Quarterly report pursuant to sections 13 or 15(d)

Notes Payable

Notes Payable

9 Months Ended

Sep. 30, 2013

Notes payable consisted of the following:



	September 30, 2013		December 31, 2012
Note payable under revolving credit agreement with principal shareholder	$	—	$	25,500
Notes payable to clearing firm under forgivable loans	18,214		18,214
Note payable to a subsidiary of Premier Trust’s former shareholder	510		685
Notes payable to finance Securities America acquisition, net of $2,096 and $7,120 of unamortized discount in 2013 and 2012, respectively	57,254		153,580
Total	$	75,978	$	197,979

The Company estimates that the fair value of notes payable was $78,927 at September 30, 2013 and $187,385 at December 31, 2012 based on then current interest rates at which similar amounts of debt could currently be borrowed (Level 2 inputs). As of September 30, 2013, the Company was in compliance with all debt covenants in its debt agreements.

The lenders under the notes to finance the Securities America acquisition in November 2011 included Frost Nevada Investments Trust ("Frost-Nevada"), an affiliate of the Company's Chairman of the Board and principal shareholder, Vector Group, Ltd. ("Vector Group"), a principal shareholder of the Company, and the Company's President and Chief Executive Officer and a director. The principal amounts loaned by Frost Nevada, Vector Group and the Company's President and Chief Executive Officer were $135,000, $15,000 and $200, respectively.

The Company used the net proceeds from the sale of Series A Preferred Stock in the three and nine months ended September 30, 2013 (see Note 8) to prepay $11,000 and $101,350 principal amount, respectively, of the $160,700 aggregate principal amount of its 11% notes due 2016, which were used to finance its 2011 acquisition of Securities America, and to repay the outstanding borrowings (approximately $39,300) under its revolving credit agreement with an affiliate of its principal shareholder and the chairman of its Board of Directors, Phillip Frost, M.D. As a result of such repayment, $40,000 became available for borrowing under such revolving credit agreement. In connection with the prepayment, the Company recorded a loss on extinguishment of debt for the three and nine months ended September 30, 2013 of $446 and $4,200, respectively, which included previously issued discounts and debt issue costs.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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