NOTE 29. Subsequent Events

The Company evaluated subsequent events through the date of issuance of the accompanying consolidated financial statements. There were no events requiring disclosure other than the matters below.

Sale of ClearPoint

On February 14, 2013, the Company and certain of its affiliates, including ClearPoint, entered into an Asset Purchase Agreement ("Purchase Agreement") with Homeward. Pursuant to the Purchase Agreement, Homeward acquired substantially all of ClearPoint's assets and assumed certain liabilities of ClearPoint. In connection with this transaction, which closed on February 22, 2013, ClearPoint paid Homeward approximately $0.5 million, which was based primarily on the value of the loan pipeline, fixed assets and other costs and expenses.

The Purchase Agreement provides for customary termination and indemnification provisions. In connection with the indemnification provisions, the Company will maintain an escrow account of $5.0 million for a three-year period following the closing date. The Parent has also provided for a guarantee of ClearPoint's indemnification obligations to Homeward, up to a maximum of $2.5 million. If during the three-year period following the closing date, the payment of sums from the escrow amount is not permitted, indemnity claims of Homeward will be paid under the guaranty, up to a maximum of $7.5 million. Any amounts paid under the guarantee will be released to the Company from the escrow amount on a dollar-for-dollar basis. Indemnity claims of Homeward, if any, will be paid first from the escrow amount, and then, to the extent necessary, drawn upon the guaranty.

ClearPoint will be reclassified as a discontinued operation in the first quarter of 2013. The Company estimates it will recognize a pre-tax loss of approximately $5.0 million in connection with this disposition.

Wind-Down of Curtailment Guaranties

On February 14, 2013 and in connection with entering the Purchase Agreement, the Company, ClearPoint and lenders under ClearPoint's Credit Facilities entered into Consent and Wind-down Agreements ("Consent and Wind-down Agreements"), pursuant to which the Curtailment Guaranties will be deemed terminated upon the repayment of the outstanding obligations under ClearPoint's Credit Facilities (provided that any funded loan that has not been purchased by the thirty-first day following the closing date of the Homeward Transaction shall be immediately due and payable under the respective credit facilities). As of March 15, 2013, ClearPoint had no remaining exposure to these credit facilities and the Curtailment Guaranties have terminated. Refer to Notes 15 and 19 herein for additional information.

ClearPoint Transition Services and Line of Credit Agreement

In connection with the Homeward Transaction, ClearPoint has agreed to provide transition services which includes loan origination services in Massachusetts and Virginia, currently through the earlier of March 31, 2013 or such date as Homeward receives the applicable licenses required to originate loans in these states. ClearPoint has arranged for a temporary credit facility in order to finance this origination activity. Capacity under this credit facility is $10 million and the facility can be terminated with five days written notice, or otherwise expires on September 30, 2013. Homeward will reimburse ClearPoint for the costs of providing the loan origination services and has provided a payment and performance guaranty of ClearPoint's obligations to the lender of this facility.

Departure of Professionals within the Credit Products Division

On February 20, 2013, the Company confirmed the departure of approximately 20 professionals previously employed in the Company's Credit Products division (current headcount within this division is approximately 70). As a result, revenues from this group have declined significantly.

Departure of Executive Officer

On January 29, 2013, the Company announced that, effective January 28, 2013, Eric J. Gleacher, the Chairman of the Board of Directors of the Company, resigned as a director and executive officer of the Company.

Prospective Departure of Certain Members of the Board of Directors

In a letter dated February 23, 2013, four current directors of the Company, Henry S. Bienen, Robert A. Gerard, Bruce Rohde and Robert S. Yingling, informed the Company that they do not intend to stand for re-election at the Company's Annual Meeting. The letter also stated that, should the situation change in the interim, they may be willing to reconsider their decision not to stand. The directors' decision not to stand for re-election was not the result of any disagreement with the Company relating to the Company's operations, policies or practices.

Director Nominations by MatlinPatterson

Also on February 23, 2013, the Company received a submission by MatlinPatterson FA Acquisition LLC, a significant holder of the Company's common stock, of a slate of eight nominees for election to the Company's Board of Directors at the Company's Annual Meeting. In their proposal, MatlinPatterson nominated current directors Marshall Cohen, Mark R. Patterson and Christopher Pechock, as well as nominees Carl McKinzie, Jaime Lifton, Edwin Banks, Keith B. Hall and Nasir Hasan.

SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands of dollars, except for per share data)

	Three Months Ended

	Mar 2012			Jun 2012			Sep 2012			Dec 2012
Total revenues	$	69,362		$	48,138		$	45,479		$	53,443
Interest expense		4,619			3,492			2,149			2,567

Net revenues		64,743			44,646			43,330			50,876
Total expenses (excluding interest)		70,025			76,398			48,354			62,171

Loss from continuing operations before income taxes and discontinued operations		(5,282	)		(31,752	)		(5,024	)		(11,295	)
Income tax (benefit)/expense		(566	)		27,198			(2,223	)		193

Loss from continuing operations		(4,716	)		(58,950	)		(2,801	)		(11,488	)
Income/(loss) from discontinued operations, net of taxes		32			(23	)		33			223

Net loss	$	(4,684	)	$	(58,973	)	$	(2,768	)	$	(11,265	)

Loss per share:
Basic loss per share
Continuing operations	$	(0.04	)	$	(0.49	)	$	(0.02	)	$	(0.10	)
Discontinued operations		—			—			—			—

Net loss per share	$	(0.04	)	$	(0.49	)	$	(0.02	)	$	(0.10	)

Dilutive loss per share
Continuing operations	$	(0.04	)	$	(0.49	)	$	(0.02	)	$	(0.10	)
Discontinued operations		—			—			—			—

Net loss per share	$	(0.04	)	$	(0.49	)	$	(0.02	)	$	(0.10	)

The sum of the quarter earnings per share amount does not always equal the full fiscal year's amount due to the effect of averaging the number of shares of common stock and common stock equivalents throughout the year.

Correction of an Error. During the preparation of the Annual Report on Form 10-K for the year ended December 31, 2012, the Company determined that in the second quarter of 2012, we incorrectly provided for a valuation allowance on $1.9 million of net operating losses ("NOLs") that were realizable by the Company. This had the effect of overstating income tax expense by approximately $1.9 million in the Form 10-Q for the three and six months ended June 30, 2012 and nine months ended September 30, 2012. We evaluated the effects of this error and concluded that it is not material to the Company's previously issued Quarterly Report on Form 10-Q for the three and six months ended June 30, 2012 and nine months ended September 30, 2012. Nevertheless, we revised in this report, our Consolidated Statement of Operations to correct for the effect of this error in our financial statements for the three and six months ended June 30, 2012 and for the nine month ended September 30, 2012 and will include this revision in future filings. We determined that correcting the misstatement in the fourth quarter of 2012 would have been material to the results of the three months ended December 31, 2012 and thus revised the results of the three months ended June 30, 2012. The revision does not affect net operating, investing or financing cash flows reported within the Consolidated Statement of Cash Flows and has an insignificant effect on the Company's Consolidated Statement of Financial Condition for all periods.

The amounts on prior period Consolidated Statements of Operations and earnings per share ("EPS") that have been revised is summarized below:

(in thousands, except per share amounts)	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012			Nine Months Ended September 30, 2012

Net loss—as previously reported	$	(60,832	)	$	(65,516	)	$	(68,285	)
Adjustment		1,859			1,859			1,859

Net loss—as revised	$	(58,973	)	$	(63,657	)	$	(66,426	)

EPS—Basic and Diluted
EPS—as previously reported	$	(0.51	)	$	(0.55	)	$	(0.57	)

EPS—as revised	$	(0.49	)	$	(0.53	)	$	(0.56	)

	Three Months Ended

(in thousands, except per share amounts)	Mar 2011			Jun 2011			Sep 2011			Dec 2011
Total revenues	$	91,958		$	59,435		$	56,836		$	64,856
Interest expense		2,569			3,056			2,672			3,616

Net revenues		89,389			56,379			54,164			61,240
Total expenses (excluding interest)		74,661			53,963			132,949			61,476

Income/(loss) from continuing operations before income taxes and discontinued operations		14,728			2,416			(78,785	)		(236	)
Income tax expense/(benefit)		6,129			1,164			(3,085	)		(2,001	)

Income/(loss) from continuing operations		8,599			1,252			(75,700	)		1,765
(Loss)/income from discontinued operations, net of taxes		(1,394	)		(11,672	)		(5,357	)		383

Net income/(loss)	$	7,205		$	(10,420	)	$	(81,057	)	$	2,148

Earnings per share:
Basic income/(loss) per share
Continuing operations	$	0.07		$	0.01		$	(0.61	)	$	0.01
Discontinued operations		(0.01	)		(0.09	)		(0.04	)		0.00

Net income/(loss) per share	$	0.06		$	(0.08	)	$	(0.65	)	$	0.02

Dilutive income/(loss) per share
Continuing operations	$	0.07		$	0.01		$	(0.61	)	$	0.01
Discontinued operations		(0.01	)		(0.09	)		(0.04	)		0.00

Net income/(loss) per share	$	0.06		$	(0.08	)	$	(0.65	)	$	0.02

Quarterly financial data results for the three months ended March 31, 2011 and June 30, 2011 have been revised in order to report the results of the Equities division as discontinued operations. Refer to Note 26 herein for additional information.

Correction of an Error. During the preparation of the Annual Report on Form 10-K for the year ended December 31, 2011, the Company determined that in the second quarter of 2011, we incorrectly treated the entire goodwill and impairment allocated to the Equities division as non-deductible for tax, whereas approximately $0.6 million should have been treated as tax deductible. This had the effect of overstating income tax expense by approximately $0.6 million in the Form 10-Q for the three and six months ended June 30, 2011 and nine months ended September 30, 2011. The tax expense related to the Equities division was subsequently allocated to discontinued operations in the third quarter of 2011, when the Company exited the business effective August 22, 2011. We evaluated the effects of this error and concluded that it is not material to the Company's previously issued Quarterly Report on Form 10-Q for the three and six months ended June 30, 2011 and nine months ended September 30, 2011. Nevertheless, we revised in this report and future filings, our Consolidated Statement of Operations to correct for the effect of this error in our financial statements for the three and six months ended June 30, 2011 and for the nine month ended September 30, 2011. We determined that correcting the misstatement in the fourth quarter of 2011 would have been material to the results of the three months ended December 31, 2011 and thus revised the results of the three months ended June 30, 2011. The revision does not affect net operating, investing or financing cash flows reported within the Consolidated Statement of Cash Flows and has an insignificant effect on the Company's Consolidated Statement of Financial Condition for all periods.

The amounts on prior period Consolidated Statements of Operations, earnings per share ("EPS") and discontinued operations that have been revised is summarized below:

(in thousands, except per share amounts)	Three Months Ended June 30, 2011			Six Months Ended June 30, 2011			Nine Months Ended September 30, 2011

Net loss—as previously reported	$	(11,006	)	$	(3,802	)	$	(84,859	)
Adjustment		586			586			586

Net loss—as revised	$	(10,420	)	$	(3,216	)	$	(84,273	)

EPS—Basic and Diluted
EPS—as previously reported	$	(0.09	)	$	(0.03	)	$	(0.69	)

EPS—as revised	$	(0.08	)	$	(0.03	)	$	(0.68	)

Discontinued operations—as previously reported		n/a			n/a		$	(19,011	)

Discontinued operations—as revised		n/a			n/a		$	(18,425	)