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Investments, Carried at Cost | 9 Months Ended
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Sep. 30, 2019
Schedule of Investments [Abstract] |
Investments, Carried at Cost | 9. Investments, Carried at Cost The following table sets forth the Company’s investments, carried at cost:
|  | September 30, 2019 |  |  | December 31, 2018 |
AdvisorEngine – Preferred stock |  | $ | 25,000 |  |  | $ | 25,000 |
Thesys Group, Inc. (“Thesys”) |  |  | 3,080 |  |  |  | 3,080 |
Total |  | $ | 28,080 |  |  | $ | 28,080 |
AdvisorEngine Preferred Stock The Company owns approximately 46% (or 41% on a fully-diluted basis) of AdvisorEngine, a digital ​​​​​​​wealth management platform, through strategic investments totaling $25,000. In consideration of its investment, the Company received 11,811,856 shares and 2,646,062 shares of Series A and Series A-1 convertible preferred stock, respectively. The Series A and Series A-1 preferred shares have substantially the same terms, are convertible into common stock at the option of the Company and contain various rights and protections including a non-cumulative 6.0% dividend, payable if and when declared by the board of directors, and a liquidation preference that is senior to all other holders of capital stock of AdvisorEngine. The Company and AdvisorEngine also entered into an agreement whereby the Company’s asset allocation models are made available through AdvisorEngine’s open architecture platform and the Company actively introduces the platform to its distribution network. The investment is accounted for under the cost method of accounting as it is not considered to be in-substance common stock. The Company quantitatively assessed its investment for impairment at December 31, 2018. The table below presents the ranges and weighted averages of significant unobservable inputs used in this assessment:
|  | Range (Weighted Average) |
Market Approach |  |  |  |
Revenue multiple |  |  | 4.7 x - 5.4 x ( 5.0 x) |
Income Approach |  |  |  |
Weighted average cost of capital (“WACC”) |  |  | 26.0% |
An increase in the revenue multiple would result in a higher enterprise value, whereas an increase in the WACC would reduce fair value. The results of the quantitative assessment noted no impairment at December 31, 2018. In addition, no impairment existed at September 30, 2019 based upon a qualitative assessment. There were also no observable price changes during the applicable reporting periods. Thesys On June 20, 2017, the Company was issued 7,797,533 newly authorized shares of Series Y preferred stock (“Series Y Preferred”) of Thesys in connection with the resolution of a dispute related to the Company’s ownership stake in Thesys. The Series Y Preferred represents current ownership of approximately 19% of Thesys on a fully diluted basis (excluding certain reserved shares). In addition, the Company was issued a warrant to purchase 3,898,766 shares of Series Y Preferred. The Series Y Preferred ranks pari passu in priority with Thesys’s current preferred stockholders, has a liquidation preference of $0.231 per share, contains various rights and protections and is convertible into common stock at the option of the Company. The warrant is exercisable for five years after closing, at varying exercise prices that increase over time and set at multiples of a pre-determined Thesys valuation (or new valuation if Thesys completes a qualified financing, as defined, within two years). If a claim is brought against Thesys or the Company relating to the settlement, the warrant will be exercisable for 100% of the number of shares of Series Y Preferred issued to the Company at closing. The Series Y Preferred is accounted for under the cost method of accounting as it is not considered to be in-substance common stock. The Company quantitatively assessed its investment for impairment at December 31, 2018. The table below presents the ranges and weighted averages of significant unobservable inputs used in this assessment:
|  | Range (Weighted Average) |
Income Approach (1) |  |
WACC |  | 3.8% - 15.5% (14.1%)
(1) | The inputs selected varied, based upon the Thesys business line being valued. An increase in the WACC would result in a lower enterprise value.
The quantitative assessment performed resulted in the recognition of an impairment in the fourth quarter of 2018. No additional impairment was recognized at September 30, 2019 based upon a qualitative assessment. There were also no observable price changes during the applicable reporting periods. The carrying value of the Series Y Preferred was $3,080 at September ​​​​​​​30, 2019 and December 31, 2018, respectively. The fair value of the warrant was determined to be insignificant. The warrant is not accounted for as a derivative as it cannot be net settled​​​​​​​ and is not readily convertible to cash.

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