional distributors for marketing its products and, in a limited number of cases, in order to incentivize clients to invest in GLG Funds managed by the Company. Such arrangements are generally priced at a portion of the Company’s management and performance fees paid by the fund. The Company has recorded its revenues net of rebates. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Administration fees are calculated on a similar basis as management fees and are recognized as the related services are performed. From its gross administration fees, the Company pays sub-administration fees to third-party administrators and custodians. Administration fees are recognized net of sub-administration fees. In addition, most GLG Funds managed by the Company have share classes with distribution fees that are paid to third party institutional distributors. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Rebates and sub-administration fees on the balance sheet represent amounts payable under the rebate and sub-administration fee arrangements described above. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Where a single-manager alternative strategy fund or internal Fund of Funds (“FoF”) managed by the Company invests in an underlying single-manager alternative strategy fund managed by the Company, the “investing fund” is the top-level GLG Fund into which a client invests and the “investee fund” is the underlying GLG Fund into which the investing fund allocates funds for investment. When one of the single-manager alternative strategy funds or internal FoFs managed by the Company invests in an underlying single-manager alternative strategy fund managed by the Company: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>management fees are charged at the investee fund level, except in the case of (1) the GLG Multi Strategy Fund where management fees are charged at both the investee and investing fund levels and (2) the GLG Balanced Managed Fund and the GLG Stockmarket Managed Fund where management fees are charged only at the investing fund level;</td> </tr> </table> </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>performance fees are charged at the investee fund level, except in the case of the GLG Global Aggressive Fund where performance fees are charged at both the investee and investing fund levels, to the extent, if any, that the performance fee charged at the investing fund level is greater than the performance fee charged at the investee fund level; and</td> </tr> </table> </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>administration fees, where applicable, are charged at both the investing and investee fund levels.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Due to the impact of foreign currency exposures on management and performance fees, the Company has elected to utilize cash flow hedge accounting to hedge a portion of its anticipated foreign currency denominated revenue. The effective portion of the hedge is recorded as a component of other comprehensive income and is released into management or performance fee income, respectively, when the hedged revenues impact the income statement. The ineffective portion of the hedge is recorded each period as derivative gain or loss in other income or other expense, respectively. See “— Derivatives and Hedging” below for a further discussion of the Company’s foreign exchange hedging activities. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Operating Leases</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     During the quarter ended March 31, 2010 the Company completed the sublease of a portion of one of its rental properties. As the Company is expected to incur an excess of costs on the subleased space over anticipated revenues, a loss of $4,092 was recognized on execution of the sublease in the first quarter and first six months of 2010. Sublease income is recorded in other income. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Unsettled Fund Receivables and Payables</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     For our Open Ended Investment Collective Funds businesses, the company acts as intermediary for the collection of subscriptions due from customers and payable to the funds, and for redemption requests receivable from funds and payable to customers. In each case an unsettled fund receivable or payable is recorded. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Derivatives and Hedging</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company is exposed to foreign exchange risks relating to performance and management fees denominated in foreign currencies and also to general, administration and other costs denominated in foreign currencies. Forward foreign exchange contracts on various foreign currencies are entered into to manage those risks. These contracts are designated as cash flow hedges, with changes in fair value attributable to changes in the relevant spot rates recorded in other comprehensive income and reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings. Changes in the fair value of the hedge attributable to the spot-forward differential are recorded directly in the consolidated statement of operations. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">For those derivatives that are designated as hedges and for which hedge accounting is desired, the hedging relationship is formally designated and documented at its inception. The document identifies the risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged item or transaction, the nature of risk being hedged and how effectiveness will be measured throughout its duration. Such hedges are expected at inception to be highly effective in offsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the reporting period for which they were designated. All hedging activities are used for risk management purposes and used to mitigate monthly foreign exchange rate movements in association with fees receivable and operating expenditure. </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock This element may be used to describe all significant accounting policies of the reporting entity. 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