| Securities Owned and Securities Sold, But Not Yet Purchased |
|
2.
|
Securities Owned and Securities Sold, But Not Yet
Purchased
|
The
components of securities owned and securities sold, but not yet
purchased, at fair value at June 30, 2011 and December 31, 2010
were as follows:
|
|
|
Securities
owned
|
|
|
Securities sold,
but not yet purchased
|
|
|
June 30, 2011
|
|
|
|
|
|
|
|
Common
stock and warrants
|
|
$ |
728 |
|
|
$ |
1,749 |
|
|
Restricted
common stock and warrants
|
|
|
1,789 |
|
|
|
9 |
|
|
Total
|
|
$ |
2,517 |
|
|
$ |
1,758 |
|
| |
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
Common
stock and warrants
|
|
$ |
577 |
|
|
$ |
10 |
|
|
Restricted
common stock and warrants
|
|
|
2,085 |
|
|
|
— |
|
|
Total
|
|
$ |
2,662 |
|
|
$ |
10 |
|
|
|
As
of June 30, 2011 and December 31, 2010, approximately $990 and
$666, respectively, of securities owned were deposited with the
Company’s subsidiaries’ clearing broker. Under the
clearing agreements with such clearing broker, the securities may
be sold or hypothecated by such clearing broker.
|
Securities
sold, but not yet purchased, at fair value represent obligations of
the Company’s subsidiaries to purchase the specified
financial instrument at the then current market
price. Accordingly, these transactions result in
off-balance-sheet risk as the Company's subsidiaries’
ultimate obligation to repurchase such securities may exceed the
amount recognized in the condensed consolidated statements of
financial condition.
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|
The
fair value hierarchy, established under authoritative accounting
guidance, ranks the quality and reliability of the information used
to determine fair values. Financial assets and liabilities carried
at fair value are classified and disclosed in one of the following
three categories:
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|
|
•
|
Level 1 —
Quoted prices in active markets for identical assets or
liabilities.
|
|
|
•
|
Level 2 —
Inputs other than quoted prices in active markets, which are
directly or indirectly observable for the asset or
liability.
|
|
|
•
|
Level 3 —
Unobservable inputs for the asset or liability where there is
little or no market data, which requires the reporting entity to
develop its own assumptions.
|
Securities
are carried at fair value and classified as follows:
As
of June 30, 2011:
|
Securities owned, at fair value
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Common
stock and warrants
|
|
$ |
728 |
|
|
$ |
1,789 |
|
|
$ |
— |
|
|
$ |
2,517 |
|
|
Total
|
|
$ |
728 |
|
|
$ |
1,789 |
|
|
$ |
— |
|
|
$ |
2,517 |
|
|
Securities sold, but not yet
purchased, at fair value
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Common
stock and warrants
|
|
$ |
1,749 |
|
|
$ |
9 |
|
|
$ |
— |
|
|
$ |
1,758 |
|
|
Total
|
|
$ |
1,749 |
|
|
$ |
9 |
|
|
$ |
— |
|
|
$ |
1,758 |
|
As
of December 31, 2010:
|
Securities owned, at fair
value
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Common
stock and warrants
|
|
$ |
577 |
|
|
$ |
2,085 |
|
|
$ |
— |
|
|
$ |
2,662 |
|
|
Total
|
|
$ |
577 |
|
|
$ |
2,085 |
|
|
$ |
— |
|
|
$ |
2,662 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold, but not yet
purchased, at fair value
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Common
stock and warrants
|
|
$ |
— |
|
|
$ |
10 |
|
|
$ |
— |
|
|
$ |
10 |
|
|
Total
|
|
$ |
— |
|
|
$ |
10 |
|
|
$ |
— |
|
|
$ |
10 |
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Warrants
are carried at a discount to fair value as determined by using the
Black-Scholes option pricing model due to
illiquidity. This model takes into account the
underlying securities' current market value, the market volatility
of the underlying securities, the term of the warrants, exercise
price, and risk-free rate of return. As of June 30, 2011
and December 31, 2010, the fair value of the warrants was $1,355
and $1,907, respectively, and is included in common stock and
warrants (level 2) above.
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