COWEN INC. - Quarter Report: 2010 March (Form 10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2010
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-34516

Cowen Group, Inc.
(Exact name of registrant as specified in its charter)


Delaware (State or Other Jurisdiction of Incorporation or Organization)		27-0423711 (I.R.S. Employer Identification No.)
599 Lexington Avenue New York, New York (Address of Principal Executive Offices)		10022 (Zip Code)

(212) 845-7900
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of May 12, 2010 there were 74,656,513 shares of the registrant's common stock outstanding.

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Item No.

PART I. FINANCIAL INFORMATION
	1. Unaudited Condensed Consolidated Financial Statements		4
		Condensed Consolidated Statements of Financial Condition	4
		Condensed Consolidated Statements of Operations	5
		Condensed Consolidated Statements of Changes in Equity	6
		Condensed Consolidated Statements of Cash Flows	7
		Notes to Condensed Consolidated Financial Statements	9
	2. Management's Discussion and Analysis of Financial Condition and Results of Operations		49
	3. Quantitative and Qualitative Disclosures About Market Risk		78
	4. Controls and Procedures		78
PART II. OTHER INFORMATION
	1. Legal Proceedings		79
	1A. Risk Factors		80
	2. Unregistered Sales of Equity Securities and Use of Proceeds		81
	3. Defaults Upon Senior Securities		81
	4. (Removed and Reserved)		81
	5. Other Information		81
	6. Exhibits		82
SIGNATURES			83
EXHIBIT INDEX			84
	Exhibit 10.1
	Exhibit 31.1
	Exhibit 31.2
	Exhibit 32

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Special Note Regarding Forward-Looking Statements

We have made statements in this Quarterly Report on Form 10-Q (including in "Management's Discussion and Analysis of Financial Condition and Results of Operations") that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking terms such as "may," "might," "will," "would," "could," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "project," "possible," "potential," "intend," "seek" or "continue," the negative of these terms and other comparable terminology or similar expressions. In addition, our management may make forward-looking statements to analysts, representatives of the media and others. These forward-looking statements represent only the Company's beliefs regarding future events (many of which, by their nature, are inherently uncertain and beyond our control) and are predictions only, based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. In particular, you should consider the risks contained in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2009.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations.

Unaudited Condensed Consolidated Financial Statements are presented for the three months ended March 31, 2010 and 2009. The Consolidated Financial Statements as of December 31, 2009 were audited.

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PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

Cowen Group, Inc.

Condensed Consolidated Statements of Financial Condition

(in thousands, except share and per share data)

(unaudited)

				As of March 31, 2010			As of December 31, 2009

Assets
	Cash and cash equivalents			$	12,855		$	147,367
	Cash collateral pledged				501			7,246
	Securities owned, at fair value				141,960			54,153
	Other investments				25,376			28,490
	Receivable from brokers				62,377			32,525
	Fees receivable				16,029			22,446
	Due from related parties (see Note 16)				10,568			14,860
	Fixed assets, net of accumulated depreciation and amortization of $18,033 and $16,449, respectively				30,822			32,603
	Goodwill				27,179			27,179
	Intangible assets, net of accumulated amortization of $5,416 and $4,506, respectively				15,484			16,394
	Other assets				25,674			24,199
	Consolidated Funds
	Cash and cash equivalents				1,031			625
	Securities owned, at fair value				8,628			—
	Other investments, at fair value				515,195			550,407
	Other assets				1,431			947

			Total Assets	$	895,110		$	959,441

Liabilities and Stockholders' Equity
	Securities sold, not yet purchased, at fair value			$	58,298		$	14,812
	Payable to brokers				28,523			3,817
	Compensation payable				25,078			80,923
	Note payable and short-term borrowings				18,000			49,746
	Fees payable (see Note 16)				3,417			5,387
	Due to related parties (see Note 16)				7,924			8,103
	Accounts payable, accrued expenses and other liabilities				49,986			65,599
	Consolidated Funds
	Capital withdrawals payable				23,531			26,312
	Accounts payable, accrued expenses and other liabilities				348			392

			Total Liabilities		215,105			255,091

Commitments and Contingencies (see Note 11)
Redeemable non-controlling interests					215,400			230,825

Stockholders' equity
	Preferred stock, par value $0.01 per share; 10,000,000 shares authorized, no shares issued and outstanding				—			—
	Class A common stock, par value $0.01 per share: 250,000,000 shares authorized, 74,743,163 shares issued and outstanding as of March 31, 2010 and December 31, 2009 (including 2,298,204 and 2,323,116 restricted shares, respectively)				726			726
	Class B common stock, par value $0.01 per share: 250,000,000 authorized, no shares issued and outstanding				—			—
	Additional paid-in capital				488,082			483,872
	Accumulated deficit				(23,529	)		(10,553	)
	Accumulated other comprehensive loss				(674	)		(520	)

		Total stockholders' equity			464,605			473,525

			Total Liabilities and Stockholders' Equity	$	895,110		$	959,441

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Cowen Group, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

				Three Months Ended March 31,

				2010			2009
Revenues
	Investment banking			$	6,005		$	—
	Brokerage				29,575			—
	Management fees				9,270			11,511
	Incentive income				2,093			—
	Interest and dividends				804			91
	Reimbursement from affiliates				1,742			3,394
	Other				622			1,019
	Consolidated Funds
		Interest and dividends			5,781			4,626
		Other			366			84

			Total revenues		56,258			20,725
Expenses
	Employee compensation and benefits				43,433			14,907
	Floor brokerage and trade execution				5,028			—
	Interest and dividends				446			349
	Professional, advisory and other fees				2,388			1,402
	Service fees				3,812			606
	Communications				3,302			274
	Occupancy and equipment				5,629			2,531
	Depreciation and amortization				2,494			1,236
	Client services and business development				4,164			1,485
	Other				7,386			2,739
	Consolidated Funds
		Interest and dividends			1,568			2,410
		Professional, advisory and other fees			678			840
		Floor brokerage and trade execution			709			—
		Other			204			127

			Total expenses		81,241			28,906
Other income (loss)
	Net gains (losses) on securities, derivatives and other investments				1,524			259
	Consolidated Funds:
		Net realized and unrealized gains (losses) on investments and other transactions			19,218			12,667
		Net realized and unrealized gains (losses) on derivatives			(220	)		(17,355	)
		Net gains (losses) on foreign currency transactions			(725	)		1,341

			Total other income (loss)		19,797			(3,088	)

			Income (loss) before income taxes		(5,186	)		(11,269	)

Income tax expense (benefit)					(266	)		(66	)

			Net income (loss)		(4,920	)		(11,203	)
Net (income) loss attributable to non-controlling interests in consolidated subsidiaries					(8,056	)		2,404

			Net income (loss) attributable to Cowen Group, Inc. stockholders	$	(12,976	)	$	(8,799	)

Weighted average common shares outstanding:
	Basic				72,509			37,537
	Diluted				72,509			37,537
Earnings (loss) per share:
	Basic			$	(0.18	)	$	(0.23	)

	Diluted			$	(0.18	)	$	(0.23	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Cowen Group, Inc.
Condensed Consolidated Statements of Changes in Equity
(in thousands, except share data)
(unaudited)

			Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Retained Earnings/ Accumulated deficit			Total Stockholders' Equity			Redeemable Noncontrolling Interest

Balance, December 31, 2009		74,743,163	$	726	$	483,872	$	(520	)	$	(10,553	)	$	473,525		$	230,825

Comprehensive income (loss):
	Net income (loss)	—		—		—		—			(12,976	)		(12,976	)		8,056		(4,920	)
	Defined Benefit Plans	—		—		—		87			—			87			—		87
	Foreign currency translation	—		—		—		(241	)		—			(241	)		—		(241	)

Total comprehensive income		—		—		—		(154	)		(12,976	)		(13,130	)		8,056		(5,074	)
Capital contributions		—		—		—		—			—			—			1,902
Capital distributions		—		—		—		—			—			—			(23,671	)
Deconsolidation of CHRP GP (see Note 2b)		—		—		—		—			—			—			(1,712	)
Amortization of share based compensation		—		—		4,210		—			—			4,210			—

Balance, March 31, 2010		74,743,163	$	726	$	488,082	$	(674	)	$	(23,529	)	$	464,605		$	215,400

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Cowen Group, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

							Three Months Ended March 31,

							2010			2009
Cash flows from operating activities:
	Net income (loss)						$	(4,920	)	$	(11,203	)
	Adjustments to reconcile net income (loss) to net cash (used in) / provided by operating activities:
		Depreciation and amortization						2,494			1,236
		Share-based compensation						4,210			—
		Net loss on disposal of fixed assets						264			—
		Purchases of securities owned, at fair value						(123,057	)		(56,709	)
		Proceeds from sales of securities owned, at fair value						72,719			60,049
		Proceeds from the sale of short investments						36,626			—
		Payments to cover short investments						(17,641	)		—
		Net (gains) losses on securities, derivatives and other investments						(1,297	)		(586	)
		Consolidated Funds:
			Purchases of securities owned, at fair value					(52,535	)		—
			Proceeds from sales of securities owned, at fair value					43,904			—
			Purchases of other investments					(13,039	)		(1,015	)
			Proceeds from sales of other investments					69,481			35,824
			Net realized and unrealized (gains) losses on securities and other investments and other transactions					(21,227	)		1,875
		(Increase) decrease in operating assets:
				Securities owned, at fair value, held at broker dealer				(37,710	)		—
				Receivable from brokers				(29,852	)		14,287
				Fees receivable				6,417			5,012
				Due from related parties				4,292			6,325
				Other assets				(1,475	)		(714	)
				Consolidated Funds:
					Cash and cash equivalents			(406	)		(39	)
					Other assets			(725	)		153
		Increase (decrease) in operating liabilities:
				Securities sold, but not yet purchased, at fair value, held at broker dealer				24,629			—
				Payable to brokers				24,706			—
				Compensation payable				(55,527	)		(27,772	)
				Fees payable				(1,970	)		(5,146	)
				Due to related parties				(179	)		1,662
				Accounts payable, accrued expenses and other liabilites				(15,613	)		(3,854	)
				Consolidated Funds:
					Due to related parties			—			(136	)
					Accounts payable, accrued expenses and other liabilities			(44	)		(63	)

						Net cash (used in) / provided by operating activities		(87,475	)		19,186

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Cowen Group, Inc.

Condensed Consolidated Statements of Cash Flows (Continued)

(in thousands)

(unaudited)

				Three Months Ended March 31,

				2010			2009
(continued)
Cash flows from investing activities:
	Purchases of other investments				(958	)		—
	Proceeds from sales of other investments				3,539			4,233
	Purchase of fixed assets				(67	)		(195	)

			Net cash provided by investing activities		2,514			4,038

Cash flows from financing activities:
	Securities repurchased under agreement to sell				—			(1,425	)
	Repayments on the line of credit				(25,001	)		—
	Capital withdrawals to members				—			(12,664	)
	Consolidated Funds:
		Repayments on the line of credit			—			(10,208	)
		Capital contributions by non-controlling interests in Consolidated Funds			1,902			—
		Capital withdrawals to non-controlling interests in Consolidated Funds			(26,452	)		(21,991	)

			Net cash used in financing activities		(49,551	)		(46,288	)

Change in cash and cash equivalents					(134,512	)		(23,064	)
Cash and cash equivalents at beginning of period					147,367			46,677

Cash and cash equivalents at end of period				$	12,855		$	23,613

Supplemental information
	Cash paid during the period for interest			$	580		$	18

	Cash paid during the period for taxes			$	138		$	230

Supplemental non-cash information:
	Deconsolidation of CHRP GP (See Note 2b)			$	1,712		$	—

	Net settlement of cash collateral pledged with repayments on the line of credit			$	6,745		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Cowen Group, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Business

Cowen Group, Inc., a Delaware corporation, was formed on June 1, 2009 in connection with the Transaction Agreement and Agreement and Plan of Merger ("Transaction Agreement"), dated as of June 3, 2009, by and among Cowen Holdings, Inc., ("Cowen Holdings," formerly Cowen Group, Inc.), Lexington Merger Corp., Ramius LLC ("Ramius," formerly Park Exchange LLC) and RCG Holdings LLC ("RCG," formerly Ramius LLC). For more information related to the acquisition, see Note 3.

Cowen Group, Inc. is a diversified financial services firm and, together with its consolidated subsidiaries (collectively, "Cowen Group" or the "Company") provides alternative investment management, investment banking, research, and sales and trading services through its two business segments: alternative investment management and broker-dealer. The alternative investment management segment includes hedge funds, fund of funds, real estate, healthcare royalty funds and cash management services, offered primarily under the Ramius name. The broker-dealer segment offers industry focused investment banking services for growth-oriented companies, domain knowledge-driven research and a sales and trading platform for institutional investors, primarily under the Cowen name.

2. Significant Accounting Policies

a.: Basis of presentation

These consolidated financial statements include the accounts of the Company, its operating and other subsidiaries, and entities in which the Company has a controlling financial interest or a substantive, controlling general partner interest. All material intercompany transactions and balances have been eliminated in consolidation. Certain fund entities that are consolidated in these consolidated financial statements, as further discussed below, are not subject to these consolidation provisions with respect to their own investments pursuant to their specialized accounting.

In the opinion of management these unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") related to interim financial statements. Results for interim periods should not be considered indicative of results for any other interim period or for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007, included in the Form 10-K of Cowen Group as filed with the SEC on March 25, 2010. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are necessary for a fair presentation of the results for the interim periods.

The business combination between Ramius and Cowen Holdings was accounted for as an acquisition by Ramius of Cowen Holdings. As a result, the historical financial statements of Ramius have become the historical financial statements of the Company.

The assets and liabilities of Cowen Holdings were recorded at their respective fair values, as of November 2, 2009, and combined with those of Ramius. The financial statements of the Company that include periods after November 2, 2009 reflect such fair values and were not restated retroactively to reflect the historical financial position or results of operations of Cowen Holdings. For periods after November 2, 2009, the results of operations of Cowen Holdings are included in the results of

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Cowen Group, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

2. Significant Accounting Policies (Continued)

operations of the Company. Stockholders' equity has been retroactively restated to include the 37,536,826 shares of Class A common stock issued to RCG at the consummation of the Transactions (as defined in Note 3) as the issued capital for all periods prior to the Transactions.

The Company serves as the managing member/general partner and/or investment manager to affiliated fund entities which it sponsors and manages. Certain of these funds in which the Company has a substantive, controlling general partner interest are consolidated with the Company pursuant to US GAAP as described below (the "Consolidated Funds"). Consequently, the Company's consolidated financial statements reflect the assets, liabilities, income and expenses of these funds on a gross basis. The ownership interests in these funds which are not owned by the Company are reflected as non-controlling interests in consolidated subsidiaries in the accompanying consolidated financial statements. The management fees and incentive income earned by the Company from these funds are eliminated in consolidation.

b.: Principles of consolidation

The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity ("VOE") or a variable interest entity ("VIE") under US GAAP.

Voting Interest Entities ("VOEs") are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the obligation to absorb losses, the right to receive residual returns and the right to direct the activities of the entity that most significantly impact the entity's economic performance. VOEs are consolidated in accordance with Financial Accounting Standards Board ("FASB") accounting standards. In accordance with these standards, the Company presently consolidates five funds deemed to be VOEs for which it acts as the general partner. RTS Global 3x Fund LP ("RTS 3x") was first consolidated in the first quarter of 2010, when it commenced operations.

VIEs are entities that lack one or more of the characteristics of a VOE. Any enterprise having a controlling financial interest in a VIE is considered that VIE's primary beneficiary. In accordance with FASB accounting standards, an enterprise must consolidate all VIEs of which it is the primary beneficiary. Prior to the adoption of the revised accounting guidance for VIEs (as discussed in note 2d) the primary beneficiary of a VIE is defined as the enterprise that has a variable interest, or a combination of variable interests, that will absorb a majority of the VIE's expected losses, receive a majority of the VIE's expected residual returns, or both. Subsequent to the adoption of the revised accounting guidance for VIEs the primary beneficiary of a VIE is the enterprise that has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance, and which has an obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company determines whether it is the primary beneficiary of a VIE by performing a qualitative and/or quantitative analysis of the VIE that includes a review of, among other things, its capital structure, terms of any contracts between the Company and the VIE, which interests create or absorb variability, related party relationships and the design of the VIE.

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Cowen Group, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

2. Significant Accounting Policies (Continued)

The Company has determined that it no longer exercises control over Cowen Healthcare Royalty GP, LLC (the "CHRP GP") as it no longer acts as managing member of this entity, and beginning with the first quarter of 2010, no longer consolidates this entity. The Company now accounts for its investment in the CHRP GP under the equity method of accounting.

c.: Valuation of investments and derivative contracts

The Financial Accounting Standards Board's ("FASB") accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are as follows:


Level 1		Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date;
Level 2		Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active; and
Level 3		Fair value is determined based on pricing inputs that are unobservable and includes situations where there is little, if any, market activity for the asset or liability. The determination of fair value for assets and liabilities in this category requires significant management judgment or estimation.

Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes "observable" requires significant judgment by the Company. The Company considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Company's perceived risk of that instrument.

The Company and its operating company subsidiaries act as the manager for the Consolidated Funds. Both the Company and the Consolidated Funds hold certain investments which are valued by the Company, acting as the investment manager. The fair value of these investments is generally estimated based on proprietary models developed by the Company, which include discounted cash flow analyses, public market comparables, and other techniques and may be based, at least in part, on independently sourced market information. The material estimates and assumptions used in these models include the timing and expected amount of cash flows, the appropriateness of discount rates used, and, in some cases, the ability to execute, timing of, and estimated proceeds from expected financings. Significant judgment and estimation goes into the selection of an appropriate valuation methodology as well as the assumptions used in these models, and the timing and actual values realized

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Cowen Group, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

2. Significant Accounting Policies (Continued)

with respect to investments could be materially different from values derived based on the use of those estimates. The valuation methodologies applied impact the reported value of the Company's investments and the investments held by the Consolidated Funds in the consolidated financial statements. Certain of the Company's investments are relatively illiquid or thinly traded and may not be immediately liquidated on demand if needed. Fair values assigned to these investments may differ significantly from the fair values that would have been used had a ready market for the investments existed and such differences could be material.

The Company primarily uses the "market approach" valuation technique to value its financial instruments measured at fair value. In determining an instrument's placement within the hierarchy, the Company separates the Company's financial instruments into three categories: securities, derivative contracts and other investments. To the extent applicable, each of these categories can further be divided between those held long or sold short.

Securities—Securities whose values are based on quoted market prices in active markets for identical assets, and are therefore classified in level 1 of the fair value hierarchy, include active listed equities, certain U.S. government and sovereign obligations, and certain money market securities. The Company does not adjust the quoted price for such instruments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

Certain positions for which there is a limited market, consisting primarily of convertible debt, corporate debt and loans, are stated at fair value. The estimated fair values assigned by management are determined in good faith and are based on available information considering, among other things, quotations provided by published pricing services, counterparties and other market participants, and pricing models using quoted inputs, and do not necessarily represent the amounts which might ultimately be realized. Such positions that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing sources which are supported by observable inputs are classified within level 2. As level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability.

Derivative contracts—Derivative contracts can be exchange-traded or privately negotiated over-the-counter ("OTC"). Exchange-traded derivatives, such as futures contracts and exchange traded option contracts, are typically classified within level 1 or level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. OTC derivatives, such as generic forwards, swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within level 2. Derivative contracts are included within other assets on the consolidated statements of financial condition.

Other investments—Other investments measured at fair value consist primarily of portfolio funds and real estate investments, which are valued as follows:

i.: Portfolio funds—Portfolio funds ("Portfolio Funds") include interests in funds and investment companies managed externally by the Company and unaffiliated managers. The Company follows a new accounting pronouncement regarding fair value measurements and disclosures relating to investments in certain entities that calculate net asset value ("NAV") per share (or

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Cowen Group, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

2. Significant Accounting Policies (Continued)

its equivalent). The guidance permits, as a practical expedient, an entity holding investments in certain entities that either are investment companies as defined by the AICPA Audit and Accounting Guide, Investment Companies, or have attributes similar to an investment company, and calculate net asset value per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment.

The Company categorizes its investments in Portfolio Funds within the fair value hierarchy dependent on the ability to redeem the investment. If the Company has the ability to redeem its investment at NAV at the measurement date or within the near term, the Portfolio Fund is categorized as a Level 2 fair value measurement. If the Company does not know when it will have the ability to redeem its investment or cannot do so in the near term, the Portfolio Fund is categorized as a Level 3 fair value measurement. See Note 4 for further details of the Company's investments in Portfolio Funds.

ii.: Real estate investments—Real estate investments are valued at estimated fair value. The fair value of real estate investments are estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Real estate investments without a public market are valued based on assumptions and valuation techniques used by the Company. Such valuation techniques may include discounted cash flow analysis, prevailing market capitalization rates or earning multiples applied to earnings from the investment, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties, consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence, as well as independent external appraisals. In general, the Company considers several valuation techniques when measuring the fair value of a real estate investment. However, in certain circumstances, a single valuation technique may be appropriate. Real estate investments are reviewed on a quarterly basis by the Company for significant changes at the property level or a significant change in the overall market which would impact the value of the real estate investment resulting in unrealized appreciation or depreciation.

The Company also reflects its real estate equity investments net of investment level financing. Valuation adjustments attributable to underlying financing arrangements are considered in the real estate equity valuation based on amounts at which the financing liabilities could be transferred to market participants at the measurement date.

Real estate and capital markets are cyclical in nature. Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates and interest and inflation rates. In addition, the Company invests in real estate and real estate related investments for which no liquid market exists. The market prices for such investments may be volatile and may not be readily ascertainable. Amounts ultimately realized by the Company from investments sold may differ from the fair values presented, and the differences could be material.

Table of Contents

Cowen Group, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

2. Significant Accounting Policies (Continued)

The Company's real estate investments are typically categorized as Level 3 within the fair value hierarchy as management uses significant unobservable inputs in determining their estimated fair value.

See Note 4 for further information regarding the Company's investments and fair value measurements.

d.: Recently adopted accounting pronouncements

In June 2009, the FASB issued a new accounting standard which revises the accounting for VIEs by introducing a new consolidation model. This new standard changes the approach to determining the primary beneficiary of a VIE and requires companies to more frequently assess whether they must consolidate VIEs. The new model identifies two primary characteristics of a controlling financial interest: (1) the power to direct significant activities of the VIE, and (2) the obligation to absorb losses of and/or provide rights to receive benefits from the VIE that are potentially significant to the VIE. In February 2010, the FASB finalized an Accounting Standards Update ("ASU") which defers the requirements of this standard for certain interests in investment funds and certain similar entities. Therefore the adoption of this new standard on January 1, 2010 did not have a material impact on the Company's financial position, results of operations or cash flows, as substantially all of the entities in which it holds variable interests qualify for the scope deferral under the ASU.

In June 2009, the FASB issued amended guidance on accounting for transfers of financial assets. The amendments were issued to improve the information that a reporting entity provides in its financial statements about a transfer of financial assets, the effects of a transfer on its financial statements, and a transferor's continuing involvement, if any, in transferred financial assets. The amendments eliminate the concept of qualifying special purpose entities from US GAAP. These entities will now be evaluated for consolidation in accordance with the applicable consolidation criteria. The amendments are effective for reporting periods beginning on or after November 15, 2009. The adoption of this new standard on January 1, 2010 did not have a material impact on the Company's financial position, results of operations or cash flows.

In January 2010, the FASB issued a new accounting standard that provides amended disclosure requirements related to fair value measurements. This standard is effective for financial statements issued for reporting periods beginning after December 15, 2009 for certain disclosures and for reporting periods beginning after December 15, 2010 for other disclosures. Since these amended principles require only additional disclosures concerning fair value measurements, adoption will and has not affected the Company's financial condition, results of operations or cash flows.

e.: Future adoption of accounting pronouncements

As of March 31, 2010, none of the changes to the Codification issued by the FASB that are not yet effective are expected to have an impact on the Company's financial position or results of operations.

3. Acquisition

On November 2, 2009, the transactions contemplated by the Transaction Agreement (the "Transactions"), were consummated including (1) the merger of Lexington Merger Corp. with and into

Table of Contents

Cowen Group, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

3. Acquisition (Continued)

Cowen Holdings, pursuant to which each outstanding share of common stock of Cowen Holdings was converted into one share of Class A common stock of the Company and (2) the transfer by RCG (which prior to the consummation of the Transactions operated the Ramius business) of substantially all of its assets and liabilities to Park Exchange LLC in exchange for the Company's issuance to RCG of 37,536,826 shares of Class A common stock of the Company. Following the consummation of the Transactions, each of Park Exchange LLC and Cowen Holdings became wholly owned subsidiaries of the Company, and Park Exchange LLC was renamed Ramius LLC.

The Transactions were accounted for under the acquisition method in accordance with US GAAP. Accordingly, the Transactions were accounted for as an acquisition by Ramius of Cowen Holdings. As such, results of operations for Cowen Holdings are included in the accompanying consolidated statements of operations since the date of acquisition, and the assets acquired and liabilities assumed were recorded at their fair value as at the acquisition date.

Included in the accompanying consolidated statements of operations for the three months ended March 31, 2010 are revenues of $38.1 million and a net loss of $15.2 million related to Cowen Holdings. The following table provides unaudited supplemental pro forma financial information for the three months ended March 31, 2009 as if the Transactions had occurred as of the beginning of that period:

		Three Months Ended March 31, 2009

		(in thousands, except per share data)
		(unaudited)
Pro forma total revenues		$	64,458
Pro forma net loss			(20,394	)
Pro forma net loss attributable to Cowen Group, Inc. stockholders			(18,410	)
Pro forma net loss per share:
	Basic	$	(0.33	)
	Diluted	$	(0.33	)

4. Investments and Fair Value Measurements for Operating Entities and Consolidated Funds

a.: Operating Entities

Securities owned, at fair value

Securities owned are held by the Company and considered held for trading and carried at fair value. Substantially all equity securities and options are pledged to the clearing broker under terms which permit the clearing broker to sell or re-pledge the securities to others subject to certain limitations.

Table of Contents

Cowen Group, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

4. Investments and Fair Value Measurements for Operating Entities and Consolidated Funds (Continued)

As of March 31, 2010 and December 31, 2009, securities owned consisted of the following, at fair value:

	As of March 31, 2010		As of December 31, 2009

	(dollars in thousands)
U.S. Government securities*	$	14,003	$	—
Common stocks		51,206		11,439
Restricted common stock		5,058		—
Corporate bonds*		64,489		38,327
Options		5,300		1,312
Warrants and rights		587		1,356
Mutual Funds		1,317		1,719

	$	141,960	$	54,153

*: At March 31, 2010, maturities ranged from April 2010 to December 2012 and interest rates ranged between 0.04% and 12.00%. At December 31, 2009, maturities ranged from April 2010 to December 2012 and interest rates ranged between 0.04% and 12.00%.

Other investments

As of March 31, 2010 and December 31, 2009, other investments consisted of the following:

Other investments

	As of March 31, 2010		As of December 31, 2009

	(dollars in thousands)
(1) Portfolio Funds, at fair value	$	17,022	$	20,683
(2) Real estate investments, at fair value		1,108		1,077
(3) Equity method investments		6,933		6,521
(4) Lehman claims, at fair value		313		209

	$	25,376	$	28,490

Table of Contents

Cowen Group, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

4. Investments and Fair Value Measurements for Operating Entities and Consolidated Funds (Continued)

	As of March 31, 2010		As of December 31, 2009

	(dollars in thousands)
Tapestry Investment Co PCC Ltd	$	1,505	$	2,669
Cowen Healthcare Royalty Partners, L.P.		14,144		17,009
Ramius Global Credit Fund LP		801		—
Ramius Value and Opportunity Fund LP		298		639
RCG Special Opportunities Fund, Ltd		165		321
Other affiliated funds		109		45

	$	17,022	$	20,683

	As of March 31, 2010		As of December 31, 2009

	(dollars in thousands)
RCG Longview Debt Fund IV Management, LLC	$	1,944	$	1,651
Cowen Healthcare Royalty GP, LLC*		1,153		—
RCG Longview Partners, LLC		1,365		1,565
RCG Urban American, LLC		675		605
Urban American Real Estate Fund II, L.P.		490		409
RCG Longview Louisiana Manager, LLC		341		400
RCG Longview Equity Management, LLC		298		1,360
RCG Kennedy House, LLC		258		222
Other		409		309

	$	6,933	$	6,521

	As of March 31, 2010		As of December 31, 2009

	(dollars in thousands)
Investments of Enterprise LP	$	412,294	$	449,160
Investments of consolidated fund of funds investment companies		88,935		97,366

	$	501,229	$	546,526

		March 31, 2010

		Ramius Levered Multi-Strategy FOF LP		Ramius Multi-Strategy FOF LP		Ramius Vintage Multi-Strategy FOF LP		RTS Global 3x Fund LP		Total
	Strategy	Fair Value		Fair Value		Fair Value		Fair Value		Fair Value
				(dollars in thousands)
Ramius Multi-Strategy Master FOF LP*	Multi-Strategy	$	—	$	34,536	$	—	$	—	$	34,536	(a)
Ramius Vintage Multi-Strategy Master FOF LP*	Multi-Strategy		—		—		40,255		—		40,255	(a)
Tapestry Pooled Account V LLC*	Credit-Based		726		—		—		—		726	(b)
Externally Managed Portfolio Funds	Credit-Based		639		—		—		—		639	(b)
Externally Managed Portfolio Funds	Futures & Global Macro		—		—		—		9,354		9,354	(c)
Externally Managed Portfolio Funds	Event Driven		2,815		—		—		—		2,815	(d)
Externally Managed Portfolio Funds	Hedged Equity		29		—		—		—		29	(e)
Externally Managed Portfolio Funds	Multi-Strategy		528		—		—		—		528	(f)
Externally Managed Portfolio Funds	Fixed Income Arbitrage		53		—		—		—		53	(g)
Externally Managed Portfolio Funds	Other		—		—		—		—		—

		$	4,790	$	34,536	$	40,255	$	9,354	$	88,935

		December 31, 2009

		Ramius Levered Multi-Strategy FOF LP		Ramius Multi-Strategy FOF LP		Ramius Vintage Multi-Strategy FOF LP		Total
	Strategy	Fair Value		Fair Value		Fair Value		Fair Value
				(dollars in thousands)
Ramius Multi-Strategy Master FOF LP*	Multi-Strategy	$	—	$	43,939	$	—	$	43,939	(a)
Ramius Vintage Multi-Strategy Master FOF LP*	Multi-Strategy		—		—		47,371		47,371	(a)
Tapestry Pooled Account V LLC*	Credit-Based		783		—		—		783	(b)
Externally Managed Portfolio Funds	Credit-Based		1,894		—		—		1,894	(b)
Externally Managed Portfolio Funds	Event Driven		2,787		—		—		2,787	(d)
Externally Managed Portfolio Funds	Hedged Equity		28		—		—		28	(e)
Externally Managed Portfolio Funds	Multi-Strategy		497		—		—		497	(f)
Externally Managed Portfolio Funds	Fixed Income Arbitrage		56		—		—		56	(g)
Externally Managed Portfolio Funds	Other		11		—		—		11

		$	6,056	$	43,939	$	47,371	$	97,366

	As of March 31, 2010		As of December 31, 2009

	(dollars in thousands)
U.S. Government securities*	$	7,438	$	—
Corporate bonds*		1,190		—

	$	8,628	$	—

	As of March 31, 2010		As of December 31, 2009

	(dollars in thousands)
(1) Portfolio Funds	$	501,229	$	546,526
(2) Lehman Claims		13,966		3,881

	$	515,195	$	550,407

	As of March 31, 2010

	Shares/ Principal Amount		Fair Value
	(amounts in thousands)
U.S. Treasury notes, 0.87% - 8.75%, due February 2012 - August 2020, including futures	$	77,342	$	81,354
U.S. Treasury notes, 1.00% - 3.625%, due December 2011 - February 2020, including futures		111,710		(111,342	)

		Assets at Fair Value as of March 31, 2010

		Level 1		Level 2		Level 3		Total
		(dollars in thousands)
Securities owned
	US Government securities	$	14,003	$	—	$	—	$	14,003
	Common stocks		50,866		6		334		51,206
	Restricted common stock		—		—		5,058		5,058
	Corporate bonds		—		64,489		—		64,489
	Options		5,300		—		—		5,300
	Warrants and rights		—		—		587		587
	Mutual Funds		1,317		—		—		1,317
Other investments
	Portfolio Funds(a)		1,504		1,111		14,407		17,022
	Real estate investments		—		—		1,108		1,108
	Lehman claim		—		—		313		313
Other assets
	Derivative contracts		87		—		—		87

		$	73,077	$	65,606	$	21,807	$	160,490

	Operating Entities															Consolidated Funds

	Common stock		Restricted common stock		Warrants and Rights			Portfolio Funds			Real estate			Lehman claim		Portfolio Funds			Lehman claim
Balance at December 31, 2009	$	334	$	—	$	—		$	17,370		$	1,077		$	209	$	97,366		$	3,881
Transfers in (out)		—		—		1,356			(2,866	)		—			—		—			—
Purchases		—		5,000		—			134			44			—		13,039			—
Sales		—		—		(402	)		(803	)		(53	)		—		(24,205	)		—
Realized gains (losses)		—		—								—			104		2,398			—
Unrealized gains (losses)		—		58		(367	)		572			40			—		337			10,085

Balance at March 31, 2010	$	334	$	5,058	$	587		$	14,407		$	1,108		$	313	$	88,935		$	13,966

Balance at December 31, 2008	$	—	$	—	$	—		$	1,970		$	1,605		$	209	$	157,513		$	3,881
Transfers in (out)		—		—		—			—			—			—		—			—
Purchases		—		—		—			—			—			—		1,015			—
Sales		—		—		—			—			—			—		(34,929	)		—
Realized gains (losses)		—		—		—			(220	)		—			—		602			—
Unrealized gains (losses)		—		—		—			2			(103	)		—		(933	)		—

Balance at March 31, 2009	$	—	$	—	$	—		$	1,752		$	1,502		$	209	$	123,268		$	3,881

	March 31, 2010					December 31, 2009

	Securities owned		Securities sold, but not yet purchased			Securities owned		Securities sold, but not yet purchased
	(dollars in thousands)
Bank debt	$	1,948	$	—		$	1,646	$	—
Commercial mortgage backed securities		—		—			2,723		—
Common stock		194,251		(73,917	)		182,447		(47,151	)
Convertible debt		119,207		(3,290	)		123,060		—
Corporate bonds		124,713		(1,515	)		181,402		(1,541	)
Exchange traded funds		1,772		(11,349	)		—		(5,549	)
Foreign government debt		5,794		(5,833	)		10,374		(10,660	)
Loans		878		—			812		—
Options—put		2,246		(1,284	)		6,052		(84	)
Options—call		3,406		(2,441	)		2,335		(3,048	)
OTC fx call option		1		—			5		(1	)
Preferred stock		2,898		(622	)		4,558		(198	)
Private equity		132		—			107		—
Restricted stock		8,127		—			6,172		—
Rights		1,832		—			1,950		—
Trade claims		128		—			128		—
US Treasury Notes		123,168		(153,132	)		185,118		(82,004	)
Warrants		10,040		—			6,831		—

	$	600,541	$	(253,383	)	$	715,720	$	(150,236	)

Description	As of March 31, 2010			As of December 31, 2009

	(dollars in thousands)
Asset swaps	$	152		$	295
Credit default swaps—protection purchased		(429	)		(574	)
Credit default swaps—protection sold		424			432
Currency forwards		(225	)		691
Equity swaps—long exposure		21			(1,001	)
Futures		(115	)		(822	)
Interest rate call swaption—long exposure		13			105
Interest rate call swaption—short exposure		—			(127	)
Interest rate swaps—long exposure		—			40
Total return swap		903			2,123

	$	744		$	1,162

		March 31, 2010				December 31, 2009

	Strategy	Ramius Multi-Strategy Master FOF LP		Ramius Vintage Multi-Strategy Master FOF LP		Ramius Multi-Strategy Master FOF LP		Ramius Vintage Multi-Strategy Master FOF LP
		(dollars in thousands)
Ramius Hedged Equity FOF LP*	Hedged Equity	$	1,471	$	—	$	6,725	$	—
Ramius Vintage Multi-Strategy Master FOF LP*	Multi Strategy		2,444		—		5,394		—
Tapestry Pooled Account II, LLC*	Hedged Equity		—		4,405		—		5,643
Tapestry Pooled Account V, LLC*	Credit-Based		1,495		1,596		1,612		1,721
Externally Managed Funds	Credit-Based		6,270		984		4,084		1,158
Externally Managed Funds	Event Driven		8,705		9,770		9,117		13,912
Externally Managed Funds	Fixed Income Arbitrage		76		—		81		—
Externally Managed Funds	Hedged Equity		6,838		4,749		5,461		5,453
Externally Managed Funds	Multi Strategy		7,779		7,988		11,564		14,647
Externally Managed Funds	Other		—		—		47		—
Externally Managed Funds	Global Macro		3,008		3,231		2,081		5,321
Externally Managed Funds	Opportunistic Equity		—		2,967		—		2,825
Externally Managed Funds	Managed Futures		2,332		1,236		2,256		1,276

		$	40,418	$	36,926	$	48,422	$	51,956

	As of March 31, 2010

	(dollars in thousands)
Bond Futures	$	5
Commodity Forward		169
Commodity Future		837
Currency Forward		270
Currency Future		296
Energy Future		6
Index Future		261
Interest Rate Future		25

	$	1,869

	Three Months Ended March 31,

	2010			2009
	(dollars in thousands)
*Net (income) loss attributable to non-controlling interests in consolidated subsitiaries*
Operating Companies	$	—		$	421
Consolidated Funds		(8,056	)		1,983

	$	(8,056	)	$	2,404

			Weighted-Average Grant Date Fair Value

Balance outstanding at December 31, 2009	2,554,182		$	6.90
Granted	3,848,499			4.89
Vested	(24,912	)		7.55
Forfeited	(39,268	)		4.89

Balance outstanding at March 31, 2010	6,338,501		$	5.69

			Weighted-Average Grant Date Fair Value

Balance outstanding at December 31, 2009	2,859,426		$	7.30
Granted	1,515			5.55
Vested	—			—
Forfeited	(20,016	)		7.30

Balance outstanding at March 31, 2010	2,840,925		$	7.30

			Weighted Average Exercise Price/Share		Weighted Average Remaining Term		Aggregate Intrinsic Value(1)

					(in years)		(in thousands)
Balance outstanding at December 31, 2009	892,782		$	15.06
Options granted	—			—
Options acquired	—			—
Options exercised	—			—
Options forfeited	—			—
Options expired	(21,879	)		16.00

Balance outstanding at March 31, 2010	870,903		$	15.04		3.60	$	—

Options exercisable at March 31, 2010	809,570		$	14.97		3.60	$	—

	Minimum Lease Payments

	Equipment Leases		Facility Leases
	(in thousands)
Remainder of 2010	$	8,097	$	13,653
2011		6,140		17,222
2012		3,506		16,426
2013		1,760		14,921
2014		146		10,667
Thereafter		—		59,998

	$	19,649	$	132,887

			Three Months Ended March 31, 2010

												Adjustments
			Alternative Investment Management			Broker-Dealer			Total Income			Funds Consolidation			Other Adjustments			US GAAP
									(dollars in thousands)
Revenues
	Investment banking		$	—		$	6,005		$	6,005		$	—		$	—		$	6,005
	Brokerage			—			29,575			29,575			—			—			29,575
	Management fees			12,587			28			12,615			(895	)		(2,450	)		9,270
	Incentive income			1,982			—			1,982			—			111			2,093
	Investment Income			11,192			229			11,421			—			(11,421	)		—
	Interest and dividends			—			—			—			—			804			804
	Reimbursement from affiliates			—			—			—			(145	)		1,887			1,742
	Other Revenue			(51	)		124			73			—			549			622
	Consolidated Funds			—			—			—			6,147			—			6,147

		Total revenues		25,710			35,961			61,671			5,107			(10,520	)		56,258
Expenses
	Employee compensation and benefits			16,184			25,136			41,320			—			2,113			43,433
	Interest and dividends			116			—			116			—			330			446
	Non-compensation expenses			8,783			24,468			33,251			—			952			34,203
	Reimbursement from affiliates			(1,887	)		—			(1,887	)		—			1,887			—
	Consolidated Funds			—			—			—			3,159			—			3,159

		Total expenses		23,196			49,604			72,800			3,159			5,282			81,241
Other income (loss)
	Net gain (loss) on securities, derivatives and other investments			—			—			—			—			1,524			1,524
	Consolidated Funds			—			—			—			6,108			12,165			18,273

		Total other income (loss)		—			—			—			6,108			13,689			19,797

		Income (loss) before income taxes and non-controlling interests		2,514			(13,643	)		(11,129	)		8,056			(2,113	)		(5,186	)

Income taxes				—			—			—						(266	)		(266	)

		Economic Income (Loss) / Net income (loss) before non-controlling interests		2,514			(13,643	)		(11,129	)		8,056			(1,847	)		(4,920	)
	(Income) loss attributable to non-controlling interests			—			—			—			(8,056	)		—			(8,056	)
		Economic Income (Loss) / Net Income (loss) available to all Members	$	2,514		$	(13,643	)	$	(11,129	)	$	—		$	(1,847	)	$	(12,976	)

Platform	Total Assets under Management			Primary Strategies

	(dollars in millions)
Hedge Funds	$	1,703	⁽¹⁾	Multi-Strategy
				Single Strategy
Fund of Funds		1,777	⁽²⁾	Multi-Strategy
				Single Strategy
				Customized Solutions
				Hedging Strategies
		555		Advisory
Real Estate⁽³⁾		1,628	⁽⁴⁾	Debt
				Equity
Ramius Trading Strategies		18		RTS Global 3X Fund LP
		6		RTS Global Fund LP
Cowen Healthcare Royalty Partners⁽⁵⁾		903	⁽⁴⁾	Royalty Interests
Other⁽⁶⁾		1,275		Cash Management
				Mortgage Advisory

Total	$	7,865

	Year ended December 31,

	Year ended December 31,								January 1, 2010			Three months ended April 1, 2010
	2007		2008			2009			January 1, 2010			Three months ended April 1, 2010
Beginning Assets under Management	$	9,592,135	$	12,900,355		$	9,765,230		$	8,313,638		$	7,847,712
Net Subscriptions (Redemptions)		2,601,939		(1,066,714	)		(1,780,117	)⁽²⁾		(465,926	)		(70,511	)
Net Performance⁽¹⁾		706,281		(2,068,411	)		328,525			—			87,949

Ending Assets under Management	$	12,900,355	$	9,765,230		$	8,313,638		$	7,847,712		$	7,865,150

			Performance for three months Ended March 31,

Platform	Strategy	Largest Fund(1)	2010(2)			2009
Hedge Funds	Multi-Strategy	Ramius Multi-Strategy Fund Ltd		2.25	%		(0.70	)%
		(Inception Jan. 1, 1996)
		Ramius Enterprise LP		1.93	%		(0.87	)%
		(Inception Jan. 1, 2008)
	Single Strategy	Ramius Value and Opportunity
		Overseas Fund Ltd.		7.80	%		0.93	%
		(Inception Mar. 1, 2006)
Fund of Funds	Managed Accounts	Activist Portfolio with Hedging Overlay		2.94	%		0.40	%
		(Inception Sept. 1, 2007)
		Low Volatility Multi-Strategy Fund		1.55	%		0.24	%
		(Inception Aug. 1, 2005)
Real Estate	Debt	RCG Longview Debt Fund IV, L.P.		2.93	%⁽³⁾		(4.96	)%⁽³⁾
		(Inception Nov. 12, 2007)
	Equity	RCG Longview Equity Fund, L.P.		8.01	%⁽³⁾		(2.29	)%⁽³⁾
		(Inception Nov. 22, 2006)
Ramius Trading Strategies	Commodity Advisory	RTS Global 3X Fund LP		5.99	%		n/a
		(Inception Mar 1, 2010)
		RTS Global Fund LP		1.95	%		n/a
		(Inception Mar 1, 2010)
Other	Cash Management			0.67	%		0.00	%

				Three Months Ended March 31,						Period to Period

				2010			2009			$ Change			% Change
				(dollars in thousands)
Revenues
		Investment banking		$	6,005		$	—		$	6,005			NM
		Brokerage			29,575			—			29,575			NM
		Management fees			9,270			11,511			(2,241	)		(19.5	)%
		Incentive income			2,093			—			2,093			NM
		Interest and dividends			804			91			713			783.5	%
		Reimbursement from affiliates			1,742			3,394			(1,652	)		(48.7	)%
		Other Revenue			622			1,019			(397	)		(39.0	)%
		Consolidated Funds revenues			6,147			4,710			1,437			30.5	%

			Total revenues		56,258			20,725			35,533			171.4	%
Expenses
		Employee compensation and benefits			43,433			14,907			28,526			191.4	%
		Interest and dividends			446			349			97			27.8	%
		General, administrative and other expenses			34,203			10,273			23,930			232.9	%
		Consolidated Funds expenses			3,159			3,377			(218	)		(6.5	)%

			Total expenses		81,241			28,906			52,335			181.1	%
Other income (loss)
		Net gain (loss) on securities, derivatives and other investments			1,524			259			1,265			488.4	%
		Consolidated Funds net gains (losses)			18,273			(3,347	)		21,620			NM

			Total other income (loss)		19,797			(3,088	)		22,885			(741.1	)%

			Income (loss) before income taxes		(5,186	)		(11,269	)		6,083			(54.0	)%

	Income taxes				(266	)		(66	)		(200	)		303.0	%

			Net loss		(4,920	)		(11,203	)		6,283			(56.1	)%
		(Income) loss attributable to non-controlling interests			(8,056	)		2,404			(10,460	)		NM

			Net loss attributable to Cowen Group, Inc. stockholders	$	(12,976	)	$	(8,799	)	$	(4,177	)		47.5	%


COWEN GROUP, INC.
By:	/s/ PETER A. COHEN
	Name:	Peter A. Cohen
	Title:	Chief Executive Officer and President (principal executive officer)
By:	/s/ STEPHEN A. LASOTA
	Name:	Stephen A. Lasota
	Title:	Chief Financial Officer (principal financial officer and principal accounting officer)

Exhibit No.			Description

	10.1		Modification Agreement, dated as of May 11, 2010, among the Registrant, RCG Holdings LLC, C4S & Co., L.L.C., Ramius LLC, Ramius Alternative Solutions LLC, BA Alpine Holdings, Inc., Alpine Cayman Islands Limited, UniCredit Bank AG (formerly known as Bayerische Hypo- und Vereinsbank AG, Munich), HVB Alternative Advisors LLC and CEAKSCH Verwaltungs G.m.b.H.
	31.1		Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
	31.2		Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
	32		Certification of CEO and CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.