Discontinued Operations & Assets and LIabilities Held for Sale

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations & Assets and LIabilities Held for Sale

Discontinued Operations & Assets and Liabilities Held for Sale

In July 2013, the Company entered into an agreement to sell to an investor group Urban, the reverse mortgage origination and securitization business that was previously owned by Knight. The transaction was completed in the fourth quarter of 2013, and, as a result, the revenues and expenses of Urban's operations and costs of the related sale have been included in (Loss) Income from discontinued operations, net of tax within the Consolidated Statements of Operations for the six months ended December 31, 2013 and the year ended December 31, 2014.

The revenues and results of operations of discontinued operations are summarized as follows (in thousands):

	For the year ended December 31, 2014			For the six months ended December 31, 2013
Revenues & Gain on sale	$	(1,148	)	$	39,868
Expenses:
Compensation	$	70		$	14,068
Payments for order flow	—			9,885
Execution and clearance fees	—			5,038
Other expenses	930			10,748
Total Expenses	1,000			39,739
Pre-tax (loss) income from discontinued operations	(2,148		)	129
Income tax benefit (expense)	816			(49		)
Loss (Income) from discontinued operations, net of tax	$	(1,332	)	$	80

In September 2014, KCG entered into an agreement to sell certain assets and liabilities related to its FCM business to Wedbush Securities Inc. The transaction closed on November 30, 2014 and as such, there are no assets or liabilities related to the FCM business on the December 31, 2014 Consolidated Statement of Financial Condition. As a result of KCG’ s decision to early adopt the aforementioned ASU that amended the requirements for reporting discontinued operations, the FCM is not considered a discontinued operation, and therefore the results of the FCM’s operations are included in the Global Execution Services segment and in Continuing Operations on the Consolidated Statements of Operations for all applicable years presented.

In October 2014, the Company announced that it began to explore strategic options for KCG Hotspot, with the goal of executing on opportunities if it creates additional value for its stockholders, clients and employees. KCG Hotspot is a single disposal group that is considered to be held-for-sale as of December 31, 2014 and, as a result, certain assets and liabilities related to KCG Hotspot have been included in Assets of business held for sale and Liabilities of business held for sale on the Consolidated Statement of Financial Condition as of December 31, 2014. The Company believes that no impairment exists as the fair value of the net assets related to KCG Hotspot less the costs to sell the business will exceed the related carrying value at December 31, 2014. The Company does not believe that this sale represents a strategic shift that will have a major effect on its operations and financial results, and therefore KCG Hotspot will not meet the requirements to be treated as a discontinued operation under the recently adopted ASU relating to discontinued operations. As such, the results of KCG Hotspot's operations are included in the Global Execution Services segment and in Continuing Operations on the Consolidated Statements of Operations for all applicable years presented.

The KCG Hotspot assets and liabilities held for sale are summarized as follows (in thousands):

	December 31,
	2014
Assets:
Fixed assets, less accumulated depreciation	$	391
Intangible assets, net accumulated amortization	34,696
Other assets	5,397
Total assets of business held for sale	$	40,484
Liabilities:
Accrued compensation expense	$	2,298
Accrued expenses and other liabilities	58
Total liabilities of business held for sale	$	2,356

In January 2015, KCG entered into an agreement to sell KCG Hotspot to BATS. See Footnote 27 “Subsequent Event” for additional information.