Consolidation (Tables)

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The following table presents the balances of the consolidated investment products that, after intercompany eliminations, are reflected in the condensed consolidated balance sheets as of September 30, 2018 and December 31, 2017:



	As of
	September 30, 2018									December 31, 2017
				VIEs									VIEs
	VOEs			CLOs			Other			VOEs			CLOs			Other

($ in thousands)
Cash and cash equivalents	$	911		$	49,868		$	415		$	820		$	82,823		$	18,489
Investments	30,137			1,737,518			23,724			34,623			1,555,879			7,250
Other assets	162			16,346			380			767			32,671			48
Notes payable	—			(1,608,735		)	—			—			(1,457,435		)	—
Securities purchased payable and other liabilities	(989		)	(82,709		)	(366		)	(1,319		)	(110,871		)	(764		)
Noncontrolling interests	(3,961		)	(15,507		)	—			(4,178		)	(16,667		)	—
The Company’s net interests in consolidated investment vehicles	$	26,260		$	96,781		$	24,153		$	30,713		$	86,400		$	25,023

Schedule of Consolidated Collateralized Loan Obligations

Although these beneficial interests are eliminated upon consolidation, the application of the measurement alternative prescribed by ASU 2014-13, results in the net assets of the consolidated CLOs shown above to be equivalent to the beneficial interests retained by the Company at September 30, 2018, as shown in the table below:



	As of
	September 30, 2018
($ in thousands)
Subordinated notes	$	95,714
Accrued investment management fees	1,067
Total Beneficial Interests	$	96,781

The following table represents income and expenses of the consolidated CLOs included in the Company’s condensed consolidated statements of operations for the period indicated:



	Nine Months Ended September 30,
($ in thousands)	2018
Income:
Realized and unrealized gain (loss), net	$	(3,587	)
Interest income	70,404
Total Income	66,817

Expenses:
Other operating expenses	2,065
Interest expense	46,786
Total Expense	48,851
Noncontrolling interest	(876		)
Net Income (loss) attributable to CIPs	$	17,090

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:



	Nine Months Ended September 30,
($ in thousands)	2018
Distributions received and unrealized gains on the subordinated notes held by the Company	$	11,652
Investment management fees	5,438
Total Economic Interests	$	17,090

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 16, as of September 30, 2018 and December 31, 2017 by fair value hierarchy level were as follows:

September 30, 2018



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	138,301	$	—	$	—	$	138,301
Marketable securities:
Sponsored funds	39,951		—		—		39,951
Equity securities	18,641		—		—		18,641
Sponsored closed-end funds	3,738		—		—		3,738
Other investments:
Investments in collateralized loan obligations	—		—		5,043		5,043
Nonqualified retirement plan assets	7,409		—		—		7,409
Total assets measured at fair value	$	208,040	$	—	$	5,043	$	213,083

December 31, 2017



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	72,993	$	—	$	—	$	72,993
Marketable securities:
Sponsored funds	46,849		—		—		46,849
Equity securities	15,810		—		—		15,810
Sponsored closed-end funds	3,765		—		—		3,765
Other investments
Investment in collateralized loan obligations	—		18,900		4,439		23,339
Nonqualified retirement plan assets	6,706		—		—		6,706
Total assets measured at fair value	$	146,123	$	18,900	$	4,439	$	169,462

The assets and liabilities of the consolidated investment products measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017 by fair value hierarchy level were as follows:

As of September 30, 2018



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	49,329	$	—	$	—	$	49,329
Debt investments	—		1,756,552		1,004		1,757,556
Equity investments	30,997		2,826		—		33,823
Total Assets Measured at Fair Value	$	80,326	$	1,759,378	$	1,004	$	1,840,708
Liabilities
Notes payable	$	—	$	1,608,735	$	—	$	1,608,735
Short sales	661		—		—		661
Total Liabilities Measured at Fair Value	$	661	$	1,608,735	$	—	$	1,609,396

As of December 31, 2017



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	82,769	$	—	$	—	$	82,769
Debt investments	—		1,527,845		33,887		1,561,732
Equity investments	35,126		—		894		36,020
Total Assets Measured at Fair Value	$	117,895	$	1,527,845	$	34,781	$	1,680,521
Liabilities
Notes payable	$	—	$	1,457,435	$	—	$	1,457,435
Derivatives	2		—		—		2
Short sales	719		—		—		719
Total Liabilities Measured at Fair Value	$	721	$	1,457,435	$	—	$	1,458,156

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 September 30,						Nine Months Ended September 30,
($ in thousands)	2018			2017			2018			2017
Level 3 Investments ^(a)
Balance at beginning of period	$	5,744		$	2,909		$	4,439		$	—
Acquired in period	—			—			1,326			2,916
Change in unrealized gain (loss), net	(701		)	(168		)	(722		)	(175		)
Balance at end of period	$	5,043		$	2,741		$	5,043		$	2,741


^(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:



	Nine Months Ended September 30,
($ in thousands)	2018			2017
Level 3 Debt and Equity securities ^(a)
Balance at beginning of period	$	34,781		$	25
Realized gains (losses), net	1,993			(90		)
Change in unrealized gains (losses), net	583			87
Acquired in business combination	—			9,151
Purchases	7,122			1,212
Amortization	19			12
Sales	(13,892		)	(765		)
Transfers to Level 2	(34,119		)	(4,944		)
Transfers from Level 2	4,517			44,634
Balance at end of period	$	1,004		$	49,322


(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 are due to 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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