UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-34516

Cowen Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	27-0423711 (I.R.S. Employer Identification No.)
599 Lexington Avenue New York, New York (Address of Principal Executive Offices)	10022 (Zip Code)

(646) 562-1000

(Registrant's telephone number, including area code)

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

Title of Each Class	Trading Symbol	Name of Exchange on Which Registered
Class A Common Stock, par value $0.01 per share	COWN	The Nasdaq Global Market
7.35% Senior Notes due 2027	COWNZ	The Nasdaq Global Market
7.75% Senior Notes due 2033	COWNL	The Nasdaq Global Market

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ☒  No ☐ 

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

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐
Smaller reporting company ☐ Emerging growth company ☐

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

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

As of April 29, 2020, there were 27,688,071 shares of the registrant's common stock outstanding.

Item No.			Page No.
PART I. FINANCIAL INFORMATION			4
	1. Unaudited Condensed Consolidated Financial Statements		4
		Condensed Consolidated Statements of Financial Condition	4
		Condensed Consolidated Statements of Operations	6
		Condensed Consolidated Statements of Comprehensive Income (Loss)	8
		Condensed Consolidated Statements of Changes in Equity	9
		Condensed Consolidated Statements of Cash Flows	10
		Notes to Condensed Consolidated Financial Statements	12
	2. Management's Discussion and Analysis of Financial Condition and Results of Operations		65
	3. Quantitative and Qualitative Disclosures About Market Risk		88
	4. Controls and Procedures		88
PART II. OTHER INFORMATION			88
	1. Legal Proceedings		88
	1A. Risk Factors		89
	2. Unregistered Sales of Equity Securities and Use of Proceeds		92
	3. Defaults Upon Senior Securities		93
	4. Mine Safety Disclosures		93
	5. Other Information		93
	6. Exhibits		94
SIGNATURES			95

2

Special Note Regarding Forward-Looking Statements

We have made statements in this Quarterly Report on Form 10-Q (including in "Management's Discussion and Analysis of Financial Condition and Results of Operations") that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking terms such as "may," "might," "will," "would," "could," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "project," "possible," "potential," "intend," "seek" or "continue," the negative of these terms and other comparable terminology or similar expressions. In addition, our management may make forward-looking statements to analysts, representatives of the media and others. These forward-looking statements represent only the Company's beliefs regarding future events (many of which, by their nature, are inherently uncertain and beyond our control) and are predictions only, based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. In particular, you should consider the risks contained in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 and the risks contained in Item 1A of this periodic report on Form 10-Q for the three months ended March 31, 2020.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations.

Unaudited Condensed Consolidated Financial Statements are presented for the three months ended March 31, 2020 and 2019. The Consolidated Financial Statements as of December 31, 2019 were audited.

3

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

Cowen Inc. Condensed Consolidated Statements of Financial Condition (dollars in thousands, except share and per share data) (unaudited)
Assets	As of March 31, 2020		As of December 31, 2019
Cash and cash equivalents	$	270,079	$	301,123
Cash collateral pledged	7,538		6,563
Segregated cash	131,266		107,328
Securities owned, at fair value ($200,278 and $941,595 were pledged to various parties)	776,046		1,633,552
Receivable on derivative contracts, at fair value	83,867		62,977
Securities borrowed	971,430		754,441
Other investments ($113,627 and $114,504 at fair value, respectively)	163,274		185,722
Deposits with clearing organizations, brokers and banks	131,948		91,755
Receivable from brokers, dealers and clearing organizations, net of allowance of $792 and $721, respectively	773,317		681,695
Receivable from customers, net of allowance of $675 and $650, respectively	193,009		105,647
Fees receivable, net of allowance of $2,364 and $2,620, respectively	157,081		126,358
Due from related parties	24,802		26,749
Fixed assets, net of accumulated depreciation and amortization of $34,942 and $32,846, respectively	33,909		33,661
Operating lease right-of-use assets	88,306		92,852
Goodwill	137,728		137,728
Intangible assets, net of accumulated amortization of $29,528 and $26,395, respectively	31,989		35,200
Deferred tax asset, net	80,848		79,166
Other assets	91,026		84,158
Consolidated Funds
Cash and cash equivalents	39,721		30,874
Securities owned, at fair value	355,496		375,278
Receivable on derivative contracts, at fair value	17,292		5,833
Other investments	149,689		175,769
Receivable from brokers	20,668		25,964
Other assets	1,722		1,632
Total Assets	$	4,732,051	$	5,162,025
Liabilities and Stockholders' Equity
Liabilities
Securities sold, not yet purchased, at fair value	$	527,471	$	451,836
Securities sold under agreements to repurchase	57,420		23,244
Payable for derivative contracts, at fair value	72,385		60,761
Securities loaned	997,794		1,601,866
Payable to brokers, dealers and clearing organizations	330,096		271,018
Payable to customers	488,814		430,224
Commission management payable	112,688		71,620
Compensation payable	69,631		223,139
Operating lease liabilities	91,835		97,581
Notes payable and other debt	407,531		345,451
Convertible debt	119,929		118,688
Fees payable	21,162		21,540
Accounts payable, accrued expenses and other liabilities	164,540		141,557

4

Cowen Inc. Condensed Consolidated Statements of Financial Condition (dollars in thousands, except share and per share data) (unaudited)
	As of March 31, 2020		As of December 31, 2019
(continued)
Consolidated Funds
Due to related parties	—		581
Payable for derivative contracts, at fair value	18,066		4,769
Payable to brokers	1,263		864
Capital withdrawals payable	9,290		1,276
Accounts payable, accrued expenses and other liabilities	1,091		560
Total Liabilities	$	3,491,006	$	3,866,575
Commitments and Contingencies (Note 16)
Temporary Equity
Redeemable non-controlling interests	$	318,001	$	391,275
Permanent Equity
Cowen Inc. stockholders' equity
Preferred stock, par value $0.01 per share: 10,000,000 shares authorized, 120,750 shares issued and outstanding as of March 31, 2020 (aggregate liquidation preference of $120,750,000) and 10,000,000 shares authorized, 120,750 shares issued and outstanding as of December 31, 2019 (aggregate liquidation preference of $120,750,000), respectively	$	1	$	1
Class A common stock, par value $0.01 per share: 62,500,000 shares authorized, 47,848,963 shares issued and 27,628,117 outstanding as of March 31, 2020 and 62,500,000 shares authorized, 47,215,938 shares issued and 28,610,357 outstanding as of December 31, 2019, respectively (including 299,436 and 216,912 restricted shares, respectively)	334		334
Class B common stock, par value $0.01 per share: 62,500,000 authorized, no shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	—		—
Additional paid-in capital	1,119,534		1,110,635
(Accumulated deficit) retained earnings	(29,869)		(16,809)
Accumulated other comprehensive income (loss)	(5)		(5)
Less: Class A common stock held in treasury, at cost, 20,220,846 and 18,605,581 shares as of March 31, 2020 and December 31, 2019, respectively	(305,192)		(284,301)
Total Cowen Inc. Stockholders' Equity	784,803		809,855
Nonredeemable non-controlling interests	138,241		94,320
Total Permanent Equity	$	923,044	$	904,175
Total Liabilities, Temporary Equity and Permanent Equity	$	4,732,051	$	5,162,025

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

5

Cowen Inc. Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited)
	Three Months Ended March 31,
	2020		2019
Revenues
Investment banking	$	105,028	$	80,106
Brokerage	139,362		97,463
Management fees	11,604		7,141
Incentive income	—		15
Interest and dividends	42,077		29,092
Reimbursement from affiliates	261		288
Reinsurance premiums	10,471		6,591
Other revenues	1,850		1,061
Consolidated Funds
Interest and dividends	2,525		2,325
Other revenues	631