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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2018
Fair Value Disclosures [Abstract] |
Fair Value Measurements | 5. Fair Value Measurements Securities owned and securities sold, but not yet purchased are measured at fair value. The fair value of securities is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the exit price”) in an orderly transaction between market participants at the measurement date. Accounting Standards Codification (“ASC”) 820, Fair Value Measurements, establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the transparency of inputs as follows:
|  | Level 1 |  | – |  | Quoted prices for identical instruments in active markets.
|  | Level 2 |  | – |  | Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
|  | Level 3 |  | – |  | Instruments whose significant drivers are unobservable.
The availability of observable inputs can vary from product to product and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The tables below summarize the categorization of the Company’s assets and liabilities measured at fair value. During the three and nine months ended September 2018 and 2017 there were no transfers between Levels 1, 2 and 3.
|  | September 30, 2018 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 5,722 |  |  | $ | 5,722 |  |  | $ | — |  |  | $ | — |
Securities owned, at fair value |  |  | 4,426 |  |  |  | 4,426 |  |  |  | — |  |  |  | — |
Total |  | $ | 10,148 |  |  | $ | 10,148 |  |  |  | — |  |  | $ | — |
Non-recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
AdvisorEngine Inc. – Option(1) |  | $ | 3,278 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,278 |
Thesys Group, Inc. – Series Y preferred stock(2) |  |  | 6,909 |  |  |  | — |  |  |  | — |  |  |  | 6,909 |
Total |  | $ | 10,187 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,187 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred consideration (Note 11) |  | $ | 156,055 |  |  | $ | — |  |  | $ | — |  |  | $ | 156,055 |
Securities sold, but not yet purchased |  |  | 2,018 |  |  |  | 2,018 |  |  |  | — |  |  |  | — |
Total |  | $ | 158,073 |  |  | $ | 2,018 |  |  | $ | — |  |  | $ | 156,055 |
|  | December 31, 2017 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 26,548 |  |  | $ | 26,548 |  |  | $ | — |  |  | $ | — |
Securities owned, at fair value |  |  | 66,294 |  |  |  | 1,691 |  |  |  | 64,603 |  |  |  | — |
Total |  | $ | 92,842 |  |  | $ | 28,239 |  |  | $ | 64,603 |  |  | $ | — |
Non-recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
AdvisorEngine Inc. – Option(1) |  | $ | 3,278 |  |  |  | — |  |  |  | — |  |  | $ | 3,278 |
Thesys Group, Inc. – Series Y preferred stock(2) |  |  | 6,909 |  |  |  | — |  |  |  | — |  |  |  | 6,909 |
Total |  | $ | 10,187 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,187 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities sold, but not yet purchased |  | $ | 950 |  |  | $ | 950 |  |  | $ | — |  |  | $ | — |
Total |  | $ | 950 |  |  | $ | 950 |  |  | $ | — |  |  | $ | — |
(1) | Fair value determined on December 29, 2017 (See Note 9).
(2) | Fair value determined on June 20, 2017 (See Note 9).
Recurring Fair Value Measurements - Methodology Cash and Cash Equivalents (Note 4) – These financial assets represent cash in banks or cash invested in highly liquid investments with original maturities less than 90 days. These investments are valued at par, which approximates fair value, and are considered Level 1. Securities Owned/Sold but Not Yet Purchased (Note 6) – Securities owned and sold, but not yet purchased include investments in ETFs and short-term investment grade corporate bonds. ETFs are generally traded in active, quoted and highly liquid markets and are therefore classified as Level 1 in the fair value hierarchy. Investments in short-term investment grade corporate bonds are classified as Level 2 as fair value is generally derived from observable bids for these financial instruments. Deferred Consideration – Deferred consideration represents the present value of an obligation to pay gold into perpetuity and was measured at September 30, 2018 using forward-looking gold prices ranging from $1,193 per ounce to $2,693 per ounce which are extrapolated from the last observable price (beyond 2024), discounted at a rate of 10%. This obligation is classified as Level 3 as the discount rate and extrapolated forward-looking gold prices are significant unobservable inputs. An increase in gold prices would result in an increase in deferred consideration, whereas, an increase in the discount rate would reduce the fair value. See Note 11 for additional information. The following table presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Deferred consideration (See Note 11) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 162,848 |  |  | $ | — |  |  | $ | 172,746 | (1) |  | $ | — |
Net realized losses/(gains)(2) |  |  | 2,880 |  |  |  | — |  |  |  | 5,595 |  |  |  | — |
Net unrealized losses/(gains)(3) |  |  | (7,732 | ) |  |  | — |  |  |  | (17,630 | ) |  |  | — |
Settlements |  |  | (1,941 | ) |  |  | — |  |  |  | (4,656 | ) |  |  | — |
Ending balance |  | $ | 156,055 |  |  | $ | — |  |  | $ | 156,055 |  |  | $ | — |
(1) | Arose in connection with the completion of the ETFS Acquisition on April 11, 2018 (See Note 3).
(2) | Recorded as contractual gold payments expense on the Company’s Consolidated Statements of Operations.
(3) | Recorded as gain on revaluation of deferred consideration on the Company’s Consolidated Statements of Operations.

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- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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