Consolidation (Tables)

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The following table presents the balances of the consolidated investment products that, after intercompany eliminations, were reflected in the Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016:



	As of
	June 30, 2017									December 31, 2016
				VIEs									VIEs
	VOEs			CLOs			Other			VOEs			CLOs			Other

($ in thousands)
Total cash and cash equivalents	$	909		$	48,135		$	3,278		$	1,859		$	14,449		$	2,775
Investments	31,559			1,263,265			59,565			99,247			346,967			42,828
All other assets	1,092			24,186			2,508			2,211			5,888			1,059
Notes payable	—			(1,096,434		)	—			—			(328,761		)	—
Securities purchased payable and other liabilities	(1,667		)	(137,177		)	(4,214		)	(2,310		)	(12,534		)	(1,799		)
Noncontrolling interests	(3,632		)	(15,731		)	(53,704		)	(12,505		)	—			(24,761		)
The Company’s net interests in consolidated investment vehicles	$	28,261		$	86,244		$	7,433		$	88,502		$	26,009		$	20,102

Schedule of Consolidated Collateralized Loan Obligations

Although these beneficial interests are eliminated upon consolidation, the application of the measurement alternative, as adopted on January 1, 2016, prescribed by ASU 2014-13, results in the net amount of the consolidated CLOs shown above to be equivalent to the beneficial interests retained by the Company at June 30, 2017, as shown in the table below:



	As of
Beneficial Interests	June 30, 2017
($ in thousands)
Subordinated notes	$	85,067
Accrued investment management fees	1,177
Total Beneficial Interests	$	86,244

The following table represents income and expenses of the consolidated CLOs included in the Company’s Condensed Consolidated Statements of Operations for the periods indicated:



	Six Months Ended June 30,
($ in thousands)	2017
Income:
Realized and unrealized loss, net	$	(1,189	)
Interest Income	8,445
Total Income	$	7,256

Expenses:
Other operating expenses	89
Interest expense	5,852
Total Expense	$	5,941
Net Income attributable to CIPs that are CLOs	$	1,315

As summarized in the table below, the application of the measurement alternative as prescribed by ASU 2014-13 results in the consolidated net income summarized above to be equivalent to the Company’s own economic interests in the consolidated CLOs, which are eliminated upon consolidation:



Economic Interests	Six Months Ended June 30,
($ in thousands)	2017
Distributions received and unrealized gains on the subordinated notes held by the Company	$	427
Investment management fees	888
Total Economic Interests	$	1,315

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

The Company’s assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of consolidated investment products, which are separately discussed in Note 15, as of June 30, 2017 and December 31, 2016 by fair value hierarchy level were as follows:

June 30, 2017



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	73,434	$	—	$	—	$	73,434
Marketable securities trading:
Sponsored funds	55,660		—		—		55,660
Equity securities	12,740		—		—		12,740
Marketable securities available-for-sale:
Sponsored closed-end funds	3,762		—		—		3,762
Other investments:
Investment in collateralized loan obligation	—		—		2,909		2,909
Nonqualified retirement plan assets	6,396		—		—		6,396
Total assets measured at fair value	$	151,992	$	—	$	2,909	$	154,901

December 31, 2016



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	48,620	$	—	$	—	$	48,620
Marketable securities trading:
Sponsored funds	60,019		—		—		60,019
Equity securities	11,473		—		—		11,473
Marketable securities available-for-sale:
Sponsored closed-end funds	3,415		—		—		3,415
Other investments
Nonqualified retirement plan assets	5,808		—		—		5,808
Total assets measured at fair value	$	129,335	$	—	$	—	$	129,335

The assets and liabilities of the consolidated investment products measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016 by fair value hierarchy level were as follows:

As of June 30, 2017



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	48,111	$	—	$	—	$	48,111
Debt investments	—		1,312,126		9,150		1,321,276
Equity investments	33,113		—		—		33,113
Total Assets Measured at Fair Value	$	81,224	$	1,312,126	$	9,150	$	1,402,500
Liabilities
Notes payable	$	—	$	1,096,434	$	—	$	1,096,434
Derivatives	1		—		—		1
Short sales	751		—		—		751
Total Liabilities Measured at Fair Value	$	752	$	1,096,434	$	—	$	1,097,186

As of December 31, 2016



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	14,449	$	—	$	—	$	14,449
Debt investments	—		448,477		87		448,564
Equity investments	40,270		208		—		40,478
Derivatives	4		—		—		4
Total Assets Measured at Fair Value	$	54,723	$	448,685	$	87	$	503,495
Liabilities
Notes payable	$	—	$	328,761	$	—	$	328,761
Derivatives	3		235		62		300
Short sales	649		—		—		649
Total Liabilities Measured at Fair Value	$	652	$	328,996	$	62	$	329,710

Reconciliation of Assets of Consolidated Sponsored Investment Products For Level 3 Investments, Unobservable Inputs Used to Determine Fair Value

The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value.



	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2017		2016		2017		2016
Level 3 Investments (a)
Balance at beginning of period	$	—	$	—	$	—	$	—
Acquired in business combination	2,916		—		2,916		—
Change in unrealized (loss), net	7		—		7		—
Balance at end of period	$	2,923	$	—	$	2,923	$	—

(a) The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment.

The following table is a reconciliation of assets of consolidated investment products for Level 3 investments for which significant unobservable inputs were used to determine fair value.



	Six Months Ended June 30,
($ in thousands)	2017			2016
Level 3 Debt securities (a)
Balance at beginning of period	$	25		$	1,397
Realized losses, net	(4		)	(356		)
Acquired in business combination	9,150			—
Purchases	100			151
Paydowns	—			(5		)
Sales	(121		)	(1,449		)
Transferred to Level 2	—			—
Transfers from Level 2	—			1
Change in unrealized gain, net	—			350
Balance at end of period	$	9,150		$	89


(a)	The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment. All transfers are deemed to occur at the end of period. Transfers between Level 2 and Level 3 were due to a decrease in trading activities at period end.

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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