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Revenues from Contracts with Customers | 6 Months Ended
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Jun. 30, 2018
Revenue From Contract With Customer [Abstract] |
Revenues from Contracts with Customers | NOTE 17 – Revenues from Contracts with Customers The following table presents the Company’s total revenues separated between revenues from contracts with customers and other sources of revenues for the three and six months ended June 30, 2018 (in thousands):
|  | Three Months Ended June 30, 2018 |  |  | Six Months Ended June 30, 2018 |
Revenues from contracts with customers: |  |  |  |  |  |  |  |
Commissions |  | $ | 166,902 |  |  | $ | 332,677 |
Investment banking |  |  | 161,063 |  |  |  | 337,425 |
Asset management and service fees |  |  | 199,568 |  |  |  | 395,369 |
Other |  |  | 3,796 |  |  |  | 7,514 |
Total revenue from contracts with customers |  |  | 531,329 |  |  |  | 1,072,985 |
Other sources of revenue: |  |  |  |  |  |  |  |
Interest |  |  | 154,421 |  |  |  | 292,155 |
Principal transactions |  |  | 88,984 |  |  |  | 186,766 |
Other |  |  | 5,277 |  |  |  | 4,916 |
Total revenues |  | $ | 780,011 |  |  | $ | 1,556,822 |
Revenue from contracts with customers is recognized when, or as, we satisfy our performance obligations by transferring the promised goods or services to the customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring our progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised goods or services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. The following provides detailed information on the recognition of our revenues from contracts with customers: Commissions. We earn commission revenue by executing, settling, and clearing transactions for clients primarily in OTC and listed equity securities, insurance products, and options. Trade execution and clearing and custody services, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission revenues associated with combined trade execution and clearing and custody services, as well as trade execution services on a standalone basis, are recognized at a point in time on trade-date. Commission revenues are generally paid on settlement date and we record a receivable between trade-date and payment on settlement date. Investment Banking. We provide our clients with a full range of capital markets and financial advisory services. Capital markets services include underwriting and placement agent services in both the equity and debt capital markets, including private equity placements, initial public offerings, follow-on offerings, underwriting and distributing public and private debt. Capital raising revenues are recognized at a point in time on trade-date, as the client obtains the control and benefit of the capital markets offering at that point. Costs associated with capital raising transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded, and are recorded on a gross basis within other operating expenses in the consolidated statements of operations as we are acting as a principal in the arrangement. Any expenses reimbursed by our clients are recognized as investment banking revenues. Revenues from financial advisory services primarily consist of fees generated in connection with merger, acquisition and restructuring transactions. Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed, as the performance obligation is to successfully broker a specific transaction. Fees received prior to the completion of the transaction are deferred within accounts payable and accrued expenses on the consolidated statements of financial condition. Advisory fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. A significant portion of the fees we receive for our advisory services are considered variable as they are contingent upon a future event (e.g., completion of a transaction or third party emergence from bankruptcy) and are excluded from the transaction price until the uncertainty associated with the variable consideration is subsequently resolved, which is expected to occur upon achievement of the specified milestone. Payment for advisory services are generally due promptly upon completion of a specified milestone or, for retainer fees, periodically over the course of the engagement. We recognize a receivable between the date of completion of the milestone and payment by the customer. Expenses associated with investment banking advisory engagements are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized upon completion of services. All other investment banking advisory related expenses, including expenses incurred related to restructuring assignments, are expensed as incurred. All investment banking advisory expenses are recognized within other operating expenses on the consolidated statements of operations and any expenses reimbursed by our clients are recognized as investment banking revenues. Asset Management Fees. We earn management and performance fees in connection with investment advisory services provided to institutional and individual clients. Investment advisory fees are charged based on the value of assets in fee-based accounts and are affected by changes in the balances of client assets due to market fluctuations and levels of net new client assets. Fees are charged either in advance based on fixed rates applied to the value of the customers’ account at the beginning of the period or periodically based on contracted rates and account performance. Contracts can be terminated at any time with no incremental payments due to our company upon termination. If the contract is terminated by the customer fees are prorated for the period and fees charged for the post termination period are refundable to the customer. Disaggregation of Revenue The following tables present the Company’s revenues from contracts with customers by reportable segment disaggregated by major business activity and primary geographic regions for the three and six months ended June 30, 2018 (in thousands):
|  | Three Months Ended June 30, 2018 (1) |
|  | Global Wealth Management |  |  | Institutional Group |  |  | Total |
Major business activity: |  |  |  |  |  |  |  |  |  |  |  |
Commissions |  | $ | 118,129 |  |  | $ | 48,773 |  |  | $ | 166,902 |
Investment banking - capital raising |  |  | 7,968 |  |  |  | 66,112 |  |  |  | 74,080 |
Investment banking - advisory fees |  |  | 81 |  |  |  | 86,922 |  |  |  | 87,003 |
Asset management |  |  | 199,557 |  |  |  | 11 |  |  |  | 199,568 |
Other |  |  | 3,796 |  |  |  | — |  |  |  | 3,796 |
Total |  |  | 329,531 |  |  |  | 201,818 |  |  |  | 531,349 |
Primary Geographic Region: |  |  |  |  |  |  |  |  |  |  |  |
United States |  |  | 329,531 |  |  |  | 173,415 |  |  |  | 502,946 |
Europe |  |  | — |  |  |  | 25,953 |  |  |  | 25,953 |
Other |  |  | — |  |  |  | 2,450 |  |  |  | 2,450 |
|  | $ | 329,531 |  |  | $ | 201,818 |  |  | $ | 531,349 |
|  | Six Months Ended June 30, 2018 (1) |
|  | Global Wealth Management |  |  | Institutional Group |  |  | Total |
Major business activity: |  |  |  |  |  |  |  |  |  |  |  |
Commissions |  | $ | 237,334 |  |  | $ | 95,343 |  |  | $ | 332,677 |
Investment banking - capital raising |  |  | 15,656 |  |  |  | 137,113 |  |  |  | 152,769 |
Investment banking - advisory fees |  |  | 81 |  |  |  | 184,595 |  |  |  | 184,676 |
Asset management |  |  | 395,346 |  |  |  | 23 |  |  |  | 395,369 |
Other |  |  | 7,514 |  |  |  | — |  |  |  | 7,514 |
Total |  |  | 655,931 |  |  |  | 417,074 |  |  |  | 1,073,005 |
Primary Geographic Region: |  |  |  |  |  |  |  |  |  |  |  |
United States |  |  | 655,931 |  |  |  | 349,765 |  |  |  | 1,005,696 |
Europe |  |  | — |  |  |  | 63,832 |  |  |  | 63,832 |
Other |  |  | — |  |  |  | 3,477 |  |  |  | 3,477 |
|  | $ | 655,931 |  |  | $ | 417,074 |  |  | $ | 1,073,005 |
(1) Excludes revenue included in the Other segment. See Note 21 for further break-out of revenues by geography. Information on Remaining Performance Obligations and Revenue Recognized from Past Performance We do not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at June 30, 2018. Investment banking advisory fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price at June 30, 2018. Contract Balances The timing of our revenue recognition may differ from the timing of payment by our customers. We record a receivable when revenue is recognized prior to payment and we have an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, we record deferred revenue until the performance obligations are satisfied. We had receivables related to revenues from contracts with customers of $134.8 million and $96.0 million at June 30, 2018 and December 31, 2017, respectively. We had no significant impairments related to these receivables during the three months ended June 30, 2018. Our deferred revenue primarily relates to retainer fees received in investment banking advisory engagements where the performance obligation has not yet been satisfied. Deferred revenue at June 30, 2018 was $8.1 million.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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