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What changed in PIPER SANDLER COMPANIES's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PIPER SANDLER COMPANIES'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.

+379 added−367 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-24)

Top changes in PIPER SANDLER COMPANIES's 2023 10-K

379 paragraphs added · 367 removed · 314 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeGeelan 47 General Counsel and Secretary Chad R. Abraham is our chief executive officer, a position he has held since January 2018. He previously served as global co-head of investment banking and capital markets from October 2010 to December 2017. Prior to that, he served as head of equity capital markets since November 2005. Mr.
Biggest changeHe previously served as global co-head of investment banking and capital markets from October 2010 to December 2017. Prior to that, he served as head of equity capital markets since November 2005. Mr. Abraham joined Piper Sandler Companies in 1991 in our investment banking group and was promoted to managing director and head of technology investment banking in 1999.
Founded in 1895, Piper Sandler Companies provides a broad set of products and services, including financial advisory services; equity and debt capital markets products; public finance services; institutional brokerage; fundamental equity and macro research services; fixed income services; and alternative asset management strategies.
Founded in 1895, Piper Sandler Companies provides a broad set of products and services, including financial advisory services; equity and debt capital markets products; public finance services; institutional brokerage services; fundamental equity and macro research services; fixed income services; and alternative asset management strategies.
Regulation As a participant in the financial services industry, our business is regulated by U.S. federal and state regulatory agencies, self-regulatory organizations ("SROs") and securities exchanges, and by foreign governmental agencies, financial regulatory bodies and securities exchanges.
REGULATION As a participant in the financial services industry, our business is regulated by U.S. federal and state regulatory agencies, by self-regulatory organizations ("SROs") and securities exchanges, and by foreign governmental agencies, financial regulatory bodies and securities exchanges.
He served as assistant general counsel and assistant secretary from November 2007 until becoming general counsel in January 2013. Mr. Geelan joined Piper Sandler Companies in 2005. 7 Table of Contents Additional Information Our principal executive offices are located at 800 Nicollet Mall, Suite 900, Minneapolis, Minnesota 55402, and our general telephone number is (612) 303-6000.
He served as assistant general counsel and assistant secretary from November 2007 until becoming general counsel in January 2013. Mr. Geelan joined Piper Sandler Companies in 2005. Piper Sandler Companies | 7 Table of Contents ADDITIONAL INFORMATION Our principal executive offices are located at 800 Nicollet Mall, Suite 900, Minneapolis, Minnesota 55402, and our general telephone number is (612) 303-6000.
As registered investment advisors, these entities are subject to requirements that relate to, among other things, fiduciary duties to clients, maintaining an effective compliance program, solicitation agreements, conflicts of interest, financial and electronic recordkeeping and reporting requirements, disclosure requirements, limitations on agency cross and principal transactions between advisor and advisory clients, as well as general anti-fraud prohibitions.
As registered investment advisors, these entities are subject to requirements that relate to, among other things, fiduciary duties to clients, maintaining an effective compliance program, solicitation agreements, conflicts of interest, financial and electronic recordkeeping and reporting requirements, disclosure requirements, limitations on agency cross and principal transactions between the advisor and advisory clients, as well as general anti-fraud prohibitions.
Dillahunt is our global co-head of investment banking and capital markets, a position he has held since March 2021. Prior to that, he served as co-head of our diversified industrials and services group from 2011 to 2020, and as vice chairman of investment banking and chairman of M&A and private equity coverage from 2020 to March 2021. Mr.
Dillahunt is our global co-head of investment banking and capital markets, a position he has held since March 2021. Prior to that, he served as co-head of our services and industrials group from 2011 to 2020, and as vice chairman of investment banking and chairman of M&A and private equity coverage from 2020 to March 2021. Mr.
Piper Sandler & Co. is also a registered investment advisor and subject to these requirements. Parallel General Partners Limited is the general partner of several private equity limited partnerships; it and the limited partnerships are registered and regulated by the GFSC.
Piper Sandler & Co. is also a registered investment advisor and subject to these requirements. Parallel General Partner Limited is the general partner of several private equity limited partnerships; it and the limited partnerships are registered and regulated by the GFSC.
The Piper Sandler logo and the other trademarks, tradenames and service marks of Piper Sandler Companies mentioned in this report or elsewhere, including, but not limited to, PIPER SANDLER ® , PIPER JAFFRAY ® , REALIZE THE POWER OF PARTNERSHIP ® , CORNERSTONE MACRO ® , SIMMONS ENERGY | A DIVISION OF PIPER SANDLER ® , SIMMONS ENERGY | A DIVISION OF PIPER JAFFRAY ® , SIMMONS ENERGY ® , SIMMONS & COMPANY INTERNATIONAL ® , SIMMONSCO-INTL ® , PIPER SANDLER FINANCE SM , BIOINSIGHTS ® , TAKING STOCK WITH TEENS ® , HEALTHY ACTIVE AND SUSTAINABLE LIVING ® and GUIDES FOR THE JOURNEY ® , are the property of Piper Sandler Companies.
The Piper Sandler logo and the other trademarks, tradenames and service marks of Piper Sandler Companies mentioned in this report or elsewhere, including, but not limited to, PIPER SANDLER ® , PIPER JAFFRAY ® , REALIZE THE POWER OF PARTNERSHIP ® , CORNERSTONE MACRO ® , SIMMONS ENERGY | A DIVISION OF PIPER SANDLER ® , SIMMONS ENERGY | A DIVISION OF PIPER JAFFRAY ® , SIMMONS ENERGY ® , SIMMONS & COMPANY INTERNATIONAL ® , SIMMONSCO-INTL ® , PIPER SANDLER FINANCE SM , BIOINSIGHTS ® , TAKING STOCK WITH TEENS ® , HEALTHY ACTIVE AND SUSTAINABLE LIVING ® and GUIDES FOR THE JOURNEY ® , are the property of Piper Sandler & Co., a subsidiary of Piper Sandler Companies.
We believe our programs align both individual employees and long-term company performance with stockholder interests. Training and Development – A core tenet of our talent system is to develop talent from within and to supplement with external candidates. We provide opportunities for employees to grow and build their careers through various training and development programs.
We believe our programs align both individual employees and long-term company performance with shareholder interests. Training and Development A core tenet of our talent system is to develop talent from within our company and to supplement with external candidates. We provide opportunities for employees to grow and build their careers through various training and development programs.
This is reflected in our commitment to attract, retain and develop a diverse and talented workforce in a high-quality, equitable and inclusive environment.
This is reflected in our commitment to engage, attract, retain and develop a diverse and talented workforce in a high-quality, equitable and inclusive environment.
We maintain several programs and partnerships to help us attract a diverse array of exceptional talent, including the Career Exploration Program, the Piper Sandler MBA Fellowship Program and community partnerships with organizations that focus on coaching, training and mentorship to help close the career opportunity gaps for underrepresented college students.
We maintain several programs and partnerships to help us attract a diverse array of great talent, including the Career Exploration Program, the Piper Sandler MBA Fellowship Program and community partnerships with organizations that focus on coaching, training and mentorship to help close the career opportunity gaps for underrepresented college students.
ITEM 1. BUSINESS. Overview Piper Sandler Companies is an investment bank and institutional securities firm, serving the needs of corporations, private equity groups, public entities, non-profit entities and institutional investors in the U.S. and internationally.
Item 1. Business. OVERVIEW Piper Sandler Companies is an investment bank and institutional securities firm, serving the needs of corporations, private equity groups, public entities, non-profit entities and institutional investors in the United States ("U.S.") and internationally.
Certain of our businesses also are subject to compliance with laws and regulations of U.S. federal and state governments, non-U.S. governments, their respective agencies and/or various SROs or exchanges governing the privacy of client information.
Certain of our businesses also are subject to compliance with laws and regulations of U.S. federal and state governments, non-U.S. governments, their respective agencies or various SROs or exchanges governing the privacy of client information, as applicable.
Baker was a director and chief financial officer at Koch Industries and led corporate finance and corporate development for Koch’s energy businesses, and a director for Alton Geoscience where he provided consulting services to refining and marketing companies on the West Coast. Michael R.
Prior to that, Mr. Baker was a director and chief financial officer at Koch Industries and led corporate finance and corporate development for Koch’s energy businesses, and a director for Alton Geoscience where he provided consulting services to refining and marketing companies on the West Coast. Michael R.
We are subject to complex and extensive regulation of most aspects of our business, including the manner in which securities transactions are effected, net capital requirements, financial and electronic recordkeeping and reporting procedures, relationships and conflicts with customers, the handling of cash and margin accounts, conduct, experience and training requirements for certain employees, and the manner in which we prevent and detect money-laundering and bribery activities.
We are subject to complex and extensive regulation of most aspects of our business, including the manner in which securities transactions are effected, net capital requirements, financial and electronic recordkeeping and reporting procedures, relationships and conflicts with customers, conduct, experience and training requirements for certain employees, and the manner in which we prevent and detect money-laundering and bribery activities.
Prior to that, she served as treasurer from August 2006 until May 2008; and as finance director of our corporate and institutional services business from July 2002 until July 2004 when the role was expanded to include our public finance services division. Ms. Schoneman joined Piper Sandler Companies in 1990 in our accounting department. Timothy L.
Prior to that, she served as treasurer from August 2006 until May 2008; and as finance director of our corporate and institutional services business from July 2002 until July 2004 when the role was expanded to include our public finance services division. Ms. Schoneman joined Piper Sandler Companies in 1990 in our accounting department. Katherine P.
Our entities in Hong Kong, the United Kingdom and Guernsey are subject to similar anti-money laundering laws and regulations in those jurisdictions. We are also subject to the U.S. Foreign Corrupt Practices Act as well as other anti-bribery laws in the jurisdictions in which we operate.
Our entities in Hong Kong, the U.K. and Guernsey are subject to similar anti-money laundering laws and regulations in those jurisdictions. We are also subject to the U.S. Foreign Corrupt Practices Act as well as other anti-bribery and anti-corruption laws in the jurisdictions in which we operate.
Financial Conduct Authority and registered under the laws of England and Wales, as well as an entity that is authorized, licensed and regulated by the Hong Kong Securities and Futures Commission and registered under the laws of Hong Kong. The U.K.
We also operate one entity that is authorized, licensed and regulated by the Financial Conduct Authority of the U.K. and registered under the laws of England and Wales, as well as an entity that is authorized, licensed and regulated by the Hong Kong Securities and Futures Commission and registered under the laws of Hong Kong.
One key metric we use to benchmark our firm to industry peer companies is the number of investment banking managing directors. At December 31, 2022, we had 159 corporate investment banking managing directors.
One key metric we use to benchmark our firm to industry peer companies is the number of investment banking managing directors. At December 31, 2023, we had 169 corporate investment banking managing directors.
Many of our large competitors have greater financial resources than we have and may have more flexibility to offer a broader set of products and services than we can. In addition, there is significant competition within the securities industry for obtaining and retaining the services of qualified employees.
Many of our large competitors have greater financial and technology resources than we have and may have greater capacity for risk and potential innovation as well as more flexibility to offer a broader set of products and services than we can. In addition, there is significant competition within the securities industry for obtaining and retaining the services of qualified employees.
Baker joined Piper Sandler Companies in February 2016 in connection with our acquisition of Simmons & Company International, where Mr. Baker came to serve as a managing director and leader of its midstream/downstream investment banking group after joining in 2001. Prior to that, Mr.
Prior to that, he served as our co-head of energy investment banking from February 2016 to December 2018. Mr. Baker joined Piper Sandler Companies in February 2016 in connection with our acquisition of Simmons & Company International, where Mr. Baker came to serve as a managing director and leader of its midstream/downstream investment banking group after joining in 2001.
We also help raise capital through equity and debt financings. We operate in the following focus sectors: healthcare; financial services; consumer; energy and power; diversified industrials and services; technology; and chemicals, primarily focusing on middle-market clients. For our government and non-profit clients, we underwrite municipal issuances, provide municipal financial advisory and loan placement services, and offer various over-the-counter derivative products.
We operate in the following focus sectors: healthcare; financial services; energy and power; services and industrials; consumer; technology; and chemicals, primarily focusing on middle-market clients. For our government and non-profit clients, we underwrite municipal issuances, provide municipal financial advisory and loan placement services, and offer various over-the-counter derivative products.
In 2022, we donated a total of $7.0 million through employee donations, our corporate matching gifts programs and corporate grants. Our employees committed to $2.2 million in donations to 1,645 charities in 2022 through our Annual Charitable Giving Campaign, a two-week campaign when Piper Sandler Companies matches each employee's donations up to $5,000.
In 2023, we donated a total of $7.1 million through employee donations, our corporate matching gifts programs and corporate grants. Our employees supported 1,885 causes in 2023 through our Annual Charitable Giving Campaign, a two-week campaign when Piper Sandler Companies matches each employee's donations up to $5,000.
We principally engage in trading activities to facilitate customer activity. • Alternative Asset Management Funds – We have created alternative asset management funds in merchant banking and healthcare in order to invest firm capital and to manage capital from outside investors. 3 Table of Contents Financial Information about Geographic Areas As of December 31, 2022, the substantial majority of our net revenues and long-lived assets were located in the U.S.
Alternative Asset Management Funds We have created alternative asset management funds in merchant banking and healthcare in order to invest firm capital and to manage capital from outside investors. FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS As of December 31, 2023, the substantial majority of our net revenues and long-lived assets were located in the U.S.
Our macro research teams provide a comprehensive overview of global trends, such as economic and energy trends, as well as policy actions and political developments. Fixed income services provides advice on balance sheet management, investment strategy and customized portfolio solutions. We provide fixed income sales and trading solutions to banks, registered investment advisors, public entities, credit unions, and insurance companies.
Our macro research teams provide a comprehensive overview of global trends, such as economic and energy trends, as well as policy actions and political developments. Fixed income services provides advice on balance sheet management, investment strategy and customized portfolio solutions.
As of December 31, 2022, we had 1,790 full-time employees, of which 1,690 were employed in the United States and 100 in the United Kingdom and Hong Kong. Approximately 1,320 of our employees were registered with the Financial Industry Regulatory Authority, Inc. ("FINRA") as of December 31, 2022.
As of December 31, 2023, we had 1,725 full-time employees, of which 1,632 were employed in the U.S. and 93 in the United Kingdom ("U.K.") and Hong Kong. Approximately 1,330 of our employees were registered with the Financial Industry Regulatory Authority, Inc. ("FINRA") as of December 31, 2023.
For further information on the restricted shares we grant to employees as part of year-end compensation, see Note 19 to our consolidated financial statements in Part II, Item 8 of this Form 10-K.
We provide employees with competitive compensation packages that include base salary, annual incentive bonuses, length of service awards, and equity awards. For further information on the restricted shares we grant to employees as part of year-end compensation, see Note 19 to our consolidated financial statements in Part II, Item 8 of this Form 10-K.
Financial Conduct Authority and the Hong Kong Securities and Futures Commission regulate these entities (in their respective jurisdictions) in areas of capital adequacy, customer protection and business conduct, among others.
The Financial Conduct Authority of the U.K. and the Hong Kong Securities and Futures Commission regulate these entities (in their respective jurisdictions) in areas of capital adequacy, customer protection and business conduct, among others. We also have a subsidiary organized in Guernsey and regulated by the Guernsey Financial Services Commission ("GFSC").
Our public finance investment banking capabilities focus on state and local governments, cultural and social service non-profit entities, special districts, project finance, and the education, healthcare, hospitality, senior living, housing and transportation sectors. • Equity and Fixed Income Institutional Brokerage – We offer both equity and fixed income advisory and trade execution services for institutional investors, corporations, and government and non-profit entities.
Our public finance investment banking capabilities focus on state and local governments, cultural and social service non-profit entities, special districts, project finance, and the education, healthcare, hospitality, senior living, housing and transportation sectors.
The regulatory framework of the financial services industry is designed primarily to safeguard the integrity of the capital markets and to protect customers, not creditors or shareholders. The laws, rules and regulations comprising this regulatory framework can (and do) change frequently, as can the interpretation and enforcement of existing laws, rules and regulations.
The regulatory framework of the financial services industry is designed primarily to safeguard the integrity of the capital markets and to protect customers, not creditors or shareholders.
Our employee resource groups also serve as a source of inclusion and engagement for our employees, in addition to supporting our efforts to recruit a diverse workforce. Our employee resource groups consist of Multicultural, Pride, Veterans, Women's, and Young Professionals networks, and each employee resource group is sponsored and supported by senior leaders across the firm.
Our employee resource groups consist of Multicultural, Pride, Veterans, Women's, and Young Professionals networks, and each employee resource group is open to all employees and is sponsored and supported by senior leaders across the firm.
Our U.S. broker dealer subsidiary (Piper Sandler & Co.) is registered as a securities broker dealer with the SEC and is a member of various SROs and securities exchanges.
Our U.S. broker dealer subsidiary (Piper Sandler & Co.) is registered as a securities broker dealer with the SEC and is a member of various SROs and securities exchanges. FINRA serves as the primary SRO of Piper Sandler & Co., and the New York Stock Exchange ("NYSE") has oversight over NYSE-related market activities.
Any state may revoke a license to conduct a securities business and fine or otherwise discipline broker dealers and their officers, directors and employees. We also operate one entity that is authorized, licensed and regulated by the U.K.
Any state may revoke a license to conduct a securities business and fine or otherwise discipline broker dealers and their officers, directors and employees.
She previously served as chief financial officer from May 2008 to December 2017, and global head of equities from June 2017 to December 2017.
Debbra L. Schoneman is our president, a position she has held since January 2018. She previously served as chief financial officer from May 2008 to December 2017, and global head of equities from June 2017 to December 2017.
Compensation and Benefits Program – Our compensation program is designed to attract, reward and retain employees who possess the skills necessary to support our business objectives and assist in the achievement of our strategic goals. We provide employees with competitive compensation packages that include base salary, annual incentive bonuses, length of service awards, and equity awards.
Piper Sandler Companies | 4 Table of Contents Compensation and Benefits Program Our compensation program is designed to attract, reward and retain employees who possess the skills necessary to support our business objectives and assist in the achievement of our strategic goals.
Our Business We operate in one reportable segment providing investment banking services, institutional sales and trading services for various equity and fixed income products, and research services. • Investment Banking – For our corporate clients and financial sponsors, we provide advisory services, which includes mergers and acquisitions ("M&A"); equity and debt private placements; and debt and restructuring advisory.
Investment Banking For our corporate clients and financial sponsors, we provide advisory services, which includes mergers and acquisitions ("M&A"); equity and debt private placements; and debt and restructuring advisory. We also help raise capital through equity and debt financings.
Any failure with respect to our practices, procedures and controls in any of these areas could subject us to regulatory consequences, including fines, and potentially other significant liabilities. 6 Table of Contents Information About our Executive Officers Information regarding our executive officers and their ages as of February 17, 2023, are as follows: Name Age Position(s) Chad R.
Any failure with respect to our practices, procedures and controls in any of these areas could subject us to regulatory consequences, including fines, and potentially other significant liabilities.
Abraham 54 Chief Executive Officer Debbra L. Schoneman 54 President Timothy L. Carter 55 Chief Financial Officer James P. Baker 55 Global Co-Head of Investment Banking and Capital Markets Michael R. Dillahunt 54 Global Co-Head of Investment Banking and Capital Markets Jonathan J. Doyle 57 Vice Chairman and Head of Financial Services Group John W.
Baker 56 Global Co-Head of Investment Banking and Capital Markets Michael R. Dillahunt 55 Global Co-Head of Investment Banking and Capital Markets Jonathan J. Doyle 58 Vice Chairman and Head of Financial Services Group John W. Geelan 48 General Counsel and Secretary Chad R. Abraham is our chief executive officer, a position he has held since January 2018.
Our headquarters are located in Minneapolis, Minnesota and we have offices across the United States and international locations in London, Aberdeen and Hong Kong.
Our headquarters are located in Minneapolis, Minnesota and we have offices across the U.S. and international locations in London, Aberdeen and Hong Kong. OUR BUSINESS We operate in one reportable segment providing investment banking services, institutional sales and trading services for various equity and fixed income products, and research services.
We also have a subsidiary organized in Guernsey and regulated by the Guernsey Financial Services Commission ("GFSC"). 5 Table of Contents Entities in the jurisdictions identified above are also subject to anti-money laundering regulations.
Entities in the jurisdictions identified above are also subject to anti-money laundering regulations.
Carter joined Piper Sandler Companies in 1995. James P. Baker is our global co-head of investment banking and capital markets, a position he has held since January 2019. Prior to that, he served as our co-head of energy investment banking from February 2016 to December 2018. Mr.
Clune served in various capacities with Morgan Stanley from 2005 through June 2022, including global head, liquidity coverage and planning, and chief financial officer, U.S. banks. James P. Baker is our global co-head of investment banking and capital markets, a position he has held since January 2019.
Carter is our chief financial officer, a position he has held since January 2018. He previously served as senior vice president of finance from May 2017 to December 2017. Prior to that, he served as treasurer from May 2008 to May 2017, chief accounting officer from 2006 to May 2008, and controller from 1999 to 2006. Mr.
Clune is our chief financial officer, a position she has held since January 2024. She most recently served as senior vice president of finance from November 2023 to January 2024. Before joining Piper Sandler Companies, Ms.
The Piper Sandler MBA Fellowship Program is designed to attract full-time MBA students from underrepresented backgrounds and provides each participant with financial compensation and a summer associate internship. 4 Table of Contents We are focused on building an inclusive culture through a variety of initiatives supported by our DEI committee, including mentorship and training.
These programs, which consider all aspects of diversity during the selection process, serve as a direct pipeline for summer internship opportunities that have the potential to convert to full-time positions. We are focused on building an inclusive culture through a variety of initiatives supported by our DEI council, including mentorship and training.
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The Career Exploration Program, designed to attract high-achieving undergraduate students from underrepresented backgrounds, serves as a direct pipeline for summer internship opportunities that have the potential to convert to full-time positions.
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We are organized as one reportable segment in order to maximize the value we provide to clients by leveraging our diversified expertise and broad relationships of the experienced professionals across our company.
Removed
In July 2007, the National Association of Securities Dealers and the member regulation, enforcement and arbitration functions of the New York Stock Exchange ("NYSE") consolidated to form FINRA, which now serves as the primary SRO of Piper Sandler & Co., although the NYSE continues to have oversight over NYSE-related market activities.
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Piper Sandler Companies | 3 Table of Contents Equity and Fixed Income Institutional Brokerage We offer both equity and fixed income advisory and trade execution services for institutional investors, corporations, and government and non-profit entities.
Removed
Abraham joined Piper Sandler Companies in 1991 in our investment banking group and was promoted to managing director and head of technology investment banking in 1999. Debbra L. Schoneman is our president, a position she has held since January 2018.
Added
We provide fixed income sales and trading solutions to banks, registered investment advisors, public entities, credit unions, asset managers, and insurance companies. We principally engage in trading activities to facilitate customer activity.
Added
The Career Exploration Program and the Piper Sandler MBA Fellowship Program are designed to attract talented undergraduate students and MBA students, respectively, whose life experiences, demonstrated interests, and achievements will contribute to our commitment to DEI.
Added
Our employee resource groups also serve as a source of inclusion and engagement for our employees, in addition to supporting our efforts to recruit a diverse workforce.
Added
Piper Sandler Companies | 5 Table of Contents The laws, rules and regulations comprising this regulatory framework can (and do) change frequently, as can the interpretation and enforcement of existing laws, rules and regulations.
Added
Piper Sandler Companies | 6 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Information regarding our executive officers and their ages as of February 20, 2024, are as follows: Name Age Position(s) Chad R. Abraham 55 Chief Executive Officer Debbra L. Schoneman 55 President Katherine P. Clune 43 Chief Financial Officer James P.
Added
Clune was treasurer and head of planning and strategy at Evercore Inc., from June 2022 to November 2023, and global head of financial planning and analysis at Morgan Stanley from June 2020 to June 2022. Prior to that, Ms.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA successful penetration or circumvention of the security of our systems could cause serious negative consequences for us, including significant disruption of our operations and those of our clients, customers and counterparties; misappropriation of our confidential information or that of our clients, customers, counterparties or employees; or damage to our computers or systems and those of our clients, customers and counterparties; and could result in violations of applicable privacy and other laws, financial loss to us or to our customers, loss of confidence in our security measures, customer dissatisfaction, significant litigation exposure and reputational harm, all of which could have a material adverse effect on us.
Biggest changeA cyber attack or other information security events could result in violations of applicable privacy and other laws, financial loss to us or to our customers, loss of confidence in our security measures, customer dissatisfaction, significant litigation exposure and reputational harm, all of which could have a material adverse effect on us.
The following discussion sets forth the risk factors that we have identified in each area of principal risk as being the most material to our business, future financial condition, and results of operations.
The following discussion sets forth risk factors that we have identified in each principal area of risk as being the most material to our business, future financial condition, and results of operations.
In setting out and executing upon a strategic vision for our business, we are faced with a number of inherent risks, including risks relating to external events and market and economic conditions, competition, and business performance that could all negatively affect our ability to execute on our strategic decisions and, therefore, our future financial condition or results of operations.
In setting out and executing upon a strategic vision for our business, we are faced with a number of inherent risks, including risks relating to external events, market and economic conditions, competition, and business performance that could all negatively affect our ability to execute on our strategic decisions and, therefore, our future financial condition or results of operations.
In our role as underwriter for equity and fixed income securities, we commit to purchase securities from the issuer or one or more holders of the issuer's securities, and then sell those securities to other investors or into the public markets, as applicable.
In our role as underwriter for equity and fixed income securities, we commit to purchase securities from the issuer or one or more holders of the issuer's securities, and we then sell those securities to other investors or into the public markets, as applicable.
It also may require us to make additional investments in technology systems and may require us to reevaluate the current value and/or expected useful lives of our technology systems, which could negatively impact our results of operations.
It also may require us to make additional investments in technology systems and may require us to reevaluate the current value or expected useful lives of our technology systems, which could negatively impact our results of operations.
In addition, our asset management subsidiaries, PSC Capital Partners LLC, Piper Sandler Advisors LLC, Piper Heartland Healthcare Capital LLC and Piper Sandler Finance Management LLC, as well as Piper Sandler & Co., are registered as investment advisors with the SEC and subject to the regulation and oversight by the SEC, and we have an additional asset management subsidiary subject to regulation in Guernsey.
In addition, our asset management subsidiaries, PSC Capital Partners LLC, Piper Sandler Advisors LLC, Piper Heartland Healthcare Capital LLC and Piper Sandler Finance Management LLC, as well as Piper Sandler & Co., are registered as investment advisors with the SEC and are subject to the regulation and oversight by the SEC, and we have an additional asset management subsidiary subject to regulation in Guernsey.
A full description of each of these principal areas of risk, as well as the primary risk management processes that we use to mitigate our risk exposure in each, is discussed below under the caption "Risk Management" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of this Form 10-K.
A description of each of these principal areas of risk, as well as the primary risk management processes that we use to mitigate our risk exposure in each, is discussed below under the caption "Risk Management" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of this Form 10-K.
We could experience disruptions with our credit facilities in the future, including the loss of liquidity sources and/or increased borrowing costs, if lenders or investors develop a negative perception of our short- or long-term financial prospects, which could result from decreased business activity.
We could experience disruptions with our credit facilities in the future, including the loss of liquidity sources or increased borrowing costs, if lenders or investors develop a negative perception of our short- or long-term financial prospects, which could result from decreased business activity.
Legislative and regulatory proposals could significantly curtail the revenue from certain products that we currently provide or otherwise have a material adverse effect on our results of operations.
Legislative and regulatory proposals could significantly curtail the revenue from certain products or services that we currently provide or could otherwise have a material adverse effect on our results of operations.
Also, concerns about, or a default by, one institution generally leads to losses, significant liquidity problems, or defaults by other institutions, which in turn could adversely affect our business.
Also, concerns about, or a default by, one institution generally leads to losses, liquidity problems, or defaults by other institutions, which in turn could adversely affect our business.
It is difficult to predict the economic and market conditions for 2023, which are dependent upon global and U.S. economic conditions and geopolitical events globally. Our smaller scale and the cyclical nature of the economy and the financial services industry leads to volatility in our financial results, including our operating margins, compensation ratios, business mix, and revenue and expense levels.
It is difficult to predict the economic and market conditions for 2024, which are dependent upon global and U.S. economic conditions and geopolitical events globally. Our smaller scale and the cyclical nature of the economy and the financial services industry leads to volatility in our financial results, including our operating margins, compensation ratios, business mix, and revenue and expense levels.
While our employees and agents are required to comply with these laws, we cannot ensure that our internal control policies and procedures will always protect us from intentional, reckless or negligent acts committed by our employees or agents, which acts could subject our company to fines or other regulatory consequences that could disrupt our operations and negatively impact our results of operations.
While our employees and agents are required to comply with these laws, we cannot ensure that our internal controls policies and procedures will always protect us from intentional, reckless or negligent acts committed by our employees or agents, which acts could subject our company to fines or other regulatory consequences that could disrupt our operations and negatively impact our results of operations.
We will need to successfully manage these risks in order to fully realize the anticipated benefits of these transactions. Longer-term, our corporate development activities may require increased costs in the form of management personnel, financial and management systems and controls and facilities, which, in the absence of continued revenue growth, could cause our operating margins to decline.
We will need to successfully manage these risks in order to fully realize the anticipated benefits of these transactions. Our corporate development activities may require increased costs in the form of management personnel, financial and management systems and controls and facilities, which, in the absence of continued revenue growth, could cause our operating margins to decline.
Despite our efforts to ensure the integrity of our systems and information, we have not been and may not be able to anticipate, detect or implement effective preventive measures against all cyber threats, especially because the techniques used are increasingly sophisticated, change frequently, and are often not recognized until months after the attack.
Despite our efforts to ensure the integrity of our systems and information, we may not be able to anticipate, detect or implement effective preventive measures against all cyber threats, especially because the techniques used are increasingly sophisticated, change frequently, and are often not recognized until months after the attack.
For example, a client's acquisition transaction may be delayed or terminated because of a failure to agree upon final terms with the counterparty, failure to obtain necessary regulatory consents or director or stockholder approvals, failure to secure necessary financing, adverse market conditions or unexpected financial or other issues in the client's or counterparty's business.
For example, a client's acquisition transaction may be delayed or terminated because of a failure to agree upon final terms with the counterparty, failure to obtain necessary regulatory consents or director or shareholder approvals, failure to secure necessary financing, adverse market conditions or unexpected financial or other issues in the client's or counterparty's business.
Risks associated with legal liability often are difficult to assess or quantify and their existence and magnitude can remain unknown for significant periods of time, making the amount of legal reserves related to these legal liabilities difficult to determine and subject to future revision.
Risks associated with legal liability often are difficult to assess or quantify, and their existence and magnitude can remain unknown for significant periods of time, making the amount of legal reserves related to these legal contingencies difficult to determine and subject to future revision.
We work with our employees, clients, vendors, service providers, counterparties and other third parties to develop and implement measures designed to protect against such an event, but we may not be able to fully protect 16 Table of Contents against such an event, and do not have, and may be unable to put in place, secure capabilities with all of these third parties and we may not be able to ensure that these third parties have appropriate controls in place to protect the confidentiality of the information.
We work with our employees, clients, vendors, service providers, counterparties and other third parties to develop and implement measures designed to protect against such an event, but we may not be able to fully protect against such an event, and do not have, and may be unable to put in place, secure capabilities with all of these third parties and we may not be able to ensure that these third parties have appropriate controls in place to protect the confidentiality of the information.
Both the healthcare and financial services sectors are significant contributors to our overall results, and negative developments in either of these sectors, including but not limited to negative developments that result from legislative or regulatory actions, would materially and disproportionately impact our equities investment banking results, even if general economic conditions were strong.
Both the healthcare and financial services sectors are significant contributors to our overall results, and negative developments in either of these sectors, including negative developments that result from legislative or regulatory actions, would materially and disproportionately impact our equities investment banking results, even if general economic conditions were strong.
Cyber attacks can originate from a variety of sources, including third parties who are affiliated with foreign governments or employees acting negligently or in a manner adverse to our interests.
Cyber attacks can originate from a variety of sources, including third parties who are affiliated with foreign governments or other actors or employees acting negligently or in a manner adverse to our interests.
Although we discuss these risk factors primarily in the context of their potential effects on our business, financial condition or results of operations, you should understand that these effects can have further negative implications such as: reducing the price of our common stock; reducing our capital, which can have regulatory and other consequences; affecting the confidence that our clients and other counterparties have in us, with a resulting negative effect on our ability to conduct and grow our business; and reducing the attractiveness of our securities to potential purchasers, which may adversely affect our ability to raise capital and secure other funding or the prices at which we are able to do so.
Although we discuss these risk factors primarily in the context of their potential effects on our business, financial condition or results of operations, it should be understood that these effects can have further negative implications such as: reducing the price of our common stock; reducing our capital, which can have regulatory and other consequences; affecting the confidence that our clients and other counterparties have in us, with a resulting negative effect on our ability to conduct and grow our business; and reducing the attractiveness of our securities to potential purchasers, which may adversely affect our ability to raise capital and secure other funding or the prices at which we are able to do so.
We refine our risk management techniques, strategies and assessment methods on an ongoing basis. However, risk management techniques and strategies, both ours and those available to the market generally, may not be fully effective in identifying and 17 Table of Contents mitigating our risk exposure in all economic market environments or against all types of risk.
We refine our risk management techniques, strategies and assessment methods on an ongoing basis. However, risk management techniques and strategies, both ours and those available to the market generally, may not be fully effective in identifying and mitigating our risk exposure in all economic market environments or against all types of risk.
We believe these provisions protect our shareholders from coercive or otherwise unfair 20 Table of Contents takeover tactics by requiring potential acquirors to negotiate with our board of directors and by providing our board of directors with more time to assess any acquisition proposal, and are not intended to make our company immune from takeovers.
We believe these provisions protect our shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to negotiate with our board of directors and by providing our board of directors with more time to assess any acquisition proposal, and are not intended to make our company immune from takeovers.
The following are those material operational risk factors that we have identified that could pose a risk to us. Our information and technology systems, including outsourced systems, are critical components of our operations, and failure of those systems or other aspects of our operations infrastructure may disrupt our business, cause financial loss and constrain our growth.
The following are material operational risk factors that could pose a risk to us. Our information and technology systems, including outsourced systems, are critical components of our operations, and failure of those systems or other aspects of our operations infrastructure may disrupt our business, cause financial loss and constrain our growth.
A system malfunction (due to hardware failure, capacity overload, security incident, data corruption, etc.) or mistake made relating to the processing of transactions could result in financial loss, liability to clients, regulatory intervention, reputational damage and constraints on our ability to grow.
A system malfunction (due to hardware failure, capacity overload, security incident, data corruption, or similar event) or mistake made relating to the processing of transactions could result in financial loss, liability to clients, regulatory intervention, reputational damage and constraints on our ability to grow.
As a result, our financial results may vary significantly from quarter to quarter and year to year. 9 Table of Contents Developments in specific business sectors and markets in which we conduct our business have in the past adversely affected, and may in the future adversely affect, our business and profitability.
As a result, our financial results may vary significantly from quarter to quarter and year to year. Piper Sandler Companies | 9 Table of Contents Developments in specific business sectors and markets in which we conduct our business have in the past adversely affected, and may in the future adversely affect, our business and profitability.
We have experienced, and expect to experience in the future, fluctuations in the market price of our common stock due to factors that relate to the nature of our business, including but not limited to changes in our revenues, operating results, earnings per share, and return on equity.
We have experienced, and expect to experience in the future, fluctuations in the market price of our common stock due to factors that relate to the nature of our business, including changes in our revenues, operating results, earnings per share, and return on equity.
Any failure by us in creating and maintaining a culture that emphasizes serving our clients' best interests or detecting or preventing employees from engaging in behaviors that run counter to that culture might lead to reputational damage for our firm. The following are those material human capital risk factors that we have identified that could pose a risk to us.
Any failure by us in creating and maintaining a culture that emphasizes serving our clients' best interests or detecting or preventing employees from engaging in behaviors that run counter to that culture might lead to reputational damage for our firm. The following are material human capital risk factors that could pose a risk to us.
Consequently, broker dealer regulations often serve to limit our activities, through net capital, customer protection and market conduct requirements and restrictions on the businesses in which we may operate or invest. We also must comply with asset management regulations, including requirements related to fiduciary duties to clients, record-keeping and reporting and customer disclosures.
Consequently, broker dealer regulations often serve to limit our activities, through net capital, customer protection, market conduct requirements and other restrictions on the businesses in which we may operate or invest. We also must comply with numerous regulations, including requirements related to fiduciary duties to clients, record-keeping, reporting and customer disclosures.
Our underwriting activities, including bought deal transactions and equity block trading activities, expose us to the 14 Table of Contents risk of loss if the price of the security falls below the price we purchased the security before we are able to sell all of the securities that we purchased.
Our underwriting activities, including bought deal transactions and equity block trading activities, expose us to the risk of loss if the price of the security falls below the price we purchased the security before we are able to sell all of the securities that we purchased.
Further, additional risks beyond those discussed below and elsewhere in this Form 10-K or in other of our reports filed with, or furnished to, the SEC could adversely affect us. We cannot assure you that the risk factors herein or elsewhere in our other reports filed with, or furnished to, the SEC address all potential risks that we may face.
Further, additional risks beyond those discussed below and elsewhere in this Form 10-K or in other of our reports filed with, or furnished to, the SEC could adversely affect us. We cannot provide assurance that the risk factors herein or elsewhere in our other reports filed with, or furnished to, the SEC address all potential risks that we may face.
As a result, we may not pay dividends at any rate or at all. Our stock price may fluctuate as a result of several factors, including but not limited to, changes in our revenues, operating results, and return on equity.
As a result, we may not pay dividends at any rate or at all. Our stock price may fluctuate as a result of several factors, including changes in our revenues, operating results, and return on equity.
Widespread concern or doubts in the market about U.S. or global economic conditions, the potential for financial contagion or widespread corporate or government defaults, the possibility of the broader outbreak of armed conflict in Eastern Europe, geopolitical tensions concerning Taiwan, or the pace, impact, or effectiveness of the actions by the U.S.
Widespread concern or doubts in the market about U.S. or global economic conditions, the potential for financial contagion or widespread corporate or government defaults, the U.S. presidential election, the possibility of the broader outbreak of armed conflict in the Middle East or Eastern Europe, geopolitical tensions concerning Taiwan, or the pace, impact, or effectiveness of the actions by the U.S.
If parties fail to complete a transaction on which we are advising or an 10 Table of Contents offering in which we are participating, we could earn little or no revenue from the transaction and may have incurred significant expenses (e.g., travel and legal expenses) associated with the transaction.
If parties fail to complete a transaction on which we are advising or an offering in which we are participating, we could earn little or no revenue from the transaction and may have incurred significant expenses (e.g., travel and legal expenses) associated with the transaction.
The nature and amount of credit risk depends on the type of transaction, the structure and duration of that transaction and the parties involved. The following are the material liquidity and credit risk factors that we have identified that could pose a risk to us.
The nature and amount of credit risk depends on the type of transaction, the structure and duration of that transaction and the parties involved. The following are material liquidity and credit risk factors that could pose a risk to us.
These issues include, but are not limited to, appropriately dealing with potential conflicts of interest, legal and regulatory requirements, perceptions of our environmental, social and governance practices or business selection, ethical issues, money laundering, cybersecurity, and the proper identification of the strategic, market, human capital, liquidity, credit, operational, legal and regulatory risks inherent in our business and products.
These issues include appropriately dealing with potential conflicts of interest, legal and regulatory requirements, perceptions of our environmental, social and governance practices or business selection, ethical issues, money laundering, cybersecurity, and the proper identification of the strategic, market, human capital, liquidity, credit, operational, legal and regulatory risks inherent in our business and products.
In addition, global macroeconomic conditions and U.S. financial markets remain vulnerable to the potential risks posed by exogenous shocks, which could include, among other things, political or social unrest or financial uncertainty in the United States and the European Union, including the potential for financial contagion or widespread corporate or government defaults, renewed concern about China's economy or financial sector, the wider outbreak of armed conflict in Eastern Europe, geopolitical tensions concerning Taiwan, and complications involving terrorism and armed conflicts around the world, or other challenges to global trade or travel.
Global macroeconomic conditions and U.S. financial markets also remain vulnerable to the potential risks posed by exogenous shocks, which could include, among other things, political or social unrest or economic uncertainty in the U.S. and the European Union, including the potential for financial contagion or widespread corporate or government defaults, renewed concern about China's economy or financial sector, the wider outbreak of armed conflict in the Middle East or Eastern Europe, geopolitical tensions concerning Taiwan, and complications involving terrorism and armed conflicts around the world, or other challenges to global trade.
Specialty high-yield new issuances have contributed a significant portion of our public finance investment banking revenues in recent years. During 2022, higher nominal rates and interest rate volatility had a disproportionately negative impact on investor demand for high-yield products as compared to other municipal issuances, which impacted our results of operations.
Both refunding and specialty high-yield new issuances have contributed a significant portion of our public finance investment banking revenues in recent years. During 2023, higher nominal rates and interest rate volatility had a disproportionately negative impact on the level of refunding issuances and investor demand for high-yield products as compared to other municipal issuances, which impacted our results of operations.
We are in compliance with Section 404 of the Sarbanes-Oxley Act as of December 31, 2022.
We are in compliance with Section 404 of the Sarbanes-Oxley Act as of December 31, 2023.
ITEM 1A. RISK FACTORS. In the normal course of our business activities, we are exposed to a variety of risks. The principal risks we face in operating our business include: strategic risks, market risks, human capital risks, liquidity risks, credit risks, operational risks, and legal and regulatory risks.
Item 1A. Risk Factors. In the normal course of our business activities, we are exposed to a variety of strategic risks, market risks, human capital risks, liquidity risks, credit risks, operational risks, and legal and regulatory risks.
With respect to interest rate swap contracts with customer credit exposure, we have retained the credit exposure with four non-publicly rated counterparties totaling $10.8 million at December 31, 2022 as part of our matched-book interest rate swap program. In the event of a termination of the contract, the counterparty would owe us the applicable amount of the credit exposure.
With respect to interest rate swap contracts with customer credit exposure, we have retained the credit exposure with four non-publicly rated counterparties totaling $6.7 million at December 31, 2023 as part of our matched-book interest rate swap program. In the event of a termination of the contract, the counterparty would owe us the applicable amount of the credit exposure.
When we conduct business outside the United States, we are subject to risks, including, without limitation, the risk that we will be unable to provide effective operational support to these business activities, the risk of noncompliance with foreign laws and regulations, and the general economic and political conditions in countries where we conduct business, which may differ significantly from those in the United States.
When we conduct business outside the U.S., we are subject to risks, including the risk that we will be unable to provide effective operational support to these business activities, the risk of noncompliance with foreign laws and regulations, and the general economic and political conditions in countries where we conduct business, which may differ significantly from those in the U.S.
However, these provisions apply even if the offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our board of directors determines is not in the best interests of our company and our shareholders. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
However, these provisions apply even if the offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our board of directors determines is not in the best interests of our company and our shareholders. Item 1B. Unresolved Staff Comments. None. Piper Sandler Companies | 22 Table of Contents
With respect to risk management, we enter into derivative contracts to hedge interest rate and market value risks associated with our security positions, including fixed income inventory positions that we hold for facilitating client activity.
With respect to risk management, we enter into derivative contracts to hedge interest rate and market value risks associated with our security positions, including fixed income inventory positions that we hold for facilitating client activity. Generally, we do not hedge all of our interest rate risk.
It also includes the risk that legislation could reduce or eliminate certain business activities that we are currently engaged in, which could negatively impact our future financial condition or results of operations. The following are those material legal and regulatory risk factors that we have identified that could pose a risk to us.
It also includes the risk that legislation could reduce or eliminate certain business activities that we are currently engaged in, which could harm our future financial condition or results of operations. The following are material legal and regulatory risk factors that could pose a risk to us.
Specifically, our operating subsidiaries include broker dealer and related securities entities organized in the United States, the United Kingdom, and Hong Kong. Each of these entities is registered or licensed with the applicable local regulator and is subject to all of the applicable rules and regulations promulgated by those authorities.
Specifically, our operating subsidiaries include broker dealer and related securities entities organized in the U.S., the U.K., and Hong Kong. Each of these entities is registered or licensed with the applicable local regulator and is subject to all the applicable rules and regulations promulgated by those authorities.
If the outlook for macroeconomic conditions in 2023 were to deteriorate further, the level of financial market activity could continue to decrease, which would reduce our equities investment banking revenues more generally.
If the outlook for macroeconomic conditions in 2024 were to remain depressed, or deteriorate further, the level of financial market activity could continue to decrease, which would reduce our equities investment banking revenues more generally.
We have not been immune from such events. Some of the publicized breaches have involved sophisticated and targeted cyber attacks intended to obtain unauthorized access to confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, including through the introduction of computer viruses, malware, ransomware, phishing, denial-of-service, and other means.
Some of the publicized breaches have involved sophisticated and targeted cyber attacks intended to obtain unauthorized access to confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, including through the introduction of computer viruses, malware, ransomware, phishing, denial-of-service, and other means.
Legal and Regulatory Risk Legal and regulatory risk includes the risk of non-compliance with applicable legal and regulatory requirements and the loss to our reputation we may suffer as a result of failure to comply with laws, regulations, rules, related SRO standards and codes of conduct applicable to our business activities.
Piper Sandler Companies | 19 Table of Contents LEGAL AND REGULATORY RISK Legal and regulatory risk includes the risk of non-compliance with applicable legal and regulatory requirements and the loss to our reputation we may suffer as a result of failure to comply with laws, regulations, rules, related SRO standards and codes of conduct applicable to our business activities.
Federal Reserve intended to manage the rate of inflation through interest rate increases, or the efficacy or adequacy of government measures enacted to support the U.S. and global economy, could erode the outlook for macroeconomic conditions, economic growth, and business confidence, which would negatively impact our businesses. • Our equities investment banking revenues from our advisory and equity capital markets businesses are directly related to macroeconomic conditions and corresponding financial market activity.
Federal Reserve with respect to interest rates, or the efficacy or adequacy of government measures enacted to support the U.S. and global economy, could erode the outlook for macroeconomic conditions, economic growth, and business confidence, which would negatively impact our businesses. • Our equities investment banking revenues from our advisory and equity capital markets businesses are directly related to macroeconomic conditions and corresponding financial market activity.
Although we take protective measures and endeavor to modify them as circumstances warrant, our computer systems, software and networks have been and may be vulnerable to unauthorized access, misuse, computer viruses or other malicious code and other events that could have a security impact.
Piper Sandler Companies | 18 Table of Contents Although we take protective measures and endeavor to modify them as circumstances warrant, our computer systems, software and networks have been and may be vulnerable to unauthorized access, misuse, computer viruses or other malicious code and other events that could have a security impact.
As an example, a significant portion of our equities investment banking revenues in recent years has been derived from advisory and capital markets engagements in our focus sectors, and activity in this area is highly correlated to the macroeconomic environment and market conditions.
As an example, a significant portion of our equities investment banking revenues in recent years has been derived from advisory and capital markets engagements in our focus sectors and from financial sponsor clients, and activity in these areas is highly correlated to market conditions and the macroeconomic environment.
Concentration of risk may result in losses to us even when economic and market conditions are generally favorable for others in our industry. An inability to readily divest trading positions may result in financial losses to our business.
Concentration of risk may result in losses to us even when economic and market conditions are generally favorable for others in our industry. Piper Sandler Companies | 15 Table of Contents An inability to readily divest trading positions may result in financial losses to our business.
An inability to access capital readily or on terms favorable to us could impair our ability to fund operations and could jeopardize our financial condition and results of operations. Liquidity, or ready access to funds, is essential to our business.
Piper Sandler Companies | 13 Table of Contents An inability to access capital readily or on terms favorable to us could impair our ability to fund operations and could jeopardize our financial condition and results of operations. Liquidity, or ready access to funds, is essential to our business.
If we are unable to generate a substantial number of new engagements and generate fees from the successful completion of those transactions, our business and results of operations could be adversely affected. The number of anticipated investment banking transactions may differ from actual results.
If we are unable to generate a substantial number of new engagements and generate fees from the successful completion of those transactions, our business and results of operations could be adversely affected.
If we are unable to obtain necessary funding, or if the funding we obtain is on terms and conditions unfavorable to us, it could negatively affect our business activities and operations, and our ability to pursue certain growth initiatives and make certain capital decisions, including the decision whether to pay future dividends to our shareholders, as well as our future financial condition or results of operations. 13 Table of Contents Concentration of risk increases the potential for significant losses.
If we are unable to obtain necessary funding, or if the funding we obtain is on terms and conditions unfavorable to us, it could negatively affect our business activities and operations, and our ability to pursue certain growth initiatives and make certain capital decisions, including the decision whether to pay future dividends to our shareholders, as well as our future financial condition or results of operations.
Protection of our sensitive and confidential information is critical to our operations, and failure of those systems may disrupt our business, damage our reputation, and cause financial losses. Our clients routinely provide us with sensitive and confidential information.
Piper Sandler Companies | 17 Table of Contents Protection of our sensitive and confidential information is critical to our operations, and failure of those systems may disrupt our business, damage our reputation, and cause financial losses. Our clients routinely provide us with sensitive and confidential information.
Our ability to attract, develop and retain highly skilled and productive employees, develop the next generation of our business leadership, and instill and maintain a culture of ethics is critical to the success of our business.
Piper Sandler Companies | 12 Table of Contents Our ability to attract, develop and retain highly skilled and productive employees, develop the next generation of our business leadership, and instill and maintain a culture of ethics is critical to the success of our business.
Economic and market conditions have had, and will continue to have, a direct and material impact on our results of operations and financial condition because performance in the financial services industry is heavily influenced by the overall strength of economic conditions and financial market activity.
Economic and market conditions have had, and will continue to have, a direct and material impact on our results of operations and financial condition because performance in the financial services industry is heavily influenced by the overall strength of economic conditions and financial market activity. For example: • In 2023, our business continued to be impacted by the U.S.
We may make strategic acquisitions, enter into new business opportunities, or engage in joint ventures, which could cause us to incur unforeseen expenses and have disruptive effects on our business and may not yield the benefits we expect.
Piper Sandler Companies | 10 Table of Contents We may make strategic acquisitions, enter into new business opportunities, or engage in joint ventures that could cause us to incur unforeseen expenses, have disruptive effects on our business and may not yield the benefits we expect.
The regulatory restrictions described above may impede access to funds our holding company needs to make payments on any such obligations. Other Risks to Our Shareholders The following are additional risk factors that we have identified that could pose a material risk to us or our shareholders.
The regulatory restrictions described above may impede access to funds our holding company needs to make payments on any such obligations. Piper Sandler Companies | 21 Table of Contents OTHER RISKS TO OUR SHAREHOLDERS The following are additional risk factors that could pose a material risk to us or our shareholders.
Our future results of operations and financial condition may be adversely affected by the valuation adjustments that we apply to these financial instruments. 15 Table of Contents Investments in private companies are valued based on an assessment of each underlying security, considering rounds of financing, the financial condition and operating results of the private company, third party transactions and market-based information, including comparable company transactions, trading multiples (e.g., multiples of revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA")), discounted cash flow analyses and changes in market outlook, among other factors.
Piper Sandler Companies | 14 Table of Contents Investments in private companies are valued based on an assessment of each underlying security, considering rounds of financing, the financial condition and operating results of the private company, third-party transactions and market-based information, including comparable company transactions, trading multiples (e.g., multiples of revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA")), discounted cash flow analyses and changes in market outlook, among other factors.
In December 2022, we renewed our unsecured revolving credit facility and increased the size from $65 million to $75 million to use for working capital and general corporate purposes. Our U.S. broker dealer subsidiary also renewed an $80 million committed credit facility in December 2022 for an additional twelve months.
In December 2023, we renewed our unsecured revolving credit facility and increased the size from $75 million to $100 million to use for working capital and general corporate purposes. We also renewed our committed line in December 2023 for an additional twelve months and decreased the size from $80 million to $50 million.
This concentration of risk may cause us to suffer losses even when economic and market conditions are generally favorable for our competitors. Further, disruptions in the credit markets can make it difficult to hedge exposures effectively and economically.
We have committed capital to these businesses, and we may take substantial positions in particular types of securities or issuers. This concentration of risk may cause us to suffer losses even when economic and market conditions are generally favorable for our competitors. Further, disruptions in the credit markets can make it difficult to hedge exposures effectively and economically.
These valuation techniques require significant management estimation and judgment. Operational Risk Operational risk is the risk of loss, or damage to our reputation, resulting from inadequate or failed processes, people and systems or from external events. Such loss or reputational damage could negatively impact our future financial condition and results of operations.
Piper Sandler Companies | 16 Table of Contents OPERATIONAL RISK Operational risk is the risk of loss, or damage to our reputation, resulting from inadequate or failed processes, people and systems or from external events. Such loss or reputational damage could negatively impact our future financial condition and results of operations.
Continued market volatility or uncertainty related to a decline in the U.S. or global macroeconomic outlook, including as a result of actions taken or to be taken by central banks, including the U.S. Federal Reserve, could cause financial market activity to continue to decrease, which would also negatively affect our equities investment banking revenues.
In addition, market volatility or uncertainty related to a decline in the U.S. or global macroeconomic outlook could cause financial market activity to decrease, which would also negatively affect our equities investment banking revenues.
Both the healthcare and financial services sectors are significant contributors to our overall results, and negative developments in either of these sectors, including but not limited to negative developments that result from legislative or regulatory actions, could negatively affect our results of operations, even if general economic conditions were strong. 19 Table of Contents The business operations that we conduct outside of the United States subject us to unique risks.
Both the healthcare and financial services sectors are significant contributors to our overall results, and negative developments in either of these sectors, including negative developments that result from legislative or regulatory actions, could negatively affect our results of operations, even when general economic conditions are strong.
We expect to continue to experience pricing and other competitive pressures in our equities and fixed income institutional brokerage businesses in the future.
We expect to continue to experience pricing and other competitive pressures in our equities and fixed income institutional brokerage businesses in the future. In addition, we will need to continue to invest in these businesses in order to continue to meet our clients’ needs and maintain sufficient scale.
To the extent that those conditions continue or worsen in 2023, and to the extent that there is concern about U.S. economic growth, high-yield sectors may continue to be disproportionately affected, which would impact our results of operations. • Our fixed income institutional business derives its revenue from sales and trading activity in the municipal and taxable markets and from hybrid preferreds and U.S. government agency products.
To the extent that those conditions continue or worsen in 2024, and to the extent that there is concern about U.S. economic growth, refunding activity and high-yield sectors may continue to be disproportionately affected, which would impact our results of operations.
Volatility, uncertainty, or slowdowns in any of these sectors may adversely affect our business, sometimes disproportionately, and may cause volatility in the net revenues we receive from our corporate advisory and capital markets activities.
For example: • Our equities investment banking business focuses on specific sectors, including healthcare, financial services, energy and power, services and industrials, consumer, technology, and chemicals. Volatility, uncertainty, or slowdowns in any of these sectors may adversely affect our business, sometimes disproportionately, and may cause volatility in the net revenues we receive from our corporate advisory and capital markets activities.
We are subject to the SEC's uniform net capital rule (Rule 15c3-1) and the net capital rule of FINRA, which may limit our ability to make withdrawals of capital from Piper Sandler & Co.
Regulatory capital requirements may limit our ability to expand or maintain our present levels of business or impair our ability to meet our financial obligations. We are subject to the SEC's uniform net capital rule (Rule 15c3-1) and the net capital rule of FINRA, which may limit our ability to withdraw capital from Piper Sandler & Co.
The completion of anticipated investment banking transactions in our pipeline is uncertain and partially beyond our control, and our investment banking revenue is typically earned only upon the successful completion of a transaction. In most cases, we receive little or no payment for investment banking engagements that do not result in the successful completion of a transaction.
In most cases, we receive little or no payment for investment banking engagements that do not result in the successful completion of a transaction.
During periods of heightened volatility, financial market activity can significantly decline, as we experienced with respect to equity capital markets activity in 2022, and our business suffers reduced revenues as a result.
During periods of heightened economic uncertainty, financial market activity can significantly decline, as we experienced in 2023, and our business may suffer reduced revenues as a result.
In addition, we will need to continue to invest in these businesses in order to continue to meet our clients’ needs and maintain sufficient scale. 11 Table of Contents Our inability to identify and address actual, potential, or perceived conflicts of interest may negatively impact our reputation and have a material adverse effect on our business.
Piper Sandler Companies | 11 Table of Contents Our inability to identify and address actual, potential, or perceived conflicts of interest may negatively impact our reputation and have a material adverse effect on our business.
Exposures from and expenses incurred related to any of the foregoing actions or proceedings could have a negative impact on our results of operations and financial condition.
Exposures from and expenses incurred related to any of the foregoing actions or proceedings could have a negative impact on our results of operations and financial condition. In addition, future results of operations could be adversely affected if reserves relating to these legal liabilities are required to be increased or legal proceedings are resolved in excess of established reserves.
Our expectations for our corporate culture and ethics are instilled and maintained by the "tone at the top" set by our management and board of directors.
Our expectations for our corporate culture and ethics are instilled and maintained by the "tone at the top" set by our management and board of directors. Lapses in our corporate culture could lead to reputational damage or employee loss, either of which could adversely affect our results of operations.
Concentration of risk increases the potential for significant losses in our sales and trading, alternative asset management, credit underwriting and syndication platform, and underwriting businesses. We have committed capital to these businesses, and we may take substantial positions in particular types of securities and/or issuers.
These valuation techniques require significant management estimation and judgment. Concentration of risk increases the potential for significant losses. Concentration of risk increases the potential for significant losses in our sales and trading, alternative asset management, credit underwriting and syndication platform, and underwriting businesses.
The following are those material risk factors that we have identified that could pose a risk to our strategic vision, and the market risks that may impact execution of our strategy. 8 Table of Contents Developments in market and economic conditions have in the past adversely affected, and may in the future adversely affect, our business and profitability and cause volatility in our results of operations.
Piper Sandler Companies | 8 Table of Contents Developments in market and economic conditions have in the past adversely affected, and may in the future adversely affect, our business and profitability and cause volatility in our results of operations.
Lapses in our corporate culture could lead to reputational damage or employee loss, either of which could adversely affect our results of operations. 12 Table of Contents Our business success depends in large part on the strategic decisions made by our leadership team, and the business plans developed and implemented by our senior business leaders.
Our business success depends in large part on the strategic decisions made by our leadership team, and the business plans developed and implemented by our senior business leaders.
The volume and amount of damages claimed in litigation, arbitrations, regulatory enforcement actions and other adversarial proceedings against financial services firms has historically been intense. Our experience has been that adversarial proceedings against financial services firms typically increase during and following a market downturn.
These risks include potential liability under securities laws and regulations in connection with our capital markets, asset management and other businesses. The volume and amount of damages claimed in litigation, arbitrations, regulatory enforcement actions and other adversarial proceedings against financial services firms has historically been intense.
We also are subject to claims from disputes with our employees and our former employees under various circumstances.
Our experience has been that adversarial proceedings against financial services firms typically increase during and following a market downturn. We also are subject to claims from disputes with our employees and our former employees under various circumstances.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn December 2022, we entered into a 15-year lease agreement which comprises approximately 113,000 square feet of space for our future principal executive office located at 350 N. 5th Street, Minneapolis, Minnesota 55401.
Biggest changeIn December 2022, we entered into a 15-year lease agreement which comprises approximately 113,000 square feet of space for our future principal executive office located at 350 N. 5th Street, Minneapolis, Minnesota 55401. Item 3. Legal Proceedings.
Our principal executive office is located at 800 Nicollet Mall, Suite 900, Minneapolis, Minnesota 55402 and, as of February 17, 2023, comprises approximately 124,000 square feet of space under a lease which expires November 30, 2025.
Our principal executive office is located at 800 Nicollet Mall, Suite 900, Minneapolis, Minnesota 55402 and, as of February 20, 2024 , comprises approximately 124,000 square feet of space under a lease which expires November 30, 2025.
ITEM 2. PROPERTIES. As of February 17, 2023, we conducted our operations through 63 principal offices in 32 states, and the District of Columbia, and in London, Aberdeen and Hong Kong. All of our offices are leased.
Item 2. Properties. As of February 20, 2024, we conducted our operations through 59 principal offices in 31 states, and the District of Columbia, and in London, Aberdeen and Hong Kong. All of our offices are leased.
Added
The discussion of our legal proceedings contained in Note 16 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K is incorporated herein by reference. Item 4. Mine Safety Disclosures. Not applicable. Piper Sandler Companies | 24 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal Number of Shares Approximate Dollar Purchased as Part of Value of Shares Yet to be Total Number of Average Price Publicly Announced Purchased Under the Period Shares Purchased Paid per Share Plans or Programs Plans or Programs (1) Month #1 (October 1, 2022 to October 31, 2022) 228 (2) $ 105.85 208 $ 138 million Month #2 (November 1, 2022 to November 30, 2022) 6,652 $ 145.90 — $ 138 million Month #3 (December 1, 2022 to December 31, 2022) 4,120 $ 130.19 — $ 138 million Total 11,000 $ 139.19 208 $ 138 million (1) Effective May 6, 2022, our board of directors authorized the repurchase of up to $150.0 million of common stock through December 31, 2024.
Biggest changePiper Sandler Companies | 25 Table of Contents ISSUER PURCHASES OF EQUITY SECURITIES The table below sets forth the information with respect to purchases made by or on behalf of Piper Sandler Companies or any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act), of our common stock during the quarter ended December 31, 2023: Total Number of Shares Approximate Dollar Purchased as Part of Value of Shares Yet to be Total Number of Average Price Publicly Announced Purchased Under the Period Shares Purchased Paid per Share Plans or Programs Plans or Programs (1) Month #1 October 1, 2023 to October 31, 2023 14,088 $ 144.13 — $ 138 million Month #2 November 1, 2023 to November 30, 2023 1,787 $ 152.51 — $ 138 million Month #3 December 1, 2023 to December 31, 2023 4,326 $ 174.87 — $ 138 million Total 20,201 $ 151.45 — $ 138 million (1) Effective May 6, 2022, our board of directors authorized the repurchase of up to $150.0 million of common stock through December 31, 2024.
The graph assumes $100 was invested on December 31, 2017 in each of our common stock, the S&P 500 Index and the S&P 500 Diversified Financials Index, and that all dividends were reinvested on the date of payment without payment of any commissions.
The graph assumes $100 was invested on December 31, 2018 in each of our common stock, the S&P 500 Index and the S&P 500 Diversified Financials Index, and that all dividends were reinvested on the date of payment without payment of any commissions.
Restrictions on our U.S. broker dealer subsidiary's ability to pay dividends are described in Note 22 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.
Restrictions on our U.S. broker dealer subsidiary's ability to pay dividends are described in Note 24 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.
Dividend Policy Our board of directors has approved a dividend policy with the intention of returning between 30 percent and 50 percent of our fiscal year adjusted net income to shareholders. Our board of directors has declared a special cash dividend on our common stock of $1.25 per share related to 2022 adjusted net income.
DIVIDEND POLICY Our board of directors has approved a dividend policy with the intention of returning between 30 percent and 50 percent of our fiscal year adjusted net income to shareholders. Our board of directors has declared a special cash dividend on our common stock of $1.00 per share related to 2023 adjusted net income.
In addition, our board of directors has declared a quarterly cash dividend on our common stock of $0.60 per share to be paid on March 17, 2023, to shareholders of record as of the close of business on March 3, 2023. Our board of directors is free to change our dividend policy at any time.
In addition, our board of directors has declared a quarterly cash dividend on our common stock of $0.60 per share to be paid on March 15, 2024, to shareholders of record as of the close of business on March 4, 2024. Our board of directors is free to change our dividend policy at any time.
The following graph compares the performance of an investment in our common stock from December 31, 2017 through December 31, 2022, with the S&P 500 Index and the S&P 500 Diversified Financials Index.
The following graph compares the performance of an investment in our common stock from December 31, 2018 through December 31, 2023, with the S&P 500 Index and the S&P 500 Diversified Financials Index.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock is listed on the New York Stock Exchange under the symbol "PIPR." Shareholders We had 8,942 shareholders of record and approximately 44,692 beneficial owners of our common stock as of February 17, 2023.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. MARKET INFORMATION Our common stock is listed on the New York Stock Exchange under the symbol "PIPR." SHAREHOLDERS We had 8,473 shareholders of record and approximately 47,559 beneficial owners of our common stock as of February 20, 2024.
This special dividend will be paid on March 17, 2023, to shareholders of record as of the close of business on March 3, 2023. Including this special cash dividend, we will have returned $3.65 per share, or approximately 32 percent of our fiscal year 2022 adjusted net income to shareholders.
This special dividend will be paid on March 15, 2024, to shareholders of record as of the close of business on March 4, 2024. Including this special cash dividend, we will have returned $3.40 per share, or approximately 37 percent of our fiscal year 2023 adjusted net income to shareholders.
(2) Consists of 208 shares of common stock repurchased on the open market pursuant to a 10b5-1 plan established with an independent agent at an average price of $105.55 per share, and 20 shares of common stock withheld from recipients of restricted stock to pay taxes upon the vesting of the restricted stock at an average price of $108.97 per share. 22 Table of Contents Stock Performance Graph This performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
Piper Sandler Companies | 26 Table of Contents STOCK PERFORMANCE GRAPH This performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
FIVE YEAR TOTAL RETURN FOR PIPER SANDLER COMPANIES COMMON STOCK, THE S&P 500 INDEX AND THE S&P DIVERSIFIED FINANCIALS INDEX Company/Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Piper Sandler Companies $ 100 $ 79.31 $ 98.25 $ 127.36 $ 236.05 $ 180.79 S&P 500 Index 100 95.62 125.72 148.85 191.58 156.88 S&P 500 Diversified Financials 100 90.08 112.21 124.96 169.79 150.65
Five Year Total Return Company/Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Piper Sandler Companies $ 100 $ 123.88 $ 160.60 $ 297.64 $ 227.96 $ 314.08 S&P 500 Index 100 131.49 155.68 200.37 164.08 207.21 S&P 500 Diversified Financials 100 124.57 138.73 188.49 167.25 193.24
Removed
Purchases of Equity Securities The table below sets forth the information with respect to purchases made by or on behalf of Piper Sandler Companies or any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act), of our common stock during the quarter ended December 31, 2022.
Added
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS Information about securities authorized for issuance under our equity compensation plans is included in Part III, Item 12 of this Form 10-K, and is incorporated herein by reference.

Item 7. Management's Discussion & Analysis

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

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Biggest changeOur board of directors declared the following dividends on shares of our common stock: Declaration Date Dividend Per Share Record Date Payment Date Related to 2019: January 31, 2020 (1) $ 0.750 March 2, 2020 March 13, 2020 Related to 2020: January 31, 2020 $ 0.375 March 2, 2020 March 13, 2020 May 1, 2020 $ 0.200 May 29, 2020 June 12, 2020 July 31, 2020 $ 0.300 August 28, 2020 September 11, 2020 October 30, 2020 $ 0.375 November 24, 2020 December 11, 2020 February 4, 2021 (1) $ 1.850 March 3, 2021 March 12, 2021 Related to 2021: February 4, 2021 $ 0.400 March 3, 2021 March 12, 2021 April 30, 2021 $ 0.450 May 28, 2021 June 11, 2021 July 30, 2021 $ 0.550 August 27, 2021 September 10, 2021 October 29, 2021 (1) $ 3.000 November 23, 2021 December 10, 2021 October 29, 2021 $ 0.550 November 23, 2021 December 10, 2021 February 10, 2022 (1) $ 4.500 March 2, 2022 March 11, 2022 Related to 2022: February 10, 2022 $ 0.600 March 2, 2022 March 11, 2022 April 29, 2022 $ 0.600 May 27, 2022 June 10, 2022 July 29, 2022 $ 0.600 August 26, 2022 September 9, 2022 October 28, 2022 $ 0.600 November 23, 2022 December 9, 2022 February 3, 2023 (1) $ 1.250 March 3, 2023 March 17, 2023 Related to 2023: February 3, 2023 $ 0.600 March 3, 2023 March 17, 2023 (1) Represents a special cash dividend.
Biggest changeOur board of directors declared the following dividends on shares of our common stock: Declaration Date Dividend Per Share Record Date Payment Date Related to 2020: February 4, 2021 (1) $ 1.85 March 3, 2021 March 12, 2021 Related to 2021: February 4, 2021 0.40 March 3, 2021 March 12, 2021 April 30, 2021 0.45 May 28, 2021 June 11, 2021 July 30, 2021 0.55 August 27, 2021 September 10, 2021 October 29, 2021 (1) 3.00 November 23, 2021 December 10, 2021 October 29, 2021 0.55 November 23, 2021 December 10, 2021 February 10, 2022 (1) 4.50 March 2, 2022 March 11, 2022 Related to 2022: February 10, 2022 0.60 March 2, 2022 March 11, 2022 April 29, 2022 0.60 May 27, 2022 June 10, 2022 July 29, 2022 0.60 August 26, 2022 September 9, 2022 October 28, 2022 0.60 November 23, 2022 December 9, 2022 February 3, 2023 (1) 1.25 March 3, 2023 March 17, 2023 Related to 2023: February 3, 2023 0.60 March 3, 2023 March 17, 2023 May 2, 2023 0.60 May 26, 2023 June 9, 2023 July 28, 2023 0.60 August 25, 2023 September 8, 2023 October 27, 2023 0.60 November 21, 2023 December 8, 2023 February 2, 2024 (1) 1.00 March 4, 2024 March 15, 2024 Related to 2024: February 2, 2024 0.60 March 4, 2024 March 15, 2024 (1) Represents a special cash dividend.
(Amounts in thousands) Adjusted Interests Adjustments GAAP Adjusted Interests Adjustments GAAP Investment banking Advisory services $ 776,428 $ — $ — $ 776,428 $ 1,026,138 $ — $ — $ 1,026,138 Corporate financing 125,342 — — 125,342 362,797 — — 362,797 Municipal financing 107,739 — — 107,739 164,284 — — 164,284 Total investment banking 1,009,509 — — 1,009,509 1,553,219 — — 1,553,219 Institutional brokerage Equity brokerage 210,314 — — 210,314 154,067 — — 154,067 Fixed income services 194,953 — — 194,953 233,510 — — 233,510 Total institutional brokerage 405,267 — — 405,267 387,577 — — 387,577 Interest income 20,365 — — 20,365 6,967 — — 6,967 Investment income/(loss) 1,552 (1,575) — (23) 34,982 59,050 — 94,032 Total revenues 1,436,693 (1,575) — 1,435,118 1,982,745 59,050 — 2,041,795 Interest expense 2,980 — 6,500 9,480 2,288 — 8,446 10,734 Net revenues 1,433,713 (1,575) (6,500) 1,425,638 1,980,457 59,050 (8,446) 2,031,061 Total non-interest expenses 1,164,560 7,919 118,790 1,291,269 1,430,505 7,196 151,848 1,589,549 Pre-tax income $ 269,153 $ (9,494) $ (125,290) $ 134,369 $ 549,952 $ 51,854 $ (160,294) $ 441,512 Pre-tax margin 18.8 % 9.4 % 27.8 % 21.7 % (1) The following is a summary of the adjustments needed to reconcile our consolidated U.S.
(Amounts in thousands) Adjusted Interests Adjustments GAAP Adjusted Interests Adjustments GAAP Revenues Investment banking: Advisory services $ 776,428 $ — $ — $ 776,428 $ 1,026,138 $ — $ — $ 1,026,138 Corporate financing 125,342 — — 125,342 362,797 — — 362,797 Municipal financing 107,739 — — 107,739 164,284 — — 164,284 Total investment banking 1,009,509 — — 1,009,509 1,553,219 — — 1,553,219 Institutional brokerage: Equity brokerage 210,314 — — 210,314 154,067 — — 154,067 Fixed income services 194,953 — — 194,953 233,510 — — 233,510 Total institutional brokerage 405,267 — — 405,267 387,577 — — 387,577 Interest income 20,365 — — 20,365 6,967 — — 6,967 Investment income/(loss) 1,552 (1,575) — (23) 34,982 59,050 — 94,032 Total revenues 1,436,693 (1,575) — 1,435,118 1,982,745 59,050 — 2,041,795 Interest expense 2,980 — 6,500 9,480 2,288 — 8,446 10,734 Net revenues 1,433,713 (1,575) (6,500) 1,425,638 1,980,457 59,050 (8,446) 2,031,061 Total non-interest expenses 1,164,560 7,919 118,790 1,291,269 1,430,505 7,196 151,848 1,589,549 Pre-tax income $ 269,153 $ (9,494) $ (125,290) $ 134,369 $ 549,952 $ 51,854 $ (160,294) $ 441,512 Pre-tax margin 18.8 % 9.4 % 27.8 % 21.7 % (1) The following is a summary of the adjustments needed to reconcile our consolidated U.S.
GAAP financial results to the adjusted, non-GAAP financial results: Noncontrolling interests – The impacts of consolidating noncontrolling interests in our alternative asset management funds are not included in our adjusted financial results.
GAAP financial results to the adjusted, non-GAAP financial results: Noncontrolling interests – The impacts of consolidating noncontrolling interests in our alternative asset management funds are not included in our adjusted financial results.
Compensation expense related to share-based awards which require future service are amortized over the service period of the award. Forfeitures of awards with service conditions are accounted for when they occur. Share-based awards that do not require future service are recognized in the year in which the awards are deemed to be earned.
Compensation expense related to share-based awards that require future service are amortized over the service period of the award. Forfeitures of awards with service conditions are accounted for when they occur. Share-based awards that do not require future service are recognized in the year in which the awards are deemed to be earned.
Our clearing arrangement activities are recorded net from trading activity and reported within receivables from or payables to brokers, dealers and clearing organizations. The funding is at the discretion of Pershing (i.e., uncommitted) and could be denied without a notice period.
Our clearing arrangement activities are recorded net of trading activity and reported within receivables from or payables to brokers, dealers and clearing organizations. The funding is at the discretion of Pershing (i.e., uncommitted) and could be denied without a notice period.
The risk of default depends on the creditworthiness of the counterparty and/or issuer of the security. We mitigate this risk by establishing and monitoring individual and aggregate position limits for each counterparty relative to potential levels of activity, holding and marking to market collateral on certain transactions.
The risk of default depends on the creditworthiness of the counterparty or issuer of the security. We mitigate this risk by establishing and monitoring individual and aggregate position limits for each counterparty relative to potential levels of activity, holding and marking to market collateral on certain transactions.
The timing of incentive compensation payments, which generally occur in February, has a greater impact on our cash position and liquidity than is reflected on our consolidated statements of operations. In conjunction with our acquisitions, we have granted restricted stock and restricted cash with service conditions, which are amortized to compensation expense over the service period.
The timing of incentive compensation payments, which is generally in February, has a greater impact on our cash position and liquidity than is reflected on our consolidated statements of operations. In conjunction with our acquisitions, we have granted restricted stock and restricted cash with service conditions, which are amortized to compensation expense over the service period.
Amounts attributed to noncontrolling interests are subtracted from total assets and total shareholders' equity in determining adjusted assets and tangible common shareholders' equity, respectively, as they represent assets and equity interests in consolidated entities that are not attributable, either directly or indirectly, to Piper Sandler Companies.
Amounts attributable to noncontrolling interests are subtracted from total assets and total shareholders' equity in determining adjusted assets and tangible common shareholders' equity, respectively, as they represent assets and equity interests in consolidated entities that are not attributable, either directly or indirectly, to Piper Sandler Companies.
Depending on the specific security, the structure of the financial product, and/or overall market conditions, we may be forced to hold a security for substantially longer than we had planned or forced to liquidate into a challenging market if funding becomes unavailable.
Depending on the specific security, the structure of the financial product, or overall market conditions, we may be forced to hold a security for substantially longer than we had planned or forced to liquidate into a challenging market if funding becomes unavailable.
The amount of deal-related expenses is principally dependent on the level of deal activity and may vary from period to period as the recognition of deal-related costs typically coincides with the closing of a transaction.
The amount of deal-related expenses is principally dependent on the level and mix of deal activity and may vary from period to period as the recognition of deal-related costs typically coincides with the closing of a transaction.
These adjustments affect the following financial measures: net revenues, compensation expenses, non-compensation expenses, income tax expense, net income applicable to Piper Sandler Companies, earnings per diluted common share, total non-interest expenses, pre-tax income and pre-tax margin. Management believes that presenting these results and measures on an adjusted basis in conjunction with the corresponding U.S.
These adjustments affect the following financial measures: net revenues, compensation expenses, non-compensation expenses, income tax expense, net income attributable to Piper Sandler Companies, earnings per diluted common share, total non-interest expenses, pre-tax income and pre-tax margin. Management believes that presenting these results and measures on an adjusted basis in conjunction with the corresponding U.S.
Market risk can be exacerbated in times of trading illiquidity when market participants refrain from transacting in normal quantities and/or at normal bid-offer spreads.
Market risk can be exacerbated in times of trading illiquidity when market participants refrain from transacting in normal quantities or at normal bid-offer spreads.
A significant portion of compensation expense is comprised of variable incentive arrangements, including discretionary incentive compensation, the amount of which fluctuates in proportion to the level of business activity, increasing with higher revenues and operating profits. Other compensation costs, primarily base salaries and benefits, are more fixed in nature.
A significant portion of compensation expense is comprised of variable incentive arrangements, including discretionary incentive compensation, the amount of which fluctuates in proportion to the level of business activity, increasing with higher revenues and operating profits and decreasing with lower revenues and operating profits. Other compensation costs, primarily base salaries and benefits, are more fixed in nature.
Unrealized gains and losses related to these financial instruments are reflected on our consolidated statements of operations. The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants at the measurement date (the exit price).
Unrealized gains and losses related to these financial instruments are reflected on our consolidated statements of operations. The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants at the measurement date (i.e., the exit price).
The following relevant events and circumstances were evaluated in concluding that it was not more likely than not that goodwill was impaired: macroeconomic conditions, industry and market considerations and the overall financial performance of our reporting unit. Our annual goodwill impairment testing, performed as of October 31, 2022, resulted in no impairment.
The following relevant events and circumstances were evaluated in concluding that it was not more likely than not that goodwill was impaired: macroeconomic conditions, industry and market considerations and the overall financial performance of our reporting unit. Our annual goodwill impairment testing, performed as of October 31, 2023, resulted in no impairment.
Interest rate risk is managed by selling short U.S. government securities, agency securities, corporate debt securities and derivative contracts. See Note 5 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information on our derivative contracts.
Interest rate risk is managed by selling short U.S. government securities, agency securities, corporate debt securities and derivative contracts. See Note 7 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information on our derivative contracts.
The transaction expands our presence in Europe. • On February 4, 2022, we completed the acquisition of Cornerstone Macro Research LP, including its subsidiary, Cornerstone Macro LLC (collectively, "Cornerstone Macro"), a research firm focused on providing macro research and equity derivatives trading to institutional investors.
The transaction expanded our presence in Europe. • On February 4, 2022, we completed the acquisition of Cornerstone Macro Research LP, including its subsidiary, Cornerstone Macro LLC (collectively, "Cornerstone Macro"), a research firm focused on providing macro research and equity derivatives trading to institutional investors.
This proportionate share is reflected in net income/(loss) applicable to noncontrolling interests in the accompanying consolidated statements of operations, and has no effect on our overall financial performance, as ultimately, this income or loss is not income or loss for us.
This proportionate share is reflected in net income/(loss) attributable to noncontrolling interests in the accompanying consolidated statements of operations, and has no effect on our overall financial performance, as ultimately, this income or loss is not income or loss for us.
At December 31, 2022, Piper Sandler Ltd., our broker dealer subsidiary registered in the U.K., was subject to, and was in compliance with, the capital requirements of the Prudential Regulation Authority and the Financial Conduct Authority pursuant to the Financial Services Act of 2012.
At December 31, 2023, Piper Sandler Ltd., our broker dealer subsidiary registered in the U.K., was subject to, and was in compliance with, the capital requirements of the Prudential Regulation Authority and the Financial Conduct Authority pursuant to the Financial Services Act of 2012.
At December 31, 2022, Piper Sandler Hong Kong Limited was in compliance with the liquid capital requirements of the Hong Kong Securities and Futures Commission. Off-Balance Sheet Arrangements In the ordinary course of business we enter into various types of off-balance sheet arrangements.
At December 31, 2023, Piper Sandler Hong Kong Limited was in compliance with the liquid capital requirements of the Hong Kong Securities and Futures Commission. OFF-BALANCE SHEET ARRANGEMENTS In the ordinary course of business we enter into various types of off-balance sheet arrangements.
We are generally subject to extensive regulation in the various jurisdictions in which we conduct our business. We have established procedures that are designed to ensure compliance with applicable statutory and regulatory requirements, such as public company reporting obligations, regulatory net capital requirements, sales and trading practices, potential conflicts of interest, anti-money laundering, privacy and financial and electronic recordkeeping.
We are generally subject to extensive regulation in the various jurisdictions in which we conduct our business. We have established procedures that are reasonably designed to achieve compliance with applicable statutory and regulatory requirements, such as public company reporting obligations, regulatory net capital requirements, sales and trading practices, potential conflicts of interest, anti-money laundering, privacy, and financial and electronic recordkeeping.
See "Cautionary Note Regarding Forward-Looking Statements" in this Form 10-K for additional information regarding such statements and related risks and uncertainties. Item 7 in this Form 10-K discusses our 2022 and 2021 results and the year-over-year comparisons between 2022 and 2021.
See "Cautionary Note Regarding Forward-Looking Statements" in this Form 10-K for additional information regarding such statements and related risks and uncertainties. Item 7 in this Form 10-K discusses our 2023 and 2022 results and the year-over-year comparisons between 2023 and 2022.
GAAP purposes, these items are included in each of their respective line items on the consolidated statements of operations. Adjusted operating income and adjusted operating margin present the results of operations excluding the impact resulting from the consolidation of noncontrolling interests in alternative asset management funds.
For U.S. GAAP purposes, these items are included in each of their respective line items on the consolidated statements of operations. Adjusted operating income and adjusted operating margin present the results of operations excluding the impact resulting from the consolidation of noncontrolling interests in alternative asset management funds.
We also evaluated our intangible assets (indefinite and definite-lived) and concluded there was no impairment in 2022. Stock-Based Compensation Plans As part of our compensation to employees and directors, we use stock-based compensation, consisting of restricted stock, restricted stock units and stock options.
We also evaluated our indefinite-lived intangible assets and concluded there was no impairment in 2023. Stock-Based Compensation Plans As part of our compensation to employees and directors, we use stock-based compensation, consisting of restricted stock, restricted stock units and stock options.
Discussion of our 2020 results and the year-over-year comparisons between 2021 and 2020 can be found in "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 year ended December 31, 2021 , filed with the SEC on February 25, 2022 .
Discussion of our 2021 results and the year-over-year comparisons between 2022 and 2021 can be found in "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 year ended December 31, 2022 , filed with the SEC on February 24, 2023 .
The preparation of financial statements in compliance with U.S. GAAP and industry practices requires us to make estimates and assumptions that could materially affect amounts reported in our consolidated financial statements.
GAAP and conform to practices within the securities industry. The preparation of financial statements in compliance with U.S. GAAP and industry practices requires us to make estimates and assumptions that could materially affect amounts reported in our consolidated financial statements.
The transaction expands the scale of our technology sector and adds general partner advisory services. • On June 10, 2022, we completed the acquisition of Stamford Partners LLP ("Stamford Partners"), a specialist investment bank offering mergers and acquisitions advisory services to European food and beverage and related consumer sectors.
The transaction expanded the scale of our technology sector and added general partner advisory services. • On June 10, 2022, we completed the acquisition of Stamford Partners LLP ("Stamford Partners"), a specialist investment bank offering mergers and acquisitions advisory services to European food and beverage and related consumer sectors.
(2) We believe the fair value of these derivative contracts is a more relevant measure of the obligations because we believe the notional or contract amount overstates the expected payout. At December 31, 2022 and 2021, the net fair value of these derivative contracts approximated $7.8 million and $19.8 million, respectively. (3) The investment commitments have no specified call dates.
(2) We believe the fair value of these derivative contracts is a more relevant measure of the obligations because we believe the notional or contract amount overstates the expected payout. At December 31, 2023 and 2022, the net fair value of these derivative contracts approximated $6.9 million and $7.8 million, respectively. (3) The investment commitments have no specified call dates.
Membership is comprised of senior leadership, including but not limited to, our Chief Executive Officer, President, Chief Financial Officer, Treasurer, Head of Market and Credit Risk, and Head of Fixed Income Trading and Risk. Other committees that help evaluate and monitor risk include underwriting, leadership team and operating committees.
Membership is comprised of senior leadership, including our Chief Executive Officer, President, Chief Financial Officer, Treasurer, Head of Market and Credit Risk, and Head of Fixed Income Trading and Risk. Other committees that help evaluate and monitor risk include underwriting, leadership team and operating committees.
The occurrence of one or more of these events, which we have experienced, could jeopardize our or our clients' or counterparties' confidential and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our, our clients', our counterparties' or third parties' operations.
The occurrence of one or more of these events could jeopardize our or our clients' or counterparties' confidential and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our, our clients', our counterparties' or third parties' operations.
Management believes that presenting adjusted financial results excluding the acquisition-related amounts provides clarity on the financial results generated by the core operating components of our business. 34 Table of Contents The following table sets forth the adjusted, non-GAAP financial results and adjustments necessary to reconcile to our consolidated U.S.
Management believes that presenting adjusted financial results excluding the acquisition-related amounts provides clarity on the financial results generated by the core operating components of our business. Piper Sandler Companies | 39 Table of Contents The following table sets forth the adjusted, non-GAAP financial results and adjustments necessary to reconcile to our consolidated U.S.
The timing of these incentive compensation payments, which generally are made in February, has a significant impact on our cash position and liquidity. 41 Table of Contents Our dividend policy is intended to return between 30 percent and 50 percent of our fiscal year adjusted net income to shareholders.
The timing of these incentive compensation payments, which is generally in February, has a significant impact on our cash position and liquidity. Our dividend policy is intended to return between 30 percent and 50 percent of our fiscal year adjusted net income to shareholders.
These non-GAAP financial measures include adjustments to exclude (1) revenues and expenses related to noncontrolling interests, (2) interest expense on long-term financing from net revenues, (3) amortization of intangible assets related to acquisitions, (4) compensation and non-compensation expenses from acquisition-related agreements, (5) acquisition-related restructuring and integration costs and (6) the income tax expense allocated to the adjustments.
These non-GAAP financial measures include adjustments to exclude (1) investment (income)/loss and non-compensation expenses related to noncontrolling interests, (2) interest expense on long-term financing from net revenues, (3) amortization of intangible assets related to acquisitions, (4) compensation and non-compensation expenses from acquisition-related agreements, (5) restructuring and integration costs related to acquisitions and/or headcount reductions and (6) the income tax expense/(benefit) allocated to the adjustments.
We have minimal market risk related to these matched-book derivative contracts; however, we do have counterparty risk with one major financial institution, which is mitigated by collateral deposits. In addition, we have a limited number of counterparties (contractual amount of $154.1 million at December 31, 2022) who are not required to post collateral.
We have minimal market risk related to these matched-book derivative contracts; however, we do have counterparty risk with one major financial institution, which is mitigated by collateral deposits. In addition, we have a limited number of counterparties (contractual amount of $150.2 million at December 31, 2023) who are not required to post collateral.
The funding is at the discretion of CIBC (i.e., uncommitted) and could be denied subject to a notice period. This arrangement is reported within receivables from or payables to brokers, dealers and clearing organizations, net of trading activity. At December 31, 2022, we had $28.2 million of financing outstanding under this arrangement.
The funding is at the discretion of CIBC (i.e., uncommitted) and could be denied subject to a notice period. This arrangement is reported within receivables from or payables to brokers, dealers and clearing organizations, net of trading activity. At December 31, 2023, we had $80.6 million of financing outstanding under this arrangement.
Given the mix of our business activities, funding requirements are fulfilled through a diversified range of short-term and long-term financing. We attempt to ensure that the tenor of our borrowing liabilities equals or exceeds the expected holding period of the assets being financed.
Given the mix of our business activities, funding requirements are fulfilled through a diversified range of financing arrangements. We attempt to ensure that the tenor of our borrowing liabilities equals or exceeds the expected holding period of the assets being financed.
Certain market conditions can impact the liquidity of our inventory positions, requiring us to hold larger inventory positions for longer than expected or requiring us to take other actions that may adversely impact our results. A significant component of our employees' compensation is paid in annual discretionary incentive compensation.
Piper Sandler Companies | 46 Table of Contents Certain market conditions can impact the liquidity of our inventory positions, requiring us to hold larger inventory positions for longer than expected or requiring us to take other actions that may adversely impact our results. A significant component of our employees' compensation is paid in annual discretionary incentive compensation.
GAAP basis 16,965 16,955 Adjustment: Unvested acquisition-related restricted stock with service conditions 909 1,251 Adjusted weighted average diluted common shares outstanding 17,874 18,206 External Factors Impacting Our Business Performance in the financial services industry in which we operate is highly correlated to the overall strength of macroeconomic conditions, financial market activity and the effect of geopolitical events.
GAAP basis 17,224 16,965 Adjustment: Unvested acquisition-related restricted stock with service conditions 715 909 Adjusted weighted average diluted common shares outstanding 17,939 17,874 External Factors Impacting Our Business Performance in the financial services industry in which we operate is highly correlated to the overall strength of macroeconomic conditions, financial market activity and the effect of geopolitical events.
Our fully disclosed clearing agreement includes a covenant requiring Piper Sandler & Co., our U.S. broker dealer subsidiary, to maintain excess net capital of $120 million. At December 31, 2022, we had less than $0.1 million of financing outstanding under this arrangement.
Our fully disclosed clearing agreement includes a covenant requiring Piper Sandler & Co., our U.S. broker dealer subsidiary, to maintain excess net capital of $120 million. At December 31, 2023, we had $0.2 million of financing outstanding under this arrangement.
Legal and Regulatory Risk Legal and regulatory risk includes the risk of non-compliance with applicable legal and regulatory requirements and loss to our reputation we may suffer as a result of failure to comply with laws, regulations, rules, related self-regulatory organization standards and codes of conduct applicable to our business activities.
Piper Sandler Companies | 56 Table of Contents Legal and Regulatory Risk Legal and regulatory risk includes the risk of non-compliance with applicable legal and regulatory requirements and loss to our reputation we may suffer as a result of failure to comply with laws, regulations, rules, related self-regulatory organization standards and codes of conduct applicable to our business activities.
Deal-Related Expenses – Deal-related expenses include costs we incurred over the course of a completed investment banking deal, which primarily consist of legal fees, offering expenses, and travel and entertainment costs. For the year ended December 31, 2022, deal-related expenses were $31.9 million, compared with $42.9 million for the year ended December 31, 2021.
Deal-Related Expenses Deal-related expenses include costs we incurred over the course of a completed investment banking deal, which primarily consist of legal fees, offering expenses, and travel costs. For the year ended December 31, 2023, deal-related expenses were $28.2 million, compared with $31.9 million for the year ended December 31, 2022.
Institutional brokerage revenues comprise all of the revenues generated through trading activities, which consist of facilitating customer trades and executing competitive municipal underwritings, as well as fees received for our research services and corporate access offerings.
Institutional brokerage revenues comprise all of the revenues generated through trading activities, which principally consist of facilitating customer trades, as well as fees received for our research services and corporate access offerings.
Interest expense represents amounts associated with financing, economically hedging and holding short inventory positions, including interest paid on our long-term financing arrangements, as well as commitment fees on our line of credit and revolving credit facility. For the year ended December 31, 2022, interest expense decreased to $9.5 million, compared with $10.7 million in 2021.
Interest expense represents amounts associated with financing, economically hedging and holding short inventory positions, including interest paid on our short- and long-term financing arrangements, as well as commitment fees on our committed line and revolving credit facility. For the year ended December 31, 2023, interest expense increased to $10.1 million, compared with $9.5 million in 2022.
Revenues are generated through commissions and sales credits earned on equity and fixed income institutional sales activities, net interest revenues on trading securities held in inventory, profits and losses from trading these securities, and research checks as clients pay us for research services and corporate access offerings.
Revenues are generated through commissions and sales credits earned on equity and fixed income institutional sales activities, net interest revenues on trading securities held in inventory, profits and losses from trading these securities, and fees for research services and corporate access offerings.
Effective May 6, 2022, our board of directors authorized the repurchase of up to $150.0 million in common shares through December 31, 2024. At December 31, 2022, we had $138.2 million remaining under this authorization.
Effective May 6, 2022, our board of directors authorized the repurchase of up to $150.0 million in common shares through December 31, 2024. In 2023, we did not repurchase any shares of our common stock related to this authorization. At December 31, 2023, we had $138.2 million remaining under this authorization.
Our committed short-term credit facility, revolving credit facility and Class B Notes include covenants requiring Piper Sandler & Co. to maintain a minimum regulatory net capital of $120 million. Our fully disclosed clearing agreement with Pershing includes a covenant requiring Piper Sandler & Co. to maintain excess net capital of $120 million.
Our committed line and revolving credit facility include covenants requiring Piper Sandler & Co. to maintain a minimum regulatory net capital of $120 million. Our fully disclosed clearing agreement with Pershing includes a covenant requiring Piper Sandler & Co. to maintain excess net capital of $120 million.
We have also established procedures that are designed to require that our policies relating to ethics and business conduct are followed. The legal and regulatory focus on the financial services industry presents a continuing business challenge for us.
We have also established procedures that are reasonably designed to achieve compliance with our policies relating to ethics and business conduct. The legal and regulatory focus on the financial services industry presents a continuing business challenge for us.
Investment income/(loss) includes realized and unrealized gains and losses on investments, including amounts attributable to noncontrolling interests, in our merchant banking and healthcare funds, as well as management and performance fees generated from those funds. For the year ended December 31, 2022, we recorded an investment loss of $23 thousand, compared to investment income of $94.0 million in 2021.
Investment income/(loss) includes realized and unrealized gains and losses on investments, including amounts attributable to noncontrolling interests, in our alternative asset management funds, as well as management and performance fees generated from those funds. For the year ended December 31, 2023, we recorded investment income of $30.0 million, compared to an investment loss of $23 thousand in 2022.
The expenses consisted of $5.2 million of transaction costs primarily related to our 2022 acquisitions, $5.6 million for vacated leased office space associated with our acquisitions of The Valence Group ("Valence") and Cornerstone Macro and $0.6 million of severance benefits. For the year ended December 31, 2021, we incurred acquisition-related restructuring and integration costs of $4.7 million.
The expenses primarily consisted of $6.7 million of severance benefits related to headcount reductions and $0.9 million for vacated leased office space associated with our acquisitions of Cornerstone Macro and The Valence Group ("Valence"). For the year ended December 31, 2022, we incurred acquisition-related restructuring and integration costs of $11.4 million.
The uncollateralized amounts, representing the fair value of the derivative contracts, expose us to the credit risk of these counterparties. At December 31, 2022, we had $10.8 million of credit exposure with these counterparties, including $6.2 million of credit exposure with one counterparty.
The uncollateralized amounts, representing the fair value of the derivative contracts, expose us to the credit risk of these counterparties. At December 31, 2023, we had $6.7 million of credit exposure with these counterparties, including $5.8 million of credit exposure with one counterparty.
Clearing Arrangement with Bank Financing – In the second quarter of 2021, we established a financing arrangement with a U.S. branch of Canadian Imperial Bank of Commerce ("CIBC") related to our convertible securities inventories. Under this arrangement, our convertible securities inventories are cleared through a broker dealer affiliate of CIBC, and held and financed by CIBC.
Clearing Arrangement with Bank Financing We have established a financing arrangement with a U.S. branch of Canadian Imperial Bank of Commerce ("CIBC") related to our convertible securities inventories. Under this arrangement, our convertible securities inventories are cleared through a broker dealer affiliate of CIBC and held by CIBC.
GAAP financial results for the periods presented: Year Ended December 31, 2021 2020 Adjustments (1) Adjustments (1) Total Noncontrolling Other U.S. Total Noncontrolling Other U.S.
GAAP financial results for the periods presented: Year Ended December 31, 2023 2022 Adjustments (1) Adjustments (1) Total Noncontrolling Other U.S. Total Noncontrolling Other U.S.
GAAP basis were $1.43 billion for the year ended December 31, 2022, compared with $2.03 billion in the prior-year period. For the year ended December 31, 2022, adjusted net revenues were $1.43 billion, compared with $1.98 billion for the year ended December 31, 2021. The variance explanations for net revenues and adjusted net revenues are consistent on both a U.S.
GAAP basis were $1.35 billion for the year ended December 31, 2023, compared with $1.43 billion in the prior-year period. For the year ended December 31, 2023, adjusted net revenues were $1.33 billion, compared with $1.43 billion for the year ended December 31, 2022. The variance explanations for net revenues and adjusted net revenues are consistent on both a U.S.
This resulted in a $4.6 million tax benefit to our results of operations. 40 Table of Contents We record deferred tax benefits for future tax deductions expected upon the vesting of stock-based compensation. We recognize the income tax effects of stock-based compensation awards in the income statement when the awards vest.
This resulted in a $4.6 million tax benefit to our results of operations for the year ended December 31, 2022. We record deferred tax benefits for future tax deductions expected upon the vesting of stock-based compensation. We recognize the income tax effects of stock-based compensation awards in the income statement when the awards vest.
Our board of directors has declared a special cash dividend on our common stock of $1.25 per share related to 2022 adjusted net income. This special dividend will be paid on March 17, 2023, to shareholders of record as of the close of business on March 3, 2023.
Our board of directors has declared a special cash dividend on our common stock of $1.00 per share related to 2023 adjusted net income. This special dividend will be paid on March 15, 2024, to shareholders of record as of the close of business on March 4, 2024.
We expect that these provisions will not impact our ability to meet current and future obligations. At December 31, 2022, our net capital under the SEC's uniform net capital rule was $198.5 million, and exceeded the minimum net capital required under the SEC rule by $197.5 million.
We expect that these provisions will not impact our ability to meet current and future obligations. At December 31, 2023, our net capital under the SEC's uniform net capital rule was $247.9 million, and exceeded the minimum net capital required under the SEC rule by $246.9 million.
Including this special cash dividend, we will have returned $3.65 per share, or approximately 32 percent of our fiscal year 2022 adjusted net income to shareholders.
Including this special cash dividend, we will have returned $3.40 per share, or approximately 37 percent of our fiscal year 2023 adjusted net income to shareholders.
Collectively, debt advisory transactions and equity and debt private placements are referred to as capital advisory transactions. Investment banking revenues also include equity and debt corporate financing activities and municipal financings. In 2022, investment banking revenues were $1.01 billion, down 35.0 percent compared to $1.55 billion in the prior-year period.
Collectively, debt advisory transactions and equity and debt private placements are referred to as capital advisory transactions. Investment banking revenues also include equity and debt corporate financing activities and municipal financings. In 2023, investment banking revenues were $923.8 million, down 8.5 percent compared to $1.01 billion in the prior-year period.
At December 31, 2022, there were no advances against this credit facility. 44 Table of Contents This credit facility includes customary events of default and covenants that, among other things, require Piper Sandler & Co. to maintain a minimum regulatory net capital of $120 million, limit our leverage ratio, require maintenance of a minimum ratio of operating cash flow to fixed charges, and impose certain limitations on our ability to make acquisitions and make payments on our capital stock.
This credit facility includes customary events of default and covenants that, among other things, require Piper Sandler & Co. to maintain a minimum regulatory net capital of $120 million, limit our leverage ratio, require maintenance of a minimum ratio of operating cash flow to fixed charges, and impose certain limitations on our ability to make acquisitions and make payments on our capital stock.
This decrease was partially offset by $4.5 million in expense for the earnout with no service requirements related to Cornerstone Macro. 33 Table of Contents Income Taxes – For the year ended December 31, 2022, our provision for income taxes was $33.2 million, which included a $5.6 million tax benefit related to stock-based compensation awards vesting at values greater than the grant price and a one-time tax benefit of $4.6 million related to the full reversal of our U.K. subsidiary's deferred tax valuation allowance, as a result of improved operating results in the U.K.
For the year ended December 31, 2022, our provision for income taxes was $33.2 million, which included a $5.6 million tax benefit related to stock-based compensation awards vesting at values greater than the grant price and a one-time tax benefit of $4.6 million related to the full reversal of our U.K. subsidiary's deferred tax valuation allowance, as a result of improved operating results in the U.K.
The realization of deferred tax assets is assessed and a valuation allowance is recognized to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized.
The realization of deferred tax assets is assessed and a valuation allowance is recognized to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized. We believe that our future taxable profits will be sufficient to recognize our deferred tax assets.
Recent Accounting Pronouncements Recent accounting pronouncements are set forth in Note 3 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K, and are incorporated herein by reference. 38 Table of Contents Critical Accounting Policies and Estimates Our accounting and reporting policies comply with U.S. GAAP and conform to practices within the securities industry.
Piper Sandler Companies | 43 Table of Contents RECENT ACCOUNTING PRONOUNCEMENTS Recent accounting pronouncements are set forth in Note 3 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K, and are incorporated herein by reference. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our accounting and reporting policies comply with U.S.
Our convertible securities inventories are generally economically hedged by the underlying common stock or the stock options of the underlying common stock. Financing under this arrangement is secured primarily by convertible securities and collateral limitations could reduce the amount of funding available.
We generally economically hedge changes in the market value of our convertible securities inventories using the underlying common stock or the stock options of the underlying common stock. Financing under this arrangement is secured primarily by convertible securities and collateral limitations could reduce the amount of funding available.
In 2022, investing activities used $127.1 million, of which $96.5 million was used for the acquisitions of DBO Partners, Stamford Partners and Cornerstone Macro. We also used $30.6 million for the purchase of fixed assets. Cash of $250.1 million was used in financing activities as we paid $107.5 million in dividends and repurchased $187.3 million of common stock during 2022.
We also used $30.6 million for the purchase of fixed assets. Cash of $250.1 million was used in financing activities, as we paid $107.5 million in dividends and repurchased $187.3 million of common stock during 2022.
A modest portion of our business is conducted in currencies other than the U.S. dollar, and changes in foreign exchange rates relative to the U.S. dollar can therefore affect the value of non-U.S. dollar net assets, revenues and expenses.
Foreign Exchange Risk Foreign exchange risk represents the potential volatility to earnings or capital arising from movement in foreign exchange rates. A modest portion of our business is conducted in currencies other than the U.S. dollar, and changes in foreign exchange rates relative to the U.S. dollar can therefore affect the value of non-U.S. dollar net assets, revenues and expenses.
The right-of-use lease asset is also subtracted from total assets in determining adjusted assets as it is not an operating asset that can be deployed in a liquid manner.
Right-of-use lease assets are also subtracted from total assets in determining adjusted assets as these are not operating assets that can be deployed in a liquid manner.
To the extent inflation results in rising interest rates and has adverse effects upon the securities markets, it may adversely affect our financial position and results of operations.
To the extent inflation results in rising interest rates and has adverse effects upon the securities markets, it may adversely affect our financial position and results of operations. Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Outside Services – Outside services expenses include securities processing expenses, outsourced technology functions, outside legal fees, fund expenses associated with our consolidated alternative asset management funds and other professional fees. Outside services expenses increased 15.8 percent to $53.2 million in 2022, compared with $45.9 million in 2021, primarily due to higher professional fees.
Outside Services Outside services expenses include securities processing expenses, outsourced technology functions, outside legal fees, fund expenses associated with our consolidated alternative asset management funds and other professional fees. Outside services expenses decreased 2.7 percent to $51.8 million in 2023, compared with $53.2 million in 2022, primarily due to lower professional fees.
The following table summarizes the future aggregate amortization expense of our intangible assets with determinable lives: (Amounts in thousands) 2023 $ 19,440 2024 9,445 2025 7,887 2026 7,253 2027 3,480 Thereafter 2,732 Total $ 50,237 Other Operating Expenses – Other operating expenses primarily include insurance costs, license and registration fees, expenses related to our charitable giving program and litigation-related expenses, which consist of the amounts we reserve and/or pay out related to legal and regulatory matters.
The following table summarizes the future aggregate amortization expense of our intangible assets with determinable lives: (Amounts in thousands) 2024 $ 9,445 2025 7,887 2026 7,253 2027 3,480 2028 2,191 Thereafter 541 Total $ 30,797 Piper Sandler Companies | 37 Table of Contents Other Operating Expenses Other operating expenses primarily include insurance costs, license and registration fees, expenses related to our charitable giving program and litigation-related expenses, which consist of the amounts we accrue for and/or pay out related to legal and regulatory matters.
The adjusted financial results exclude (1) revenues and expenses related to noncontrolling interests, (2) interest expense on long-term financing from net revenues, (3) amortization of intangible assets related to acquisitions, (4) compensation and non-compensation expenses from acquisition-related agreements and (5) acquisition-related restructuring and integration costs. For U.S.
The adjusted financial results exclude (1) investment (income)/loss and non-compensation expenses related to noncontrolling interests, (2) interest expense on long-term financing from net revenues, (3) amortization of intangible assets related to acquisitions, (4) compensation and non-compensation expenses from acquisition-related agreements, (5) restructuring and integration costs related to acquisitions and/or headcount reductions and (6) non-compensation expenses from potential regulatory settlements.
Advances under this facility are secured by certain marketable securities. The facility includes a covenant that requires Piper Sandler & Co. to maintain a minimum regulatory net capital of $120 million, and the unpaid principal amount of all advances under the facility will be due on December 8, 2023.
The facility includes a covenant that requires Piper Sandler & Co. to maintain a minimum regulatory net capital of $120 million, and the unpaid principal amount of all advances under the facility will be due on December 6, 2024.
Interest income represents amounts earned from holding long inventory positions. For the year ended December 31, 2022, interest income increased to $20.4 million, compared with $7.0 million in 2021, reflecting higher interest rates on our long inventory and cash balances.
For the year ended December 31, 2023, interest income increased to $26.7 million, compared with $20.4 million in 2022, reflecting higher interest rates on our long inventory and cash balances.
GAAP measures provides a more meaningful basis for comparison of its operating results and underlying trends between periods , and enhances the overall understanding of our current financial performance by excluding certain items that may not be indicative of our core operating results.
Management believes that presenting results and measures on an adjusted, non-GAAP basis in conjunction with the corresponding U.S. GAAP measures provides a more meaningful basis for comparison of its operating results and underlying trends between periods, and enhances the overall understanding of our current financial performance by excluding certain items that may not be indicative of our core operating results.
Other adjustments – The following items are not included in our adjusted financial results: Year Ended December 31, (Amounts in thousands) 2021 2020 Interest expense on long-term financing $ 8,446 $ 9,628 Compensation from acquisition-related agreements 116,795 113,396 Acquisition-related restructuring and integration costs 4,724 10,755 Amortization of intangible assets related to acquisitions 30,080 44,728 Non-compensation expenses from acquisition-related agreements 249 12,085 151,848 180,964 Total other adjustments $ 160,294 $ 190,592 Discussion of the year-over-year comparisons between 2021 and 2020 can be found in "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 year ended December 31, 2021, filed with the SEC on February 25, 2022 .
Other adjustments – The following items are not included in our adjusted financial results: Year Ended December 31, (Amounts in thousands) 2022 2021 Other adjustments Interest expense on long-term financing $ 6,500 $ 8,446 Other adjustments to total non-interest expenses: Compensation from acquisition-related agreements 87,525 116,795 Restructuring and integration costs 11,440 4,724 Amortization of intangible assets related to acquisitions 15,375 30,080 Non-compensation expenses from acquisition-related agreements 4,450 249 Total other adjustments to total non-interest expenses 118,790 151,848 Total other adjustments $ 125,290 $ 160,294 Discussion of the year-over-year comparisons between 2022 and 2021 can be found in "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 year ended December 31, 2022, filed with the SEC on February 24, 2023.
In 2022, we recorded a liability of $2.2 million for uncertain state income tax positions. Liquidity, Funding and Capital Resources We regularly monitor our liquidity position, which is of critical importance to our business.
As of December 31, 2023, we have a $1.8 million liability recorded for uncertain state income tax positions. LIQUIDITY, FUNDING AND CAPITAL RESOURCES We regularly monitor our liquidity position, which is of critical importance to our business.
The audit committee of the board of directors oversees management's processes for identifying and evaluating our major risks, and the policies, procedures and practices employed by management to govern its risk assessment and risk management processes.
Our management takes an active role in the risk management process, and the results are reported to senior management and the board of directors. The audit committee of the board of directors oversees management's processes for identifying and evaluating our major risks, and the policies, procedures and practices employed by management to govern its risk assessment and risk management processes.
With respect to these major risk exposures, the audit committee is responsible for overseeing management's monitoring and control of our major risk exposures relating to market risk, credit risk, liquidity risk, legal and regulatory risks, operational risk (including cybersecurity), and human capital risk relating to misconduct, fraud, and legal and compliance matters.
With respect to these major risk exposures, the audit committee is responsible for overseeing management's monitoring and control of our major risk exposures relating to market risk, credit risk, liquidity risk, legal and regulatory risk, operational risk (including cybersecurity, as further described in Part I, Item 1C of this Form 10-K), and human capital risk relating to misconduct, fraud, and legal and compliance matters.
We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
We have elected to test goodwill for impairment in the fourth quarter of each calendar year. We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
We estimate that a parallel 50 basis point adverse change in the market would result in a decrease of approximately $0.1 million in the carrying value of our fixed income securities inventory as of December 31, 2022, including the effect of the hedging transactions. 48 Table of Contents We also measure and monitor the aging and turnover of our long fixed income securities inventory.
We estimate that a parallel 50 basis point adverse change in the market would result in a decrease of approximately $0.3 million in the carrying value of our fixed income securities inventory as of December 31, 2023, including the effect of the hedging transactions.
See Note 2 and Note 11 to our consolidated financial statements for additional information on our impairment testing. 39 Table of Contents The initial recognition of goodwill and other intangible assets and the subsequent quantitative impairment analysis involves significant judgment in determining the estimates of future cash flows, discount rates, economic forecast and other assumptions which are then used in acceptable valuation techniques, such as the market approach (earnings and/or transaction multiples) and/or the income approach (discounted cash flow method).
The initial recognition of goodwill and other intangible assets and the subsequent quantitative impairment analysis involves significant judgment in determining the estimates of future cash flows, discount rates, economic forecast and other assumptions which are then used in acceptable valuation techniques, such as the market approach (e.g., earnings and/or transaction multiples) and/or the income approach (e.g., discounted cash flow method).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The information under the caption "Risk Management" in Part II, Item 7 of this Form 10-K entitled, "Management's Discussion and Analysis of Financial Condition and Results of Operations," is incorporated herein by reference. 51 Table of Contents
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Item 7A. Q u antitati ve and Q ualitative D isclosures A bout M arket R isk 57 Item 8.
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F inancial S tatements and S upplementa r y D ata 58 M anagement's Report on Internal Control Over Financial Reporting 58 R eport s of In dependent Registered Public Accounting F i rm (PCAOB ID 42 ) 59 C onsolidated Financia l Statements 62 N otes to the Consolidated Financial Statements 67 Supplementary Data 111

Other PIPR 10-K year-over-year comparisons