Discontinued Operations

Second Quarter 2012 vs. 2011

The Company has classified the results of its Equities segment as discontinued operations due to the Company’s decision to exit this business on August 22, 2011. Results of these discontinued operations for the three and six months ended June 30, 2012 and 2011 are presented in the following table:

Three Months Ended

Six Months Ended
June   March   June June   June
(In thousands) 2012 2012 2011* 2012 2011*
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues $ 6 $ 37 $ 4,929 $ 43 $ 10,200
Total expenses (excluding interest)   (31 )   (73 )   19,675     (104 )   27,408  
Income/(loss) from discontinued operations before income taxes 37 110 (14,746 ) 147 (17,208 )
Provisions for income taxes   60     78     (3,074 )   138     (4,142 )
(Loss)/income from discontinued operations, net of taxes $ (23 ) $ 32   $ (11,672 ) $ 9   $ (13,066 )
*Included within the table above for the three and six months ended June 30, 2011 is a goodwill and intangible impairment charge of approximately $14.3 million.

Non-GAAP Financial Results

The Company has included in this press release certain financial metrics that were not prepared in accordance with accounting principles generally accepted in the United States. These non-GAAP financial results, which include presentations of net revenues, compensation and benefits, non-compensation expenses, income before income taxes from continuing operations, provision for income taxes, net income from continuing operations, compensation expense ratios, pre-tax margin, return on average tangible equity and diluted earnings per share, are presented as an additional aid in understanding and analyzing the Company’s financial results for the quarters ended June 30, 2012, March 31, 2012, and June 30, 2011 and the six months ended June 30, 2012 and 2011. Specifically, the Company believes that the non-GAAP results provide useful information by excluding certain items that may not be indicative of the Company’s core operating results or business outlook and also to emphasize information that is critical to understanding the Company’s performance. These non-GAAP amounts exclude items reflected as adjustments within the “Reconciliation of GAAP to Non-GAAP Income from Continuing Operations” table below. The Company believes these non-GAAP results will allow for a better evaluation of the operating performance of the Company’s business and facilitate a meaningful comparison of the Company’s results in the current period to those in prior periods and future periods. References to these non-GAAP results should not be considered a substitute for results that are presented in a manner consistent with GAAP.

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