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Consolidation (Tables)

12 Months Ended

Dec. 31, 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 Consolidated Balance Sheets as of December 31, 2018 and 2017:



	As of December 31,
	2018									2017
				VIEs									VIEs
($ in thousands)	VOEs			CLOs			Other			VOEs			CLOs			Other
Cash and cash equivalents	$	1,029		$	51,363		$	559		$	820		$	82,823		$	18,489
Investments	12,923			1,709,266			27,379			34,623			1,555,879			7,250
Other assets	228			30,426			403			767			32,671			48
Notes payable	—			(1,620,260		)	—			—			(1,457,435		)	—
Securities purchased payable and other liabilities	(823		)	(69,737		)	(146		)	(1,319		)	(110,871		)	(764		)
Noncontrolling interests	(2,348		)	(13,958		)	(36		)	(4,178		)	(16,667		)	$	—
The Company’s net interests in consolidated investment products	$	11,009		$	87,100		$	28,159		$	30,713		$	86,400		$	25,023

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 discussed in Note 19, as of December 31, 2018 and December 31, 2017, by fair value hierarchy level were as follows:



December 31, 2018
($ in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	158,596	$	—	$	—	$	158,596
Investment securities - fair value
Sponsored funds	40,191		—		—		40,191
Equity securities	16,981		—		—		16,981
Trading debt securities	—		—		2,099		2,099
Investment securities - available for sale	—		—		2,023		2,023
Nonqualified retirement plan assets	6,716		—		—		6,716
Total assets measured at fair value	$	222,484	$	—	$	4,122	$	226,606



December 31, 2017
($ in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	72,993	$	—	$	—	$	72,993
Investment securities - equity
Sponsored funds	50,614		—		—		50,614
Equity securities	15,810		—		—		15,810
Trading debt securities	—		—		2,677		2,677
Investment securities - available for sale	—		18,900		1,762		20,662
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 by fair value hierarchy level were as follows:



As of December 31, 2018
($ in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	51,363	$	—	$	—	$	51,363
Debt investments	5,306		1,724,714		6,848		1,736,868
Equity investments	12,700		—		—		12,700
Total assets measured at fair value	$	69,369	$	1,724,714	$	6,848	$	1,800,931
Liabilities
Notes payable	$	—	$	1,620,260	$	—	$	1,620,260
Short sales	707		—		—		707
Total liabilities measured at fair value	$	707	$	1,620,260	$	—	$	1,620,967



As of December 31, 2017
($ in thousands)	Level 1		Level 2		Level 3		Total
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:



	Twelve Months Ended December 31,
($ in thousands)	2018			2017
Level 3 Investments (a)
Balance at beginning of period	$	4,439		$	—
Acquired in business combination	—			2,916
Purchases	1,326			2,370
Change in unrealized gain (loss), net	(1,643		)	(847		)
Balance at end of period	$	4,122		$	4,439


^(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 and liabilities of consolidated investment products for Level 3 investments for which significant unobservable inputs were used to determine fair value.



	Year Ended December 31,
($ in thousands)	2018			2017
Level 3 Securities (a)
Balance at Balance at beginning of period	$	34,781		$	25
Purchases	7,122			3,174
Sales	(13,895		)	(3,357		)
Paydowns	—			—
Amortization	19			9
Change in unrealized gains (losses), net	1,993			434
Realized gains (loss), net	562			(49		)
Acquired in business combination	—			9,151
Transfers to Level 2	(33,873		)	(35,258		)
Transfers from Level 2	10,139			60,652
Balance at end of period	$	6,848		$	34,781


(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.

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



	Year Ended December 31,
($ in thousands)	2018			2017
Level 3 Securities (a)
Balance at Balance at beginning of period	$	34,781		$	25
Purchases	7,122			3,174
Sales	(13,895		)	(3,357		)
Paydowns	—			—
Amortization	19			9
Change in unrealized gains (losses), net	1,993			434
Realized gains (loss), net	562			(49		)
Acquired in business combination	—			9,151
Transfers to Level 2	(33,873		)	(35,258		)
Transfers from Level 2	10,139			60,652
Balance at end of period	$	6,848		$	34,781


(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.

Schedule of VIE Consolidated Investment Product

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 December 31, 2018, as shown in the table below:



($ in thousands)
Subordinated notes	$	86,011
Accrued investment management fees	1,089
Total Beneficial Interests	$	87,100

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



	Year Ended
($ in thousands)	December 31, 2018
Income:
Realized and unrealized gain (loss), net	$	(16,202	)
Interest income	96,666
Total Income	$	80,464

Expenses:
Other operating expenses	$	2,547
Interest expense	64,788
Total Expense	67,335
Noncontrolling interest	(37		)
Net Income (loss) attributable to CIPs	$	13,092

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:



	Year Ended
($ in thousands)	December 31, 2018
Distributions received and unrealized gains (losses) on the subordinated notes held by the Company	$	5,763
Investment management fees	7,329
Total Economic Interests	$	13,092

- 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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