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Item 1A. Risk Factors

2025-02-27 compared with 2024-03-01 · 87 added, 93 removed, 349 unchanged (34% of the section changed)

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Our results of operations may be materially affected by market fluctuations and by global and economic conditions and other factors, including changes in asset values.

Our results of operations have been, in the past, and may, in the future, be materially affected by market fluctuations due to global financial markets, economic conditions, public health epidemics, changes to global trade policies, tax legislation and tariffs and other factors, including the level and volatility of equity, fixed income and commodity prices, the level and term structure of interest rates, inflation and currency values, and the level of other market indices.

Our results of operations have been, in the past, and may, in the future, be materially affected by market fluctuations due to global financial markets, economic conditions, weather events, public health epidemics, changes to global trade policies, tax legislation and tariffs and other factors, including the level and volatility of equity, fixed income and commodity prices, the level and term structure of interest rates, inflation and currency values, and the level of other market indices.

The results of our Capital Markets business segment, particularly results relating to our involvement in primary and secondary markets for all types of financial products, are subject to substantial market fluctuations due to a variety of factors that we cannot control or predict with great certainty.

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As a market maker and dealer, the Company may own large positions in specific securities, and these undiversified holdings concentrate the risk of market fluctuations and may result in greater losses than would be the case if the Company's holdings were more diversified.

During periods of unfavorable market or economic conditions, the level of individual investor participation in the global markets, as well as the level of client assets, may also decrease, which would negatively impact the results of our Private Client and Asset Management business segments.

Substantial market fluctuations could also cause variations in the value of our investments in our funds, the flow of investment capital into or from Assets Under Management ("AUM"), and the way customers allocate capital among money market, equity, fixed income or other investment alternatives, which could negatively impact our Private Client and Asset Management business segments.

Additionally, increases in the fair value of OPY Class A non-voting common stock will likely result in higher compensation expense associated with the Oppenheimer stock appreciation rights (“OARs”) offered to certain employees as part of their compensation package.

The value of our financial instruments may be materially affected by market fluctuations.

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Holding large and concentrated positions may expose us to losses.

Concentration of risk may reduce revenues or result in losses in our market-making, investing, underwriting, including block trading, and lending businesses in the event of unfavorable market movements, or when market conditions are more favorable for our competitors.

Concentration of risk may reduce revenues or result in losses in our market-making, investing, underwriting, block trading, and lending businesses in the event of unfavorable market movements, or when market conditions are more favorable for our competitors.

Changes in interest rates (especially if such changes are rapid), sustained low or high interest rates or uncertainty regarding the future direction of interest rates, may create a less favorable environment for certain of the Company's businesses, particularly its fixed income business, resulting in reduced business volume and reduced revenue.

Prior to the Federal Reserve increasing the federal funds rate during its 2022 and 2023 monetary tightening cycle, the historical low interest rate environment substantially reduced the interest profits available to the Company through its margin lending and also reduced profit contributions from cash sweep products such as the FDIC-insured Bank Deposit program.

If interest rates decrease in immediate future periods, which appears highly probable, and/or balances within our cash sweep products decrease, the Company's profitability will be negatively impacted.

If interest rates continue to decrease in immediate future periods, which appears highly probable, and/or balances within our cash sweep products decrease, the Company's profitability will be negatively impacted.

Credit risk may expose the Company to losses caused by the inability of borrowers or other third parties to satisfy their obligations.

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Although we regularly review our credit exposures, default risk may arise from events or circumstances that are difficult to detect or foresee.

Furthermore, we also incur credit risk in our Private Client business segment lending to mainly individual investors related to margin loans collateralized by securities.

Furthermore, we also incur credit and certain concentration risk in our Wealth Management business segment lending to mainly individual investors related to margin loans collateralized by securities.

While Oppenheimer limits customer loans to an amount not greater than 65% of the fair value of the securities, our two largest customer accounts collectively comprise approximately 52% of the margin loans as of December 31, 2024.

Defaults by another large financial institution could adversely affect financial markets generally.

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Liquidity risk refers to the risk that we will be unable to finance our operations due to a loss of access to the capital markets or difficulty in liquidating our assets.

Liquidity risk also encompasses our ability (or perceived ability) to meet our financial

obligations without experiencing significant business disruption or reputational damage that may threaten our viability as a going concern as well as the associated funding risks triggered by the market or idiosyncratic stress events that may negatively affect our liquidity and may impact our ability to raise new funding.

Liquidity risk also encompasses our ability (or perceived ability) to meet our financial obligations without experiencing significant business disruption or reputational damage that may threaten our viability as a going concern as well as the associated funding risks triggered by the market or idiosyncratic stress events that may negatively affect our liquidity and may impact our ability to raise new funding.

Liquidity is essential to our businesses and we rely on external sources to finance a significant portion of our operations.

Our liquidity could be negatively affected by our inability to raise funding in the long-term or short-term debt capital markets, our inability to access the secured lending markets, or unanticipated outflows of cash or collateral by customers or clients.

Factors that we cannot control, such as disruption of the financial markets or negative views about the financial services industry generally, including concerns regarding fiscal matters in the U.S.

and other geographic areas, could impair our ability to raise funding.

In addition, our ability to raise funding could be impaired if investors or lenders develop a negative perception of our long-term or short-term financial prospects due to factors such as an incurrence of large trading or operational losses, a downgrade by the rating agencies, or a decline in the level of our business activity, if regulatory authorities take significant action against us or our industry, or we discover significant employee misconduct or illegal activity.

We have a contingency funding plan that would guide our actions in the event the Company’s liquidity sources used in the ordinary course of business are disrupted.

However, factors that we cannot control, such as disruption of the financial markets or negative views about the financial services industry generally, including concerns regarding fiscal matters in the U.S.

and other geographic areas, could impair our ability to raise funding, including from our contingent funding sources.

In addition, our ability to raise funding could be impaired if investors or lenders develop a negative perception of our long-term or short-term financial prospects due to factors such as an incurrence of large trading or operational losses, or a decline in the level of our business activity, if regulatory authorities take significant action against us or our industry, or we discover significant employee misconduct or illegal activity.

With the increase in the value of financial assets (particularly equity securities), utilities, of which we are a member, have significantly increased their deposit requirements, which are purported to reflect the risks to the financial system of members unable to meet their settlement obligations.

Under some scenarios, such requirements required even on simple agency transactions could be so significant as to be beyond the Company’s ability to fund.

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 portfolios, trading assets or corporate-owned life insurance policies, to meet maturing liabilities or other obligations.

We may be unable to sell some of our assets or we may have to sell assets at a discount to market value, either of which could adversely affect our results of operations, cash flows and financial condition.

Our borrowing costs and access to the debt capital markets depend on our credit ratings.

The rating agencies continue to monitor certain company-specific and industry-wide factors that are important to the determination of our credit ratings.

These include governance, the level and quality of earnings, capital adequacy, liquidity and funding, risk appetite and management, asset quality, strategic direction, business mix, regulatory and legislative changes, macroeconomic environment, and perceived levels of support.

It is possible that the rating agencies could downgrade our ratings and those of similar institutions.

Our long-term borrowing costs will continue to remain high given the Company's current rating levels.

Any future downgrades would increase these borrowing costs and may impact our ability to access the debt capital markets in future periods.

Our short-term lines of credit are uncommitted in nature and subject to the risk that our lenders decline to fund a requested loan.

The Company has uncommitted short-term lines of credit in the form of bank call loans with multiple third-party financial institutions.

All these arrangements are secured in nature, with the Company fully collateralizing any drawdowns with marketable securities.

Under these arrangements, lenders are not contractually obligated to make loans to us and may decline to fund any requested loan in their sole discretion.

It is possible that our lenders exit these uncommitted relationships or reduce the amount of our available funding, which could have a material adverse effect on our available liquidity and our ability to meet short-term obligations.

If the Company is unable to repay its outstanding indebtedness when due, its operations may be materially adversely affected.

The Company cannot assure that its operations will generate funds sufficient to repay its existing debt obligations as they come due.

The Company's failure to repay its indebtedness and make interest payments as required by our debt obligations could have a material adverse effect on our results of operations and financial condition, including the acceleration of the payment of debt.

Operational Risk

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Our businesses are highly dependent on our ability to process and report, on a daily basis, a large number of transactions across numerous markets.

We may introduce new products or services or change processes or reporting, including in connection with new regulatory requirements, resulting in new operational risks that we may not fully appreciate or identify, including the requirement to implement shortened settlement cycles.

Further shortening of settlement cycles may place additional stresses on our systems and resources and may impact our ability to perform these processes on a timely basis.

We may introduce new products or services or change processes or reporting, including in connection with new regulatory requirements, resulting in new operational risks that we may not fully

appreciate or identify.

The trend toward direct access to automated, electronic markets and the move to more automated trading platforms has resulted in the use of increasingly complex technology that relies on the continued effectiveness of the programming code and integrity of the data to process the trades.

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As a participant in the global capital markets, we face the risk of incorrect valuation or risk management of our trading positions due to flaws in data, models, electronic trading systems or processes or due to fraud or cyber-attack.

The adoption of shortened settlement cycles in the execution and settlement of securities transactions places increased burdens on participants including the adoption of new processes and procedures to facilitate such settlement.

A failure to successfully

adopt such procedures and technology within the mandated adoption period could negatively impact our business, our clients and our reputation.

We also face the risk of operational failure or disruption of any of the clearing agents, exchanges, clearing houses or other financial intermediaries we use to facilitate our lending and securities transactions.

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Introduction of new technology presents challenges on a regular basis.

There are significant technical and financial costs and risks in the development of new or enhanced applications, including the risk that we might be unable to effectively use new technologies or adapt our applications to emerging industry standards.

There are significant technical and financial costs and risks in the

development of new or enhanced applications, including the risk that we might be unable to effectively use new technologies or adapt our applications to emerging industry standards.

Our continued success depends, in part, upon our ability to:

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and (iii) retain skilled information technology employees.

Failure of our technology systems, which could result from events beyond our control, or an inability to effectively

upgrade those systems or implement new technology-driven products or services, could result in financial losses, liability to clients, and violations of applicable privacy and other applicable laws and regulatory sanctions.

Failure of our technology systems, which could result from events beyond our control, or an inability to effectively upgrade those systems or implement new technology-driven products or services, could result in financial losses, liability to clients, and violations of applicable privacy and other applicable laws and regulatory sanctions.

Security breaches of our technology systems, or those of our clients or other third-party vendors we rely on, may expose us to significant liability and harm our reputation.

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Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks.

Although cybersecurity incidents among financial services firms are on the rise, we have not experienced any material losses relating to cyber-attacks or other information security breaches.

Although cybersecurity incidents among financial services firms are on the rise, we have not experienced any material losses relating to cyber-attacks or other information security breaches, although such attacks are occurring more frequently and with increased sophistication.

However, there can be no assurance that we will not suffer such losses in the future.

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These laws and regulations are increasing in complexity and number.

If any person, including any of our associates, negligently disregards or intentionally breaches our established controls with respect to client or employee data, or otherwise mismanages or misappropriates such data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution.

If any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to client or employee data, or otherwise mismanages or misappropriates such data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution.

In addition, unauthorized disclosure of sensitive or confidential client or employee data, whether through system failure, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients and related revenue.

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The effective use of technology increases efficiency and enables financial institutions to better serve customers and reduce costs.

The Company's future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in the Company's operations.

The Company's future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products and services that

will satisfy customer demands, as well as to create additional efficiencies in the Company's operations.

Many of the Company's competitors have substantially greater resources to invest in technological improvements.

Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on the Company's business and, in turn, the Company's financial condition and results of operations.

Our future success depends, in part, on our ability to anticipate and respond effectively to the risk of, and the opportunity presented by, digital disruption and other technology change.

These may include new applications based on artificial intelligence, machine learning, or new approaches to data mining.

Risks related to artificial intelligence, including our use of third-party products incorporating artificial intelligence, include the generation of factually incorrect or biased results, also known as hallucinations, data security vulnerabilities, potential IP infringement, mishandling of confidential, proprietary, or private information, and potentially problematic third-party license terms.

In addition, the SEC has recently proposed new rules on the use of artificial intelligence by investment advisers that could add to the compliance risks and burdens of using this technology.

We continue to evaluate emerging technologies like artificial intelligence, machine learning and generative artificial intelligence for incorporation into our business.

State and federal regulations relating to these emerging technologies are quickly evolving, and, should we adopt such technologies, we may require significant resources to maintain our business practices while seeking to comply with applicable laws.

Any failure to accurately identify and address our responsibilities and liabilities in this new environment could negatively affect any solutions we develop incorporating such technologies and could subject us to reputational harm, regulatory action or litigation, any of which may harm our financial condition and operating results.

There is risk associated with the sufficiency of coverage under the Company’s insurance policies.

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The Company's business may be negatively affected if in the future its insurance proves to be inadequate or unavailable.

Our ability to insure our property and insure against business interruption may be adversely affected by climate change and the refusal by insurance carriers to insure against certain resultant risks.

In addition, insurance claims may divert management resources away from operating the business.

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We also may be negatively impacted by 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.

New regulations or guidance relating to climate change, as well as the perspectives of stockholders, 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.

We are subject to risks relating to environmental, social, and governance (“ESG”) matters that could adversely affect our reputation, business, financial condition, and results of operations, as well as the price of our common stock.

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We continue to explore implementing ESG considerations across our business practices and operations, a task complicated by the lack of consensus around a defining standard of ESG.

We continue to focus on improving the resilience of our operations, fostering an inclusive workforce and maintaining a system of good corporate governance.

However, our efforts in this regard may be insufficient and may expose the Company to reputational risk from entities purporting to "grade" ESG platforms, reductions in business with certain clients demanding greater ESG efforts or to regulatory expectation and enforcement if such practices become the subject of rule-making by regulators to whom we are subject.

We continue to focus on improving the resilience of our operations, fostering an inclusive

workforce and maintaining a system of good corporate governance.

However, our efforts in this regard may be insufficient and may expose the Company to reputational risk from entities purporting to "grade" ESG platforms, reductions in business with certain clients demanding greater ESG efforts or to regulatory expectation and enforcement if such practices ever become the subject of rule-making by regulators to whom we are subject.

We are subject to risks, including reputational risk, associated with ESG issues.

The public holds diverse and often conflicting views on ESG topics.

As a financial institution, we have multiple stakeholders, including our shareholders, clients, associates, federal, state and other regulatory authorities, as well as the communities in which we operate, and these stakeholders will often have differing priorities and expectations regarding ESG issues.

As a financial institution, we have multiple stakeholders, including our stockholders, clients, employees, federal, state and other regulatory authorities, as well as the communities in which we operate, and these stakeholders will often have differing priorities and expectations regarding ESG issues.

Recently, anti-ESG sentiment has gained some momentum across the United States, with several states and the federal government (including the SEC) having enacted or proposed “anti-ESG” policies or legislation, or issued related legal opinions.

If we take action in conflict with one or another of those stakeholders’ expectations, we could experience an increase in client complaints, a loss of business, or reputational harm.

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Certain of our clients might also require that we implement additional ESG procedures or standards in order to continue to do business with them.

If we fail to comply with specific ESG-related investor or client expectations and standards, or to provide the disclosure relating to ESG issues that any

third parties may believe is necessary or appropriate (regardless of whether there is a legal requirement to do so), our reputation, business, financial condition, and/or results of operations, as well as the price of our common stock could be negatively impacted.

If we fail to comply with specific ESG-related investor or client expectations and standards, or to provide the disclosure relating to ESG issues that any third parties may believe is necessary or appropriate (regardless of whether there is a legal requirement to do so), our reputation, business, financial condition, and/or results of operations, as well as the price of our common stock could be negatively impacted.

Moreover, there has been increased regulatory focus on ESG-related practices of investment managers.

A growing interest on the part of investors and regulators in ESG factors, and increased demand for, and scrutiny of, ESG-related disclosures by asset managers has likewise increased the risk that we could be perceived as, or accused of, making inaccurate or misleading statements regarding the investment strategies offered to our clients or of our ESG efforts or initiatives, commonly referred to as “greenwashing.” Such perceptions or accusations could damage our reputation, result in litigation or regulatory enforcement actions, and adversely affect our business.

The change in administrations at the federal level may significantly impact expectations around ESG policies and our ability to foresee necessary changes to meet societal standards .

REGULATORY AND COMPLIANCE RISKS

The Company is subject to extensive securities regulation and the failure to comply with these regulations could subject it to monetary penalties or sanctions.

The securities industry and the Company's business are subject to extensive regulation by the SEC, state securities regulators, other governmental regulatory authorities and industry self-regulatory organizations.

The securities industry and the Company's business are subject to extensive regulation by the SEC, state securities regulators, other governmental regulatory authorities and industry SROs.

The Company may be adversely affected by new or revised legislation or regulations or changes in the interpretation or enforcement of existing laws and rules by these governmental regulatory authorities and self-regulatory organizations.

Oppenheimer is a broker-dealer and investment adviser registered with the SEC and is primarily regulated by FINRA.

Broker-dealers are subject to regulations which cover all aspects of the securities business, including, without limitation sales methods and supervision, underwriting, trading practices among broker-dealers, emerging standards concerning fees and charges imposed on clients for fee-based programs, use and safekeeping of customers' funds and securities, anti-money laundering and the USA PATRIOT Act o 2001 (the "Patriot Act") compliance, capital structure of securities firms, trade and regulatory reporting, cybersecurity, pricing of services, compliance with Department of Labor ("DOL") rules and regulations for retirement accounts, compliance with lending practices (Regulation T), record keeping, and the conduct of directors, officers and employees.

Broker-dealers and investment advisers are subject to regulations which cover all aspects of the securities business, including, without limitation sales methods and supervision, underwriting, trading practices by and among broker-dealers and investment advisers, emerging standards concerning fees and charges imposed on clients for fee-based programs, use and safekeeping of customers' funds and securities, anti-money laundering and Patriot Act compliance, capital structure of securities firms, trade and regulatory reporting, cybersecurity, pricing of services, compliance with Department of Labor ("DOL") rules and regulations for retirement accounts, compliance with lending practices (Regulation T), record keeping, and the conduct of directors, officers and employees.

Compliance with many of the regulations applicable to the Company involves a number of risks, particularly in areas where applicable regulations may be subject to varying interpretation.

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New regulations may result in enhanced standards of duty on broker-dealers in their dealings with their clients (fiduciary standards).

Consequently, these regulations often serve to limit the Company's activities, including through net capital, customer protection and market conduct requirements, including those relating to principal trading.

Consequently, these regulations often serve to limit the Company's activities, including through net capital, customer protection

and market conduct requirements, including those relating to principal trading.

Much of the regulation of broker-dealers has been delegated to self-regulatory organizations, principally FINRA.

FINRA adopts rules, subject to approval by the SEC, which govern its members and conducts periodic examinations of member firms' operations.

If the Company is found to have violated any applicable laws, rules or regulations, formal administrative or judicial proceedings may be initiated against it that may result in censure, fine, civil or criminal penalties, including treble damages in the case of insider trading violations, the issuance of cease-and-desist orders, the suspension or termination of our broker-dealer or investment advisory activities, the suspension or disqualification of our officers or employees;

If the Company is found to have violated any applicable laws, rules or regulations, formal administrative or judicial proceedings may be initiated against it that may result in censure, fine, civil or criminal penalties, including treble damages in the case of insider trading violations, the issuance of cease-and-desist orders, the limitation, suspension or termination of our broker-dealer or investment advisory activities, the suspension or disqualification of our officers or employees;

or other adverse consequences.

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Firms in the financial services industry have been operating in an onerous regulatory environment.

The industry has experienced increased scrutiny from a variety of regulators, including the SEC, CFTC and FINRA as well as state regulators.

The industry has experienced increased scrutiny from a variety of regulators, including the SEC and FINRA as well as state regulators.

Penalties and fines sought by regulatory authorities have increased substantially.

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Each of the regulatory bodies with jurisdiction over us has regulatory powers dealing with many different aspects of financial services, including, but not limited to, the authority to fine us and to grant, cancel, restrict or otherwise impose conditions on the right to continue operating particular businesses.

For example, the failure to comply with the obligations imposed by the Exchange Act on broker-dealers and the Advisers Act on investment advisers, including recordkeeping, registration, advertising and operating requirements, disclosure obligations and prohibitions on fraudulent activities, or by the Investment Company Act of 1940, as amended (the "1940 Act"), or could result in investigations, sanctions and reputational damage.

For example, the failure to comply with the obligations imposed by the Exchange Act on broker-dealers and the Advisers Act on investment advisers, including recordkeeping, registration, advertising and operating requirements, disclosure obligations and prohibitions on fraudulent activities, or by the Investment Company Act of 1940, as amended (the "1940 Act"), could result in investigations, sanctions and reputational damage.

Increasingly, regulators have instituted a practice of "regulation by enforcement" where new interpretations of existing regulations are introduced by bringing enforcement actions against securities firms for activities that occurred in the past but were not then thought to be problematic.

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and foreign governments have taken regulatory actions impacting the investment management industry, and may continue to take further actions, including expanding current (or enacting new) standards, requirements and rules that may be applicable to us and our subsidiaries, particularly those subsidiaries that are SEC registered investment advisers.

For example, the SEC

and several states and municipalities in the United States have adopted "pay-to-play" rules, which could limit our ability to charge advisory fees.

For example, the SEC and several states and municipalities in the United States have adopted "pay-to-play" rules, which could limit our ability to charge advisory fees.

Such "pay-to-play" rules could affect the profitability of the advisory portion of our business.

Additionally, the use of "soft dollars," where a portion of commissions paid to broker-dealers in connection with the execution of trades also pays for research and other services provided to advisors has been mostly prohibited in Europe and is periodically reexamined in the U.S.

and may be limited or modified in the future The use of various mutual fund share classes has also come under significant regulatory scrutiny.

The SEC found in conjunction with its Mutual Fund Share Class Disclosure Initiative that the firm's investment management disclosure relating to 12b-1 fees was deficient resulting in restitution of fees to investment management clients.

and may be limited or modified in the future.

The use of various mutual fund share classes as well as "held away" positions has also come under significant regulatory scrutiny.

Furthermore, new regulations regarding the management of hedge funds and the use of certain investment products may impact our investment management business and result in increased costs.

For example, many regulators around the world adopted disclosure and reporting requirements relating to the hedge fund business.

On June 5, 2019, the SEC adopted Regulation Best Interest (“Reg BI”) as Rule 15l-1 under the Exchange Act.

Reg BI imposes a new federal standard of conduct on registered broker-dealers and their associated persons when dealing with retail clients and requires that a broker-dealer and its representatives act in the best interest of such client and not place its own interests ahead of the customer’s interests.

The effective compliance date for Reg BI was June 30, 2020.

The new rules and processes related thereto will likely limit revenue and have increased, and will likely continue to increase costs, including, but not limited to, compliance costs associated with new or enhanced technology as well as increased litigation costs.

Additionally, Reg BI requires, among other things, that a broker-dealer and its representatives act in the best interest of such client and not place its own interests ahead of the customer’s interests when making a recommendation to that client of any securities transaction or investment strategy.

Reg BI may limit revenue and has increased, and will likely continue to increase costs, including, but not limited to, compliance costs associated with new or enhanced technology as well as increased litigation costs.

(see “Business – Regulation – Fiduciary Standard – Rulemaking by the U.S.

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The Company is exposed to litigation and arbitration risks, which may adversely affect our reputation, financial position and results of operations.

In the normal course of business, the operating subsidiaries have been and continue to be the subject of numerous civil actions and arbitrations arising out of customer complaints relating to our activities as a broker-dealer and investment adviser, as an employer and as a result of other business activities.

In the normal course of business, the Operating Subsidiaries have been and continue to be the subject of numerous civil actions and arbitrations arising out of customer complaints (including complaints from non-customers asserting standing) relating to our activities as a broker-dealer and investment adviser, as an employer and as a result of other business activities.

The risks associated with litigation, claims and assessments are oftentimes difficult to quantify.

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The policies and procedures the Company employs to identify, monitor and manage risks may not be fully effective.

Some methods of risk management are based on the use of observed historical market behavior.

Some methods of risk management are based on the use of historical information.

As a result, these methods may not predict future risk exposures, which could be significantly greater than historical measures indicate.

Other risk management methods depend on evaluation of information regarding markets, clients or other matters that are publicly available or otherwise

Other risk management methods depend on evaluation of information regarding markets, clients or other matters that are publicly available or otherwise accessible.

This information may not be accurate, complete or up-to-date or properly evaluated.

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The Company cannot give assurances that its policies and procedures will effectively and accurately record and verify this information.

The Company seeks to monitor and control its risk exposure through a variety of separate but complementary financial, credit, operational, compliance and legal reporting systems.

The Company seeks to monitor and control its risk exposure through a variety of separate but complementary financial, credit, operational, compliance and legal reporting processes and/or systems.

The Company believes that it effectively evaluates and manages the market, credit, liquidity and other risks to which it is exposed.

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The Company issues two classes of shares, Class A non-voting common stock (the “Class A Stock") and Class B voting common stock (the "Class B Stock").

At December 31, 2023, there were 99,665 shares of Class B Stock outstanding compared to 10,186,783 shares of Class A Stock.

The voting power associated with the Class B Stock allows holders of Class B Stock to effectively exercise control over all matters requiring stockholder approval, including the election of all directors and approval of significant corporate transactions, and other matters affecting the Company.

At December 31, 2024, there were 99,665 shares of Class B Stock outstanding compared to 10,231,736 shares of Class A Stock outstanding.

The voting power associated with the Class B Stock allows holders of the

Class B Stock to effectively exercise control over all matters requiring stockholder approval, including the election of all directors and approval of significant corporate transactions, and other matters affecting the Company.

Approximately 98% of the Class B Stock is held by an entity controlled by Mr.

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Due to the lack of voting power, the holders of the Class A Stock have limited influence on corporate matters.

The voting power of the holders of Class B Stock may have the effect of depressing the price of the Company's Class A Stock, and delaying or preventing a change in control of the Company or resulting in the receipt of a "control premium" by the controlling stockholder which premium would not be received by the holders of the Class A Stock.

The voting power of the holders of the Class B Stock may have the effect of depressing the price of the Company's Class A Stock, and delaying or preventing a change in control of the Company or resulting in the receipt of a "control premium" by the controlling stockholder which premium would not be received by the holders of the Class A Stock.

The controlling stockholder may have potential conflicts of interest with other stockholders including the ability to determine the outcome of "say on pay" votes at the Company.

The presence of Class B voting shares may also result in the Company receiving low “ESG scores” by some parties having unforeseeable consequences on the Company.

The presence of the Class B stock may also result in the Company receiving low “ESG scores” by some parties, which could result in unforeseeable consequences to the Company.

The trading volume in the Company's Class A Stock is less than that of larger financial services companies.

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This presence depends on the individual decisions of investors and general economic and market conditions over which the company has no control.

Given the lower trading volume of the Company's Class A Stock, significant sales of shares of the Company's Class A Stock, or the expectation of these sales, could cause the Company's Class A Stock price to fall and increase the volatility of the Class A Stock generally.

The Company is the holding company of several operating subsidiaries, and is reliant on dividends and other sources of funding from those subsidiaries to pay dividends to holders of Class A Stock and meet our debt service and other obligations.

As a holding company, we are dependent on dividends and other sources of liquidity from our various operating subsidiaries in order to meet our debt service obligations, make dividend payments to holders of Class A Stock once declared by our Board of Directors and meet our other obligations.

Given the lower trading volume of the Company's Class A Stock and an overall reduction of outstanding shares through share repurchases in recent years, significant sales of shares of the Company's Class A Stock, or the expectation of these sales, could cause the Company's Class A Stock price to fall and increase the volatility of the Class A Stock generally.

As a holding company, we are dependent on dividends and other sources of liquidity from our various Operating Subsidiaries in order to meet any debt service obligations, make dividend payments to holders of Class A Stock once declared by our Board of Directors and meet our other obligations.

Some of our Operating Subsidiaries are subject to laws and regulations that may restrict the timing and/or amount of dividends that can be distributed to the Company, or provide the regulators such as the SEC or FINRA with the ability to prohibit or reduce the amount of any planned dividend distributions to the Parent.

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Our ability to pay future dividends to holders of Class A Stock is subject to the Board of Directors’ discretion and may be impacted by our financial and operating results.

Our Board of Directors declared cash dividends of $0.15 per share each quarter in 2023 to holders of Class A and Class B Stock and also authorized the Company to repurchase shares of its Class A Stock.

The declaration and payment of future cash dividends and authorization of future share repurchases is subject to the Board of Director’s discretion and may be impacted by a number of factors, including but not limited to our net income levels, ability to generate positive operating cash flows, compliance with the Indenture for our 5.50% Senior Secured Notes, subsidiary capital requirements and general financial and business conditions.

Our Board of Directors declared cash dividends of $0.66 per share in 2024 to holders of Class A and Class B Stock and also authorized the Company to repurchase shares of its Class A Stock.

The declaration and payment of future cash dividends and authorization of future share repurchases is subject to the Board of Director’s discretion and may be impacted by a number of factors, including but not limited to our net income levels, ability to generate positive operating cash flows, subsidiary capital requirements and general financial and business conditions.

GENERAL BUSINESS AND ECONOMIC RISKS

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The nature and timing of these changes can be difficult to predict and can have a material impact on our financial statements.

In some cases, the new or revised accounting standard may require retrospective application, which would result in us restating prior-period financial statements.

In some cases, the new or revised accounting standards may require retrospective application, which would result in us restating prior-period financial statements.

Developments in market and economic conditions have adversely affected, and may in the future adversely affect, the Company's business and profitability.

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These conditions are a product of many factors, which are mostly unpredictable and beyond the Company's control, and may affect the decisions made by financial market participants.

Changes in economic and political conditions, including economic output levels, interest and inflation rates, employment levels, prices of commodities including oil and gas, exogenous market events, consumer confidence levels, public health emergencies and fiscal and monetary policy can affect market conditions.

Changes in economic and political conditions, including economic output levels, interest and inflation rates, employment levels, trade policies and tariffs, prices of commodities including oil and gas, exogenous market events, consumer confidence levels, public health emergencies, weather events and consequential damage, and fiscal and monetary policy can affect market conditions.

For example, the Federal Reserve's policies determine, in large part, the cost of funds for lending and investing and the return earned on those loans and investments.

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While many global financial markets have shown signs of improvement in recent years, uncertainty remains.

A period of sustained downturns and/or volatility in the securities markets, and/or prolonged

levels of increasing interest rates, could lead to a return to increased credit market dislocations, reductions in the value of real estate, and other negative market factors which could significantly impair our revenues and profitability.

A period of sustained downturns and/or volatility in the securities markets, and/or prolonged levels of increasing interest rates, could lead to a return to increased credit market dislocations, reductions in the value of real estate, and other negative market factors which could significantly impair our revenues and profitability.

markets may also be impacted by political and civil unrest occurring in the Middle East, Eastern Europe, Russia, Venezuela and Asia.

Concerns about the European Union ("EU"), including Britain's January 2020 exit from the EU ("Brexit"), and the stability of the EU's sovereign debt, has caused uncertainty and disruption for financial markets globally.

Hostilities between Russia and Ukraine and the conflict between Israel and Hamas as well as related disruptions of shipping routes in the Red Sea and related military action could have unforeseen and negative impacts upon the markets and the Company and its operations.

Concerns about the EU, including Brexit, and the stability of the EU's sovereign debt, has caused uncertainty and disruption for financial markets globally.

Hostilities between Russia and Ukraine, the conflict between Israel, Hamas and Iran, as well as related disruptions of shipping routes in the Red Sea and related military action, and military and other risks related to China's territorial claims adversely affecting its neighbors including Taiwan, could have unforeseen and negative impacts upon the markets and the Company and its operations.

Continued uncertainties loom over the outcome of the EU's financial support programs.

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The number of engagements the Company has at any given time is subject to change and may not necessarily result in future revenues.

Underwriting activity remained weak in 2023 and may continue so in the immediate future.

Additionally, our investments in SPACs, may be subject to forfeiture, potential regulatory scrutiny and litigation that could negatively affect our financial results.

• A portion of the Company's revenues are derived from fees generated from its asset management business segment.

Asset management fees often are primarily comprised of base management and performance (or incentive) fees.

Management fees are primarily based on assets under management.

• A portion of the Company's revenues are derived from various asset management advisory fees that often are primarily comprised of base management and performance (or incentive) fees.

Management fees are primarily based on assets

under management.

Assets under management balances are impacted by net inflow/outflow of client assets and changes in market values.

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Moreover, the Company's inability to reach agreement regarding the terms of unbundling arrangements with institutional clients who are actively seeking such arrangements could result in the loss of those clients, which would likely reduce the level of institutional commissions.

The Company believes 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 as so of our competitors seek to obtain market share by reducing fees, commissions or margins.

The announcement by several large securities firms as well as a similar “no commission” offering by retail firms utilizing the internet and electronic trading have proven popular among retail clients both new to securities markets as well as some experienced investors and will only add to this pricing pressure, especially on the firms likes ours that cater to retail investors.

The Company believes 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 as some of our competitors seek to obtain market share by reducing fees, commissions or margins.

Additional pressure on sales and trading revenue may impair the profitability of the Company's business.

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As the costs of doing business increase, the Company may not be able to continue to grow its revenues through “organic” growth (the growth attendant to hiring one employee at a time or through expanding into a new business line through a limited investment in technology and employment).

In lieu of organic growth, it becomes increasingly necessary to grow through the acquisition of a business or businesses that fulfill the Company’s strategic decisions for growth.

In lieu of organic growth, it becomes increasingly necessary to grow through the acquisition of a business or businesses that fulfill the Company’s strategic decisions

However, due to competition or the cost of such acquisitions, such expansion may not be available on a profitable basis and may threaten the Company’s ongoing ability to expand its business.

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To the extent the Company conducts business outside the United States, it is subject to risks including, without limitation, the risk that it will be unable to provide effective operational support to these business activities, the risk of non-compliance with foreign laws and regulations, the general economic and political conditions in countries where it conducts business and currency fluctuations.

The Company operates in Israel, the United Kingdom, the Isle of Jersey, Germany, Switzerland and Hong Kong.

The Company operates in Israel, the United Kingdom, the Isle of Jersey, Switzerland and Hong Kong.

If the Company is unable to manage these risks relating to its foreign operations effectively, its reputation and results of operations could be harmed.

The United Kingdom’s exit from the EU could impact our overseas operations.

In June 2016, the UK held a referendum in which voters approved an exit from the EU, commonly referred to as “Brexit,” and

the UK exited the EU in January 2020.

The withdrawal, among other outcomes, has disrupted the free movement of goods, services and people between the UK and the EU, undermined bilateral cooperation in key policy areas and significantly disrupted trade between the UK and the EU.

The UK exited the EU without a continuing agreement covering many aspects of its relationship, at least as that relates to financial services, which has been disruptive to the economies of both the UK and the EU and has negatively affected our business conducted in the EU.

We may also face new regulatory costs and challenges as a result of Brexit that could have a negative effect on our operations.

In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the UK determines which EU laws to replace or replicate.

Given the lack of comparable precedent, it is unclear what financial, regulatory, trade and legal implications the withdrawal of the UK from the EU will continue to have and how such withdrawal will continue to affect us.

The Company has reviewed various strategies to be able to continue its relationships with clients within the EU, including becoming domiciled in one or more EU countries and becoming subject to their respective regulations.

We have an EU office in Portugal to be able to continue to service various constituencies operating inside the EU.

There is no assurance that this strategy will be successful or effective.

It is possible that the level of economic activity in the UK and the rest of Europe will be adversely impacted and that we will face increased regulatory and legal complexities, including those related to tax, trade, security and employee relations as a result of Brexit.

Such changes could be costly and potentially disruptive to our operations and business relationships in affected regions.

The ability to attract, develop and retain highly skilled and productive employees, particularly qualified financial advisors is critical to the success of the Company's business.

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If we were to lose the services of any of our investment bankers, senior equity research, sales and trading professionals, asset managers, or executive officers to a competitor or otherwise, we may not be able to retain valuable relationships and some of our clients could choose to use the services of a competitor instead of our services.

If we are unable to

retain our senior professionals or recruit additional professionals, our reputation, business, results of operations and financial condition could be adversely affected.

If we are unable to retain our senior professionals or recruit additional professionals, our reputation, business, results of operations and financial condition could be adversely affected.

Further, new business initiatives and efforts to expand existing businesses generally require that we incur compensation and benefits expense before generating additional revenues.

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The Company maintains key man insurance on the life of its CEO.

Approximately 98% of the shares of Class B Stock are held by Phase II

Financial Inc.

Approximately 98% of the shares of Class B Stock are held by Phase II Financial Inc.

("Phase II"), a Delaware corporation controlled by Mr.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors