Cohen & Co Inc. 10-K

cohn20221231_10k.htm     Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K   (Mark One) ☒     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   For the fiscal year ended December 31, 2022   OR   ☐      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   For the transition period from                      to                          Commission file number: 001-32026     COHEN & COMPANY INC. (Exact name of registrant as specified in its charter) Maryland 16-1685692 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)    Cira Centre   2929 Arch Street, Suite 1703 Philadelphia ,   Pennsylvania 19104 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: ( 215 )  701-9555  Securities registered pursuant to Section 12(b) of the Act:   Title of class Trading Symbol(s) Name of each exchange on which registered    Common Stock, par value $0.01 per share COHN NYSE AMERICAN STOCK EXCHANGE    Securities registered pursuant to Section 12(g) of the Act: None   Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐     No   ☒    Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐     No   ☒    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   ☒    No  ☐    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.    Yes    ☒    No   ☐    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.    Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller Reporting Company ☒    Emerging Growth Company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐   Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.    ☐   If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☒                                Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes   ☐     No  ☒    As of June 30, 2022, the aggregate market value of the Common Stock held by non-affiliates of the Registrant was approximately $ 13.9 million.  As of March 6, 2023, there were 1,819,866  shares of Common Stock of Cohen & Company Inc. outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement for the Registrant’s 2022 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.      Table of Contents     COHEN & COMPANY INC.      TABLE OF CONTENTS       Page  PART I   Item 1. Business. 5 Item 1A. Risk Factors. 16 Item 1B. Unresolved Staff Comments. 37 Item 2. Properties. 37 Item 3. Legal Proceedings. 37 Item 4. Mine Safety Disclosures. 37        PART II        Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 38 Item 6. Selected Financial Data. 38 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. 39 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 77 Item 8. Financial Statements and Supplementary Data. 79 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 79 Item 9A. Controls and Procedures. 79 Item 9B. Other Information. 80 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 80       PART III        Item 10. Directors, Executive Officers and Corporate Governance. 81 Item 11. Executive Compensation. 81 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 81 Item 13. Certain Relationships and Related Transactions, and Director Independence. 81 Item 14. Principal Accounting Fees and Services. 81       PART IV        Item 15. Exhibit and Financial Statement Schedules. 82 Item 16. Form 10-K Summary. 87     1 Table of Contents     Forward Looking Statements   This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,”  “predict,” “project,” “forecast,” “potential,” “continue,” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.   These forward-looking statements are found at various places throughout this Annual Report on Form 10-K and include information concerning possible or assumed future results of our operations, including statements about the following subjects:     • integration of operations;   • business strategies;   • growth opportunities;   •  competitive position;   • market outlook;   •  expected financial position;   • expected results of operations;   • future cash flows;   • financing plans;   • plans and objectives of management;   •  tax treatment of the business combinations;   • our investments in both SPACs and SPAC sponsor entities, including through our SPAC Fund and SPAC Series Funds;   • our role as asset manager and sponsor in our SPAC franchise;   • fair value of assets; and   • any other statements regarding future growth, future cash needs, future operations, business plans, future financial results, and any other statements that are not historical facts.   These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties, and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You should consider the areas of risk and uncertainty described above and discussed under “Item 1A — Risk Factors.” Actual results may differ materially as a result of various factors, some of which are outside our control, including the following:     •  a decline in general economic conditions or the global financial markets;   •  continuation of the COVID-19 pandemic or future outbreaks of COVID-19, the timing and effectiveness of vaccine distribution, and uncertainty surrounding the length and severity of future impacts on the global economy and on our business, liquidity, results of operations and financial condition;   •  economic uncertainty and capital markets disruption which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine;   •  risks and liabilities due to our investments in the equity interests of SPACs and SPAC sponsor entities including the risk of increased regulation applicable to SPACs, risks regarding litigation in connection with the SPACs in which we invest and those which we sponsor, uncertainty of whether the SPACs in which we invest and those we sponsor will consummate a business combination, adverse impacts of COVID-19 on our SPAC franchise, significant competition for business opportunities in the SPAC industry, write-downs or write-offs with respect to the securities which we hold subsequent to the consummation of an initial business combination by the SPACs in which we invest and those which we sponsor, and the target of a SPAC being an early-stage and financially unstable company;    • losses caused by financial or other problems experienced by third parties;   • losses due to unidentified or unanticipated risks;   • losses (whether realized or unrealized) on our principal investments;   •  a lack of liquidity, i.e., ready access to funds for use in our businesses, or the availability of financing at prohibitive rates;   • the ability to attract and retain personnel;   • the ability to meet regulatory capital requirements administered by federal agencies;   •  the ability to pay dividends ;   •  an inability to generate incremental income from acquired, newly established, or expanded businesses;   •  unanticipated market closures due to inclement weather or other disasters;   • the volume of trading in securities including collateralized securities transactions;   •  the liquidity in capital markets;   •  the creditworthiness of our correspondents, trading counterparties, and banking and margin customers;   • changing interest rates and their impacts on U.S. residential mortgage volumes; 2 Table of Contents     • competitive conditions in each of our business segments;   • the availability of borrowings under credit lines, credit agreements, warehouse agreements, and our credit facilities;   • the potential misconduct or errors by our employees or by entities with whom we conduct business; and   • the potential for litigation and other regulatory liability.    Our Internet website is www.cohenandcompany.com and we make available on our website our filings with the Securities and Exchange Commission (“SEC”), including annual reports, quarterly reports, current reports and any amendments to those filings. The reference to our website address does not constitute incorporation by reference of the information contained therein into this Form 10-K. We also use our website to disseminate other material information to our investors (on the Home Page and in the “Investor Relations” section of our website). We also post on our website our press releases and information about our public conference calls (including the scheduled dates, times and the methods by which investors and others can listen to those calls), and we make available for replay webcasts of those calls and other presentations for a limited time.   You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. All subsequent written and oral forward-looking statements concerning other matters addressed in this Annual Report on Form 10-K and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Annual Report on Form 10-K. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.   3 Table of Contents   Certain Terms Used in this Annual Report on Form 10-K     In this Annual Report on Form 10-K, unless otherwise noted or as the context otherwise requires, the “Company,” “we,” “us,” and “our” refer to Cohen & Company Inc. (formerly Institutional Financial Markets, Inc.), a Maryland corporation and its subsidiaries on a consolidated basis; and “Cohen & Company, LLC” (formerly IFMI, LLC) or the “Operating LLC” refer to the main operating subsidiary of the Company.    “ Cohen Brothers ” refers to the pre-merger Cohen Brothers, LLC and its subsidiaries; “ AFN ” refers to the pre-merger Alesco Financial Inc. and its subsidiaries; “ AFN   Merger ” refers to the December 16, 2009 closing of the merger of AFN, Alesco Financial Holdings, LLC, a wholly owned subsidiary of AFN, with and into Cohen Brothers, which resulted in Cohen Brothers becoming a majority owned subsidiary of the Company.   “ JVB Holdings ” refers to JVB Financial Holdings, L.P., a wholly owned subsidiary of the Operating LLC; “ JVB ” refers to J.V.B. Financial Group, LLC, a wholly owned broker dealer subsidiary of JVB Holdings; “ CCFL ” refers to Cohen & Company Financial Limited (formerly known as EuroDekania Management LTD), a wholly owned subsidiary of the Operating LLC formerly regulated by the Financial Conduct Authority (formerly known as the Financial Services Authority) in the United Kingdom (the “FCA”); “ CCFEL ” refers to Cohen & Company Financial (Europe) Limited, a wholly owned subsidiary of the Operating LLC formerly regulated by the Central Bank of Ireland ( the “CBI”); Cohen & Company Financial Europe S.A. (“CCFESA”), a majority owned operating subsidiary of the Operating LLC regulated by the Autorite de Controle Prudentiel et de Resolution ("ACPR") ;and, “EuroDekania ” refers to EuroDekania (Cayman) Ltd., a Cayman Islands exempted company that was externally managed by CCFL.    “ Securities Act ” refers to the Securities Act of 1933, as amended; and “ Exchange Act ” refers to the Securities Exchange Act of 1934, as amended.   4 Table of Contents    PART I ITEM  1.  BUSINESS. INFORMATION REGARDING COHEN & COMPANY INC.    Overview   We are a Maryland corporation incorporated on October 6, 2003.  We are a financial services company specializing in an expanding range of capital markets and asset management services. Our business segments are Capital Markets, Asset Management, and Principal Investing. Our Capital Markets business segment consists of fixed income sales, trading, and gestation repo financing as well as new issue placements in corporate and securitized products and advisory services, operating primarily through our subsidiaries, JVB in the United States (the “U.S.”) and CCFESA in Europe. A division of JVB, Cohen & Company Capital Markets (“CCM”) is our full-service boutique investment bank which focuses on mergers and acquisitions (“M&A”), capital markets, and SPAC advisory. Our Asset Management business segment manages assets through investment vehicles, such as collateralized debt obligations (“CDOs”), managed accounts, joint ventures, and investment funds (collectively, “Investment Vehicles”). As of December 31, 2022, we had approximately $2.1 billion of assets under management (“AUM”) in primarily fixed income assets in a variety of asset classes including U.S. and European bank and insurance trust preferred securities (“TruPS”), debt issued by small and medium sized European, U.S., and Bermuda insurance and reinsurance companies, equity interests of SPACs and their sponsor entities. Our Principal Investing business segment is comprised primarily of investments we hold related to our SPAC franchise and investments that we have made for the purpose of earning an investment return rather than investments made to support our trading or other capital markets business activity.   Capital Markets   Our Capital Markets business segment consists primarily of fixed income sales, trading, and gestation repo financing as well as new issue placements in corporate and securitized products and advisory services operating primarily through our subsidiaries, JVB in the U.S. and CCFESA in Europe. JVB is our sole operating U.S. broker-dealer, under our JVB Holdings subsidiary, and is a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Industry Protection Corporation (“SIPC”). CCFESA is regulated by the Autorite de Controle Prudentiel et de Resolution (“ACPR”).   CCM was established in 2021 as a division of JVB to address the coverage gaps and structural conflicts at leading investment banks. Outside of expertise in M&A, capital markets, and SPAC advisory, CCM has investment banking professionals with experience in a number of emerging growth verticals including blockchain and digital assets, auto-tech, clean-tech, and cyber security, and continues to add new industry verticals to serve its clients. To date, CCM has hired 22 professionals with substantial industry experience to build a leading boutique capital markets and advisory team.   Our fixed income sales and trading group provides trade execution to corporate investors, institutional investors, mortgage originators, and other smaller broker-dealers. We specialize in a variety of products, including but not limited to: corporate bonds and loans, asset-backed securities (“ABS”), mortgage backed securities (“MBS”), commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”), CDOs, collateralized loan obligations (“CLOs”), collateralized bond obligations (“CBOs”), collateralized mortgage obligations (“CMOs”), municipal securities, to-be-announced securities (“TBAs”) and other forward agency MBS contracts, U.S. government bonds, U.S. government agency securities, brokered deposits and certificates of deposit (“CDs”) for small banks, and hybrid capital of financial institutions including TruPS, whole loans, and other structured financial instruments.   In 2012, we established a trading desk for “to-be-announced” securities, or TBAs, as part of our mortgage group. TBAs are forward mortgage-backed securities whose exact collateral remains unknown until just prior to the trade settlement, although the characteristics of the collateral are known. The forward collateral types are exclusively issued by U.S. government agencies, such as the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), and the Government National Mortgage Association (“Ginnie Mae”). One objective of our mortgage group is to provide capital markets execution services to small and middle market institutional mortgage originators that hedge their mortgage pipelines. In addition to providing credit for MBS trading lines and execution services, our mortgage group offers trading of specified pools and financing for qualified originators. Our mortgage group offers a range of solutions for institutional clients seeking to enhance their mortgage pipeline execution and overall portfolio profitability. In addition, our mortgage group acts as an intermediary between borrowers and lenders of short-term funds and provides funding for various inventory positions using repurchase agreements.   For several years, JVB has operated a gestation repo financing program. In general, JVB lends money to a counterparty after obtaining collateral securities from that counterparty via a reverse repurchase agreement. JVB also borrows money from another counterparty using the same collateral securities via a repurchase agreement. JVB seeks to earn net interest margin on these transactions. Gestation repo involves entering into repurchase and reverse repurchase agreements where the underlying collateral security represents a pool of newly issued mortgage loans. The borrowers (the reverse repurchase agreement counterparties) are generally mortgage originators. The lenders (the repurchase agreement counterparties) are a diverse group of counterparties comprised of banks, insurance companies, and other financial institutions. Gestation trades can be structured in two ways: (i) on balance sheet trades and (ii) agency trades. For on balance sheet trades, JVB borrows from one counterparty and lends to another on a principal basis and earns net interest margin. For agency repo trades, JVB gets paid a fee (which is paid by the borrower and is a function of the reverse repo notional amount), while the borrower and lender transact with each other directly.    From 2017 through 2021, we also operated a matched book general collateral funding (“GCF”) repo business as a full netting member of the Fixed Income Clearing Corporation’s (“FICC”) Government Services Division. Primarily due to reduced spreads in the repo market for GCF collateral, we exited the GCF business in 2021.    Our Capital Markets business segment generates revenue through the following activities: (1) trading activities, which include execution and brokerage services, gestation repo, riskless trading activities as well as gains and losses (unrealized and realized), and income and expense earned on securities classified as trading, and (2) new issue and advisory revenue comprised of (a) origination fees for newly created financial instruments originated by us, (b) revenue from advisory services, and (c) new issue revenue associated with arranging and placing the issuance of newly created financial instruments. Our Capital Markets business segment has offices in Boca Raton (Florida), Jupiter (Florida), Locust Valley (New York), Menlo Park (California), New York City (New York), Paris (France), and Philadelphia (Pennsylvania).   Trades in our Capital Markets business segment can be either “riskless” or risk based. “Riskless trades” are transacted with a customer order in hand, resulting in limited risk to us. “Risk-based trades” involve us owning the securities and thus placing our capital at risk. Such risk-based trading activity may include the use of leverage. In recent years, we began to utilize more leverage in our Capital Markets business segment. We believe that the prudent use of capital to facilitate client orders increases trading volume and profitability. Any gains or losses on trading securities that we have classified as investments-trading are recorded in our Capital Markets business segment, whereas any gains or losses on securities that we classified as other investments, at fair value are recorded in our Principal Investing business segment.    Our commercial real estate lending platform (“CRE Opportunities”), which operates outside of JVB, was created in 2021 with a primary focus on multi-family transitional loans and a team of nine professionals with extensive origination, underwriting, and securitization experience in the commercial real estate market.    5 Table of Contents   Asset Management   Our Asset Management business segment manages assets within a variety of Investment Vehicles. We earn management fees for our ongoing asset management services provided to these Investment Vehicles, which may include fees both senior and subordinate to the securities issued by the Investment Vehicles. Management fees are based on the value of the AUM or the investment performance of the vehicle, or both. As of December 31, 2022, we had $2.1 billion in AUM. AUM equals the sum of the net asset value (“NAV”) or gross assets of the Investment Vehicles we manage based on whichever measurement serves as the basis for the calculation of our management fees. Our calculation of AUM may differ from the calculations of other asset managers and, as a result, this measure may not be comparable to similar measures presented by other asset managers. This definition of AUM is not necessarily identical to any definition of AUM that may be used in our management agreements. We do not receive management fees for assets managed within our SPAC Series Funds. See discussion below.     As of December 31, 2022, we had three subsidiaries that act as managers to our Investment Vehicles. Two of these subsidiaries, Cohen & Company Financial Management, LLC (“CCFM”) and Dekania Capital Management, LLC (“DCM”), are registered investment advisors under the Investment Advisers Act of 1940 (the “Investment Advisers Act”). CCFESA is based in France and regulated by the ACPR.   Subsidiary Product Line         CCFM SPAC Fund, SPAC Series Funds, Alesco CDOs   DCM U.S. Insurance JV, Dekania Europe CDOs   CCFESA PriDe Funds and other managed accounts.       The table below shows changes in our AUM by product line for the last five years.   ASSETS UNDER MANAGEMENT (Dollars in Millions)       As of December 31,       2022     2021     2020     2019     2018   PriDe Funds and Other Managed Accounts   $ 813     $ 721     $ 587     $ 492     $ 408   U.S. Insurance JV     122       142       48       49       43   SPAC Fund     81       125       53       18       15   SPAC Series Funds     47       130       24       -       -   Non-CDO Investment Vehicles     1,063       1,118       712       559       466                                             Alesco CDOs     946       1,099       1,890       2,044       2,112   Dekania Europe CDOs.     107       141       167       153       171   Other     -       -       -       -       103   Total CDO AUM     1,053       1,240       2,057       2,197       2,386                                             Total AUM   $ 2,116     $ 2,358     $ 2,769     $ 2,756     $ 2,852     6 Table of Contents   A description of Investment Vehicles that were under management as of December 31, 2022 is set forth below.   PriDe Funds and Other Managed Accounts.  In July 2014, we became the investment advisor of a newly created French investment fund with total commitments of €238 million, and an initial investment period of two years (which was later extended by two years) and a maturity date of July 2026 (which was later extended until July 2028).  In January 2017, the second vintage funds in the series of these funds closed with total commitments of €203.5 million, and an initial investment period of three years (which was later extended by two years) and a maturity date of January 2032. In July 2020, the third vintage funds in the series of these funds closed with total commitments of €375.5 million, and an initial investment period of three years and a maturity date of July 2033. This series of funds is referred to in this Annual Report on Form 10-K as the “PriDe Funds.” The PriDe Funds earn investment returns by investing in a diversified portfolio of debt securities issued by small and medium sized European insurance companies that have limited access to capital markets. CCFESA earns investment advisor regular fees and investment advisor performance fees depending on the level of returns achieved. We have not made an investment, nor do we expect to make any investment, in the PriDe Funds. In addition, we provide investment management services to a number of separately managed accounts. Part of our European CDO team has transitioned to providing investment management or advisory services primarily to European family offices, high net worth individuals, and asset managers. The investment focus is on CDO and CLO notes and debt instruments where the investment managers have relevant expertise. For these services, we are paid gross annual base management or advisory fees of approximately 1.5% plus a gross annual performance fee of 20% of cash-on-cash returns in excess of an 8% hurdle. There is also an early redemption fee if any of the clients were to terminate their arrangement within the first five years of the relationship. AUM of the PriDe Funds and other managed accounts was $813.0 million as of December 31, 2022.   U.S. Insurance JV . In May 2018, we committed to invest up to $3.0 million in a newly formed joint venture (the “U.S. Insurance JV”) with an outside investor that committed to invest approximately $63.0 million of equity in the U.S. Insurance JV.  The U.S. Insurance JV was formed for the purposes of investing in debt issued by small and medium sized U.S. and Bermuda insurance and reinsurance companies and is managed by DCM. We were required to invest 4.5% of the total equity of the U.S. Insurance JV with an absolute limit of $3.0 million. The U.S. Insurance JV has a $250 million credit agreement for leverage to grow its assets. As of December 31, 2022, the NAV of the U.S. Insurance JV was $139.6 million, we had fulfilled our investment commitment, and our investment in the U.S. Insurance JV was valued at $3.5 million. In addition, the insurance company debt that will be funded by the U.S. Insurance JV may be originated by us and there may be origination fees earned in connection with such transactions. We also earn management fees as manager of the U.S. Insurance JV. We are entitled to a quarterly base management fee, an annual incentive fee (if certain return hurdles are met), and an additional incentive fee upon the liquidation of the portfolio (if certain return hurdles are met).   SPAC Fund . In 2018, we invested in and became the investment manager and general partner of a newly formed Delaware limited partnership and the investment manager for a Cayman Islands exempted company that are feeder funds into a separate Cayman Islands exempted company that serves as the primary investment vehicle (the “SPAC Fund”).  The SPAC Fund was created for the purpose of investing primarily in the equity interests of SPACs and, in certain circumstances, SPAC sponsor entities including SPACs sponsored by us, our affiliates, and third parties. As of December 31, 2022, our investment in the SPAC Fund was valued at $0.5 million. CCFM is the manager of the SPAC Fund and is entitled to a quarterly base management fee based on a percentage of the NAV of the SPAC Fund and the general partner of the SPAC fund is entitled to an annual incentive allocation based on the actual returns earned by the general partner of the SPAC Fund. We consolidate the general partner of the SPAC Fund and own 1/3 of the equity of the general partner of the SPAC Fund. As of December 31, 2022, the NAV of the SPAC Fund was $80.9 million.   SPAC Series Funds.  As a complement to the SPAC Fund, we established and became the managing member and investment manager to two newly formed umbrella limited liability companies (the “SPAC Series Funds”) that issue a separate series for each investment portfolio, which typically consists of investments in the sponsor entities of individual SPACs. The investing activity of the SPAC Series Funds includes purchasing interests in the placement units of certain SPAC sponsor entities that, in addition to placement units, entitle the SPAC Series Funds to certain amounts of founder shares, for a nominal purchase price. The number of founder shares allocated to the SPAC Series Funds are not finally determined until the related business combination (if any) is completed by the applicable SPAC. The amount of founder shares allocable to each SPAC Series Fund is subject to change for two main reasons. First, if a business combination is not completed by the applicable SPAC within the allowed timeframe, the SPAC Series Funds will forfeit all the founder shares allocated to them for that particular SPAC. Second, even if a business combination by the applicable SPAC is completed, the economic terms of the combination are subject to negotiation between the target company and that SPAC. In many cases, the total amount of founder shares to which the sponsor entities are entitled will be reduced as part of these negotiations. In these cases, any allocation to the SPAC Series Funds will also be reduced. Although we do not charge a management fee for most of the SPAC Series Funds, nor do we earn a performance fee from most of the SPAC Series Funds, we and certain of our employees receive a portion of the allocations of founder shares, for a nominal purchase price, from the SPAC sponsor entities in which the SPAC Series Funds invest. As of December 31, 2022, the SPAC Series Funds had issued limited liability company interests and invested in 43 SPAC sponsor entities, and the aggregated total net asset carrying value of the remaining SPAC Series Funds was $47.5 million. As of December 31, 2022, our investment in the SPAC Series Funds was carried at $2.4 million. As of December 31, 2022, in our capacity as the asset manager of the SPAC Series Funds, we had received and still hold an allocation of 9.3 million founder shares, for a nominal purchase price, from 22 different SPAC sponsor entities. These allocations will be worthless if the underlying SPACs fail to complete their business combination and liquidate. Furthermore, even if a business combination is completed, the founder shares allocable to us may be adjusted significantly downward based on final negotiation with the business combination counterparty. See below description of our Principal Investments as of December 31, 2022.   CDOs . As of December 31, 2022, we managed five Alesco CDOs and two Dekania Europe CDOs, which were initially securitized during 2004 to 2007. A CDO is a form of secured borrowing secured by different types of fixed income assets such as corporate or mortgage loans or bonds. The borrowing is in the form of a securitization, which means that the lenders are actually investing in notes secured by the assets. In the event of a default, the lender will have recourse only to the assets securing the loan. These structures can hold different types of securities, but as of December 31, 2022, our only remaining CDOs under management were backed by U.S. and European bank and insurance TruPS and subordinated debt. In general, our Alesco and Dekania Europe deals have the following terms. We receive senior and subordinate management fees. We can be removed as manager without cause if 66.7% of the rated note holders voting separately by class and 66.7% of the equity holders vote to remove us, or if 75% of the most senior note holders vote to remove us when certain over-collateralization ratios fall below 100%. We can be removed as manager for cause if a majority of the controlling class of note holders or a majority of equity holders vote to remove us. “Cause” includes unremedied violations of the collateral management agreement or indenture, defaults attributable to certain actions of the manager, misrepresentations or fraud, criminal activity, bankruptcy, insolvency or dissolution. There was a non-call period for the equity holders, which ranged from three to six years. Once this non-call period expires, a majority of the equity holders can trigger an optional redemption as long as the liquidation of the collateral generates sufficient proceeds to pay all principal and accrued interest on the rated notes and all expenses. In ten years after the closing, an auction call will be triggered if the rated notes have not been redeemed in full. In an auction call redemption, an appointee will conduct an auction of the collateral, which will only be executed if the highest bid results in sufficient proceeds to pay all principal and accrued interest on the rated notes and all expenses. If the auction is not successfully completed, all residual interest that would normally be distributed to equity holders will be sequentially applied to reduce the principal of the rated notes. Any failure of an over-collateralization coverage test redirects interest to paying down notes until compliance is restored. The securities mature up to 30 years from closing. An event of default will occur if certain over-collateralization ratios drop below 100%. While an event of default exists, a majority of the senior note holders can declare the principal and accrued and unpaid interest immediately due and payable. All of the Alesco and Dekania Europe CDOs that we manage have reached their auction call redemption features, which means the portfolio of collateral for each CDO is subject to an auction on either a quarterly or bi-annual basis. If an auction is successful, the management contract related to such CDO will be terminated in connection with the liquidation of the CDO and we will lose the related management fees.    7 Table of Contents   CREO JV.  In September 2021, we committed to invest up to $15.0 million of equity into a newly formed joint venture (the “CREO JV”) with an outside investor that committed to invest approximately $435.0 million of equity into the CREO JV. We are required to invest 7.5% of the total equity of the CREO JV with a maximum investment of $15.0 million. As of December 31, 2022, the NAV of the CREO JV was $87.8 million, we had invested $6.5 million of our $15.0 million investment commitment, and our investment in the CREO JV was valued at $6.6 million. The CREO JV is managed by us. The CREO JV was formed for the purposes of investing in primarily multi-family commercial real estate mortgage-backed loans and below-investment-grade rated tranches in CRE CLOs collateralized by mostly transitional commercial real estate mortgage-backed loans. “CRE CLO” means any pooling of commercial real estate mortgage-backed loans into a collateralized loan obligation. The commercial real estate loans that are funded by the CREO JV may be originated by us and we may earn origination fees in connection with such transactions. In addition, we may earn structuring fees in connection with structuring and consummating a CRE CLO consisting of a pooling of commercial real estate loans. Any origination fees or structuring fees earned by us will be in our Capital Markets segment. We will also earn management fees as manager of any CRE CLOs based on the value of the assets consolidated into a CRE CLO (calculated in accordance with the terms of such CRE CLO), payable from the proceeds generated by and in accordance with the distribution waterfall of such CRE CLO. The CREO JV has a repurchase facility to finance its assets until they can be securitized into CRE CLOs. Through December 31, 2022, we had not yet structured or consummated a CRE CLO and, accordingly, had not earned any management fees as manager have been earned yet.     In addition, we have historically received revenue shares from certain asset management businesses that we initially sponsored or owned, and subsequently sold or spun-off. A description of our only remaining asset management revenue share as of December 31, 2022 is set forth below.   Infrastructure Finance Business . On March 12, 2012, we entered into an agreement with unrelated third parties whereby we agreed to assist in the establishment of an international infrastructure finance business (“IIFC”). As consideration for our assistance in establishing IIFC, we received 8.0% of certain revenues of the manager of IIFC through October 31, 2021, and effective November 1, 2021, we receive 7.35% of certain revenues of the manager of IIFC. The IIFC revenue share arrangement expires when we have earned a cumulative $20 million in revenue share payments or with the dissolution of IIFC’s management company.  Also, in any particular year, the revenue share earned by us cannot exceed $2.0 million.  In 2022, we earned $0.7 million from the IIFC revenue share. From inception through 2022, we have earned $4.5 million.    8 Table of Contents   Principal Investing   Our Principal Investing business segment has historically been comprised of investments in the Investment Vehicles we manage, as well as investments in certain other structured products, and the related gains and losses that they generate. In 2014, we refocused our Principal Investing portfolio on products that we do not manage for the purpose of earning an investment return. More recently, capitalizing on our SPAC expertise, we have become active in multiple aspects of the SPAC market, including as a sponsor, asset manager, and investor, and as a result we hold various investments related to our SPAC franchise.     A SPAC is a shell corporation formed for the sole purpose of raising investment capital through an initial public offering (“IPO”), which is then used to acquire or merge with one or more unspecified businesses to be identified after the IPO. SPACs are formed and sponsored by experienced business executives who are confident that their reputation and experience will help them identify a profitable company to acquire or with which to merge. The sponsors of the applicable SPAC generally provide the starting capital for that SPAC and such sponsors stand to benefit from a sizeable stake in the post business combination acquired or merged company (assuming a business combination is consummated by the SPAC which they sponsor). The capital raised in the SPAC’s IPO is placed in an interest-bearing trust account and cannot be disbursed except to complete a business combination or to return the money to investors (if the SPAC does not complete a business combination within the required time period and must be liquidated.) A SPAC generally has approximately two years to complete a deal. In return for the capital invested by investors in the SPAC IPO, investors typically receive units in the SPAC, with each unit often comprising a share of common stock and a warrant (or fraction thereof) to purchase more stock at a later date. The purchase price per unit of the securities is typically $10.00. After a SPAC’s IPO, the pre-IPO units of the SPAC become separable into shares of common stock and warrants. The purpose of the warrant is to provide investors with additional compensation for investing in the SPAC. The warrants generally become exercisable either 30 days after the completion of a business combination or twelve months after the IPO. The fair market value of the target company must be at least 80% (but generally much more) of the SPAC’s trust assets. Upon successful completion of a business combination, the sponsors will profit from their stake in the post-business combination acquired or merged company, while the investors receive an equity interest according to their respective investment amounts The founders of the SPAC generally purchase founder shares at the initiation of the SPAC, paying nominal consideration for the number of shares that, based on recent transactions, results in or around a 20% to 25% ownership stake in the outstanding shares after the completion of the IPO.   Since 2018, we have sponsored three SPACs. Our first sponsored SPAC, Insurance Acquisition Corp. (“Insurance SPAC”), completed its $150.7 million IPO in March 2019, entered into a merger agreement in June 2020, and completed its business combination in October 2020 with Shift Technologies, Inc. (“Shift”), a car-buying e-commerce platform. When the merger closed on October 13, 2020, Insurance SPAC changed its name to “Shift Technologies, Inc.” and, on October 15, 2020, its trading symbol on the NASDAQ Capital Market (“NASDAQ”) changed from “INSU” to “SFT.”  Our second sponsored SPAC, INSU Acquisition Corp. II (“Insurance SPAC II”), completed its $250 million IPO in September 2020 and entered into a merger agreement in November 2020 with Metromile, Inc., a digital insurance platform and pay-by-mile auto insurer (“MetroMile”), which closed on February 9, 2021. When the merger closed, Insurance SPAC II changed its name to Metromile, Inc. and on February 10, 2021, its trading symbol on NASDAQ changed from “INAQ” to “MILE.” Subsequently, MetroMile was acquired by Lemonade, Inc. (NASDAQ:LMND) (“Lemonade”). Our third sponsored SPAC, INSU Acquisition Corp. III (“Insurance SPAC III”), completed its $218 million IPO in December 2020 and was liquidated in December 2022 without completing a business combination within the required timeframe. See note 4 to our consolidated financial statements included in this Annual Report on Form 10-K.   Subject to changes in the overall SPAC market, which are evolving rapidly, we may continue to grow our SPAC franchise and capitalize on opportunities in the space. In addition to our sponsored SPACs, we receive founder shares and purchase placement units and IPO units in various SPACs sponsored by third parties and affiliates, through our SPAC Fund, our SPAC Series Funds, and our Principal Investing portfolio. The amount of founder shares allocated to us are not finally determined until the related business combination is completed. The amount of founder shares allocable to us are subject to change for two main reasons. First, if a business combination is not completed by the applicable SPAC within the allowed time frame, we will forfeit all the founder shares allocated to us for that particular SPAC. Second, even if a business combination is completed by the applicable SPAC, the economic terms of the combination are subject to negotiation between the target company and that SPAC. In many cases, the total amount of founder shares to which the sponsor entities are entitled to will be reduced as part of these negotiations. In these cases, any allocation of founder shares to us will also be reduced.    We also invest in SPAC sponsor entities that we do not consolidate because we are not the managing member of such sponsor entity or otherwise do not have the power to direct the sponsor entity's most important activities. In these cases, we treat our investment in the SPAC sponsor entity as an equity method investment. Furthermore, because of the difficulty of determining the fair value of such an investment during the applicable SPAC's pre-business combination period, we generally have not elected fair value option. If a SPAC completes a business combination and we have an equity method investment in the associated sponsor entity, the sponsor entity will record income equal to the difference between the fair value of the restricted and unrestricted shares it receives and the carrying value of its equity method investment in the SPAC. We will recognize our share of this gain as income from equity method affiliates. The sponsor entity will continue to mark its investment in the SPAC to market after the business combination and we will recognize our share of the change in fair value as income or loss from equity method affiliates. Once the sponsor entity distributes to us our share of the SPAC shares it owns, we will reclassify our investment from investment in equity method affiliate to other investments, at fair value as we will then hold the SPAC shares directly (rather than through an equity method investee). We will then record principal transactions income and loss until the SPAC shares themselves are liquidated.   9 Table of Contents   As of December 31, 2022, our Principal Investing portfolio included other investments, at fair value, which were valued at $28.0 million, and investments in equity method affiliates, which were carried at $8.9 million. A description of our Principal Investments as of December 31, 2022 is set forth below.           Other Investments,     Investments in Equity   Investment Ticker   at fair value     Method Affiliates   Sponsored SPACs:                     Post-Business Combination                     Lemonade, Inc. LMND   $ 561     $ -     Shift Technologies, Inc. SFT     245       -             806       -   Non-Sponsored SPACs:                     Post-Business Combination                     Alpha Tau Medical Ltd. DRTS     -       379     Archer Aviation, Inc. ACHR     7       -     Blacksky Technologies, Inc. BKSY     28       -     FOXO Technologies, Inc. FOXO     109       -     Heliogen, Inc. HLGN     353       -     MoneyLion, Inc. ML     25       -     Parella Weinberg Partners PWP     232       121     Payoneer Global, Inc. PAYO     1,633       -     REE Automotive Ltd. REE     296       -     Rubicon Technologies, Inc. RBT     4,424       -     Rumble Inc. RUM     23       -     Wejo Group, Ltd. WEJO     175       -             7,305       500   Pre-Business Combination                     Various     1,061       -                         Other Investments:                       CREO JV     6,568       -     U.S. Insurance JV     3,459       -     Dutch Real Estate     -       5,530     SPAC Fund     527       -     SPAC Series Funds     -       2,336     Stoa USA Inc. / FlipOs     6,693       -     Other Investments     1,603       563             18,850       8,429                         Total Principal Investing Portfolio   $ 28,022     $ 8,929     Investment in Sponsored SPACs, Post-Business Combination.  As of December 31, 2022, our investment in the post-business combination public equities of Shift and Lemonade was valued at $0.8 million, which was included as a component of other investments, at fair value in our consolidated balance sheet. Our investment in Shift is the result of our sponsorship of Insurance SPAC and our investment in Lemonade is the result of our sponsorship of Insurance SPAC II. Certain of the shares are subject to restrictions on transfer until certain threshold trading prices are met. See notes 4 and 9 to our consolidated financial statements included in this Annual Report on Form 10-K.   Investment in Non-Sponsored SPACs, Post-Business Combination.  An investment in non-sponsored SPACs, post-business combination is classified as other investments, at fair value after we receive our allocation of the post-business combination publicly traded company shares. During the period between a closing of the business combination and receiving our allocation of shares in the post-business combination publicly traded company, an investment in non-sponsored SPACs, post-business combination is classified as an investment in equity method affiliates, representing an investment in the sponsor of the SPAC, entitling us to an eventual allocation of post-business combination public company shares. As of December 31, 2022, our investment in the public equity of non-sponsored SPACs, post-business combination was valued at $7.3 million as a component of other investments, at fair value and our investment in the sponsors entitling us to public equity of non-sponsored SPACs, post-business combination had a carrying value of $0.5 million as a component of investment in equity method affiliates. These investments are primarily a result of allocations of founder shares to us and certain of our employees, for a nominal purchase price, from the SPAC sponsor entities in which the SPAC Series Funds invest. Certain of the shares are subject to restrictions on transfer until threshold trading prices are met. See notes 4 and 9 to our consolidated financial statements included in this Annual Report on Form 10-K.    Investment in Non-Sponsored SPACs, Pre-Business Combination.  An investment in non-sponsored SPACs, pre-business combination is classified as other investments, at fair value if we purchase shares of publicly traded SPACs directly in the open market. An investment in non-sponsored SPACs, pre-business combination is classified as an investment in equity method affiliates if the investment is in the sponsor of a SPAC and entitles us to an eventual allocation of public company shares from a SPAC sponsor, if a SPAC successfully completes a business combination. As of December 31, 2022, our investment in the public equity of non-sponsored SPACs, pre-business combination was valued at $1.1 million as a component of other investments, at fair value, which represents investment in the public equity of five non-sponsored SPACs, pre-business combination. Two of these equity positions, valued at a nominal amount, are in SPACs sponsored by related parties – see notes 4 and 31 to our consolidated financial statements included in this Annual Report on Form 10-K. All five of these publicly traded SPACs have completed an IPO but have not yet consummated a business combination, and none have signed a merger agreement with a potential business combination target.   Investment in CREO JV.  In September 2021, we co-established and committed to invest up to $15.0 million in CREO JV. As of December 31, 2022, we had invested $6.5 million of our $15.0 million investment commitment, our investment in CREO JV was valued at $6.6 million, which was included as a component of other investments, at fair value in our consolidated balance sheet, and the NAV of the CREO JV was $87.8 million.   Investment in U.S. Insurance JV.  During 2018, we co-established and committed to invest up to $3.0 million in the U.S. Insurance JV. As of December 31, 2022, we had fulfilled our investment commitment, our investment in the U.S. Insurance JV was valued at $3.5 million, which was included as a component of other investments, at fair value in our consolidated balance sheet, and the NAV of the U.S. Insurance JV was $139.6 million. 10 Table of Contents   Investment in Dutch Real Estate.  In December 2019, we acquired a 45% interest in CK Capital Partners B.V. (“CK Capital”), a private company incorporated in the Netherlands, which provides asset and investment advisory services relating to real estate holdings, as well as a 10% interest in a related real estate holding company. In December 2021, we invested an additional $2.4 million in the related real estate holding company. As of December 31, 2022, our investment in these Dutch real estate entities was carried at $5.5 million, $0.4 million in CK Capital and $5.1 million in the real estate holding company, which was included as a component of investment in equity method affiliates in our consolidated balance sheet.   Investment in the SPAC Fund.  In August 2018, we established and invested $0.6 million in the SPAC Fund. As of December 31, 2022, our investment in the SPAC Fund was valued at $0.5 million, which was included as a component of other investments, at fair value in our consolidated balance sheet, and the NAV of the SPAC Fund was $80.9 million.   Investment in the SPAC Series Funds.  In 2020, as a complement to the SPAC Fund, we established and became the managing member and investment manager to the SPAC Series Funds that issue a separate series for each investment portfolio, which typically consists of investments in the sponsor entities of individual SPACs. As of December 31, 2022, our investment in the SPAC Series Funds was carried at $2.4 million, which was included as a component of investment in equity method affiliates in our consolidated balance sheet.   Investment in Stoa USA Inc. / FlipOs. During 2021 and 2022, we invested an aggregate of $0.7 million in Stoa USA Inc., a property technology company dedicated to closing the housing gap in America. Its software platform, FlipOs, enables real estate investors to purchase, renovate, and sell homes faster and more efficiently. As of December 31, 2022, our investment in Stoa USA Inc. / FlipOs was valued at $6.7 million, which was included as a component of other investments, at fair value in our consolidated balance sheet.   Investment in Other Securities.  We have invested in various original issuance securities that we have originated and certain other securities that we have not originated including private equity, public equity, and real estate loans. As of December 31, 2022, our investments in these other securities were valued at $1.6 million, which was included as a component of other investments, at fair value, and $0.6 million, which was included as a component of investment in equity method affiliates, in our consolidated balance sheet.   11 Table of Contents   Employees    As of December 31, 2022, we employed a total of 121 full time professionals and support staff. This number includes 65 employees of our JVB subsidiary, 9 employees of our CRE Opportunities group, 13 employees of our Principal Investing business segment, 15 employees of our U.S. Asset Management business segment, 6 employees of our European Asset Management business segment, and 13 employees of our support services group. We consider our employee relations to be good and believe that our compensation and employee benefits are competitive with those offered by other financial services firms that we compete with for personnel. None of our employees is subject to any collective bargaining agreements. Our core asset is our professionals, their intellectual capital, and their dedication to providing the highest quality services to our clients. Prior to joining us, members of our management team held positions with other leading financial services firms, accounting firms, law firms, investment firms, or other public companies. Lester R. Brafman, Daniel G. Cohen, and Joseph W. Pooler, Jr. are our executive operating officers, and biographical information relating to each of these officers is incorporated by reference in “Part III — Item 10 — Directors, Executive Officers and Corporate Governance” to the Company’s Proxy Statement, to be filed in connection with the Company’s 2022 Annual Meeting of Stockholders.   Competition   All areas of our business are intensely competitive, and we expect them to remain so. We believe that the principal factors affecting competition in our business include economic environment, quality and price of our products and services, client relationships, reputation, market focus, and the ability of our professionals.   Our competitors are other public and private asset managers, investment banks, brokerage firms, merchant banks, and financial advisory firms. We compete globally and on a regional, product and niche basis. Many of our competitors have substantially greater capital and resources than we do and offer a broader range of financial products and services. Certain of these competitors continue to raise additional amounts of capital to pursue business strategies that may be similar to ours. Some of these competitors may also have access to liquidity sources that are not available to us, which may pose challenges for us with respect to investment opportunities. In addition, some of these competitors may have higher risk tolerances or make different risk assessments than we do, allowing them to consider a wider variety of investments and establish broader business relationships.   In recent years, there has been substantial consolidation and convergence among companies in the financial services industry, including among many of our former competitors. In particular, a number of large commercial banks have established or acquired broker-dealers or have merged with other financial institutions. Many of these firms have the ability to offer a wider range of products than we offer, including loans, deposit taking, and insurance. Many of these firms also offer more comprehensive investment banking services, which may enhance their competitive position. They also have the ability to support investment banking and securities products with commercial banking and other financial services revenue in an effort to gain market share, which could result in pricing pressure in our business. This trend toward consolidation and convergence has significantly increased the capital base and geographic reach of our competitors.   Competition is intense for the recruitment and retention of experienced and qualified professionals. The success of our business and our ability to continue to compete effectively will depend significantly upon our continued ability to retain and motivate our existing professionals and attract new professionals. We compete, among other factors, on the level and nature of compensation and long-term incentives, workplace culture and opportunities for professional and personal development for our employees. Our ability to continue to compete effectively in our businesses will depend upon our ability to attract new employees and retain and motivate our existing employees, in each case, at appropriate compensation levels. See “Item 1A — Risk Factors."   Regulation     Certain of our subsidiaries, in the ordinary course of their business, are subject to extensive regulation by government and self-regulatory organizations both in the U.S. and abroad. As a matter of public policy, these regulatory bodies are responsible for safeguarding the integrity of the securities and other financial markets. The regulations promulgated by these regulatory bodies are designed primarily to protect the interests of the investing public generally and thus cannot be expected to protect or further the interests of our company or our stockholders and may have the effect of limiting or curtailing our activities, including activities that might be profitable.   As of December 31, 2022, our regulated subsidiaries include: JVB, a registered broker-dealer regulated by FINRA and subject to oversight by the U.S. Securities and Exchange Commission (the “SEC”); CCFESA, a French company regulated by the French Prudential Supervision and Resolution Authority ( Autorit é  de Contr ô le Prudentiel et de R é solution , the “ACPR”); and CCFM and DCM, each of which is a registered investment adviser regulated by the SEC under the Investment Advisers Act. Since our inception, our businesses have been operated within a legal and regulatory framework that is constantly developing and changing, requiring us to be able to monitor and comply with a broad range of legal and regulatory developments that affect our activities.   Certain of our businesses are also subject to compliance with laws and regulations of U.S. federal and state governments, foreign governments, their respective agencies and/or various self-regulatory organizations or exchanges relating to, among other things, the privacy of client information and any failure to comply with these regulations could expose us to liability and/or reputational damage. Additional legislation, changes in rules promulgated by financial authorities and self-regulatory organizations or changes in the interpretation or enforcement of existing laws and rules, either in the U.S. or abroad, may directly affect our mode of operation and profitability.   The U.S. and foreign government agencies and self-regulatory organizations, as well as state securities commissions in the U.S., are empowered to conduct periodic examinations and initiate administrative proceedings that can result in censure, fine, the issuance of cease-and-desist orders, and/or the suspension or expulsion of a broker-dealer or its directors, officers, or employees. See “Item 1A — Risk Factors” beginning on page 17.   12 Table of Contents   U.S. Regulation . As of December 31, 2022, JVB was registered as a broker-dealer with the SEC and was a member of and regulated by FINRA. JVB is subject to the regulations of FINRA and industry standards of practice that cover many aspects of its business, including initial licensing requirements, sales and trading practices, relationships with customers (including the handling of cash and margin accounts), capital structure, capital requirements, record-keeping and reporting procedures, experience and training requirements for certain employees, and supervision of the conduct of affiliated persons, including directors, officers, and employees. FINRA has the power to expel, fine, and otherwise discipline member firms and their employees for violations of these rules and regulations. JVB is also registered as a broker-dealer in certain states, requiring us to comply with the laws, rules, and regulations of each state in which JVB is registered. Each state may revoke the registration to conduct a securities business in that state and may fine or otherwise discipline broker-dealers and their employees for failure to comply with such state’s laws, rules, and regulations.   The SEC, FINRA, and various other regulatory agencies within and outside of the U.S. have stringent rules and regulations with respect to the maintenance of specific levels of net capital by regulated entities. Generally, a broker-dealer’s net capital is net worth plus qualified subordinated debt less deductions for certain types of assets. The net capital rule under the Exchange Act requires that at least a minimum part of a broker-dealer’s assets be maintained in a relatively liquid form. The SEC and FINRA impose rules that require notification when net capital falls below certain predefined criteria. These rules also dictate the ratio of debt to equity in the regulatory capital composition of a broker-dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances. If a firm fails to maintain the required net capital, it may be subject to suspension or revocation of registration by the applicable regulatory agency, and suspension or expulsion by these regulators could ultimately lead to a firm’s liquidation. Additionally, the net capital rule under the Exchange Act and certain FINRA rules impose requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC and FINRA for certain capital withdrawals.   If these net capital rules are changed or expanded, or if there is an unusually large charge against our net capital, our operations that require the intensive use of capital would be limited. A large operating loss or charge against our net capital could adversely affect our ability to expand or even maintain current levels of business, which could have a material adverse effect on our business and financial condition.   Our investment adviser subsidiaries, CCFM and DCM, are registered with the SEC as investment advisers and are subject to the rules and regulations of the Investment Advisers Act. The Investment Advisers Act imposes numerous obligations on registered investment advisers including record-keeping, operational and marketing requirements, disclosure obligations, limitations on principal transactions between an adviser and its affiliates and advisory clients, and prohibitions on fraudulent activities. The SEC is authorized to institute proceedings and impose sanctions for violations of the Investment Advisers Act, ranging from fines and censure to termination of an investment adviser’s registration. Investment advisers are also subject to certain state securities laws and regulations.   We are also subject to the U.S.A PATRIOT Act of 2001 (the “Patriot Act”), which imposes obligations regarding the prevention and detection of money-laundering activities, including the establishment of customer due diligence, customer verification, and other compliance policies and procedures. These regulations require certain disclosures by, and restrict the activities of, broker-dealers, among others. Failure to comply with these new requirements may result in monetary, regulatory and, in the case of the Patriot Act, criminal penalties.   In July 2010, the federal government passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Dodd-Frank Act significantly restructures and intensifies regulation in the financial services industry, with provisions that include, among other things, the creation of a new systemic risk oversight body ( i.e. , the Financial Stability Oversight Council), expansion of the authority of existing regulators, increased regulation of and restrictions on OTC derivatives markets and transactions, broadening of the reporting and regulation of executive compensation, expansion of the standards for market participants in dealing with clients and customers, and regulation of fiduciary duties owed by municipal advisors or conduit borrowers of municipal securities. In addition, Section 619 of the Dodd-Frank Act (known as the “Volker Rule”) and section 716 of the Dodd-Frank Act (known as the “swaps push-out rule”) limit proprietary trading of certain securities and swaps by certain banking entities. Although we are not a banking entity and are not otherwise subject to these rules, some of our clients and many of our counterparties are banks or entities affiliated with banks and will be subject to these restrictions.  These sections of the Dodd-Frank Act and the regulations that are adopted to implement them could negatively affect the swaps and securities markets by reducing their depth and liquidity and thereby affect pricing in these markets.  Further, the Dodd-Frank Act as a whole and the intensified regulatory environment will likely alter certain business practices and change the competitive landscape of the financial services industry, which may have an adverse effect on our business, financial condition, and results of operations.  To date, we have adapted successfully to the applicable legislative and regulatory requirements of Dodd-Frank.   In June 2018, in response to the uncertainty surrounding Brexit, we created a new subsidiary, Cohen & Company Financial (Europe) Limited (“CCFEL”) in Ireland, for the purpose of seeking to become regulated to perform asset management and capital markets activities in Ireland and the European Union. In April 2019, CCFEL received authorization from the CBI under the European Union (Markets in Financial Instruments) Regulations 2017 to provide Financial Instruments.  The services for which CCFEL received authorization include the receipt and transmission of orders in relation to Financial Instruments, the execution of orders on behalf of clients, portfolio management, investment advice and investment research, and financial analysis.  In addition, CCFEL applied for approval of a French branch, which approval was granted by the CBI and the branch was authorized by the French regulators in April 2019.  Following authorization of the French Branch of CCFEL, various contracts originally entered into by Cohen & Company Financial Limited (“CCFL”), formerly regulated by the Financial Conduct Authority in the United Kingdom, were novated to the French Branch of CCFEL. The novation of contracts was completed on July 1, 2019. In order to finalize our Brexit plans and to increase the efficiency of our activity in Europe (and as all the regulated activity of CCFEL was carried out by its French branch), we later created a new subsidiary, CCFESA, in France, for the purpose of taking over our regulated European activities under one regulated entity. In October 2021, CCFESA received authorization from the ACPR to act as Investment Firm under the European Union (Markets in Financial Instruments) Regulations 2017 to provide Financial Instruments.  The services for which CCFESA received authorization include the receipt and transmission of orders in relation to Financial Instruments, the execution of orders on behalf of clients, portfolio management, investment advice and investment research, and financial analysis. Following authorization of CCFESA, various contracts originally entered into by CCFL and CCFEL were novated to CCFESA. The novation of contracts was completed on November 1, 2021. Further to such novation, both CCFL and CCFEL have stopped carrying out any regulated activity and are in the process of liquidating .   13 Table of Contents   French Regulation. Our French subsidiary, Cohen & Company Financial (Europe) S.A. (“CCFESA”) is an investment services provider authorized and regulated by the French Prudential Supervision and Resolution Authority ( Autorit é de Contr ô le Prudentiel et de R é solution , the “ACPR”). CCFESA is subject to the ACPR’s rules and guidance, but also to the rules of the French Financial Markets Authority ( Autorit é des March é s Financiers , the “AMF”) and the relevant provisions of the French Monetary and Financial Code and the AMF’s general regulations. CCFESA’s license by the ACPR covers the following activities: (1) order reception and transmission for third parties; (2) order execution for third parties; (3) investment advice; and (4) portfolio management for third parties; it can also carry out research and financial analysis.  An overview of key aspects of France’s regulatory regime, which apply to CCFESA, is set out below.   Ongoing regulatory obligations . As a French regulated entity, CCFESA is subject to ongoing regulatory obligations, which cover the following wide-ranging aspects of its business. The ACPR sets conditions that all French authorized investment firms, including CCFESA, must satisfy in order to become and remain authorized by the ACPR. These relate to the firm’s initial capital and appropriate financial resources for the proposed activities, the identity and status of direct and indirect shareholders, a management that has the knowledge, experience and fitness of investment firms and is located in France and has a program of operations for each of the proposed services approved by the AMF.   CCFESA is expected to comply with the ACPR’s regulatory frameworks.  Consequently, the ACPR imposes overarching responsibilities on the directors and senior management of a regulated firm. Key requirements in this context include the need to have adequate systems and controls in relation to: (1) senior management arrangements and general organizational requirements; (2) compliance, internal audit, and financial crime prevention; (3) outsourcing; (4) record keeping; (5) risk management; and (6) managing conflicts of interest.   CCFESA permitted activity is to deal only with eligible counterparties and professional clients as defined under Schedule 2 of the MIFID II Regulations in relation to the regulated activities it conducts. The level with which CCFESA must comply is dependent on the categorization of its clients, which should be considered in the context of the regulated activity being performed. These rules include requirements relating to the type and level of information that must be provided to clients before business is conducted with or for them, the regulation of financial promotions, procedures for entering into client agreements, obligations relating to the suitability and appropriateness of investments, and rules about managing investments and reporting to clients.   Reporting . All authorized firms in France are required to report to the ACPR and to the AMF on a periodic basis. CCFESA’s reporting requirements are based on the scope of its license. The ACPR will use the information submitted by CCFESA to monitor it on an ongoing basis. There are also high-level reporting obligations, whereby CCFESA is required to engage with the AMF in an open and co-operative way and to disclose appropriately anything relating to its activity and which would affect its business plan, activity or any relevant information submitted to the regulators in the context of its license application.   Enforcement powers . The ACPR has a wide range of disciplinary and enforcement tools that it can use should a regulated firm fail to comply with its regulatory obligations.  However, this primary jurisdiction does not exclude that of the AMF with regard more specifically to any failure by persons placed under its supervision (and therefore within investment firms) to fulfil their professional obligations. In addition, the AMF has the option of delegating its power of control, in particular to market operators and clearing houses and to the ACPR. For its part, the ACPR can also delegate its power of control, in particular to the AMF.   A wide range of tools can be used to take action against regulated entities and/or individuals which fall short of our expected standards of behavior including:   ● issuance of a warning ● issuance of a rebuke ● prohibition, for a maximum period of 10 years, from carrying out certain operations and any other limitations in the exercise of its activity ● temporary suspension or compulsory resignation, for a maximum period of 10 years, of one or more managers, with or without the appointment of a provisional administrator ● partial or total withdrawal of approval or removal from the list of authorized persons, with or without the appointment of a liquidator ● temporary or definitive withdrawal of the professional card, temporary ban on trading for their own account, temporary or definitive ban on the exercise of all or part of the activities or the exercise of management functions within the relevant entity; ● imposition of a fine.   With regard to the pecuniary sanctions which may be imposed by the ACPR and/or the AMF instead of or in addition to the aforementioned sanctions, such fines cannot exceed 100 million euros (or ten times the amount of the benefit derived from such breach if this can be determined) or 15% of net annual turnover for breaches specifically referred to in the French Monetary and Financial Code.  Fines issued against individuals under the authority or acting on behalf of an investment firm cannot exceed 15 million euros (or ten times the amount of the benefit derived from the breach if this can be determined).   In addition to the general sanctions regime as described above, a specific regime is provided for breaches of the provisions of the Capital Requirement (CRR) Regulation and the Capital Requirement Directive IV (CRD), which establish in particular the capital and liquidity requirements, as well as the rules of governance to which investment firms are subject.   Financial Resources . As part of the firm regulatory requirements under the ACPR it must maintain adequate financial resources as set out in the European Union Regulation (EU) 2019/2033, also known as the Investment Firms Regulation (IFR), and Directive (EU) 2019/2034, also known as the Investment Firms Directive (IFD). The IFR and the IFD apply to investment firms deemed sufficiently small and non-interconnected (so called “class 3” firms); “Class 3” firms are subject to lighter requirements; specifically, the capital requirement for a class 3 firm is equal to the higher of (1) €75k of permanent minimum capital requirement (PMR); or (2) a quarter of its fixed overheads requirements. CCFESA is classified as a class 3 firm. This means that it would be subject to a base regulatory tangible capital requirement of €480k . In addition, this base capital will be reviewed on an annual basis. The Company's capital will also be reviewed in the event of a material change in the Company's business since the preceding year.   Anti-money Laundering Requirements . A French financial institution is subject to additional client acceptance requirements, which stem from anti-money laundering and terrorist financing legislation that requires a firm to identify its clients before conducting business with or for them and to retain appropriate documentary evidence of this process. Relevant anti-money laundering legislation in France is derived from EU Directives and more particularly EU Directive 2015/849 of 20 May 2015 (also known as the “Fourth Directive”) and EU Directive 2018/843 of 30 May 2018 (also known as the “Fifth Directive”).  The fight against money laundering and terrorist financing (AML-CFT) is one of the AMF’s main supervisory priorities. The ACPR is also responsible for protecting the customers of the supervised institutions and ensuring the fight against money laundering and the financing of terrorism. It also has resolution powers.   14 Table of Contents   The obligations derived from the Fourth Directive were implemented into the French Monetary and Financial Code and  include:   ● Risk assessment ● Identification and verification of the identity of clients and their beneficial owners ● Due diligence measures upon entry and throughout the business relation ● Obligation to file suspicious transaction reports to TRACFIN ● Internal audit and reporting to the AMF ● Implementation of asset freezing measures   The Fifth Directive has been implemented into French law at the beginning of 2020. It sets out a series of measures to fight against terrorist financing more effectively and guarantee improved transparency of financial transactions.   Changes in Existing Laws and Rules . Additional legislation and regulations, changes in rules promulgated by the government regulatory bodies, or changes in the interpretation or enforcement of laws and regulations may directly affect the manner of our operation, our net capital requirements, or our profitability. In addition, any expansion of our activities into new areas may subject us to additional regulatory requirements that could adversely affect our business, reputation, and results of operations.   Available Information   On our internet website address at  www.cohenandcompany.com.  we make available, free of charge, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and any amendments to those reports that we file or furnish pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such information with, or furnish such information to, the SEC.  Copies of such reports and other information are also available at no charge to any person who requests them at Cohen & Company, Attention: Investor Relations, 2929 Arch Street, 17th Floor, Philadelphia, PA 19104-2870 (Telephone: (215) 701-8952).   Our filings can also be obtained for free on the SEC’s Internet site at http://www.sec.gov . The reference to our website address does not constitute incorporation by reference of the information contained on our website in this filing or in other filings with the SEC, and the information contained on our website is not part of this filing.     15 Table of Contents     ITEM 1A.  RISK FACTORS.   You should carefully consider the risks and uncertainties described below and elsewhere in this Annual Report on Form 10-K. If any of these risks actually occur, our business, financial condition, liquidity and results of operations could be adversely affected. The risks and uncertainties described below constitute all of the material risks of the Company of which we are currently aware; however, the risks and uncertainties described below may not be the only risks the Company will face. Additional risks and uncertainties of which we are presently unaware, or that we do not currently deem to be material, may become important factors that affect us and could materially and adversely affect our business, financial condition, results of operations and the trading price of our securities. Investing in the Company’s securities involves risk and the following risk factors, together with the other information contained in this report and the other reports and documents filed by us with the SEC, including Forms ADV filed by CCFM and DCM, should be considered carefully.   Summary of Risk Factors   The following summary highlights some of the principal risks that could adversely affect our business, financial condition or results of operations. This summary is not complete and the risks summarized below are not the only risks we face.   Risks Related to Our Business and Our Industry :     ● Difficult market conditions have adversely affected our business and may continue to do so.   ● Economic slowdown, market volatility, a recession and increasing interest rates may impair investments and operating results.   ● We may experience write downs of financial instruments and other losses due to the volatile and illiquid market conditions.   ● We have incurred losses for certain periods covered by this report and in the recent past and may incur losses in the future.   ● Continued difficulties in our Capital Markets segment due to intense competition has resulted in significant strain on our administrative, operational and financial resources and these difficulties may continue in the future.   ● The incurrence of additional debt could adversely effect on our financial condition and results of operation.   ● Our gestation repo business serves a narrow market and is likely subject to highly volatile demand.   ● Our mortgage group’s revenue is highly dependent on the U.S. housing market, generally.   ● Our matched book repo financing is facilitated through JVB which is subject to various broker-dealer regulations.   ● We may not be successful in achieving our strategic goals with respect to our matched book repo business.   ● Our Capital Markets segment depends significantly on a limited group of customers.   ● Failure to retain senior management and qualified personnel may result in our not being able to execute our business strategy.   ● Payment of severance could strain our cash flow.   ● If additional cash is not available, our business and financial performance will be significantly harmed.   ● Failure to obtain or maintain adequate capital and funding would adversely affect the growth and results of our operations.   ● The lack of liquidity in certain investments may adversely affect our business, financial condition and results of operations.   ● If we are unable to manage the risks of international operations effectively, our business could be adversely affected.   ● The securities settlement process exposes us to risks that may adversely affect our business.   ● We are exposed to the risk that third parties that are indebted to us will not perform their obligations.   ● We are exposed to various risks related to margin requirements under repurchase agreements and securities financing arrangements and are highly dependent on our clearing relationships.     ● We have market risk exposure from unmatched principal transactions entered into by our brokerage desks.   ● Pricing and other competitive pressures may impair the revenues and profitability of our brokerage business.   ● Increase in capital commitments in our trading business increases the potential for significant losses.   ● Our principal trading and investments expose us to risk of loss.   ● Our principal investments are subject to various risks and expose us to a significant risk of capital loss.   ● Transition away from LIBOR may adversely affect our business.   ● Historical returns of our funds and managed accounts may not be indicative of their future results.   ● There is increasing regulatory supervision of alternative asset management companies.   ● Asset management clients generally may redeem their investments, which could reduce our asset management fee revenues.   ● The investment management business is intensely competitive, which could have a material adverse impact on our business.   ● Poor performance of our investment funds’ and separately managed accounts’ investments could result in a decline in our asset management revenue and earnings and investors terminating our management agreements.   ● If the investments we have made on behalf of our CDOs perform poorly, we will suffer a decline in our asset management revenue and earnings and the investors in our CDOs may seek to terminate our management agreements.   ● Our investments in SPAC Sponsor Entities are speculative, subject to total loss, and illiquid prior to business combination.   ● Our investments in post-business combination SPACs are carried at fair value but are subject to sale restrictions which could result in significant losses to our business.   ● Our strategic relationship with Cohen Circle, LLC ("Cohen Circle"), formerly Fintech Masala, LLC could result in conflicts of interest and a termination of such relationship could result in losses to our business.   ● Our management may allocate some portion of their time to the business of the SPAC, which may create conflicts of interest.   ● Any agreement to indemnify a SPAC against certain claims could negatively affect our financial results.   ● We may make future loans to SPACs which may not be repaid.   ● If our risk management systems for our businesses are ineffective, we may be exposed to material unanticipated losses.   ● Failures in our information and communications systems could significantly disrupt our business.   ● We may not be able to keep pace with continuing changes in technology.   ● Failure to protect client data or prevent breaches of our information systems could expose us to liability/reputational damage.   ● We are largely dependent on Pershing LLC to provide clearing services and margin financing.   ● Our substantial level of indebtedness could adversely affect our financial health and ability to compete.   ● Changes in accounting interpretations or assumptions could adversely impact our financial statements.   ● Any change of our investment strategy, hedging strategy, asset allocation and operational policies may result in riskier investments and adversely affect the market value of our Common Stock.   ● Maintenance of our Investment Company Act exemption imposes limits on our operations.   ● The soundness of other financial institutions and intermediaries affects us.   16 Table of Contents     ● We operate in a highly regulated industry and may face increasing restrictions on, and examination of, the conduct of our operations.   ● Substantial legal liability or significant regulatory action could materially affect our business.    ● Highly competitive markets could have a material effect on our business.   ● Employee misconduct or error could harm our business.   ● We operate in a highly regulated industry and may face increasing restrictions on, and examination of, the conduct of our operations.   ● Substantial legal liability or significant regulatory action could materially affect our business.   ● Highly competitive markets could have a material adverse effect on our business.   ● Employee misconduct or error could harm our business.   Risks Related to Our Organizational Structure and Ownership of Our Common Stock :     ● We are dependent on distributions from the Operating LLC as a holding company.   ● Daniel G. Cohen’s significant ownership interests in the Operating LLC and other entities could create conflicts of interest.   ● As a “controlled company,” our other stockholders may lose certain corporate governance protections.   ● Redemptions of our outstanding LLC Units may cause substantial dilution to our existing stockholders.   ● We may not fully realize our deferred tax asset.   ● The Maryland General Corporation Law and our charter and bylaws may prevent potentially beneficial takeover attempts.   Risks Related to General and Global Factors :     ● The COVID-19 pandemic has caused severe disruptions in the U.S. and global economy and is expected to continue to impact our business, financial condition and results of operations.   ● We may incur losses as a result of unforeseen events, including further spread of the COVID-19 pandemic, cybersecurity incidents and events, terrorist attacks, climate-related incidents, or other natural disasters.     ● We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine.  Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.     ● If we fail to maintain effective internal control over financial reporting and disclosure controls and procedures in the future, we may not be able to accurately report our financial results, which could have an adverse effect on our business.   ● Future sales of our Common Stock could lower the price of our Common Stock and harm our future securities offerings.   ● Our stockholders’ percentage ownership in the Company may be diluted in the future.   ● If we fail to control our costs effectively, our business could be disrupted and adversely affected.   ● We may need to offer new investment strategies and products in order to continue to generate revenue.   ● Our failure to deal appropriately with conflicts of interest could damage our reputation and adversely affect our business.   ● Insurance may be inadequate to cover risks facing the Company.   ● We depend on third-party software licenses and the loss of key licenses could adversely affect our brokerage services.   ● Failure to maintain effective internal control over financial reporting and disclosure controls could harm our business.   ● The market price of our Common Stock may be volatile and may be affected by market conditions beyond our control.   ● Our Common Stock may be delisted, which may have a material adverse effect on the liquidity and our Common Stock value.   17 Table of Contents   Risks Related to Our Business and Our Industry   Difficult market conditions have adversely affected our business in many ways and may continue to adversely affect our business in a manner which could materially reduce our revenues.      Our business has been and may continue to be materially affected by conditions in the global financial markets and economic conditions. The financial markets continue to be volatile and continue to present many challenges such as the level and volatility of interest rates, investor sentiment, the availability and cost of credit, the status of the U.S. mortgage and real estate markets, consumer confidence, unemployment and geopolitical issues.   Global economic conditions and global financial markets remain vulnerable to the potential risks posed by certain events, which could include, among other things, level and volatility of interest rates, economic growth or its sustainability, unforeseen changes to gross domestic product, inflation, fluctuations or other changes in both debt and equity capital markets and currencies, political and financial uncertainty in the United States and the European Union, ongoing concern about Asia’s economies, global supply disruptions, complications involving terrorism and armed conflicts around the world (including the conflict between Russia and Ukraine), or other challenges to global trade or travel, such as those that have occurred due to the COVID-19 pandemic. More generally, because our business is closely correlated to the general economic outlook, a significant deterioration in that outlook or realization of certain events would likely have an immediate and significant negative impact on our business and overall results of operations.   A prolonged economic slowdown, volatility in the markets, a recession, and increasing interest rates could impair our investments and harm our operating results.   Our investments are, and will continue to be, susceptible to economic slowdowns, recessions and rising interest rates, which may lead to financial losses in our investments and a decrease in revenues, net income and asset values. These events may reduce the value of our investments, reduce the number of attractive investment opportunities available to us and harm our operating results, which, in turn, may adversely affect our cash flow from operations.   Our ability to raise capital in the long-term or short-term debt capital markets or the equity markets, or to access secured lending markets, has been and could continue to be adversely affected by conditions in the U.S. and international markets and the economy. Global market and economic conditions have been, and continue to be, disrupted and volatile. In particular, the cost and availability of funding have been and may continue to be adversely affected by illiquid credit markets and wider credit spreads and volatility of interest rates (including overnight repo). As a result of concern about the stability of the markets generally and the strength of counterparties specifically, many lenders and institutional investors have reduced and, in some cases, ceased to provide funding to borrowers. Continued turbulence in the U.S. and international markets and economy may adversely affect our liquidity and financial condition and the willingness of certain counterparties to do business with us.   In addition, global macroeconomic conditions and U.S. financial markets remain vulnerable to the potential risks posed by exogenous shocks, which could include, among other things, political and financial uncertainty in the U.S. and the European Union (the “EU”), continued spread of the global novel coronavirus (“COVID-19”) pandemic, renewed concern about China’s economy, cybersecurity incidents and events, climate-related incidents, complications involving terrorism and armed conflicts around the world, or other challenges to global trade or travel. More generally, because our business is closely correlated to the macroeconomic outlook, a significant deterioration in that outlook or an exogenous shock would likely have an immediate negative impact on our overall results of operations.    We may experience write downs of financial instruments and other losses related to the volatile and illiquid market conditions.   The credit markets in the U.S. experienced significant disruption and volatility from mid-2007 through early 2009, and challenging conditions have continued since that time. Although financial markets have become more stable, there remains a certain degree of uncertainty about a global economic recovery. Available liquidity also declined precipitously during the credit crisis and remains significantly depressed. The disruption in these markets generally, and in the U.S. and European markets in particular, impacted and may continue to impact our business. We have exposure to these markets and products, and if market conditions continue to worsen, the fair value of our investments and our management fees could further deteriorate. In addition, market volatility, illiquid market conditions and disruptions in the global credit markets have made it extremely difficult to value certain of our securities. Subsequent valuations, in light of factors then prevailing, may result in significant changes in the values of these securities, and when such securities are sold, it may be at a price materially lower than the current fair value. Any of these factors could require us to take further write downs in the fair value of our investment portfolio or cause our management fees to decline, which may have an adverse effect on our results of operations in future periods.   We have incurred losses for certain periods covered by this report and in the recent past and may incur losses in the future.   The Company recorded net loss of $58.7 million for the year ended December 31, 2022. We may incur additional losses in future periods. If we are unable to finance future losses, those losses may have a significant effect on our liquidity as well as our ability to operate our business.   In addition, the Company has incurred and may continue to incur significant expenses in connection with initiating new business activities or in connection with any expansion or reorganization of our businesses. We may also engage in strategic acquisitions and investments for which we may incur significant expenses. Accordingly, we may need to increase our revenue at a rate greater than our expenses in order to achieve and maintain our profitability. If our revenue does not increase sufficiently, or even if our revenue does increase but we are unable to manage our expenses, we will not achieve and maintain profitability in future periods.   We have experienced difficulties in our Capital Markets segment over the past several years due to intense competition in our industry, which has resulted in significant strain on our administrative, operational and financial resources. These difficulties may continue in the future.   The financial services industry and all of our businesses are intensely competitive, and we expect them to remain so. We compete with commercial banks, brokerage firms, insurance companies, sponsors of mutual funds, hedge funds and other companies offering financial services in the U.S., globally, and through the internet. We compete on the basis of several factors, including transaction execution, capital or access to capital, products and services, innovation, reputation, risk appetite and price. Over time, certain sectors of the financial services industry have become more concentrated as institutions involved in a broad range of financial services have been acquired by or merged into other firms or have declared bankruptcy. These developments could result in our competitors gaining greater capital and other resources such as a broader range of products and services and geographic diversity. We have experienced and may continue to experience pricing pressures in our Capital Markets segment as a result of these factors and as some of our competitors may seek to increase market share by reducing prices.   Both margins and volumes in certain products and markets within the fixed income brokerage business have decreased materially as competition has increased and general market activity has declined. Further, we expect that competition will increase over time, resulting in continued margin pressure. These challenges have materially adversely affected our Capital Markets segment’s results of operations and may continue to do so.   18 Table of Contents   We intend to focus on improving the performance of our Capital Markets segment, which could place additional demands on our resources and increase our expenses. Improving the performance of our Capital Markets segment will depend on, among other things, our ability to successfully identify groups and individuals to join our firm and our ability to successfully grow our existing business lines and platforms and opportunistically expand into other complementary business areas. It may take more than a year for us to determine whether we have successfully integrated new individuals, lines of business and capabilities into our operations. During that time, we may incur significant expenses and expend significant time and resources toward training, integration and business development. If we are unable to hire and retain senior management or other qualified personnel, such as salespeople and traders, we will not be able to grow our business and our financial results may be materially and adversely affected.   There can be no assurance that we will be able to successfully improve the operations of our Capital Markets segment, and any failure to do so could have a material adverse effect on our ability to generate revenue and control expenses.   Our gestation repo business serves a narrow market and is likely subject to highly volatile demand.   We operate a matched gestation repo program.  Gestation repo involves entering into repo and reverse repo where the underlying collateral security represents a pool of newly issued mortgages.  Our reverse repo counterparties are mortgage originators.  This type of financing would only be of interest to mortgage originators.  Therefore, demand for gestation repo financing is narrow and volumes will therefore be more volatile.    Mortgage and U.S. Housing Market-Related Risks   In recent years, our mortgage group has become an increasingly important component of our Capital Markets segment and the Company overall.  The mortgage group primarily earns revenue by providing hedging execution, securities financing, and trade execution services to mortgage originators and other investors in mortgage backed securities.  Therefore, this group’s revenue is highly dependent on the volume of mortgage originations in the U.S. Origination activity is highly sensitive to interest rates, the U.S. job market, housing starts, sale activity of existing housing stock, as well as the general health of the U.S. economy.  In addition, any new regulation that impacts U.S. government agency mortgage backed security issuance activity, residential mortgage underwriting standards, or otherwise impacts mortgage originators will impact our business.  We have no control over these external factors and there is no effective way for us to hedge against these risks.  Our mortgage group’s volumes and profitability will be highly impacted by these external factors.   Our Capital Markets segment depends significantly on a limited group of customers.     From time to time, based on market conditions, a small number of our customers may account for a significant portion of the revenues earned in our Capital Markets segment. None of our customers is obligated contractually to use our services. Accordingly, these customers may direct their activities to other firms at any time. The loss of or a significant reduction in demand for our services from any of these customers could have a material adverse effect on our business, financial condition and operating results.   19 Table of Contents     If we do not retain our senior management and continue to attract and retain qualified personnel, we may not be able to execute our business strategy.   The members of our senior management team have extensive experience in the financial services industry. Their reputations and relationships with investors, financing sources and members of the business community in our industry, among others, are critical elements in operating and expanding our business. As a result, the loss of the services of one or more members of our senior management team could impair our ability to execute our business strategies, which could hinder our ability to achieve and sustain profitability.  The Company has various employment arrangements with the members of its senior management team, but there can be no assurance that the terms of these employment arrangements will provide sufficient incentives for each of the members of the senior management team to continue employment with us.   We depend on the diligence, experience, skill and network of business contacts of our senior management team and our employees in connection with (1) our Capital Markets segment, (2) our asset management operations, (3) our investment activities, (4) the evaluation, negotiation, structuring and management of new business opportunities, and (5) our SPAC franchise, including our investments in SPACs and SPAC sponsors and our serving as the asset manager for certain SPAC Funds. Our business depends on the expertise of our personnel and their ability to work together as an effective team and our success depends substantially on our ability to attract and retain qualified personnel. Competition for employees with the necessary qualifications is intense, and we may not be successful in our efforts to recruit and retain the required personnel. The inability to recruit and retain qualified personnel could affect our ability to provide an acceptable level of service to our clients and funds, attract new clients, and develop new lines of business, each of which could have a material adverse effect on our business.   Payment of severance could strain our cash flow.   Certain members of our senior management team have agreements that provide for substantial severance payments. Should several of these senior managers leave our employ under circumstances entitling them to severance, or become disabled or die, the need to pay these severance benefits could put a strain on our cash flow.   Our business will require a significant amount of cash, and if it is not available, our business and financial performance will be significantly harmed.     We require a substantial amount of cash to fund our investments, pay our expenses and hold our assets. More specifically, we require cash to:     • meet our working capital requirements and debt service obligations;   • make incremental investments in our Capital Markets segment;   • make investments in our growing asset management business;   • make investments supporting our SPAC franchise, including in pre- and post-business combination SPAC public companies and in SPAC sponsor entities;   • hire new employees; and   • meet other needs.   Our primary sources of working capital and cash are expected to consist of:         • revenue from operations, including net trading revenue, asset management revenue, new issue and advisory revenue, interest income and dividends from our investment portfolio and potential monetization of principal investments;   • interest income from temporary investments and cash equivalents;   • sales of assets; and   • proceeds from future borrowings or any offerings of our equity or debt securities.   We may not be able to generate a sufficient amount of cash from operations and investing and financing activities in order to successfully execute our business strategy.   Failure to obtain or maintain adequate capital and funding would adversely affect the growth and results of our operations and may, in turn, negatively affect the market price of our Common Stock.   Liquidity is essential to our businesses. We depend upon the availability of adequate funding and capital for our operations. In particular, we may need to raise additional capital in order to significantly grow our business. In recent years, we have engaged in a number of capital raising transactions with Daniel G. Cohen, the Executive Chairman of the Board, and/or persons or entities controlled by or close to Mr. Cohen because the terms of such transactions have been more favorable than terms available from unrelated third parties.  Our liquidity could be substantially adversely affected by our inability to raise funding in the long-term or short-term debt capital markets or the equity capital markets or our inability to access the secured lending markets. Factors that we cannot control, such as continued or additional disruption of the financial markets, or negative views about the financial services industry generally, have limited and may continue to limit our ability to raise capital. In addition, our ability to raise capital could be impaired if lenders develop a negative perception of our long-term or short-term financial prospects or if Mr. Cohen becomes unwilling to continue to fund the Company’s operations. Lenders could develop negative perceptions if we incur large trading losses, we suffer a decline in the level of our business activity, we suffer material litigation losses, regulatory authorities take significant action against us, or we discover significant employee misconduct or illegal activity, among other reasons. Sufficient funding or capital may not be available to us in the future on terms that are acceptable, or at all. If we are unable to raise funding using the methods described above, we would likely need to finance or liquidate unencumbered assets, such as our investment and trading portfolios, in order to meet our maturing liabilities. We may be unable to sell some of our assets, or we may have to sell assets at a discount from market value, either of which could adversely affect our results of operations and cash flows.  If we are unable to meet our funding needs on a timely basis, our business would be adversely affected and there may be a negative impact on the market price of our Common Stock.   20 Table of Contents   Our investments in the equity interests of SPACs and SPAC Sponsor Entities may expose us to increased risks and liabilities.   We have and may continue to invest in the equity interests of SPACs and SPAC sponsor entities, including SPACs sponsored by us, our affiliates, and third parties. There are numerous risks associated with investing in the equity interests of SPACs and SPAC sponsor entities, including: (i) because a SPAC is raised without a specifically-identified acquisition target, it may never, or only after an extended period of time, be able to find and execute a suitable business combination, during which period the capital which we have invested in or committed to the SPAC will not be available to us for other uses; (ii) investments made by us in a SPAC and SPAC sponsor entities may be entirely lost or otherwise decline in value if the SPAC does not timely execute a business combination; (iii) SPACs typically invest in single assets and not diversified portfolios, and investments therein are therefore subject to significant concentration risk; (iv) SPACs incur substantial fees, costs and expenses related to their initial public offerings, being a public company and in connection with pursuing a business combination (in some cases, regardless of whether, or when, the SPAC ultimately consummates a business transaction); and (v) there remains substantial uncertainty regarding the viability of SPAC investing on a large scale, the supply of desirable transactions and whether regulatory, tax or other authorities will implement additional or adverse policies relating to SPACs and SPAC investing. We expect regulatory scrutiny of SPACs and other blank check companies to continue to increase and the regulations regarding SPACs may change. Our investments in the equity interests of SPACs and SPAC sponsor entities may also subject us to the risk of litigation by third parties, including fund investors dissatisfied with the performance or management of SPAC Funds, public investors in SPACs and a variety of other potential litigants. Any losses relating to these developments could adversely impact our business, results of operations and financial condition, as well as harm our professional reputation.    Our investments in SPAC Sponsor Entities are highly speculative, subject to total loss, and completely illiquid prior to business combination.               The Company has invested in the sponsor entities of SPACs and these investments are highly speculative.  Generally, SPAC sponsor entities are LLC’s that pool their members’ interests and invest in the private placement of a SPAC.  The SPAC will also raise funds in a public offering and seek to complete a business combination within an agreed upon timeframe.  The SPAC will use the proceeds of the private placement to pay transaction and operating expenses during the period it is seeking a business combination.  The proceeds of the public offering are placed in an interest-bearing trust and can only be used to complete the business combination.  Typically, the public investors must approve any business combination prior to its effectiveness.  If a business combination is not completed within the agreed upon timeframe, the SPAC will liquidate and return the funds to the public investors.  If there are funds remaining after liquidation, the sponsor entities may receive some portion of their investment back, but will likely suffer a total loss of investment.  Accordingly, our investments in SPAC sponsor entities is subject to a total loss of our investment and such losses may adversely affect our business, financial condition and results of operations.     During the period prior to the distribution of our interests in the SPAC sponsor entity, the Company includes its investment as a component of investment in equity method affiliates.  As of December 31, 2022, of the Company’s $8.9 million balance of investment in equity method affiliates, $3.4 million represents direct or indirect investments in SPAC sponsor entities.  These investments are subject to transfer restrictions (as described in greater detail below), are completely illiquid and could be worthless if the underlying sponsor entities liquidate without completing a business combination.    Our investments in post-business combination SPACs are carried at fair value but are subject to sale restrictions which could result in significant losses to our business.   We hold securities in public companies that were merger partners with the SPACs in which we invested or sponsored and we intend to continue to invest in SPACs and SPAC sponsor entities in the future.  A significant portion of the securities in the post-business combination SPACs are and will be restricted for sale and may require the securities to trade above a certain price level for a certain period of time prior to becoming transferable.  It is possible that the securities which we hold in post-business combination SPACs never trade at the applicable price levels for the requisite period of time and, in turn, the transfer restrictions thereon are never lifted.  In such event, such restricted securities may be completely illiquid and this could significantly reduce their value, if not render them completely worthless.  Further, investments in post-business combination SPAC securities may not be transferable until such securities are registered for sale with the SEC.  The Company could suffer significant mark-to-market losses on these restricted securities prior to being able to sell them.  In some cases, we hedge these positions by entering into short options trades on the underlying unrestricted equity.  However, we are limited in our ability to enter into these because of capital and financing requirements associated with such trades.    As of December 31, 2022, of our $28.0 million reported as other investments, at fair value, $3.1 million represented restricted shares of post-business combination SPACs that were subject to transfer restrictions and could not be sold.  If these securities do not trade at the applicable per share price levels for the requisite periods of time and, in turn, the transfer restrictions thereon are never lifted, we could suffer significant losses and these securities could be rendered illiquid and even worthless, which could result in significant harm to our business and results of operations.   Our strategic relationship with Cohen Circle, LLC (“Cohen Circle”) could terminate, which could adversely affect the growth and viability of our SPAC franchise, which, in turn would negatively affect our results of our operations, and our strategic relationship with Cohen Circle could also result in conflicts of interest which could negatively affect our SPAC franchise and our business.   Cohen Circle, an entity of which Daniel G. Cohen and his mother, Betsy Cohen, are members, is a fintech investing platform and the sponsor of third party SPACs.  We have entered into consulting agreements with Cohen Circle pursuant to which Betsy Cohen and other Cohen Circle representatives have provided and will continue to provide consulting services to us regarding our SPAC franchise and the SPAC entities of which we are sponsors.  We anticipate that we will continue to enter into consulting arrangements with Cohen Circle in connection with the SPACs which we sponsor in the future.  In the event that our strategic relationship with Cohen Circle is terminated, the loss of the services of Cohen Circle’s personnel could significantly impair our SPAC franchise's ability to continue to succeed, which could hinder our ability to achieve and sustain profitability.  21 Table of Contents   In addition, certain of our employees also provide consulting and other SPAC-related services to Cohen Circle pursuant to contractual arrangements with the SPACs of which Cohen Circle is a sponsor.  Pursuant to these contractual relationships, our employees may be incentivized to identify and consummate potential SPAC business combinations on behalf of Cohen Circle rather than for us.  Further, these contractual relationships could result in our competing with Cohen Circle for potential SPAC business combination targets and other opportunities.  All of the foregoing could result in lost opportunities for our SPAC franchise, which could have negative impacts on our SPAC franchise and business as a whole.   If we are unable to manage the risks of international operations effectively, our business could be adversely affected.    We currently provide services and products to clients in Europe, through offices in Dublin and Paris. There are certain additional risks inherent in doing business in international markets, particularly in the regulated brokerage and asset management industries. These risks include:     • additional regulatory requirements;   • difficulties in recruiting and retaining personnel and managing the international operations;   • potentially adverse tax consequences, tariffs and other trade barriers;   •  adverse labor laws; and   • reduced protection for intellectual property rights.   If we are unable to manage any of these risks effectively, our business could be adversely affected.   In addition, our current international operations expose us to the risk of fluctuations in currency exchange rates generally and fluctuations in the exchange rates for the Euro and the British Pound Sterling in particular. Although we may hedge our foreign currency risk, we may not be able to do so successfully and may incur losses that could adversely affect our financial condition or results of operations.    The securities settlement process exposes us to risks that may adversely affect our business, financial condition and results of operations.   We provide brokerage services to our clients in the form of “matched principal transactions” or by providing liquidity by purchasing securities from them on a principal basis. In “matched principal transactions” we act as a “middleman” by serving as a counterparty to both a buyer and a seller in matching reciprocal back-to-back trades. These transactions, which generally involve bonds, are then settled through clearing institutions with which we have a contractual relationship. There is no guarantee that we will be able to maintain existing contractual relationships with clearing institutions on favorable terms or that we will be able to establish relationships with new clearing institutions on favorable terms, or at all.   In executing matched principal transactions, we are exposed to the risk that one of the counterparties to a transaction may fail to fulfill its obligations, either because it is not matched immediately or, even if matched, one party fails to deliver the cash or securities it is obligated to deliver upon settlement. In addition, some of the products we trade or may trade in the future are in less commoditized markets which may exacerbate this risk because transactions in such markets may not settle on a timely basis. Adverse movements in the prices of securities that are the subject of these transactions can increase our risk. In addition, widespread technological or communication failures, as well as actual or perceived credit difficulties, or the insolvency of one or more large or visible market participants, could cause market-wide credit difficulties or other market disruptions. These failures, difficulties or disruptions could result in a large number of market participants not settling transactions or otherwise not performing their obligations.   We are subject to financing risk in these circumstances because if a transaction does not settle on a timely basis, the resulting unmatched position may need to be financed, either directly by us or through one of our clearing organizations at our expense. These charges may not be recoverable from the failing counterparty. Finally, in instances where the unmatched position or failure to deliver is prolonged or widespread due to rapid or widespread declines in liquidity for an instrument, there may also be regulatory capital charges required to be taken by us which, depending on their size and duration, could limit our business flexibility or even force the curtailment of those portions of our business requiring higher levels of capital. Credit or settlement losses of this nature could adversely affect our financial condition or results of operations.   In the process of executing matched principal transactions, miscommunications and other errors by our clients or by us can arise whereby a transaction is not completed with one or more counterparties to the transaction, leaving us with either a long or short unmatched position. If the unmatched position is promptly discovered and there is a prompt disposition of the unmatched position, the risk to us is usually limited. If the discovery of an out trade is delayed, the risk is heightened by the increased possibility of intervening market movements prior to disposition. Although out trades usually become known at the time of, or later on the day of, the trade, it is possible that they may not be discovered until later in the settlement process. When out trades are discovered, our policy will generally be to have the unmatched position disposed of promptly, whether or not this disposition would result in a loss to us. The occurrence of unmatched positions generally rises with increases in the volatility of the market and, depending on their number and amount, such out trades have the potential to have a material adverse effect on our financial condition and results of operations.   From time to time, we may also provide brokerage services in the form of agency transactions. In agency transactions, we charge a commission for connecting buyers and sellers and assisting in the negotiation of the price and other material terms of the transaction. After all material terms of a transaction are agreed upon, we identify the buyer and seller to each other and leave them to settle the trade directly. We are exposed to credit risk for commissions we bill to clients for agency brokerage services.   Participation in matched principal, principal, or agency transactions subjects us to disputes, counterparty credit risk, lack of liquidity, operational failure or other market wide or counterparty specific risks. Any losses arising from such risks could adversely affect our financial condition or results of operations. In addition, the failure of a significant number of counterparties or a counterparty that holds a significant amount of derivatives exposure, or that has significant financial exposure to, or reliance on, the mortgage, asset-backed or related markets, could have a material adverse effect on the trading volume and liquidity in a particular market for which we provide brokerage services or on the broader financial markets.   We have policies and procedures to identify, monitor and manage these risks, through reporting and control procedures and by monitoring credit standards applicable to our clients. These policies and procedures, however, may not be fully effective. Some of our risk management methods will depend upon the evaluation of information regarding markets, clients or other matters that are publicly available or otherwise accessible by us. That information may not, in all cases, be accurate, complete, up-to-date or properly evaluated. If our policies and procedures are not fully effective or we are not always successful in monitoring or evaluating the risks to which we may be exposed, our financial condition or results of operations could be adversely affected. In addition, we may not be able to obtain insurance to cover all of the types of risks we face and any insurance policies we do obtain may not provide adequate coverage for covered risks.   22 Table of Contents   We are exposed to the risk that third parties that are indebted to us will not perform their obligations.   Credit risk refers to the risk of loss arising from borrower, counterparty or obligor default when a borrower, counterparty or obligor does not meet its obligations. We incur significant credit risk exposure through our Capital Markets segment. This risk may arise from a variety of business activities, including but not limited to extending credit to clients through various lending commitments; providing short or long-term funding that is secured by physical or financial collateral whose value may at times be insufficient to fully cover the loan repayment amount; entering into swap or other derivative contracts under which counterparties have obligations to make payments to us; and posting margin and/or collateral to clearing houses, clearing agencies, exchanges, banks, securities firms and other financial counterparties. We incur credit risk in traded securities and loan pools whereby the value of these assets may fluctuate based on realized or expected defaults on the underlying obligations or loans.   There is a possibility that continued difficult economic conditions may further negatively impact our clients and our current credit exposures. Although we regularly review our credit exposures, default risk may arise from events or circumstances that are difficult to detect or foresee.    We are exposed to various risks related to margin requirements under repurchase agreements and securities financing arrangements and are highly dependent on our clearing relationships.      We maintain repurchase agreements with various third-party financial institutions and other counterparties. Under those repurchase agreements we act as both a buyer and a seller of the subject securities. Our business related to these repurchase agreements is predominantly matched, meaning that we do not purchase or sell securities unless there is another institution prepared to simultaneously purchase or sell securities to or from us, as applicable. There are limits to the amount of securities that may be transferred pursuant to these agreements, and available lines both for us and our counterparties for whom we purchase securities are approved on a case-by-case basis after each counterparty has gone through a credit review process. The repurchase agreements we execute with our counterparties include substantive provisions other than those covenants and other customary provisions contained in standard master repurchase agreements. However, while these additional provisions may work to mitigate some of the risks related to repurchase agreement transactions, these additional substantive provisions do not guarantee the performance of a counterparty or alleviate all of the potential risks we could face from entering into repurchase agreement transactions.    The repurchase agreements generally require a seller under a repurchase agreement to transfer additional securities to the counterparty who is acting as the buyer under the repurchase agreement in the event that the value of the securities then held by the buyer falls below specified levels. Each repurchase agreement contains events of default in cases where a counterparty breaches its obligations under the agreement. When we are acting in the capacity of a seller under these agreements, we receive margin calls from time to time in the ordinary course of business, and no assurance can be given that we will be able to satisfy requests from our counterparties to post additional collateral in the future. Similarly, when we are acting in the capacity of a buyer under these agreements we make margin calls from time to time to our seller counterparties in the ordinary course of business and no assurance can be given that our counterparties will have adequate funds or collateral to satisfy such margin call requirements. Generally, if there was an event of default under a repurchase agreement, such event of default would provide the non-defaulting counterparty with the option to terminate all outstanding repurchase transactions with us and make all amounts due from the defaulting counterparty immediately payable. However, there can be no assurance that any such defaulting counterparty will have the funds or collateral needed to fully satisfy any such margin call or other amount due. Generally, repurchase obligations are full recourse obligations and if we were to default under a repurchase obligation, the counterparty would have recourse to our other assets if the collateral was insufficient to satisfy our obligation in full.   In addition, our clearing brokers provide securities financing arrangements including margin arrangements and securities borrowing and lending arrangements. These arrangements generally require us to transfer additional securities or cash to the clearing broker in the event that the value of the securities then held by the clearing broker in the margin account falls below specified levels and contain events of default that would be triggered if we were to breach our obligations under such agreements. An event of default under a clearing agreement would give the clearing broker the option to terminate the clearing arrangement and any amounts owed to the clearing broker would be immediately due and payable. These obligations are full recourse to us.   Furthermore, we are highly dependent on our relationships with our clearing brokers. Any termination of our clearing arrangements whether due to a breach of the agreement by us or a default, bankruptcy or reorganization of a clearing broker would result in a significant disruption to our business as we clear all trades through these entities. Any such termination would have a significant negative impact on our dealings and relationship with our customers and there is no guarantee we would be able to replace any such clearing broker on similar terms.   We have market risk exposure from unmatched principal transactions entered into by our brokerage desks, which could result in substantial losses to us and adversely affect our financial condition and results of operations.     We allow certain of our brokerage desks access to limited amounts of capital to enter into unmatched principal transactions in the ordinary course of business for the purpose of facilitating clients’ execution needs for transactions initiated by such clients or to add liquidity to certain illiquid markets. As a result, we have market risk exposure on these unmatched principal transactions. Our exposure will vary based on the size of the overall positions, the terms and liquidity of the instruments brokered, and the amount of time the positions will be held before we dispose of the positions.   We do not track our exposure to unmatched positions on an intra-day basis. These unmatched positions are intended to be held short-term, however, due to a number of factors, including the nature of a position and access to the market on which we trade, we may not be able to match each position or effectively hedge our exposure and often may be forced to hold a position overnight that has not been hedged. To the extent any unmatched positions are not disposed of intra-day, we mark those positions to market. Adverse movements in the securities underlying the positions or a downturn or disruption in the markets for the positions could result in our sustaining a substantial loss. In addition, any principal gains and losses resulting from these positions could, from time to time, have a disproportionate positive or negative effect on our financial condition and results of operations for a particular reporting period.   Pricing and other competitive pressures may impair the revenues and profitability of our brokerage business.      In recent years, we have experienced significant pricing pressures on trading margins and commissions, primarily in debt trading. In the fixed income market, regulatory requirements have resulted in greater price transparency, leading to increased price competition and decreased trading margins. The trend toward using alternative trading systems is continuing to grow, which may result in decreased commission and trading revenue, reduce our participation in the trading markets and our ability to access market information, and lead to the creation of new and stronger competitors. Additional pressure on sales and trading revenue may impair the profitability of our brokerage business. We believe that price competition and pricing pressures in these and other areas will continue as institutional investors continue to reduce the amounts they are willing to pay, including reducing the number of brokerage firms they use, and some of our competitors seek to obtain market share by reducing fees, commissions or margins.   23 Table of Contents   Increase in capital commitments in our trading business increases the potential for significant losses.      We may enter into transactions in which we commit our own capital as part of our trading business. The number and size of these transactions may materially affect our results of operations in a given period. We may also incur significant losses from our trading activities due to market fluctuations and volatility from quarter to quarter. We maintain trading positions in the fixed income markets to facilitate client-trading activities. To the extent that we own security positions, in any of those markets, a downturn in the value of those securities or in those markets could result in losses from a decline in value. Conversely, to the extent that we have sold securities we do not own in any of those markets, an upturn in those markets could expose us to potentially unlimited losses as we attempt to acquire the securities in a rising market. Moreover, taking such positions in times of significant volatility can lead to significant unrealized losses, which further impact our ability to borrow to finance such activities.   Our principal trading and investments expose us to risk of loss.     A significant portion of our revenue is derived from trading in which we act as principal. The Company may incur trading losses relating to the purchase, sale or short sale of corporate and asset-backed fixed income securities and other securities for our own account and from other principal trading. In any period, we may experience losses as a result of price declines, lack of trading volume, general market conditions, employee inexperience, errors or misconduct, or illiquidity. From time to time, we may engage in a large block trade in a single security or maintain large position concentrations in a single security, securities of a single issuer, or securities of issuers engaged in a specific industry. In general, any downward price movement in these securities could result in a reduction of our revenues and profits.   In addition, we may engage in hedging transactions and strategies that may not properly mitigate losses in our principal positions. If the transactions and strategies are not successful, we could suffer significant losses.    Our principal investments are subject to various risks and expose us to a significant risk of capital loss, which may materially and adversely affect our results of operations and cash flows.      We use a portion of our own capital in a variety of principal investment activities, each of which involves risks of illiquidity, loss of principal and revaluation of assets. As of December 31, 2022, we had $28.0 million in other investments, at fair value.   We may use our capital, including on a leveraged basis, for principal investments in both private and public company securities that may be illiquid and volatile. The equity securities of any privately held entity in which we make a principal investment are likely to be restricted as to resale and may otherwise be highly illiquid. In the case of fund, SPAC-related or similar investments, our investments may be illiquid until such investment vehicles are liquidated. We expect that there will be restrictions on our ability to resell any such securities that we acquire for a period of time after we acquire such securities. Thereafter, a public market sale may be subject to volume limitations or be dependent upon securing a registration statement for an initial, and potentially secondary, public offering of the securities. Even if we make an appropriate investment decision, we cannot be assured that general market conditions will not cause the market value of our investments to decline. For example, an increase in interest rates, a general decline in the equity markets, or other market and industry conditions adverse to the type of investments we make and intend to make could result in a decline in the value of our investments or a total loss of our investment.   There are no regularly quoted market prices for a number of the investments we make. The value of our investments is determined using fair value methodologies described in valuation policies, which may take into consideration, among other things, the nature of the investment, the expected cash flows from the investment, bid or ask prices provided by third parties for the investment, the trading price of recent sales of securities (in the case of publicly traded securities), restrictions on transfer, and other recognized valuation methodologies. The methodologies we use in valuing individual investments are based on estimates and assumptions specific to the particular investments. Therefore, the value of our investments does not necessarily reflect the prices that would actually be obtained by us when such investments are sold. Realizations at values significantly lower than the values at which investments have been previously held would result in loses of potential incentive income and principal investments.   In addition, in our principal investment activities, our concentrated holdings, illiquidity and market volatility may make it difficult to value certain of our investment securities. Subsequent valuations, in light of factors then prevailing, may result in significant changes in the values of these securities in future periods. In addition, at the time of any sales and settlements of these securities, the price we ultimately realize will depend on the demand and liquidity in the market at that time and may be materially lower than current fair value of such securities. Any of these factors could require us to take write-downs in the value of our investment and securities portfolio, which may have an adverse effect on our results of operations in future periods. If we are unable to manage any of these risks effectively, our results of operations and cash flows could be materially and adversely affected.   Transition away from LIBOR as a benchmark reference for interest rates may affect the cost of capital and may require amending or restructuring existing debt instruments and related hedging arrangements for us, our investment funds and our separately managed accounts, and may impact the value of floating rate securities based on LIBOR we, our investment funds or our separately managed accounts hold or may hold in the future, which may result in additional costs or adversely affect our, our funds’ or our separately managed accounts’ liquidity, results of operations and financial condition.   We currently have $48,125 of par value debt which incurs interest based on the London interbank offered rate (“LIBOR”). The U.K. Financial Conduct Authority (the authority that regulates LIBOR) announced that it will cease publication of the most commonly used U.S. dollar LIBOR tenors after June 30, 2023, though the less commonly used tenors ceased publication after December 31, 2021.  U.S. federal banking agencies have issued guidance to strongly encourage institutions to cease entering into contracts that reference LIBOR by December 31, 2021.  Central banks and regulators in the U.S. and other jurisdictions are working to implement the transition to suitable replacements for LIBOR. As an alternative to LIBOR, for example, the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has recommended replacing U.S. dollar LIBOR with the Secured Overnight Financing Rate (“SOFR”), a new index calculated based on short-term repurchase agreements, backed by Treasury securities. Although there have been a number of issuances utilizing different variants of SOFR, or the Sterling Over Night Index Average, an alternative reference rate that is used for transactions based on Pounds Sterling,  many existing loans based on LIBOR remain to be transitioned to a replacement rate, and market participants are still working to develop workable transition mechanisms, including coordination with related hedging arrangements. As such, it is not possible to predict all potential effects of these changes on U.S. and global credit markets.   24 Table of Contents   The administrator of LIBOR announced its intention to extend the publication of U.S. dollar LIBOR (except for the one-week and two-month tenors) until June 30, 2023, subject to a consultation process, and the Federal Reserve Board, the Alternative Reference Rates Committee and the International Swaps and Derivatives Association also issued concurrent statements agreeing with such announcement. Our investments funds and our separately managed accounts may need to amend or restructure our existing LIBOR-based debt instruments and any related hedging arrangements that extend beyond June 30, 2023, which may be difficult, costly and time consuming. In addition, from time to time our investment funds and separately managed accounts invest in floating rate loans and investment securities whose interest rates are indexed to LIBOR. Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBOR, or any changes announced with respect to such reforms, may result in a sudden or prolonged increase or decrease in the reported LIBOR rates and the value of LIBOR-based loans and securities, including those of other issuers we or our funds currently own or may in the future own, and may impact the availability and cost of hedging instruments and borrowings, including potentially, an increase to our and our funds’ and separately managed accounts’ interest expense and cost of capital. Any increased costs or reduced profits as a result of the foregoing may adversely affect our liquidity, results of operations and financial condition.   The historical returns of our funds and managed accounts may not be indicative of the future results of our funds and managed accounts.     The historical returns of our funds and managed accounts should not be considered indicative of future results expected from such fund and managed accounts or from any future funds we may raise or managed accounts we may open. Our rates of return reflect unrealized gains, as of the applicable measurement date, which may never be realized due to changes in market and other conditions not in our control that may adversely affect the ultimate valuation of the investments in a fund. The returns of our funds may have also benefited from investment opportunities and general market conditions that may not repeat themselves, and there can be no assurance that our current or future funds will be able to avail themselves of profitable investment opportunities. Furthermore, the historical and potential future returns of the funds we manage also may not necessarily bear any relationship to potential returns on our shares.   There is increasing regulatory supervision of alternative asset management companies.     In the past several years, the financial services industry has been the subject of heightened scrutiny by regulators around the globe. In particular, the SEC and its staff have focused more narrowly on issues relevant to alternative asset management firms, forming specialized units devoted to examining such firms and, in certain cases, bringing enforcement actions against the firms, their principals and employees. In the last few years, there were a number of enforcement actions within the industry. The SEC announced that the 2020 examination priorities for the Office of Compliance Inspections and Examinations include such items as market infrastructure, information security, and anti-money laundering programs, but the SEC also signaled its intention to examine firms in emerging risk areas, such as robo-advice, digital assets, cybersecurity, SPACs, and new rules under the Investment Advisers Act of 1940, as amended and interpretations on standards of care. It is unclear, however, whether the SEC and its staff will increase the level of enforcement if, in the future, there is an effort on the part of the federal government to increase restrictions on business conduct, which could result in significant changes in, and uncertainty with respect to, legislation, regulation and government policy.   Some of our asset management clients generally may redeem their investments, which could reduce our asset management fee revenues.   Our asset management fund agreements generally permit investors to redeem their investments with us after an initial “lockup” period, during which redemptions are restricted or penalized. However, any such restrictions may be waived by us. Thereafter, redemptions are permitted at quarterly or annual intervals. If the return on the assets under our management does not meet investors’ expectations, investors may elect to redeem their investments and invest their assets elsewhere, including with our competitors. Our management fee revenues correlate directly with the amount of assets under our management; therefore, redemptions may cause our fee revenues to decrease. Investors may decide to reallocate their capital away from us and to other asset managers for a number of reasons, including poor relative investment performance, changes in prevailing interest rates that make other investments more attractive, changes in investor perception regarding our focus or alignment of interest, dissatisfaction with changes in or a broadening of a fund’s investment strategy, changes in our reputation, and departures or changes in responsibilities of key investment professionals. For these and other reasons, the pace of redemptions and corresponding reduction in our assets under management could accelerate. In the future, redemptions could require us to liquidate assets under unfavorable circumstances, which would further harm our reputation and results of operations.   The investment management business is intensely competitive, which could have a material adverse impact on our business.     We have been working to grow our asset management business and we compete as an investment manager for both fund investors and investment opportunities. The investment management business is highly fragmented, with our competitors consisting primarily of sponsors of public and private investment funds, real estate development companies, SPACs, business development companies, investment banks, commercial finance companies and operating companies acting as strategic buyers of businesses. We believe that competition for fund investors is based primarily on:     • investment performance;   • investor liquidity and willingness to invest;   •  investor perception of investment managers’ drive, focus and alignment of interest;   • business reputation;   • the quality of services provided to fund investors;   • pricing;   •  fund terms (including fees); and   • the relative attractiveness of the types of investments that have been or will be made.   25 Table of Contents   We believe that competition for investment opportunities is based primarily on the pricing, terms and structure of a proposed investment and certainty of execution.  A number of factors serve to increase our competitive risks:      • our competitors may have greater financial, technical, marketing and other resources and more personnel than we do, and, in the case of some asset classes or geographic regions, longer operating histories, more established relationships, greater expertise or a better reputation;   •  fund investors may materially decrease their allocations in new funds due to their experiences following an economic downturn, the limited availability of capital, regulatory requirements or a desire to consolidate their relationships with investment firms;   •  certain of our competitors may have agreed to terms with respect to their investment funds or products that are more favorable to investors than our funds or products, such as lower management fees, greater fee sharing or higher performance hurdles for carried interest and, therefore, we may be forced to match or otherwise revise our terms to be less favorable to us than they have been in the past;   • certain of our funds may not perform as well as competitors’ funds or other available investment products;   • our competitors have raised or may raise significant amounts of capital, and many of them have similar investment objectives and strategies to our funds, which may create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that many alternative investment strategies seek to exploit;   •  certain of our competitors may have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities;   • certain of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments;   • certain of our competitors may be subject to less regulation or less regulatory scrutiny and accordingly, may have more flexibility to undertake and execute certain businesses or investments than we do and/or bear less expense to comply with such regulations than we do;   • there are relatively few barriers to entry impeding the formation of new funds, including a relatively low cost of entering these businesses, and the successful efforts of new entrants into our various lines of business, including major commercial and investment banks and other financial institutions, have resulted in increased competition;   • certain fund investors may prefer to invest with an investment manager that is not publicly traded, is larger or manages more investment products; and   •  other industry participants will from time to time seek to recruit our investment professionals and other employees away from us.   We may lose investment opportunities in the future if we do not match investment prices, structures and terms offered by competitors. Our competitors that are corporate buyers may be able to achieve synergistic cost savings in respect of an investment, which may provide them with a competitive advantage in bidding for an investment.  Alternatively, we may experience decreased investment returns and increased risks of loss if we match investment prices, structures and terms offered by competitors. Moreover, as a result, if we are forced to compete with other investment firms on the basis of price, we may not be able to maintain our current fund fee, carried interest or other terms. There is a risk that fees and carried interest in the alternative investment management industry will decline, without regard to the historical performance of a manager. Fee or carried interest income reductions on existing or future funds, without corresponding decreases in our cost structure, could materially and adversely affect our revenues and profitability.   In addition, if interest rates were to rise or if market conditions for competing investment products become or are more favorable and such products begin to offer rates of return superior to those achieved by our funds, the attractiveness of our funds relative to investments in other investment products could decrease. This competitive pressure could materially and adversely affect our ability to make successful investments and limit our ability to raise future funds, either of which could adversely impact our business, results of operations and cash flow.    If the investments we have made or make on behalf of our investment funds and separately managed accounts perform poorly, we will suffer a decline in our asset management revenue and earnings because some of our fees are subject to the credit performance of the portfolios of assets. In addition, the investors in our investment funds and our separately managed accounts may seek to terminate our management agreements based on poor performance. Any of these results could adversely affect our results of operations and our ability to raise capital for future investment funds and separately managed accounts.   Our revenue from our asset management business is partially derived from management fees paid by the investment funds and separate accounts we manage. In the case of the investment funds and separately managed accounts, our management fees are based on the equity of and net income earned by the vehicles, which is substantially based on the performance of the securities in which they invest.   In addition, investment performance is one of the most important factors in retaining existing investors and competing for new asset management business. Investment performance may be poor as a result of current or future difficult market or economic conditions, including changes to interest rates or inflation, terrorism or political uncertainty, our investment style, the particular investments that we make, and other factors beyond our control. In the event that our investment funds or separately managed accounts perform poorly, our asset management revenues and earnings will suffer a decline. We may be unable to raise capital for new investment funds or separately managed accounts to offset any losses we may experience. In addition, our management contracts may be terminated for various reasons.  26 Table of Contents    Any agreement to indemnify a SPAC against certain claims could negatively affect our financial results.      In connection with our investments in SPACs in which we sponsor, we have agreed to and may continue to agree in the future to, indemnify the SPAC for all claims by third parties for services rendered or products sold to the SPAC, or claims by any prospective target business with which the SPAC discusses entering into a transaction agreement, subject to certain limitations. Our indemnification of the SPAC with respect to any such claims could negatively affect our financial results.  In addition, if the SPAC liquidates, we may be liable to the SPAC under these indemnification obligations.   We may in the future make loans to the SPACs in which we sponsor, which may not be repaid, in which event our financial results could be adversely affected.     We have made loans to the SPACs in which we have sponsored to fund the SPAC’s operating expenses following its IPO and may continue to do so in the future.  These loans generally bear no interest and, if a SPAC consummates a business combination in the required time frame, we would expect the loan to be repaid from the funds held in the SPAC’s trust account.  If a SPAC to which we have loaned funds does not consummate a business combination in the required time frame, no funds from the SPAC’s trust account will be available to repay any loan we have made to such SPAC.  If these loans are not repaid, our financial results could be adversely affected.    Our executive officers and members of our senior management team may allocate some portion of their time to the business of the SPACs of which we are a sponsor and to the SPACs of third party entities, which may create conflicts of interest in their determination as to how much time to devote to our affairs and may have a negative impact on our business.   Our executive officers and members of our senior management team serve key roles in the SPACs of which we are a sponsor.  For example, John Butler, our Managing Director of U.S. Insurance Strategy, serves as the Chief Executive Officer and President of the Insurance SPAC III and Joseph Pooler, our Chief Financial Officer, serves as the Chief Financial Officer of the Insurance SPAC III.  We also anticipate that our executive officers and members of our senior management team will serve as key employees for future SPACs of which we are the sponsors.  If our executive officers’ and members of our senior management team’s  involvement in the business affairs of the SPACs of which we are a sponsor require any of them to devote substantial amounts of time to such affairs, it could limit their ability to devote time to our business affairs, which may have a negative impact on our business.   Daniel G. Cohen is a member of Cohen Circle, a fintech investing platform and the sponsor of third party SPACs.  Mr. Cohen’s involvement in Cohen Circle could also limit his ability to devote time to our business affairs, which may have a negative impact on our business.  In addition, Joseph Pooler, our Chief Financial Officer and Douglas Listman, our Chief Accounting Officer serve as Chief Financial Officer of certain SPACs sponsored by Cohen Circle.     If our risk management systems for our businesses are ineffective, we may be exposed to material unanticipated losses.   We seek to manage, monitor, and control our operational, legal and regulatory risk through operational and compliance reporting systems, internal controls, management review processes and other mechanisms, and may not fully mitigate the risk exposure of our businesses in all economic or market environments or protect against all types of risk. Further, our risk management methods may not effectively predict future risk exposures, which could be significantly greater than the historical measures indicate. In addition, some of our risk management methods are based on an evaluation of information regarding markets, clients, and other matters that are based on assumptions that may no longer be accurate. A failure to adequately manage our growth, or to effectively manage our risk, could materially and adversely affect our business and financial condition. In addition, we are deploying our own capital in our funds and in principal investments, and limitations on our ability to withdraw some or all of our investments in these funds or liquidate our investment positions, whether for legal, reputational, illiquidity or other reasons, may make it more difficult for us to control the risk exposures relating to these investments.   We are highly dependent on information and communications systems. Systems failures could significantly disrupt our business, which may, in turn, negatively affect our operating results.   Our business will depend, to a substantial degree, on the proper functioning of our information and communications systems and our ability to retain the employees and consultants who operate and maintain these systems. Any failure or interruption of our systems, due to systems failures, staff departures or otherwise, could result in delays, increased costs or other problems which could have a material adverse effect on our operating results. A disaster, such as water damage to an office, an explosion or a prolonged loss of electrical power, could materially interrupt our business operations and cause material financial loss, regulatory actions, reputational harm or legal liability. In addition, if security measures contained in our systems are breached as a result of third-party action, employee error, malfeasance or otherwise, our reputation may be damaged, and our business could suffer. We have developed a business continuity plan, however, there are no assurances that such plan will be successful in preventing, timely and adequately addressing, or mitigating the negative effects of any failure or interruption.   There can be no assurance that our information systems and other technology will continue to be able to accommodate our operations, or that the cost of maintaining the systems and technology will not materially increase from the current level. A failure to accommodate our operations, or a material increase in costs related to information systems and technology, could have a material adverse effect on our business.   We may not be able to keep pace with continuing changes in technology.   Our market is characterized by rapidly changing technology. To be successful, we must adapt to this rapidly changing environment by continually improving the performance, features, and reliability of our services. We could incur substantial costs if we need to modify our services or infrastructure or adapt our technology to respond to these changes. A delay or failure to address technological advances and developments or an increase in costs resulting from these changes could have a material and adverse effect on our business, financial condition and results of operations.   Failure to protect client data or prevent breaches of our information systems could expose us to liability or reputational damage .   The secure transmission of confidential information over public networks is a critical element of our operations. We are dependent on information technology networks and systems to securely process, transmit and store electronic information and to communicate among our locations and with our clients and vendors. As the breadth and complexity of this infrastructure continue to grow, the potential risk of security breaches and cyber-attacks increases. As a financial services company, we may be subject to cyber-attacks and phishing scams by third parties. In addition, vulnerabilities of our external service providers and other third parties could pose security risks to client information. Such breaches could lead to shutdowns or disruptions of our systems and potential unauthorized disclosure of confidential information and violations of privacy laws and regulations.   27 Table of Contents   In providing services to clients, we manage, utilize and store sensitive and confidential client data, including personal data. As a result, we are subject to numerous laws and regulations designed to protect this information, such as U.S. federal and state laws and foreign regulations governing the protection of personally identifiable information. These laws and regulations are increasing in complexity and number, change frequently and sometimes conflict. If any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to client data, or otherwise mismanages or misappropriates that data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions. Unauthorized disclosure of sensitive or confidential client data, whether through systems failure, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients. Similarly, unauthorized access to or through our information systems, whether by our employees or third parties, including a cyber-attack by computer programmers and hackers who may deploy viruses, worms or other malicious software programs, could result in negative publicity, significant remediation costs, legal liability, financial responsibility under our security guarantee to reimburse clients for losses resulting from unauthorized activity in their accounts and damage to our reputation and could have a material adverse effect on our results of operations. Further, the General Data Protection Regulation (“GDPR”) requires entities processing the personal data of individuals in the European Union to meet certain requirements regarding the handling of that data. Failure to meet GDPR requirements could result in substantial penalties and materially adversely impact our financial results. The occurrence of any of these incidents could result in reputational damage, adverse publicity, loss of consumer confidence, reduced sales and profits, complications in executing our growth initiatives and regulatory and legal risk, including criminal penalties or civil liabilities. In addition, our liability insurance might not be sufficient in type or amount to cover us against claims related to security breaches, cyber-attacks, phishing scams and other related breaches.   We are largely dependent on Pershing LLC to provide clearing services and margin financing.      Our broker-dealer relies on Pershing LLC to provide clearing services, as well as other operational and support functions that cannot be provided for internally. In addition, currently all of our margin financing is obtained from Pershing LLC.  As of December 31, 2022, our total margin loan payable to Pershing LLC is $135.0 million.  If our relationship with Pershing LLC is terminated, there can be no assurance that the functions and margin loan financing previously provided could be replaced on comparable economic terms.    Our substantial level of indebtedness could adversely affect our financial health and ability to compete. In addition, our failure to satisfy the financial covenants in our debt agreements could result in a default and acceleration of repayment of the indebtedness thereunder.   Our balance sheet includes approximately $52.6 million par value of recourse indebtedness. Our indebtedness could have important consequences to our stockholders. For example, our indebtedness could:     • make it more difficult for us to pay our debts as they become due during general adverse economic and market industry conditions because any related decrease in revenues could cause our cash flows from operations to decrease and make it difficult for us to make our scheduled debt payments;   • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and consequently, place us at a competitive disadvantage to our competitors with less debt;   • require a substantial portion of our cash flow from operations to be used for debt service payments, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes;   • limit our ability to borrow additional funds to expand our business or alleviate liquidity constraints, as a result of financial and other restrictive covenants in our indebtedness; and   • result in higher interest expense in the event of increases in interest rates since some of our borrowings are and will continue to be, at variable rates of interest.   Under the junior subordinated notes related to the Alesco Capital Trust, we are required to maintain a total debt to capitalization ratio of less than 0.95 to 1.0. Also, because the aggregate amount of our outstanding subordinated debt exceeds 25% of our net worth, we are unable to issue any further subordinated debt.  As of December 31, 2022, we have a substantial amount of debt with variable interest rates. We may experience material increases in our interest expense as a result of increases in general interest rate levels.  In addition, our indebtedness imposes restrictions that limit our discretion with regard to certain business matters, including our ability to engage in consolidations and mergers and our ability to transfer and lease certain of our properties. Such restrictions could make it more difficult for us to expand, finance our operations and engage in other business activities that may be in our interest.  Our ability to comply with these and any other provisions of such agreements will be affected by changes in our operating and financial performance, changes in business conditions or results of operations, adverse regulatory developments or other events beyond our control. The breach of any of these covenants could result in a default, which could cause our indebtedness to become due and payable. If the maturity of our indebtedness were accelerated, we may not have sufficient funds to pay such indebtedness. Any additional indebtedness we may incur in the future may subject us to similar or even more restrictive conditions.   Accounting rules for certain of our transactions are highly complex and involve significant judgment and assumptions. Changes in accounting interpretations or assumptions could adversely impact our financial statements.   Accounting rules for transfers of financial assets, income taxes, compensation arrangements including share-based compensation, securitization transactions, consolidation of variable interest entities, determining the fair value of financial instruments and other aspects of our operations are highly complex and involve significant judgment and assumptions. These complexities could lead to delay in preparation of our financial information. Changes in accounting interpretations or assumptions could materially impact our financial statements.   28 Table of Contents   We may change our investment strategy, hedging strategy, asset allocation and operational policies without our stockholders’ consent, which may result in riskier investments and adversely affect the market value of our Common Stock.   We may change our investment strategy, hedging strategy, asset allocation and/or operational policies at any time without the consent of our stockholders. A change in our investment or hedging strategy may increase our exposure to various risks including interest rate and exchange rate fluctuations. Furthermore, our board of directors will determine our operational policies and may amend or revise our policies, including polices with respect to our acquisitions, growth, operations, indebtedness, capitalization and distributions, or our board may approve transactions that deviate from these policies without a vote of, or notice to, our stockholders. Operational policy changes could adversely affect the market value of our Common Stock.   Maintenance of our Investment Company Act exemption imposes limits on our operations, and loss of our Investment Company Act exemption would adversely affect our operations.   We seek to conduct our operations so that we are not required to register as an investment company under the Investment Company Act. Section 3(a)(l)(C) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), defines an “investment company” as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Excluded from the term “investment securities,” among other things, are securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company set forth in Section 3(c)(l) or Section 3(c)(7) of the Investment Company Act.   We are a holding company that conducts our business primarily through the Operating LLC as a voting-controlled subsidiary. Whether or not we qualify under the 40% test is primarily based on whether the securities we hold in the Operating LLC are investment securities. If we were required to register as an investment company under the Investment Company Act, we would become subject to substantial regulation with respect to our capital structure (including our ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company Act) and other matters. Such limitations could have a material adverse effect on our business and operations. As of December 31, 2022, we are in compliance with and meet the Section 3(a)(1)(C) exclusion.   The soundness of other financial institutions and intermediaries affects us .   We face the risk of operational failure, termination or capacity constraints of any of the clearing agents, exchanges, clearing houses or other financial intermediaries that we use to facilitate our securities transactions. As a result of the consolidation over the years of clearing agents, exchanges and clearing houses, our exposure to certain financial intermediaries has increased and could affect our ability to find adequate and cost-effective alternatives should the need arise. Any failure, termination or constraint of these intermediaries could adversely affect our ability to execute transactions, service our clients and manage our exposure to risk.   Our ability to engage in routine trading and funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, funding, and counterparty or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial industry, including brokers and dealers, commercial banks, investment banks, mortgage originators and other institutional clients. Furthermore, although we do not hold any European sovereign debt, we may do business with and be exposed to financial institutions that have been affected by the recent European sovereign debt crisis. As a result, defaults by, or even rumors or questions about the financial condition of, one or more financial services institutions, or the financial services industry generally, have historically led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices insufficient to recover the full amount of the loan or derivative exposure due us. Although we have not suffered any material or significant losses as a result of the failure of any financial counterparty, any such losses in the future may materially adversely affect our results of operations.   We operate in a highly regulated industry and may face restrictions on, and examination of, the way we conduct certain of our operations.   Our business is subject to extensive government and other regulation, and our relationship with our broker-dealer clients may subject us to increased regulatory scrutiny. These regulations are designed to protect the interests of the investing public generally rather than our stockholders and may result in limitations on our activities. Governmental and self-regulatory organizations, including the SEC, FINRA, the Commodity Futures Trading Commission and other agencies and securities exchanges such as the NYSE and NYSE American regulate the U.S. financial services industry, and regulate certain of our operations in the U.S. Some of our international operations are subject to similar regulations in their respective jurisdictions, including rules promulgated by  the ACPR which apply to our operations in France. These regulatory bodies are responsible for safeguarding the integrity of the securities and other financial markets and protecting the interests of investors in those markets. In addition, all records of registered investment advisors and broker-dealers are subject at any time, and from time to time, to examination by the SEC. Some aspects of the business that are subject to extensive regulation and/or examination by regulatory agencies, include:     • sales methods, trading procedures and valuation practices;   • investment decision making processes and compensation practices;   • use and safekeeping of client funds and securities;   • the manner in which we deal with clients;   • the safeguarding of personally identifiable information;   • capital requirements;   • financial and reporting practices;   • required record keeping and record retention procedures;   • the licensing of employees;   • the conduct of directors, officers, employees and affiliates;   • systems and control requirements;   • conflicts of interest including, but not limited to allocation of investment opportunities and targets for business combinations for SPACs;   • restrictions on marketing, gifts and entertainment; and   • client identification and anti-money laundering requirements.   29 Table of Contents   The SEC, FINRA, ACPR, and various other domestic and international regulatory agencies also have stringent rules and regulations with respect to the maintenance of specific levels of net capital by broker-dealers. Generally, in the U.S., a broker-dealer’s net capital is defined as its net worth, plus qualified subordinated debt, less deductions for certain types of assets. If these net capital rules are changed or expanded, or if there is an unusually large charge against net capital, our operations that require the intensive use of capital would be limited. Also, our ability to withdraw capital from our regulated subsidiaries is subject to restrictions, which in turn could limit our ability or that of our subsidiaries to pay dividends, repay debt, make distributions and redeem or purchase shares of our Common Stock or other equity interests in our subsidiaries. A large operating loss or charge against net capital could adversely affect our ability to expand or even maintain our expected levels of business, which could have a material adverse effect on our business. In addition, we may become subject to net capital requirements in other foreign jurisdictions in which we operate. While we expect to maintain levels of capital in excess of regulatory minimums, we cannot predict our future capital needs or our ability to obtain additional financing.   If we or any of our subsidiaries fail to comply with any of these laws, rules or regulations, we or such subsidiary may be subject to censure, significant fines, cease-and-desist orders, suspension of business, suspensions of personnel or other sanctions, including revocation of registrations with FINRA, withdrawal of authorizations from or revocation of registrations with international agencies to whose regulation we are subject, which would have a material adverse effect on our business. The adverse publicity arising from the imposition of sanctions against us by regulators, even if the amount of such sanctions is small, could harm our reputation and cause us to lose existing clients or fail to gain new clients.   The authority to operate as a broker-dealer in a jurisdiction is dependent on the registration or authorization in that jurisdiction or the maintenance of a proper exemption from such registration or authorization. Our ability to comply with all applicable laws and rules is largely dependent on our compliance, credit approval, audit and reporting systems and procedures, as well as our ability to attract and retain qualified personnel. Any growth or expansion of our business may create additional strain on our compliance, credit approval, audit and reporting systems and procedures and could result in increased costs to maintain and improve such systems and procedures.   In addition, new laws or regulations or changes in the enforcement of existing laws or regulations applicable to us and our clients may adversely affect our business, and our ability to function in this environment will depend on our ability to constantly monitor and react to these changes. Such changes may cause us to change the way we conduct our business, both in the U.S. and internationally. The government agencies that regulate us have broad powers to investigate and enforce compliance and punish noncompliance with their rules, regulations and industry standards of practice. If we and our directors, officers and employees fail to comply with the rules and regulations of these government agencies, we and they may be subject to claims or actions by such agencies.   Substantial legal liability or significant regulatory action could have material adverse financial effects or cause significant reputational harm, either of which could seriously harm our business.   We face substantial regulatory and litigation risks and conflicts of interests and may face legal liability and reduced revenues and profitability if our business is not regarded as compliant or for other reasons. We are subject to extensive regulation, and many aspects of our business will subject us to substantial risks of liability. We engage in activities in connection with (1) the evaluation, negotiation, structuring, marketing, and sales and management of our investment funds and financial products, (2) our Capital Markets segment, (3) our asset management operations, and (4) our investment activities. Our activities may subject us to the risk of significant legal liabilities under securities or other laws for material omissions or materially false or misleading statements made in connection with securities offerings and other transactions. In addition, to the extent our clients, or investors in our investment funds and financial products, suffer losses, they may claim those losses resulting from our or our officers’, directors’, employees’, agents’ or affiliates’ breach of contract, fraud, negligence, willful misconduct or other similar misconduct, and may bring actions against us under federal or state securities or other applicable laws. Dissatisfied clients may also make claims against us regarding quality of trade execution, improperly settled trades, or mismanagement. We may become subject to these claims as the result of failures or malfunctions of electronic trading platforms or other brokerage services, including failures or malfunctions of third-party providers’ systems which are beyond our control, and third parties may seek recourse against us for any losses. In addition, investors may claim breaches of collateral management agreements, which could lead to our termination as collateral manager under such agreements.   Following the start of the financial crisis in 2007, the volume of claims and amount of damages claimed in litigation and regulatory proceedings against financial advisors and asset managers increased. With respect to the asset management business, we make investment decisions on behalf of our clients that could result in, and in some instances in the past have resulted in, substantial losses. In addition, as a manager, we are responsible for clients’ compliance with regulatory requirements. Investment decisions we make on behalf of clients could cause such clients to fail to comply with regulatory requirements and could result in substantial losses. Although the management agreements generally include broad indemnities and provisions designed to limit our exposure to legal claims relating to our services, these provisions may not protect us or may not be enforced in all cases.   In addition, we are exposed to risks of litigation or investigation relating to transactions which present conflicts of interest that are not properly addressed. In such actions, we could be obligated to bear legal, settlement and other costs (which may be in excess of available insurance coverage). Also, with a workforce consisting of many very highly paid professionals, we may face the risk of lawsuits relating to claims for compensation, which may individually or in the aggregate be significant in amount. Similarly, certain corporate events, such as a reduction in our workforce or employee separations, could also result in additional litigation or arbitration. In addition, as a public company, we are subject to the risk of investigation or litigation by regulators or our public stockholders arising from an array of possible claims, including investor dissatisfaction with the performance of our business or our share price, allegations of misconduct by our officers and directors or claims that we inappropriately dealt with conflicts of interest or investment allocations. In addition, we may incur significant expenses in defending claims, even those without merit. If any claims brought against us result in a finding of substantial legal liability and/or require us to incur all or a portion of the costs arising out of litigation or investigation, our business, financial condition, liquidity and results of operations could be materially and adversely affected. Such litigation or investigation, whether resolved in our favor or not or ultimately settled, could cause significant reputational harm, which could seriously harm our business.   The competitive pressures we face as a result of operating in highly competitive markets could have a material adverse effect on our business, financial condition, liquidity and results of operations.   A number of entities conduct asset management, origination, investment, and broker-dealer activities. We compete with public and private funds, SPACs and SPAC sponsors, REITs, commercial and investment banks, savings and loan institutions, mortgage bankers, insurance companies, institutional bankers, governmental bodies, commercial finance companies, traditional asset managers, brokerage firms and other entities.   30 Table of Contents   Many firms offer similar and/or additional products and services to the same types of clients that we target or may target in the future. Many of our competitors are substantially larger and have more relevant experience, have considerably greater financial, technical and marketing resources, and have more personnel than we have. There are few barriers to entry, including a relatively low cost of entering these lines of business, and the successful efforts of new entrants into our expected lines of business, including major banks and other financial institutions, may result in increased competition. Other industry participants may, from time to time, seek to recruit our investment professionals and other employees away from us.    With respect to our asset management activities, our competitors may have more extensive distribution capabilities, more effective marketing strategies, more attractive investment vehicle structures and broader name recognition than we do. Further, other investment managers may offer services at more competitive prices than we do, which could put downward pressure on our fee structure. With respect to our origination and investment activities, some competitors may have a lower cost of funds, enhanced operating efficiencies, and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than we can. The competitive pressures we face, if not effectively managed, may have a material adverse effect on our business, financial condition, liquidity and results of operations.   Also, as a result of this competition, we may not be able to take advantage of attractive asset management, origination and investment opportunities and, therefore, may not be able to identify and pursue opportunities that are consistent with our business objectives. Competition may limit the number of suitable investment opportunities offered to us. It may also result in higher prices, lower yields and a narrower spread of yields over our borrowing costs, making it more difficult for us to acquire new investments on attractive terms. In addition, competition for desirable investments could delay the investment in desirable assets, which may in turn reduce our earnings per share.    With respect to our broker-dealer activities, our revenues could be adversely affected if large institutional clients that we have increase the amount of trading they do directly with each other rather than through our broker-dealer, decrease the amount of trading they do with our broker-dealer because they decide to trade more with our competitors, decrease their trading of certain over-the-counter (“OTC”) products in favor of exchange-traded products, or hire in-house professionals to handle trading that our broker-dealer would otherwise be engaged to do.   We have experienced intense price competition in our fixed income brokerage business in recent years. Some competitors may offer brokerage services to clients at lower prices than we offer, which may force us to reduce our prices or to lose market share and revenue. In addition, we intend to focus primarily on providing brokerage services in markets for less commoditized financial instruments. As the markets for these instruments become more commoditized, we could lose market share to other inter-dealer brokers, exchanges and electronic multi-dealer brokers who specialize in providing brokerage services in more commoditized markets. If a financial instrument for which we provide brokerage services becomes listed on an exchange or if an exchange introduces a competing product to the products, we broker in the OTC market, the need for our services in relation to that instrument could be significantly reduced. Further, the recent consolidation among exchange firms, and expansion by these firms into derivative and other non-equity trading markets, will increase competition for customer trades and place additional pricing pressure on commissions and spreads.    Employee misconduct or error, which can be difficult to detect and deter, could harm us by impairing our ability to attract and retain clients and by subjecting us to significant legal liability and reputational harm.   There have been a number of highly publicized cases involving fraud, trading on material non-public information, or other misconduct by employees and others in the financial services industry, and there is a risk that our employees could engage in misconduct that adversely affects our business. For example, we may be subject to the risk of significant legal liabilities under securities or other laws for our employees’ material omissions or materially false or misleading statements in connection with securities and other transactions. In addition, our advisory business requires that we deal with confidential matters of great significance to our clients. If our employees were to improperly use or disclose confidential information provided by our clients, we could be subject to regulatory sanctions and could suffer serious harm to our reputation, financial position, current client relationships and ability to attract future clients. We are also subject to extensive regulation under securities laws and other laws in connection with our asset management business. Failure to comply with these legislative and regulatory requirements by any of our employees could adversely affect us and our clients. It is not always possible to deter employee misconduct, and any precautions taken by us to detect and prevent this activity may not be effective in all cases.   Furthermore, employee errors, including mistakes in executing, recording or reporting transactions for clients (such as entering into transactions that clients may disavow and refuse to settle) could expose us to financial losses and could seriously harm our reputation and negatively affect our business. The risk of employee error or miscommunication may be greater for products that are new or have non-standardized terms.   31 Table of Contents    Risks Related to Our Organizational Structure and Ownership of Our Common Stock      We could repurchase shares of our Common Stock at price levels considered excessive, the amount of our Common Stock we repurchase may decrease from historical levels, or we may not repurchase any additional shares of our Common Stock in the future.   During 2021 and 2022, 49,544 and 0 shares of Common Stock, respectively, were repurchased and retired by us both in accordance with our Rule 10b5-1 trading plan (the “10b5-1 Plan”). We could repurchase shares of our Common Stock at price levels considered excessive, thereby spending more cash on such repurchases then deemed reasonable and effectively retiring fewer shares than would be retired if repurchases were effected at lower prices.  Further, our future repurchases of shares of our Common Stock, if any, and the number of shares of Common Stock we may repurchase will depend upon our financial condition, results of operations and other factors deemed relevant by our board of directors. There can be no assurance that we will continue our practice of repurchasing shares of our Common Stock or that we will have the financial resources to repurchase   shares of our Common Stock in the future.   See note 21 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information regarding the 10b5-1 Plan.       We are a holding company whose primary asset is units of membership interests in the Operating LLC, and we are dependent on distributions from the Operating LLC to pay taxes and other obligations.   We are a holding company whose primary asset is units of membership interests in the Operating LLC. Since the Operating LLC is a limited liability company taxed as a partnership, we, as a member of the Operating LLC, could incur tax obligations as a result of our allocable share of the income from the operations of the Operating LLC. In addition, we have convertible senior debt and junior subordinated notes outstanding. The Operating LLC will pay distributions to us in amounts necessary to satisfy our tax obligations and regularly scheduled payments of interest in connection with our convertible senior debt and our junior subordinated notes, and we are dependent on these distributions from the Operating LLC in order to generate the funds necessary to meet these obligations and liabilities. Industry conditions and financial, business and other factors will affect our ability to generate the cash flows we need to make these distributions. There may be circumstances under which the Operating LLC may be restricted from paying dividends to us under applicable law or regulation (for example due to Delaware limited liability company act limitations on the Operating LLC’s ability to make distributions if liabilities of the Operating LLC after the distribution would exceed the value of the Operating LLC’s assets).   As a holding company that does not conduct business operations in its own right, substantially all of the assets of the Company are comprised of our minority economic ownership interest in the Operating LLC. The Company’s ability to pay any dividends to our stockholders will be dependent on any distributions we receive from the Operating LLC and subject to the Operating LLC’s operating agreement (the “Operating LLC Agreement”). The amount and timing of distributions by the Operating LLC will be at the discretion of the Operating LLC’s board of managers, which is comprised of Daniel G. Cohen, our Executive Chairman and the majority owner of the Operating LLC, Lester Brafman, our Chief Executive Officer and Joseph W. Pooler, Jr., our Chief Financial Officer.   Certain subsidiaries of the Operating LLC have restrictions on the withdrawal of capital and otherwise in making distributions and loans. JVB is subject to net capital restrictions imposed by the SEC and FINRA, which require certain minimum levels of net capital to remain in JVB. In addition, these restrictions could potentially impose notice requirements or limit the Company’s ability to withdraw capital above the required minimum amounts (excess capital) whether through distribution or loan. CCFEL is regulated by the CBI in Ireland and must maintain certain minimum levels of capital.  CCFESSA is regulated by the ACPR and must maintain certain minimum levels of capital.   Daniel G. Cohen, our Executive Chairman, has significant ownership interests in the Operating LLC and competing duties to other entities (including Cohen Circle) that could create potential conflicts of interest and may result in decisions that are not in the best interests of other Cohen & Company Inc. stockholders.   As of December 31, 2022, Daniel G. Cohen, our Executive Chairman, individually and through an entity he wholly owns, Cohen Bros. Financial, LLC (“CBF”), owns 23,476,355 units of membership interests (including both unrestricted and restricted units), or 38.8% of the membership interests in the Operating LLC.  In addition, as of December 31, 2022, the DGC Trust owns 20,225,095 or 33.4% units of the membership interests in the Operating LLC.  The DGC Trust was formed by Daniel G. Cohen.  Although Daniel G. Cohen is neither a trustee nor a named beneficiary of the DGC Trust and does not have any voting or dispositive control of securities held by the trust, he may be deemed to be a beneficial owner of all securities held by the DGC Trust as a result of his ability to acquire any of the DGC Trust’s assets, including any securities held by the DGC Trust (and, in turn, the sole voting and sole dispositive power with respect to such securities), by substituting other property of an equivalent value without the approval or consent of any person, including any trustee or beneficiary of the DGC Trust.       Cohen & Company, Inc. also holds units of membership interests in the Operating LLC and has the majority voting power of the LLC through a proxy granted to it by Mr. Cohen and the DGC Trust.  On September 25, 2020, the Securities Purchase Agreement (the "SPA") dated December 30, 2019, by and among the Company, the Operating LLC, Daniel Cohen, and DGC Trust and the Amended and Restated Limited Liability Company Agreement of the Operating LLC were amended to provide that the voting proxy shall be revoked in the event that Daniel G. Cohen and/or his affiliates cease to beneficially own a majority of the voting securities of the Company. See notes 21 and 31.   Additionally, as of December 31, 2022, Daniel G. Cohen owns 5.8% of our Common Stock.  Further, as of such date, Mr. Cohen could be deemed to be the beneficial owner of additional shares of our Common Stock representing 4.5%, which is owned by EBC 2013 Family Trust (“EBC”) as the result of Mr. Cohen’s position as trustee of the trust and as a result of the fact that Mr. Cohen has sole voting power with respect to all securities held by EBC.  As noted above, Daniel G. Cohen may control certain actions of the Company. As an owner of interests in the Operating LLC, Daniel G. Cohen may have interests that differ from the stockholders of the Company, including in circumstances in which there may be tax consequence to the members of the Operating LLC. Further, Daniel G. Cohen’s ownership interests in third party entities, including Cohen Circle, may result in his interests differing from the stockholders of the Company.  As a result of his ownership in both the Company, the Operating LLC and third party entities, including Cohen Circle, it is possible that Daniel G. Cohen as a shareholder of the Company could approve or reject actions based on his own interests as a stockholder that may or may not be in the best interests of the other the Company’s stockholders.   32 Table of Contents   We are controlled by Daniel G. Cohen, whose interests in our business may be different than our other stockholders, and, as a “controlled company” within the meaning of the rules of NYSE American, our other stockholders will not have the same protections afforded to stockholders of companies that are subject to certain corporate governance requirements.   Mr. Cohen currently owns approximately 42.9% of the voting power of the Company as a result of his ownership of Common Stock, Series E Preferred Stock and Series F Preferred Stock.   Further, the DGC Family Fintech Trust (the “DGC Trust”), a trust formed by Mr. Cohen, owns 9,880,268 shares of our Series F Preferred Stock.  Our Series F Preferred Stock votes together with the holders of our Common Stock on all matters, entitling the holders thereof to one vote for every ten shares of Series F Preferred Stock held.  Accordingly, the shares of Series F Preferred Stock held by the DGC Trust entitle the DGC Trust to 988,027 votes on matters presented to holders of our Common Stock.  Although Daniel G. Cohen is neither a trustee nor a named beneficiary of the DGC Trust and does not have any voting or dispositive control of securities held by the DGC Trust, pursuant to the terms of the DGC Trust, Mr. Cohen has the ability to acquire any of the DGC Trust’s assets, including the 9,880,268 units of the membership interests in the Operating LLC held by the DGC Trust (at any time and without the consent of the trustees or beneficiaries of the DGC Trust) by substituting such assets with other property of equivalent value.  Accordingly, Mr. Cohen, at any time, could become the owner of the membership interests in the Operating LLC currently held by the DGC Trust and, in turn, an additional 21.9% of the voting power of the Company.   As a result of Mr. Cohen’s voting control of the Company, Mr. Cohen has the right to designate all members of our board of directors and his nominees to our board of directors will have the ability to control the appointment of our management, the entering into of mergers, material acquisitions and dispositions and other extraordinary transactions and to influence amendments to our charter, bylaws and other corporate governance documents. So long as Mr. Cohen continues to own a majority of our voting stock, he will have the ability to control the vote in any election of directors and will have the ability to approve or prevent any transaction that requires stockholder approval regardless of whether others believe the transaction are or are not in our best interests. In any of these matters, the interests of Mr. Cohen may differ from or conflict with the interests of our other stockholders. Moreover, this concentration of voting stock ownership may also adversely affect the trading price for our Common Stock to the extent investors perceive disadvantages in owning stock of a company with a controlling stockholder.   In addition, because Mr. Cohen controls a majority of our voting stock, we are a “controlled company” within the meaning of the corporate governance standards of NYSE American. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirements that a majority of the board of directors consist of independent directors and the requirements that the executive compensation committee and nominating and corporate governance committee each be comprised entirely of independent directors. We may take advantage of certain of these exemptions for as long as we continue to qualify as a “controlled company.” Accordingly, our stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of NYSE American.   Any future distributions to our stockholders will depend upon certain factors affecting our operating results, some of which are beyond our control.  Our board of directors has not declared cash dividends recently. Any future distributions to our stockholders will depend upon certain factors affecting our operating results, some of which are beyond our control.   Our ability to make cash distributions is based on many factors, including the return on our investments, operating expense levels and certain restrictions imposed by Maryland law. Some of these factors are beyond our control and a change in any such factor could affect our ability to make distributions in the future. We may not be able to make distributions. Our stockholders should rely on increases, if any, in the price of our Common Stock for any return on their investment. Furthermore, we are dependent on distributions from the Operating LLC to be able to make distributions. See the risk factor above titled “We are a holding company whose primary asset is units of membership interest in the Operating LLC and we are dependent on distributions from the Operating LLC to pay taxes and other obligations.”   Future sales of our Common Stock in the public market could lower the price of our Common Stock and impair our ability to raise funds in future securities offerings.   Future sales of a substantial number of shares of our Common Stock in the public market, or the perception that such sales may occur, could adversely affect the then prevailing market price of our Common Stock and could make it more difficult for us to raise funds in the future through a public offering of our securities.   Your percentage ownership in the Company may be diluted in the future.   Your percentage ownership in the Company may be diluted in the future because of equity awards that have been, or may be, granted to our directors, officers and employees. We have adopted equity compensation plans that provide for the grant of equity-based awards, including restricted stock, stock options and other equity-based awards to our directors, officers and other employees, advisors and consultants. At December 31, 2022, we had 341,059 shares of restricted stock outstanding to employees and directors of the Company and there were 761,324 shares available for future awards under our equity compensation plans. The Operating LLC also has issued 6,541,490   units that are restricted.  Vesting of restricted stock, Operating LLC units, and stock option grants is generally contingent upon performance conditions and/or service conditions. Vesting of those shares of restricted units and stock would dilute the ownership interest of existing stockholders. Equity awards will continue to be a source of compensation for employees and directors.   If we raise additional capital, we expect it will be necessary for us to issue additional equity or convertible debt securities. If we issue equity or convertible debt securities, the price at which we offer such securities may not bear any relationship to our value, the net tangible book value per share may decrease, the percentage ownership of our current stockholders would be diluted, and any equity securities we may issue in such offering or upon conversion of convertible debt securities issued in such offering, may have rights, preferences or privileges with respect to liquidation, dividends, redemption, voting and other matters that are senior to or more advantageous than our Common Stock. If we finance acquisitions by issuing equity securities or securities convertible into equity securities, our existing stockholders will also be diluted.   33 Table of Contents    The issuance of the shares of Common Stock upon the redemption, if any, of the issued and outstanding LLC Units may cause substantial dilution to our existing stockholders and may cause the price of our Common Stock to decline.   There are 60,528,362 units of membership interests in the Operating LLC issued and outstanding, including 23,476,355 units of membership interests in the Operating LLC beneficially owned by Daniel G. Cohen. Subject to certain restrictions, pursuant to the Operating LLC Agreement, a holder of unrestricted units of membership interests in the Operating LLC may cause the Operating LLC to redeem such units at any time for, at the Company’s option, (A) cash or (B) one share of the Company’s Common Stock for every ten units of membership interests in the Operating LLC.  If the outstanding units of membership interests in the Operating LLC are redeemed by the Company for Common Stock, our existing stockholders could be significantly diluted and the price of our Common Stock may decline.  See note 21 to our consolidated financial statements included in this Annual Report on Form 10-K.    We may not be able to generate sufficient taxable income to fully realize our deferred tax asset, which would also have to be reduced if U.S. federal income tax rates are lowered.     As of December 31, 2022, we have recorded a deferred tax asset of $6.9 million.  If we are unable to generate sufficient taxable income prior to the expiration of our NOLs, the NOLs would expire unused. Our projections of future taxable income required to fully realize the recorded amount of the net deferred tax asset reflect numerous assumptions about our operating businesses and investments and are subject to change as conditions change specific to our business units, investments or general economic conditions. Changes that are adverse to us could result in the need to increase our deferred tax asset valuation allowance resulting in a charge to results of operations and a decrease to total stockholders’ equity. In addition, any decrease in the federal statutory tax rate, or other changes in federal tax statutes, could also cause a reduction in the economic benefit of the NOL currently available to us.   The Maryland General Corporation Law (the “MGCL”), and provisions in our charter and bylaws may prevent takeover attempts that could be beneficial to our stockholders.   Provisions of the MGCL and our charter and bylaws could discourage a takeover of us even if a change of control would be beneficial to the interests of our stockholders. These statutory, charter and bylaw provisions include the following:     • the MGCL generally requires the affirmative vote of two-thirds of all votes entitled to be cast on the matter to approve a merger, consolidation, or share exchange involving us or the transfer of all or substantially all of our assets;   • our board of directors has the power to classify and reclassify authorized and unissued shares of our Common Stock or preferred stock and, subject to certain restrictions in the Operating LLC Agreement, authorize the issuance of a class or series of Common Stock or preferred stock without stockholder approval;   • our charter may be amended only if the amendment is declared advisable by our board of directors and approved by the affirmative vote of the holders of our Common Stock entitled to cast at least two-thirds of all of the votes entitled to be cast on the matter;   • a director may be removed from office at any time with or without cause by the affirmative vote of the holders of our Common Stock entitled to cast at least two-thirds of the votes of the stock entitled to be cast in the election of directors;   • an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders and nominations of persons for election to our board of directors at an annual or special meeting of our stockholders;   • no stockholder is entitled to cumulate votes at any election of directors; and   • our stockholders may take action in lieu of a meeting with respect to any actions that are required or permitted to be taken by our stockholders at any annual or special meeting of stockholders only by unanimous consent.   34 Table of Contents   Risks Related to General and Global Factors   The COVID-19 pandemic has caused severe disruptions in the U.S. and global economy and is expected to continue to impact our business, financial condition and results of operations.   Our business operations are and will continue to be susceptible to impacts of the COVID-19 pandemic. There is substantial uncertainty regarding the continuation of the COVID-19 pandemic and whether future, more widespread outbreaks will occur. The impact that the COVID-19 pandemic continues to have on our business and will have on our business in the future will depend on numerous factors that we cannot reliably predict, including the duration and scope of the COVID-19 pandemic; the effectiveness of vaccinations; the implications as a result of the emerging variants of COVID-19; governmental, business, and individuals’ actions in response to the pandemic; and the impact on economic activity including the possibility of recession or financial market instability. These factors may adversely impact global financial market, as well as our businesses, including our SPAC franchise business, TBA trading and mortgage-related operations. This uncertainty may also affect our management’s accounting estimates and assumptions. For further information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - COVID 19 / Impairment of Goodwill” in Part II, Item 7 of this Annual Report on Form 10-K.   We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.   U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine has lead to market disruptions, including significant volatility in credit and capital markets.   Additionally, Russia’s prior annexation of Crimea, the recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military interventions in Ukraine have led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic, including agreement to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets.    Any of the abovementioned factors could affect our business, prospects, financial condition, and operating results. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks described in this Annual Report on Form 10-K.   Climate change concerns and incidents could disrupt our business, adversely affect the profitability of certain of our investments, adversely affect customer activity levels, adversely affect the creditworthiness of our counterparties, and damage our reputation.   Climate change may cause extreme weather events that disrupt our business operations, which may negatively affect our ability to service and interact with our customers, and also may adversely affect the value of certain of our investments, including those in the real estate markets. Climate change may also have a negative impact on the financial condition of our customers, which may decrease revenues from those customers and increase the credit risk associated with loans and other credit exposures to those customers. Additionally, our reputation and customer relationships may be damaged as a result of our involvement, or our customers’ involvement, in certain industries or projects associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change. New regulations or guidance relating to climate change, as well as the perspectives of shareholders, employees and other stakeholders regarding climate change, may affect whether and on what terms and conditions we engage in certain activities or offer certain products.   If we fail to implement our control our costs effectively, our business could be disrupted, and our financial results could be adversely affected.   The Company continues to look for ways to reduce infrastructure costs and reposition itself in the financial services industry. Beginning in 2010 and continuing to the present, the Company executed initiatives that created efficiencies within its business and decreased operating expenses through the realignment of operating facilities, a merger of its two registered U.S. broker-dealer subsidiaries, and a restructuring of operating systems and systems support.   Our cost management initiatives have included reducing our workforce, which has placed increased burdens on our management, systems and resources, and generally increased our dependence on key persons and reduced functional back-ups. As a result, our ability to respond to unexpected challenges may be impaired, and we may be unable to take advantage of new opportunities. In addition, if these and other initiatives do not have the desired effects or result in the projected increased efficiencies, the Company may incur additional or unexpected expenses, reputational damage, or loss of customers which would adversely affect the Company’s operations and revenues.   In response to changes in industry and market conditions, the Company may be required to further strategically realign its resources and consider restructuring, disposing of, or otherwise exiting businesses. We cannot assure you that we will be able to:     • Expand our capabilities or systems effectively;   • Successfully develop new products or services;   • Allocate our human resources optimally;   • Identify, hire or retain qualified employees or vendors;   • Incorporate effectively the components of any business that we may acquire in our effort to achieve growth;   • Sell businesses or assets at their fair market value; or   • Effectively manage the costs associated with developing, growing, acquiring or exiting a business.   35 Table of Contents   We may need to offer new investment strategies and products in order to continue to generate revenue.   The asset management industry is subject to rapid change. Strategies and products that had historically been attractive may lose their appeal for various reasons. Thus, strategies and products that have generated fee revenue for us in the past may fail to do so in the future, in which case we would have to develop new strategies and products. It could be both expensive and difficult for us to develop new strategies and products, and we may not be successful in this regard. Since the disruptions in the global financial markets, we have had difficulty expanding our offerings which has inhibited our growth and harmed our competitive position in the asset management industry, and this may continue in the future.   Our failure to deal appropriately with conflicts of interest could damage our reputation and adversely affect our business.   Appropriately dealing with conflicts of interest is complex and difficult and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential or actual conflicts of interest. It is possible that potential or perceived conflicts could give rise to investor dissatisfaction or litigation or regulatory enforcement actions. In addition, regulatory scrutiny of, or litigation in connection with, conflicts of interest would have a material adverse effect on our reputation, which could materially and adversely affect our business in a number of ways, including an inability to raise additional funds, a reluctance of counterparties to do business with us and the costs of defending litigation.   Insurance may be inadequate to cover risks facing the Company   Our operations and financial results are subject to risks and uncertainties related to our use of a combination of insurance, self-insured retention and self-insurance for a number of risks, including most significantly: property and casualty, workers’ compensation, errors and omissions liability, general liability and the portion of employee-related health care benefits plans we fund, among others.   While we endeavor to purchase insurance coverage that is appropriate to our assessment of risk, we are unable to predict with certainty the frequency, nature or magnitude of claims for direct or consequential damages. Our business may be negatively affected in the future if our insurance proves to be inadequate or unavailable. In addition, insurance claims may harm our reputation or divert management attention and resources away from operating our business.   We depend on third-party software licenses and the loss of any of our key licenses could adversely affect our ability to provide our brokerage services.   We license software from third parties, some of which is integral to our electronic brokerage systems and our business. Such licenses are generally terminable if we breach our obligations under the licenses or if the licensor gives us notice in advance of the termination. If any of these relationships were terminated, or if any of these third parties were to cease doing business, we may be forced to spend significant time and money to replace the licensed software. These replacements may not be available on reasonable terms, or at all. A termination of any of these relationships could have a material adverse effect on our financial condition and results of operations.   If we fail to maintain effective internal control over financial reporting and disclosure controls and procedures in the future, we may not be able to accurately report our financial results, which could have an adverse effect on our business.   If our internal controls over financial reporting and disclosure controls and procedures are not effective, we may not be able to provide reliable financial information. Because we are a smaller reporting company, we are not required to obtain, nor have we voluntarily obtained, an auditor attestation regarding the effectiveness of our controls as of December 31, 2022. Therefore, as of December 31, 2022, we have only performed management’s assessment of the effectiveness of our internal controls and management has determined that our internal controls are effective as of December 31, 2022. Any failure to maintain effective controls in the future could adversely affect our business or cause us to fail to meet our reporting obligations. Such non-compliance could also result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements. In addition, perceptions of our business among customers, suppliers, rating agencies, lenders, investors, securities analysts and others could be adversely affected.   The market price of our Common Stock may be volatile and may be affected by market conditions beyond our control.   The market price of our Common Stock is subject to significant fluctuations in response to, among other factors:     • variations in our operating results and market conditions specific to our business;   • changes in financial estimates or recommendations by securities analysts;   • the emergence of new competitors or new technologies;   • operating and market price performance of other companies that investors deem comparable;   • changes in our board or management;   • sales or purchases of our Common Stock by insiders;   • commencement of, or involvement in, litigation;   • changes in governmental regulations;   • the relatively low trading volumes of our Common Stock; and   • general economic conditions and slow or negative growth of related markets.   In addition, if the market for stocks in our industry, or the stock market in general, experience a loss of investor confidence, the market price of our Common Stock could decline for reasons unrelated to our business, financial condition or results of operations. If any of the foregoing occurs, it could cause the price of our Common Stock to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to the board of directors and management.    Our Common Stock may be delisted, which may have a material adverse effect on the liquidity and value of our Common Stock.   To maintain our listing on the NYSE American, we must meet certain financial and liquidity criteria. The market price of our Common Stock has been and may continue to be subject to significant fluctuation as a result of periodic variations in our revenues and results of operations. If we violate the NYSE American listing requirements, our Common Stock may be delisted. If we fail to meet any of the NYSE American’s listing standards, our Common Stock may be delisted. In addition, our board may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our Common Stock from the NYSE American may materially impair our stockholders’ ability to buy and sell our Common Stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our Common Stock. In addition, the delisting of our Common Stock could significantly impair our ability to raise capital.     36 Table of Contents   ITEM 1B.  UNRESOLVED STAFF COMMENTS.   None.      ITEM 2.  PROPERTIES.   The following table lists our current leases as of December 31, 2022.    City Description   Square Feet   Expiration Date Status (1) New York, NY 3 Columbus Circle- 24th Floor     11,166   2/28/2029 Partially Occupied / Partially Subleased New York, NY 3 Columbus Circle- 17th Floor     8,409   3/31/2024 Occupied Philadelphia, PA 2929 Arch Street     9,501   11/30/2029 Partially Occupied / Partially Subleased Boca Raton, FL 1825 NW Corporate Blvd     5,208   6/30/2024 Occupied Paris, France 17 avenue de l'Opera     1,830   5/31/2030 Occupied Locust Valley, NY 63 Forest Avenue     288   9/30/2025 Occupied Menlo Park, CA 2727 Sandy Hill Road     2,735   8/31/2025 Occupied Jupiter, FL 601 Heritage Drive     290   9/30/2023 Occupied       (1) For purposes of this table, the term “Partially Occupied / Partially Subleased” means we occupy a portion of the space and sublease the remaining portion to a third-party or third parties; and “Occupied” means we fully utilize the space for our operations.   The properties that we occupy are used either by the Company’s Capital Markets, Asset Management, or Principal Investing segments or all three. We believe that the facilities we occupy are suitable and adequate for our current operations.     ITEM  3.  LEGAL PROCEEDINGS.     On October 8, 2021, Cohen & Company, Ltd., an Ohio limited liability company, as plaintiff, filed a complaint with the United States District Court, Eastern District of Pennsylvania, under the caption Cohen & Company, Ltd. v. Cohen & Company Inc. , alleging that Cohen & Company Inc., as defendant, has been using the “Cohen & Company” trademark and business name, which allegedly infringes and unfairly competes with the plaintiff’s registered trademarks “Cohen & Company” and “Cohen & Co,” in violation of applicable federal and state trademark laws and regulations.  Pursuant to the complaint, the plaintiff has demanded that the defendant be permanently enjoined from using the “Cohen & Company” trademark and business name in connection with its business, pay to the plaintiff statutory damages, attorneys’ fees and costs and other damages, and pay over to plaintiff all gains, profits and advantages realized by the defendant from its allegedly unlawful acts and omissions.  The Company filed a partial motion on April 18, 2022, and on October 6, 2022, the Court granted the Company's motion and dismissed the plaintiff's counterfeiting claim with prejudice. On October 27, 2022, the parties executed a confidential settlement agreement and all the plaintiff's claims were dismissed with prejudice on October 31, 2022, ending the case.  Other than legal fees incurred which are included in the Company's financial statements, the Company incurred no loss related to this case.    From time to time, the Company is a party to various routine legal proceedings, claims, and regulatory inquiries arising out of the ordinary course of the Company’s business. Management believes that the results of these routine legal proceedings, claims, and regulatory matters will not have a material adverse effect on the Company’s financial condition, or on the Company’s operations and cash flows. However, the Company cannot estimate the legal fees and expenses to be incurred in connection with these routine matters and, therefore, is unable to determine whether these future legal fees and expenses will have a material impact on the Company’s operations and cash flows. It is the Company’s policy to expense legal and other fees as incurred.    ITEM  4.  MINE SAFETY DISCLOSURES.   Not Applicable.    37 Table of Contents     PART II   ITEM  5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.   Market Information for Our Common Stock and Dividends   Our Common Stock trades under the symbol "COHN" on the NYSE American Stock Exchange. The closing price of our Common Stock was $8.99 on March 6, 2023. We had 1,819,866 shares of Common Stock outstanding held by 35 holders of record as of March 6, 2023.   Commencing on March 22, 2004, our Common Stock began trading on the NYSE under the symbol “SFO.” On October 6, 2006, upon completion of our merger with Alesco Financial Trust and our name change from Sunset Financial Resources, Inc. to Alesco Financial Inc., our NYSE symbol was changed to “AFN.”   On December 16, 2009, we effectuated a 1-for-10 reverse stock split.  Also, our name changed from Alesco Financial Inc. to Cohen & Company Inc., we moved our listing of Common Stock from the NYSE to the NYSE American Stock Exchange (formerly known as the NYSE MKT LLC) and our trading symbol was changed to “COHN.”   Effective January 21, 2011, we changed our name to Institutional Financial Markets, Inc. and our Common Stock began trading on the NYSE American Stock Exchange under the symbol “IFMI.”   On September 1, 2017, we effectuated a second 1-for-10 reverse stock split and changed our name to Cohen & Company Inc. Our trading symbol was changed to “COHN.”   During the third quarter of 2010, our board of directors initiated a dividend of $0.50 per quarter, which was paid regularly through December 31, 2011. Beginning in 2012, our board of directors declared a dividend of $0.20 per quarter, which was paid regularly through the first quarter of 2019.  Each time a cash dividend was declared by our board of directors, a pro rata distribution was made to the other members of the Operating LLC upon payment of dividends to our stockholders. On August 2, 2019, we announced that our board of directors decided to suspend our quarterly cash dividend.     On July 29, 2021, our board of directors reinstated our quarterly dividend declaring a cash dividend of $0.25 per share.  We have paid a cash dividend of $0.25 regularly since then.  In addition to our routine quarterly distribution, on March 8, 2022, our board of directors declared a special dividend of $0.75 per share. Any future determination to declare and pay dividends will be made at the discretion of our board of directors, after taking into account a variety of factors, including business, financial, and regulatory considerations as well as any limitations under Maryland law or imposed by any agreements governing our indebtedness.      Unregistered Sales of Equity Securities   None   Issuer Purchases of Equity Securities    Period   Total Number of Shares Purchased     Average Price Paid Per Share     Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs     Maximum Dollar Value of Shares that May Yet be Purchased under the Plans or Programs (1)   October 1, 2022 - October 31, 2022   -     $-     -     $-   November 1, 2022 - November 30, 2022   -     $-     -     $-   December 1, 2022 - December 31, 2022   -     $-     -     $-   Total     -               -                 (1) Dollar amounts in thousands.  On August 3, 2007, our board of directors authorized us to repurchase up to $50 million of our Common Stock from time to time in open market purchases or privately negotiated transactions. The repurchase plan was publicly announced on August 7, 2007.  See note 21 to our consolidated financial statements in this Annual Report on Form 10-K.      Equity Compensation Plans   Information on certain of our equity compensation plans, for which shares of our common stock are authorized for issuance, is included in the section of our Proxy Statement captioned “Cash and Equity Plan Compensation” and is incorporated herein by reference.     ITEM 6.  [Reserved]       38 Table of Contents     ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.   “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On a regular basis, we evaluate these estimates, including fair value of financial instruments. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.   All amounts in this disclosure are in thousands (except share, unit, per share, and per unit data) except where otherwise noted.    Overview   We are a financial services company specializing in an expanding range of capital markets and asset management services. We are organized into three business segments: Capital Markets, Asset Management, and Principal Investing.     • Capital Markets :  Our Capital Markets business segment consists primarily of fixed income sales, trading, gestation repo financing, new issue placements in corporate and securitized products, and advisory services. Our fixed income sales and trading group provides trade execution to corporate investors, institutional investors, mortgage originators, and other smaller broker-dealers. We specialize in a variety of products, including but not limited to: corporate bonds, ABS, MBS, RMBS, CDOs, CLOs, CBOs, CMOs, municipal securities, TBAs and other forward agency MBS contracts, U.S. government bonds, U.S. government agency securities, brokered deposits and CDs for small banks, and hybrid capital of financial institutions including TruPS, whole loans, and other structured financial instruments. We also offer execution and brokerage services for equity products. We carry out our capital markets activities primarily through our subsidiaries: JVB in the United States and CCFESA in Europe.  A division of JVB, Cohen & Company Capital Markets ("CCM") is our full-service boutique investment bank which focuses on M&A, capital markets, and SPAC advisory.     • Asset Management : Our Asset Management business segment manages assets within CDOs, managed accounts, joint ventures, and investment funds (collectively, “Investment Vehicles”). A CDO is a form of secured borrowing. The borrowing is secured by different types of fixed income assets such as corporate or mortgage loans or bonds. The borrowing is in the form of a securitization, which means that the lenders are actually investing in notes backed by the assets. In the event of default, the lenders will have recourse only to the assets securing the loan. Our Asset Management business segment includes our fee-based asset management operations, which include on-going base and incentive management fees. As of December 31, 2022, we had approximately $2.1 billion in assets under management (“AUM”) of which 49.8% was in CDOs. A significant portion of our asset management revenue is earned from the management of CDOs.  We have not completed a new securitization since 2008.  As a result, our asset management revenue has declined from its historical highs as the assets of the CDOs decline due to maturities, repayments, auction call redemptions, and defaults.  Our ability to complete securitizations in the future will depend upon, among other things, our asset origination capacity and success, our ability to arrange warehouse financing to originate assets, our willingness and capacity to fund required amounts to obtain warehouse financing and securitized financings, and the demand in the markets for such securitizations.  The remaining portion of our AUM is from a diversified mix of other Investment Vehicles that were more recently formed.     • Principal Investing : Our Principal Investing business segment is comprised of investments that we hold related to our SPAC franchise and other investments we have made for the purpose of earning an investment return rather than investments to support our trading or other Capital Markets business segment activities.  These investments are a component of our other investments, at fair value, other investments sold, not yet purchased, and investments in equity method affiliates in our consolidated balance sheet.     We generate our revenue by business segment primarily through the following activities.     Capital Markets:     • Our trading activities, which include execution and brokerage services, securities lending activities, riskless trading activities, as well as gains and losses (unrealized and realized) and income and expense earned on securities classified as trading;   • Net interest income on our matched book repo financing activities; and   • New issue and advisory revenue comprised of (a) new issue revenue associated with originating, arranging, or placing newly created financial instruments and (b) revenue from advisory services.    Asset Management:     • Asset management fees for our on-going asset management services provided to certain Investment Vehicles, which may include fees both senior and subordinate to the securities issued by the Investment Vehicle; and   •  Incentive management fees earned based on the performance of the certain Investment Vehicles.   Principal Investing:     • Gains and losses (unrealized and realized) and income and expense earned on securities classified as other investments, at fair value and other investments sold, not yet purchased; and   • Income and loss earned on equity method investments.    39 Table of Contents   Business Environment   Our business in general and our Capital Markets business segment in particular, do not produce predictable earnings.  Our results can vary dramatically from year to year and quarter to quarter.  Our business is materially affected by economic conditions in the financial markets, political conditions, broad trends in business and finance, the housing and mortgage markets, changes in volume and price levels of securities transactions, and changes in interest rates, including overnight funding rates, all of which can affect our profitability and are unpredictable and beyond our control. These factors may affect the financial decisions made by investors and companies, including their level of participation in the financial markets and their willingness to participate in corporate transactions. Severe market fluctuations or weak economic conditions could reduce our trading volume and revenues, negatively affect our ability to generate new issue and advisory revenue, and adversely affect our profitability.   As a general rule, our trading business benefits from increased market volatility.  Increased volatility usually results in increased activity from our clients and counterparties.  However, periods of extreme volatility may at times result in clients reducing their trading volumes, which would negatively impact our results.  Also, periods of extreme volatility may result in large fluctuations in securities valuations and we may incur losses on our holdings.  Also, our mortgage group’s business benefits when mortgage volumes increase, and may suffer when mortgage volumes decrease.  Among other things, mortgage volumes are significantly impacted by changes in interest rates.   In addition, as a smaller firm, we are exposed to intense competition.  Although we provide financing to our customers, larger firms have a much greater capability to provide their clients with financing, giving them a competitive advantage.  We are much more reliant upon our employees’ relationships, networks, and abilities to identify and capitalize on market opportunities.  Therefore, our business may be significantly impacted by the addition or loss of key personnel.    We try to address these challenges by (i) focusing our business on clients and asset classes that are underserved by the large firms, (ii) continuing to monitor our fixed costs to enhance operating leverage and limit our losses during periods of low volumes, and (iii) attempting to hire and retain entrepreneurial and effective traders, investment bankers, and salespeople. Our business environment is rapidly changing.  New risks and uncertainties emerge continuously and it is not possible for us to predict all the risks we will face.  This may negatively impact our operating performance.    A portion of our revenue is generated from net trading activity. We engage in proprietary trading for our own account, provide and arrange securities financing for our customers, and execute “riskless” trades with a customer order in hand resulting in limited market risk to us. The inventory of securities held for our own account, as well as held to facilitate customer trades, and our market making activities are sensitive to market movements.   A portion of our revenue is generated from new issue and advisory engagements. The fees charged and volume of these engagements are sensitive to the overall business environment.  We provide origination services in Europe through our subsidiary CCFESA, and new issue and advisory services in the U.S. through our subsidiary JVB. A division of JVB, CCM is our full-service boutique investment bank which focuses on M&A, capital markets, and SPAC advisory.  Currently, our primary source of new issue and advisory revenue is from originating assets for our U.S. and European insurance asset management business including our U.S. Insurance JV and our CREO JV, as well and from investment banking and advisory services through CCM.   A portion of our revenue is generated from management fees. Our ability to charge management fees and the amount of those fees is dependent upon the underlying investment performance and stability of the Investment Vehicles. If these types of investments do not provide attractive returns to investors, the demand for such instruments will likely fall, thereby reducing our opportunity to earn new management fees or maintain existing management fees. The creation of CDOs has depended upon a vibrant securitization market. Since 2008, volumes within the securitization market have dropped significantly and have not fully recovered since that time. We have not completed a new securitization since 2008. The remaining portion of our AUM is from a diversified mix of other Investment Vehicles most of which were more recently formed.    A significant portion of our asset management revenue is earned from the management of CDOs.  As a result, our asset management revenue from CDOs has declined from its historical highs as the assets of the CDOs decline due to maturities, repayments, auction call redemptions, and defaults.  Our ability to complete securitizations in the future will depend upon, among other things, our asset origination capacity and success, our ability to arrange warehouse financing to originate assets, our willingness and capacity to fund required amounts to obtain warehouse financing and securitized financings, and the demand in the markets for such securitizations.   A portion of our revenues is generated from our principal investing activities. Therefore, our revenues are impacted by the overall market supply of and demand for these investments as well as the individual performance of each investment. Our principal investments are included within other investments, at fair value, other investments sold, not yet purchased, and investments in equity method affiliates in our consolidated balance sheets.  More recently, a significant component of our principal investment revenue and income from equity method affiliates has come from SPAC related equity investments, primarily in entities that have been the result of sponsored SPAC business combinations or related party sponsored SPAC business combinations or third party sponsored SPAC business combinations.  Access to these investments is reliant on a robust SPAC market.  Performance of the resulting principal investments can be materially impacted by overall performance of the equity markets.  See note 8 to our consolidated financial statements included in this Annual Report on Form 10-K.    The SPAC Market   Beginning in 2018, we began sponsoring a series of SPACs.  Each sponsored SPAC either completed or was seeking to complete a business combination with a company involved in the insurance market.  In addition, we invest in other SPACs at various stages of their business life cycle.  Beginning in 2019, these SPAC activities have become a significant portion of our Principal Investing business segment. In August 2018, we invested in and became the general partner of a newly formed investment fund (the “SPAC Fund”), which was created for the purpose of investing in the equity interests of SPACs and SPAC sponsor entities including SPACs sponsored by us, our affiliates, and third parties. As a complement to the SPAC Fund, we established and became manager of two newly formed umbrella limited liability companies (the “SPAC Series Funds”) that issue a separate series of interest for each investment portfolio, which typically consists of investments in the sponsor entities of individual SPACs.  Generally, when a SPAC acquires or merges with a privately held target company, the target company winds up owning a majority of the resulting outstanding equity of the SPAC so the transaction is accounted for as a reverse merger.  Private companies utilize reverse mergers with SPACs as a method of going public as an alternative to a traditional IPO.  All of our business activity related to SPACs is highly sensitive to the volume of activity in the SPAC market.  Volumes could be negatively impacted if target companies no longer see SPACs as an attractive alternative thereby reducing the number of suitable potential business combination targets.  Also, investor demand for SPACs would be negatively impacted if the stocks of SPACs that successfully complete a business combination underperform the market.  If volumes of SPAC activity decline, our results of operations will likely be significantly negatively impacted.     Equity prices of post business combination SPACs declined significantly during 2022. We are exposed to public equity prices of SPACs and post business combination SPACs both through our other investments, at fair value and investments in equity method affiliates. As a result, we recorded significant principal transaction losses and equity method losses during the year ended December 31, 2022. Continued declines in the equity prices of these companies will result in further losses for us. 40 Table of Contents Margin Pressures in Fixed Income Brokerage Business   Performance in the financial services industry in which we operate is highly correlated to the overall strength of the economy and financial market activity. Overall market conditions are a product of many factors beyond our control and can be unpredictable. These factors may affect the financial decisions made by investors, including their level of participation in the financial markets. In turn, these decisions may affect our business results. With respect to financial market activity, our profitability is sensitive to a variety of factors including the volatility of the equity and fixed income markets, the level and shape of the various yield curves, and the volume and value of trading in securities.   Margins and volumes in certain products and markets within the fixed income brokerage business continue to decrease materially as competition has increased and general market activity has declined. Further, we continue to expect that competition will increase over time, resulting in continued margin pressure.    Our response to this margin compression has included: (i) building a diversified fixed income trading platform; (ii) acquiring or building out new product lines and expanding existing product lines; (iii) building a hedging execution and funding operation to service mortgage originators; and (iv) monitoring our fixed costs. Our cost management initiatives are ongoing. However, there can be no certainty that these efforts will be sufficient. If insufficient, we will likely see a decline in profitability.   U.S.    Housing Market   In recent years, our mortgage group has grown in significance to our Capital Markets segment and our company overall.  The mortgage group primarily earns revenue by providing hedging execution, securities financing, and trade execution services to mortgage originators and other investors in mortgage-backed securities.  Therefore, this group’s revenue is highly dependent on the volume of mortgage originations in the U.S.  Origination activity is highly sensitive to interest rates, the U.S. job market, housing starts, sale activity of existing housing stock, as well as the general health of the U.S. economy.  In addition, any new regulation that impacts U.S. government agency mortgage-backed security issuance activity, residential mortgage underwriting standards, or otherwise impacts mortgage originators will impact our business.  We have no control over these external factors and there is no effective way for us to hedge against these risks.  Our mortgage group’s volumes and profitability will be highly impacted by these external factors.    Rising Interest Rates and Inflation   During 2022, the U.S. Federal Reserve began a process of raising the federal funds rate and quantitative tightening to address rising inflation. These actions have the effect of increasing interest rates which negatively impacts our business in several ways:   1. Rising rates reduce the fair value of fixed income securities we hold on our balance sheet. 2. Rising rates have created instability in the equity markets which has reduced equity financing and business combination volumes and negatively impacted CCM. 3. Rising rates have reduced the volumes of new issue fixed income instruments which has negatively impacted our CREO JV. 4. Rising rates significantly reduce mortgage activity. Our mortgage group's profitability is mainly impacted by the volume of mortgage activity in the U.S. (both mortgages for new home purchases as well as refinancing). Furthermore, our mortgage group engages in repo lending to mortgage originators. Reduced mortgage volumes impose financial pressures on mortgage originators and may increase the risk that originators default on their repo obligations to us. See Note 11 to our consolidated financial statements included in Item 1 of this Annual Report on Form 10-K. 5. Rising rates may ultimately push the U.S. into recession, which may further reduce overall transaction volumes in the financial markets negatively impacting our business generally.   COVID-19    In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic.  The spread of COVID-19 has caused significant volatility in domestic and international markets. There is on-going uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies.     In 2021, medical professionals developed COVID-19 vaccines and governments began to distribute them globally, which is expected to reduce virus spread and further aid economic recovery.  Despite broad improvements in the global fight against the COVID-19 virus, we will likely be impacted by the pandemic in other ways which we cannot reliably determine.  We will continue to monitor market conditions and respond accordingly.  In April 2020, we applied for and received a $2,166 loan under the Paycheck Protection Program ("PPP") of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.  On June 21, 2021, we received notification that the U.S. Small Business Administration, as administrator of the PPP, had approved our PPP loan forgiveness application for $2,127 and all accrued interest on the PPP loan, leaving us with a remaining PPP loan balance of $39. The PPP loan forgiveness was recorded to other non-operating income on the consolidated statements of operations and comprehensive income.  We repaid the remaining balance plus accrued interest on June 25, 2021, at which point the PPP loan balance was reduced to zero.     41 Table of Contents   Recent Events and Transactions    Conversion of the 2017 Convertible Note   On March 10, 2017, the Operating LLC issued to DGC Family Fintech Trust (the “DGC Trust”), a trust established by Daniel G. Cohen, a convertible senior secured promissory note in the aggregate principal amount of $15,000 (the "2017 Convertible Note").  On March 20, 2022, the DGC Trust elected to convert the 2017 Convertible Note into an aggregate of 10,344,827 units of membership interests in the Operating LLC at the conversion rate specified in the 2017 Convertible Note agreement of $1.45 per unit. As a result of such conversion, the 2017 Convertible Note was cancelled in its entirety.  These units of membership interests have the same conversion and redemption rights as the existing convertible non-controlling interest units of membership interest.  See note 20.   Pursuant to the DGC Trust’s governing documents, Daniel G. Cohen has the ability to acquire at any time any of the DGC Trust’s assets, including the units of membership interests, by substituting other property of an equivalent value without the approval or consent of any person, including any trustee or beneficiary of the DGC Trust. See Notes 21 and 31.   The 2020   Senior Note s   On January 31, 2022, the Operating LLC and JKD Investor entered into a Note Purchase Agreement.  On January 31, 2020, the Operating LLC entered into a Note Purchase Agreement (the “Original Purchase Agreement”) with JKD Capital Partners I LTD, a New York corporation (“JKD Investor”), and RN Capital Solutions LLC, a Delaware limited liability company (“RNCS”).  The JKD Investor is owned by Jack DiMaio, Jr., the vice chairman of the Company’s board of directors and the Operating LLC’s board of managers, and his spouse.  The note purchased by the JKD Investor is herein referred to as the “JKD Note.”     Pursuant to the Original Purchase Agreement, JKD Investor and RNCS each purchased a senior promissory note in the principal amount of $2,250 (for an aggregate investment of $4,500).  The senior promissory notes bore interest at a fixed rate of 12% per annum and matured on January 31, 2022, pursuant to which, among other things, on such date, (i) JKD Investor paid to the Operating LLC an additional $2,250 and (ii) in consideration for such funds, the Operating LLC issued to JKD Investor an Amended and Restated Senior Promissory Note in the aggregate principal amount of $4,500 (the “Amended and Restated Note”), which Amended and Restated Note amended and restated the JKD Note in its entirety.  The 2022 Purchase Agreement contains customary representations and warranties on the part of each of JKD Investor and the Operating LLC. We used these proceeds to retire $2,250 of existing 2020 Senior Notes held by RNCS.  See note 20 and 31.    Commercial Real Estate Opportunities ("CREO")  JV   On September 3, 2021, we committed to invest up to $15,000 of equity in a newly formed joint venture (the “CREO JV”) with an outside investor who committed to invest approximately $435,000 of equity in the CREO JV.  We are required to invest 7.5% of the total equity of the CREO JV with an absolute limit of $15,000. The CREO JV is managed by us.   The CREO JV was formed for the purposes of investing in primarily multi-family commercial real estate mortgage-backed loans and below-investment-grade rated tranches in CRE CLOs collateralized by mostly transitional commercial real estate mortgage-backed loans. “CRE CLO” means any pooling of commercial real estate mortgage-backed loans into a collateralized loan obligation.   The commercial real estate loans that will be funded by the CREO JV may be originated by us and we may earn origination fees in connection with such transactions. In addition, we may earn structuring fees in connection with structuring and consummating a CRE CLO consisting of a pooling of commercial real estate loans. We will also earn management fees as manager of any CRE CLOs based on the value of the assets consolidated into a CRE CLO (calculated in accordance with the terms of such CRE CLO), payable from the proceeds generated by and in accordance with the distribution waterfall of such CRE CLO.   We elected the fair value option in accordance with the provisions of ASC 820 to account for our equity method investment in the CREO JV.  The investment is included in other investments, at fair value, on the consolidated balance sheet and gains and losses (both realized and unrealized) are recognized in the consolidated statement of operations as a component of principal transactions and other income.  Because the CREO JV has the attributes of investment companies as described in ASC 946-15-2, we estimate the fair value of our investment using the net asset value (“NAV”) per share (or its equivalent) as of the reporting date in accordance with the “practical expedient” provisions related to investments in certain entities that calculate net asset value per share (or its equivalent) included in ASC 820 for all entities. As of December 31, 2022, our investment balance in the CREO JV was $6,568.   Wind Down of the Company's GCF Repo Business   During 2017-2021, we carried out a matched book GCF repo business as a full-netting member of the FICC Government Services Division.  In October 2021, primarily due to reduced spreads in the repo market for GCF collateral, we decided to wind down this business.  As of December 31, 2021, the wind down was completed and the GCF reverse repurchase agreements and repurchase agreements balances were reduced to zero. See note 11.   42 Table of Contents   INSU Acquisition Corp III ("Insurance SPAC III")   The Operating LLC was the manager of Insurance Acquisition Sponsor III, LLC (“IAS III”) and Dioptra Advisors III, LLC (together with IAS III, the “Insurance SPAC III Sponsor Entities”). The Insurance SPAC III Sponsor Entities were sponsors of INSU Acquisition Corp. III ("Insurance SPAC III"). On December 22, 2020, Insurance SPAC III completed the sale of 25,000,000 units (the "Insurance SPAC III Units") in its initial public offering ("IPO"). Each Insurance SPAC III Unit consisted of one share of Insurance SPAC III's class A common stock, par value $0.0001 per share ("Insurance SPAC III Common Stock"), and one-third of one Insurance SPAC III warrant (each, an "Insurance SPAC III Warrant"), where each whole Insurance SPAC III Warrant entitled the holder to purchase one share of Insurance SPAC III Common Stock for $11.50 per share. The Insurance SPAC III Units were sold in the IPO at an offering price of $10.00 per unit. If Insurance SPAC III failed to consummate a business combination within the first 24 months following the IPO, its corporate existence would cease except for the purpose of winding up its affairs and liquidating its assets.    The Operating LLC loaned to Insurance SPAC III approximately $71 to cover IPO expenses, which was repaid in full at the closing of the IPO. IAS III and its affiliates, including the Operating LLC, committed to loan Insurance SPAC III up to an additional $1,500 to cover operating and acquisition related expenses following the IPO, of which $960 was borrowed by Insurance SPAC III. See notes 31 and 32.  The loans bore no interest, and if the Insurance SPAC III consummated a business combination in the required time period, the loans were to be repaid from the funds held in Insurance SPAC III’s trust account. If Insurance SPAC III did not consummate a business combination in the required time frame, no funds from Insurance SPAC III's trust account could be used to repay the loans.    On November 18, 2022, Insurance SPAC III announced it would not consummate an initial business combination within the time period required and that it intended to dissolve and liquidate, effective as of the close of business on December 22, 2022, and redeem all of the Insurance SPAC III Common Stock and each Insurance SPAC Warrant that were included in its IPO, at a per-share redemption price of approximately $10.09. As of the close of business on December 22, 2022, the Insurance SPAC III Common Stock and each Insurance SPAC Warrant were deemed cancelled and represented only the right to receive the redemption amount.   In order to provide for the disbursement of funds from the trust account, Insurance SPAC III instructed the trustee of the trust account to take all necessary actions to liquidate the securities held in the trust account. The proceeds of the trust account were held in a non-interest bearing account while awaiting disbursement to the holders of the Public Shares. Record holders will receive their  pro rata  portion of the proceeds of the trust account, less $100 of interest to pay dissolution expenses and net of taxes payable. Insurance SPAC III Sponsor Entities agreed to waive their redemption rights with respect to their outstanding shares of Class B common stock issued prior to the Insurance SPAC III IPO. There will be no redemption rights or liquidating distributions with respect to each Insurance SPAC III Warrant, which will expire worthless.   As a result of the liquidation of Insurance SPAC III, we recorded an equity method loss of $5,896 for the year ended December 31, 2022, which included a write-off of the amounts advanced to Insurance SPAC III from the Operating LLC as well as amounts invested.  Of this loss,$4,808 was allocated to the non-convertible non-controlling interests. Therefore, the net impact to the Operating LLC was $1,088. 43 Table of Contents   Consolidated Results of Operations   The following section provides a comparative discussion of our consolidated results of operations for the specified periods. The period-to-period comparisons of financial results are not necessarily indicative of future results.   Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021    The following table sets forth information regarding our consolidated results of operations for the years ended December 31, 2022 and 2021.      COHEN & COMPANY INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands)       Year Ended December 31,     Favorable / (Unfavorable)       2022     2021     $ Change     % Change   Revenues                                 Net trading   $ 40,009     $ 69,385     $ (29,376 )     (42 )% Asset management     9,004       10,923       (1,919 )     (18 )% New issue and advisory     24,721       28,736       (4,015 )     (14 )% Principal transactions and other income     (29,347 )     37,324       (66,671 )     (179 )% Total revenues     44,387       146,368       (101,981 )     (70 )%                                   Operating expenses                                 Compensation and benefits     50,290       85,048       34,758       41 % Business development, occupancy, equipment     5,076       3,365       (1,711 )     (51 )% Subscriptions, clearing, and execution     8,274       10,307       2,033       20 % Professional fee and other operating     8,153       7,684       (469 )     (6 )% Depreciation and amortization     557       371       (186 )     (50 )% Total operating expenses     72,350       106,775       34,425       32 %                                   Operating income / (loss)     (27,963 )     39,593       (67,556 )     (171 )%                                   Non-operating income / (expense)                                                                   Interest expense, net     (4,982 )     (7,233 )     2,251       31 % Income / (loss) from equity method affiliates     (20,931 )     36,010       (56,941 )     (158 )% Other non operating income     -       2,127       (2,127 )     (100 )% Income / (loss) before income taxes     (53,876 )     70,497       (124,373 )     (176 )% Income tax expense / (benefit)     4,794       (3,541 )     (8,335 )     (235 )% Net income / (loss)     (58,670 )     74,038       (132,708 )     (179 )% Less: Net income (loss) attributable to the non-convertible non-controlling interest     (23,203 )     35,574       58,777       165 % Enterprise net income (loss)     (35,467 )     38,464       (73,931 )     (192 )% Less: Net income (loss) attributable to the convertible non-controlling interest     (22,078 )     26,656       48,734       183 % Net income / (loss) attributable to Cohen & Company Inc.   $ (13,389 )   $ 11,808     $ (25,197 )     (213 )%   Revenues   Revenues decreased by $101,981, or 70%, to $44,387 for the year ended December 31, 2022, as compared to $146,368 for the year ended December 31, 2021. As discussed in more detail below, the change was comprised of (i) a decrease of $29,376 in net trading revenue; (ii) a decrease of $1,919 in asset management revenue; (iii) a decrease of $4,015 in new issue and advisory revenue; and (iv) a decrease of $66,671 in principal transactions and other income.     44 Table of Contents   Net Trading   Net trading revenue decreased by $29,376, or 42%, to $40,009 for the year ended December 31, 2022, as compared to $69,385 for the year ended December 31, 2021.  The following table shows the detail by trading group.    NET TRADING (Dollars in Thousands)       Year Ended December 31,       2022     2021     Change   Mortgage   $ 1,143     $ 6,885     $ (5,742 ) Matched book repo     30,595       46,139       (15,544 ) High yield corporate     4,694       10,390       (5,696 ) Investment grade corporate     1,197       593       604   Wholesale and other     2,380       5,378       (2,998 ) Total   $ 40,009     $ 69,385     $ (29,376 )   Our net trading revenue includes unrealized gains on our trading investments, as of the applicable measurement date that may never be realized due to changes in market or other conditions not in our control.  This may adversely affect the ultimate value realized from these investments. In addition, our net trading revenue also includes realized gains on certain proprietary trading positions. Our ability to derive trading gains from such trading positions is subject to overall market conditions. Due to volatility and uncertainty in the capital markets, the net trading revenue recognized during the year may not be indicative of future results. Furthermore, from time to time, some of the assets included in the Investments-trading line of our consolidated balance sheets represent level 3 valuations within the FASB valuation hierarchy. Level 3 assets are carried at fair value based on estimates derived using internal valuation models and other estimates. See notes 9 and 10 to our consolidated financial statements included in this Annual Report on Form 10-K. The fair value estimates made by us may not be indicative of the final sale price at which these assets may be sold.  We consider our matched book repo business to be subject to significant concentration risk.  See note 11 to our consolidated financial statements included in this Annual Report on Form 10-K.   The Company recorded a gross loss of $5,454 in connection with the FGMC reverse repo.  Of the $5,454 los s, $5,244 was r ecorded as a reduction in net trading revenue an d $210 was rec orded in professional fees and other operating expense.  Of the $5,244 recorded in net trading revenue, $4,330 is included in the mortgage group and $914 is included in the matched book repo group in the table above.  See note 11 to our consolidated financial statements included in Item 1 of this Annual Report on Form 10-K.     Asset Management   Assets Under Management     Our AUM equals the sum of the NAV or gross assets of the Investment Vehicles we manage based on whichever measurement serves as the basis for the calculation of our management fees.   Our calculation of AUM may differ from the calculations used by other asset managers and, as a result, this measure may not be comparable to similar measures presented by other asset managers. This definition of AUM is not necessarily identical to the definitions of AUM that may be used in our management agreements.    ASSETS UNDER MANAGEMENT (Dollars in Thousands)       As of December 31,       2022     2021     2020   Company sponsored CDOs   $ 1,053,430     $ 1,239,988     $ 2,057,178   Other Investment Vehicles (1)     1,062,897       1,118,162       712,028   Assets under management (2)   $ 2,116,327     $ 2,358,150     $ 2,769,206     (1) Other Investment Vehicles include any Investment Vehicle that is not a Company sponsored CDO. (2) In some cases, accounts we manage may employ leverage.  In some cases, our fees are based on gross assets and in some cases on net assets.  Finally, in the case of the SPAC Series Funds there are no management fees earned.  AUM included herein is calculated using either gross or net assets of each managed account or CDO based on whichever serves as the basis for our management fees. In the case where no management fees are earned, the net assets are included.     45 Table of Contents   Asset management fees decreased by $1,919, or 18%, to $9,004 for the year ended December 31, 2022, as compared to $10,923 for the year ended December 31, 2021, as discussed in more detail below.   ASSET MANAGEMENT (Dollars in Thousands)       Year Ended December 31,       2022     2021     Change   CDOs   $ 3,454     $ 2,484     $ 970   Other     5,550       8,439       (2,889 ) Total   $ 9,004     $ 10,923     $ (1,919 )    A significant portion of our asset management fees are earned from the management of CDOs.  We have not completed a new securitization since 2008.  As a result, our asset management revenue from CDOs has declined from its historical highs as the assets of the CDOs decline due to maturities, repayments, auction call redemptions, and defaults.  Our ability to complete securitizations in the future will depend upon, among other things, our asset origination capacity and success, our ability to arrange warehouse financing to originate assets, our willingness and capacity to fund required amounts to obtain warehouse financing and securitized financings, and the demand in the markets for such securitizations.    Asset management fees from CDOs increased because the Alesco 1 securitization completed a successful auction during 2022.  As a result, we received payment of deferred subordinated management fees of $1,600.  Otherwise, asset management fees from CDOs declined by $630 during 2022 mainly due to a decline in AUM due to liquidations of collateral, our removal as manager of one CDO, and principal paydowns of collateral.    Asset management fees from other investment vehicles decreased primarily due to a reduction of incentive fees earned on the SPAC Fund.   New Issue and Advisory Revenue   New issue and advisory revenue decreased by $4,015, or 14%, to $24,721 for the year ended December 31, 2022, as compared to $28,736 for the year ended December 31, 2021.         Year Ended December 31,       2022     2021     Change   Cohen & Company Capital Markets   $ 16,880     $ 22,676     $ (5,796 ) Commercial Real Estate Originations     1,897       1,428       469   U.S. Insurance Originations     4,753       1,940       2,813   European Insurance Originations     1,191       2,692       (1,501 ) Total   $ 24,721     $ 28,736     $ (4,015 )     46 Table of Contents   Our revenue earned from new issue and advisory has been, and we expect will continue to be, volatile. We earn revenue from a limited number of engagements. Therefore, a small change in the number of engagements can result in large fluctuations in the revenue recognized. Further, even if the number of engagements remains consistent, the average revenue per engagement can fluctuate considerably. Finally, our revenue is generally earned when an underlying transaction closes (rather than on a monthly or quarterly basis). Therefore, the timing of underlying transactions increases the volatility of our revenue recognition.   In addition, we often incur certain costs related to new issue engagements.  These costs are included as a component of either subscriptions, clearing and execution, or professional fees and other and will generally be recognized in the same period that the related revenue is recognized.    CCM is our full-service boutique investment banking platform which focuses on M&A, capital markets, and SPAC advisory.  In addition, we generate new issue revenue by originating new assets for the U.S. Insurance JV, CREO JV, and for our PriDe funds in Europe.    Principal Transactions and Other Income   Principal transactions and other income decreased by $66,671 to ($29,347) for the year ended December 31, 2022, as compared to $37,324 for the year ended December 31, 2021.   PRINCIPAL TRANSACTIONS & OTHER INCOME (Dollars in Thousands)       Year Ended December 31,       2022     2021     Change   SFT   $ (5,539 )   $ (5,258 )   $ (281 ) LMND     (2,805 )     43,655       (46,460 ) IMXI     -       318       (318 ) WEJO     (1,794 )     (3,160 )     1,366   REE     (4,755 )     (2,939 )     (1,816 ) ML     (238 )     (988 )     750   BKSY     (78 )     (914 )     836   FOXO     (1,044 )     -       (1,044 ) HLGN     (14,754 )     -       (14,754 ) RBT     (1,576 )     -       (1,576 ) Other SPAC equity     (2,232 )     3,094       (5,326 ) Stoa USA Inc. / FlipOs     4,196       1,805       2,391   U.S. Insurance JV     11       142       (131 ) SPAC Fund     (43 )     474       (517 ) Other principal investments     20       (45 )     65   Total principal transactions     (30,631 )     36,184       (66,815 )                           IIFC revenue share     673       634       39   All other income / (loss)     611       506       105   Other income     1,284       1,140       144                             Total principal transactions and other income   $ (29,347 )   $ 37,324     $ (66,671 )   Principal Transactions     For all investments discussed below, see note 9 to our consolidated financial statements included in this Annual Report on Form 10-K for information about how we determine the value of these instruments. For several of the investments described below, we also had an investment in the same company which was accounted for under the equity method during the periods presented.  See discussion of equity method income / (loss) below.   SFT is a publicly traded company.  In the periods presented, the shares of SFT we held were comprised of both unrestricted and restricted shares and were carried at fair value.  For a portion of the period we have held these shares, they were held in majority owned consolidated subsidiaries (the "Insurance SPAC Sponsor Entities").  Accordingly, there were significant non-controlling interest and equity compensation expense associated with these.  See discussion of non-convertible non-controlling interest and equity compensation expense below.  As of December 31, 2022, the total carrying value of our investment in SFT was $231.     LMND is a publicly traded company.  In the periods presented, the shares of LMND we held were comprised of both unrestricted and restricted shares and were carried at fair value.  For a portion of the period we have held these shares, they were held in majority owned consolidated subsidiaries (the "Insurance SPAC II Sponsor Entities").  Accordingly, there were significant non-controlling interest and equity compensation expense associated with these.  See discussion of non-convertible non-controlling interest and equity below.  As of December 31, 2022, the total carrying value of our investment in LMND was $561.    IMXI represents equity positions of International Money Express, Inc. (NASDAQ: IMXI), a publicly traded company that resulted from the merger of Intermex Holdings, LLC and FinTech Acquisition Corp. II.  These shares were carried at fair value.  As of December 31, 2022, we hold no remaining investment in IMXI.     WEJO represents equity positions of Wejo Group, Ltd. (NASDAQ: WEJO), a publicly traded company that closed its business combination with Virtuoso Acquisition Corp.  As of December 31, 2022, we had a total investment in WEJO carried at fair value of $175, which was included as a component of other investment's at fair value.     REE represents equity positions of REE Automotive Ltd. (NASDAQ: REE), a publicly traded company that closed its business combination with 10X Capital Venture Acquisition Corp.  As of December 31, 2022, we had a total investment in REE carried at fair value of $292, which was included as a component of other investments, at fair value.     ML represents equity positions of MoneyLion, Inc. (NYSE: ML), a publicly traded company that closed its business combination with Fusion Acquisition Corp.  As of December 31, 2022, we had a total investment in ML carried at fair value of $25, which was included as a component of other investments, at fair value.   47 Table of Contents   BKSY represents equity positions of BlackSky Technology Inc. (NYSE: BKSY), a publicly traded company that closed its business combination with Osprey Technologies Acquisition Corp.  As of December 31, 2022, we had a total investment in BKSY carried at fair value of $28, which was included as a component of other investments, at fair value.     FOXO represents equity positions of  FOXO Technologies Inc. (NASDAQ: FOXO), a publicly traded company that closed its business combination with Delwinds Insurance Acquisition Corp.  As of December 31, 2022, we had a total investment in FOXO carried at fair value of $109, which was included as a component of other investments, at fair value.     HLGN represents equity positions of Heliogen, Inc. (NYSE: HLGN), a publicly traded company that closed its business combination with Athena Technology Acquisition Corp.  As of December 31, 2022, we had a total investment in HLGN carried at fair value of $353, which was included as a component of other investments, at fair value.     RBT represents equity positions of Rubicon Technologies, Inc. (NYSE: RBT), a public company that closed its business combination with Founder SPAC.  As of December 31, 2022, we had a total investment in RBT carried at fair value of  $4,424, which was included as a component of other investments, at fair value.     Other SPAC equity represents equity investments in publicly traded SPACs or their successor public companies carried at fair value.    Stoa USA Inc. / FlipOs is a private company in which we own common equity.  We carry our investment at fair value.  As of December 31, 2022, we had a total investment in Stoa USA Inc. / FlipOs carried at fair value of $6,693, which was included as a component of other investments, at fair value.  See note 31 to our consolidated financial statements included in Item 1 of this Annual Report on Form 10-K.     The U.S. Insurance JV invests in insurance company debt.  We carry our investment in the U.S. Insurance JV at its reported NAV.  As of December 31, 2022, we had a total investment in the U.S. Insurance JV carried at fair value of $3,459, which was included as a component of other investments, at fair value.     The SPAC Fund invests in the equity of SPACs.  We carry our investment in the SPAC Fund at its reported NAV.  As of December 31, 2022, we had a total investment in SPAC Fund carried at fair value of $527, which was included as a component of other investments, at fair value.     Other principal investments consist of realized and unrealized gains and losses from other investments reported at fair value.    Other Income   Other income / (loss) is comprised of an ongoing revenue share arrangement as well as other miscellaneous operating income items. The revenue share arrangement noted in the table above entitles us to a percentage of revenue earned by IIFC.  The IIFC revenue share arrangement expires at the earlier of (i) the dissolution of IIFC or (ii) when we have earned a cumulative $20,000 in revenue share payments.  To date, we have earned $4,513.  Also, in any particular year, the revenue share earned by us cannot exceed $2,000.    48 Table of Contents   Operating Expenses   Operating expenses decreased by $34,425, or 32%, to $72,350 for the year ended December 31, 2022, as compared to $106,775 for the year ended December 31, 2021. As discussed in more detail below, the change was comprised of (i) a decrease of $34,758 in compensation and benefits; (ii) an increase of $1,711 in business development, occupancy, and equipment; (iii) a decrease of $2,033 in subscriptions, clearing, and execution; (iv) an increase of $469 in professional fee and other operating; and (v) an increase of $186 in depreciation and amortization.   Compensation and Benefits   Compensation and benefits decreased by $34,758, or 41%, to $50,290 for the year ended December 31, 2022, as compared to $85,048 for the year ended December 31, 2021.      COMPENSATION AND BENEFITS (Dollars in Thousands)       Year Ended December 31,       2022     2021     Change   Cash compensation and benefits   $ 45,900     $ 69,330     $ (23,430 ) Equity-based compensation     4,390       15,718       (11,328 ) Total   $ 50,290     $ 85,048     $ (34,758 )   Cash compensation and benefits in the table above is primarily comprised of salary, incentive compensation, severance, employer portion of payroll taxes, and benefits.  Cash compensation and benefits decreased by $23,430 to $45,900 for the year ended December 31, 2022, as compared to $69,330 for the year ended December 31, 2021.  Our headcount increased to 121 as of December 31, 2022 from 118 as of December 31, 2021.  Cash compensation decreased primarily due to a decrease in incentive compensation related to the decrease in overall revenue and income from equity method affiliates.    Equity-based compensation decreased by $11,328 to $4,390 for the year ended December 31, 2022, as compared to $15,718 for the year ended December 31, 2021.  Of the $15,718 of equity compensation recognized in 2021, $13,068 was due to equity compensation related to the issuance of membership units of the Insurance SPAC II Sponsor Entities to employees of the Company.  The expense was recognized upon the completion of the merger between Insurance SPAC II and MetroMile on February 9, 2021.  No further equity-based compensation expense will be recognized related to membership units of the Insurance SPAC II Sponsor Entities in the future.     The Insurance SPAC III Sponsor Entities had issued membership units to employees of the Company.  Insurance SPAC III was liquidated in 2022 and therefore these units became worthless.  No equity compensation expense was recognized on these units in 2021 or 2022, and no compensation expense will be recognized in the future.     The remaining equity-based compensation recognized during 2022 and 2021 relates to restricted grants of the Company's Common Stock and Operating LLC units.  This amount increased by $1,740 to $4,390 for the year ended December 31, 2022, as compared to $2,650 for the year ended December 31, 2021.  This increase was due to increased share grants during 2022 as compared to 2021.     Business Development, Occupancy, and Equipment   Business development, occupancy, and equipment increased by $1,711, or 51%, to $5,076 for the year ended December 31, 2022, as compared to $3,365 for the year ended December 31, 2021. This increase was comprised of an increase in business development expense of $752 and an increase in occupancy and equipment of $959.  Business development increased due to increased travel in 2022 due to a general reduction in pandemic restrictions.  The increase in occupancy and equipment expense was mainly due to additional rent in our California office.     49 Table of Contents   Subscriptions, Clearing, and Execution     Subscriptions, clearing, and execution decreased by $2,033, or 20%, to $8,274 for the year ended December 31, 2022, as compared to $10,307 for the year ended December 31, 2021.    This decrease was comprised of a decrease in clearing and execution costs of $2,342 partially offset by an increase in subscriptions and dues of $309.  The increase in subscriptions and dues was due to normal fluctuations in number of subscriptions.  The decrease in clearing and execution was due to decreased trading volumes.     Professional Fee and Other Operating Expenses   Professional fee and other operating expenses increased by $469, or 6%, to $8,153 for the year ended December 31, 2022, as compared to $7,684 for the year ended December 31, 2021. This increase was comprised of an increase in professional fees of $673; partially offset by a decrease in other operating expense of $204.  The increase in professional fees was mainly the result of increased consultant usage.  The decrease in other operating expense was mainly the result of a reduction in other (non income based) taxes.     Depreciation and Amortization   Depreciation and amortization increased by $186, or 50%, to $557 for the year ended December 31, 2022, as compared to $371 for the year ended December 31, 2021.     Non-Operating Income and Expense   Interest Expense, net   Interest expense, net decreased by $2,251 to $4,982 for the year ended December 31, 2022, as compared to $7,233 for the year ended December 31, 2021.       INTEREST EXPENSE (Dollars in Thousands)       Year Ended December 31,       2022     2021     Change   Junior subordinated notes   $ 3,442     $ 2,601     $ 841   2020 Senior Notes     458       540       (82 ) 2013 Convertible Notes / 2019 Senior Notes     -       211       (211 ) 2017 Convertible Note     327       1,534       (1,207 ) Line of Credit (Byline)     247       435       (188 ) Redeemable Financial Instrument - DGC Trust / CBF     -       197       (197 ) Redeemable Financial Instrument - JKD Capital Partners I LTD     508       1,715       (1,207 )     $ 4,982     $ 7,233     $ (2,251 )    See notes 19 and 20 to our consolidated financial statements included in this Annual Report on Form 10-K.   50 Table of Contents   Income / (loss) from Equity Method Affiliates     Income / (loss) from equity method affiliates decreased by $56,941 to ($20,931) for the year ended December 31, 2022  from $36,010 for the year ended December 31, 2021.  See note 12 to our consolidated financial statements included in this Annual Report on Form 10-K.       Year Ended December 31,       2022     2021     Change   Insurance SPACs   $ (5,898 )   $ (1,306 )   $ (4,592 ) SPAC Sponsor Entities     (14,963 )     37,453       (52,416 ) Dutch Real Estate Entities     (70 )     (137 )     67       $ (20,931 )   $ 36,010     $ (56,941 )   SPAC Sponsor Entities includes both indirect and direct investments in SPAC Sponsor Entities.  Several of these SPAC Sponsor Entities are invested in SPACs that have completed their business combinations.  Those SPAC Sponsor Entities hold restricted and unrestricted equity interests in the public post-merger entities.  We account for our investments in SPAC Sponsor Entities under the equity method of accounting.  If the SPAC Sponsor Entity distributes SPAC shares to us, we account for those SPAC shares as a component of other investments, at fair value.  The following table shows the equity method income or loss included in other SPAC Sponsor Entities above broken out by the ultimate public company investee.  For several of the investments described below, we also had an investment in the same company accounted for at fair value as a component of other investments, at fair value during the periods presented.  See discussion of principal transactions above.       Year Ended December 31,       2022     2021     Change   HLGN   $ (10,558 )   $ 28,443     $ (39,001 ) WEJO     (2,214 )     1,962       (4,176 ) DRTS     378       -       378   REE     -       2,489       (2,489 ) PAYO     -       2,993       (2,993 ) PWP     (74 )     1,293       (1,367 ) ACHR     (217 )     728       (945 ) FOXO     1,017       -       1,017   Other     (3,295 )     (455 )     (2,840 )     $ (14,963 )   $ 37,453     $ (52,416 )   As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of HLGN was $0.     As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of WEJO was $0.     As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of DRTS was $379.     As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of REE was $0.   As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of PAYO was $0.     As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of PWP was $121.    As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of ACHR was $0.     As of December 31, 2022, our equity method investment in sponsor entity of the predecessor SPAC of FOXO was $0.     The remaining other investments in SPAC Sponsor Entities represent direct and indirect investments in sponsor entities who have not yet completed a business combination.  See note 12 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-K.   51 Table of Contents   Other Non-Operating (Income) / Loss   We recorded other non-operating income of $2,127 for the year ended December 31, 2021 as the result of the forgiveness of our PPP loan.  See note 20 to our consolidated financial statements included in this Annual Report on Form 10-K.   Income Tax Expense / (Benefit)     We have significant carryforward tax assets.  As of December 31, 2022, the Company had a federal net operating loss (“NOL”) of approximately $96,002, which will be available to offset future taxable income, subject to limitations described below. If not used, this NOL will begin to expire in 2028. The Company also had net capital losses (“NCLs”) in excess of capital gains of $70,457 as of December 31, 2022, which can be carried forward to offset future capital gains.  If not used, this carryforward will begin to expire in 2023.  ASC 746 requires that we record a valuation allowance against these assets so that the net asset recognized is, in management's judgment, more likely than not to be realized.     The income tax expense / (benefit) was $4,794 for the year ended December 31, 2022, as compared to ($3,541) for the year ended December 31, 2021.  See note 23 to our consolidated financial statements included in our Annual Report on Form 10-K.   The tax expense recognized in 2022 was comprised of a deferred tax expense of $4,579 and current tax expense of $215.  The current tax expense incurred was the result of foreign, state, and local income tax.  The deferred tax expense was a U.S. federal, state, and local tax benefit, which was the result of the increase in the valuation allowance applied against the Company's NOL and NCL tax assets.     The tax benefit recognized in 2021 was comprised of a deferred tax benefit of $4,117, partially offset by current tax expense of $576.  The current tax expense incurred was the result of foreign, state, and local income tax.  The deferred tax benefit was a U.S. federal, state, and local tax benefit, which was the result of the reduction in the valuation allowance applied against the Company's net operating loss carryforward ("NOL") and net capital loss carryforward ("NCL") tax assets.     Each reporting period, management determines the expected amount of taxable income it will generate in each jurisdiction where the Company has NOLs.  Management then schedules this income against each carryforward asset and determines what portion of the asset it believes is more likely than not to be realized.  This determination is subjective and subject to many assumptions and factors including:  profitability of our business in the future, the timing of that future income as compared to carryforward asset expiration, the character of future income (ordinary or capital), and the jurisdiction in which the income will be generated in.  To the extent management's determination changes, an adjustment will be made to the valuation allowance resulting in deferred tax expense or benefit.  We recorded deferred tax benefit in 2021 because expectations of future income increased and the Company reduced the valuation allowance it had applied against carryforward assets.  The Company recorded deferred tax expense in 2022 because of expectations of future income decreased and the Company increased the valuation allowance it had applied against carryforward assets.  Because of magnitude of the Company's carryforward assets as well as the volatility of the Company's operating results, significant adjustments to the valuation allowance are likely going forward.  These future adjustments may likewise result in material amounts of deferred tax benefit or expense going forward.     Net Income/ (Loss) Attributable to the Non-Convertible Non-Controlling Interest   Net income / (loss) attributable to the non-convertible non-controlling interest for the years ended December 31, 2022 and 2021 was comprised of the non-controlling interest related to member interests in consolidated subsidiaries of the Operating LLC other than interests held by us for the relevant periods.  These interests are not convertible into Common Stock.           Year Ended December 31,       2022     2021     Change   Insurance SPAC Sponsor Entities   $ -     $ 3,560     $ (3,560 ) Insurance SPAC II Sponsor Entities     -       17,644       (17,644 ) Insurance SPAC III Sponsor Entities     (4,808 )     (615 )     (4,193 ) Other     (18,395 )     14,985       (33,380 )     $ (23,203 )   $ 35,574     $ (58,777 )     Insurance SPAC Sponsor Entities, Insurance SPAC II Sponsor Entities, and Insurance SPAC III Sponsor Entities are the Sponsor Entities formed by us for our sponsored SPACs.  Other is mainly comprised of an entity which we consolidate but do not wholly own that invests in other SPAC Sponsor Entities.     52 Table of Contents   Net Income / (Loss) Attributable to the Convertible Non-controlling Interest    Net income / (loss) attributable to the convertible non-controlling interest for the years ended December 31, 2022 and 2021 was comprised of the non-controlling interest related to member interests in the Operating LLC other than interests held by us for the relevant periods.    SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST For the Year Ended December 31, 2022       Wholly Owned Subsidiaries     Other Consolidated Subsidiaries     Total Operating LLC Consolidated     Cohen & Company Inc.     Consolidated   Net income / (loss) before tax   $ (20,287 )   $ (33,589 )   $ (53,876 )   $ -     $ (53,876 ) Income tax expense / (benefit)     (381 )     182       (199 )     4,993       4,794   Net income / (loss) after tax     (19,906 )     (33,771 )     (53,677 )     (4,993 )     (58,670 ) Other consolidated subsidiary non-controlling interest             (23,203 )     (23,203 )                 Net income / (loss) attributable to the Operating LLC     (19,906 )     (10,568 )     (30,474 )                 Average effective Operating LLC non-controlling interest % (1)                     72.45 %                 Operating LLC non-controlling interest                   $ (22,078 )                                                          Summary                                         Other consolidated subsidiary non-controlling interest                   $ (23,203 )                 Operating LLC non-controlling interest                     (22,078 )                                     $ (45,281 )                     SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST For the Year Ended December 31, 2021       Wholly Owned Subsidiaries     Other Consolidated Subsidiaries     Total Operating LLC Consolidated     Cohen & Company Inc.     Consolidated   Net income / (loss) before tax   $ 1,529     $ 68,968     $ 70,497     $ -     $ 70,497   Income tax expense / (benefit)     (2,829 )             (2,829 )     (712 )     (3,541 ) Net income / (loss) after tax     4,358       68,968       73,326       712       74,038   Other consolidated subsidiary non-controlling interest     -       35,574       35,574                   Net income / (loss) attributable to the Operating LLC     4,358       33,394       37,752                   Average effective Operating LLC non-controlling interest % (1)                     70.61 %                 Operating LLC non-controlling interest                   $ 26,656                                                            Summary                                         Other consolidated subsidiary non-controlling interest                   $ 35,574                   Operating LLC non-controlling interest                     26,656                                       $ 62,230                      (1) Non-controlling interest is recorded on a quarterly basis. Because earnings are recognized unevenly throughout the year and the non-controlling interest percentage may change during the period, the average effective non-controlling interest percentage may not equal the percentage at the end of any period or the simple average of the beginning and ending percentages.       53 Table of Contents   Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020   The following table sets forth information regarding our consolidated results of operations for the years ended December 31, 2021 and 2020.        COHEN & COMPANY INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands)       Year Ended December 31,     Favorable / (Unfavorable)       2021     2020     $ Change     % Change   Revenues                                 Net trading   $ 69,385     $ 73,611     $ (4,226 )     (6 )% Asset management     10,923       8,759       2,164       25 % New issue and advisory     28,736       2,234       26,502       1186 % Principal transactions and other income     37,324       45,506       (8,182 )     (18 )% Total revenues     146,368       130,110       16,258       12 %                                   Operating expenses                                 Compensation and benefits     85,048       59,902       (25,146 )     (42 )% Business development, occupancy, equipment     3,365       2,708       (657 )     (24 )% Subscriptions, clearing, and execution     10,307       9,887       (420 )     (4 )% Professional fee and other operating     7,684       7,068       (616 )     (9 )% Depreciation and amortization     371       334       (37 )     (11 )% Impairment of goodwill     -       7,883       7,883     NM   Total operating expenses     106,775       87,782       (18,993 )     (22 )%                                   Operating income / (loss)     39,593       42,328       (2,735 )     (6 )%                                   Non-operating income / (expense)                                                                   Interest expense, net     (7,233 )     (9,589 )     2,356       25 % Income / (loss) from equity method affiliates     36,010       (2,955 )     38,965       1319 % Other non-operating income     2,127       -       2,127       NM   Income / (loss) before income taxes     70,497       29,784       40,713       137 % Income tax expense / (benefit)     (3,541 )     (8,669 )     (5,128 )     (59 )% Net income / (loss)     74,038       38,453       35,585       93 % Less: Net income (loss) attributable to the non-convertible non-controlling interest     35,574       10,048       (25,526 )     (254 )% Enterprise net income (loss)     38,464       28,405       10,059       35 % Less: Net income (loss) attributable to the convertible non-controlling interest     26,656       14,200       (12,456 )     (88 )% Net income / (loss) attributable to Cohen & Company Inc.   $ 11,808     $ 14,205     $ (2,397 )     (17 )%   Revenues   Revenues increased by $16,258, or 12%, to $146,368 for the year ended December 31, 2021, as compared to $130,110 for the year ended December 31, 2020. As discussed in more detail below, the change was comprised of (i) a decrease of $4,226 in net trading revenue; (ii) an increase of $2,164 in asset management revenue; (iii) an increase of $26,502 in new issue and advisory revenue; and (iv) a decrease of $8,182 in principal transactions and other income.     54 Table of Contents   Net Trading   Net trading revenue decreased by $4,226, or 6%, to $69,385 for the year ended December 31, 2021, as compared to $73,611 for the year ended December 31, 2020.  The following table shows the detail by trading group.     NET TRADING (Dollars in Thousands)       For the Year Ended December 31,       2021     2020     Change   Mortgage   $ 6,885     $ 9,641     $ (2,756 ) Matched book repo     46,139       33,980       12,159   High yield corporate     10,390       8,342       2,048   Investment grade corporate     593       9,978       (9,385 ) Wholesale and other     5,378       11,670       (6,292 ) Total   $ 69,385     $ 73,611     $ (4,226 )   Our net trading revenue includes unrealized gains on our trading investments as of the applicable measurement date, which may never be realized due to changes in market or other conditions not in our control.  This may adversely affect the ultimate value realized from these investments. In addition, our net trading revenue also includes realized gains on certain proprietary trading positions. Our ability to derive trading gains from such trading positions is subject to overall market conditions. Due to volatility and uncertainty in the capital markets, the net trading revenue recognized during any year may not be indicative of future results. Furthermore, from time to time, some of the assets included in the Investments-trading line of our consolidated balance sheets represent level 3 valuations within the FASB valuation hierarchy. Level 3 assets are carried at fair value based on estimates derived using internal valuation models and other estimates. See notes 8 and 9 to our consolidated financial statements included in this Annual Report on Form 10-K. The fair value estimates determined by us may not be indicative of the final sale price at which these assets may be sold.   We consider our matched book repo business to be subject to significant concentration risk.  See note 11 to our consolidated financial statements included in Item 1 of this Annual Report on Form 10-K.    Asset Management      Asset management fees increased by $2,164, or 25%, to $10,923 for the year ended December 31, 2021, as compared to $8,759 for the year ended December 31, 2020, as discussed in more detail below.     ASSET MANAGEMENT (Dollars in Thousands)       For the Year Ended December 31,       2021     2020     Change   CDOs   $ 2,484     $ 3,407     $ (923 ) Other     8,439       5,352       3,087   Total   $ 10,923     $ 8,759     $ 2,164    A significant portion of our asset management fees are earned from the management of CDOs.  We have not completed a new securitization since 2008.  As a result, our asset management revenue from CDOs has declined from its historical highs as the assets of the CDOs decline due to maturities, repayments, auction call redemptions, and defaults.  Our ability to complete securitizations in the future will depend upon, among other things, our asset origination capacity and success, our ability to arrange warehouse financing to originate assets, our willingness and capacity to fund required amounts to obtain warehouse financing and securitized financings, and the demand in the markets for such securitizations.    Asset management fees from CDOs declined mainly due to a decline in AUM due to CDO auctions, liquidations, our removal as manager of one CDO, and principal paydowns of collateral.  Asset management fees from other investment vehicles increased primarily due to increased incentive fees earned on the SPAC Fund as well as increased fees on certain European separate accounts and investment funds.   55 Table of Contents   New Issue and Advisory Revenue   New issue and advisory revenue increased by $26,502, or 1186%, to $28,736 for the year ended December 31, 2021, as compared to $2,234 for the year ended December 31, 2020.        Year Ended December 31,       2021     2020     Change   Cohen & Company Capital Markets   $ 22,676     $ -     $ 22,676   Commercial Real Estate Originations     1,428       -       1,428   US Insurance Originations     1,940       500       1,440   Europe Insurance Originations     2,692       1,734       958   Total   $ 28,736     $ 2,234     $ 26,502     Our revenue earned from new issue and advisory has been, and we expect will continue to be, volatile. We earn revenue from a limited number of engagements. Therefore, a small change in the number of engagements can result in large fluctuations in the revenue recognized. Further, even if the number of engagements remains consistent, the average revenue per engagement can fluctuate considerably. Finally, our revenue is generally earned when an underlying transaction closes (rather than on a monthly or quarterly basis). Therefore, the timing of underlying transactions increases the volatility of our revenue recognition.   In addition, we often incur certain costs related to new issue engagements.  These costs are included as a component of either subscriptions, clearing and execution, or professional fees and other and will generally be recognized in the same period that the related revenue is recognized.    CCM is our full-service boutique investment bank, which focuses on M&A, capital markets, and SPAC advisory, which generates new issue placement and advisory revenue from clients. In addition, we generate new issue revenue by originating new assets for the U.S. Insurance JV, CREO JV, and for our PriDe funds in Europe.      56 Table of Contents   Principal Transactions and Other Income   Principal transactions and other income decreased by $8,182 to $37,324 for the year ended December 31, 2021, as compared to $45,506 for the year ended December 31, 2020.     PRINCIPAL TRANSACTIONS & OTHER INCOME (Dollars in Thousands)       For the Year Ended December 31,       2021     2020     Change   SFT   $ (5,258 )   $ 40,619     $ (45,877 ) LMND     43,655       -       43,655   IMXI     318       2,703       (2,385 ) WEJO     (3,160 )     -       (3,160 ) REE     (2,939 )     -       (2,939 ) ML     (988 )     -       (988 ) BKSY     (914 )     -       (914 ) CLO Investments     -       (535 )     535   Other SPAC equity     3,094       1,503       1,591   Stoa USA Inc. / FlipOs     1,805       -       1,805   U.S. Insurance JV     142       222       (80 ) SPAC Fund     474       183       291   Other principal investments     (45 )     7       (52 ) Total principal transactions     36,184       44,702       (8,518 )                       -   IIFC revenue share     634       491       143   All other income / (loss)     506       313       193   Other income     1,140       804       336                             Total principal transactions and other income   $ 37,324     $ 45,506     $ (8,182 )    Principal Transactions     For all investments discussed below, see note 9 to our consolidated financial statements included in this Annual Report on Form 10-K for information about how we determine the value of these instruments. For several of the investments described below, we also had an investment in the same company which was accounted for under the equity method during the periods presented.  See discussion of equity method income / (loss) below.   SFT is a publicly traded company.  In the periods presented, the shares of SFT we held were comprised of both unrestricted and restricted shares and were carried at fair value.  For a portion of the period we held these shares, they were held in majority owned consolidated subsidiaries (the Insurance SPAC Sponsor Entities).  Accordingly, there were significant non-controlling interest and equity compensation expense associated with these.  See discussion of non-convertible non-controlling interest and equity compensation expense below.     LMND is a publicly traded company.  In the periods presented, the shares of LMND we held were comprised of both unrestricted and restricted shares and were carried at fair value.  For a portion of the period we held these shares, they were held in majority owned consolidated subsidiaries (the Insurance SPAC II Sponsor Entities).  Accordingly, there were significant non-controlling interest and equity compensation expense associated with these.  See discussion of non-convertible non-controlling interest and equity below.      IMXI represents equity positions of International Money Express, Inc. (NASDAQ: IMXI), a publicly traded company that resulted from the merger of Intermex Holdings, LLC and FinTech Acquisition Corp. II.     WEJO represents equity positions of Wejo Group, Ltd. (NASDAQ: WEJO), a publicly traded company that closed its business combination with Virtuoso Acquisition Corp.     REE represents equity positions of REE Automotive Ltd. (NASDAQ: REE), a publicly traded company that closed its business combination with 10X Capital Venture Acquisition Corp.     ML represents equity positions of MoneyLion, Inc. (NYSE: ML), a publicly traded company that closed its business combination with Fusion Acquisition Corp.     BKSY represents equity positions of Blacksky Technology Inc. (NYSE:BKSY), a publicly traded company that closed its business combination with Osprey Technologies Acquisition Corp.      The CLO investments represent investments in the most junior tranche of certain CLOs.  These investments were carried at fair value.  These investments were fully liquidated in 2020.     Other SPAC equity represents equity investments in publicly traded SPACs or their successor public companies carried at fair value.    Stoa USA Inc. / FlipOs is a private company in which we own common equity.  We carry our investment at fair value.     The U.S. Insurance JV invests in insurance company debt.  We carry our investment in the U.S Insurance JV at its reported NAV.     The SPAC Fund invests in the equity of SPACs.  We carry our investment in the SPAC Fund at its reported NAV.     Other principal investments consist of realized and unrealized gains and losses from other investments reported at fair value.    57 Table of Contents   Other Income     Other income increased by $336 to $1,140 for the year ended December 31, 2021, as compared to $804 for the year ended December 31, 2020. The revenue share arrangement noted in the table above entitles us to a percentage of revenue earned by IIFC.  The IIFC revenue share arrangement expires at the earlier of (i) the dissolution of IIFC or (ii) when we have earned a cumulative $20,000 in revenue share payments.  As of December 31, 2022, we have earned $4,513.  In addition, in any particular year, the revenue share earned by us cannot exceed $2,000.     Operating Expenses   Operating expenses increased by $18,993, or 22%, to $106,775 for the year ended December 31, 2021, as compared to $87,782 for the year ended December 31, 2020. As discussed in more detail below, the change was comprised of (i) an increase of $25,146 in compensation and benefits; (ii) an increase of $657 in business development, occupancy, and equipment; (iii) an increase of $420 in subscriptions, clearing, and execution; (iv) an increase of $616 in professional fee and other operating; (v) an increase of $37 in depreciation and amortization; and (vi) a decrease of $7,883 in impairment of goodwill.    Compensation and Benefits   Compensation and benefits increased by $25,146, or 42%, to $85,048 for the year ended December 31, 2021, as compared to $59,902 for the year ended December 31, 2020.      COMPENSATION AND BENEFITS (Dollars in Thousands)       For the Year Ended December 31,       2021     2020     Change   Cash compensation and benefits   $ 69,330     $ 47,349     $ 21,981   Equity-based compensation     15,718       12,553       3,165   Total   $ 85,048     $ 59,902     $ 25,146     Cash compensation and benefits in the table above is primarily comprised of salary, incentive compensation, severance, employer portion of payroll taxes, and benefits.  Cash compensation and benefits increased by $21,981 to $69,330 for the year ended December 31, 2021, as compared to $47,349 for the year ended December 31, 2020.  Our headcount increased to 118 as of December 31, 2021 from 87 as of December 31, 2020.  Cash compensation increased primarily due to an increase in incentive compensation related to the increase in overall revenue and the increase in income from equity method affiliates.    Equity-based compensation increased by $3,165 to $15,718 for the year ended December 31, 2021, as compared to $12,553 for the year ended December 31, 2020.  Of the $15,718 of equity compensation recognized in 2021, $13,068 was due to equity compensation related to the issuance of membership units of the Insurance SPAC II Sponsor Entities to employees of the Company.  The expense was recognized upon the completion of the merger between Insurance SPAC II and MetroMile on February 9, 2021.  Of the $12,553 of equity compensation recognized in 2020, $11,700 was due to equity-based compensation related to the issuance of membership units of the Insurance SPAC Sponsor Entities to employees of the Company.  This expense was recognized upon the completion of the merger between the Insurance SPAC and Shift in October 2020.  No further equity-based compensation expense will be recognized related to membership units of the Insurance SPAC Sponsor Entities or the Insurance SPAC II Sponsor Entities in the future.     The remaining equity-based compensation recognized during 2021 and 2020 relates to restricted grants of the Company's Common Stock and Operating LLC units.  This amount increased by $1,797 to $2,650 for the year ended December 31, 2021 as compared to $853 for the year ended December 31, 2020.  This increase was due to increased share grants and a higher share price impact during 2021 as compared to 2020.     Business Development, Occupancy, and Equipment   Business development, occupancy, and equipment increased by $657, or 24%, to $3,365 for the year ended December 31, 2021, as compared to $2,708 for the year ended December 31, 2020.  This was comprised of an increase in business development expense of $443 and an increase in occupancy and equipment of $214.  Business development increased due to increased travel in 2021 due to a general reduction in pandemic restrictions.  The increase in occupancy and equipment expense was mainly due to increased rent due to our new Menlo Park office in California and other office lease renewals at higher rates.    Subscriptions, Clearing, and Execution     Subscriptions, clearing, and execution increased by $420, or 4%, to $10,307 for the year ended December 31, 2021, as compared to $9,887 for the year ended December 31, 2020. This was comprised of an increase in clearing and execution costs of $548 partially offset by a decrease in subscriptions and dues of $128.  The decrease in subscriptions and dues was due to normal fluctuations in number of subscriptions.  The increase in clearing and execution was due to increased trading volumes.       58 Table of Contents   Professional Fee and Other Operating Expenses   Professional fee and other operating expenses increased by $616, or 9%, to $7,684 for the year ended December 31, 2021, as compared to $7,068 for the year ended December 31, 2020.  This was comprised of an increase in other operating expense of $738; partially offset by a decrease in professional fees of $122.  The increase in other operating expense was mainly due to increase in operating taxes (taxes not based on income and not included as part of the provision for income taxes) in Philadelphia, Pennsylvania.  The decrease in professional fees was mainly due to a reduction in consultant usage.     Depreciation and Amortization   Depreciation and amortization increased by $37, or 11%, to $371 for the year ended December 31, 2021, as compared to $334 for the year ended December 31, 2020.    Impairment of Goodwill     We determined the financial market volatility, as well as the reduction in volumes in the GCF repo and TBA businesses that resulted from COVID-19 was a triggering event that required us to reassess the goodwill we had recorded related to JVB under the guidance of ASC 350.  We ultimately exited the GCF business in 2021. We determined that the fair value of JVB was less than its carrying value (including the goodwill).  As a result, we recorded an impairment of $7,883 in 2020.  See note 13 to our consolidated financial statements included in this Annual Report on Form 10-K.    Non-Operating Income and Expense   Interest Expense, net   Interest expense, net decreased by $2,356, or 25%, to $7,233 for the year ended December 31, 2021, as compared to $9,589 for the year ended December 31, 2020.     INTEREST EXPENSE (Dollars in Thousands)       For the Year Ended December 31,       2021     2020     Change   Junior subordinated notes   $ 2,601     $ 2,882     $ (281 ) 2020 Senior Notes     540       496       44   2013 Convertible Notes / 2019 Senior Notes     211       336       (125 ) 2017 Convertible Note     1,534       1,505       29   Line of Credit (Byline / FT)     435       1,102       (667 ) Redeemable Financial Instrument - DGC Trust / CBF     197       1,490       (1,293 ) Redeemable Financial Instrument - JKD Capital Partners I LTD     1,715       1,883       (168 ) Redeemable Financial Instrument - ViaNova Capital Group, LLC     -       (105 )     105       $ 7,233     $ 9,589     $ (2,356 )   See notes 19 and 20 to our consolidated financial statements included in this Annual Report on Form 10-K.   59 Table of Contents   Income / (loss) from Equity Method Affiliates   Income / (loss) from equity method affiliates increased by $38,965 to $36,010 for the year ended December 31, 2021, as compared to ($2,955) for the year ended December 31, 2020.  See note 12 to our consolidated financial statements included in this Annual Report on Form 10-K.       Year Ended December 31,       2021     2020     Change   Insurance SPACs   $ (1,306 )   $ (3,656 )   $ 2,350   SPAC Sponsor Entities     37,453       63       37,390   Dutch Real Estate Entities     (137 )     638       (775 )     $ 36,010     $ (2,955 )   $ 38,965     SPAC Sponsor Entities includes both indirect and direct investments in SPAC Sponsor Entities.  Several of these SPAC Sponsor Entities are invested in SPACs that have completed their respective business combinations.  Those SPAC Sponsor Entities hold restricted and unrestricted equity interests in the public post-merger entities.  We account for our investments in SPAC Sponsor Entities under the equity method of accounting.  If the SPAC Sponsor Entity distributes SPAC shares to us, we account for those SPAC shares as a component of other investments, at fair value. The following table shows the equity method balance included in other SPAC Sponsor Entities above broken out by the ultimate public company investee.  For several of the investments described below, we also had an investment in the same company accounted for at fair value as a component of other investments, at fair value during the periods presented. See discussion of principal transactions above.         Year Ended December 31,       2021     2020     Change   HLGN   $ 28,443     $ -     $ 28,443   WEJO     1,962       -       1,962   REE     2,489       -       2,489   PAYO     2,993       (9 )     3,002   PWP     1,293       (7 )     1,300   ACHR     728       -       728   Other     (455 )     79       (534 )     $ 37,453     $ 63     $ 37,390     Other Non-Operating (Income) / Loss   We recorded other non-operating income of $2,127 for the year ended December 31, 2021 as a result of the forgiveness of our PPP loan.  See note 20 to our consolidated financial statements included in this Annual Report on Form 10-K.    Income Tax Expense / (Benefit)     Income tax expense / (benefit) was ($3,541) for the year ended December 31, 2021, as compared to ($8,669) for the year ended December 31, 2020.     The tax benefit recognized in 2021 was comprised of a deferred tax benefit of $4,117, partially offset by current tax expense of $576.  The current tax expense incurred was the result of foreign, state, and local income tax.  The deferred tax benefit was a U.S. federal, state, and local tax benefit, which was the result of the reduction in the valuation allowance applied against the Company's net operating loss carryforward ("NOL") and net capital loss carryforward ("NCL") tax assets.     The tax expense recognized in 2020 was comprised of a deferred tax benefit of $8,877, partially offset by current tax expense of $208.  The current tax expense incurred was the result of foreign, state, and local income tax.  The deferred tax expense was a U.S. federal, state, and local tax benefit, which was the result of the increase in the valuation allowance applied against the Company's NOL and NCL tax assets.     We have significant carryforward tax assets.  ASC 746 requires that we record a valuation allowance against these assets so that the net asset recognized is, in management's judgment, more likely than not to be realized.     Each reporting period, management determines the expected amount of taxable income it will generate in each jurisdiction where the Company has NOLs.  Management then schedules this income against each carryforward asset and determines what portion of the asset it believes is more likely than not to be realized.  This determination is subjective and subject to many assumptions and factors including:  profitability of our business in the future, the timing of that future income as compared to carryforward asset expiration, the character of future income (ordinary or capital), and the jurisdiction the income will be generated in.  To the extent management's determination changes, an adjustment will be made to the valuation allowance resulting in deferred tax expense or benefit.  We recorded deferred tax benefit in 2021 because expectations of future income increased and the Company reduced the valuation allowance it had applied against carryforward assets.  The Company recorded deferred tax benefit in 2020 because of expectations of future income increased and the Company decreased the valuation allowance it had applied against carryforward assets.  Because of magnitude of the Company's carryforward assets as well as the volatility of the Company's operating results, significant adjustments to the valuation allowance are likely going forward.  These future adjustments will likewise result in material amounts of deferred tax benefit or expense going forward.       60 Table of Contents   Net Income / (Loss) Attributable to the Non-Convertible Non-Controlling Interest   Net income / (loss) attributable to the non-convertible non-controlling interest for the years ended December 31, 2021 and 2020 was comprised of the non-controlling interest related to member interests in consolidated subsidiaries of the Operating LLC other than interests held by us for the relevant periods.  These interests are not convertible into Common Stock.             Year Ended December 31,       2021     2020     Change   Insurance SPAC Sponsor Entities   $ 3,560     $ 9,328     $ (5,768 ) Insurance SPAC II Sponsor Entities     17,644       (262 )     17,906   Insurance SPAC III Sponsor Entities     (615 )     (16 )     (599 ) Other     14,985       998       13,987       $ 35,574     $ 10,048     $ 25,526     Insurance SPAC Sponsor Entities, Insurance SPAC II Sponsor Entities, and Insurance SPAC III Sponsor Entities were the Sponsor Entities formed by us for our sponsored SPACs.  Other is comprised of our investments in certain SPAC Pipe Entities which themselves invest in Pipe's (Private Investment in Public Equity) of post business combination SPACs as well as an entity which we consolidate but do not wholly own that invests in other SPAC Sponsor Entities.     Net Income / (Loss) Attributable to the Convertible Non-Controlling Interest   Net income / (loss) attributable to the convertible non-controlling interest for the years ended December 31, 2021 and 2020 was comprised of the non-controlling interest related to member interests in the Operating LLC other than interests held by us for the relevant periods.        SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST For the Year Ended December 31, 2021       Wholly Owned Subsidiaries     Other Consolidated Subsidiaries     Total Operating LLC Consolidated     Cohen & Company Inc.     Consolidated   Net income / (loss) before tax   $ 1,529     $ 68,968     $ 70,497     $ -     $ 70,497   Income tax expense / (benefit)     (2,829 )     -       (2,829 )     (712 )     (3,541 ) Net income / (loss) after tax     4,358       68,968       73,326       712       74,038   Other consolidated subsidiary non-controlling interest     -       35,574       35,574                   Net income / (loss) attributable to the Operating LLC     4,358       33,394       37,752                   Average effective Operating LLC non-controlling interest % (1)                     70.61 %                 Operating LLC non-controlling interest                   $ 26,656                                                            Summary                                         Other consolidated subsidiary non-controlling interest                   $ 35,574                   Operating LLC non-controlling interest                     26,656                                       $ 62,230                         SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST For the Year Ended December 31, 2020       Wholly Owned Subsidiaries     Other Consolidated Subsidiaries     Total Operating LLC Consolidated     Cohen & Company Inc.     Consolidated   Net income / (loss) before tax   $ 4,951     $ 24,833     $ 29,784     $ -     $ 29,784   Income tax expense / (benefit)     187       -       187       (8,856 )     (8,669 ) Net income / (loss) after tax     4,764       24,833       29,597       8,856       38,453   Other consolidated subsidiary non-controlling interest     -       10,048       10,048                   Net income / (loss) attributable to the Operating LLC     4,764       14,785       19,549                   Average effective Operating LLC non-controlling interest % (1)                     72.64 %                 Operating LLC non-controlling interest                   $ 14,200                                                            Summary                                         Other consolidated subsidiary non-controlling interest                   $ 10,048                   Operating LLC non-controlling interest                     14,200                                       $ 24,248                     (1) Non-controlling interest is recorded on a quarterly basis. Because earnings are recognized unevenly throughout the year and the non-controlling interest percentage may change during the period, the average effective non-controlling interest percentage may not equal the percentage at the end of any period or the simple average of the beginning and ending percentages.     61 Table of Contents   Liquidity and Capital Resources  Liquidity is a measurement of our ability to meet potential cash requirements including ongoing commitments to repay debt borrowings, make interest payments on outstanding borrowings, fund investments, and support other general business purposes. In addition, our United States and European broker-dealer subsidiaries are subject to certain regulatory requirements to maintain minimum levels of net capital. Historically, our primary sources of funds have been our operating activities and general corporate borrowings. In addition, our trading operations have generally been financed by use of collateralized securities financing arrangements as well as margin loans.   Certain subsidiaries of the Operating LLC have restrictions on the withdrawal of capital and otherwise in making distributions and loans. JVB is subject to net capital restrictions imposed by the SEC and FINRA that require certain minimum levels of net capital to remain in this subsidiary. In addition, these restrictions could potentially impose notice requirements or limit our ability to withdraw capital above the required minimum amounts (excess capital) whether through a distribution or a loan. CCFEL was regulated by the CBI.  CCFESA is subject to the regulations of the ACPR.  CBI and ACPR impose minimum capital requirements.  See note 25 to our consolidated financial statements included in this Annual Report on Form 10-K.   Dividends and Distributions   During the third quarter of 2010, our board of directors initiated a dividend of $0.50 per quarter, which was paid regularly through December 31, 2011. Beginning in 2012, our board of directors declared a dividend of $0.20 per quarter, which was paid regularly through the first quarter of 2019.  Each time a cash dividend was declared by our board of directors, a pro rata distribution was made to the other members of the Operating LLC upon payment of dividends to our stockholders.    On July 29, 2021, our board of directors reinstated our quarterly dividend declaring a cash dividend of $0.25 per share.  We have paid a quarterly cash dividend of $0.25 regularly since that date.  In addition to our routine quarterly distribution, on March 8, 2022, our board of directors declared a special cash dividend of $0.75 per share.  On March 8, 2023, our board of directors declared a quarterly dividend of $0.25 per share payable on April 5, 2023 to shareholders of record on March 22, 2023.   Repurchases of Common Stock   On December 21, 2020 and August 31, 2020, the Company entered into letter agreements (the “December 2020 Letter Agreement” and the "August 2020 Letter Agreement," respectively and, together, the "10b5-1 Plan").  The December 2020 Letter Agreement and the August 2020 Letter Agreement were entered into with Piper Sandler & Co. (the “Agent”). The agreements authorized the Agent to use reasonable efforts to purchase, on the Company’s behalf, up to an aggregate purchase price of $1,000 of Common Stock (in the case of the December 2020 letter) and $2,000 (in the case of the August 2020 letter) on any day that the NYSE was open for business. The December 2020 Letter Agreement became effective December 23, 2020 and was in effect until December 31, 2021 or until an aggregate purchase price of $1,000 shares had been purchased, which occurred on July 28, 2021.  The August 2020 Letter Agreement was in effect from August 31, 2020 until August 31, 2021 or until an aggregate purchase price of $2,000 shares had been purchased, which occurred on November 10, 2020. Pursuant to the 10b5-1 Plan, purchases of Common Stock may be made in public and private transactions and must comply with Rule 10b-18 under the Exchange Act.  The 10b5-1 Plan was designed to comply with Rule 10b5-1 under the Exchange Act.    During the twelve months ended December 31, 2021, pursuant to the 10b-5-1 Plan, the Company repurchased 49,544 shares of Common Stock in the open market for a total purchase price of $857.  During the twelve months ended December 31, 2020, pursuant to the 10b5-1 Plan, the Company repurchased 121,181 shares of Common Stock in the open market for a total purchase price of $2,143.    Issuances of Common Stock   On December 1, 2020, the Company entered into an Equity Distribution Agreement (the “Equity Agreement”) with Northland Securities, Inc. (trade name Northland Capital Markets), as sales agent (the “Sales Agent”), relating to the issuance and sale from time to time by the Company (the “ATM Program”), through the Sales Agent, of shares of the Company's Common Stock, having an aggregate offering price of up to $75,000 (collectively the “Shares”). Sales of the Shares, if any, under the Equity Agreement will be made in sales deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act as agreed with the Sales Agent.    On June 7, 2021, the Company entered into a letter agreement (the “Equity Distribution Letter Agreement”) with the Sales Agent, pursuant to which the Sales Agent agreed to use its best efforts to, commencing on June 5, 2021, sell on the Company’s behalf up to $7,966 of the Shares in the open market pursuant to the terms and conditions of the Equity Distribution Agreement and the Equity Distribution Letter Agreement, and the Company agreed not to take any action that would cause the sales of the Shares under the Letter Agreement not to comply with Rule 10b5-1 or Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Equity Distribution Letter Agreement was entered into in connection with the ATM Program and was designed to comply with Rule 10b5-1 under the Exchange Act.   During 2021, we issued 300,859 shares of Common Stock for a total price of $9,076.  During 2022, we did not issue shares of Common Stock.   These amounts do not include shares issue for equity compensation to employees.     62 Table of Contents   During the years ended December 31, 2022, 2021, and 2020, we had the following other significant financing transactions.  This excludes non-cash transactions.  See notes 19 and 20 in our consolidated financial statements included in our Annual Report on Form 10-K.   During 2022:       o We issued a new 2020 Senior Note for $2,250 and used the proceeds to pay off an existing 2020 Senior Note   o We paid dividends of $2,258 and distributions to the convertible non-controlling interest of $6,485   o We paid distributions of $2,236 to non-convertible non-controlling interest. During 2021:       o We drew and repaid $17,500 on a revolving line of credit.   o We repaid $2,400 of the 2019 Senior Note   o We repaid $4,000 of redeemable financial instruments.   o We paid dividends of $671 and distributions to the convertible non-controlling interest of $1,970   o We raised $17,095 from investments by non-convertible non-controlling interest.   o We paid distributions of $2,735 to the non-convertible non-controlling interest. During 2020:       o We drew and repaid $17,500 on a revolving line of credit.   o We received $2,166 in proceeds on the PPP loan.   o We raised $4,500 in proceeds from issuance of the 2020 Senior Notes.   o We repaid $9,163 of debt which included the Legacy Texas Credit Facility and the 2019 Senior Notes.