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Revenues from contracts with customers 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 | Revenues from contracts with customers In the first quarter of 2018, the Company adopted ASU 2014-09, "Revenue from Contracts with Customers." The Company has elected the modified retrospective method which did not result in a cumulative-effect adjustment at the date of adoption. The implementation of this new standard had no material impact on the Company's condensed consolidated financial statements for the three and six months ended June 30, 2018. Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring the promised goods or services to 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 the Company's 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 the Company determines the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for those promised goods or services (i.e., the "transaction price"). In determining the transaction price, the Company considers 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, the Company considers 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 the Company's influence, such as market volatility or the judgment and actions of third parties. The Company earns revenue from contracts with customers and other sources (principal transactions, interest and other). The following provides detailed information on the recognition of the Company's revenue from contracts with customers: Commissions Commissions from Sales and Trading — The Company earns commission revenue by executing, settling and clearing transactions with clients primarily in exchange-traded and over-the-counter corporate equity and debt securities, money market instruments and exchange-traded options and futures contracts. A substantial portion of Company's revenue is derived from commissions from private clients through accounts with transaction-based pricing. Trade execution and clearing services, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission revenue associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, is recognized at a point in time on trade date when the performance obligation is satisfied. Commission revenue is generally paid on settlement date, which is generally two business days after trade date for equity securities and corporate bond transactions and one day for government securities and commodities transactions. The Company records a receivable on the trade date and receives a payment on settlement date. Mutual Fund Income — The Company earns mutual fund income for sales and distribution of mutual fund shares. Many mutual fund companies pay distribution fees to intermediaries, such as broker-dealers, for selling their shares. The fees are operational expenses of the mutual fund and are included in its expense ratio. The Company recognizes mutual fund income at a point in time on trade date when the performance obligation is satisfied which is when the mutual fund interest is sold to the investor. Mutual fund income is generally received within 90 days. Advisory Fees The Company earns management and performance (or incentive) fees in connection with the advisory and asset management services it provides to various types of funds and investment vehicles through its subsidiaries. Management fees are generally based on the account value at the valuation date per the respective asset management agreements and are recognized over time as the customer receives the benefits of the services evenly throughout the term of the contract. Performance fees are recognized when the return on client assets under management ("AUM") exceeds a specified benchmark return or other performance targets over a 12-month measurement period. Performance fees are considered variable as they are subject to fluctuation and/or are contingent on a future event over the measurement period and are not subject to adjustment once the measurement period ends. Such fees are computed as of the fund's year-end when the measurement period ends and generally are recorded as earned in the fourth quarter of the Company's fiscal year. Both management and performance fees are generally received within 90 days. Investment Banking The Company earns underwriting revenues by providing capital raising solutions for corporate clients through initial public offerings, follow-on offerings, equity-linked offerings, private investments in public entities, and private placements. Underwriting 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. These fees are generally received within 90 days after the transactions are completed. Transaction-related expenses, primarily consisting of legal, travel and other costs directly associated with the transaction, are deferred and recognized in the same period as the related investment banking transaction revenue. Underwriting revenues and related expenses are presented gross on the condensed consolidated statement of operations. Revenue from financial advisory services includes fees generated in connection with mergers, acquisitions and restructuring transactions and such revenue and fees are primarily recorded at a point in time when services for the transactions are completed and income is reasonably determinable, generally as set forth under the terms of the engagement. Payment for advisory services is generally due upon a completion of the transaction or milestone. Retainer fees and fees earned from certain advisory services are recognized ratably over the service period as the customer receives the benefit of the services throughout the term of the contracts, and such fees are collected based on the terms of the contracts. Bank Deposit Sweep Income Bank deposit sweep income consists of revenue earned from the FDIC-insured bank deposit program. Under this program, client funds are swept into deposit accounts at participating banks and are eligible for FDIC deposit insurance up to FDIC standard maximum deposit insurance amounts. Fees are earned over time and are generally received within 30 days. Disaggregation of Revenue The following presents the Company's revenue from contracts with customers disaggregated by major business activity and other sources of revenue for the three and six months ended June 30, 2018:
(Expressed in thousands) | For the Three Months Ended June 30, 2018
| Reportable Segments
| Private Client |  | Asset Management |  | Capital Markets |  | Corporate/Other |  | Total
Revenues from contracts with customers: |  |  |  |  |  |  |  |  |
Commissions from sales and trading | $ | 39,093 |  |  | $ | — |  |  | $ | 33,022 |  |  | $ | 62 |  |  | $ | 72,177 |
Mutual fund income | 10,441 |  |  | 222 |  |  | 5 |  |  | 5 |  |  | 10,673 |
Advisory fees | 59,774 |  |  | 17,485 |  |  | 3 |  |  | 8 |  |  | 77,270 |
Investment banking - capital markets | 3,469 |  |  | — |  |  | 16,196 |  |  | — |  |  | 19,665 |
Investment banking - advisory | — |  |  | — |  |  | 8,239 |  |  | — |  |  | 8,239 |
Bank deposit sweep income | 28,853 |  |  | — |  |  | — |  |  | — |  |  | 28,853 |
Other | 3,430 |  |  | 3 |  |  | 457 |  |  | (47 | ) |  | 3,843 |
Total revenues from contracts with customers | 145,060 |  |  | 17,710 |  |  | 57,922 |  |  | 28 |  |  | 220,720 |
Other sources of revenue: |  |  |  |  |  |  |  |  |
Interest | 9,514 |  |  | (4 | ) |  | 3,263 |  |  | 283 |  |  | 13,056 |
Principal transactions, net | 212 |  |  | — |  |  | 6,989 |  |  | (801 | ) |  | 6,400 |
Other | 1,767 |  |  | — |  |  | 32 |  |  | 581 |  |  | 2,380 |
Total other sources of revenue | 11,493 |  |  | (4 | ) |  | 10,284 |  |  | 63 |  |  | 21,836 |
Total revenue | $ | 156,553 |  |  | $ | 17,706 |  |  | $ | 68,206 |  |  | $ | 91 |  |  | $ | 242,556 |
(Expressed in thousands) | For the Six Months Ended June 30, 2018
| Reportable Segments
| Private Client |  | Asset Management |  | Capital Markets |  | Corporate/Other |  | Total
Revenues from contracts with customers: |  |  |  |  |  |  |  |  |
Commissions from sales and trading | $ | 79,371 |  |  | $ | — |  |  | $ | 65,019 |  |  | $ | 77 |  |  | $ | 144,467 |
Mutual fund income | 21,268 |  |  | 505 |  |  | 7 |  |  | 10 |  |  | 21,790 |
Advisory fees | 119,910 |  |  | 34,838 |  |  | 54 |  |  | 16 |  |  | 154,818 |
Investment banking - capital markets | 7,839 |  |  | — |  |  | 30,592 |  |  | — |  |  | 38,431 |
Investment banking - advisory | — |  |  | — |  |  | 17,683 |  |  | — |  |  | 17,683 |
Bank deposit sweep income | 54,150 |  |  | — |  |  | — |  |  | — |  |  | 54,150 |
Other | 7,705 |  |  | 6 |  |  | 432 |  |  | (46 | ) |  | 8,097 |
Total revenues from contracts with customers | 290,243 |  |  | 35,349 |  |  | 113,787 |  |  | 57 |  |  | 439,436 |
Other sources of revenue: |  |  |  |  |  |  |  |  |
Interest | 18,351 |  |  | 1 |  |  | 6,468 |  |  | 463 |  |  | 25,283 |
Principal transactions, net | 132 |  |  | — |  |  | 9,381 |  |  | (387 | ) |  | 9,126 |
Other | 1,921 |  |  | — |  |  | 99 |  |  | 1,221 |  |  | 3,241 |
Total other sources of revenue | 20,404 |  |  | 1 |  |  | 15,948 |  |  | 1,297 |  |  | 37,650 |
Total revenue | $ | 310,647 |  |  | $ | 35,350 |  |  | $ | 129,735 |  |  | $ | 1,354 |  |  | $ | 477,086 |
Contract Balances The timing of the Company's revenue recognition may differ from the timing of payment by its customers. The Company records receivables when revenue is recognized prior to payment and it has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company had receivables related to revenue from contracts with customers of $22.3 million and $18.6 million at June 30, 2018 and January 1, 2018, respectively. The Company had no significant impairments related to these receivables during the three and six months ended June 30, 2018. Deferred revenue primarily relates to IRA fees received annually in advance on customer's IRA accounts managed by the Company where the performance obligation has not yet been satisfied. Total deferred revenue was $2.0 million and $nil at June 30, 2018 and January 1, 2018, respectively. The following presents the Company's contract assets and deferred revenue balances from contracts with customers, which are included in other assets and other liabilities, respectively, on the condensed consolidated balance sheet:
(Expressed in thousands) |  |  |
| Ending Balance at June 30, 2018 |  | Opening Balance at January 1, 2018
Contract assets (receivables): |  |  |
Commission (1) | $ | 3,059 |  |  | $ | 2,007 |
Mutual fund income (2) | 7,308 |  |  | 7,779 |
Advisory fees (3) | 750 |  |  | 1,460 |
Bank deposit sweep income (4) | 3,874 |  |  | 3,459 |
Investment banking fees (5) | 4,683 |  |  | 3,926 |
Other | 2,661 |  |  | — |
Total contract assets | $ | 22,335 |  |  | $ | 18,631 |
Deferred revenue (payables): |  |  |
Investment banking fees | $ | 450 |  |  | $ | — |
IRA fees | 1,515 |  |  | — |
Total deferred revenue | $ | 1,965 |  |  | $ | — |
(1) | Commission recorded on trade date but not yet settled.
(2) | Mutual fund income earned but not yet received.
(3) | Management and performance fees earned but not yet received.
(4) | Fees earned from FDIC-insured bank deposit program but not yet received.
(5) | Underwriting revenue and advisory fee earned but not yet received.
Contract Costs The Company incurs incremental transaction-related costs to obtain and/or fulfill contracts associated with investment banking and advisory engagements where the revenue is recognized at a point in time and the costs are determined to be recoverable. As of June 30, 2018, the contract costs were $1.6 million. There were no significant charges recognized in relation to these costs for the six months ended June 30, 2018.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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