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Redeemable Financial Instruments | 9 Months Ended
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Sep. 30, 2018
Redeemable Financial Instruments [Abstract] |
Redeemable Financial Instruments | 14. REDEEMABLE FINANCIAL INSTRUMENTS ﻿ Redeemable Financial Instrument – DGC Family Fintech Trust/CBF ﻿ On September 29, 2017 (the “Effective Date”), the Operating LLC entered into an investment agreement (the “2017 Investment Agreements”) with each of CBF and the DGC Family Fintech Trust, a trust established by Daniel G. Cohen (together, the “2017 Investors”). Daniel G. Cohen, the chairman of the Company’s board of directors and the Operating LLC’s board of managers, is the sole member of CBF. ﻿ Pursuant to the 2017 Investment Agreements, the 2017 Investors agreed to invest an aggregate of $10,000 (the “Investment Amount”) into the Operating LLC (the “Investment”), all of which was paid to the Operating LLC on the Effective Date. In exchange for the Investment, the Operating LLC agreed to pay to the 2017 Investors, in arrears following each calendar month during the term of the 2017 Investment Agreements, an amount equal to the aggregate investment return for such calendar month, as calculated in accordance with the terms of the 2017 Investment Agreements. The investment return (“2017 Investment Return”) is defined as an annual return, in the aggregate, equal to: ﻿
| 1. |  | for any 365-day period beginning on September 29, 2017 or any anniversary of September 29, 2017 (each an “Annual Period”) and ending on or before the third anniversary of September 29, 2017, 3.2% of the Investment Amount, plus (x) 15% of the revenue of the GCF repo business (the “Revenue of the Business”) of JVB, for any Annual Period in which the Revenue of the Business is greater than zero but less than or equal to $5,333, (y) $800 for any Annual Period in which the Revenue of the Business is greater than $5,333 but less than or equal to $8,000, or (z) 10% of the Revenue of the Business for any Annual Period in which the Revenue of the Business is greater than $8,000; or
| 2. |  | for any Annual Period following the third anniversary of September 29, 2017, (x) for any Annual Period in which the Revenue of the Business is greater than zero, the greater of 20% of the Investment Amount or 20% of the Revenue of the Business, or (y) for any Annual Period in which the Revenue of the Business is zero or less than zero, 3.2% of the Investment Amount.
﻿ The Investment Return is recorded monthly as interest expense and the related accrued interest is included in accounts payable and other liabilities. See note 12. ﻿ The term of the 2017 Investment Agreements commenced on September 29, 2017 and will continue until the 2017 Investment Agreements are terminated (see below). ﻿ Prior to the third anniversary of the 2017 Investment Agreements, the Operating LLC may terminate the 2017 Investment Agreements upon 90 days’ prior written notice to the 2017 Investors. At any time following the third anniversary, the 2017 Investors or the Operating LLC may, upon 60 days’ notice to the other party, cause the Operating LLC to pay to the 2017 Investors an amount equal the “Investment Balance” (as defined in the 2017 Investment Agreements) plus an amount equal to any accrued but unpaid Investment Return. ﻿ If the 2017 Investment Agreements are terminated by the Company within 3 years of the Effective Date, then upon termination of the 2017 Investment Agreements, the Operating LLC will, within 30 days following such termination pay to 2017 Investors an amount in cash equal to the greater of the sum of: (a) the Investment Amount, plus (b) all accrued and unpaid Investment Return monthly payments as of the date of termination, plus (c) an amount equal to an annualized 15% return on the Investment Amount from the Effective Date through the date of termination, minus (d) the aggregate amount of all Investment Return payments previously paid by the Operating LLC to the 2017 Investors, and (i) the Investment Amount plus (ii) all accrued and unpaid Investment Return monthly payments as of the date of termination. See note 22. ﻿ Redeemable Financial Instrument – JKD Capital Partners I LTD ﻿ On October 3, 2016, the Operating LLC entered into an investment agreement (the “JKD Investment Agreement”), by and between Operating LLC and JKD Capital Partners I LTD (the “JKD Investor”), pursuant to which the JKD Investor agreed to invest up to $12,000 in the Operating LLC (the “JKD Investment”), $6,000 of which was invested upon the execution of the JKD Investment Agreement and an additional $1,000 was invested in January 2017. The JKD Investor is owned by Jack DiMaio, the vice chairman of the Company’s board of directors and the vice chairman of the Operating LLC’s board of managers, and his spouse. See note 22. In exchange for the JKD Investment, the Operating LLC agreed to pay to JKD Investor during the term of the JKD Investment Agreement an amount (“JKD Investment Return”) equal to 50% of the difference between (i) the revenues generated during a quarter by the activities of the Institutional Corporate Trading Business of JVB and (ii) certain expenses incurred by such Institutional Corporate Trading Business. This JKD Investment Return is recorded monthly as interest expense or interest income with the related accrued interest recorded in accounts payable and other accrued liabilities. If the return is negative on an individual quarter, it will reduce the balance of the JKD Investment. Payments of the JKD Investment Return are made on a quarterly basis. The term of the JKD Investment Agreement commenced on October 3, 2016 and will continue until a redemption (defined below) occurs, unless the JKD Investment Agreement is earlier terminated. ﻿ The JKD Investor may terminate the JKD Investment Agreement (i) upon 90 days’ prior written notice to the Operating LLC if the Operating LLC or its affiliates modify any of their policies or procedures governing the operation of their businesses or change the way they operate their business and such modification has a material adverse effect on the amounts payable to the JKD Investor pursuant to the JKD Investment Agreement or (ii) upon 60 days’ prior written notice to the Operating LLC if the employment of Lester Brafman, the Company’s chief executive officer, is terminated. The Operating LLC may terminate the JKD Investment Agreement upon 60 days’ prior written notice to the JKD Investor if Mr. DiMaio ceases to control the day-to-day operations of the JKD Investor. Upon a termination of the JKD Investment Agreement, the Operating LLC will pay to the JKD Investor an amount equal to the “Investment Balance” (as such term is defined in the JKD Investment Agreement) as of the day prior to such termination. At any time following October 3, 2019, the JKD Investor or the Operating LLC may, upon two months’ notice to the other party, cause the Operating LLC to pay a redemption to the JKD Investor an amount equal to the Investment Balance (as such term is defined in the JKD Investment Agreement) as of the day prior to such redemption. ﻿ If the Operating LLC or JVB sells JVB’s Institutional Corporate Trading Business to any unaffiliated third party, and such sale is not part of a larger sale of all or substantially all of the assets or equity securities of the Operating LLC or JVB, the Operating LLC will pay to the JKD Investor an amount equal to 25% of the net consideration paid to the Operating LLC in connection with such sale, after deducting certain amounts and certain expenses incurred by the Operating LLC or JVB in connection with such sale. ﻿ Redeemable financial instruments consist of the following in the periods presented. ﻿ ﻿
﻿ |  |  |  |  |  |  |
﻿REDEEMABLE FINANCIAL INSTRUMENTS
﻿As of September 30, 2018
﻿(Dollars in Thousands)
﻿ |  |  |  |  |  |  |
﻿ |  |  | Outstanding Balance |  |  | Accrued Interest |
﻿JKD Capital Partners I LTD |  | $ | 6,732 |  | $ | 415 |
﻿DGC Family Fintech Trust / CBF |  |  | 10,000 |  |  | 78 |
﻿ |  | $ | 16,732 |  | $ | 493 |
﻿ |  |  |  |  |  |  |
﻿ ﻿
﻿ |  |  |  |  |  |  |
﻿REDEEMABLE FINANCIAL INSTRUMENTS
﻿As of December 31, 2017
﻿(Dollars in Thousands)
﻿ |  |  |  |  |  |  |
﻿ |  |  | Outstanding Balance |  |  | Accrued Interest |
﻿JKD Capital Partners I LTD |  | $ | 6,732 |  | $ | 367 |
﻿DGC Family Fintech Trust / CBF |  |  | 10,000 |  |  | 31 |
﻿ |  | $ | 16,732 |  | $ | 398 |
﻿ |  |  |  |  |  |  |
﻿

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