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Note 19 - Redeemable Financial Instruments | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Other Liabilities Disclosure [Text Block] | 19. REDEEMABLE FINANCIAL INSTRUMENTS ﻿ Redeemable financial instruments consisted of the following. ﻿
REDEEMABLE FINANCIAL INSTRUMENTS
(Dollars in Thousands)
|  | As of December 31, |
|  | 2020 |  |  | 2019 |
JKD Investor |  | $ | 7,957 |  |  | $ | 7,957 |
DGC Trust / CBF |  |  | 4,000 |  |  |  | 8,500 |
ViaNova Capital Group, LLC |  |  | - |  |  |  | 526 |
|  | $ | 11,957 |  |  | $ | 16,983 |
JKD Capital Partners I LTD Amendment ﻿ On October 3, 2016, the Operating LLC entered into an investment agreement (the “JKD Investment Agreement”), by and between Operating LLC and 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, an additional $1,000 was invested in January 2017, and an additional $1,268 was invested on January 9, 2019. The JKD Investor is owned by Jack DiMaio, the vice chairman of the Company's board of directors, and his spouse. ﻿ 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 (as defined in the JKD Investment Agreement, as amended) and (ii) certain expenses incurred by such Institutional Corporate Trading Business (the “Institutional Corporate Trading Business Net Revenue”). 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 in 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 (as described below) occurs, unless the JKD Investment Agreement is earlier terminated. ﻿ On March 6, 2019, the JKD Investor and the Operating LLC entered into an amendment to the JKD Investment Agreement (the “JKD Investment Agreement Amendment”), pursuant to which the term “JKD Investment Return” under the JKD Investment Agreement was amended as follows: ﻿
| (a) | during the fourth quarter of 2018, an amount equal to 42% of the Institutional Corporate Trading Business Net Revenue, and
| (b) | commencing on January 1, 2019 and for each quarter during the remainder of the term of the JKD Investment Agreement, an amount equal to a percentage of the Institutional Corporate Trading Business Net Revenue, which percentage is based on the JKD Investor's investment under the JKD Investment Agreement as a percentage of the total capital allocated to the Institutional Corporate Trading Business of JVB.
﻿ 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, as amended, 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, as amended, 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 amended) 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 in an amount equal to the Investment Balance (as such term is defined in the JKD Investment Agreement, as amended) 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. ﻿ DGC Trust/ CBF Amendments ﻿ Prior to September 30, 2019, the DGC Trust / CBF redeemable financial instruments were comprised of two separate agreements: the CBF Investment Agreement and the DGC Trust Investment Agreement. The CBF Investment Agreement and the DGC Trust Investment Agreement were both amended on September 25, 2019 and again on December 4, 2019, with each amendment becoming effective October 1, 2019. The amendments included the following amendments to each of the CBF Investment Agreement and the DGC Trust Investment Agreement: ﻿
| (a) | The term “Investment Amount” under the CBF Investment Agreement was reduced from $8,000 to $6,500 in exchange for a one -time payment of $1,500 from the Operating LLC to CBF. The payment of $1,500 was made by the Operating LLC to CBF in October 2019.
| (b) | The term “Investment Return” under the CBF Investment Agreement was amended to mean an annual return equal to:
| • | for the Annual Period ending on September 29, 2020, 3.75% of the Investment Amount, plus ( x ) 11.47% of any revenue of the GCF repo business (the “Revenue of the Business”) during such period between zero and $11,777 plus (y) 7.65% of any Revenue of the Business during such period in excess of $11,777. Prior to the second amendment, the Investment Return was with respect to any twelve -month period ending on September 29, 2020 ( each, an “Annual Period”) was 3.75% of the Investment Amount plus ( x ) 11.47% of the Revenue of the Business for any Annual Period in which the Revenue of the Business was greater than zero but less than or equal to $5,333, (y) $612 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) 7.65% of the Revenue of the Business for any Annual Period in which the Revenue of the Business is greater than $8,000, and
| • | for any Annual Period following September 29, 2020, ( 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 15.29% 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, 3.75% of the Investment Amount.
﻿
| (c) | The term “Investment Return” under the DGC Trust Investment Agreement was amended to mean an annual return equal to:
﻿
| • | for the twelve -month period ending on September 29, 2020, 3.75% of the Investment Amount plus ( x ) 3.53% of any Revenue of the Business during such period between zero and $11,177 plus (y) 2.35% of any Revenue of the Business during such period in excess of $11,177. Prior to the second amendment, the Investment Return was 3.75% of the Investment Amount, as defined in the DGC Trust Investment Agreement, plus ( x ) 3.53% of the Revenue of the Business, for any Annual Period in which the Revenue of the Business is greater than zero but less than or equal to $5,333, (y) $188 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) 2.35% of the Revenue of the Business for any Annual Period in which the Revenue of the Business is greater than $8,000, and
| • | for any Annual Period following September 29, 2020, ( 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 4.71% 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, 3.75% of the Investment Amount.
﻿ On September 25, 2020, the Operating LLC and CBF entered into Amendment No. 3 to CBF Investment Agreement, which amended the CBF Investment Agreement (i) to extend the date thereunder pursuant to which the Company or CBF could cause a redemption of the Investment Amount from September 27, 2020 to January 1, 2021, and (ii) to state that no such redemption by the Company could be in violation of any loan agreement to which the Company was then a party. On September 30, 2020, the Company redeemed the DGC Trust Investment Agreement in full by making payment of $2,000. On October 9, 2020 and effective October 15, 2020, the Operating LLC entered into Amendment No. 4 to Investment Agreement, which further amended the CBF Investment Agreement to, among other things, (A) decrease the “Investment Amount” under the CBF Investment Agreement from $6,500 to $4,000 in exchange for a one -time payment of $2,500 from the Operating LLC to CBF; and (B) provide that the term “Investment Return” (as defined in the CBF Investment Agreement) will mean an annual return equal to, (i) for any twelve -month period following September 29, 2020 (each, an “Annual Period”) in which the revenue of the business of JVB (“Revenue of the Business”), is greater than zero, the greater of 20% of the Investment Amount or 9.4% of the Revenue of the Business, or (ii) for any Annual Period in which the Revenue of the Business is zero or less than zero, 3.75% of the Investment Amount. Prior to the Investment Agreement Amendment, the term “Investment Return” under the CBF Investment Agreement was defined as (A) with respect to any Annual Period in which the Revenue of the Business was greater than zero, the greater of 20% of the Investment Amount or 15.2% of the Revenue of the Business, or (ii) for any Annual Period in which the Revenue of the Business was zero or less than zero, 3.75% of the Investment Amount. The Company made the $2,500 payment to CBF on October 15, 2020. Subsequent to December 31, 2020, the Company notified CBF that intends to redeem the remaining balance on or about March 31, 2021. ﻿ Via Nova Capital Group, LLC ﻿ On November 16, 2018 and effective as of November 19, 2018, the Operating LLC entered into an investment agreement (the “ViaNova Investment Agreement”) by and among Hancock Funding, LLC (“Hancock”), New Avenue Investments LLC (“New Avenue”), JVB, ViaNova, and the Operating LLC. Pursuant to the ViaNova Investment Agreement, Hancock, New Avenue, the Operating LLC, and JVB agreed to invest $500, $250, $500, and $2,750, respectively, into ViaNova (collectively, the “ViaNova Investment”). Pursuant to the ViaNova Investment Agreement, Hancock, the Operating LLC, and JVB invested their respective portions of the ViaNova Investment into ViaNova prior to the effective date of the ViaNova Investment Agreement. In February 2019, New Avenue invested $220 of its portion of the ViaNova Investment (i.e. $250 ). Hancock is owned by an employee of the Company. New Avenue is owned by a former employee of the Company. ﻿ Pursuant to the ViaNova Investment Agreement, in consideration of the ViaNova Investment, once the Operating LLC was repaid $693 of funded operating costs from net revenue (as defined in the ViaNova Investment Agreement) generated directly by the activities of ViaNova's RTL business, each party to the ViaNova Investment Agreement would be entitled to receive a quarterly payment equal to the net revenue (to the extent positive) generated directly by the activities of ViaNova's RTL business during such quarter, multiplied by a fraction, the numerator of which is equal to such party's portion of the ViaNova Investment and the denominator is equal to the entire ViaNova Investment. During the first quarter of 2020, the Company ceased acquiring new RTLs and began an orderly wind down of its RTL business. On August 22, 2020, the Company sold its investment in ViaNova and the remaining redeemable investment balances were paid by the Operating LLC to Hancock and New Avenue in accordance with the ViaNova Investment Agreement. See note 4. See note 20 for interest expense incurred on redeemable financial instruments. ﻿

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- Definition The entire disclosure for other liabilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.20,24) -URI http://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682 + Details
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