10q10k10q10k.net

What changed in OPPENHEIMER HOLDINGS INC's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of OPPENHEIMER HOLDINGS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+337 added−349 removedSource: 10-K (2024-03-01) vs 10-K (2023-02-28)

Top changes in OPPENHEIMER HOLDINGS INC's 2023 10-K

337 paragraphs added · 349 removed · 258 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

82 edited+17 added−28 removed150 unchanged
Biggest changeOur ability to avoid significant business disruptions is reliant on the continued ability to support our employees that continue to work remotely. To date, there have been no significant disruptions to our business or internal control processes as a result of this dispersion of employees.
Biggest changeAs the COVID-19 pandemic has subsided, we have continued to encourage employees to return to the workplace on a regular basis, as we believe that in-person engagement provides important benefits that are largely lost through remote work. To date, there have not been any significant disruptions to our business or internal control processes as a result of remote work.
Diversity, equity, and inclusion We are committed to maintaining a diverse workforce and we are committed to ensuring that all our associates feel welcome, valued, respected, and heard, so that they can fully contribute their talents for the benefit of their careers, our clients, our firm, and our communities.
Diversity, equity, and inclusion We are committed to maintaining a diverse workforce and ensuring that all our associates feel welcome, valued, respected, and heard, so that they can fully contribute their talents for the benefit of their careers, our clients, our firm, and our communities.
Generally, employees are compensated as follows: Compensation Type Business Areas Salary Incentive Production Deferred Share-Based Wealth Management X X X X Investment Banking X X X X Sales & Trading X X X Research X X X X Support Functions X X X Compensation as a percentage of revenue is a metric that the firm monitors closely.
Generally, employees are compensated as follows: Compensation Type Business Areas Salary Incentive Production Deferred Share-Based Wealth Management X X X X Investment Banking X X X X Sales & Trading X X Research X X X X Support Functions X X X Compensation as a percentage of revenue is a metric that the firm monitors closely.
We conduct ongoing and robust succession planning for senior roles of our Company, and we strive to ensure we have a diverse pool of candidates for such roles. We regularly discuss the results with executive leadership and the Board of Directors. An important driver of our success is the continuous recruitment and retention of financial advisors.
We conduct ongoing and robust succession planning for senior roles within our Company, and we strive to ensure we have a diverse pool of candidates for such roles. We regularly discuss the results with executive leadership and the Board of Directors. An important driver of our success is the continuous recruitment and retention of financial advisors.
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.
Reg BI imposes a 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 new rulemaking has fundamentally altered the provision of research to financial institutions and also requires the registration of all market participants. This rulemaking has negatively impacted the overall availability of commission revenue in payment for equity research and possibly negatively impacted the liquidity of markets for equities and fixed income securities in Europe.
The new rulemaking has fundamentally altered the provision of research to financial institutions and also requires the registration of all market participants. This rulemaking has negatively impacted the overall availability of commission revenue in payment for equity research and negatively impacted the liquidity of markets for equities and fixed income securities in Europe.
See "Management's Report on Internal Control over Financial Reporting." Wall Street Reform & Consumer Protection Act (the "Dodd-Frank Act") — In July 2010, Congress enacted extensive legislation known as the Dodd-Frank Act in which it mandated that the SEC and other regulators conduct comprehensive studies and issue new regulations based on their findings to control the activities of financial institutions in order to protect the financial system, the investing public and consumers from issues and failures of the type that occurred in the 2008-9 financial crisis.
See "Management's Report on Internal Control over Financial Reporting." Wall Street Reform & Consumer Protection Act (the "Dodd-Frank Act") — In July 2010, Congress enacted extensive legislation known as the Dodd-Frank Act in which it mandated that the SEC and other regulators conduct comprehensive studies and issue new regulations based on their findings to control the activities of financial institutions in order to protect the financial system, the investing public and consumers from issues and failures of the type that occurred in the 2008-2009 financial crisis.
Oppenheimer Investments Asia Limited Oppenheimer Investment Asia Limited, which is based in Hong Kong, China, provides fixed income and equities brokerage services to institutional investors and is regulated by the Securities and Futures Commission in Hong Kong. Oppenheimer Europe Ltd.
Oppenheimer Investments Asia Limited Oppenheimer Investments Asia Limited, which is based in Hong Kong, China, provides fixed income and equities brokerage services to institutional investors and is regulated by the Securities and Futures Commission in Hong Kong. Oppenheimer Europe Ltd.
Additional legislation, changes in rules promulgated by the SEC, the CFTC and by SROs, or changes in the interpretation or enforcement of existing laws and rules may directly affect the method of operation and profitability of broker-dealers.
Additional legislation, changes in rules promulgated by the SEC, and by SROs, or changes in the interpretation or enforcement of existing laws and rules may directly affect the method of operation and profitability of broker-dealers.
Capabilities include: pre-trade and post-trade analytics; access to all major market centers in the US; access to sophisticated and custom algorithms; professional clearing and settlement expertise. Taxable Fixed Income Oppenheimer employs over 85 d edicated fixed income sales and trading professionals in offices in the U.S., the United Kingdom (London), the Isle of Jersey (St. Helier) and Asia (Hong Kong).
Capabilities include: pre-trade and post-trade analytics; access to all major market centers in the US; access to sophisticated and custom algorithms; professional clearing and settlement expertise. Taxable Fixed Income Oppenheimer employs over 110 d edicated fixed income sales and trading professionals in offices in the U.S., the United Kingdom (London), the Isle of Jersey (St. Helier) and Asia (Hong Kong).
Oppenheimer offers capabilities in trading and sales; transacting in investment grade and high yield corporate bonds; mortgage-backed securities; U.S. government and Agency bonds; and the sovereign and corporate debt of industrialized and Emerging Market countries, which may be denominated in currencies other than U.S. dollars. Oppenheimer also publishes desk analysis with respect to a number of such securities.
Oppenheimer offers capabilities in trading and sales; transacting in investment grade and high yield corporate bonds; mortgage-backed securities; U.S. government and Agency bonds; distressed loans; and the sovereign and corporate debt of industrialized and Emerging Market countries, which may be denominated in currencies other than U.S. dollars. Oppenheimer also publishes desk analysis with respect to a number of such securities.
The Patriot Act also contains financial transparency laws and enhanced information collection tools and enforcement mechanisms for the U.S. government, including: due diligence and record-keeping requirements for private banking and correspondent accounts; standards for obtaining and verifying customer identification at account opening; and rules to produce certain records upon request of a regulator or law enforcement and to promote cooperation among financial institutions, regulators, and law enforcement in identifying parties that may be involved in terrorism, money laundering and other crimes.
The Patriot Act also contains financial transparency laws and enhanced information collection tools and enforcement mechanisms for the U.S. government, including: due diligence and record-keeping requirements for private banking and correspondent accounts; standards for obtaining and verifying customer identification at account opening; and rules to produce certain records upon request of a regulator or law enforcement and to 12 Table of Contents promote cooperation among financial institutions, regulators, and law enforcement in identifying parties that may be involved in terrorism, money laundering and other crimes.
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and an investment adviser under the Investment Adviser Act of 1940, as amended (the "Adviser Act"), and transacts business on various exchanges.
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and transacts business on various exchanges.
Oppenheimer's High Yield corporate bond research effort is designed to identify United States debt issuances that provide a combination of high current yield plus capital appreciation over the short to medium term. Its mortgage backed securities practice focuses on the detailed analysis of individual agency and non-agency mortgage backed securities.
Oppenheimer's High Yield corporate bond research effort is designed to identify United States debt issuances that provide a combination of high current yield plus capital appreciation over the short to medium term. Our mortgage backed securities practice focuses on the detailed analysis of individual agency and non-agency mortgage backed securities.
Oppenheimer Investments Asia Limited is required to maintain Required Liquid Capital of the greater of HKD 3.0 million or 5% of Adjusted Liabilities as defined by the Hong Kong Securities and Futures Financial Resources Rules. As of December 31, 2022, Oppenheimer Investments Asia Limited was in compliance with its regulatory requirements.
Oppenheimer Investments Asia Limited is required to maintain Required Liquid Capital of the greater of HKD 3.0 million or 5% of Adjusted Liabilities as defined by the Hong Kong Securities and Futures Financial Resources Rules. As of December 31, 2023, Oppenheimer Investments Asia Limited was in compliance with its regulatory requirements.
In addition, U.S. broker-dealers will be required to submit customer account information to the repository. This will make the CAT the world's largest repository of securities transactions. In June 2020, Oppenheimer, like other U.S. broker dealers, began reporting equity trades, and in July, 2020 non-complex option trades to the CAT. Oppenheimer began reporting complex option trades in 2021.
In addition, U.S. broker-dealers will be required to submit customer account information to the repository. This will make the CAT the world's largest repository of securities transactions and client information. In June 2020, Oppenheimer, like other U.S. broker dealers, began reporting equity trades, and in July, 2020 non-complex option trades to the CAT.
Bank Secrecy Act and USA PATRIOT Act of 2001— The Bank Secrecy Act and the USA PATRIOT Act of 2001 (“Patriot Act”) and requirements administered by the Financial Crimes Enforcement Network (“FinCEN”) require financial institutions, among other things, to implement a risk-based program reasonably designed to prevent money laundering and to combat the 13 Table of Contents financing of terrorism, including through suspicious activity and currency transaction reporting, compliance, record-keeping and initial and on-going due diligence on customers.
Bank Secrecy Act and USA PATRIOT Act of 2001— The Bank Secrecy Act and the USA PATRIOT Act of 2001 (“Patriot Act”) and requirements administered by the Financial Crimes Enforcement Network (“FinCEN”) require financial institutions, among other things, to implement a risk-based program reasonably designed to prevent money laundering and to combat the financing of terrorism, including through suspicious activity and currency transaction reporting, compliance, record-keeping and initial and on-going due diligence on customers.
Regulation NMS and Regulation SHO have substantially affected the trading of equity securities. These regulations were intended to increase transparency in the markets and have acted to further reduce spreads and, with competition from electronic 12 Table of Contents marketplaces, to reduce commission rates paid by institutional investors. These rules have also reduced liquidity in some markets under some circumstances.
Regulation NMS and Regulation SHO have substantially affected the trading of equity securities. These regulations were intended to increase transparency in the markets and have acted to further reduce spreads and, with competition from electronic marketplaces, to reduce commission rates paid by institutional investors. These rules have also reduced liquidity in some markets under some circumstances.
The Company's headquarters and the primary location for its technology infrastructure are both supported by emergency electric generator back-up. All of these service providers have assured the Company that they have made plans for providing continued service in the case of an unexpected event that might disrupt their services.
The Company's headquarters and the primary and secondary locations for its technology infrastructure are both supported by emergency electric generator back-up. All of these service providers have assured the Company that they have made plans for providing continued service in the case of an unexpected event that might disrupt their services.
Equity Derivatives and Index Options — O ppenheimer offers listed equity and index options strategies for investors seeking to manage risk and optimize returns within the equities market. Oppenheimer's experienced professionals have expertise in many listed derivative products designed to serve the diverse needs of its institutional, corporate and private client base.
Equity Derivatives and Index Options — Oppenheimer offers listed equity and index options strategies for investors seeking to manage risk and optimize returns within the equities market. Oppenheimer's experienced professionals have expertise in many listed derivative products designed to serve the diverse needs of its institutional, corporate and private client base.
The development of the firm’s current and future leaders is critical to the future growth of the Company. This starts with a focus on the professional development of entry-level employees by offering a variety of programs, including the annual Summer Internship Program, Rotational Trainee Program, Investment Banking Analyst Program and associate Financial Advisor Program.
The development of the firm’s current and future leaders is critical to the future growth of the Company. This starts with a focus on the professional development of entry-level employees by offering a variety of programs, including the annual Summer Internship Program, Investment Banking Analyst Program and associate Financial Professional Program.
These programs are designed to provide competitive compensation and financial incentives for employees in meeting various performance targets which drive the overall financial performance of the Company while taking into account the Company's overall financial performance, individual performance, as well as the Company's corporate and risk management objectives.
These programs are designed to provide competitive 9 Table of Contents compensation and financial incentives for employees in meeting various performance targets which drive the overall financial performance of the Company while taking into account the Company's overall financial performance, individual performance, as well as the Company's corporate and risk management objectives.
In all of our diversity efforts, we strive to create opportunities for diverse communities to participate, 8 Table of Contents contribute, and grow. We believe that to truly achieve all of the benefits of having a diverse and inclusive workforce, all associates and advisors need to be engaged in these discussions.
In all of our diversity efforts, we strive to create opportunities for diverse communities to participate, contribute, and grow. We believe that to truly achieve all of the benefits of having a diverse and inclusive workforce, all associates and advisors need to be engaged in these discussions.
Under the Net 16 Table of Contents Capital Rule, broker-dealers are required to maintain certain records and provide the SEC with quarterly reports with respect to, among other things, significant movements of capital, including transfers to a holding company parent or other affiliate.
Under the Net Capital Rule, broker-dealers are required to maintain certain records and provide the SEC with quarterly reports with respect to, among other things, significant movements of capital, including transfers to a holding company parent or other affiliate.
ADMINISTRATION AND OPERATIONS Administration and operations personnel are responsible for the processing of securities transactions; the receipt, identification and delivery of funds and securities; the maintenance of internal financial controls; accounting functions; custody of customers' securities; the handling of margin accounts for Oppenheimer and its correspondents; and general office services.
ADMINISTRATION AND OPERATIONS 7 Table of Contents Administration and operations personnel are responsible for the processing of securities transactions; the receipt, identification and delivery of funds and securities; the maintenance of internal financial controls; accounting functions; custody of customers' securities; the handling of margin accounts for Oppenheimer and its correspondents; and general office services.
The rule is in response to Wall Street's May 6, 2010 "Flash Crash", during which the market sustained a significant decline without any underlying news or economic rationale. The CAT will be 15 Table of Contents utilized to identify the beneficial owner in every securities transaction and to correlate that information across market participants.
The rule is in response to Wall Street's May 6, 2010 "Flash Crash", during which the market sustained a significant decline without any underlying news or economic rationale. The CAT will be utilized to identify the beneficial owner in every securities transaction and to correlate that information across market participants.
The Notes will mature on October 1, 2025 and bear interest at a rate of 5.50% per annum, payable semiannually on April 1st and October 1st, respectively, of each year. The Parent used the net proceeds from the offering of the Notes, along with cash on hand, to redeem in full its 6.75% Notes.
The Notes will mature on October 1, 2025 and bear interest at a rate of 5.50% per annum, payable semiannually on April 1st and October 1st, respectively, of each year. The Parent used the net proceeds from the offering of the Notes, along with cash on hand, to redeem in full its previous issued 6.75% Senior Secured Notes.
Oppenheimer Israel Ltd. operates subject to the authority of the Israel Securities Authority. Oppenheimer is also a member of the Securities Industry and Financial Markets Association ("SIFMA"), a non-profit organization that represents the shared interests of participants in the United States financial markets.
Oppenheimer Israel Ltd. operates subject to the authority of the Israel Securities Authority. Oppenheimer is also a member of the Securities Industry and Financial Markets Association ("SIFMA"), a 11 Table of Contents non-profit organization that represents the shared interests of participants in the United States financial markets.
PRIVATE CLIENT Through its Private Client Division, Oppenheimer provides a comprehensive array of financial services through a network of 968 financial advisors in 92 offices located throughout the United States. Clients include high-net-worth individuals and families, corporate executives, and public and private businesses.
PRIVATE CLIENT Through its Private Client Division, Oppenheimer provides a comprehensive array of financial services through a network of 931 financial advisors in 90 offices located throughout the United States. Clients include high-net-worth individuals and families, corporate executives, and public and private businesses.
Management has determined that the Company's internal control over financial reporting as of December 31, 2022 was effective.
Management has determined that the Company's internal control over financial reporting as of December 31, 2023 was effective.
Equities Division Oppenheimer employs 38 senior research analysts covering almost 700 equity securities, primarily listed in the U.S. and over 75 dedicated equity sales and trading professionals in offices throughout the U.S. and in the UK (London), Switzerland (Geneva), and Asia (Hong Kong).
Equities Division Oppenheimer employs 38 senior research analysts covering approximately 675 equity securities, primarily listed in the U.S. and over 75 dedicated equity sales and trading professionals in offices throughout the U.S. and in the UK (London), Switzerland (Geneva), and Asia (Hong Kong).
Freedom, a registered broker-dealer with the SEC, offers discount services to a small number of individual investors throughout the United States. The Company is a wholly-owned subsidiary of Oppenheimer & Co. Inc and a member of FINRA.
Freedom, a registered broker-dealer with the SEC, offers discount services to a small number of individual investors throughout the United States. The Company is a wholly-owned subsidiary of Oppenheimer & Co. Inc and a member of the Financial Industry Regulatory Authority, Inc. ("FINRA").
The Company recognizes that it is a long-term commitment to develop and sustain a diverse and inclusive environment. In addition, the Company has a relatively flat management structure that fosters innovative thought generation and quick decision-making.
The Company recognizes that it is a long-term commitment to 8 Table of Contents develop and sustain a diverse and inclusive environment. In addition, the Company has a relatively flat management structure that fosters innovative thought generation and quick decision-making.
REGULATORY CAPITAL REQUIREMENTS As registered broker-dealers and member firms regulated by FINRA, Oppenheimer and Freedom are subject to certain net capital requirements pursuant to Rule 15c3-1 (the "Net Capital Rule") promulgated under the Exchange Act.
REGULATORY CAPITAL REQUIREMENTS 15 Table of Contents As registered broker-dealers and member firms regulated by FINRA, Oppenheimer and Freedom are subject to certain net capital requirements pursuant to Rule 15c3-1 (the "Net Capital Rule") promulgated under the Exchange Act.
Clients may choose a variety of ways to establish a relationship and conduct business including brokerage accounts with transaction-based pricing and/or investment advisory accounts with asset-based fee pricing. As of December 31, 2022, the Company held client assets under administration of $105 billion.
Clients may choose a variety of ways to establish a relationship and conduct business including brokerage accounts with transaction-based pricing and/or investment advisory accounts with asset-based fee pricing. As of December 31, 2023, the Company held client assets under administration of $118.2 billion.
U.S. state law and regulations adopted under U.S. federal law impose obligations on Oppenheimer and its subsidiaries for protecting the security, confidentiality and integrity of client information, and require notice of data breaches to certain U.S. regulators, and, in some cases, to clients.
U.S. state law and regulations adopted under U.S. federal law impose obligations on the Company and its subsidiaries for protecting the security, confidentiality and integrity of client 14 Table of Contents information, and require notice of data breaches to certain U.S. regulators, and, in some cases, to clients.
Platform support functions include sales and marketing along with administrative services such as trade execution, client services, records management and client reporting and performance monitoring as well as custody through Oppenheimer. At December 31, 2022, the Company had $36.8 billion of client assets under management ("AUM") in fee-based programs.
Platform support functions include sales and marketing along with administrative services such as trade execution, client services, records management and client reporting and performance monitoring as well as custody through Oppenheimer. At December 31, 2023, the Company had $43.9 billion of client assets under management ("AUM") in fee-based programs.
In order to provide continuity for these services, the Company operates a primary data center as well as maintains back-up facilities (information technology, operations and data processing) in sites with requisite communications back-up systems.
In order to provide continuity for these services, the Company operates a primary data center remote from its principal office as well as maintains back-up facilities (information technology, operations and data processing) in sites with requisite communications back-up systems.
Oppenheimer's investment banking division provides strategic advisory services and capital markets products to emerging growth and middle market businesses as well as financial sponsors. The investment banking industry coverage groups focus on the consumer and retail, energy, financial institutions, healthcare, rental services, technology, transportation and logistics sectors.
Oppenheimer's investment banking division provides strategic advisory services and capital markets products to emerging growth and middle market businesses as well as financial sponsors. The investment banking industry coverage groups focus on the Consumer & Retail, Financial Institutions, Healthcare, Industrials & Energy, Latin America, and Technology sectors.
We evaluate a full range of strategic alternatives, identify the appropriate structure and source of funds to provide our clients with the ability to pursue an optimal and value maximizing outcome. We offer comprehensive services to meet our client needs in balance sheet restructurings and liability management, mergers and acquisitions, and strategic capital solutions.
We evaluate a full range of strategic alternatives, identify the appropriate structures and sources of capital to provide our clients with the ability to pursue an optimal and value maximizing outcome. We offer comprehensive services to meet our client needs in strategic capital solutions, liability management and balance sheet restructurings as well as mergers and acquisitions.
A breakdown of the firm’s compensation as a percentage of revenue by business segment is as follows: 2022 2021 2020 Total Firm 66.7 % 64.3 % 63.6 % Private Client 55.9 % 64.2 % 55.5 % Asset Management 24.4 % 19.3 % 28.4 % Capital Markets 77.3 % 59.0 % 66.7 % Employee Safety and Well-Being The health and well-being of our employees and their loved ones is paramount to the firm.
A breakdown of the firm’s compensation as a percentage of revenue by business segment is as follows: 2023 2022 2021 Total Firm 62.7 % 66.7 % 64.3 % Private Client 49.8 % 55.9 % 64.2 % Asset Management 28.1 % 24.4 % 19.3 % Capital Markets 77.9 % 77.3 % 59.0 % Employee Safety and Well-Being The health and well-being of our employees and their loved ones is paramount to the firm.
The California Privacy Rights Act of 2020, effective January 1, 2023, subsequently amends the CCPA in a number of ways, including, without limitation, by introducing a new data category and additional privacy principles, as well as expanding data subject rights and establishing a dedicated privacy regulator. Enforcement is scheduled to begin on July 1, 2023.
The California Privacy Rights Act of 2020, effective January 1, 2023, subsequently amends the CCPA in a number of ways, including, without limitation, by introducing a new data category and additional privacy principles, as well as expanding data subject rights and establishing a dedicated privacy regulator.
REGULATION Self-Regulatory Organization Membership — Oppenheimer is a member firm of the following self-regulatory organizations ("SROs"): the Financial Industry Regulatory Authority ("FINRA"), the Intercontinental Exchange, Inc., known as ICE Futures U.S., and the National Futures Association ("NFA"). In addition, Oppenheimer has satisfied the requirements of the Municipal Securities Rulemaking Board ("MSRB") for effecting customer transactions in municipal securities.
REGULATION Self-Regulatory Organization Membership — Oppenheimer is a member firm of the following self-regulatory organizations ("SROs"): FINRA, and the Intercontinental Exchange, Inc., known as ICE Futures U.S. In addition, Oppenheimer has satisfied the requirements of the Municipal Securities Rulemaking Board ("MSRB") for effecting customer transactions in municipal securities. Freedom is also a member of FINRA.
Oppenheimer Europe Ltd., which is based in the United Kingdom, with offices in the Isle of Jersey, Germany and Switzerland, provides institutional equities and fixed income brokerage and corporate finance and is regulated by the Financial Conduct Authority in the United Kingdom, and the Jersey Financial Services Commission in the Isle of Jersey. Oppenheimer Israel Ltd.
Oppenheimer Europe Ltd., which is based in the United Kingdom, with offices in the Isle of Jersey, Portugal, Germany and Switzerland, provides institutional equities and fixed income brokerage and corporate finance as well as fund placement activities and is regulated by the Financial Conduct Authority in the United Kingdom, and the Jersey Financial Services Commission in the Isle of Jersey.
In the area of information security, we have developed and implemented a framework of principles, policies and technology to protect our own information and that of our clients. We apply numerous safeguards to maintain the confidentiality, integrity and availability of both client and firm information.
In the area of information security, we have developed and implemented a framework of processes, policies and technology to protect our own information and that of our clients. We apply numerous safeguards to maintain the confidentiality, integrity and availability of both client and firm information. See "Cybersecurity" in Part 1, Item 1C.
The Company clears its non-U.S. international equities business in securities traded on European exchanges carried on by Oppenheimer Europe Ltd. through Global Prime Partners Ltd. Oppenheimer has a multi-currency platform which enables it to facilitate client trades in securities denominated in foreign currencies.
The Company clears its non-U.S. international equities business in securities traded on European exchanges carried on by Oppenheimer Europe Ltd. through Global Prime Partners Ltd. Oppenheimer has a multi-currency platform which enables it to facilitate client trades in securities denominated in foreign currencies. Effective December 31, 2023, Oppenheimer terminated its commodity business and will no longer facilitate client commodity transactions.
The human capital needs of our business are also supported by the Company’s Human Resources Department, which reports into the Chief Financial Officer. At December 31, 2022, the Company employed 2,912 employees (2,868 full-time and 44 part-time), of whom 968 were financial advisors.
The human capital needs of our business are also supported by the Company’s Human Resources Department, which reports into the Chief Financial Officer. At December 31, 2023, the Company employed 2,942 employees (2,903 full-time and 39 part-time), of whom 931 were financial advisors.
Recently online firms have offered “free” trades to all investors, which has become increasingly popular with small investors, living and working from home. At present, it is not possible to determine the nature of this competitive threat, given its newness and the type of client it has attracted to date.
In recent years, online firms have offered “free” trades to all investors, which have become increasingly popular with small investors. At present, it is not possible to determine the nature of this competitive 10 Table of Contents threat, given its relative newness and the type of client it has attracted to date.
Other jurisdictions have, or are proposing to pass privacy legislation that is similar to GDPR. Oppenheimer has adopted and disseminated privacy policies, and communicates required information relating to financial privacy and data security, in accordance with applicable law. Money Market Funds — In July 2014, the SEC adopted amendments to the rules that govern money market mutual funds.
Oppenheimer has adopted and disseminated privacy policies, and communicates required information relating to financial privacy and data security, in accordance with applicable law. Money Market Funds — In July 2014, the SEC adopted amendments to the rules that govern money market mutual funds.
In addition to a comprehensive healthcare and benefits program, the Company offers various health and wellness programs including confidential emotional support, work-life solutions, financial resources, and campaigns to promote the physical and emotional well-being of our employees.
In addition to a comprehensive healthcare and benefits program, the Company offers various health and wellness programs including confidential emotional support, work-life solutions, financial resources, and campaigns to promote the physical and emotional well-being of our employees. Throughout 2023, most of our employees worked under a hybrid arrangement that provided some flexibility to work on a remote basis.
A portion of Oppenheimer's revenue is derived from commissions from private clients through accounts with transaction-based pricing. Brokerage commissions are charged on investment products in accordance with a schedule which Oppenheimer has formulated. Discounts are available to and can be negotiated with customers based on transaction size and volume as well as a number of other factors.
Brokerage commissions are charged on investment products in accordance with a schedule which Oppenheimer has formulated. Discounts are available to and can be negotiated with customers based on transaction size and volume as well as a number of other factors. In recent years, an increasing number of clients have chosen to do business through fee-based accounts.
Oppenheimer Trust offers a wide variety of trust services to clients of Oppenheimer. This includes custody services, advisory services and specialized servicing options for clients. At December 31, 2022, Oppenheimer Trust held custodial assets of $405.9 million. Freedom Investments, Inc.
Oppenheimer Trust offers a wide variety of trust services to clients of Oppenheimer. This includes custody services, advisory services and specialized servicing options for clients. At December 31, 2023, Oppenheimer Trust held custodial assets of $466.0 million. Oppenheimer Trust is regulated by the Delaware State Bank Commissioner. Freedom Investments, Inc.
Smaller broker-dealers were required to report equity and option trades in 2021. The CAT NMS Plan requires SROs to create plans to eliminate duplicative reporting.
Oppenheimer began reporting complex option trades in 2021. Smaller broker-dealers were required to report equity and option trades in 2021. In May 2024, client personal information must begin to be submitted. The CAT NMS Plan requires SROs to create plans to eliminate duplicative reporting.
These criteria include, but are not limited to, strategic thinking, integrity, building a corporate culture of ethical and responsible behavior, compliance with regulatory requirements, managing employee performance, retention and morale, and reaching various production-related milestone goals depending on the business or support unit. 9 Table of Contents As discussed above, the Company's compensation programs differ by area within the firm.
The Company has performance assessment criteria from which to rate performance which is tied to overall compensation. These criteria include, but are not limited to, strategic thinking, integrity, building a corporate culture of ethical and responsible behavior, compliance with regulatory requirements, managing employee performance, retention and morale, and reaching various production-related milestone goals depending on the business or support unit.
Oppenheimer Investments Asia Limited was approved by the SFC to provide institutional fixed income and equities brokerage services to Hong Kong institutional investors and corporate finance advisory services to Hong Kong institutional clients.
As of December 31, 2023, Oppenheimer Europe Ltd. was in compliance with its regulatory requirements. Oppenheimer Investments Asia Limited was approved by the SFC to provide institutional fixed income and equities brokerage services to Hong Kong institutional investors and corporate finance advisory services to Hong Kong institutional clients.
Oppenheimer provides the following private client services: Full-Service Brokerage — Oppenheimer offers full-service brokerage covering investment alternatives including exchange-traded and over-the-counter corporate equity and debt securities, money market instruments, exchange-traded options and futures contracts, municipal bonds, mutual funds, exchange-traded funds, and unit investment trusts.
Oppenheimer provides the following private client services: Full-Service Brokerage — Oppenheimer offers full-service brokerage covering investment alternatives including exchange-traded and over-the-counter corporate equity and debt securities, money market instruments, exchange-traded options, municipal bonds, mutual funds, exchange-traded funds, and unit investment trusts. A portion of Oppenheimer's revenue is derived from commissions from private clients through accounts with transaction-based pricing.
Oppenheimer Israel (OPCO) Ltd., which is based in Tel Aviv, Israel, provides investment services in the State of Israel and operates subject to the authority of the Israel Securities Authority.
Oppenheimer Israel Ltd. Oppenheimer Israel (OPCO) Ltd., which is based in Tel Aviv, Israel, provides investment services including investment banking and merger and acquisition advice in the State of Israel and operates subject to the authority of the Israel Securities Authority. BondWave LLC The Company acquired BondWave LLC (“BondWave”), in December of 2023.
Additionally, Connecticut, Colorado, Utah and Virginia have adopted new privacy laws granting consumers various privacy rights that exceed the requirements set by federal law, which laws become effective on July 1, 2023, December 31, 2023, and January 1, 2023, respectively. Numerous other states are considering privacy legislation either along the lines of, or with more onerous requirements than, the CCPA.
Additionally, Connecticut, Colorado, Utah and Virginia have adopted new privacy laws granting consumers various privacy rights that exceed the requirements set by federal law, which laws became effective on July 1, 2023, July 1, 2023, December 31, 2023, and January 1, 2023, respectively.
Effective January 2022, IFPR changed its minimum capital requirement, which is now sterling 750,000 (previously it was Euro 730,000). Capital ratios are now expressed differently, but are effectively unchanged when comparing performance to required regulatory minimums. As of December 31, 2022, Oppenheimer Europe Ltd. was in compliance with its regulatory requirements.
Oppenheimer Europe Ltd. is authorized by the FCA of the United Kingdom to provide investment services under the Investment Firms’ Prudential Regime (“IFPR”). Effective January 2022, IFPR changed its minimum capital requirement, which is now sterling 750,000 (previously it was Euro 730,000). Capital ratios are now expressed differently, but are effectively unchanged when comparing performance to required regulatory minimums.
Additionally, foreign-based securities firms and commercial banks regularly offer their services in performing a variety of investment banking functions including mergers and acquisitions advice, leveraged buy-out financing, merchant banking, and bridge financing, all in direct competition with U.S. broker-dealers. 10 Table of Contents We also compete with companies that offer web-based financial services and discount brokerage services, usually with lower levels of service, to individual clients.
Additionally, foreign-based securities firms and commercial banks regularly offer their services in performing a variety of investment banking functions including mergers and acquisitions advice, leveraged buy-out financing, merchant banking, and bridge financing, all in direct competition with U.S. investment banks.
Pursuant to its Certificate and Articles of Incorporation, effective on May 11, 2005, the Company's legal existence was continued under the Canada Business Corporations Act. Effective May 11, 2009, the Company changed its jurisdiction of incorporation from the federal jurisdiction of Canada to the State of Delaware in the United States with the approval of its shareholders.
Effective May 11, 2009, the Company changed its jurisdiction of incorporation from the federal jurisdiction of Canada to the State of Delaware in the United States with the approval of its shareholders.
See note 18 to the consolidated financial statements appearing in Item 8 for further information on the Company's regulatory capital requirements. Senior Secured Notes On June 23, 2017, the Company issued in a private offering $200.0 million aggregate principal amount of 6.75% Senior Secured Notes due 2022 (the "6.75% Notes") at an issue price of 100% of the principal amount.
See note 19 to the consolidated financial statements appearing in Item 8 for further information on the Company's regulatory capital requirements. 16 Table of Contents Senior Secured Notes On September 22, 2020, the Parent issued $125.0 million aggregate principal amount of 5.50% Senior Secured Notes due 2025 (the “Notes”) at an issue price of 100% of the principal amount.
Imposing such a new standard of care on additional client relationships could result in incremental costs for our business and we are evaluating how these regulatory changes may further impact our business.
Imposing such a new standard of care on our client relationships could result in incremental costs for our business and we are evaluating how these proposed regulatory changes may further impact our business. There is considerable controversy over these new rules and the extent to which they supersede or conflict with rules promulgated under Reg BI.
OAM is registered as an investment adviser with the SEC under the Adviser Act. OAM provides investment advice to clients through separate accounts and wrap fee programs. OPY Credit Corp. OPY Credit Corp. was formed in order to facilitate leveraged loan transactions on behalf of investment banking clients seeking such services. Oppenheimer Trust Company of Delaware Inc.
OAM is registered as an investment adviser with the SEC under the Adviser Act. OAM provides investment advice to clients through separate accounts and wrap fee programs. OPY Credit Corp. OPY Credit Corp. primarily engages in secondary trading activities related to the purchase and sale of loans, primarily on a riskless principal basis. Oppenheimer Trust Company of Delaware Inc.
In addition, we compete with advisors holding themselves out as "independent" and who are registered investment advisers or RIAs. We compete principally on the basis of the quality of our advisors, services, product selection, location and reputation in local markets.
We compete principally on the basis of the quality of our advisors, services, product selection, location and reputation in local markets.
It appears that the limitation of available services to smaller institutions in the UK as a result of MiFID II may be resulting in the applicability of these rules to smaller institutions. It is possible that these restrictive business practices may be adopted in the U.S. although there is currently no such regulatory requirement in the U.S.
It appears that the limitation of available services to smaller institutions in the UK as a 13 Table of Contents result of MiFID II may be resulting in the applicability of these rules to smaller institutions.
On December 18, 2020, the DOL published its final prohibited transaction exemption (“PTE”) addressing investment advice fiduciaries to ERISA plans and IRAs.
As business continues to be conducted under the Reg BI Rules, it is likely that additional changes may be necessary. On December 18, 2020, the DOL published its final prohibited transaction exemption (“PTE”) addressing investment advice fiduciaries to ERISA plans and IRAs.
("OPY Credit"), a New York corporation organized to trade and clear syndicated corporate loans. We conduct our international businesses through Oppenheimer Europe Ltd. (United Kingdom with offices in the Isle of Jersey, Germany and Switzerland), Oppenheimer Investments Asia Limited (Hong Kong), and Oppenheimer Israel (OPCO) Ltd. (Israel). Oppenheimer Holdings Inc. was originally incorporated under the laws of British Columbia.
("OPY Credit"), a New York corporation which conducts secondary trading activities related to the purchase and sale of loans, primarily on a riskless principal basis. We conduct our international businesses through Oppenheimer Europe Ltd. (United Kingdom with offices in the Isle of Jersey, Portugal, Germany and Switzerland), Oppenheimer Investments Asia Limited (Hong Kong), and Oppenheimer Israel (OPCO) Ltd. (Israel).
The General Data Protection Regulation (“GDPR”) imposes additional requirements for companies that collect or store personal data of European Union residents. The GDPR expands the scope of the EU data protection law to all foreign companies processing personal data of EU residents, imposes a strict data protection compliance regime, and includes new rights.
The GDPR expands the scope of the EU data protection law to all foreign companies processing personal data of EU residents, imposes a strict data protection compliance regime, and includes new rights. Other jurisdictions have passed, or are proposing to pass privacy legislation that is similar to GDPR.
The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) — The Sarbanes-Oxley Act effected significant changes to corporate governance, auditing requirements and corporate reporting. This law generally applies to all companies, including the Company, with equity or debt securities registered under the Exchange Act.
This law generally applies to all companies, including the Company, with equity or debt securities registered under the Exchange Act.
The Company may also take proprietary long-term investment positions in private companies where the Company believes the investment has the possibility of growth in the value of the investment based on the intrinsic business. Any such investments may also be a pre-cursor to offering participations in such investments through private early round partnership interests to qualified high net worth investors.
The Company may also take proprietary long-term investment positions in private companies where the Company believes the investment has the possibility of growth in the value of the investment based on the intrinsic business.
The directive is intended to strengthen investor protection and improve the functioning of financial markets making them more efficient, resilient and transparent.
Markets in Financial Instruments Directive (known as "MiFID II") — MiFID II became effective on January 3, 2018 in the United Kingdom and all of the European Union. The directive is intended to strengthen investor protection and improve the functioning of financial markets making them more efficient, resilient and transparent.
During the fourth quarter of 2022, the Company repurchased and subsequently cancelled $10.95 million of the 5.50% Senior Secured Notes, recognizing a small extinguishment gain. As of December 31, 2022, $114.05 million aggregate principal amount of the Notes remains outstanding. See note 12 to the consolidated financial statements appearing in Item 8 for further discussion.
During the fourth quarter of 2022, the Company repurchased and subsequently cancelled $10.95 million of the Notes, recognizing a small extinguishment gain. During the first quarter of 2023, the Company repurchased and cancelled $1.0 million aggregate principal amount of its Notes in the open market. As of December 31, 2023, $113.05 million aggregate principal amount of the Notes remains outstanding.
The SEC and/or SROs may in certain circumstances restrict the Company's brokerage subsidiaries' ability to withdraw excess net capital and transfer it to the Company or to other Operating Subsidiaries or to expand the Company's business. Oppenheimer Europe Ltd. is authorized by the FCA of the United Kingdom to provide investment services under Investment Firms’ Prudential Regime (“IFPR”).
The SEC and/or SROs may in certain circumstances restrict the Company's brokerage subsidiaries' ability to withdraw excess net capital and transfer it to the Company or to other Operating Subsidiaries or to expand the Company's business. As of December 31, 2023, Oppenheimer and Freedom were in compliance with their regulatory requirements.
These issuers may have high levels of indebtedness and be sensitive to adverse economic conditions, such as recession or increasing interest rates. 5 Table of Contents Fixed Income Research - Oppenheimer has a total of six fixed income research professionals covering high yield corporate, mortgage backed, Emerging Market, and municipal securities.
These issuers may have high levels of indebtedness and be sensitive to adverse economic conditions, such as recession or increasing interest rates.
Freedom is also a member of FINRA. Oppenheimer Europe Ltd. is regulated by the Financial Conduct Authority ("FCA") in the United Kingdom and the Jersey Financial Services Commission ("JFSC") in the Isle of Jersey. Oppenheimer Investments Asia Limited is regulated by the Securities and Futures Commission ("SFC") in Hong Kong.
Oppenheimer and Freedom are each registered as a broker-dealer in the 50 states and the District of Columbia and Puerto Rico. Oppenheimer Europe Ltd. is regulated by the Financial Conduct Authority ("FCA") in the United Kingdom and the Jersey Financial Services Commission ("JFSC") in the Isle of Jersey.
Failure to meet the requirements of the Bank Secrecy Act, the Patriot Act or FinCEN can lead to regulatory actions including significant fines and penalties as well as significant reputational damage. Markets in Financial Instruments Directive (known as "MiFID II") — MiFID II became effective on January 3, 2018 in the United Kingdom and all of the European Union.
Failure to meet the requirements of the Bank Secrecy Act, the Patriot Act or FinCEN can lead to regulatory actions including significant fines and penalties as well as significant reputational damage. The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) — The Sarbanes-Oxley Act effected significant changes to corporate governance, auditing requirements and corporate reporting.
FINRA has been designated as the primary regulator of Oppenheimer and Freedom with respect to securities and option trading activities and the NFA has been designated as Oppenheimer's primary regulator with respect to commodities activities.
Much of the regulation of broker-dealers has been delegated to SROs such as FINRA. FINRA has been designated as the primary regulator of Oppenheimer and Freedom with respect to securities and option trading activities. As indicated above, as of December 31, 2023, Oppenheimer no longer provides commodity-related services to its customers.
Debt Capital Markets — Oppenheimer offers a full range of debt capital markets solutions for domestic and international companies as well as foreign governments and quasi-sovereign institutions. Oppenheimer focuses on structuring and distributing public and private debt through financing transactions, including leveraged buyouts, acquisitions, growth capital financings, recapitalizations and Chapter 11 exit financings.
Debt Capital Markets — Oppenheimer offers a full range of debt capital markets solutions for domestic and international companies as well as foreign governments and quasi-sovereign institutions. Oppenheimer acts as underwriter or placement agent on high yield senior and subordinated debt offerings as well as on bond financings for Emerging Market issuers.
In addition, the DOL is expected to amend the five-part test by the end of 2023 so that the fiduciary standard would apply to a broader range of client relationships.
On October 31, 2023, the DOL proposed a “Retirement Security Rule” package that, if finalized, would replace the five-part test with a broader series of rules such that the fiduciary standard would apply to a wider range of client relationships.

… 47 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+3 added−16 removed171 unchanged
Biggest changeFurther, new business initiatives and efforts to expand existing businesses generally require that we incur compensation and benefits expense before generating additional revenues. 30 Table of Contents Moreover, companies in our industry whose employees accept positions with competitors frequently claim that those competitors have engaged in unfair hiring practices.
Biggest changeMoreover, companies in our industry whose employees accept positions with competitors frequently claim that those competitors have engaged in unfair hiring practices. We have been subject to such claims and may be subject to additional claims in the future as we seek to hire qualified personnel, some of whom may work for our competitors.
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 authorities and self-regulatory organizations. Oppenheimer is a broker-dealer and investment adviser registered with the SEC and is primarily regulated by FINRA.
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.
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.
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.
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 come under significant regulatory scrutiny.
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.
Although the Company's Class A Stock is listed for trading on the NYSE, the trading volume in the Class A Stock is less than that of larger financial services companies.
The trading volume in the Company's Class A Stock is less than that of larger financial services companies. Although the Company's Class A Stock is listed for trading on the NYSE, the trading volume in the Class A Stock is less than that of larger financial services companies.
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 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.
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 also incur credit risk in our Private Client business segment lending to mainly individual investors related to margin loans collateralized by securities. Defaults by another large financial institution could adversely affect financial markets generally. The commercial soundness of many financial institutions may be closely interrelated as a result of credit, trading, clearing, or other relationships between these institutions.
Furthermore, we also incur credit risk in our Private Client business segment lending to mainly individual investors related to margin loans collateralized by securities. Defaults by another large financial institution could adversely affect financial markets generally. The commercial soundness of many financial institutions may be closely interrelated as a result of credit, trading, clearing, or other relationships between these institutions.
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 or legislative changes, macroeconomic environment, and perceived levels of support.
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.
There can be no guarantee that the operation of these systems will allow the Company to prevent or mitigate the various risks faced by its businesses. Various regulators periodically review the companies’ risk control practices, and, if found inadequate, bring enforcement actions and sanctions against such firms.
There can be no guarantee that the operation of these systems will allow the Company to prevent or mitigate the various risks faced by its businesses. Various regulators periodically review the companies’ risk control practices, and, if found inadequate, bring enforcement actions and seek sanctions against such firms.
Cybersecurity - 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. The expectations of sound operational and informational security practices have risen among our clients and vendors, the public at large and regulators.
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. The expectations of sound operational and informational security practices have risen among our clients and vendors, the public at large and regulators.
If management’s estimates and assumptions are inaccurate, our financial position and results could be materially and adversely impacted. At times, the Financial Accounting Standards Board (the “FASB”) and the SEC may amend or introduce new accounting standards or interpretive guidance that could impact the preparation of our financial statements.
If management’s estimates and assumptions are inaccurate, our financial position and results of operations could be materially and adversely impacted. At times, the Financial Accounting Standards Board (the “FASB”) and the SEC may amend or introduce new accounting standards or interpretive guidance that could impact the preparation of our financial statements.
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 and FINRA as well as state regulators. Penalties and fines sought by regulatory authorities have increased substantially.
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. Penalties and fines sought by regulatory authorities have increased substantially.
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 parties and has negatively affected our business conducted in 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.
As a financial institution, we have multiple stakeholders, including our shareholders, clients, associates, federal and state 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 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.
Environmental, Social and Governance (ESG) Risks - 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.
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.
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 Senior Secured Notes, subsidiary capital requirements and general financial and business conditions.
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.
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 some of our competitors seek to obtain market share by reducing fees, commissions or margins.
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 has 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 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.
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 23 Table of Contents as “greenwashing.” Such perceptions or accusations could damage our reputation, result in litigation or regulatory enforcement actions, and adversely affect our business.
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 Company is exposed to the risk that third parties that owe it money, securities or other assets will not perform their obligations. The Company is exposed to credit risk related to third parties such as trading counterparties, customers, clearing agents, exchanges, clearing houses, and other financial intermediaries as well as issuers whose securities we hold.
The Company is exposed to the risk that third parties that owe it money, securities or other assets will not perform their obligations. The Company is exposed to credit risk related to third parties such as trading counterparties, depository institutions, customers, clearing agents, exchanges, clearing houses, and other financial intermediaries as well as issuers whose securities we hold.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of the Company's Class A Stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which the Company has no control.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of the company's common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which the company has no control.
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 presently plan to have an EU office in Portugal to be able to continue to service various constituencies operating inside the EU.
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 risk associated with the sufficiency of coverage under the Company’s insurance policies The Company's operations and financial results are subject to risks and uncertainties related to the use of a combination of insurance, self-insured retention and self-insurance for a number of risks, including most significantly property and casualty, general liability, cyber-crime, workers' compensation, and the portion of employee-related health care benefits plans funded by the Company, and certain errors and omissions liability, among others.
There is risk associated with the sufficiency of coverage under the Company’s insurance policies. 22 Table of Contents The Company's operations and financial results are subject to risks and uncertainties related to the use of a combination of insurance, self-insured retention and self-insurance for a number of risks, including most significantly property and casualty, general liability, cyber-crime, workers' compensation, and the portion of employee-related health care benefits plans funded by the Company, and certain errors and omissions liability, among others.
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 23 Table of Contents 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.
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 (the "Patriot Act") compliance, capital structure of securities firms, trade and regulatory reporting, cybersecurity, pricing of services, compliance with 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 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.
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, 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, 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.
U.S. 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 recent exit from the EU ("Brexit"), and the stability of the EU's sovereign debt, has caused uncertainty and disruption for financial markets globally.
U.S. 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.
Additionally, our investments in SPACs, may be subject to forfeiture, potential regulatory scrutiny and litigation that could negatively affect our financial results. 28 Table of Contents • 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.
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.
In addition, the 20 Table of Contents interconnectivity of multiple financial institutions with central agents, exchanges and clearing houses, and the increased importance of these entities, increases the risk that an operational failure at one institution or entity may cause an industry-wide operational failure that could materially impact our ability to conduct business.
In addition, the interconnectivity of multiple financial institutions with central agents, exchanges and clearing houses, and the increased importance of these entities, increases the risk that an operational failure at one institution or entity may cause an industry-wide operational failure that could materially impact our ability to conduct business.
Our Board of Directors declared cash dividends of $0.15 per share each quarter in 2022 to holders of Class A and Class B Stock and also authorized the Company to repurchase shares of its Class A Stock.
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.
Factors that we cannot control, such as disruption of the financial markets or negative views about the financial services 19 Table of Contents industry generally, including concerns regarding fiscal matters in the U.S. and other geographic areas, could impair our ability to raise funding.
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.
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.
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 20 Table of Contents adopt such procedures and technology within the mandated adoption period could negatively impact our business, our clients and our reputation.
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 27 Table of Contents 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.
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 21 Table of Contents 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.
The Company cannot give assurances that its policies and procedures will effectively and accurately record and verify this information. 25 Table of Contents 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 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 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. ("Phase II"), a Delaware corporation controlled by Mr. Albert Lowenthal, the Chairman and CEO of the Company. In the event of Mr.
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 30 Table of Contents Financial Inc. ("Phase II"), a Delaware corporation controlled by Mr. Albert Lowenthal, the Chairman and CEO of the Company. In the event of Mr.
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 19 Table of Contents 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.
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, delaying or preventing a change in control of the Company or may result 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 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.
Recent failures of enterprises central to the functioning of that market have created uncertainty as to the impact of this market on currency markets and the general economy.
Recent failures of enterprises central to the functioning of the digital currency market have created uncertainty as to the impact of this market on currency markets and the general economy.
In addition, insurance claims may divert management resources away from operating the business. 22 Table of Contents Climate change concerns could disrupt our businesses, adversely affect client activity levels, adversely affect the creditworthiness of our counterparties and damage our reputation.
In addition, insurance claims may divert management resources away from operating the business. Climate change concerns could disrupt our businesses, adversely affect client activity levels, adversely affect the creditworthiness of our counterparties and damage our reputation.
Although cybersecurity incidents among financial 21 Table of Contents services firms are on the rise, we have not experienced any material losses relating to cyber-attacks or other information security breaches. However, there can be no assurance that we will not suffer such losses in the future.
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. However, there can be no assurance that we will not suffer such losses in the future.
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, 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, 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.
Misconduct by employees could include, employees binding the Company to transactions that exceed authorized limits or present unacceptable risks to the Company (rogue trading); employee theft and improper use of Company or client property; employees conspiring with other employees or third parties to defraud the Company; employees hiding unauthorized or unsuccessful activities from the Company, including outside business activities that are undisclosed and may result in liability to the Company; employees steering or soliciting their clients into investments which have not been sponsored by the Company and without the proper diligence; the improper use of confidential information; employee conduct outside of acceptable norms including harassment; or employees engaging in “hacking” or breaching our cybersecurity safeguards.
Misconduct by employees could include, employees binding the Company to transactions that exceed authorized limits or present unacceptable risks to the Company (rogue trading); employee theft and improper use of Company or client property; employees conspiring with other employees or third parties to defraud the Company; employees hiding unauthorized or unsuccessful activities from the Company, including outside business activities that are undisclosed and may result in liability to the Company; employees steering or soliciting their clients into investments which have not been sponsored by the Company and without the proper diligence; the improper use of confidential information; employee conduct outside of acceptable norms including harassment; employees posting offensive or inappropriate content on social or other internet media; or employees engaging in “hacking” or breaching our cybersecurity safeguards.
For example, the SEC 24 Table of Contents 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 that portion of our business.
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.
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 or trading assets, to meet maturing liabilities or other obligations.
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.
Prior to the Federal Reserve increasing the federal funds rate by 425 basis points during 2022, 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.
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.
The Company operates in Israel, the United Kingdom, the Isle of Jersey, Germany, 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.
The Company operates in Israel, the United Kingdom, the Isle of Jersey, Germany, 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 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, 2022, there were 99,665 shares of Class B Stock outstanding compared to 10,868,556 shares of Class A Stock.
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.
Continued uncertainties loom over the outcome of the EU's financial support programs. It is possible that other EU member states may choose to follow Britain's lead and leave the EU. Any negative impact on economic conditions and global markets from these developments could adversely affect our business, financial condition and liquidity.
It is possible that other EU member states may choose to follow Britain's lead and leave the EU. Any negative impact on economic conditions and global markets from these developments could adversely affect our business, financial condition and liquidity.
An underwriter is exposed to substantial liability under federal and state securities laws, other federal and state laws, and court decisions, including decisions with respect to underwriters' liability and limitations on indemnification of underwriters by issuers.
Many aspects of the Company's business involve substantial risks of liability. An underwriter is exposed to substantial liability under federal and state securities laws, other federal and state laws, and court decisions, including decisions with respect to underwriters' liability and limitations on indemnification of underwriters by issuers.
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. 26 Table of Contents 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.
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.
Costs or difficulties relating to such a transaction, including integration of products, employees, offices, technology systems, accounting systems and management controls, may be difficult to predict accurately and be greater than expected causing the Company's estimates to differ from actual results.
Costs or difficulties relating to such a transaction, including integration of products, employees, offices, technology systems, accounting systems and management controls, may be difficult to predict accurately and be greater than expected causing the Company's estimates to differ from actual results. Operating losses emanating from any such acquired business will be reflected in the Company's reported results.
If interest rates decrease from current levels and/or balances within our cash sweep products decrease, the Company's profitability will be negatively impacted. Credit Risk Credit risk may expose the Company to losses caused by the inability of borrowers or other third parties to satisfy their obligations.
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. Credit Risk Credit risk may expose the Company to losses caused by the inability of borrowers or other third parties to satisfy their obligations.
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. Financial markets are susceptible to severe events such as dislocations which may lead to reduced liquidity.
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.
The new rules and processes related thereto will likely limit revenue and most likely involve increased 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. Department of Labor and SEC” in Part I, Item 1).
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. ( see “Business – Regulation – Fiduciary Standard – Rulemaking by the U.S.
If the Company misjudged the amount of damages that may be assessed against it from pending or threatened claims, or if the Company is unable to adequately estimate the amount of damages that will be assessed against it from claims that arise in the future and reserve accordingly, its financial condition and results of operations may be materially adversely affected.
If the Company misjudged the amount of damages that may be assessed against it from pending or threatened claims, or if the Company is unable to adequately estimate the amount of damages that will be assessed against it from claims that arise in the future and reserve accordingly, its financial condition and results of operations may be materially adversely affected. 25 Table of Contents RISK MANAGEMENT The Company's risk management policies and procedures may leave it exposed to unidentified risks or an unanticipated level of risk.
A continued lessening of investor interest in active investing and continued increase in passive investing may lead to a continued decline in the revenue the Company generates from commissions on the execution of trading transactions and, in respect of its market-making activities, a reduction in the value of its trading positions and commissions and spreads.
A continued lessening of investor interest in active investing and continued increase in passive investing may lead to a continued decline in the revenue the Company generates from commissions on the execution of trading transactions and, in respect of its market-making activities, a reduction in the value of its trading positions and commissions and spreads. 28 Table of Contents The Company has experienced significant pricing pressure in areas of its business, which may impair its revenues and profitability.
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 United Kingdom’s exit from the EU could impact our overseas operations. 29 Table of Contents 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.
In the fixed income market, regulatory requirements have resulted in greater price transparency, leading to increased price competition and decreased trading margins.
In recent years the Company has experienced, and continues to experience, significant pricing pressures on trading margins and commissions in debt and equity trading. In the fixed income market, regulatory requirements have resulted in greater price transparency, leading to increased price competition and decreased trading margins.
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.
It is not possible to determine the extent of the impact of any new laws, regulations or initiatives that may be imposed, or whether any existing proposals will become law. Conformance with any new laws or regulations could make compliance more difficult and expensive and affect the manner in which we conduct business.
Department of Labor and SEC” in Part I, Item 1). It is not possible to determine the extent of the impact of any new laws, regulations or initiatives that may be imposed, or whether any existing proposals will become law.
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.
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. 24 Table of Contents We also may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or foreign governmental regulatory authorities or SROs (e.g., FINRA) that supervise the financial markets.
RISK MANAGEMENT The Company's risk management policies and procedures may leave it exposed to unidentified risks or an unanticipated level of risk. 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.
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. As a result, these methods may not predict future risk exposures, which could be significantly greater than historical measures indicate.
If the Company violates the securities laws, or is involved in litigation in connection with a violation, the Company's reputation and results of operations may be adversely affected. Many aspects of the Company's business involve substantial risks of liability.
Conformance with any new laws or regulations could make compliance more difficult and expensive and affect the manner in which we conduct business. If the Company violates the securities laws, or is involved in litigation in connection with a violation, the Company's reputation and results of operations may be adversely affected.
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 accessible. This information may not be accurate, complete or up-to-date or properly evaluated.
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. Management of operational, legal and regulatory risk requires, among other things, policies and procedures to properly record and verify a large number of transactions and events.
In lieu of organic 29 Table of Contents 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 for growth. 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.
We have been subject to such claims and may be subject to additional claims in the future as we seek to hire qualified personnel, some of whom may work for our competitors. Some of these claims may result in material litigation. We could incur substantial costs in defending against these claims, regardless of their merits.
Some of these claims may result in material litigation. We could incur substantial costs in defending against these claims, regardless of their merits. Such claims could also discourage potential employees who work for our competitors from joining us.
Numerous regulatory changes, and enhanced regulatory and enforcement activity, relating to the asset management business may increase our compliance and legal costs and otherwise adversely affect our business.
Substantial legal liability or significant regulatory action taken against us could have a material adverse effect on our business prospects including our financial condition and results of operations. Numerous regulatory changes, and enhanced regulatory and enforcement activity, relating to the asset management business may increase our compliance and legal costs and otherwise adversely affect our business.
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. We may be removed from market indices.
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. 26 Table of Contents 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.
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 risk that we may not fully appreciate or identify.
Our businesses are highly dependent on our ability to process and report, on a daily basis, a large number of transactions across numerous markets.
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 trading volume in the Company's Class A Stock is less than that of larger financial services companies.
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.
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. The business operations that are conducted outside of the United States subject the Company to unique risks and potential loss.
The business operations that are conducted outside of the United States subject the Company to unique risks and potential loss.
The number of engagements the Company has at any given time is subject to change and may not necessarily result in future revenues. During 2022, assignments related to special purpose acquisition companies ("SPACs") decreased significantly from the prior year. We cannot assure that the volume of transactions for SPACs and corresponding fees will return to prior year's record levels.
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.
Hostilities between Russia and Ukraine have created uncertainties around the spread of the conflict, the use of nuclear weapons as well as its impact on global supply chains impacting energy supplies and food supplies throughout the world. These issues could have unforeseen and negative impacts upon the markets and the Company and its operations.
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. Continued uncertainties loom over the outcome of the EU's financial support programs.
Removed
Under these extreme conditions, the Company's risk management strategies may not be as effective as they might otherwise be under normal market conditions.
Added
A substantial majority of our cash is held with a large, global systemically important bank, often in balances that exceed the current FDIC insurance limits. If the banks we hold our deposits with enter receivership or become insolvent, we may be prevented from accessing our cash and cash equivalents in excess of FDIC insured limits.
Removed
We also may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or foreign governmental regulatory authorities or SROs (e.g., FINRA) that supervise the financial markets. Substantial legal liability or significant regulatory action taken against us could have a material adverse effect on our business prospects including our cash position.
Added
During 2023, several large regional banks failed and their operations were assumed by other institutions. During this period of uncertainty, markets were negatively impacted and clients, redeployed their cash deposits to institutions deemed to be “safer”.
Removed
Management of operational, legal and regulatory risk requires, among other things, policies and procedures to properly record and verify a large number of transactions and events.
Added
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.

… 13 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed3 unchanged
Biggest changeHelier, Isle of Jersey, Geneva, Switzerland, Frankfurt, Germany, Tel Aviv, Israel and Hong Kong, China. Working arrangements for employees based outside of our corporate headquarters varies based on local regulations and COVID-19 infection rates. Management is assessing its future real estate needs in light of the ongoing pandemic, current remote conditions, the existing footprint, and upcoming lease expirations.
Biggest changeHelier, Isle of Jersey, Geneva, Switzerland, Lisbon, Portugal, Frankfurt, Germany, Tel Aviv, Israel and Hong Kong, China. Working arrangements for employees based outside of our corporate headquarters vary based on local regulations, including health regulations. Management is assessing its future real estate needs in light of the hybrid working environment, the existing footprint, and upcoming lease expirations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

13 edited+25 added−9 removed1 unchanged
Biggest changeHorizon is alleged to be a fraudulent scheme involving, among others, a former Oppenheimer 32 Table of Contents employee John Woods. John Woods left Oppenheimer’s employ in 2016 and Oppenheimer never received a complaint or question from any of the investors prior to the Securities and Exchange Commission (“SEC”) bringing a complaint against Woods and his co-conspirators in 2021.
Biggest changeJohn Woods left Oppenheimer’s employ in 2016 and Oppenheimer never received a complaint or question from any of the investors prior to the SEC bringing a complaint against Woods and his co-conspirators in 2021. Each investor who was an Oppenheimer client signed a document acknowledging that Horizon was not an approved Oppenheimer product.
The foregoing estimate is based on various factors, including the varying stages of the proceedings (including the fact that some are currently in preliminary stages), the numerous yet-unresolved issues in many of the proceedings and the attendant uncertainty of the various potential outcomes of such proceedings.
The foregoing aggregate estimate is based on various factors, including the varying stages of the proceedings (including the fact that some are currently in preliminary stages), the numerous yet-unresolved issues in many of the proceedings and the attendant uncertainty of the various potential outcomes of such proceedings.
On September 13, 2022, the SEC filed a complaint against Oppenheimer in the United States District Court for the Southern District of New York (the “Court”) alleging that Oppenheimer violated Section 15B(c)(1) of the Exchange Act and Rule15c2-12 thereunder as well as Municipal Securities Rulemaking Board Rules G-17 and G-27 for not having fully complied with the exemption from the continuing disclosure obligations under Rule 15c2-12.
On September 13, 2022, the SEC filed a complaint against Oppenheimer in the United States District Court for the Southern District of New York (the “Court") alleging that Oppenheimer violated Section 15B(c)(1) of the Exchange Act and Rule 15c2-12 thereunder as well as Municipal Securities Rulemaking Board Rules G-17 and G-27 for not having fully complied with the exemption from the continuing disclosure obligations under Rule 15c2-12.
This estimated aggregate range is based upon currently available information for those legal proceedings in which the Company is involved, where an estimate for such losses can be made. For certain cases, the Company does not believe that it can make an estimate.
This estimated aggregate range is based upon currently available information for those legal proceedings in which the Company is involved, where the Company can make an estimate for such losses. For certain cases, the Company does not believe that it can make an estimate.
On June 30, 2022, the Company received a "Wells Notice" from the SEC requesting that Oppenheimer make a written submission to the SEC to explain why Oppenheimer should not be charged with violations of Section 15c2-12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 15c2-12 thereunder as well as Municipal Securities Rulemaking Board Rules G-17 and G-27 in relation to its sales of municipal notes pursuant to an exemption from continuing disclosure contained in Rule 15c2-12.
On June 30, 2022, the Oppenheimer received a "Wells Notice" from the SEC requesting that Oppenheimer make a written submission to the SEC to explain why Oppenheimer should not be charged with violations of Section 15c2-12 of the Exchange Act, and Rule 15c2-12 thereunder as well as Municipal Securities Rulemaking Board Rules G-17 and G-27 in relation to its sales of municipal notes pursuant to an exemption from continuing disclosure contained in Rule 15c2-12.
For legal or regulatory proceedings where there is at least a reasonable possibility that a loss or an additional loss may be incurred, the Company estimates a range of aggregate loss in excess of amounts accrued of up to $40 million.
For legal and regulatory proceedings where there is at least a reasonable possibility that a loss or an additional loss may be incurred, the Company estimates a range of aggregate loss in excess of amounts accrued of up to $23 million.
Item 3. LEGAL PROCEEDINGS Many aspects of the Company's business involve substantial risks of liability. In the normal course of business, the Company has been the subject of customer complaints and has been named as a defendant or co-defendant in various lawsuits or arbitrations creating substantial exposure.
Item 3. LEGAL PROCEEDINGS Many aspects of the Company's business involve substantial risks of liability. In the normal course of business, the Company has been named as defendant or co-defendant in various legal actions, including arbitrations, class actions and other litigation, creating substantial exposure and periodic expenses.
Each investor signed a document acknowledging that Horizon was not an approved Oppenheimer product. Over a protracted period of time, Woods made multiple false statements to Oppenheimer, to regulators and to a state court.
Over a protracted period of time, Woods made multiple false statements to Oppenheimer, to regulators and to a state court.
Accordingly, the Company's estimate will change from time to time, and actual losses may be materially more than the current estimate. Beginning on or about August 31, 2021, Oppenheimer has been named as a respondent in thirty-seven arbitrations, many containing multiple claimants, each filed before FINRA, relating to those claimants’ purported investment in Horizon Private Equity, III, LLC (“Horizon”).
Beginning on or about August 31, 2021, Oppenheimer was named as a respondent in forty-eight arbitrations, many containing multiple claimants, each filed before FINRA, relating to those claimants’ purported investment in Horizon Private Equity, III, LLC (“Horizon”). Horizon is alleged to be a fraudulent scheme involving, among others, a former Oppenheimer employee, John Woods.
Claimants do not allege Oppenheimer received any of the funds invested in Horizon, but rather that Oppenheimer’s purported failure to properly supervise its employees allowed the alleged scheme to occur and continue. The twenty-six arbitrations still pending claim specific monetary damages allege losses of approximately $36.4 million in the aggregate while a few others claim unspecified damages.
Claimants do not allege Oppenheimer received any of the funds invested in Horizon, but rather that Oppenheimer’s purported failure to properly supervise its employees allowed the alleged scheme to occur and continue. Oppenheimer has settled, or settled in principle, or an award has been rendered in forty-one of the Horizon-related arbitrations, with approximately one hundred thirty-eight individual complainants.
The SEC asked the Court to enter an order enjoining Oppenheimer from violating the above referenced rules and requiring it to disgorge approximately $1.9 million plus interest. The Company believes such claim to be without merit and intends to vigorously defend itself against such claim.
The SEC asked the Court to enter an order enjoining Oppenheimer from violating the above-referenced rules and requiring it to disgorge approximately $1.9 million plus interest. and pay a civil penalty. On January 30, 2024 Oppenheimer and the SEC reached an agreement in principle to settle the litigation pursuant to which Oppenheimer would pay a civil penalty of $1.2 million.
Oppenheimer believes these claims to be without merit and intends to defend itself vigorously against these claims. As previously reported Oppenheimer’s motion to vacate the arbitration award in Donald Robinson, Timothy and Sharon Padden, Rhett Rainey, Kelly A.
Oppenheimer believes these claims to be without merit and intends to defend itself vigorously against these claims.
The Company is also involved from time to time in certain governmental and self-regulatory agency investigations and proceedings. These proceedings arise primarily from securities brokerage, asset management and investment banking activities.
Certain of the actual or threatened legal matters include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. These proceedings arise primarily from securities brokerage, asset management and investment banking activities.
Removed
Regulatory investigations in the financial services industry may include investigations by multiple regulators of matters involving the same or similar underlying facts and seek substantial penalties, fines or other monetary relief.
Added
The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding the Company's business, which may result in expenses, adverse judgments, settlements, fines, penalties, injunctions or other relief. The investigations include inquiries from the SEC, FINRA and other regulators.
Removed
While the ultimate resolution of routine pending litigation, regulatory and other matters cannot be currently determined, in the opinion of management, after consultation with legal counsel, the Company does not believe that the resolution of these matters will have a material adverse effect on its consolidated balance sheet and statement of cash flows.
Added
The Company accrues for estimated loss contingencies related to legal and regulatory matters within Other Expenses in the consolidated income statement when available information indicates that it is probable a liability had been incurred and the Company can reasonably estimate the amount of that loss.
Removed
However, the Company's results of operations could be materially affected during any period if liabilities in that period differ from prior estimates.
Added
In many proceedings, however, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount of any loss.
Removed
Notwithstanding the foregoing, multiple adverse results in arbitrations, litigations or regulatory proceedings currently filed or to be filed against the Company, could have a material adverse effect on the Company's results of operations and financial condition, including its cash position.
Added
In addition, even where a loss is possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously recognized loss contingency, it is often not possible to reasonably estimate the size of the possible loss or range of loss or possible additional losses or range of additional losses. 33 Table of Contents For certain legal and regulatory proceedings, the Company cannot reasonably estimate such losses, particularly for proceedings that are in their early stages of development or where plaintiffs seek substantial, indeterminate or special damages.
Removed
The materiality of legal and regulatory matters to the Company's future operating results depends on the level of future results of operations as well as the timing and ultimate outcome of such legal and regulatory matters. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Factors Affecting 'Forward-Looking Statements'" in Part I, Item 2.
Added
Counsel may be required to review, analyze and resolve numerous issues, including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal questions relevant to the proceedings in question, before the Company can reasonably estimate a loss or range of loss or additional loss for the proceeding.
Removed
In accordance with applicable accounting guidance, the Company establishes reserves for litigation and regulatory matters when those matters present loss contingencies that are both probable and reasonably estimable. When loss contingencies are not both probable and reasonably estimable, the Company does not establish reserves.
Added
Even after lengthy review and analysis, the Company, in many legal and regulatory proceedings, may not be able to reasonably estimate possible losses or range of losses.
Removed
In some of the matters described below, loss contingencies are not probable and reasonably estimable in the view of management and, accordingly, the Company has not established reserves for those matters.
Added
For certain other legal and regulatory proceedings, the Company can estimate possible losses, or range of loss in excess of amounts accrued, but does not believe, based on current knowledge and after consultation with counsel, that such losses individually, or in the aggregate, will have a material adverse effect on the Company's consolidated financial statements as a whole.
Removed
Rainey Trust, Toucan Holdings LP, Robert Goodman, Robert Daniel Burgner, Individually and as Trustee of the Burgner Family Charitable Remainder Trust, Douglas Kasemeier, Wesley Callaway, and Billy Loveless v. Oppenheimer & Co. Inc. (the “Robinson Arbitration”) was denied on January 30, 2023.
Added
Accordingly, the Company's estimate will change from time to time, and actual losses may be more than the current estimate.
Removed
Oppenheimer has settled, or settled in principle, eleven of the Horizon related arbitrations, including the Robinson Arbitration,with approximately forty-one individual complainants. The aggregate settlement payments for those eleven arbitrations total approximately $48.6 million.
Added
On November 18, 2022, Oppenheimer received an information request from the SEC requesting information related to the use of text messaging and similar forms of electronic communications by employees of Oppenheimer and whether those communications were properly retained by Oppenheimer as part of its records preservation requirements relating to the broker-dealer business activities of Oppenheimer.
Added
Subsequently, Oppenheimer received a similar information request from the Commodity Futures Trading Commission (“CFTC”). On January 4, 2024, Oppenheimer submitted an Offer of Settlement to the SEC. On February 9, 2024, the SEC issued an order (the “Order”) pursuant to which Oppenheimer will pay a fine in the amount of $12 million and agree to certain undertakings.
Added
In addition to the Order Oppenheimer received a waiver of certain statutory disqualifications from the SEC. On February 7, 2024, Oppenheimer submitted an Offer of Settlement to the CFTC pursuant to which Oppenheimer offered to pay a fine of $1 million and agree to certain undertakings.
Added
The aggregate payments for those forty-one arbitrations total approximately $87.7 million. The seven arbitrations still pending claim specific monetary damages and allege losses of approximately $7.9 million in the aggregate.
Added
On June 16, 2023, Oppenheimer was served with a complaint in an action entitled John and Cynthia Kearney, John & Tera Sargent, Mike Hall, Individually and as Assignee of 6694 Dawson Blvd, LLC, Thomas and Beverly Crampton, Roy and Shirley Hill, Billy and Debra Lanter, Larry Lawson, Eugene Lyle, Scott Spence, and Dolores Willoughby v. Oppenheimer & Co.
Added
Inc., Anne Greene and Gordon Morse, filed in Georgia State Court, Fulton County. Plaintiffs allege that they were all investors in Horizon. However, all of the plaintiffs allege that they invested in Horizon after John Woods left Oppenheimer’s employ in 2016 and virtually all of the plaintiffs were not Oppenheimer customers.
Added
Plaintiffs further allege that Oppenheimer, through its inaction and/or misconduct, is responsible for their alleged losses and are seeking unspecified damages sounding in violations of the Georgia RICO statute and negligence per se. On September 5, 2023, Oppenheimer filed a motion to dismiss the complaint, which is pending before the court.
Added
That same day, Oppenheimer also filed a motion to transfer the case to the Metro 34 Table of Contents Atlanta Business Case Division, which motion was granted. Oppenheimer believes these claims to be without merit and intends to defend itself vigorously against these claims.
Added
Also, on July 17, 2023, Oppenheimer was served with a complaint in an action entitled Mark Del Pico, Elizabeth Del Pico and Surrey Lane Partners GP LLC, as general Partner of Surrey Lane Partners, Ltd. v. Oppenheimer & Co. Inc., and Michael Mooney , filed in Florida State Court, Sarasota County.
Added
Plaintiffs allege that they were all investors in Horizon; however, none of the plaintiffs were Oppenheimer customers. All of the plaintiffs allege that they invested in Horizon years after John Woods left Oppenheimer’s employ in 2016.
Added
Plaintiffs further allege that Oppenheimer, through its inaction and/or misconduct, is responsible for their alleged losses and are seeking unspecified damages from Oppenheimer sounding in negligence per se , aiding and abetting breach of fiduciary duty, and aiding and abetting fraud. On August 28, 2023, Oppenheimer filed a motion to dismiss the complaint.
Added
Rather than respond to Oppenheimer’s motion to dismiss, on January 12, 2024, plaintiffs filed an amended complaint that includes an additional claim of fraud against Oppenheimer. On February 2, 2024, Oppenheimer filed a motion to dismiss the amended complaint which is pending before the court.
Added
Finally, on August 25, 2023, Oppenheimer was served with a complaint in an action entitled Lisa Wright, Billy Ray Boaz, Sylvia Boyles, Donald and Gina Bryant, Alton Graviette, Gilbert and Felicia Hawks, Michael and Brenda Craig, Barbara and Russell Danley, Carolyn and Ronald Edwards, Pamela Goins, Amy Gordon, Susan Gregory, Timothy Hall, Ronald Jones, Douglas Lineberry, Marcia Martin, Bobby and Jo Simpson, Karen Stephens, Caroline Moser, Rebecca Tapp, Paul Vaughan, Brenda and Varner Vogler, and Peggie Thomas v.
Added
Oppenheimer & Co. Inc., Ann Greene and Gordon Morse , filed in Georgia State Court, Fulton County. Plaintiffs allege that they were all investors in Horizon. However, all of the plaintiffs allege that they invested in Horizon after John Woods left Oppenheimer’s employ in 2016 and virtually all of the plaintiffs were not Oppenheimer customers.
Added
Plaintiffs further allege that Oppenheimer, through its inaction and/or misconduct, is responsible for their alleged losses and are seeking unspecified damages sounding in violations of the Georgia RICO statute and negligence per se. On September 15, 2023, Oppenheimer filed a motion to transfer the case to the Metro Atlanta Business Case Division, which motion was granted.
Added
On October 31, 2023, Oppenheimer filed a motion to dismiss the complaint, which is pending before the court. Oppenheimer believes these claims to be without merit and intends to defend itself vigorously against these claims.
Added
The settlement is subject to Oppenheimer obtaining a waiver of certain statutory disqualifications.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

15 edited+5 added−0 removed11 unchanged
Biggest changeThe following table provides information regarding purchases of shares of Class A Stock during the fourth quarter: (a) (b) (c) (d) 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 number of shares that may yet be purchased under the plans or programs (2) October 1 - 31, 2022 8,692 $31.47 8,692 144,034 November 1 - 30, 2022 — $— — 144,034 December 1 - 31, 2022 (1) — $— — 687,034 Q4 2022 Total 8,692 $31.47 8,692 687,034 (1) On December 13, 2022, the Company announced that its Board of Directors approved a share repurchase program that authorizes the Company to purchase up to 543,000 shares of the Company's Class A Stock.
Biggest changeThe following table provides information regarding purchases of shares of Class A Stock during the fourth quarter of 2023: (a) (b) (c) (d) 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 number of shares that may yet be purchased under the plans or programs (1) October 1 - 31, 2023 13,809 $38.18 13,809 313,131 November 1 - 30, 2023 85,739 $37.42 85,739 227,392 December 1 - 31, 2023 3,693 $39.85 3,693 223,699 Q4 2023 Total 103,241 $37.61 103,241 223,699 (1) None of the foregoing authorizations is subject to expiration.
The Company paid cash dividends of $1.54 per share in 2021 to holders of Class A and Class B Stock, including a special dividend of $1.00 per share paid on December 31, 2021, for a total of $19.4 million. The Company paid cash dividends of $1.48 per share in 2020 for a total of $18.6 million.
The Company paid cash dividends of $1.54 per share in 2021 to holders of Class A and Class B Stock, including a special dividend of $1.00 per share paid on December 31, 2021, for a total of $19.4 million.
Such repurchases, if any, will depend on a number of factors, including, but not limited to, the Company’s priorities for the use of cash, price, market and economic conditions, its liquidity requirements, and legal and contractual restrictions. During 2022, the Company repurchased and cancelled $10.95 million aggregate principal amount of its Senior Secured Notes in the open market
Such repurchases, if any, will depend on a number of factors, including, but not limited to, the Company’s priorities for the use of cash, price, market and economic conditions, its liquidity requirements, and legal and contractual restrictions. During 2023, the Company repurchased and cancelled $1.0 million aggregate principal amount of its Senior Secured Notes in the open market.
The Company does not presently contemplate listing the Class B Stock in the United States on any national or regional stock exchange or on NASDAQ. The Company paid cash dividends of $0.60 per share in 2022 to holders of Class A and Class B Stock for a total of $7.0 million.
The Company does not presently contemplate listing the Class B Stock in the United States on any national or regional stock exchange or on NASDAQ. The Company paid cash dividends of $0.60 per share in 2023 to holders of Class A and Class B Stock for a total of $6.5 million.
As of December 31, 2022, there were 1,695,239 shares of Class A Stock underlying outstanding options and restricted share awards. The Class A Stock underlying all vested options, if exercised, and restricted shares could be sold pursuant to Rule 144 or effective registration statements on Form S-8.
As of December 31, 2023, there were 1,591,861 shares of Class A Stock underlying outstanding options and restricted share awards. The Class A Stock underlying all vested options, if exercised, and restricted shares could be sold pursuant to Rule 144 or effective registration statements on Form S-8.
(2) None of the foregoing authorizations is subject to expiration. In addition, the Company has repurchased and may continue to seek to repurchase its outstanding 5.50% Senior Secured Notes due 2025 (the “Senior Secured Notes”) from time to time through, as applicable, tender offers, open market purchases, privately negotiated transactions or otherwise.
In addition, the Company has repurchased and may continue to seek to repurchase its outstanding 5.50% Senior Secured Notes due 2025 (the “Senior Secured Notes”) from time to time through, as applicable, tender offers, open market purchases, privately negotiated transactions or otherwise.
(b) The following table sets forth information about the stockholders of the Company as of February 28, 2023 as set forth in the records of the Company's transfer agent and registrar: Number of Shares Outstanding Number of Stockholders of Record Class A Stock 11,067,778 90 Class B Stock 99,665 31 (c) Share-Based Compensation Plans On February 26, 2014, the Company adopted the Oppenheimer Holdings Inc. 2014 Incentive Plan (the "OIP") pursuant to which the Compensation Committee of the Board of Directors of the Company grants options to purchase Class A Stock, restricted Class A Stock awards and Class A Stock awards to officers, directors and key employees of the Company and its subsidiaries.
(b) The following table sets forth information about the stockholders of the Company as of March 1, 2024 as set forth in the records of the Company's transfer agent and registrar: Number of Shares Outstanding Number of Stockholders of Record Class A Stock 10,357,376 86 Class B Stock 99,665 32 (c) Share-Based Compensation Plans On February 26, 2014, the Company adopted the Oppenheimer Holdings Inc. 2014 Incentive Plan (the "OIP") pursuant to which the Compensation Committee of the Board of Directors of the Company grants options to purchase Class A Stock, restricted Class A Stock awards and Class A Stock awards to officers, directors and key employees of the Company and its subsidiaries.
During the fourth quarter of 2022, the Company issued 8,692 shares of Class A Stock pursuant to the Company's share-based compensation plans to employees of the Company for no cash consideration. Such issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act.
During the fourth quarter of 2023, the Company issued 791 shares of Class A Stock pursuant to the Company's share-based compensation plans to employees of the Company for no cash consideration. Such issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
As of December 31, 2021, 223,821 shares remained available to be purchased under the share repurchase program.
As of December 31, 2022, 687,034 shares remained available to be purchased under the share repurchase program.
(d) Share Performance Graph The following graph shows changes over the past five year period of U.S. $100 invested in (1) the Company's Class A Stock, (2) the Standard & Poor's 500 Index (S&P 500), and (3) the Standard & Poor's 500 Diversified Financial Index (S&P 500 / Diversified Financials – S5DIVF): 34 Table of Contents As of December 31, 2017 2018 2019 2020 2021 2022 Oppenheimer Class A Stock 100 97 104 123 179 160 S&P 500 100 94 121 140 178 144 S&P 500 / Diversified Financials 100 89 109 120 161 141 Stock Buy-Back and Repurchase of Senior Secured Notes On May 15, 2020, the Company announced that its Board of Directors approved a share repurchase program that authorizes the Company to purchase up to 530,000 shares of the Company's Class A Stock, representing approximately 4.2% of its 12,636,523 then issued and outstanding shares of Class A Stock.
(d) Share Performance Graph The following graph shows changes over the past five year period of U.S. $100 invested in (1) the Company's Class A Stock, (2) the Standard & Poor's 500 Index (S&P 500), and (3) the Standard & Poor's 500 Diversified Financial Index (S&P 500 / Diversified Financials – S5DIVF): 36 Table of Contents As of December 31, 2018 2019 2020 2021 2022 2023 Oppenheimer Class A Stock 100 109 129 188 168 164 S&P 500 100 129 150 190 153 190 S&P 500 / Diversified Financials 100 123 135 181 158 180 Stock Buy-Back and Repurchase of Senior Secured Notes On February 28, 2022, the Company announced that its Board of Directors approved a share repurchase program that authorizes the Company to purchase up to 518,000 shares of the Company's Class A Stock, representing approximately 4.2% of its 12,322,073 then issued and outstanding shares of Class A Stock.
This authorization supplemented the 98,625 shares that remained authorized and available under the Company's previous share repurchase program for a total of 628,625 shares authorized and available for repurchase at May 15, 2020.
This authorization supplemented the 120,155 shares that remained authorized and available under the Company's previous share repurchase program for a total of 638,155 shares authorized.
As of December 31, 2022, 687,034 shares remained available to be purchased under its share repurchase program. During the year ended December 31, 2021, the Company purchased and canceled an aggregate of 177,192 shares of Class A Stock for a total consideration of $7.7 million ($43.67 per share).
As of December 31, 2023, 223,699 shares remained available to be purchased under its share repurchase program. During the year ended December 31, 2022, the Company purchased and canceled an aggregate of 1,684,287 shares of Class A Stock for a total consideration of $60.6 million ($36.00 per share) under its share repurchase program.
On February 28, 2022, the Company announced that its Board of Directors approved a share repurchase program that authorizes the Company to purchase up to 518,000 shares of the Company's Class A Stock, representing approximately 4.2% of its 12,322,073 then issued and outstanding shares of Class A Stock.
On March 1, 2024, the Company's Board of Directors approved a share repurchase program that authorizes the Company to purchase up to 518,000 shares of the Company's Class A Stock, representing approximately 5.0% of its 10,357,376 then issued and outstanding shares of Class A Stock.
This authorization supplemented the 144,034 shares that remained authorized and available under the Company's previous share repurchase program for a total of 687,034 shares authorized. 35 Table of Contents During the year ended December 31, 2022, the Company purchased and canceled an aggregate of 1,684,287 (15%) shares of Class A Stock for a total consideration of $60.6 million ($36.00 per share).
This authorization supplemented the 144,034 shares that remained authorized and available under the Company's previous share repurchase program for a total of 223,699 shares authorized.
The Company's share-based compensation plans are described in note 16 to the consolidated financial statements appearing in Item 8.
The OIP expired by its terms on February 26, 2024. On March 1, 2024 the Board of Directors adopted the Company’s 2024 Incentive Plan which is subject to shareholder approval at the Annual Meeting of Stockholders on May 6, 2024. The Company's share-based compensation plans are described in note 17 to the consolidated financial statements appearing in Item 8.
Added
The Company paid cash dividends of $0.60 per share in 2022 to holders of Class A and Class B Stock for a total of $7.0 million.
Added
On May 31, 2023, the Company announced the commencement of a modified “Dutch Auction” tender offer to purchase up to $30.0 million of its Class A Stock at a price not less than $34.00 per share or more than $40.00 per share.
Added
The Company completed its repurchases pursuant to the tender offer on July 6, 2023, when it successfully repurchased and cancelled 437,183 shares of Class A Stock at $40.00 per share for an aggregate purchase price of $17.49 million.
Added
As a result, the Company had 10,447,392 shares outstanding on July 6, 2023 after the purchase. 37 Table of Contents During the year ended December 31, 2023, the Company purchased and canceled an aggregate of 463,335 shares of Class A Stock for a total consideration of $17.6 million ($38.07 per share) under its share repurchase program.
Added
One purpose of the tender offer, among others, was to assure that sufficient liquidity existed for our stockholder that might have been required to sell shares of Class A Stock when the shares were removed from the Russell 2000 and 3000 indices at the end of June 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

62 edited+27 added−38 removed60 unchanged
Biggest changeWe remain confident in the strength of our brand, the resiliency of our businesses and our ability to continue to provide essential investment services to our clients. 39 Table of Contents RESULTS OF OPERATIONS The following table and discussion summarizes the changes in the major revenue and expense categories for the past three years: (Expressed in thousands ) For the Years Ended December 31, For the Years Ended December 31, 2022 2021 % Change 2021 2020 % Change REVENUE Commissions $ 370,382 $ 401,607 (7.8) $ 401,607 $ 395,097 1.6 Advisory fees 425,615 451,197 (5.7) 451,197 455,261 (0.9) Investment banking 127,529 435,870 (70.7) 435,870 222,298 96.1 Bank deposit sweep income 104,558 15,557 572.1 15,557 34,829 (55.3) Interest 60,713 36,482 66.4 36,482 33,477 9.0 Principal transactions, net 21,031 23,984 (12.3) 23,984 27,874 (14.0) Other 1,113 29,338 (96.2) 29,338 29,831 (1.7) Total revenue 1,110,941 1,394,035 (20.3) 1,394,035 1,198,667 16.3 EXPENSES Compensation and related expenses 740,827 886,840 (16.5) 886,840 770,997 15.0 Communications and technology 85,474 80,520 6.2 80,520 82,132 (2.0) Occupancy and equipment costs 59,897 60,069 (0.3) 60,069 62,352 (3.7) Clearing and exchange fees 25,566 22,306 14.6 22,306 22,978 (2.9) Interest 23,846 9,855 142.0 9,855 15,680 (37.1) Other 129,777 109,804 18.2 109,804 75,528 45.4 Total expenses 1,065,387 1,169,394 (8.9) 1,169,394 1,029,667 13.6 Pre-tax income 45,554 224,641 (79.7) 224,641 169,000 32.9 Income taxes 13,444 65,677 (79.5) 65,677 46,014 42.7 Net Income $ 32,110 $ 158,964 (79.8) $ 158,964 $ 122,986 29.3 Net income (loss) attributable to noncontrolling interest, net of tax (241) — * — — * Net income attributable to Oppenheimer Holdings Inc. $ 32,351 $ 158,964 (79.6) $ 158,964 $ 122,986 29.3 *Percentage not meaningful Fiscal 2022 compared to Fiscal 2021 Revenue • Commission revenue was $370.4 million for the year ended December 31, 2022, a decrease of 7.8% compared with $401.6 million for the year ended December 31, 2021 due to decreased client activity in mutual funds, listed securities, OTC products and annuities, partially offset by higher commission income on municipal bonds. • Advisory fees were $425.6 million for the year ended December 31, 2022, a decrease of 5.7% compared with $451.2 million for the year ended December 31, 2021 due to the reduced valuations of assets under management. • Investment banking revenue was $127.5 million for the year ended December 31, 2022, a decrease of 70.7% compared with $435.9 million for the year ended December 31, 2021 driven by an industry-wide decrease in M&A transactions, and significantly lower levels of capital issuances in the equity markets, particularly in the healthcare and technology sectors. • Bank deposit sweep income was $104.6 million for the year ended December 31, 2022, an increase of 572.1% compared with $15.6 million for the year ended December 31, 2021 due to significantly higher short-term interest rates. 40 Table of Contents • Interest revenue was $60.7 million for the year ended December 31, 2022, an increase of 66.4% compared with $36.5 million in 2021 due to higher average margin balances and higher short-term interest rates. • Principal transactions revenue was $21.0 million for the year ended December 31, 2022, a decrease of 12.3% compared with $24.0 million for the year ended December 31, 2021 driven by lower income from investment grade, high yield, Emerging Markets, and municipal bonds partially offset by higher income from U.S. government securities. • Other revenue was $1.1 million for the year ended December 31, 2022, a decrease of 96.2% compared to $29.3 million for the year ended December 31, 2021 primarily due to a decrease in the cash surrender value of Company-owned life insurance during 2022, which fluctuates based on changes in fair value of the policies' underlying investments.
Biggest changeRESULTS OF OPERATIONS The following table and discussion summarizes the changes in the major revenue and expense categories for the past three years: (Expressed in thousands ) For the Years Ended December 31, For the Years Ended December 31, 2023 2022 % Change 2022 2021 % Change REVENUE Commissions $ 349,248 $ 370,382 (5.7) $ 370,382 $ 401,607 (7.8) Advisory fees 415,679 425,615 (2.3) 425,615 451,197 (5.7) Investment banking 117,665 127,529 (7.7) 127,529 435,870 (70.7) Bank deposit sweep income 172,807 104,558 65.3 104,558 15,557 572.1 Interest 104,550 60,713 72.2 60,713 36,482 66.4 Principal transactions, net 65,347 21,031 210.7 21,031 23,984 (12.3) Other 23,529 1,113 2,014.0 1,113 29,338 (96.2) Total revenue 1,248,825 1,110,941 12.4 1,110,941 1,394,035 (20.3) EXPENSES Compensation and related expenses 782,396 740,827 5.6 740,827 886,840 (16.5) Communications and technology 91,321 85,474 6.8 85,474 80,520 6.2 Occupancy and equipment costs 66,002 59,897 10.2 59,897 60,069 (0.3) Clearing and exchange fees 24,928 25,566 (2.5) 25,566 22,306 14.6 Interest 68,599 23,846 187.7 23,846 9,855 142.0 Other 168,809 129,777 30.1 129,777 109,804 18.2 Total expenses 1,202,055 1,065,387 12.8 1,065,387 1,169,394 (8.9) Pre-tax income 46,770 45,554 2.7 45,554 224,641 (79.7) Income tax provision 16,498 13,444 22.7 13,444 65,677 (79.5) Net Income $ 30,272 $ 32,110 (5.7) $ 32,110 $ 158,964 (79.8) Net income (loss) attributable to non-controlling interest, net of tax 93 (241) * (241) — * Net income attributable to Oppenheimer Holdings Inc. $ 30,179 $ 32,351 (6.7) $ 32,351 $ 158,964 (79.6) *Percentage not meaningful Fiscal 2023 compared to Fiscal 2022 Revenue • Commission revenue was $349.2 million for the year ended December 31, 2023, a decrease of 5.7% compared with $370.4 million for the year ended December 31, 2022 due to decreased client activity in listed securities, OTC products and options, partially offset by higher commission income on annuities. • Advisory fees were $415.7 million for the year ended December 31, 2023, a decrease of 2.3% compared with $425.6 million for the year ended December 31, 2022 due to lower management fees from advisory programs attributable to reduced billable AUM levels and lower incentive fees from alternative investments during the year. 41 Table of Contents • Investment banking revenue was $117.7 million for the year ended December 31, 2023, a decrease of 7.7% compared with $127.5 million for the year ended December 31, 2022 driven by an industry-wide slowdown in M&A transactions and lower levels of fixed income capital issuances, partially offset by higher equity underwriting fees. • Bank deposit sweep income was $172.8 million for the year ended December 31, 2023, an increase of 65.3% compared with $104.6 million for the year ended December 31, 2022 due to higher short-term interest rates, partially offset by lower cash sweep balances. • Interest revenue was $104.6 million for the year ended December 31, 2023, an increase of 72.2% compared with $60.7 million for the year ended December 31, 2022 due to higher short-term interest rates, which drove record full year margin interest income. • Principal transactions revenue was $65.3 million for the year ended December 31, 2023, an increase of 210.7% compared with $21.0 million for the year ended December 31, 2022 primarily due to higher fixed income trading volumes. • Other revenue was $23.5 million for the year ended December 31, 2023, a significant increase compared to $1.1 million for the year ended December 31, 2022 primarily due to increases in the cash surrender value of Company-owned life insurance during 2023, which fluctuates based on changes in fair value of the policies' underlying investments.
This analysis should be read in conjunction with the consolidated financial statements and related footnote disclosures contained in this report. BACKGROUND The consolidated financial statements include the accounts of Oppenheimer Holdings Inc. and its consolidated subsidiaries (together, the "Company", "Parent", "we", "our" or "us").
This analysis should be read in conjunction with the consolidated financial statements and related footnote disclosures contained in this report. BACKGROUND The consolidated financial statements include the accounts of Oppenheimer Holdings Inc. ("Parent") and its consolidated subsidiaries (together, the "Company", "we", "our" or "us").
(x) the adoption and implementation of the SEC’s “Regulation Best Interest” and other regulations adopted in recent years, (xi) war, terrorist acts and nuclear confrontation as well as political unrest, including events relating to Russia’s invasion of Ukraine and Western sanctions, (xii) the Company’s ability to achieve its business plan, (xiii) the effects of the economy on the Company’s ability to find and maintain financing options and liquidity, (xiv) credit, operational, legal and regulatory risks, (xv) risks related to foreign operations, including those in the United Kingdom which may be affected by Britain’s January 2020 exit from the EU(“Brexit”) and economic uncertainty in the UK, EU, and elsewhere, (xvi) the effect of technological innovation on the financial services industry and securities business, (xvii) risks related to election results, Congressional gridlock, political and social unrest, government shutdowns and investigations, trade wars, changes in or uncertainty surrounding regulation, and the potential for default by the U.S. government on the nation's debt, (xviii) risks related to changes in capital requirements under international standards that may cause banks to back away from providing funding to the securities industry, and (xix) risks related to the severity and duration of the COVID-19 Pandemic; the COVID-19 Pandemic’s impact on the U.S. and global economies; and federal, state and local governmental responses to the COVID-19 Pandemic.
(x) the adoption and implementation of the SEC’s “Regulation Best Interest” and other regulations adopted in recent years, (xi) war, terrorist acts and nuclear confrontation as well as political unrest, including events relating to Russia’s invasion of Ukraine and Western sanctions and the Israel-Hamas war and related unrest in the Middle East, (xii) the Company’s ability to achieve its business plan, (xiii) the effects of the economy on the Company’s ability to find and maintain financing options and liquidity, (xiv) credit, operational, legal and regulatory risks, (xv) risks related to foreign operations, including those in the United Kingdom which may be affected by Britain’s January 2020 exit from the EU(“Brexit”) and economic uncertainty in the UK, EU, and elsewhere, (xvi) the effect of technological innovation on the financial services industry and securities business, (xvii) risks related to election results, Congressional gridlock, political and social unrest, government shutdowns and investigations, trade wars, changes in or uncertainty surrounding regulation, and the potential for default by the U.S. government on the nation's debt, (xviii) risks related to changes in capital requirements under international standards that may cause banks to back away from providing funding to the securities industry, and (xix) risks related to the severity and duration of the COVID-19 Pandemic; the COVID-19 Pandemic’s impact on the U.S. and global economies; and federal, state and local governmental responses to the COVID-19 Pandemic.
We recognize the importance of compliance with applicable regulatory requirements and are committed to performing rigorous and ongoing assessments of our compliance and risk management effort, and investing in people and programs, while providing a platform with first class investment programs and services. 37 Table of Contents The Company is also reviewing its full service business model to determine the opportunities available to build or acquire closely related businesses in areas where others have shown some success.
We recognize the importance of compliance with applicable regulatory requirements and are committed to performing rigorous and ongoing assessments of our compliance and risk management effort, and investing in people and programs, while providing a platform with first class investment programs and services. 39 Table of Contents The Company is also reviewing its full service business model to determine the opportunities available to build or acquire closely related businesses in areas where others have shown some success.
In addition to adopting Reg BI, the SEC adopted rules (i) requiring broker-dealers and investment advisers to provide a written relationship summary to each client, and (ii) clarifying certain interpretations under the Investment Advisers Act of 1940 including but not limited to when a broker-dealer's activity is considered “solely incidental” to its broker-dealer business and is, therefore, not considered investment advisory activity (collectively, the “Reg BI Rules”).
In addition to adopting Reg BI, the SEC adopted rules (i) requiring broker-dealers and investment advisers to provide a written relationship summary to each client, and (ii) clarifying certain interpretations under the Advisers Act including but not limited to when a broker-dealer's activity is considered “solely incidental” to its broker-dealer business and is, therefore, not considered investment advisory activity (collectively, the “Reg BI Rules”).
The Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by E.A. Viner International Co. and Viner Finance Inc. (together, the "Guarantors"), unless released as described below. Each of the Guarantors is 100% owned by the Parent. The indenture for the Notes contains covenants with restrictions which are discussed in note 12.
The Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by E.A. Viner International Co. and Viner Finance Inc. (together, the "Guarantors"), unless released as described below. Each of the Guarantors is 100% owned by the Parent. The indenture for the Notes contains covenants with restrictions which are discussed in note 13.
See note 15 to the consolidated financial statements appearing in Item 8 for further details. Impact if actual results differ from assumptions – Although we believe that our estimates and judgements are reasonable, actual results may differ from these estimates. Some or all of these judgements are subject to review by the relevant taxing authorities.
See note 16 to the consolidated financial statements appearing in Item 8 for further details. Impact if actual results differ from assumptions – Although we believe that our estimates and judgements are reasonable, actual results may differ from these estimates. Some or all of these judgements are subject to review by the relevant taxing authorities.
As of December 31, 2022, the Company had $31.8 million in financial instruments, comprised of auction rate securities, classified within Level 3 of the fair value hierarchy. See note 7 to the consolidated financial statements appearing in Item 8 for further information on the fair value definition, Level 1, Level 2 and Level 3 and related valuation techniques.
As of December 31, 2023, the Company had $2.7 million in financial instruments, comprised of auction rate securities, classified within Level 3 of the fair value hierarchy. See note 8 to the consolidated financial statements appearing in Item 8 for further information on the fair value definition, Level 1, Level 2 and Level 3 and related valuation techniques.
For a discussion of our results of operations and liquidity and capital resources for the year ended December 31, 2020, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
For a discussion of our results of operations and liquidity and capital resources for the year ended December 31, 2021, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The purpose of this section is to discuss and analyze our consolidated financial condition, liquidity and capital resources and results of operations for the years ended December 31, 2022 and 2021.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The purpose of this section is to discuss and analyze our consolidated financial condition, liquidity and capital resources and results of operations for the years ended December 31, 2023 and 2022.
I mpact if actual results differ from assumptions – We established an independent valuation process to evaluate and approve the valuation of our financial instruments. For financial instruments that are classified in Level 3, we review the appropriateness of the unobservable inputs to ensure consistency with how a market participant would arrive at the unobservable input.
Impact if actual results differ from assumptions – We established an independent valuation process to evaluate and approve the valuation of our financial instruments. For financial instruments that are classified in Level 3, we review the appropriateness of the unobservable inputs to ensure consistency with how a market participant would arrive at the unobservable input.
The assumptions we used to determine the estimates of reserves may be incorrect and the actual disposition of a legal or regulatory proceeding could be greater or less than the reserve amount. Income Taxes Critical estimates – We are subject to the income tax laws of the U.S., its states, and the municipalities in which we operate.
The assumptions we used to determine the estimates of reserves may be incorrect and the actual disposition of a legal or regulatory proceeding could be greater or less than the reserve amount. 48 Table of Contents Income Taxes Critical estimates – We are subject to the income tax laws of the U.S., its states, and the municipalities in which we operate.
(4) Private equity funds represent private equity fund of funds including portfolios focused on natural resources and related assets. 45 Table of Contents (5) The portfolio enhancement program sells uncovered, far out-of-money puts and calls on the S&P 500 Index. The program is market neutral and uncorrelated to the index.
(4) Private equity funds represent private equity fund of funds including portfolios focused on natural resources and related assets. (5) The portfolio enhancement program sells uncovered, far out-of-money puts and calls on the S&P 500 Index. The program is market neutral and uncorrelated to the index.
Certain of those policies are considered to be particularly important to the presentation of the Company's financial results because they require management to make difficult, complex or subjective judgments, often as a result of matters that are inherently uncertain.
Certain of those policies are considered to be particularly 47 Table of Contents important to the presentation of the Company's financial results because they require management to make difficult, complex or subjective judgments, often as a result of matters that are inherently uncertain.
There can be no assurance that the Company has correctly or completely identified and assessed all of the factors affecting the Company's business. See “Risk Factors” in Part I, Item 1A. 53 Table of Contents
There can be no assurance that the Company has correctly or completely identified and assessed all of the factors affecting the Company's business. See “Risk Factors” in Part I, Item 1A.
Our collateral maintenance policies and procedures are designed to limit our exposure to credit risk. Securities owned, with the exception of the ARS, are mainly comprised of actively trading, readily marketable securities.
Our collateral maintenance policies and procedures are designed to limit our exposure to credit risk. Securities owned, with the exception of the auction rate securities, are mainly comprised of actively trading, readily marketable securities.
Each legal and regulatory proceeding is reviewed with counsel in each accounting period and the reserve is 47 Table of Contents adjusted as deemed appropriate by management. Any change in the reserve amount is recorded in the results of that period. See note 17 to the consolidated financial statements appearing in Item 8 for further details.
Each legal and regulatory proceeding is reviewed with counsel in each accounting period and the reserve is adjusted as deemed appropriate by management. Any change in the reserve amount is recorded in the results of that period. See note 18 to the consolidated financial statements appearing in Item 8 for further details.
The new rules and processes related thereto may limit revenue and most likely will involve increased costs, including, but not limited to, compliance costs associated with new or enhanced technology as well as increased litigation costs.
The new rules and processes related thereto may limit revenue and have increased, and most likely will continue to increase costs, including, but not limited to, compliance costs associated with new or enhanced technology as well as increased litigation costs.
Other Regulatory Matters On November 18, 2022, the Company received an information request from the SEC requesting information relating to the use of text messaging and similar forms of electronic communications by employees of the Company and whether those communications were properly retained by the Company as part of its records preservation requirements relating to the broker-dealer or investment adviser business activities of the Company.
Other Regulatory Matters On November 18, 2022, Oppenheimer received an information request from the SEC requesting information related to the use of text messaging and similar forms of electronic communications by employees of Oppenheimer and whether those communications were properly retained by Oppenheimer as part of its records preservation requirements relating to the broker-dealer business activities of Oppenheimer.
We advanced $19.8 million in forgivable notes (which are inherently illiquid) to employees for the year ended December 31, 2022 ($22.1 million for the year ended December 31, 2021) as upfront or backend inducements to commence or continue employment as the case may be. The amount of funds allocated to such inducements will vary with hiring activity.
We advanced $21.5 million in forgivable notes (which are inherently illiquid) to employees for the year ended December 31, 2023 ($19.8 million for the year ended December 31, 2022) as upfront or backend inducements to commence or continue employment as the case may be. The amount of funds allocated to such inducements will vary with hiring activity.
Its principal subsidiaries are Oppenheimer & Co. Inc. ("Oppenheimer") and Oppenheimer Asset Management Inc. ("OAM"). As of December 31, 2022, we provided our services from 92 offices in 25 states located throughout the United States, offices in Puerto Rico, Tel Aviv, Israel, Hong Kong, China, London, England, St. Helier, Isle of Jersey, Munich, Germany and Geneva, Switzerland.
Its principal subsidiaries are Oppenheimer & Co. Inc. ("Oppenheimer") and Oppenheimer Asset Management Inc. ("OAM"). As of December 31, 2023, we provided our services from 90 offices in 25 states located throughout the United States, offices in Puerto Rico, Tel Aviv, Israel, Hong Kong, China, London, England, St. Helier, Isle of Jersey, Portugal and Geneva, Switzerland.
Each Guarantor will be automatically and unconditionally released and discharged upon: the sale, exchange or transfer of the capital stock of a Guarantor and the Guarantor ceasing to be a direct or indirect subsidiary of the Parent if such sale does not constitute an asset sale under the Indenture for the Notes or does not constitute an asset sale effected in compliance with the asset sale and merger covenants of the Indenture for the Notes; a Guarantor being dissolved or liquidated; a Guarantor being designated unrestricted in compliance with the applicable provisions of the Notes; or the exercise by the Parent of its legal defeasance option or covenant defeasance option or the discharge of the Parent's obligations under the Indenture for the Notes in accordance with the terms of such Indenture. 49 Table of Contents The following tables present results of operations for the twelve months ended December 31, 2022 and balance sheet at December 31, 2022 for the Parent and Guarantors.
Each Guarantor will be automatically and unconditionally released and discharged upon: the sale, exchange or transfer of the capital stock of a Guarantor and the Guarantor ceasing to be a direct or indirect subsidiary of the Parent if such sale does not constitute an asset sale under the Indenture for the Notes or does not constitute an asset sale effected in compliance with the asset sale and merger covenants of the Indenture for the Notes; a Guarantor being dissolved or liquidated; a Guarantor being designated unrestricted in compliance with the applicable provisions of the Notes; or the exercise by the Parent of its legal defeasance option or covenant defeasance option or the discharge of the Parent's obligations under the Indenture for the Notes in accordance with the terms of such Indenture. 50 Table of Contents The following tables present the selected financial information for the twelve months ended December 31, 2023 for the Parent and Subsidiary Guarantors.
AUM includes the total market value of client investments in discretionary and non-discretionary advisory programs and as well as the net asset value of private placement of alternative investments offered by and held by clients of the firm. Client assets under administration ("CAUA") as of December 31, 2022 totaled $105.0 billion.
AUM includes the total market value of client investments in discretionary and non-discretionary advisory programs and as well as the net asset value of private placement of alternative investments offered by and held by clients of the firm. Client assets under administration ("CAUA") as of December 31, 2023 totaled $118.2 billion.
Our reviews have resulted in plans that we believe would result in a reduction of assets through liquidation that would significantly reduce the Company's need for external financing. Our primary long-term cash requirements include $113.4 million principal outstanding as of December 31, 2022 under our Senior Secured Notes (due in 2025) and $182.6 million of operating lease obligations.
Our reviews have resulted in plans that we believe would result in a reduction of assets through liquidation that would significantly reduce the Company's need for external financing. Our primary long-term cash requirements include $113.1 million principal outstanding as of December 31, 2023 under our Notes (due in 2025) and $183.3 million of operating lease obligations.
The Company provides investment advisory services through OAM and Oppenheimer Investment Management LLC ("OIM") and Oppenheimer's financial advisor directed programs. At December 31, 2022, client assets under management LLC ("AUM") totaled $36.8 billion.
The Company provides investment advisory services through OAM and Oppenheimer Investment Management LLC ("OIM") and Oppenheimer's financial advisor directed programs. At December 31, 2023, client assets under management ("AUM") totaled $43.9 billion.
At December 31, 2022, bank call loans were zero ($69.5 million at December 31, 2021). The average daily bank loan outstanding for the year ended December 31, 2022 was $79.4 million ($76.4 million for the year ended December 31, 2021).
At December 31, 2023, bank call loans were zero (zero at December 31, 2022). The average daily bank loan outstanding for the year ended December 31, 2023 was $49.4 million ($79.4 million for the year ended December 31, 2022).
The Company cautions readers that a variety of factors could cause the Company’s actual results to differ materially from the anticipated results or other expectations expressed in the Company’s forward-looking statements.
Forward-looking statements are not guarantees and involve risks, uncertainties and assumptions. The Company cautions readers that a variety of factors could cause the Company’s actual results to differ materially from the anticipated results or other expectations expressed in the Company’s forward-looking statements.
The total cash requirement for interest expense related to the Notes and operating lease obligations is estimated to be approximately $17.6 million for the 2023 year.
The total cash requirement for interest expense related to the Notes and operating lease obligations is estimated to be approximately $18.7 million for the 2024 year.
The Company has responded to the information request and continues to cooperate with the SEC inquiry. FACTORS AFFECTING "FORWARD-LOOKING STATEMENTS" From time to time, the Company may publish or make oral statements that constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 which provides a safe harbor for forward-looking statements.
FACTORS AFFECTING "FORWARD-LOOKING STATEMENTS" From time to time, the Company may publish or make oral statements that constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 which provides a safe harbor for forward-looking statements.
On August 23, 2021, Moody’s upgraded the Company's Corporate Family rating and the rating on the Unregistered Notes from “B1” with a stable outlook to “Ba3” with a stable outlook. Liquidity For the most part, the Company's assets consist of cash and cash equivalents and assets that it can readily convert into cash.
Moody’s Corporate Family rating and the rating on the Notes is a “Ba3” with a stable outlook. Liquidity For the most part, the Company's assets consist of cash and cash equivalents and assets that it can readily convert into cash.
Funding Risk (Expressed in thousands) For the Years Ended December 31, 2022 2021 Cash provided by operating activities $ 64,492 $ 227,786 Cash used in investing activities (14,137) (6,267) Cash provided by/(used in) financing activities (253,912) 84,581 Net increase/(decrease) in cash and cash equivalents and restricted cash $ (203,557) $ 306,100 Management believes that funds from operations, combined with our capital base and available credit facilities, are sufficient for our liquidity needs in the foreseeable future.
Funding Risk (Expressed in thousands) For the Years Ended December 31, 2023 2022 Cash provided by/(used in) operating activities $ (18,810) $ 64,492 Cash used in investing activities (15,561) (14,137) Cash used in financing activities (74,761) (253,912) Net decrease in cash and cash equivalents and restricted cash $ (109,132) $ (203,557) Management believes that funds from operations, combined with our capital base and available credit facilities, are sufficient for our liquidity needs in the foreseeable future.
The average daily balance of reverse repurchase agreements and repurchase agreements on a gross basis for the year ended December 31, 2022 was $172.4 million and $356.5 million, respectively ($120.3 million and $352.8 million, respectively, for the year ended December 31, 2021).
The average daily balance of reverse repurchase agreements and repurchase agreements on a gross basis for the year ended December 31, 2023 was $107.6 million and $547.1 million, respectively ($172.4 million and $356.6 million, respectively, for the year ended December 31, 2022).
The average daily securities loan balance for the year ended December 31, 2022 was $297.6 million ($285.2 million for the year ended December 31, 2021). The largest daily stock loan balance for the year ended December 31, 2022 was $350.1 million ($322.2 million for the year ended December 31, 2021).
The average daily securities loan balance for the year ended December 31, 2023 was $327.0 million ($297.6 million for the year ended December 31, 2022). The largest daily stock loan balance for the year ended December 31, 2023 was $391.5 million ($350.1 million for the year ended December 31, 2022).
The largest daily bank loan outstanding for the year ended December 31, 2022 was $226.6 million ($227.7 million for the year ended December 31, 2021). At December 31, 2022, securities loan balances totaled $320.8 million ($244.2 million at December 31, 2021).
The largest daily bank loan outstanding for the year ended December 31, 2023 was $167.3 million ($226.6 million for the year ended December 31, 2022). At December 31, 2023, securities loan balances totaled $285.0 million ($320.8 million at December 31, 2022).
Valuation is based on collateral requirements for a series of contracts representing the investment strategy. Capital Markets Capital Markets reported revenue of $337.8 million for the year ended December 31, 2022, 46.0% lower compared with the prior year. Pre-tax loss was $25.7 million compared with a pre-tax income of $204.1 million for the prior year.
Valuation is based on collateral requirements for a series of contracts representing the investment strategy. 46 Table of Contents Capital Markets Capital Markets reported revenue of $345.9 million for the year ended December 31, 2023, 2.4% higher compared with the prior year. Pre-tax loss was $63.0 million compared with a pre-tax loss of $25.7 million for the prior year.
The significant accounting policies used in the preparation of the Company's consolidated financial statements are summarized in note 2 to those statements.
CRITICAL ACCOUNTING ESTIMATES The Company's accounting estimates are essential to understanding and interpreting the financial results reported on the consolidated financial statements. The significant accounting policies used in the preparation of the Company's consolidated financial statements are summarized in note 2 to those statements.
The Company believes many of the steps taken by the Company to achieve compliance with the Reg BI Rules will enable the Company to comply with the PTE.
The Company believes many of the steps taken by the Company to achieve compliance with the Reg BI Rules will enable the Company to comply with the PTE. The Company implemented certain additional processes beyond the actions taken to comply with the Reg BI Rules in order to ensure full compliance with the PTE.
Repurchase and reverse repurchase agreements are presented on a net-by-counterparty basis, when the repurchase and reverse repurchase agreements are executed with the same counterparty, have the same explicit settlement date, are executed in accordance with a master netting arrangement, the securities underlying the repurchase and reverse repurchase agreements exist in "book entry" form and certain other requirements are met. 50 Table of Contents Certain of our repurchase agreements and reverse repurchase agreements are carried at fair value as a result of the Company's fair value option election.
Repurchase and reverse repurchase agreements are presented on a net-by-counterparty basis, when the repurchase and reverse repurchase agreements are executed with the same counterparty, have the same explicit settlement date, are executed in accordance with a master netting arrangement, the securities underlying the repurchase and reverse repurchase agreements exist in "book entry" form and certain other requirements are met. 51 Table of Contents At December 31, 2023, the gross balances of reverse repurchase agreements and repurchase agreements were $8.9 million and $643.4 million, respectively.
At December 31, 2022, the Company employed 2,912 employees (2,868 full-time and 44 part-time), of whom 968 were financial advisors.
At December 31, 2023, the Company employed 2,942 employees (2,903 full-time and 39 part-time), of whom 931 were financial advisors.
Asset Management Asset Management reported revenue of $99.2 million for the year ended December 31, 2022, 5.1% lower compared with the prior year.
Asset Management Asset Management reported revenue of $88.4 million for the year ended December 31, 2023, 10.9% lower compared with the prior year.
The following table provides a breakdown of the change in assets under management for the year ended December 31, 2022: (Expressed in millions) For the Year Ended December 31, 2022 Beginning Balance Appreciation (Depreciation) Ending Balance Fund Type Contributions Redemptions Traditional (1) $ 37,832 $ 5,356 $ (6,253) $ (5,522) $ 31,413 Institutional Fixed Income (2) 869 109 (70) (72) 836 Alternative Investments: Hedge funds (3) 4,678 170 (275) (1,532) 3,041 Private Equity Funds (4) 2,444 159 (965) (486) 1,152 Portfolio Enhancement Program (5) 380 10 (37) (1) 352 $ 46,203 $ 5,804 $ (7,600) $ (7,613) $ 36,794 (1) Traditional investments include third party advisory programs, Oppenheimer financial advisor managed and advisory programs, and Oppenheimer Asset Management taxable and tax-exempt portfolio management strategies.
The following table provides a breakdown of the change in assets under management for the year ended December 31, 2023: (Expressed in millions) For the Year Ended December 31, 2023 Beginning Balance Appreciation (Depreciation) Ending Balance Fund Type Contributions Redemptions Traditional (1) $ 31,413 $ 7,610 $ (6,356) $ 5,476 $ 38,143 Institutional Fixed Income (2) 836 17 (70) 70 853 Alternative Investments: Hedge funds (3) 3,041 120 (315) 617 3,463 Private Equity Funds (4) 1,152 190 (83) (153) 1,106 Portfolio Enhancement Program (5) 352 6 (53) — 305 $ 36,794 $ 7,943 $ (6,877) $ 6,010 $ 43,870 (1) Traditional investments include third party advisory programs, Oppenheimer financial advisor managed and advisory programs, and Oppenheimer Asset Management taxable and tax-exempt portfolio management strategies.
REGULATORY MATTERS AND DEVELOPMENTS Regulation Best Interest (U.S.) On June 5, 2019, the SEC adopted Regulation Best Interest (“Reg BI”) as Rule 15l-1 under the Exchange Act.
All such requirements have been met in the ordinary course with available collateral. 52 Table of Contents REGULATORY MATTERS AND DEVELOPMENTS Regulation Best Interest (U.S.) On June 5, 2019, the SEC adopted Regulation Best Interest (“Reg BI”) as Rule 15l-1 under the Exchange Act.
CAUA includes AUM and the other assets for which the firm provides services. We also provide trust services and products through Oppenheimer Trust Company of Delaware and discount brokerage services through Freedom Investments, Inc. ("Freedom"). Through OPY Credit Corp., from time to time we may offer syndication as well as trading of issued syndicated corporate loans.
CAUA includes AUM and the other assets for which the firm provides services. We also provide trust services and products through Oppenheimer Trust Company of Delaware and discount brokerage services through Freedom Investments, Inc. ("Freedom"). Through OPY Credit Corp., we conduct secondary trading activities related to the purchase and sale of loans, primarily on a riskless principal basis.
These forward-looking statements may relate to such matters as anticipated financial performance, future revenues, earnings, liabilities or expenses, business prospects, projected ventures, new products, anticipated market performance, and similar matters.
These forward-looking statements may relate to such matters as anticipated financial performance, future revenues, earnings, liabilities or expenses, liquidity and cash flows, business prospects, strategic objectives, projected ventures, new products, anticipated market performance, and similar matters. Words such as “believes,” “expects,” “anticipates,” “estimates,” “will,” “may,” “could,” “should” and “would” are intended to identify forward-looking statements.
See “Business – Regulatory - Regulatory Capital Requirements” in Part I, Item 1 and note 18 of the Notes to Consolidated Financial Statements in Item 8 for further information on regulatory capital requirements.
As of December 31, 2023, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements. See “Business – Regulatory - Regulatory Capital Requirements” in Part I, Item 1 and note 19 of the Notes to Consolidated Financial Statements in Item 8 for further information on regulatory capital requirements.
During the fourth quarter of 2022, the Company repurchased and subsequently cancelled $10.95 million of the 5.50% Senior Secured Notes, recognizing a small extinguishment gain. As of December 31, 2022, $114.05 million aggregate principal amount of the Notes remain outstanding. See note 12 to the consolidated financial statements appearing in Item 1 for further discussion.
During the fourth quarter of 2022, the Company repurchased and subsequently cancelled $10.95 million of the Notes, recognizing a small extinguishment gain. As of December 31, 2022, $114.05 million aggregate principal amount of the Notes remain outstanding. During the first quarter of 2023, the Company repurchased and cancelled $1.0 million aggregate principal amount of its Notes in the open market.
Fiscal 2021 compared to Fiscal 2020 Revenue • Commission revenue was $401.6 million for the year ended December 31, 2021, an increase of 1.6% compared with $395.1 million for the year ended December 31, 2020 due to increased client activity in mutual funds, options, annuities, and mortgage backed securities partially offset by lower commission income on municipal bonds. • Advisory fees were $451.2 million for the year ended December 31, 2021, a decrease of 0.9% compared with $455.3 million for the year ended December 31, 2020 due to a significant decrease in incentive fees from alternative investments partially offset by higher management fees from advisory programs during 2021. • Investment banking revenue was $435.9 million for the year ended December 31, 2021, an increase of 96.1% compared with $222.3 million for the year ended December 31, 2020 driven by increased M&A activity and fees associated with a significant number of capital raising transactions (PIPES) in the healthcare and technology sectors completed during the 2021 year. • Bank deposit sweep income was $15.6 million for the year ended December 31, 2021, a decrease of 55.3% compared with $34.8 million for the year ended December 31, 2020 due to lower short-term interest rates partially offset by higher average cash sweep balances. • Interest revenue was $36.5 million for the year ended December 31, 2021, an increase of 9.0% compared with $33.5 million in 2020 due to higher average margin balances partially offset by lower short-term interest rates. • Principal transactions revenue was $24.0 million for the year ended December 31, 2021, a decrease of 14.0% compared with $27.9 million for the year ended December 31, 2020 driven by lower income from investment grade, high yield, Emerging Markets, and municipal bonds partially offset by higher income from corporate and convertible bonds. • Other revenue was $29.3 million for the year ended December 31, 2021, a decrease of 1.7% compared to $29.8 million for the year ended December 31, 2020 primarily due to a decrease in the cash surrender value of Company-owned life insurance during 2021. 41 Table of Contents Expenses • Compensation and related expenses totaled $886.8 million during the year ended December 31, 2021, an increase of 15.0% compared with the year ended December 31, 2020.
Fiscal 2022 compared to Fiscal 2021 Revenue • Commission revenue was $370.4 million for the year ended December 31, 2022, a decrease of 7.8% compared with $401.6 million for the year ended December 31, 2021 due to decreased client activity in mutual funds, listed securities, OTC products and annuities, partially offset by higher commission income on municipal bonds. • Advisory fees were $425.6 million for the year ended December 31, 2022, a decrease of 5.7% compared with $451.2 million for the year ended December 31, 2021 due to the reduced valuations of assets under management. • Investment banking revenue was $127.5 million for the year ended December 31, 2022, a decrease of 70.7% compared with $435.9 million for the year ended December 31, 2021 driven by an industry-wide decrease in M&A transactions, and significantly lower levels of capital issuances in the equity markets, particularly in the healthcare and technology sectors. • Bank deposit sweep income was $104.6 million for the year ended December 31, 2022, an increase of 572.1% compared with $15.6 million for the year ended December 31, 2021 due to significantly higher short-term interest rates. • Interest revenue was $60.7 million for the year ended December 31, 2022, an increase of 66.4% compared with $36.5 million in 2021 due to higher average margin balances and higher short-term interest rates. 42 Table of Contents • Principal transactions revenue was $21.0 million for the year ended December 31, 2022, a decrease of 12.3% compared with $24.0 million for the year ended December 31, 2021 driven by lower income from investment grade, high yield, Emerging Markets, and municipal bonds partially offset by higher income from U.S. government securities. • Other revenue was $1.1 million for the year ended December 31, 2022, a decrease of 96.2% compared to $29.3 million for the year ended December 31, 2021 primarily due to a decrease in the cash surrender value of Company-owned life insurance during 2022, which fluctuates based on changes in fair value of the policies' underlying investments.
Pre-tax income was $35.8 million, a decrease of 0.3% compared with the prior year. 43 Table of Contents 44 Table of Contents (Expressed in thousands, unless otherwise indicated) For the Years Ended December 31, 2022 2021 % Change Revenue $ 99,242 $ 104,598 (5.1) Advisory fee revenue 99,224 104,584 (5.1) Other 18 14 28.6 Total Expenses $ 63,489 $ 68,724 (7.6) Compensation 24,261 27,811 (12.8) Non-compensation 39,228 40,913 (4.1) Pre-Tax Income $ 35,753 $ 35,874 (0.3) Compensation Ratio 24.4 % 26.6 % (8.3) Non-compensation Ratio 39.5 % 39.1 % 1.0 Pre-Tax Margin 36.0 % 34.3 % 5.0 AUM (billions) $ 36.8 $ 46.2 (20.3) • Advisory fee revenue on traditional and alternative managed products decreased 5.1% from the prior year primarily due to lower management fees from advisory programs, partially offset by higher incentive fees from alternative investments during the year. • AUM were at reduced levels of $36.8 billion at December 31, 2022, which is the basis for advisory fee billings for January 2023.
Pre-tax income was $24.1 million, a decrease of 32.6% compared with the prior year. 44 Table of Contents 45 Table of Contents (Expressed in thousands, unless otherwise indicated) For the Years Ended December 31, 2023 2022 % Change Revenue $ 88,433 $ 99,242 (10.9) Advisory fee revenue 96,259 99,224 (3.0) Other (7,826) 18 * Total Expenses $ 64,342 $ 63,489 1.3 Compensation 24,846 24,261 2.4 Non-compensation 39,496 39,228 0.7 Pre-Tax Income $ 24,091 $ 35,753 (32.6) Compensation Ratio 28.1 % 24.4 % 15.2 Non-compensation Ratio 44.7 % 39.5 % 13.2 Pre-Tax Margin 27.2 % 36.0 % (24.4) AUM (billions) $ 43.9 $ 36.8 19.3 * Percentage not meaningful • Advisory fee revenue decreased 3.0% from the prior year primarily due to lower management fees from advisory programs attributable to reduced billable AUM levels and lower incentive fees from alternative investments during the year. • Other revenue decreased $7.8 million from a year ago primarily due to a decrease in the fair value of positions held in private equity investments. • AUM were $43.9 billion at December 31, 2023, which is the basis for advisory fee billings for January 2024. • The increase in AUM from December 31, 2022 to December 31, 2023 was comprised of higher asset values of $6.0 billion on existing client holdings and a net contribution of assets of $1.1 billion. • Compensation expenses and non-compensation expenses were relatively flat when compared to the prior year.
The liquid assets at Oppenheimer Europe Ltd. are primarily comprised of cash deposits in bank accounts. 48 Table of Contents The liquid assets at Oppenheimer Investments Asia Limited are primarily comprised of investments in U.S. Treasuries and cash deposits in bank accounts.
The regulatory capital requirements for Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited were $5.4 million and $384,120, 49 Table of Contents respectively, at December 31, 2023. The liquid assets at Oppenheimer Europe Ltd. are primarily comprised of cash deposits in bank accounts. The liquid assets at Oppenheimer Investments Asia Limited are primarily comprised of investments in U.S.
However, increases in interest rates will increase fees the Company earns from FDIC-insured deposits of clients through a program offered by the Company, though such increases may be offset if the cash sweep balances decrease. These rate increases will also increase the rates the Company charges on margin balances and have a positive impact on our earnings.
While increases in interest rates will increase fees the Company earns from FDIC insured deposits of clients through a program offered by the Company, such increases may be offset to an extent if the cash sweep balances continue to decrease as clients seek higher-yielding investments.
The largest amount of reverse repurchase agreements and repurchase agreements outstanding on a gross basis during the year ended December 31, 2022 was $663.9 million and $668.3 million, respectively ($424.2 million and $636.7 million, respectively, for the year ended December 31, 2021). Liquidity Management We manage our need for liquidity on a daily basis to ensure compliance with regulatory requirements.
The largest amount of reverse repurchase agreements and repurchase agreements outstanding on a gross basis during the year ended December 31, 2023 was $506.4 million and $806.9 million, respectively ($663.9 million and $668.3 million, respectively, for the year ended December 31, 2022).
Any restrictions on transfer of these liquid assets from Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited to the Company or its other subsidiaries would be limited by regulatory capital requirements. The Company permanently reinvests eligible earnings of its foreign subsidiaries and, accordingly, does not accrue any U.S. income taxes that would arise if these earnings were repatriated.
Treasuries and cash deposits in bank accounts. Any restrictions on transfer of these liquid assets from Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited to the Company or its other subsidiaries would be limited by regulatory capital requirements.
(Expressed in thousands) As of December 31, 2022 Total Assets $ 2,037,404 Due From Non-Guarantor Subsidiary 15,596 Total Liabilities 541,605 Due To Non-guarantor Subsidiary 5,412 For the Year Ended December 31, 2022 Total Revenue $ 10,310 Pre-Tax Loss 297 Net Loss 203 On June 17, 2021, S&P upgraded the Company's Corporate Family rating and rating on the Unregistered Notes from 'B+' with a stable outlook to 'BB-' with a stable outlook.
(Expressed in thousands) As of December 31, 2023 Total Assets $ 2,087,888 Due From Non-Guarantor Subsidiary 15,908 Total Liabilities 574,368 Due To Non-guarantor Subsidiary 55,799 For the Year Ended December 31, 2023 Total Revenue $ 10,472 Pre-Tax Loss 114 Net Income 1,520 S&P’s Corporate Family rating and the rating on the Notes is a 'BB-' with a stable outlook.
BUSINESS SEGMENTS The table below presents information about the reported revenue and pre-tax income (loss) of the Company's reportable business segments for the three months and years ended December 31, 2022 and 2021: (Expressed in thousands) For the Three Months Ended December 31, For the Years Ended December 31, 2022 2021 % Change 2022 2021 % Change Revenue Private Client $ 201,748 $ 173,310 16.4 $ 675,680 $ 665,060 1.6 Asset Management 22,940 27,930 (17.9) 99,242 104,598 (5.1) Capital Markets 90,549 165,575 (45.3) 337,821 625,704 (46.0) Corporate/Other (1,657) (1,697) (2.4) (1,802) (1,327) 35.8 Total 313,580 365,118 (14.1) 1,110,941 1,394,035 (20.3) Pre-Tax Income (Loss) Private Client 49,331 17,784 177.4 142,250 101,146 40.6 Asset Management 9,837 10,270 (4.2) 35,753 35,874 (0.3) Capital Markets (11,328) 96,838 * (25,696) 204,090 * Corporate/Other (17,568) (32,940) (46.7) (106,753) (116,469) 8.3 Total $ 30,272 $ 91,952 (67.1) $ 45,554 $ 224,641 (79.7) * Percentage not meaningful Private Client Private Client reported revenue of $675.7 million for the year ended December 31, 2022, 1.6% higher compared with the prior year.
BUSINESS SEGMENTS The table below presents information about the reported revenue and pre-tax income (loss) of the Company's reportable business segments for the three months and years ended December 31, 2023 and 2022: (Expressed in thousands) For the Three Months Ended December 31, For the Years Ended December 31, 2023 2022 % Change 2023 2022 % Change Revenue Private Client $ 203,834 $ 201,748 1.0 $ 801,754 $ 675,680 18.7 Asset Management 21,446 22,940 (6.5) 88,433 99,242 (10.9) Capital Markets 81,457 90,549 (10.0) 345,897 337,821 2.4 Corporate/Other 1,552 (1,657) * 12,741 (1,802) * Total 308,289 313,580 (1.7) 1,248,825 1,110,941 12.4 Pre-Tax Income (Loss) Private Client 53,945 49,331 9.4 194,444 142,250 36.7 Asset Management 6,125 9,837 (37.7) 24,091 35,753 (32.6) Capital Markets (18,179) (11,328) 60.5 (62,961) (25,696) 145.0 Corporate/Other (24,059) (17,568) 36.9 (108,804) (106,753) 1.9 Total $ 17,832 $ 30,272 (41.1) $ 46,770 $ 45,554 2.7 * Percentage not meaningful Private Client Private Client reported revenue of $801.8 million for the year ended December 31, 2023, 18.7% higher compared with the prior year.
The Company's overseas subsidiaries, Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited, are subject to local regulatory capital requirements that restrict our ability to utilize their capital for other purposes. The regulatory capital requirements for Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited were $5.14 million and $383,963, respectively, at December 31, 2022.
At December 31, 2023 and December 31, 2022, the Company had no such borrowings outstanding. The Company also has some availability of short-term bank financing on an unsecured basis. The Company's overseas subsidiaries, Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited, are subject to local regulatory capital requirements that restrict our ability to utilize their capital for other purposes.
Financial advisor headcount declined amid retirements to 968 at the end of 2022 compared to 996 at the end of 2021. 42 Table of Contents (Expressed in thousands, except financial advisor headcount or otherwise indicated) For the Years Ended December 31, 2022 2021 % Change Revenue $ 675,680 $ 665,060 1.6 Commissions 190,614 217,724 (12.5) Advisory fees 326,240 346,559 (5.9) Bank deposit sweep income 104,558 15,557 572.1 Interest 51,866 29,290 77.1 Other 2,402 55,930 (95.7) Total Expenses $ 533,430 $ 563,914 (5.4) Compensation 377,671 446,968 (15.5) Non-compensation 155,759 116,946 33.2 Pre-Tax Income $ 142,250 $ 101,146 40.6 Compensation Ratio 55.9 % 67.2 % (16.8) Non-compensation Ratio 23.1 % 17.6 % 31.3 Pre-Tax Margin 21.1 % 15.2 % 38.8 AUA (billions) $ 105.0 $ 122.1 (14.0) Cash Sweep Balances (billions) $ 5.5 $ 7.9 (30.4) Financial Advisor Headcount 968 996 (2.8) • Retail commissions decreased 12.5% from the prior year primarily due to decreased client activity in mutual funds, listed securities, OTC products and annuities, partially offset by higher commission income on municipal bonds. • Advisory fees decreased 5.9% due to the reduced valuations of assets under management. • Bank deposit sweep income increased $89.0 million or 572.1% from the prior year due to significant increases in short-term interest rates. • Interest revenue increased 77.1% from the prior year due to higher average margin balances and higher short-term interest rates. • Other revenue declined 95.7% compared with the prior year primarily due to decreases in the cash surrender value of Company-owned life insurance policies which fluctuates based on changes in fair value of the policies' underlying investments. • Compensation expenses decreased 15.5% from the prior year primarily due to decreased production, share-based and incentive compensation costs, partially offset by the inflationary impact on salaries. • Non-compensation expenses increased 33.2% from the prior year primarily due to higher legal costs recorded during third quarter of 2022 which related to an adverse arbitration decision.
Pre-tax income was $194.4 million, an increase of 36.7% from the prior year. 43 Table of Contents (Expressed in thousands, except financial advisor headcount or otherwise indicated) For the Years Ended December 31, 2023 2022 % Change Revenue $ 801,754 $ 675,680 18.7 Commissions 186,496 190,614 (2.2) Advisory fees 319,191 326,240 (2.2) Bank deposit sweep income 172,807 104,558 65.3 Interest 85,105 51,866 64.1 Other 38,155 2,402 1,488.5 Total Expenses $ 607,310 $ 533,430 13.8 Compensation 399,185 377,671 5.7 Non-compensation 208,125 155,759 33.6 Pre-Tax Income $ 194,444 $ 142,250 36.7 Compensation Ratio 49.8 % 55.9 % (10.9) Non-compensation Ratio 26.0 % 23.1 % 12.6 Pre-Tax Margin 24.3 % 21.1 % 15.2 AUA (billions) $ 118.2 $ 105.0 12.6 Cash Sweep Balances (billions) $ 3.4 $ 5.5 (38.2) Financial Advisor Headcount 931 968 (3.8) • Retail commissions decreased slightly from the prior year due to lower overall client activity, though transaction volumes improved later in the year. • Advisory fees decreased 2.2% from the prior year due to lower billable AUM during the year. • Bank deposit sweep income for the full year was a record high and increased $68.2 million or 65.3% from the prior year due to higher short-term interest rates, partially offset by lower cash sweep balances. • Interest revenue increased 64.1% from the prior year due to record full year margin interest income attributable to higher short-term interest rates. • Other revenue increased significantly compared with the prior year primarily due to increases in the cash surrender value of Company-owned life insurance policies, which fluctuates based on changes in fair value of the policies' underlying investments. • Compensation expenses increased 5.7% from the prior year primarily due to higher deferred compensation costs. • Non-compensation expenses increased 33.6% from the prior year primarily due to the impact of significant legal costs.
Our liquidity needs may be affected by market conditions, increased inventory positions, business expansion and other unanticipated occurrences. In the event that existing financial resources do not satisfy our liquidity needs, we may have to seek additional external financing. The availability of such additional external financing may depend on market factors outside our control.
In the event that existing financial resources do not satisfy our liquidity needs, we may have to seek additional external financing. The availability of such additional external financing may depend on market factors outside our control. We have Company-owned life insurance policies which are utilized to fund certain non-qualified deferred compensation plans.
The Company implemented certain additional processes beyond the actions taken to comply with the Reg BI Rules in order to ensure full compliance with the PTE. 52 Table of Contents Regulatory Environment See the discussion of the regulatory environment in which we operate and the impact on our operations of certain rules and regulations in Item 1 “Business - Regulation” herein for additional information.
Regulatory Environment See the discussion of the regulatory environment in which we operate and the impact on our operations of certain rules and regulations in Item 1 “Business - Regulation” herein for additional information. Oppenheimer and many of its affiliates are each subject to various regulatory capital requirements.
We have Company-owned life insurance policies which are utilized to fund certain non-qualified deferred compensation plans. Certain policies which could provide additional liquidity if needed had a cash surrender value of $74.8 million as of December 31, 2022.
Certain policies which could provide additional liquidity if needed had a cash surrender value of $86.5 million as of December 31, 2023.
The unrecognized deferred tax liability associated with the outside basis difference of its foreign subsidiaries is estimated at $3.5 million for those subsidiaries. We have continued to reinvest permanently the excess earnings of Oppenheimer Israel (OPCO) Ltd. in its own business and in the businesses in Europe and Asia to support business initiatives in those regions.
We have continued to reinvest permanently the excess earnings of Oppenheimer Israel (OPCO) Ltd. in its own business and in the businesses in Europe and Asia to support business initiatives in those regions. We will continue to review our historical treatment of these earnings to determine whether our historical practice will continue or whether a change is warranted.
(Expressed in thousands ) For the Years Ended December 31, 2022 2021 % Change Revenue $ 337,821 $ 625,704 (46.0) Investment Banking $ 117,101 $ 410,539 (71.5) Advisory fees 84,569 194,753 (56.6) Equities underwriting 24,583 186,736 (86.8) Fixed income underwriting 8,898 27,004 (67.0) Other (949) 2,046 * Sales and Trading $ 217,712 $ 213,491 2.0 Equities 141,013 138,363 1.9 Fixed income 76,699 75,128 2.1 Other $ 3,008 $ 1,674 79.7 Total Expenses $ 363,517 $ 421,614 (13.8) Compensation 260,974 318,850 (18.2) Non-compensation 102,543 102,764 (0.2) Pre-Tax Income (Loss) $ (25,696) $ 204,090 * Compensation Ratio 77.3 % 51.0 % 51.6 Non-compensation Ratio 30.4 % 16.4 % 85.4 Pre-Tax Margin (7.6) % 32.6 % * * Percentage not meaningful • Advisory fees earned from investment banking activities decreased 56.6% compared with the prior year driven by an industry-wide decrease in M&A transactions. • Equities underwriting fees decreased 86.8% compared with the prior year due to significantly lower levels of capital issuances in the equity markets, particularly in the healthcare and technology sectors. • Fixed income underwriting fees were down 67.0% compared with the prior year primarily driven by fewer public finance debt issuances during the year. • Equities sales and trading increased 1.9% compared with the prior year. • Fixed income sales and trading increased 2.1% compared with the prior year driven by higher trading income from U.S. government securities. • Compensation expenses decreased 18.2% compared with the prior year primarily due to decreased incentive compensation costs. • Non-compensation expenses were 0.2% lower compared with the prior year. 46 Table of Contents CRITICAL ACCOUNTING ESTIMATES The Company's accounting estimates are essential to understanding and interpreting the financial results reported on the consolidated financial statements.
(Expressed in thousands ) For the Years Ended December 31, 2023 2022 % Change Revenue $ 345,897 $ 337,821 2.4 Investment Banking $ 111,734 $ 117,101 (4.6) Advisory fees 69,623 84,569 (17.7) Equities underwriting 33,904 24,583 37.9 Fixed income underwriting 6,594 8,898 (25.9) Other 1,613 (949) * Sales and Trading $ 231,867 $ 217,712 6.5 Equities 128,216 141,013 (9.1) Fixed income 103,651 76,699 35.1 Other $ 2,296 $ 3,008 (23.7) Total Expenses $ 408,858 $ 363,517 12.5 Compensation 269,330 260,974 3.2 Non-compensation 139,528 102,543 36.1 Pre-Tax Loss $ (62,961) $ (25,696) 145.0 Compensation Ratio 77.9 % 77.3 % 0.8 Non-compensation Ratio 40.3 % 30.4 % 32.6 Pre-Tax Margin (18.2) % (7.6) % 139.5 * Percentage not meaningful • Advisory fees earned from investment banking activities decreased 17.7% compared with the prior year driven by an industry-wide slowdown in M&A transactions. • Equities underwriting fees increased 37.9% compared with the prior year due to higher new issuance volumes and deal sizes, primarily during the third quarter. • Fixed income underwriting fees were down 25.9% compared with the prior year primarily driven by less overall new issuance activity. • Equities sales and trading decreased 9.1% compared with the prior year due to reduced volumes as a result of lower market volatility. • Fixed income sales and trading increased 35.1% compared with the prior year driven by higher trading income attributable to higher volumes. • Compensation expenses were slightly higher than the prior year due to opportunistic hires and inflationary pressures on wages as well as higher deferred compensation costs. • Non-compensation expenses were 36.1% higher compared with the prior year mainly due to an increase in interest expense in financing trading inventories.
Compensation and related expenses as a percentage of revenue was 63.6% for the year ended December 31, 2021 compared with 64.3% for the year ended December 31, 2020. • Non-compensation expenses were $282.6 million during the year ended December 31, 2021, an increase of 9.2% compared with $258.7 million during the year ended December 31, 2020 due to increased legal, underwriting, travel and entertainment, and conference costs partially offset by reduced interest costs during the year ended December 31, 2021.
Compensation and related expenses as a percentage of revenue was 62.7% for the year ended December 31, 2023 compared with 66.7% for the year ended December 31, 2022. • Non-compensation expenses were $419.7 million during the year ended December 31, 2023, an increase of 29.3% compared with $324.6 million during the year ended December 31, 2022 due to the impact of significant legal costs and an accrual for a regulatory settlement. • The effective income tax rate for the year ended December 31, 2023 was 35.3% compared with 29.5% for the year ended December 31, 2022 primarily due to the impact of a non-deductible regulatory settlement totaling $13.0 million.
Removed
Impact of Interest Rates The Federal Reserve ("FED") increased the federal funds rate by 425 basis point during 2022, with the majority of that increase occurring during the second half of the year. While we have seen indications in the fourth quarter that inflation has peaked and is beginning to slowly abate, it remains at elevated levels.
Added
Impact of Change in Short-term Interest Rates After increasing rates by 425 basis points in 2022, the Federal Reserve (the “FED”) slowed both the pace and magnitude of rate increases in 2023.
Removed
As a result, it is likely that the FED will continue to increase the federal funds rate when it meets in early 2023, though at a slower pace, and in fact did so on February 1, 2023, with a 25 basis point increase.
Added
To prevent overtightening in the midst of conflicting economic data and stress within the regional banking sector at the outset of the year, the FED proceeded cautiously and enacted four federal funds rate increases – 25 basis points each – between its February and July meetings.
Removed
In addition, the FED has continued to reduce its balance sheet as it allows maturing bonds to runoff without re-investing the proceeds. The increases in the federal funds rate will be favorable to the Company’s interest-based revenues. However, the FED's current policies, which are intended to reduce inflation, are also likely to reduce economic activity possibly leading to a recession.
Added
The FED paused on further tightening actions for the remainder of 2023, largely due to improved inflationary readings, resulting in the target federal funds rate remaining at 5.25% to 5.50% as of December 31, 2023. The FED’s forecast currently projects three rate decreases during 2024, though this is subject to change.
Removed
Such increases, while bringing down inflationary pressures may also prove detrimental to economic activity and thereby to financial markets in general.
Added
Increases in the federal funds rate will be favorable to the Company’s interest-based revenues though any future federal funds rate decreases may result in reductions to these revenues.
Removed
The impact of rate increases seems likely to increase volatility in financial markets, decrease the value of fixed income investments and negatively impact equity share prices while reducing revenues the Company derives from commissions and from fees based on the value of client assets managed by the Company.
Added
These rate increases will also increase the rates the Company charges on margin balances which have a positive impact on our earnings. 2023 Israel-Hamas War On October 7, 2023, Hamas initiated an unprovoked invasion of Israel from the Gaza Strip, resulting in thousands of casualties.
Removed
Ukraine War In February 2022, without provocation, Russia invaded Ukraine. The war has lasted longer than previously anticipated, and it seems likely it will last for an extended period of time as the Ukrainians continue to be more successful than initially expected at turning back Russian forces and as NATO and other countries supply the Ukrainians with armaments and supplies.
Added
Israel formally declared war on Hamas in response to the attack and initiated several military operations in an effort to clear militants from the area. The war has triggered a humanitarian crisis, with hundreds of thousands displaced from their homes and many without food, water or electricity.
Removed
The European Union and the United States have imposed broad-based sanctions and impounded financial assets of Russia, its companies and various notable Russian individuals. The impact of the sanctions has been to increase the price of hydrocarbons and the costs of various agricultural products produced by both Russia and Ukraine.
Added
There remains a risk that the conflict could expand into a wider regional war, which could have an adverse impact on the worldwide economy, financial markets and thus on our business. At this time, the conflict has not yet had a material impact on our business operations in Israel or elsewhere.
Removed
In addition, the disruption of supplies for those products has further increased inflationary pressures in Europe as well as the rest of the world and in addition has led to significant cutbacks in economic activity due to anticipated shortages of natural gas in the winter period due to actions taken by Russia and OPEC.
Added
“Dutch Auction” Tender Offer On July 6, 2023, the Company completed its “Dutch Auction” tender offer. A total of 437,183 shares of the Company's Class A Stock, par value $0.001 per share were properly tendered at a purchase price of $40.00 per share for an aggregate cost of approximately $17.49 million.
Removed
It has also had the indirect effect of lowering consumer confidence and consumer spending in Europe, all of which could have an adverse impact on financial markets in Europe as well as the U.S. and, thus on our business.
Added
The purpose of the tender offer, among others, was to assure that sufficient liquidity existed for our stockholders that might have been required to sell shares of Class A Stock when they were removed from the Russell 2000 and 3000 indices at the end of June 2023.

… 47 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+2 added−0 removed21 unchanged
Biggest changeWith respect to its trading activities, the Company has procedures designed to ensure that all transactions are accurately recorded and properly reflected on the Company's books on a timely basis. 54 Table of Contents With respect to client activities, the Company operates a system of internal controls designed to ensure that transactions and other account activity (new account solicitation, transaction authorization, transaction processing, billing and collection) are properly approved, processed, recorded and reconciled.
Biggest changeWith respect to client activities, the Company operates a system of internal controls designed to ensure that transactions and other account activity (new account solicitation, transaction authorization, transaction processing, billing and collection) are properly approved, processed, recorded and reconciled. The Company has procedures designed to assess and monitor counterparty risk. Legal and Regulatory Risk .
The Company has comprehensive procedures for addressing issues such as regulatory capital requirements, sales and trading practices, use of and safekeeping of customer funds and securities, granting of credit, collection activities, money laundering, and record keeping. The Company has designated Anti-Money Laundering Compliance Officers who monitor compliance with regulations under the U.S. Patriot Act.
The Company has comprehensive procedures for addressing issues such as regulatory capital requirements, sales and trading practices, use of and safekeeping of customer funds and securities, granting of credit, collection activities, money laundering, and record keeping. The Company has designated Anti-Money Laundering Compliance Officers who monitor compliance with regulations under the Patriot Act.
In comparison, FINRA Rule 4210 permits loans of up to 75% of the value of the equity securities in a customer's account. Further discussion of credit risk appears in note 8 to the Company's consolidated financial statements appearing in Item 8. Operational Risk.
In comparison, FINRA Rule 4210 permits loans of up to 75% of the value of the equity securities in a customer's account. Further discussion of credit risk appears in note 9 to the Company's consolidated financial statements appearing in Item 9. Operational Risk.
The value-at-risk calculation uses standard statistical techniques to measure the potential loss in fair value based upon a one-day holding period and a 95% confidence level of loss. The calculation is based upon a variance-covariance methodology, which assumes a normal distribution of changes in portfolio value.
The value-at-risk calculation uses standard statistical techniques to measure the potential loss in fair value based upon a one-day holding period and a 95% 55 Table of Contents confidence level of loss. The calculation is based upon a variance-covariance methodology, which assumes a normal distribution of changes in portfolio value.
The changes in the value-at-risk amounts reported in 2022 from those reported in 2021 reflect changes in the size and composition of the Company's trading portfolio at December 31, 2022 compared to December 31, 2021.
The changes in the value-at-risk amounts reported in 2023 from those reported in 2022 reflect changes in the size and composition of the Company's trading portfolio at December 31, 2023 compared to December 31, 2022.
In addition, Oppenheimer's securities positions are subject to fluctuations in market value and liquidity. In addition to monitoring the credit-worthiness of its customers and counterparties, Oppenheimer imposes more conservative margin requirements than those of FINRA Rule 4210.
In addition, Oppenheimer's securities positions are subject to fluctuations in market value and liquidity. In addition to monitoring the creditworthiness of its customers and counterparties, Oppenheimer imposes more conservative margin requirements than those of FINRA Rule 4210.
See further discussion of the Company's reserve policy in "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates" in Item 7, "Legal Proceedings" in Item 3 and "Business — Regulation" in Item 1. Value-at-Risk .
See further discussion of the Company's policies in "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates" in Part II, Item 7, "Legal Proceedings" in Part 1, Item 3 and "Business — Regulation" in Part 1, Item 1. Value-at-Risk .
The Company has procedures designed to assess and monitor counterparty risk. Legal and Regulatory Risk . Legal and regulatory risk includes the risk of non-compliance with applicable legal and regulatory requirements, client claims and the possibility of sizeable adverse legal judgments. The Company is subject to extensive regulation in the different jurisdictions in which it conducts its activities.
Legal and regulatory risk includes the risk of non-compliance with applicable legal and regulatory requirements, client claims and the possibility of sizeable adverse legal judgments. The Company is subject to extensive regulation in the different jurisdictions in which it conducts its activities.
The Company's portfolio as of December 31, 2022 includes approximately $24.3 million in corporate equities, which are related to deferred compensation liabilities and which do not bear any value-at-risk to the Company.
The Company's portfolio as of December 31, 2023 includes approximately $18.6 million in corporate equities, which are related to deferred compensation liabilities and which do not bear any value-at-risk to the Company.
At December 31, 2022 and 2021, the Company's value-at-risk for each component of market risk was as follows: (Expressed in thousands) VAR for Fiscal 2022 VAR for Fiscal 2021 High Low Average High Low Average Equity price risk $ 298 $ 25 $ 104 $ 196 $ 17 $ 106 Interest rate risk 2,928 881 1,547 605 387 496 Commodity price risk — — — 90 — 45 Diversification benefit (483) (903) (652) (359) (238) (299) Total $ 2,743 $ 3 $ 999 $ 532 $ 166 $ 348 (Expressed in thousands) VAR at December 31, 2022 2021 Equity price risk $ 67 $ 46 Interest rate risk 1,192 387 Diversification benefit (578) (1,178) Total $ 681 $ (745) 55 Table of Contents The potential future loss presented by the total value-at-risk generally falls within predetermined levels of loss that should not be material to the Company's results of operations, financial condition or cash flows.
At December 31, 2023 and 2022, the Company's value-at-risk for each component of market risk was as follows: (Expressed in thousands) VAR for Fiscal 2023 VAR for Fiscal 2022 High Low Average High Low Average Equity price risk $ 165 $ 11 $ 91 $ 298 $ 25 $ 104 Interest rate risk 2,027 1,345 1,638 2,928 881 1,547 Commodity price risk — — — — — — Diversification benefit (317) (780) (561) (483) (903) (652) Total $ 1,875 $ 576 $ 1,168 $ 2,743 $ 3 $ 999 (Expressed in thousands) VAR at December 31, 2023 2022 Equity price risk $ 79 $ 67 Interest rate risk 1,345 1,192 Diversification benefit (317) (578) Total $ 1,107 $ 681 The potential future loss presented by the total value-at-risk generally falls within predetermined levels of loss that should not be material to the Company's results of operations, financial condition or cash flows.
Each trading department adheres to internal position limits determined by the Market Risk Committee and regularly reviews the age and composition of its proprietary accounts. Positions and profits and losses for each trading department are reported to senior management on a daily basis. In its market-making activities, Oppenheimer must provide liquidity in the equities for which it makes markets.
Positions and profits and losses for each trading department are reported to senior management on a daily basis. 54 Table of Contents In its market-making activities, Oppenheimer must provide liquidity in the equities for which it makes markets.
Added
Each trading department adheres to internal position limits determined by the Market Risk Committee and regularly reviews the age and composition of its proprietary accounts.
Added
With respect to its trading activities, the Company has procedures designed to ensure that all transactions are accurately recorded and properly reflected on the Company's books on a timely basis.

Other OPY 10-K year-over-year comparisons