OPPENHEIMER HOLDINGS INC - Quarter Report: 2023 June (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			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 1-12043

OPPENHEIMER HOLDINGS INC.

(Exact name of registrant as specified in its charter)


Delaware			98-0080034
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

85 Broad Street

New York, NY 10004

(Address of principal executive offices) (Zip Code)

(212) 668-8000

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A non-voting common stock	OPY	The New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

Large accelerated filer

☐

Accelerated Filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

The number of shares of the Company's Class A non-voting common stock and Class B voting common stock (being the only classes of common stock of the Company) outstanding on July 28, 2023 was 10,451,767 and 99,665 shares, respectively.

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OPPENHEIMER HOLDINGS INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q



		Page No.
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of June 30 , 2023 and December 31, 2022	3
	Condensed Consolidated Income Statements for the three and six months ended June 3 0 , 2023 and 2022	4
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 3 0 , 2023 and 2022	5
	Condensed Consolidated Statements of Changes in Stockholders' Equity and Redeemable Noncontrolling Interests for the three and six months ended June 3 0 , 2023 and 2022	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 3 0 , 2023 and 2022	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	53
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 6.	Exhibits	57
	Signatures	58

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PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (UNAUDITED)

OPPENHEIMER HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)


(Expressed in thousands, except number of shares and per share amounts)	June 30, 2023		December 31, 2022
ASSETS
Cash and cash equivalents	$	29,145	$	112,433
Deposits with clearing organizations	76,294		77,691
Restricted cash	25,803		25,534
Receivable from brokers, dealers and clearing organizations	334,220		206,077
Receivable from customers, net of allowance for credit losses of $349 ($350 in 2022)	1,066,439		1,202,764
Income tax receivable	17,196		—

Securities owned, including amounts pledged of $660,007 ($175,724 in 2022), at fair value	924,183		498,594
Notes receivable, net	60,873		57,495
Furniture, equipment and leasehold improvements, net of accumulated depreciation of $98,341 ($97,751 in 2022)	42,579		36,742
Right-of-use lease assets, net of accumulated amortization of $90,125 ($82,449 in 2022)	154,811		142,630
Goodwill	137,889		137,889
Intangible assets	32,100		32,100
Other assets	190,843		184,443
Total assets	$	3,092,375	$	2,714,392
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Drafts payable	$	21,734	$	—
Bank call loans	94,400		—
Payable to brokers, dealers and clearing organizations	421,403		550,006
Payable to customers	401,168		456,475
Securities sold under agreements to repurchase	645,315		161,009
Securities sold but not yet purchased, at fair value	71,101		52,768
Accrued compensation	189,475		239,136
Income tax payable	—		4,130
Accounts payable and other liabilities	89,557		102,202
Lease liabilities	196,934		182,570
Senior secured notes, net of debt issuance costs of $501 ($616 in 2022)	112,549		113,434
Deferred tax liabilities, net of deferred tax assets of $56,564 ($55,628 in 2022)	34,369		32,241
Total liabilities	2,278,005		1,893,971
Commitments and contingencies (Note 14)
Redeemable noncontrolling interests	25,948		25,466
Stockholders' equity
Common stock ($0.001 par value per share): Class A: shares authorized: 50,000,000; shares issued and outstanding: 10,884,575 and 10,868,556 as of June 30, 2023 and December 31, 2022, respectively Class B: shares authorized, issued and outstanding: 99,665 as of June 30, 2023 and December 31, 2022	11		11
Additional paid-in capital	25,576		28,628
Retained earnings	762,471		764,178
Accumulated other comprehensive income	256		1,416
Total Oppenheimer Holdings Inc. stockholders' equity	788,314		794,233
Noncontrolling interest (Note 2)	108		722
Total Stockholders' equity	788,422		794,955
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	$	3,092,375	$	2,714,392

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

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OPPENHEIMER HOLDINGS INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS (unaudited)



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Expressed in thousands, except number of shares and per share amounts)	2023		2022		2023		2022
REVENUE
Commissions	$	88,544	$	94,378	$	175,241	$	192,699
Advisory fees	101,015		107,405		201,559		223,171
Investment banking	19,978		16,653		57,943		55,123
Bank deposit sweep income	44,060		14,845		92,969		19,199
Interest	27,320		11,789		52,261		21,306
Principal transactions, net	16,253		1,258		29,743		3,622
Other	9,019		(9,106)		18,152		(11,870)
Total revenue	306,189		237,222		627,868		503,250
EXPENSES
Compensation and related expenses	187,224		177,979		393,516		364,010
Communications and technology	22,783		20,896		45,223		42,481
Occupancy and equipment costs	16,440		14,554		32,341		29,244
Clearing and exchange fees	5,927		6,242		12,190		12,218
Interest	17,467		3,628		30,609		6,140
Other	68,047		20,092		106,639		41,113
Total expenses	317,888		243,391		620,518		495,206

Pre-tax income (loss)	(11,699)		(6,169)		7,350		8,044
Income taxes provision (benefit)	(2,131)		(1,449)		2,454		2,986
Net income (loss)	$	(9,568)	$	(4,720)	$	4,896	$	5,058

Net loss attributable to noncontrolling interest, net of tax	(168)		(846)		(321)		(360)
Net income (loss) attributable to Oppenheimer Holdings Inc.	$	(9,400)	$	(3,874)	$	5,217	$	5,418

Earnings (loss) per share attributable to Oppenheimer Holdings Inc.
Basic	$	(0.85)	$	(0.32)	$	0.47	$	0.44
Diluted	$	(0.85)	$	(0.32)	$	0.44	$	0.41

Weighted average shares outstanding
Basic	11,016,430		11,980,115		11,054,306		12,222,527
Diluted	11,016,430		11,980,115		11,911,379		13,141,538

Period end shares outstanding	10,984,240		11,370,609		10,984,240		11,370,609

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

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OPPENHEIMER HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Expressed in thousands)	2023		2022		2023		2022
Net income (loss)	$	(9,568)	$	(4,720)	$	4,896	$	5,058
Other comprehensive loss, net of tax
Currency translation adjustment	(663)		(2,038)		(1,160)		(2,652)
Comprehensive income (loss)	$	(10,231)	$	(6,758)	3,736		2,406
Less net loss attributable to noncontrolling interests	(168)		(846)		(321)		(360)
Comprehensive income (loss) attributable to Oppenheimer Holdings Inc.	$	(10,063)	$	(5,912)	$	4,057	$	2,766

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

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OPPENHEIMER HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (unaudited)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Expressed in thousands, except per share amount)	2023		2022		2023		2022
Common stock ($0.001 par value per share)
Beginning Balance	$	11	$	12	$	11	$	12
Issuance of Class A non-voting common stock	—		—		—		—
Repurchase of Class A non-voting common stock for cancellation	—		(1)		—		(1)
Ending Balance	11		11		11		11
Additional paid-in capital
Balance at beginning of period	22,374		62,446		28,628		78,034
Issuance of Class A non-voting common stock	184		—		5,672		2,344
Repurchase of Class A non-voting common stock for cancellation	—		(30,217)		(3,687)		(46,375)



Share-based expense	3,349		3,232		6,642		6,053
Vested employee share plan awards	(259)		—		(11,578)		(4,595)
Change in redemption value of redeemable noncontrolling interests	(72)		—		(101)		—
Balance at end of period	25,576		35,461		25,576		35,461
Retained earnings
Balance at beginning of period	777,121		748,323		764,178		740,926
Repurchase of Class A non-voting common stock for cancellation	(3,599)		—		(3,599)		—
Net income (loss) (1)	(9,400)		(3,874)		5,217		5,418
Dividends paid	(1,651)		(1,835)		(3,325)		(3,730)

Balance at end of period	762,471		742,614		762,471		742,614
Accumulated other comprehensive income
Balance at beginning of period	919		3,611		1,416		4,225
Currency translation adjustment	(663)		(2,038)		(1,160)		(2,652)
Balance at end of period	256		1,573		256		1,573
Total Oppenheimer Holdings Inc. stockholders' equity	$	788,314	$	779,659	$	788,314	$	779,659
Noncontrolling interest
Balance at beginning of period	433		2,555		722		2,069
Capital distribution to noncontrolling interest	171		—		171		—
Net loss attributable to noncontrolling interest	(168)		(846)		(321)		(360)
Change in redemption value of redeemable noncontrolling interests	(328)		—		(464)		—
Balance at end of period	108		1,709		108		1,709
Total stockholders' equity	$	788,422	$	781,368	$	788,422	$	781,368
Redeemable Noncontrolling Interests
Balance at beginning of period	25,557		127,765		25,466		127,765
Redemption of redeemable noncontrolling interests	(9)		—		(83)		—
Change in redemption value of redeemable noncontrolling interests	400		—		565		—
Balance at end of period	$	25,948	$	127,765	$	25,948	$	127,765

Dividends paid per share	$	0.15	$	0.15	$	0.30	$	0.30


(1) Attributable to Oppenheimer Holdings Inc.

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

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OPPENHEIMER HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

FOR THE SIX MONTHS ENDED JUNE 30,


(Expressed in thousands)	2023		2022
Cash flows from operating activities
Net income	$	4,896	$	5,058
Adjustments to reconcile net income to net cash used in operating activities
Non-cash items included in net income:
Depreciation and amortization of furniture, equipment and leasehold improvements	3,897		3,806
Deferred income taxes	2,485		3,026
Amortization of notes receivable	7,570		6,995
Amortization of debt issuance costs	110		126
Write-off of debt issuance costs	5		—
Provision for (reversal of) credit losses	(1)		94
Share-based compensation	7,773		(2,589)
Amortization of right-of-use lease assets	13,945		13,170
Gain on repurchase of senior secured notes	(51)		—
Decrease (increase) in operating assets:
Deposits with clearing organizations	1,397		(32,600)
Receivable from brokers, dealers and clearing organizations	(128,143)		2,004
Receivable from customers	136,326		(66,723)
Income tax receivable	(17,196)		—
Securities purchased under agreements to resell	—		935
Securities owned	(425,589)		13,232
Notes receivable	(10,948)		(12,111)
Other assets	(8,115)		24,394
Increase (decrease) in operating liabilities:
Drafts payable	21,734		10,020
Payable to brokers, dealers and clearing organizations	(128,603)		(33,590)
Payable to customers	(55,307)		(37,643)
Securities sold under agreements to repurchase	484,306		(106,354)
Securities sold but not yet purchased	18,333		182,694
Accrued compensation	(50,792)		(160,196)
Income tax payable	(4,130)		—
Accounts payable and other liabilities	(24,713)		(45,119)
Cash used in operating activities	(150,811)		(231,371)
Cash flows from investing activities
Purchase of furniture, equipment and leasehold improvements	(9,734)		(2,307)

Proceeds from the settlement of Company-owned life insurance	555		1,191
Cash used in investing activities	(9,179)		(1,116)
Cash flows from financing activities
Cash dividends paid on Class A non-voting and Class B voting common stock	(3,325)		(3,730)


Repurchase of Class A non-voting common stock for cancellation	(7,285)		(46,375)
Payments for employee taxes withheld related to vested share-based awards	(5,907)		(2,251)

Addition to noncontrolling interests	171		—
Redemption of redeemable noncontrolling interests	(83)		—


Repurchase of senior secured notes	(1,000)		—


Increase in bank call loans	94,400		107,800
Cash provided by financing activities	76,971		55,444
Net decrease in cash, cash equivalents and restricted cash	(83,019)		(177,043)
Cash, cash equivalents and restricted cash, beginning of period	137,967		341,524
Cash, cash equivalents and restricted cash, end of period	$	54,948	$	164,481

Reconciliation of cash, cash equivalents and restricted cash within the condensed consolidated balance sheets:	2023		2022
Cash and cash equivalents	$	29,145	$	36,606
Restricted cash	25,803		127,875
Total cash, cash equivalents and restricted cash	$	54,948	$	164,481

Schedule of non-cash financing activities
Employee share plan issuance	$	9,062	$	3,809

Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	30,113	$	5,776
Cash paid during the period for income taxes, net	$	20,322	$	22,750

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


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

1. Organization

Oppenheimer Holdings Inc. ("OPY" or the "Parent") is incorporated under the laws of the State of Delaware. The condensed consolidated financial statements include the accounts of OPY and its consolidated subsidiaries (together, the "Company"). Oppenheimer Holdings Inc., through its operating subsidiaries, is a leading middle market investment bank and full service broker-dealer that is engaged in a broad range of activities in the financial services industry, including retail securities brokerage, institutional sales and trading, investment banking (corporate and public finance), equity and fixed income research, market-making, trust services, and investment advisory and asset management services.

The Company is headquartered in New York and has 92 retail branch offices in 25 states located throughout the United States and offices in Puerto Rico, Tel Aviv, Israel, Hong Kong, China, London, England, St. Helier, Isle of Jersey, Munich, Germany, Portugal and Geneva, Switzerland as well as institutional businesses located in London, Tel Aviv, and Hong Kong. The principal subsidiaries of OPY are Oppenheimer & Co. Inc. ("Oppenheimer"), a registered broker-dealer in securities and investment adviser under the Investment Advisers Act of 1940; Oppenheimer Asset Management Inc. ("OAM") and its wholly-owned subsidiary, Oppenheimer Investment Management LLC, both registered investment advisers under the Investment Advisers Act of 1940; Oppenheimer Trust Company of Delaware ("Oppenheimer Trust"), a limited purpose trust company that provides fiduciary services such as trust and estate administration and investment management; OPY Credit Corp., which from time to time may offer syndication as well as trading of issued corporate loans; Oppenheimer Europe Ltd., based in the United Kingdom, with offices in the Isle of Jersey, Portugal, Germany, and Switzerland, which provides institutional equities and fixed income brokerage and corporate finance and is regulated by the Financial Conduct Authority; Oppenheimer Investments Asia Limited, based in Hong Kong, China, which provides fixed income and equities brokerage services to institutional investors and is regulated by the Securities and Futures Commission.

Oppenheimer owns Freedom Investments, Inc. ("Freedom"), a registered broker dealer in securities, which provides discount brokerage services, and Oppenheimer Israel (OPCO) Ltd., based on Tel Aviv, Israel, which provides investment services in the State of Israel and operates subject to the authority of the Israel Securities Authority.

2. Summary of significant accounting policies and estimates

Basis of Presentation

The accompanying condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC") regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America ("U.S. GAAP") and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 (the "Form 10-K"). The accompanying condensed consolidated balance sheet data was derived from the audited consolidated financial statements but does not include all disclosures required by U.S. GAAP for annual financial statement purposes. The accompanying condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Preparing financial statements requires management to make estimates and assumptions that affect the amounts that are reported in the financial statements and the accompanying disclosures. Although these estimates are based on management's knowledge of current events and actions that the Company may undertake in the future, actual results may differ materially from the estimates. The condensed consolidated results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for any future interim or annual period.

Reclassification

Effective June 30, 2022, the Company reclassified certain stockholders' equity amounts on the condensed consolidated balance sheet and condensed consolidated statements of changes in stockholders' equity and redeemable noncontrolling interests. The reclassification included separately presenting the par value of common stock, and combining previously disclosed share capital and contributed capital amounts in the currently reported additional paid-in capital amount. The reclassification had no impact on previously reported total stockholders’ equity amounts.


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

Oppenheimer Acquisition Corp. I

On October 26, 2021, OPY Acquisition Corp. I (“OHAA”) consummated its $126.5 million initial public offering (the “OHAA IPO”). OHAA is a special purpose acquisition company, incorporated in Delaware for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”). OPY Acquisition LLC I (the “Sponsor”), a Delaware series limited liability company and the Company’s subsidiary, is the sponsor of OHAA. The Company and its employees control OHAA through the Sponsor’s ownership of Class A founder shares of OHAA. As a result, both OHAA and the Sponsor are recorded in the Company's consolidated financial statements.

Upon IPO completion, funds totaling $127.8 million, including proceeds from the OHAA IPO of $126.5 million and $1.3 million investment from the Sponsor, were held in a trust account until the earlier of (i) the completion of a Business Combination or (ii) ten business days after April 29, 2023, 18 months from the closing of the OHAA IPO (“Combination Period”), pursuant to OHAA's certificate of incorporation. The cash held in the trust account is recorded in “Restricted Cash” on the consolidated balance sheet.

Transaction costs, which consisted of a net underwriting fee of $2.5 million and $0.5 million of other offering costs, were charged against the gross proceeds of the OHAA IPO consistent with SEC Staff Accounting Bulletin (SAB) Topic 5.

On December 20, 2022, OHAA’s stockholders approved an amendment to its certificate of incorporation that was filed with the Delaware Secretary of State on December 22, 2022 which extends the deadline by which it must complete its initial business combination from April 29, 2023 to October 30, 2023. In connection with its proposal to amend its certificate of incorporation, OHAA was required to give its Class A stockholders the opportunity to redeem their shares of Class A common stock. Of the 12,650,000 shares of Class A common stock that were outstanding, a total of 10,170,490 shares exercised their redemption rights. As of June 30, 2023, $25.8 million remained in the trust account that is recorded within “Restricted Cash” on the condensed consolidated balance sheet.

“Redeemable noncontrolling interests” of $25.9 million associated with the publicly-held OHAA Class A ordinary shares are recorded on the Company’s condensed consolidated balance sheet as of June 30, 2023 at redemption value and classified as temporary equity in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity”. Changes in redemption value are recognized immediately as they occur and will adjust the carrying value of redeemable noncontrolling interests to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable noncontrolling interests will be affected by charges to additional paid-in-capital and noncontrolling interests attributable to certain members of the Sponsor on a pro rata ownership basis.

The public warrants and private warrants exercisable for OHAA Class A ordinary shares that were issued in connection with the OHAA IPO (the “OHAA Warrants”) qualify for equity accounting treatment under FASB ASC Topic 815.

Oppenheimer Principal Investments LLC

Oppenheimer Principal Investments LLC ("OPI") is a Delaware special purpose "Series" limited liability company formed in December 2020 and designed to retain and reward talented employees of the Company, primarily in connection with the deployment of Company capital into successful private market investments, and also in connection with the Company's receipt of non-cash compensation from investment banking assignments. OPI is designed to promote alignment of Company, client and employee interests as they relate to profitable investment opportunities. This program acts as an incentive for senior employees to identify attractive private investments for the Company and its clients, and as a retention tool for key employees of the Company. OPI treats its members as partners for tax purposes generally and with respect to the separate Series formed to participate in (i) the incentive fees generated by successful client investments in the Company's Private Market Opportunities program, or (ii) principal investments made by the Company or a portion of the gains thereon, either through the outright purchase of an investment or consideration earned in lieu of an investment banking fee or other transaction fee. Employees who become members of a Series receive a "profit interest", as that term is used in Internal Revenue Service (“IRS”) regulations, and receive an allocation of capital appreciation of the investment held by the particular Series that exceeds a threshold amount established for each Series. Participating employees are also subject to vesting and forfeiture requirements for each Series


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

investment. Vested profit interests are accounted for as compensation expense under FASB Topic ASC 710. Additionally, the Company’s policy is to consolidate those entities where it owns the majority voting interests. The Company owns the majority voting interest of OPI through Oppenheimer Alternative Investment Management (“OAIM”), the managing member of OPI and a subsidiary of OAM. Pursuant to the Company’s policy for consolidation, the Company consolidates OPI. See note 10 for details.

Noncontrolling interests represents ownership interests in the Sponsor of OHAA, OHAA Class A founder and Class A ordinary shares held by management and employees of the Company, as well as OHAA Class B shares held by directors and officers of OHAA and an employee of the Company. Noncontrolling interests also include publicly-held warrants to purchase OHAA Class A ordinary shares.

For the six months ended June 30, 2023 and June 30, 2022, the net loss (net of taxes) attributed to noncontrolling interests was $321,000 and $360,000, respectively.

Restricted Cash

Restricted cash represents OHAA deposits held in trust as indicated above.

3. Financial Instruments - Credit Losses

Under ASC 326 "Financial Instruments - Credit Losses", the Company can elect to use an approach to measure the allowance for credit losses using the fair value of collateral where the borrower is required to, and reasonably expected to, continually adjust and replenish the amount of collateral securing the instrument to reflect changes in the fair value of such collateral. The Company has elected to use this approach for securities borrowed, margin loans, and reverse repurchase agreements. No material historical losses have been reported on these assets. See note 9 for details.

As of June 30, 2023, the Company had $60.9 million of notes receivable ($57.5 million as of December 31, 2022). Notes receivable represent recruiting and retention payments generally in the form of upfront loans to financial advisors and key revenue producers as part of the Company's overall growth strategy. These notes generally amortize over a service period of 3 to 10 years from the initial date of the note or based on productivity levels of the respective employees. All such notes are contingent on the employees' continued employment with the Company. The unforgiven portion of the notes becomes due on demand in the event the employee departs during the service period. At this point, any uncollected portion of the notes is reclassified into a defaulted notes category.

The allowance for uncollectibles is a valuation account that is deducted from the amortized cost basis of the defaulted notes balance to present the net amount expected to be collected. Balances are charged-off against the allowance when management deems the amount to be uncollectible.

The Company reserves 100% of the uncollected balance of defaulted notes which are five years and older and applies an expected loss rate to the remaining balance. The expected loss rate is based on historical collection rates of defaulted notes. The expected loss rate is adjusted for changes in market conditions such as changes in unemployment rates, changes in interest rates and other relevant factors. For the three and six months ended June 30, 2023, no adjustments were made to the expected loss rates. The Company will continuously monitor the effect of these factors on the expected loss rate and adjust it as necessary.

The allowance is measured on a pool basis as the Company has determined that the entire defaulted portion of notes receivable has similar risk characteristics.

As of June 30, 2023, the uncollected balance of defaulted notes was $6.2 million and the allowance for uncollectibles was $3.8 million. The allowance for uncollectibles consisted of $2.2 million related to defaulted notes balances (five years and older) and $1.6 million related to defaulted notes balances (under five years).


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

The following table presents the disaggregation of defaulted notes by year of default as of June 30, 2023:


(Expressed in thousands)
	As of June 30, 2023

2023	$	1,130
2022	285
2021	1,899
2020	423
2019	323
2018 and prior	2,176
Total	$	6,236

The following table presents activity in the allowance for uncollectibles of defaulted notes for the three and six months ended June 30, 2023 and 2022:


(Expressed in thousands)
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Beginning balance	$	4,051	$	5,247	$	4,327	$	4,923
Additions and other adjustments	(237)		(141)		(513)		183
Ending balance	$	3,814	$	5,106	$	3,814	$	5,106

4. Leases

The Company has operating leases for office space and equipment expiring at various dates through 2034. The Company leases its corporate headquarters at 85 Broad Street, New York, New York which houses its executive management team and many administrative functions for the firm as well as its research, trading, investment banking, and asset management divisions and an office in Troy, Michigan, which among other things, houses its payroll and human resources departments. In addition, the Company has 92 retail branch offices in the United States as well as offices in London, England, St. Helier, Isle of Jersey, Geneva, Switzerland, Munich, Germany, Tel Aviv, Israel and Hong Kong, China.

The Company is constantly assessing its needs for office space and, on a rolling basis, has many leases that expire in any given year.

Substantially all of the leases are held by the Company's subsidiary, Viner Finance Inc., which is a consolidated subsidiary and 100% owned by the Company.

Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Most leases include an option to renew and the exercise of lease renewal options is at the Company's sole discretion. The Company did not include the renewal options as part of the right of use assets and liabilities.

The depreciable life of assets and leasehold improvements is limited by the expected lease term. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of June 30, 2023, the Company had right-of-use operating lease assets of $154.8 million (net of accumulated amortization of $90.1 million) which are comprised of real estate leases of $152.0 million (net of accumulated amortization of $87.7 million) and equipment leases of $2.8 million (net of accumulated amortization of $2.4 million). As of June 30, 2023, the Company had


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

operating lease liabilities of $196.9 million which are comprised of real estate lease liabilities of $194.1 million and equipment lease liabilities of $2.8 million. The Company had no finance leases as of June 30, 2023.

As most of the Company's leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company used the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date. The Company used the incremental borrowing rate as of the lease commencement date for the operating leases that commenced subsequent to January 1, 2019.

The following table presents the weighted average lease term and weighted average discount rate for the Company's operating leases as of June 30, 2023 and December 31, 2022, respectively:


	As of
	June 30, 2023	December 31, 2022

Weighted average remaining lease term (in years)	6.86	6.82
Weighted average discount rate	7.05%	6.66%

The following table presents operating lease costs recognized for the three and six months ended June 30, 2023 and June 30, 2022, respectively, which are included in occupancy and equipment costs on the condensed consolidated income statements:


(Expressed in thousands)
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease costs:
Real estate leases - Right-of-use lease asset amortization	$	6,686	$	6,189	$	13,125	$	12,346
Real estate leases - Interest expense	3,398		3,267		6,607		6,623
Equipment leases - Right-of-use lease asset amortization	431		410		853		824
Equipment leases - Interest expense	47		35		93		67

The maturities of lease liabilities as of June 30, 2023 and December 31, 2022 are as follows:


(Expressed in thousands)
	As of
	June 30, 2023		December 31, 2022
2023	$	22,196	$	42,343
2024	43,123		38,018
2025	37,174		31,684
2026	34,753		29,671
2027	33,205		28,178
After 2027	79,433		58,146
Total lease payments	$	249,884	$	228,040
Less interest	(52,950)		(45,470)
Present value of lease liabilities	$	196,934	$	182,570

As of June 30, 2023, the Company had $9.3 million of additional real estate operating leases that have not yet commenced ($40.2 million as of December 31, 2022).


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

5. Revenue from contracts with customers

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 its past experiences, the time period during which uncertainties are expected 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 the 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, are 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, options and commodities transactions. The Company records a receivable on the trade date and receives a payment on the settlement date.

Mutual Fund Income — The Company earns mutual fund income for sales and distribution of mutual fund shares, which consists of a fixed fee amount and a variable amount. The Company recognizes mutual fund income at a point in time on the trade date when the performance obligation is satisfied which is when the mutual fund interest is sold to the investor. The ongoing distribution fees for distributing investment products from mutual fund companies are generally considered variable consideration because they are based on the value of AUM and are uncertain on trade date. The Company recognizes distribution fees over the investment period as the amounts become known and the portion recognized in the current period may relate to distribution services performed in prior periods. 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, asset-based programs 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 AUM exceeds a specified benchmark return or as other performance targets over a 12-month measurement period are met. Performance fees are considered variable and they are recognized at a point in time 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


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

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 time. 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 income statements.

Revenue from financial advisory services includes fees generated in connection with mergers, acquisitions, and restructuring transactions. Such revenue and fees are primarily recorded at a point in time when services for the performance obligations have been completed and income is reasonably determinable, generally as set forth under the terms of the engagement. Payment for advisory services is generally due upon 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, 2023 and 2022:


(Expressed in thousands)	For the Three Months Ended June 30, 2023
	Reportable Segments
	Private Client		Asset Management		Capital Markets		Corporate/Other		Total
Revenue from contracts with customers:
Commissions from sales and trading	$	37,666	$	—	$	43,154	$	8	$	80,828
Mutual fund and insurance income	7,711		—		1		4		7,716
Advisory fees	78,811		22,196		—		8		101,015
Investment banking - capital markets	1,688		—		7,345		—		9,033
Investment banking - advisory	—		—		10,945		—		10,945
Bank deposit sweep income	44,060		—		—		—		44,060
Other	3,284		—		594		21		3,899
Total revenue from contracts with customers	173,220		22,196		62,039		41		257,496
Other sources of revenue:
Interest	22,403		—		4,109		808		27,320
Principal transactions, net	1,072		—		13,410		1,771		16,253
Other	4,550		2		24		544		5,120
Total other sources of revenue	28,025		2		17,543		3,123		48,693
Total revenue	$	201,245	$	22,198	$	79,582	$	3,164	$	306,189


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)


(Expressed in thousands)	For the Three Months Ended June 30, 2022
	Reportable Segments
	Private Client		Asset Management		Capital Markets		Corporate/Other		Total
Revenue from contracts with customers:
Commissions from sales and trading	$	38,108	$	—	$	48,425	$	6	$	86,539
Mutual fund and insurance income	7,808		—		1		30		7,839
Advisory fees	83,085		24,311		—		9		107,405
Investment banking - capital markets	2,359		—		6,010		—		8,369
Investment banking - advisory	—		—		8,284		—		8,284
Bank deposit sweep income	14,845		—		—		—		14,845
Other	4,807		—		479		66		5,352
Total revenue from contracts with customers	151,012		24,311		63,199		111		238,633
Other sources of revenue:
Interest	10,369		—		1,392		28		11,789
Principal transactions, net	(2,233)		—		6,564		(3,073)		1,258
Other	(14,677)		4		119		96		(14,458)
Total other sources of revenue	(6,541)		4		8,075		(2,949)		(1,411)
Total revenue	$	144,471	$	24,315	$	71,274	$	(2,838)	$	237,222


(Expressed in thousands)	For the Six Months Ended June 30, 2023
	Reportable Segments
	Private Client		Asset Management		Capital Markets		Corporate/Other		Total
Revenue from contracts with customers:
Commissions from sales and trading	$	76,590	$	—	83,201		14		$	159,805
Mutual fund and insurance income	15,423		—		5		8		15,436
Advisory fees	155,394		46,150		—		15		201,559
Investment banking - capital markets	3,475		—		15,586		—		19,061
Investment banking - advisory	—		—		38,882		—		38,882
Bank deposit sweep income	92,969		—		—		—		92,969
Other	7,277		—		1,100		118		8,495
Total revenue from contracts with customers	351,128		46,150		138,774		155		536,207
Other sources of revenue:
Interest	42,982		—		7,138		2,141		52,261
Principal transactions, net	2,121		—		23,814		3,808		29,743
Other	8,435		7		138		1,077		9,657
Total other sources of revenue	53,538		7		31,090		7,026		91,661
Total revenue	$	404,666	$	46,157	$	169,864	$	7,181	$	627,868


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)


(Expressed in thousands)	For the Six Months Ended June 30, 2022
	Reportable Segments
	Private Client		Asset Management		Capital Markets		Corporate/Other		Total
Revenue from contracts with customers:
Commissions from sales and trading	$	81,463	$	—	95,061		17		$	176,541
Mutual fund and insurance income	16,130		—		6		22		16,158
Advisory fees	171,613		51,424		117		17		223,171
Investment banking - capital markets	5,665		—		19,234		—		24,899
Investment banking - advisory	35		—		30,189		—		30,224
Bank deposit sweep income	19,199		—		—		—		19,199
Other	7,642		—		797		188		8,627
Total revenue from contracts with customers	301,747		51,424		145,404		244		498,819
Other sources of revenue:
Interest	18,517		—		2,685		104		21,306
Principal transactions, net	(4,166)		—		8,080		(292)		3,622
Other	(20,780)		8		156		119		(20,497)
Total other sources of revenue	(6,429)		8		10,921		(69)		4,431
Total revenue	$	295,318	$	51,432	$	156,325	$	175	$	503,250

Contract Assets and Liabilities

The timing of the Company's revenue recognition may differ from the timing of payment by its customers. The Company records contract assets when payment is due from a client conditioned on future performance or the occurrence of other events. 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 $34.3 million and $32.8 million at June 30, 2023 and December 31, 2022, respectively. The Company had no significant impairments related to these receivables during the three months ended June 30, 2023.

Deferred revenue relates to IRA fees received annually in advance on customers' IRA accounts managed by the Company and retainer fees and other fees earned from certain advisory transactions where the performance obligations have not yet been satisfied. Total deferred revenue was $2.86 million and $900,000 at June 30, 2023 and December 31, 2022, 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:


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)


(Expressed in thousands)	As of
	June 30, 2023		December 31, 2022
Contract assets (receivables):
Commission (1)	$	5,596	$	3,533
Mutual fund income (2)	5,208		4,993
Advisory fees (3)	4,309		5,368
Bank deposit sweep income (4)	6,434		9,057
Investment banking fees (5)	6,710		5,136
Other	5,995		4,686
Total contract assets	$	34,252	$	32,773
Deferred revenue (payables):
Investment banking fees (6)	$	1,507	$	900
IRA fees (7)	1,353		—
Total deferred revenue	$	2,860	$	900

(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 fees earned but not yet received, including certain receivables.

(6)Retainer fees and fees received from certain advisory transactions where the performance obligations have not yet been satisfied.

(7) Fee received in advance on an annual basis.

6. Earnings per share

Basic earnings per share are computed by dividing net income over the weighted average number of shares of Class A non-voting common stock ("Class A Stock") and Class B voting common stock ("Class B Stock") outstanding. Diluted earnings per share includes the weighted average number of shares of Class A Stock and Class B Stock outstanding and options to purchase Class A Stock and unvested restricted stock awards of Class A Stock using the treasury stock method.

Earnings per share have been calculated as follows:


(Expressed in thousands, except number of shares and per share amounts)
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Basic weighted average number of shares outstanding	11,016,430		11,980,115		11,054,306		12,222,527
Net dilutive effect of share-based awards, treasury stock method (1)	—		—		857,073		919,011
Diluted weighted average number of shares outstanding	11,016,430		11,980,115		11,911,379		13,141,538

Net income (loss) attributable to Oppenheimer Holdings Inc.	$	(9,400)	$	(3,874)	$	5,217	$	5,418

Earnings (Loss) per share attributable to Oppenheimer Holdings Inc.
Basic	$	(0.85)	$	(0.32)	$	0.47	$	0.44
Diluted	$	(0.85)	$	(0.32)	$	0.44	$	0.41

(1) For the three months ended June 30, 2023, the diluted net loss per share computation did not include the anti-dilutive effect of 1,138,992 shares of Class A Stock granted under share-based compensation arrangements. For the six months ended June 30, 2023, the diluted net income per share computation did not include the anti-dilutive effect of 281,810 shares of Class A Stock granted under share-based compensation arrangements. For the three months ended June 30, 2022, the diluted net loss per share computation did not include the anti-dilutive effect of 1,267,733 shares of Class A Stock granted under share-based


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

compensation arrangements. For the six months ended June 30, 2022, the diluted net income per share computation did not include the anti-dilutive effect of 4,100 shares of Class A Stock granted under share-based compensation arrangements.

7. Receivable from and payable to brokers, dealers and clearing organizations


(Expressed in thousands)
	As of
	June 30, 2023		December 31, 2022
Receivable from brokers, dealers and clearing organizations consisting of:
Securities borrowed	$	255,568	$	127,817
Receivable from brokers	48,354		49,125
Clearing organizations and other	24,789		20,036
Securities failed to deliver	5,509		9,099

Total	$	334,220	$	206,077
Payable to brokers, dealers and clearing organizations consisting of:
Securities loaned	$	336,513	$	320,843
Securities failed to receive	5,656		62,646
Payable to brokers	553		123
Clearing organizations and other (1)	78,681		166,394
Total	$	421,403	$	550,006

(1) The balances are primarily related to trade date / settlement date adjustments for positions in inventory.

8. Fair value measurements

Securities owned, securities sold but not yet purchased, investments and derivative contracts are carried at fair value with changes in fair value recognized in earnings each period.

Valuation Techniques

A description of the valuation techniques applied, and inputs used in measuring the fair value of the Company's financial instruments, is as follows:

U.S. Government Obligations

U.S. Treasury securities are valued using quoted market prices obtained from active market makers and inter-dealer brokers.

U.S. Agency Obligations

U.S. agency securities consist of agency issued debt securities and mortgage pass-through securities. Non-callable agency issued debt securities are generally valued using quoted market prices, quoted market prices for comparable securities or discounted cash flow models. Callable agency issued debt securities are valued by benchmarking model-derived prices to quoted market prices and trade data for identical or comparable securities. The fair value of mortgage pass-through securities is model driven with respect to spreads of the comparable to-be-announced ("TBA") security.

Sovereign Obligations

The fair value of sovereign obligations is determined based on quoted market prices when available or a valuation model that generally utilizes interest rate yield curves and credit spreads as inputs.

Corporate Debt and Other Obligations

The fair value of corporate bonds is estimated using recent transactions, broker quotations and bond spread information.


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

Mortgage and Other Asset-Backed Securities

The Company values non-agency securities collateralized by home equity and various other types of collateral based on external pricing and spread data provided by independent pricing services. When specific external pricing is not observable, the valuation is based on yields and spreads for comparable bonds.

Municipal Obligations

The fair value of municipal obligations is estimated using recently executed transactions, broker quotations, and bond spread information.

Convertible Bonds

The fair value of convertible bonds is estimated using recently executed transactions and dollar-neutral price quotations, where observable. When observable price quotations are not available, fair value is determined based on cash flow models using yield curves and bond spreads as key inputs.

Corporate Equities

Equity securities and options are generally valued based on quoted prices from the exchange or market where traded. To the extent quoted prices are not available, fair values are generally derived using bid/ask spreads.

Auction Rate Securities ("ARS")

Background

In February 2010, Oppenheimer finalized settlements with each of the New York Attorney General's office and the Massachusetts Securities Division (collectively, the "Regulators") concluding proceedings by the Regulators concerning Oppenheimer's marketing and sale of ARS. Pursuant to the settlements with the Regulators, Oppenheimer agreed to extend offers to repurchase ARS from certain of its clients. As of September 30, 2021, the Company had completed its ARS purchase obligations related to the settlements with the Regulators. In addition to the settlements with the Regulators, Oppenheimer had also reached settlements of and received adverse awards in legal proceedings with various clients where the Company was obligated to purchase ARS. As of June 30, 2023, the Company no longer had any obligations to purchase ARS from such legal settlements or adverse awards.

As of June 30, 2023, the Company owned $31.7 million of ARS. This amount represents the unredeemed or unsold amount that the Company holds as a result of ARS buybacks pursuant to the settlements with the Regulators and legal settlements and awards referred to above.

Valuation

The Company’s ARS owned referred to above have, for the most part, been subject to issuer tender offers. The Company has valued the ARS securities owned at the tender offer price and categorized them in Level 3 of the fair value hierarchy due to the illiquid nature of the securities and the period of time since the last tender offer. The fair value of ARS is particularly sensitive to movements in interest rates. However, an increase or decrease in short-term interest rates may or may not result in a higher or lower tender offer in the future or the tender offer price may not provide a reasonable estimate of the fair value of the securities. In such cases, other valuation techniques might be necessary.

As of June 30, 2023, the Company had a valuation allowance totaling $5.2 million relating to ARS owned (which is included as a reduction to securities owned on the condensed consolidated balance sheet).

Investments

In its role as general partner in certain hedge funds and private equity funds, the Company, through its subsidiaries, holds direct investments in such funds. The Company uses the net asset value of the underlying fund as a basis for estimating the fair value of its investment.

The following table provides information about the Company's investments in Company-sponsored funds as of June 30, 2023:


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)


(Expressed in thousands)
	Fair Value		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Hedge funds (1)	$	520	$	—	Quarterly - Annually	30 - 120 Days
Private equity funds (2)	12,173		2,705		N/A	N/A
	$	12,693	$	2,705

(1) Includes investments in hedge funds and hedge fund of funds that pursue long/short, event-driven, and activist strategies

(2) Includes private equity funds and private equity fund of funds with diversified portfolios focusing on but not limited to technology companies, venture capital and global natural resources

The following table provides information about the Company's investments in Company-sponsored funds as of December 31, 2022:


(Expressed in thousands)
	Fair Value		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Hedge funds (1)	$	574	$	—	Quarterly - Annually	30 - 120 Days
Private equity funds (2)	8,221		3,018		N/A	N/A
	$	8,795	$	3,018

(1) Includes investments in hedge funds and hedge fund of funds that pursue long/short, event-driven, and activist strategies.

(2) Includes private equity funds and private equity fund of funds with diversified portfolios focusing on but not limited to technology companies, venture capital and global natural resources.

The Company owns an investment in a financial technologies firm. The Company elected the fair value option for this investment and it is included in other assets on the condensed consolidated balance sheet. The Company determined the fair value of the investment based on an implied market-multiple approach and observable market data, including comparable company transactions. As of June 30, 2023, the fair value of the investment was $6.2 million and was categorized in Level 2 of the fair value hierarchy.

Assets and Liabilities Measured at Fair Value

The Company's assets and liabilities, recorded at fair value on a recurring basis as of June 30, 2023, and December 31, 2022, have been categorized based upon the above fair value hierarchy as follows:


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2023:


(Expressed in thousands)
	Fair Value Measurements as of June 30, 2023
	Level 1		Level 2		Level 3		Total
Assets

Deposits with clearing organizations	$	27,675	$	—	$	—	$	27,675
Securities owned:
U.S. Treasury securities	719,574		—		—		719,574
U.S. Agency securities	—		5,919		—		5,919

Corporate debt and other obligations	—		10,544		—		10,544
Mortgage and other asset-backed securities	—		3,867		—		3,867
Municipal obligations	—		91,648		—		91,648
Convertible bonds	—		28,581		—		28,581
Corporate equities	31,887		—		—		31,887
Money markets	—		487		—		487
Auction rate securities	—		—		31,682		31,682
Securities owned, at fair value	751,461		141,046		31,682		924,189
Investments (1)	5,454		11,713		—		17,167

Derivative contracts:

TBAs	—		4,734		—		4,734

Derivative contracts, total	—		4,734		—		4,734
Total	$	784,590	$	157,493	$	31,682	$	973,765
Liabilities
Securities sold but not yet purchased:
U.S. Treasury securities	$	41,737	$	—	$	—	$	41,737
U.S. Agency securities	—		2		—		2

Corporate debt and other obligations	—		2,782		—		2,782


Convertible bonds	—		9,857		—		9,857
Corporate equities	16,723		—		—		16,723

Securities sold but not yet purchased, at fair value	58,460		12,641		—		71,101

Derivative contracts:
Futures	3,057		—		—		3,057

TBAs	—		4,696		—		4,696


Derivative contracts, total	3,057		4,696		—		7,753
Total	$	61,517	$	17,337	$	—	$	78,854

(1) Included in other assets on the condensed consolidated balance sheet.


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2022:


(Expressed in thousands)
	Fair Value Measurements as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets


Deposits with clearing organizations	$	24,937	$	—	$	—	$	24,937
Securities owned:
U.S. Treasury securities	362,815		—		—		362,815
U.S. Agency securities	—		6,012		—		6,012
Sovereign obligations	—		9,502		—		9,502
Corporate debt and other obligations	—		9,844		—		9,844
Mortgage and other asset-backed securities	—		1,882		—		1,882
Municipal obligations	—		30,126		—		30,126
Convertible bonds	—		21,800		—		21,800
Corporate equities	24,837		—		—		24,837
Money markets	—		—		—		—
Auction rate securities	—		—		31,776		31,776
Securities owned, at fair value	387,652		79,166		31,776		498,594
Investments (1)	—		7,068		—		7,068

Derivative contracts:
TBAs	—		1,762		—		1,762


Total	$	412,589	$	87,996	$	31,776	$	532,361
Liabilities
Securities sold but not yet purchased:
U.S. Treasury securities	$	25,006	$	—	$	—	$	25,006
U.S. Agency securities	—		3		—		3
Sovereign obligations	—		9,048		—		9,048
Corporate debt and other obligations	—		2,905		—		2,905


Convertible bonds	—		4,428		—		4,428
Corporate equities	11,378		—		—		11,378

Securities sold but not yet purchased, at fair value	36,384		16,384		—		52,768

Derivative contracts:
Futures	44		—		—		44

TBAs	—		1,761		—		1,761

Derivative contracts, total	44		1,761		—		1,805
Total	$	36,428	$	18,145	$	—	$	54,573

(1) Included in other assets on the condensed consolidated balance sheet.


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

The following tables present changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the three and six months ended June 30, 2023 and 2022:


(Expressed in thousands)
	Level 3 Assets and Liabilities
	For the Three Months Ended June 30, 2023
			Total Realized
	Beginning		and Unrealized		Purchases		Sales and		Transfers		Ending
	Balance		Losses		and Issuances		Settlements		In (Out)		Balance
Assets
Auction rate securities (1)	$	31,776	$	6	$	—	$	(100)	$	—	$	31,682

(1) Represents auction rate securities that failed in the auction rate market.

(Expressed in thousands)

Level 3 Assets and Liabilities

For the Three Months Ended June 30, 2022

Total Realized

Beginning

and Unrealized

Purchases

Sales and

Transfers

Ending

Balance

Losses

and Issuances

Settlements

In (Out)

Balance

Assets

Auction rate securities (1)

31,804

(27)

200

—

31,977

(1) Represents auction rate securities that failed in the auction rate market.

(Expressed in thousands)

Level 3 Assets and Liabilities

For the Six Months Ended June 30, 2023

Total Realized

Beginning

and Unrealized

Purchases

Sales and

Transfers

Ending

Balance

Losses

and Issuances

Settlements

In (Out)

Balance

Assets

Auction rate securities (1)

31,776

—

(100)

—

31,682

(1) Represents auction rate securities that failed in the auction rate market.

(Expressed in thousands)

Level 3 Assets and Liabilities

For the Six Months Ended June 30, 2022

Total Realized

Beginning

and Unrealized

Purchases

Sales and

Transfers

Ending

Balance

Losses

and Issuances

Settlements

In (Out)

Balance

Assets

Auction rate securities (1)

31,804

(27)

200

—

31,977

(1) Represents auction rate securities that failed in the auction rate market.


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

Financial Instruments Not Measured at Fair Value

The table below presents the carrying value, fair value and fair value hierarchy category of certain financial instruments that are not measured at fair value on the condensed consolidated balance sheets. The table below excludes non-financial assets and liabilities (e.g., furniture, equipment and leasehold improvements, and accrued compensation).

The carrying value of financial instruments not measured at fair value categorized in the fair value hierarchy as Level 1 or Level 2 (e.g., cash and receivables from customers) approximates fair value because of the relatively short-term nature of the underlying assets. The fair value of the Company's senior secured notes, categorized in Level 2 of the fair value hierarchy, is based on quoted prices from the market in which the notes trade.

Assets and liabilities not measured at fair value as of June 30, 2023:


(Expressed in thousands)			Fair Value Measurement: Assets
	Carrying Value		Level 1		Level 2		Level 3		Total
Cash	$	29,145	$	29,145	$	—	$	—	$	29,145
Restricted cash	25,803		25,803		—		—		25,803
Deposits with clearing organization	48,619		48,619		—		—		48,619
Receivable from brokers, dealers and clearing organizations:
Securities borrowed	255,568		—		255,568		—		255,568
Receivables from brokers	48,354		—		48,354		—		48,354
Securities failed to deliver	5,509		—		5,509		—		5,509
Clearing organizations and other	24,751		—		24,751		—		24,751

	334,182		—		334,182		—		334,182
Receivable from customers	1,066,439		—		1,066,439		—		1,066,439

Notes receivable, net	60,873		—		60,873		—		60,873
Investments (1)	87,826		—		87,826		—		87,826

(1) The cash surrender value of Company-owned life insurance policies, which fluctuates based on changes in fair value of the policies’ underlying investments, comprises approximately $86 million of this balance. This balance is included within other assets on the condensed consolidated balance sheet.


(Expressed in thousands)			Fair Value Measurement: Liabilities
	Carrying Value		Level 1		Level 2		Level 3		Total
Drafts payable	$	21,734	$	21,734	$	—	$	—	$	21,734
Bank call loans	94,400		—		94,400		—		94,400
Payables to brokers, dealers and clearing organizations:
Securities loaned	336,513		—		336,513		—		336,513
Payable to brokers	553		—		553		—		553
Securities failed to receive	5,656		—		5,656		—		5,656
Clearing organization and other	75,624		—		75,624		—		75,624
	418,346		—		418,346		—		418,346
Payables to customers	401,168		—		401,168		—		401,168
Securities sold under agreements to repurchase	645,315		—		645,315		—		645,315
Senior secured notes	113,050		—		107,702		—		107,702


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

Assets and liabilities not measured at fair value as of December 31, 2022:


(Expressed in thousands)			Fair Value Measurement: Assets
	Carrying Value		Level 1		Level 2		Level 3		Total
Cash	$	112,433	$	112,433	$	—	$	—	$	112,433
Restricted cash	25,534		25,534		—		—		25,534
Deposits with clearing organization	52,754		52,754		—		—		52,754
Receivable from brokers, dealers and clearing organizations:
Securities borrowed	127,817		—		127,817		—		127,817
Receivables from brokers	49,125		—		49,125		—		49,125
Securities failed to deliver	9,099		—		9,099		—		9,099
Clearing organizations	20,035		—		20,035		—		20,035

	206,076		—		206,076		—		206,076
Receivable from customers	1,202,764		—		1,202,764		—		1,202,764
Securities purchased under agreements to resell	—		—		—		—		—
Notes receivable, net	57,495		—		57,495		—		57,495
Investments (1)	79,322		—		79,322		—		79,322

(1) The cash surrender value of Company-owned life insurance policies, which fluctuates based on changes in fair value of the policies’ underlying investments, comprises approximately $77 million of this balance. This balance is included within other assets on the condensed consolidated balance sheet.


(Expressed in thousands)			Fair Value Measurement: Liabilities
	Carrying Value		Level 1		Level 2		Level 3		Total

Bank call loans	$	—	$	—	$	—	$	—	$	—
Payables to brokers, dealers and clearing organizations:
Securities loaned	320,843		—		320,843		—		320,843
Payable to brokers	123		—		123		—		123
Securities failed to receive	62,646		—		62,646		—		62,646
Other	166,350		—		166,350		—		166,350
	549,962		—		549,962		—		549,962
Payables to customers	456,475		—		456,475		—		456,475
Securities sold under agreements to repurchase	161,009		—		161,009		—		161,009
Senior secured notes	114,050		—		113,233		—		113,233

Fair Value Option

The Company elected the fair value option for securities sold under agreements to repurchase ("repurchase agreements") and securities purchased under agreements to resell ("reverse repurchase agreements") that do not settle overnight or have an open settlement date. The Company has elected the fair value option for these instruments to reflect more accurately market and economic events in its earnings and to mitigate a potential mismatch in earnings caused by using different measurement attributes (i.e. fair value versus carrying value) for certain assets and liabilities. As of June 30, 2023, the Company had no repurchase agreements and reverse repurchase agreements that do not settle overnight or have an open settlement date.

Derivative Instruments and Hedging Activities


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

The Company transacts, on a limited basis, in exchange traded and over-the-counter derivatives for both asset and liability management as well as for trading and investment purposes. Risks managed using derivative instruments include interest rate risk and, to a lesser extent, foreign exchange risk. All derivative instruments are measured at fair value and are recognized as either assets or liabilities on the condensed consolidated balance sheet.

Foreign exchange hedges

From time to time, the Company also utilizes forward and options contracts to hedge the foreign currency risk associated with compensation obligations to Oppenheimer Israel (OPCO) Ltd. employees denominated in New Israeli Shekel ("NIS"). Such hedges have not been designated as accounting hedges. Unrealized gains and losses on foreign exchange forward contracts are recorded in other assets or other liabilities on the condensed consolidated balance sheet and other income in the condensed consolidated income statement.

Derivatives used for trading and investment purposes

Futures contracts represent commitments to purchase or sell securities or other commodities at a future date and at a specified price. Market risk exists with respect to these instruments. Notional or contractual amounts are used to express the volume of these transactions and do not represent the amounts potentially subject to market risk. The Company uses futures contracts, including U.S. Treasury notes, Federal Funds, General Collateral futures, and Eurodollar contracts primarily as an economic hedge of interest rate risk associated with government trading activities. Unrealized gains and losses on futures contracts are recorded on the condensed consolidated balance sheet in payable to brokers, dealers and clearing organizations and in the condensed consolidated income statement as principal transactions revenue, net.

To-be-announced securities

The Company also transacts in pass-through mortgage-backed securities eligible to be sold in the TBA market as economic hedges against mortgage-backed securities that it owns or has sold but not yet purchased. TBAs provide for the forward or delayed delivery of the underlying instrument with settlement up to 180 days. The contractual or notional amounts related to these financial instruments reflect the volume of activity and do not reflect the amounts at risk. Net unrealized gains and losses on TBAs are recorded on the condensed consolidated balance sheet in receivable from brokers, dealers and clearing organizations or payable to brokers, dealers and clearing organizations and in the condensed consolidated income statement as principal transactions revenue, net.

The notional amounts and fair values of the Company's derivatives as of June 30, 2023 and December 31, 2022 by product were as follows:


(Expressed in thousands)
	Fair Value of Derivative Instruments as of June 30, 2023
	Description	Notional		Fair Value
Assets:
Derivatives not designated as hedging instruments (1)
Other contracts	TBAs	$	5,525	$	4,734


		$	5,525	$	4,734
Liabilities:
Derivatives not designated as hedging instruments (1)
Commodity contracts	Futures	$	8,117,000	$	3,057

Other contracts	TBAs	5,525		4,696

	Forward repurchase agreements	104,000		—

		$	8,226,525	$	7,753

(1)See "Derivative Instruments and Hedging Activities" above for a description of derivative financial instruments. Such derivative instruments are not subject to master netting agreements, thus the related amounts are not offset.


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)


(Expressed in thousands)
	Fair Value of Derivative Instruments as of December 31, 2022
	Description	Notional		Fair Value
Assets:
Derivatives not designated as hedging instruments (1)
Other contracts	TBAs	$	1,775	$	1,762
	Forward reverse repurchase agreements	15,000		—
	Other	275		$	—
		$	17,050	$	1,762
Liabilities:
Derivatives not designated as hedging instruments (1)
Commodity contracts	Futures	$	1,912,500	$	44


Other contracts	TBAs	1,775		1,761


		$	1,914,275	$	1,805

The following table presents the location and fair value amounts of the Company's derivative instruments and their effect in the condensed consolidated income statements for the three and six months ended June 30, 2023 and 2022:

(Expressed in thousands)

The Effect of Derivative Instruments in the Income Statement

For the Three Months Ended June 30, 2023

Recognized in Income on Derivatives
(pre-tax)

Types

Description

Location

Net Gain/(Loss)

Commodity contracts

Futures

Principal transactions revenue, net

3,529

Other contracts

Foreign exchange forward contracts

Other revenue

(7)

TBAs

Principal transactions revenue, net

3,558

(Expressed in thousands)

The Effect of Derivative Instruments in the Income Statement

For the Three Months Ended June 30, 2022

Recognized in Income on Derivatives
(pre-tax)

Types

Description

Location

Net Gain/(Loss)

Commodity contracts

Futures

Principal transactions revenue, net

1,328

Other contracts

Foreign exchange forward contracts

Other revenue

(20)

TBAs

Principal transactions revenue, net

(6)

1,302


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

(Expressed in thousands)

The Effect of Derivative Instruments in the Income Statement

For the Six Months Ended June 30, 2023

Recognized in Income on Derivatives
(pre-tax)

Types

Description

Location

Net Gain/(Loss)

Commodity contracts

Futures

Principal transactions revenue, net

3,739

Other contracts

Foreign exchange forward contracts

Other revenue

(8)

TBAs

Principal transactions revenue, net

3,769

(Expressed in thousands)

The Effect of Derivative Instruments in the Income Statement

For the Six Months Ended June 30, 2022

Recognized in Income on Derivatives
(pre-tax)

Types

Description

Location

Net Gain/(Loss)

Commodity contracts

Futures

Principal transactions revenue, net

3,519

Other contracts

Foreign exchange forward contracts

Other revenue

(20)

TBAs

Principal transactions revenue, net

3,555

9. Collateralized transactions

The Company enters into collateralized borrowing and lending transactions in order to meet customers' needs and earn interest rate spreads, obtain securities for settlement and finance trading inventory positions. Under these transactions, the Company either receives or provides collateral, including U.S. Government and Agency, asset-backed, corporate debt, equity, and non-U.S. Government and Agency securities.

The Company obtains short-term borrowings primarily through bank call loans. Bank call loans are generally payable on demand and bear interest at various rates. As of June 30, 2023, the outstanding balance of bank call loans was $94.4 million (zero as of December 31, 2022). Such loans with commercial banks were collateralized by the Company's securities and customer securities with market values of approximately $45.5 million and $64.4 million, respectively.

As of June 30, 2023, the Company had approximately $1.6 billion of customer securities under customer margin loans that are available to be pledged, of which the Company has re-pledged approximately $229.7 million under securities loan agreements.

As of June 30, 2023, the Company had pledged $261.8 million of customer securities directly with the Options Clearing Corporation to secure obligations and margin requirements under option contracts written by customers.

As of June 30, 2023, the Company had no outstanding letters of credit.

The Company enters into reverse repurchase agreements, repurchase agreements, securities borrowed and securities loaned transactions in order to, among other things, acquire securities to cover short positions and settle other securities obligations, so as to accommodate customers' needs and to finance the Company's inventory positions. Except as described below, repurchase and reverse repurchase agreements, principally involving U.S. Government and Agency securities, are carried at amounts at which the securities subsequently will be resold or reacquired as specified in the respective agreements and include accrued interest.

Repurchase agreements and reverse repurchase agreements are presented on a net-by-counterparty basis, when the repurchase agreements and reverse repurchase agreements are executed with the same counterparty, have the same explicit settlement date, are executed in accordance with a master netting arrangement, the securities underlying the repurchase agreements and reverse repurchase agreements exist in "book entry" form and certain other requirements are met.


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

The following table presents a disaggregation of the gross obligation by the class of collateral pledged and the remaining contractual maturity of the repurchase agreements and securities loaned transactions as of June 30, 2023:


(Expressed in thousands)
	Overnight and Open
Repurchase agreements:
U.S. Government	$	685,436
Securities loaned:
Equity securities	336,513
Gross amount of recognized liabilities for repurchase agreements and securities loaned	$	1,021,949

The following tables present the gross amounts and the offsetting amounts of reverse repurchase agreements, repurchase agreements, securities borrowed and securities loaned transactions as of June 30, 2023 and December 31, 2022:


As of June 30, 2023
(Expressed in thousands)							Gross Amounts Not Offset on the Balance Sheet
	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Balance Sheet		Net Amounts of Assets Presented on the Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amount
Reverse repurchase agreements	$	40,122	$	(40,122)	$	—	$	—	$	—	$	—
Securities borrowed (1)	255,568		—		255,568		(252,975)		—		2,593
Total	$	295,690	$	(40,122)	$	255,568	$	(252,975)	$	—	$	2,593

(1)Included in receivable from brokers, dealers and clearing organizations on the condensed consolidated balance sheet.


							Gross Amounts Not Offset on the Balance Sheet
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Balance Sheet		Net Amounts of Liabilities Presented on the Balance Sheet		Financial Instruments		Cash Collateral Pledged		Net Amount
Repurchase agreements	$	685,436	$	(40,122)	$	645,314	$	(643,479)	$	—	$	1,835
Securities loaned (2)	336,513		—		336,513		(328,171)		—		8,342
Total	$	1,021,949	$	(40,122)	$	981,827	$	(971,650)	$	—	$	10,177

(2)Included in payable to brokers, dealers and clearing organizations on the condensed consolidated balance sheet.


As of December 31, 2022
(Expressed in thousands)							Gross Amounts Not Offset on the Balance Sheet
	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Balance Sheet		Net Amounts of Assets Presented on the Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amount
Reverse repurchase agreements	$	28,012	$	(28,012)	$	—	$	—	$	—	$	—
Securities borrowed (1)	127,817		—		127,817		(127,365)		—		452
Total	$	155,829	$	(28,012)	$	127,817	$	(127,365)	$	—	$	452

(1)Included in receivable from brokers, dealers and clearing organizations on the condensed consolidated balance sheet.


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)


							Gross Amounts Not Offset on the Balance Sheet
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Balance Sheet		Net Amounts of Liabilities Presented on the Balance Sheet		Financial Instruments		Cash Collateral Pledged		Net Amount
Repurchase agreements	$	189,021	$	(28,012)	$	161,009	$	(157,981)	$	—	$	3,028
Securities loaned (2)	320,843		—		320,843		(308,535)		—		12,308
Total	$	509,864	$	(28,012)	$	481,852	$	(466,516)	$	—	$	15,336

(2)Included in payable to brokers, dealers and clearing organizations on the condensed consolidated balance sheet.

The Company elects the fair value option for those repurchase agreements and reverse repurchase agreements that do not settle overnight or have an open settlement date. As of June 30, 2023, the Company did not have any repurchase agreements and reverse repurchase agreements that do not settle overnight or have an open settlement date.

The Company receives collateral in connection with securities borrowed and reverse repurchase agreement transactions and customer margin loans. Under many agreements, the Company is permitted to sell or re-pledge the securities received (e.g., use the securities to enter into securities lending transactions, or deliver to counterparties to cover short positions). As of June 30, 2023, the fair value of securities received as collateral under securities borrowed transactions and reverse repurchase agreements was $250.7 million ($124.1 million as of December 31, 2022) and $40.0 million ($28.0 million as of December 31, 2022), respectively, of which the Company has sold and re-pledged approximately $95.5 million ($39.4 million as of December 31, 2022) under securities loaned transactions and $40.0 million under repurchase agreements ($28.0 million as of December 31, 2022).

The Company pledges certain of its securities owned for securities lending and repurchase agreements and to collateralize bank call loan transactions. The carrying value of pledged securities owned that can be sold or re-pledged by the counterparty was $660.0 million, as presented on the face of the condensed consolidated balance sheet as of June 30, 2023 ($175.7 million as of December 31, 2022).

The Company manages credit exposure arising from repurchase and reverse repurchase agreements by, in appropriate circumstances, entering into master netting agreements and collateral arrangements with counterparties that provide the Company, in the event of a customer default, the right to liquidate securities and the right to offset a counterparty's rights and obligations. The Company manages market risk of repurchase agreements and securities loaned by monitoring the market value of collateral held and the market value of securities receivable from others. It is the Company's policy to request and obtain additional collateral when exposure to loss exists. In the event the counterparty is unable to meet its contractual obligation to return the securities, the Company may be exposed to off-balance sheet risk of acquiring securities at prevailing market prices.

Credit Concentrations

Credit concentrations may arise from trading, investing, underwriting and financing activities and may be impacted by changes in economic, industry or political factors. In the normal course of business, the Company may be exposed to credit risk in the event customers, counterparties including other brokers and dealers, issuers, banks, depositories or clearing organizations are unable to fulfill their contractual obligations. The Company seeks to mitigate these risks by actively monitoring exposures and obtaining collateral as deemed appropriate. Included in receivable from brokers, dealers and clearing organizations as of June 30, 2023 were receivables from two major U.S. broker-dealers totaling approximately $125.9 million.

The Company is obligated to settle transactions with brokers and other financial institutions even if its clients fail to meet their obligations to the Company. Clients are required to complete their transactions on the settlement date, generally one to two business days after the trade date. If clients do not fulfill their contractual obligations, the Company may incur losses. The Company has clearing/participating arrangements with the National Securities Clearing Corporation, the Fixed Income Clearing Corporation ("FICC"), R.J. O'Brien & Associates (commodities transactions), Mortgage-Backed Securities Division (a division of FICC), and others. With respect to its business in reverse repurchase and repurchase agreements, substantially all open contracts as of June 30, 2023 are with the FICC. In addition, the Company clears its non-U.S. international equities business


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

carried on by Oppenheimer Europe Ltd. through Global Prime Partners, Ltd, a global clearing financial institution located in United Kingdom. The clearing organizations have the right to charge the Company for losses that result from a client's failure to fulfill its contractual obligations. Accordingly, the Company has credit exposures with these clearing brokers. The clearing brokers can re-hypothecate the securities held on behalf of the Company. As the right to charge the Company has no maximum amount and applies to all trades executed through the clearing brokers, the Company believes there is no maximum amount assignable to this right. As of June 30, 2023, the Company had recorded no liabilities with regard to this right. The Company's policy is to monitor the credit standing of the clearing brokers and banks with which it conducts business.

10. Variable interest entities ("VIEs")

The Company's policy is to consolidate all subsidiaries in which it has a controlling financial interest, as well as any VIEs where the Company is deemed to be the primary beneficiary when it has the power to make the decisions that most significantly affect the economic performance of the VIE and has the obligation to absorb significant losses or the right to receive benefits that could potentially be significant to the VIE.

The Company serves as general partner of hedge funds and private equity funds that were established for the purpose of providing alternative investments to both its institutional and qualified retail clients. The Company's investment in and additional capital commitments to these hedge funds and private equity funds are considered variable interests. The Company's additional capital commitments are subject to call at a later date and are limited to the amount committed.

The Company assesses whether it is the primary beneficiary of the hedge funds and private equity funds in which it holds a variable interest in the form of general and limited partner interests. In each instance, the Company has determined that it is not the primary beneficiary and therefore need not consolidate the hedge funds or private equity funds. The subsidiaries' general and limited partnership interests and additional capital commitments represent their maximum exposure to loss. The subsidiaries' general partnership and limited partnership interests are included in other assets on the condensed consolidated balance sheet. As of June 30, 2023, the Company did not have any hedge funds and private equity funds that are VIEs.

The Company serves as general partner of Oppenheimer Acquisition LLC I and Oppenheimer Acquisition LLC II (the "Sponsors"). They are sponsors of two special purpose acquisition companies, OHAA and Oppenheimer Acquisition Corp. II (the "SPACs”), that are seeking to effect a transaction which could be in the form of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Sponsors and the SPACs are consolidated VIE's as the Company is the primary beneficiary.

On October 26, 2021, OHAA consummated its $126.5 million IPO. The Company and its employees control OHAA through the Sponsor's ownership of Class A founder shares of OHAA. As a result, both OHAA and the Sponsor are consolidated in the Company’s financial statements.

In addition, OPI was formed in December 2020 and designed to retain and reward talented employees of the Company, primarily in connection with the deployment of Company capital into successful private market investments, and also in connection with the Company's receipt of non-cash compensation from investment banking assignments. OPI is designed to promote alignment of Company, client and employee interests as they relate to profitable investment opportunities. This program acts as an incentive for senior employees to identify attractive private investments for the Company and its clients, and as a retention tool for key employees of the Company. The Company owns the majority voting interest and control of OPI through Oppenheimer Alternative Investment Management (“OAIM”), the managing member of OPI and a subsidiary of OAM. OPI is a consolidated VIE as the Company is the primary beneficiary.


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

The following table sets forth the total assets and liabilities of VIEs consolidated on our condensed consolidated balance sheet:


(Expressed in thousands)
	As of June 30,
	2023		2022
Asset
Cash and cash equivalents	$	5,487	$	1,458
Restricted Cash	25,803		127,875
Other Assets	2,297		568
Total Assets	$	33,587	$	129,901
Liabilities
Other Liabilities	821		123
Total Liabilities	$	821	$	123

11. Long-term debt


(Expressed in thousands)
Issued	Maturity Date	June 30, 2023		December 31, 2022
5.50% Senior Secured Notes	10/1/2025	$	113,050	$	114,050
Unamortized Debt Issuance Cost		(501)		(616)
		$	112,549	$	113,434

5.50% Senior Secured Notes due 2025 (the "Notes")

On September 22, 2020, in a private offering, the Company issued $125.0 million aggregate principal amount of 5.50% Senior Secured Notes due 2025 (the "Unregistered Notes") under an indenture at an issue price of 100% of the principal amount. Interest on the Unregistered Notes is payable semi-annually on April 1st and October 1st. The Company used the net proceeds from the offering of the Unregistered Notes, along with cash on hand, to redeem in full our 6.75% Senior Secured Notes due July 1, 2022 (the "Old Notes") in the principal amount of $150.0 million (the Company held $1.4 million in treasury for a net outstanding amount of $148.6 million), and pay all related fees and expenses in relation thereto.

On November 23, 2020, we completed an exchange offer in which we exchanged 99.8% of the Unregistered Notes for a like principal amount of Notes with identical terms, except that such new Notes have been registered under the Securities Act of 1933, as amended (the "Securities Act"). We did not receive any proceeds in the exchange offer. The Notes will mature on October 1, 2025 and bear interest at a rate of 5.50% per annum, payable semiannually on April 1st and October 1st, respectively, of each year.

The Parent used the net proceeds from the offering of the Notes, along with cash on hand, to redeem in full its Old Notes, in the principal amount of $150.0 million (the Parent held $1.4 million in treasury for a net outstanding amount of $148.6 million), and pay all related fees and expenses in relation thereto. The cost to issue the Notes was $3.1 million, of which $1.9 million was paid to its subsidiary, Oppenheimer, who served as the initial purchaser of the offering, and was eliminated in consolidation. The remaining $1.2 million was capitalized and is amortized over the term of the Notes.

The Company has repurchased and may continue to seek to repurchase its Notes from time to time through, as applicable, tender offers, open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on a number of factors, including, but not limited to, the Company’s priorities for the use of cash, price, market and economic conditions, its liquidity requirements, and legal and contractual restrictions. During the first quarter of 2023, the Company repurchased and cancelled $1.0 million aggregate principal amount of its Notes in the open market. As of June 30, 2023, $113.05 million aggregate principal amount of the Notes remain outstanding.

The indenture governing the Notes contains covenants which place restrictions on the incurrence of indebtedness, the payment of dividends, the repurchase of equity, the sale of assets, the issuance of guarantees, mergers and acquisitions and the granting


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

of liens. These covenants are subject to a number of important exceptions and qualifications. These exceptions and qualifications include, among other things, a variety of provisions that are intended to allow the Company to continue to conduct its brokerage operations in the ordinary course of business. In addition, certain of the covenants will be suspended upon the Parent attaining an investment grade debt rating for the Notes from both S&P Global Ratings and Moody’s Investors Service, Inc.

Pursuant to the indenture, the following covenants apply to the Parent and its restricted subsidiaries, but generally do not apply, or apply only in part, to its Regulated Subsidiaries (as defined):

•limitation on indebtedness and issuances of preferred stock, which restricts the Parent’s ability to incur additional indebtedness or to issue preferred stock;

•limitation on restricted payments, which generally restricts the Parent’s ability to declare certain dividends or distributions, repurchase its capital stock or make certain investments;

•limitation on dividends and other payment restrictions affecting restricted subsidiaries or Regulated Subsidiaries, which generally limits the ability of certain of the Parent’s subsidiaries to pay dividends or make other transfers;

•limitation on future Subsidiary Guarantors (as hereinafter defined), which prohibits certain of the Parent’s subsidiaries from guaranteeing its indebtedness or indebtedness of any restricted subsidiary unless the Notes are comparably guaranteed;

•limitation on transactions with shareholders and affiliates, which generally requires transactions among the Parent’s affiliated entities to be conducted on an arm’s-length basis;

•limitation on liens, which generally prohibits the Parent and its restricted subsidiaries from granting liens unless the Notes are comparably secured; and

•limitation on asset sales, which generally prohibits the Parent and certain of its subsidiaries from selling assets or certain securities or property of significant subsidiaries.

The indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the Notes to become or to be declared due and payable. As of June 30, 2023, the Parent was in compliance with all of its covenants.

The Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by the Subsidiary Guarantors and future subsidiaries are required to guarantee the Notes pursuant to the indenture. The Notes are secured by a first-priority security interest in substantially all of the Parent’s and the Subsidiary Guarantors’ existing and future tangible and intangible assets, subject to certain exceptions and permitted liens.

Interest expense on the Notes for the three and six months ended June 30, 2023 was $1.6 million and $3.1 million, respectively. Interest expense on the Notes for the three and six months ended June 30, 2022 was $1.7 million and $3.4 million, respectively.

12. Income taxes

The effective income tax rate for the three and six months ended June 30, 2023 was 18.2% and 33.4% respectively, compared with 23.5% and 37.1% for the three and six months ended June 30, 2022 and reflects the Company's annual estimate of the statutory federal and state tax rates adjusted for certain discrete items. The effective tax rate for the second quarter of 2023 was impacted by permanent items and nondeductible foreign losses.

13. Stockholders' Equity

The Company's authorized shares consist of (a) 50,000,000 shares of Preferred Stock, par value $0.001 per share; (b) 50,000,000 shares of Class A Stock, par value $0.001 per share; and (c) 99,665 shares of Class B Stock, par value $0.001 per share. No Preferred Stock has been issued. 99,665 shares of Class B Stock have been issued and are outstanding.

The Class A Stock and the Class B Stock are equal in all respects except that the Class A Stock is non-voting.

The following table reflects changes in the number of shares of Class A Stock outstanding for the periods indicated:


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)


	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2023	2022	2023	2022
Class A Stock outstanding, beginning of period	10,975,723	12,156,174	10,868,556	12,447,036
Issued pursuant to share-based compensation plans	4,987	—	207,209	86,451
Repurchased and canceled pursuant to the stock buy-back	(96,135)	(885,230)	(191,190)	(1,262,543)
Class A Stock outstanding, end of period	10,884,575	11,270,944	10,884,575	11,270,944

Stock buy-back

On May 15, 2020, the Company announced that its Board of Directors approved a share repurchase program that authorizes the Company to purchase up to 530,000 shares of the Company's Class A Stock, representing approximately 4.2% of its 12,636,523 then issued and outstanding shares of Class A Stock. This authorization supplemented the 98,625 shares that remained authorized and available under the Company's previous share repurchase program for a total of 628,625 shares authorized and available for repurchase at May 15, 2020.

On February 28, 2022, the Company announced that its Board of Directors approved a share repurchase program that authorizes the Company to purchase up to 518,000 shares of the Company's Class A Stock, representing approximately 4.2% of its 12,322,073 then issued and outstanding shares of Class A Stock. This authorization supplemented the 12,407 shares that remained authorized and available under the Company's previous share repurchase program for a total of 530,407 shares authorized and available for repurchase at February 28, 2022.

On May 24, 2022, the Company announced that its Board of Directors approved a share repurchase program that authorizes the Company to purchase up to 550,000 shares of the Company's Class A Stock, representing approximately 4.6% of its 11,863,559 then issued and outstanding shares of Class A Stock. This authorization supplemented the 71,893 shares that remained authorized and available under the Company's previous share repurchase program for a total of 621,893 shares authorized and available for repurchase at May 24, 2022.

On July 29, 2022, the Company's Board of Directors approved a share repurchase program that authorizes the Company to purchase up to 536,500 shares of the Company's Class A Stock, representing approximately 4.8% of its 11,251,930 then issued and outstanding shares of Class A Stock. This authorization supplemented the 4,278 shares that remained authorized and available under the Company's previous share repurchase program for a total of 540,778 shares authorized.

On December 13, 2022, the Company's Board of Directors approved a share repurchase program that authorizes the Company to purchase up to 543,000 shares of the Company's Class A Stock, representing approximately 5.0% of its 10,867,660 then issued and outstanding shares of Class A Stock. This authorization supplemented the 144,034 shares that remained authorized and available under the Company's previous share repurchase program for a total of 687,034 shares authorized.

During the three months ended June 30, 2023, the Company purchased and canceled an aggregate of 96,135 shares of Class A Stock for a total consideration of $3.6 million ($37.43 per share) under this program. During the six months ended June 30, 2023, the Company purchased and canceled an aggregate of 191,190 shares of Class A Stock for a total consideration of $7.3 million ($38.11 per share) under this program. During the three months ended June 30, 2022, the Company purchased and canceled an aggregate of 885,230 shares of Class A Stock for a total consideration of $30.2 million ($34.13 per share) under this program. During the six months ended June 30, 2022, the Company purchased and canceled an aggregate of 1,262,543 shares of Class A Stock for a total consideration of $46.4 million ($36.73 per share) under this program. As of June 30, 2023, 495,844 shares remained available to be purchased under the share repurchase program.

The Company repurchases shares from time to time in the open market at the prevailing open market price using cash on hand, in compliance with the applicable rules and regulations of the New York Stock Exchange and federal and state securities laws and the terms of the Company's Notes. All shares purchased will be canceled. The share repurchase program is expected to continue indefinitely. The timing and amounts of any purchases will be based on market conditions and other factors including price, regulatory requirements and capital availability. The share repurchase program does not obligate the Company to


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

repurchase any dollar amount or number of shares of Class A Stock. Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without prior notice.

14. Contingencies

Many aspects of the Company's business involve substantial risks of liability. In the normal course of business, the Company has been named as defendant or co-defendant in various legal actions, including arbitrations, class actions and other litigation, creating substantial exposure and periodic expenses. Certain of the actual or threatened legal matters include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. These proceedings arise primarily from securities brokerage, asset management and investment banking activities. The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding the Company's business, which may result in expenses, adverse judgments, settlements, fines, penalties, injunctions or other relief. The investigations include inquiries from the SEC, the Financial Industry Regulatory Authority ("FINRA") and various state regulators.

The Company accrues for estimated loss contingencies related to legal and regulatory matters within Other Expenses in the consolidated income statement when available information indicates that it is probable a liability had been incurred and the Company can reasonably estimate the amount of that loss. In many proceedings, however, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount of any loss. In addition, even where a loss is possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously recognized loss contingency, it is often not possible to reasonably estimate the size of the possible loss or range of loss or possible additional losses or range of additional losses.

For certain legal and regulatory proceedings, the Company cannot reasonably estimate such losses, particularly for proceedings that are in their early stages of development or where plaintiffs seek substantial, indeterminate or special damages. Counsel may be required to review, analyze and resolve numerous issues, including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal questions relevant to the proceedings in question, before the Company can reasonably estimate a loss or range of loss or additional loss for the proceeding. Even after lengthy review and analysis, the Company, in many legal and regulatory proceedings, may not be able to reasonably estimate possible losses or range of losses.

For certain other legal and regulatory proceedings, the Company can estimate possible losses, or range of loss in excess of amounts accrued, but does not believe, based on current knowledge and after consultation with counsel, that such losses individually, or in the aggregate, will have a material adverse effect on the Company's consolidated financial statements as a whole.

For legal and regulatory proceedings where there is at least a reasonable possibility that a loss or an additional loss may be incurred, the Company estimates a range of aggregate loss in excess of amounts accrued of up to $31 million. This estimated aggregate range is based upon currently available information for those legal proceedings in which the Company is involved, where the Company can make an estimate for such losses. For certain cases, the Company does not believe that it can make an estimate. The foregoing aggregate estimate is based on various factors, including the varying stages of the proceedings (including the fact that some are currently in preliminary stages), the numerous yet-unresolved issues in many of the proceedings and the attendant uncertainty of the various potential outcomes of such proceedings. Accordingly, the Company's estimate will change from time to time, and actual losses may be more than the current estimate.

On November 18, 2022, the Company received an information request from the SEC requesting information relating to the use of text messaging and similar forms of electronic communications by employees of the Company and whether those communications were properly retained by the Company as part of its records preservation requirements relating to the broker-dealer or investment adviser business activities of the Company. Subsequently, the Company received a similar information request from the Commodity Futures Trading Commission (“CFTC”). The Company has submitted multiple responses to the information request and continues to cooperate with the SEC and CFTC inquiries.


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

LLC (“Horizon”). Horizon is alleged to be a fraudulent scheme involving, among others, a former Oppenheimer employee John Woods. John Woods left Oppenheimer’s employ in 2016 and Oppenheimer never received a complaint or question from any of the investors prior to the SEC bringing a complaint against Woods and his co-conspirators in 2021. Each investor who was an Oppenheimer client, signed a document acknowledging that Horizon was not an approved Oppenheimer product. Over a protracted period of time, Woods made multiple false statements to Oppenheimer, to regulators and to a state court. The claimants are seeking damages based on a number of legal theories, including, without limitation, violations of various state and federal statutes, breach of fiduciary duty, procurement of breach of fiduciary duty, negligent misrepresentation, aiding and abetting fraud, and unjust enrichment. Claimants do not allege Oppenheimer received any of the funds invested in Horizon, but rather that Oppenheimer’s purported failure to properly supervise its employees allowed the alleged scheme to occur and continue. The fourteen arbitrations still pending that claim specific monetary damages and allege losses of approximately $13.9 million in the aggregate while a few others claim unspecified damages. Oppenheimer believes these claims to be without merit and intends to defend itself vigorously against these claims.

Oppenheimer has settled, or settled in principle or an award has been rendered in thirty-one of the Horizon-related arbitrations, with approximately one hundred eight individual complainants. The aggregate payments for those thirty-one arbitrations total approximately $78.5 million.

On June 16, 2023, Oppenheimer was served with a complaint in an action entitled John and Cynthia Kearney, John & Tera Sargent, Mike Hall, Individually and as Assignee of 6694 Dawson Blvd, LLC, Thomas and Beverly Crampton, Roy and Shirley

Hill, Billy and Debra Lanter, Larry Lawson, Eugene Lyle, Scott Spence, and Dolores Willoughby v. Oppenheimer & Co. Inc., Anne Greene and Gordon Morse, filed in Georgia State Court, Fulton County. Plaintiffs allege that they were all investors in Horizon. However, all of the Plaintiffs allege that they invested in Horizon after John Woods left Oppenheimer’s employ in 2016 and virtually all of the plaintiffs were not Oppenheimer customers. Plaintiffs further allege that Oppenheimer, through its inaction and/or misconduct, is responsible for their alleged losses and are seeking unspecified damages sounding in violations of the Georgia RICO statute and negligence per se. Oppenheimer believes these claims to be without merit and intends to defend itself vigorously against these claims.

Also, on July 17, 2023, Oppenheimer was served with a complaint in an action entitled Mark Del Pico, Elizabeth Del Pico and Surrey Lane Partners GP LLC, as general Partner of Surrey Lane Partners, Ltd. v. Oppenheimer & Co. Inc., and Michael Mooney, filed in Florida State Court, Sarasota County. Plaintiffs allege that they were all investors in Horizon; however, none of the Plaintiffs were Oppenheimer customers. All of the Plaintiffs allege that they invested in Horizon years after John Woods left Oppenheimer’s employ in 2016. Plaintiffs further allege that Oppenheimer, through its inaction and/or misconduct, is responsible for their alleged losses and are seeking unspecified damages from Oppenheimer sounding in negligence per se, aiding and abetting breach of fiduciary duty, and aiding and abetting fraud.

On June 30, 2022, the Company received a "Wells Notice" from the SEC requesting that Oppenheimer make a written submission to the SEC to explain why Oppenheimer should not be charged with violations of Section 15c2-12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 15c2-12 thereunder as well as Municipal Securities Rulemaking Board Rules G-17 and G-27 in relation to its sales of municipal notes pursuant to an exemption from continuing disclosure contained in Rule 15c2-12. On September 13, 2022, the SEC filed a complaint against Oppenheimer in the United States District Court for the Southern District of New York (the “Court") alleging that Oppenheimer violated Section 15B(c)(1) of the Exchange Act and Rule 15c2-12 thereunder as well as Municipal Securities Rulemaking Board Rules G-17 and G-27 for not having fully complied with the exemption from the continuing disclosure obligations under Rule 15c2-12. The SEC asked the Court to enter an order enjoining Oppenheimer from violating the above-referenced rules and requiring it to disgorge approximately $1.9 million plus interest. The Company believes such claim to be without merit and intends to vigorously defend itself against such claim.

15. Regulatory requirements

The Company's U.S. broker dealer subsidiaries, Oppenheimer and Freedom are subject to the uniform net capital requirements of the SEC under Rule 15c3-1 (the "Rule") promulgated under the Exchange Act. Oppenheimer computes its net capital requirements under the alternative method provided for in the Rule which requires that Oppenheimer maintain net capital equal to two percent of aggregate customer-related debit items, as defined in SEC Rule 15c3-3. As of June 30, 2023, the net capital of Oppenheimer as calculated under the Rule was $417.5 million or 36.66% of Oppenheimer's aggregate debit items. This was $394.7 million in excess of the minimum required net capital at that date. Freedom computes its net capital requirement under


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)

the basic method provided for in the Rule, which requires that Freedom maintain net capital equal to the greater of $100,000 or 6-2/3% of aggregate indebtedness, as defined.

As of June 30, 2023, Freedom had net capital of $4.2 million, which was $4.1 million in excess of the $100,000 required to be maintained at that date.

As of June 30, 2023, the capital required and held under the FCA’s Investment Firms’ Prudential Regime (“IFPR”) for Oppenheimer Europe Ltd. was as follows:

•Common Equity Tier 1 ratio 91% (required 56.0%);

•Tier 1 Capital ratio 91% (required 75.0%); and

•Total Capital ratio 127% (required 100.0%).

Effective January 2022, IFPR changed its minimum capital requirement, which is now sterling 750,000 (previously it was Euro 730,000). Capital ratios are now expressed differently, but are effectively unchanged when comparing performance to required regulatory minimums. As of June 30, 2023, Oppenheimer Europe Ltd. was in compliance with its regulatory requirements.

As of June 30, 2023, the regulatory capital of Oppenheimer Investments Asia Limited was $4.4 million, which was $4.0 million in excess of the $382,854 required to be maintained on that date. Oppenheimer Investments Asia Limited computes its regulatory capital pursuant to the requirements of the Securities and Futures Commission of Hong Kong. As of June 30, 2023, Oppenheimer Investment Asia Limited was in compliance with its regulatory requirements.

16. Segment information

The Company has determined its reportable segments based on the Company's method of internal reporting, which disaggregates its retail business by branch and its proprietary and investment banking businesses by product. The Company evaluates the performance of its segments and allocates resources to them based upon profitability.

The Company's reportable segments are:

Private Client — includes commissions and a proportionate amount of fee income earned on assets under management ("AUM"), net interest earnings on client margin loans and cash balances, fees from money market funds, custodian fees, net contributions from stock loan activities and financing activities, and direct expenses associated with this segment; and

Asset Management — includes a proportionate amount of fee income earned on AUM from investment management services of Oppenheimer Asset Management Inc. Oppenheimer's asset management divisions employ various programs to manage client assets either in individual accounts or in funds, and includes direct expenses associated with this segment; and

Capital Markets — includes investment banking, institutional equities sales, trading, and research, taxable fixed income sales, trading, and research, public finance and municipal trading, as well as the Company's operations in the United Kingdom, Hong Kong and Israel, and direct expenses associated with this segment.

The Company does not allocate costs associated with certain infrastructure support groups that are centrally managed for its reportable segments. These areas include, but are not limited to, legal, compliance, operations, accounting, and internal audit.

Costs associated with these groups are separately reported in a Corporate/Other category and primarily include compensation and benefits.

The table below presents information about the reported revenue and pre-tax income (loss) of the Company for the three months ended June 30, 2023 and 2022. Asset information by reportable segment is not reported since the Company does not produce such information for internal use by the chief operating decision maker.


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OPPENHEIMER HOLDINGS INC. Notes to Condensed Consolidated Financial Statements (unaudited)


(Expressed in thousands)
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Revenue
Private client (1)	$	201,245	$	144,471	$	404,666	$	295,318
Asset management (1)	22,198		24,315		46,157		51,432
Capital markets	79,582		71,274		169,864		156,325
Corporate/Other	3,164		(2,838)		7,181		175
Total	$	306,189	$	237,222	$	627,868	$	503,250
Pre-Tax Income (Loss)
Private client (1)	$	20,794	$	38,800	$	75,250	$	62,946
Asset management (1)	6,533		8,120		13,014		17,594
Capital markets	(14,051)		(17,935)		(29,528)		(16,769)
Corporate/Other	(24,975)		(35,154)		(51,386)		(55,727)
Total	$	(11,699)	$	(6,169)	$	7,350	$	8,044

(1)Clients investing in the OAM advisory program are charged fees based on the value of AUM.

Advisory fees are allocated 10.0% to the Asset Management and 90.0% to the Private Client segments.

Revenue, classified by the major geographic areas in which it was earned, for the three and six months ended June 30, 2023 and 2022 was:


(Expressed in thousands)
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Americas	$	295,496	$	225,500	$	605,285	$	477,410
Europe/Middle East	10,108		10,474		20,968		22,451
Asia	585		1,248		1,615		3,389
Total	$	306,189	$	237,222	$	627,868	$	503,250

17. Subsequent events

On July 28, 2023, the Company announced a quarterly dividend in the amount of $0.15 per share, payable on August 25, 2023 to holders of Class A Stock and Class B Stock of record on August 11, 2023.

On May 31, 2023, the Company announced the commencement of a modified “Dutch Auction” tender offer to purchase up to $30.0 million of its Class A non-voting common stock at a price not less than $34.00 per share or more than $40.00 per share. The Company completed its repurchases pursuant to the tender offer on July 6, 2023, when it successfully repurchased and cancelled 437,183 shares of Class A non-voting common stock at $40.00 per share for an aggregate purchase price of $17.49 million. As a result, the Company had 10,447,392 shares outstanding on July 6, 2023 after the purchase.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BACKGROUND

The condensed consolidated financial statements include the accounts of Oppenheimer Holdings Inc. and its consolidated subsidiaries (together, the "Company", "Firm", "Parent", "we", "our" or "us"). The Company's condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto which appear elsewhere in this quarterly report.

Oppenheimer Holdings Inc., through its operating subsidiaries, is a leading middle market investment bank and full service broker-dealer that is engaged in a broad range of activities in the securities industry, including retail securities brokerage, institutional sales and trading, market-making, research, investment banking (both corporate and public finance), investment advisory and asset management services and trust services. Its principal subsidiaries are Oppenheimer & Co. Inc. ("Oppenheimer") and Oppenheimer Asset Management Inc. ("OAM"). As of June 30, 2023, we provided our services from 92 offices in 25 states located throughout the United States and offices in Puerto Rico, Tel Aviv, Israel, Hong Kong, China, London, England, St. Helier, Isle of Jersey, Munich, Germany, Portugal and Geneva, Switzerland. The Company provides investment advisory services through OAM and Oppenheimer Investment Management LLC ("OIM") and Oppenheimer's financial advisor directed programs. At June 30, 2023, client assets under management ("AUM") totaled $41.2 billion. AUM includes the total market value of client investments in discretionary and non-discretionary advisory programs as well as the net asset value of private placements of alternative investments offered by and held by clients of the firm. Client assets under administration ("CAUA") as of June 30, 2023 totaled $113.2 billion. CAUA includes AUM and the other assets for which the firm provides services. We also provide trust services and products through Oppenheimer Trust Company of Delaware and limited discount brokerage services through Freedom Investments, Inc. ("Freedom"). Through OPY Credit Corp., from time to time we may offer syndication as well as trading of issued syndicated corporate loans. At June 30, 2023, the Company employed 3,011 employees (2,897 full-time, 47 part-time and 67 summer interns), of whom 964 were financial advisors.

Outlook

We are focused on growing our private client and asset management businesses through strategic additions of experienced financial advisors in our existing branch system and employment of experienced money management personnel in our asset management business as well as deploying our capital for expansion through targeted acquisitions. We are increasingly creating and investing in private market opportunities on our own behalf and on behalf of qualified clients. We are also focused on opportunities in our capital market businesses where we can employ experienced personnel and/or small units that will improve our ability to attract institutional clients in both equities and fixed income without significantly raising our risk profile. We are continuously reviewing ways in which we can increase security around our data and our platform as the risks of cybercrime increase. In investment banking, we are committed to growing our footprint by adding experienced bankers within our existing industry practices as well as new industry practices where we believe we can be successful.

We continuously invest in and improve our technology platform to support client service and to remain competitive, while continuously managing expenses. The Company's long-term growth plan is to continue to expand existing offices by hiring experienced professionals as well as expand through the purchase of operating branch offices from other broker-dealers or the opening of new branch offices in attractive locations, and to continue to grow and develop the existing trading, investment banking, investment advisory and other divisions. We are committed to continuing to improve our capabilities to ensure compliance with industry regulations, support client service and expand our wealth management and capital markets capabilities. We recognize the importance of compliance with applicable regulatory requirements and are committed to performing rigorous and ongoing assessments of our compliance and risk management effort, and investing in people and programs, while providing a platform with first class investment programs and services.

The Company also reviews its full service business model to determine the opportunities available to build or acquire closely related businesses in areas where others have shown some success. Equally important is the search for viable acquisition candidates. Our long-term intention is to pursue growth by acquisition where we can find a comfortable match in terms of corporate goals and personnel at a price that would provide our shareholders with incremental value. We review potential acquisition opportunities from time to time with the aim of fulfilling the Company's strategic goals, while evaluating and managing our existing businesses. In addition, the Company may from time to time make minority

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private investments out of excess capital in allied or unrelated businesses with the goal of either syndicating the investment to eligible clients or retaining ownership because we believe them to be an attractive investment.

Impact of Change in Short-term Interest Rates

At its May 2023 meeting, the Federal Reserve ("FED") remained committed to tightening monetary policy as a means to lower inflation and, as a result, increased the Federal Funds rate by 25 basis points to a new target range of 5.00% to 5.25%. While several macroeconomic factors continued to suggest that further policy action would be necessary to cool the economy to achieve its 2% inflation target, the FED decided against enacting further rate increases for the first time in 10 meetings at its meeting in June, largely out of caution to see how the existing rate increases have impacted the broader economy and to prevent overtightening in light of the collapse of three midsized banks in the spring. However, based on a continuation of strong employment and other positive economic data throughout the quarter, it is likely that another rate increase will occur in the third quarter of 2023. The increases in the Federal funds rate are favorable to the Company's interest-based revenue. While increases in interest rates will increase fees the Company earns from FDIC-insured deposits of clients through a program offered by the Company, such increases may be offset to some extent if the cash sweep balances continue to decrease as clients seek higher-yielding investments. These rate increases will also increase the rates the Company charges on margin balances and have a positive impact on our earnings.

“Dutch auction” Tender Offer

On May 31, 2023, the Company announced the commencement of a modified “Dutch Auction” tender offer to purchase up to $30.0 million of its Class A non-voting common stock at a price not less than $34.00 per share or more than $40.00 per share. The purpose of the tender offer, among others, was to assure that sufficient liquidity existed for our stockholders that may be required to sell Class A shares when they were removed from the Russell 2000 and 3000 indices. The Company was advised that, as a result of the fact that voting rights are exclusively associated with the Company’s Class B voting common stock, which does not publicly trade, the Company’s Class A non-voting common stock was to be removed from the Russell 2000 and Russell 3000 on June 23, 2023. The Company completed its repurchases pursuant to the tender offer on July 6, 2023, when it successfully repurchased and cancelled 437,183 shares of Class A non-voting common stock for an aggregate purchase price of $17.49 million. As a result, the Company had 10,447,392 shares outstanding on July 6, 2023 after the purchase.

EXECUTIVE SUMMARY

The growth in our total revenue highlighted the ability of our diversified business mix to successfully operate in a mixed but still growing economy. While our operating businesses performed quite well, the Company’s overall results were adversely impacted by the accrual of a significant legal reserve related to a previously disclosed matter. We believe that this reserve will permit us to cover anticipated costs related to the matter, even though the reserve created a net loss for the quarter. During the quarter, the markets performed better than expected, as the S&P 500 and Nasdaq continued to advance upward in large part due to investor enthusiasm for generative A.I. tech stocks. On the economic front, unemployment hovered near historic lows and strong consumer spending on travel and services continued to buoy the economy along with increases in wages. The Federal Reserve continued its 15-month tightening campaign, though at a moderated pace, owing to encouraging inflationary trends and general reservations about over-tightening in light of the earlier regional bank failures.

These conditions strongly aided our Wealth Management business, where interest sensitive margin interest and sweep revenue registered large increases from the prior year and AUM began approaching levels reached prior to last year’s market decline. The lack of speculative activity resulted in continued lower transaction-based commission revenue. Capital Markets’ operating results showed modest improvement with higher M&A advisory fees, equities underwriting and sales and trading revenue offsetting lower fixed income underwriting revenue, as continued uncertainty and higher interest rates limited issuances.

The Company’s balance sheet and capital position remain strong, with ample levels of liquidity. During the second quarter, the Company purchased 96,135 shares (1%) of its Class A Stock at an average price of $37.43 per share in the open market under its share repurchase program. This resulted in 10,884,575 shares of Class A Stock remaining outstanding at June 30, 2023. The Company also launched a “Dutch auction” tender offer during the quarter through which it committed to repurchase an additional 437,183 shares at a price of $40.00 per share. The repurchase of shares in conjunction with the tender offer was completed in July and after adjusting for shares repurchased under the Tender Offer, there were 10,447,392 shares of Class A Stock remaining outstanding at July 6, 2023. Both of these actions permitted us to reach record levels in book value and tangible book value per share. We remain confident in our businesses and ability to continue delivering value to our stakeholders.

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RESULTS OF OPERATIONS

The Company reported a net loss of $9.4 million or $(0.85) per share for the second quarter of 2023, compared with a loss of $3.9 million or $(0.32) per share for the second quarter of 2022. Revenue for the second quarter of 2023 was $306.2 million, an increase of 29.1% compared to revenue of $237.2 million for the second quarter of 2022.


(Expressed in thousands, except Per Share Amounts or otherwise indicated)
	2Q-2023		2Q-2022		Change		% Change
Revenue	$	306,189	$	237,222	$	68,967	29.1
Compensation expense	$	187,224	$	177,979	$	9,245	5.2
Non-compensation expense	$	130,664	$	65,412	$	65,252	99.8
Pre-Tax (Loss)	$	(11,699)	$	(6,169)	$	(5,530)	89.6
Income Taxes (Benefit)	$	(2,131)	$	(1,449)	$	(682)	47.1
Net (Loss) (1)	$	(9,400)	$	(3,874)	$	(5,526)	142.6

(Loss) per share (basic) (1)	$	(0.85)	$	(0.32)	$	(0.53)	165.6
(Loss) per share (diluted) (1)	$	(0.85)	$	(0.32)	$	(0.53)	165.6

Book Value Per Share	$	71.77	$	68.57	$	3.20	4.7
Tangible Book Value Per Share (2)	$	56.29	$	53.62	$	2.67	5.0
Class A Shares Outstanding	10,884,575		11,270,944		(386,369)		(3.4)

AUA ($ billions)	$	113.2	$	104.0	$	9.2	8.8
AUM ($ billions)	$	41.2	$	37.1	$	4.1	11.1
(1) Attributable to Oppenheimer Holdings Inc.
(2) Represents book value less goodwill and intangible assets divided by number of shares outstanding.

Highlights

•Increased revenue for the second quarter of 2023 is primarily driven by a rise in interest sensitive income, including margin interest and bank deposit sweep income.

•The second quarter 2023 net loss is primarily attributable to an increase in non-compensation expenses, which was mostly driven by the accrual of a significant legal reserve associated with a previously disclosed matter.

•Assets under administration and under management were both at higher levels at June 30, 2023 when compared with the same period last year, benefiting from market appreciation and positive net asset flows.

•The Company repurchased 96,135 shares of Class A Stock during the second quarter of 2023 under its previously announced share repurchase program, or approximately 1% of shares outstanding at year-end.

•The Company also launched a “Dutch auction” tender offer, which resulted in the repurchase and retirement of an additional 437,183 shares of Class A non-voting common stock when the transaction closed in July 2023.

•Book value and tangible book value per share increased from the prior year period primarily as a result of share repurchases.

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BUSINESS SEGMENTS

The table below presents information about the reported revenue and pre-tax income (loss) of the Company's reportable business segments for the three and six months ended June 30, 2023 and 2022:


(Expressed in thousands)
	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2023		2022		% Change	2023		2022		% Change
Revenue
Private Client	$	201,245	$	144,471	39.3	$	404,666	$	295,318	37.0
Asset Management	22,198		24,315		(8.7)	46,157		51,432		(10.3)
Capital Markets	79,582		71,274		11.7	169,864		156,325		8.7
Corporate/Other	3,164		(2,838)		*	7,181		175		4,003.4
Total	$	306,189	$	237,222	29.1	$	627,868	$	503,250	24.8

Pre-Tax Income (Loss)
Private Client	$	20,794	$	38,800	(46.4)	$	75,250	$	62,946	19.5
Asset Management	6,533		8,120		(19.5)	13,014		17,594		(26.0)
Capital Markets	(14,051)		(17,935)		(21.7)	(29,528)		(16,769)		76.1
Corporate/Other	(24,975)		(35,154)		(29.0)	(51,386)		(55,727)		(7.8)
Total	$	(11,699)	$	(6,169)	89.6	$	7,350	$	8,044	(8.6)
*Percentage not meaningful

Private Client

Private Client reported revenue for the current quarter of $201.2 million, 39.3% higher when compared with the prior year period. Pre-tax income was $20.8 million, compared with pre-tax income of $38.8 million in the prior year period. Financial advisor headcount at the end of the current quarter was 964 compared to 990 at the end of the second quarter of 2022.


('000s, except Financial advisor headcount or otherwise indicated)
	2Q-2023			2Q-2022			Change			% Change
Revenue	$	201,245		$	144,471		$	56,774		39.3
Retail commissions	$	45,377		$	45,916		$	(539)		(1.2)
Advisory fee revenue	$	78,811		$	83,085		$	(4,274)		(5.1)
Bank deposit sweep income	$	44,060		$	14,845		$	29,215		197
Interest	$	22,403		$	10,369		$	12,034		116.1
Other	$	10,594		$	(9,744)		$	20,338		*

Total Expenses	$	180,451		$	105,671		$	74,780		70.8
Compensation	$	99,528		$	77,342		$	22,186		28.7
Non-compensation	$	80,923		$	28,329		$	52,594		185.7

Pre-tax Income	$	20,794		$	38,800		$	(18,006)		(46.4)

Compensation Ratio	49.5		%	53.5		%	(400)			(7.5)
Non-compensation Ratio	40.2		%	19.6		%	2,060			105.1
Pre-tax Margin	10.3		%	26.9		%	(16.6)		%	(61.7)

Asset Under Administration (billions)	$	113.2		$	104.0		$	9.2		8.8
Cash Sweep Balances (billions)	$	3.9		$	7.5		$	(3.6)		(48.0)

*Percentage not meaningful

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•Retail commissions were flat compared with the prior year quarter due to continued lower retail trading activity.

•Advisory fees decreased 5.1% from a year ago primarily due to lower AUM during the billing period for the current quarter when compared to the second quarter of last year.

•Bank deposit sweep income increased $29.2 million or 197% from a year ago due to higher short-term interest rates partially offset by lower cash sweep balances.

•Interest revenue approached record level and increased 116.1% from a year ago due to higher short-term interest rates.

•Other revenue increased primarily due to increases in the cash surrender value of Company-owned life insurance policies, which fluctuates based on changes in fair value of the policies' underlying investments.

•Compensation expenses increased 28.7% from a year ago primarily due to higher share-based and deferred compensation costs.

•Non-compensation expenses increased substantially (185.7%) from a year ago primarily due to additional accrual of a significant legal reserve associated with a previously disclosed matter.

Asset Management

Asset Management reported revenue for the current quarter of $22.2 million, 8.7% lower when compared with the prior year period. Pre-tax income was $6.5 million, a decrease of 19.5% compared with the prior year period.


('000s unless otherwise indicated)	2Q-2023			2Q-2022			Change			% Change
Revenue	$	22,198		$	24,315		$	(2,117)		(8.7)
Advisory fee revenue	$	22,196		$	24,311		$	(2,115)		(8.7)
Other	$	2		$	4		$	(2)		(50.0)

Total Expenses	$	15,664		$	16,195		$	(531)		(3.3)
Compensation	$	6,283		$	6,697		$	(414)		(6.2)
Non-compensation	$	9,381		$	9,498		$	(117)		(1.2)

Pre-tax Income	$	6,534		$	8,120		$	(1,586)		(19.5)

Compensation Ratio	28.3		%	27.5		%	80			2.9
Non-compensation Ratio	42.3		%	39.1		%	320			8.2
Pre-tax Margin	29.4		%	33.4		%	(4.0)		%	(12.0)

AUM (billions)	$	41.2		$	37.1		$	4.1		11.1

•Advisory fees decreased 8.7% from a year ago due to reduced management fees resulting from the lower net value of billable AUM during the quarter.

•AUM increased to $41.2 billion at June 30, 2023, which is the basis for advisory fee billings for July 2023.

•The increase in AUM was comprised of higher asset values of $3.7 billion on existing client holdings and a net contribution of $0.4 billion in new assets.

•Compensation expenses were down 6.2% from a year ago which was primarily related to decreases in incentive compensation.

•Non-compensation expenses were down 1.2% when compared to the prior year period mostly due to lower external portfolio management costs which are directly related to the decrease in billable AUM, partially offset by higher communication and technology expenses.

The following table provides a breakdown of the change in assets under management for the three months ended June 30, 2023:

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(Expressed in millions)
	For the Three Months Ended June 30, 2023
Fund Type	Beginning Balance		Contributions			Redemptions/Profit Distribution		Appreciation (Depreciation)		Ending Balance
Traditional (1)	$	33,698	$	1,604		$	(1,522)	$	1,663	$	35,443
Institutional Fixed Income (2)	841		1		-17	(17)		2		827
Alternative Investments:
Hedge funds (3)	3,246		45			(20)		128		3,399
Private Equity Funds (4)	1,188		11			(20)		4		1,183
Portfolio Enhancement Program (5)	332		—			(9)		—		323
	$	39,305	$	1,661		$	(1,588)	$	1,797	$	41,175

(1)Traditional investments include first party advisory programs, Oppenheimer financial adviser managed advisory programs and Oppenheimer Asset Management taxable and tax-exempt portfolio management strategies.

(2)Institutional fixed income provides solutions to institutional investors including: Taft-Hartley Funds,

Public Pension Funds, Corporate Pension Funds, and Foundations and Endowments.

(3) Hedge funds represent single manager hedge fund strategies in areas including hedged equity,

technology and financial services, and multi-manager and multi-strategy fund of funds.

(4)Private equity funds represent private equity fund of funds including portfolios focused on natural resources and related assets.

(5)The portfolio enhancement program sells uncovered, out-of-money puts and calls on the S&P 500 Index. The program is intended to be market neutral and uncorrelated to the index. Valuation is based on collateral requirements for a series of contracts representing the investment strategy.

Capital Markets

Capital Markets reported revenue for the current quarter of $79.6 million, 11.7% higher when compared with the prior year period. Pre-tax loss was $14.1 million, compared with a pre-tax loss of $17.9 million in the prior year period.


('000s)	2Q-2023			2Q-2022			Change			% Change
Revenues	$	79,582		$	71,274		$	8,308		11.7

Investment Banking	$	18,749		$	14,699		$	4,050		27.6
Advisory fees	$	10,945		$	8,284		$	2,661		32.1
Equities underwriting	$	5,478		$	2,751		$	2,727		99.1
Fixed income underwriting	$	1,867		$	3,259		$	(1,392)		(42.7)
Other	$	459		$	405		$	54		13.3

Sales and Trading	$	60,216		$	55,978		$	4,238		7.6
Equities	$	34,453		$	37,126		$	(2,673)		(7.2)
Fixed Income	$	25,763		$	18,852		$	6,911		36.7

Other	$	617		$	597		$	20		3.4

Total Expenses	$	93,633		$	89,209		$	4,424		5.0
Compensation	$	61,255		$	67,172		$	(5,917)		(8.8)
Non-compensation	$	32,378		$	22,037		$	10,341		46.9

Pre-tax Loss	$	(14,051)		$	(17,935)		$	3,884		(21.7)

Compensation Ratio	77.0		%	94.2		%	(1,720)			(18.3)
Non-compensation Ratio	40.7		%	30.9		%	980			31.7
Pre-tax Margin	(17.7)		%	(25.2)		%	7.5		%	(29.8)

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•Advisory fees earned from investment banking activities increased 32.1% compared with a year ago due to an increase in M&A transactions.

•Equities underwriting fees modestly increased by $2.7 million when compared with a year ago, when IPO and secondary offerings were at historically low levels industry-wide.

•Fixed income underwriting fees were down 42.7% compared with a year ago primarily driven by lower deal volumes during the second quarter of 2023.

•Equities sales and trading revenue decreased 7.2% compared with a year ago due to reduced volumes as a result of lower market volatility.

•Fixed income sales and trading revenue increased by 36.7% compared with a year ago primarily due to an increase in trading income attributable to higher volumes.

•Compensation expenses decreased 8.8% compared with a year ago primarily due to decreased incentive compensation.

•Non-compensation expenses were 46.9% higher than a year ago primarily due to an increase in interest expense in financing inventories.

CRITICAL ACCOUNTING POLICIES

The Company's condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Reference is also made to the Company's condensed consolidated financial statements and notes thereto found in its Annual Report on Form 10-K for the year ended December 31, 2022.

The Company's accounting policies are essential to understanding and interpreting the financial results reported on the condensed consolidated financial statements. The significant accounting policies used in the preparation of the Company's condensed consolidated financial statements are summarized in note 2 to those statements and the notes thereto found in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Certain of those policies are considered to be particularly important to the presentation of the Company's financial results because they require management to make difficult, complex or subjective judgments, often as a result of matters that are inherently uncertain.

During the six months ended June 30, 2023, there were no material changes to matters discussed under the heading "Critical Accounting Polices" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2023, total assets increased by 13.9% from December 31, 2022. The Company satisfies its need for short-term financing from internally generated funds and collateralized and uncollateralized borrowings, consisting primarily of bank call loans, stock loans, and uncommitted lines of credit. We finance our trading in government securities through the use of securities sold under repurchase agreements. We met our longer-term capital needs through the issuance of the 5.50% Senior Secured Notes due 2025 (see "Senior Secured Notes" below). Oppenheimer has arrangements with banks for borrowings on a fully collateralized basis. The amount of Oppenheimer's bank borrowings fluctuates in response to changes in the level of the Company's securities inventories and customer margin debt, changes in notes receivable from employees, investment in furniture, equipment and leasehold improvements, and changes in stock loan balances and financing through repurchase agreements. At June 30, 2023, the Company had bank call loans of $94.4 million compared to zero at December 31, 2022. The Company also has some availability of short-term bank financing on an unsecured basis.

The Company's overseas subsidiaries, Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited, are subject to local regulatory capital requirements that restrict our ability to utilize their capital for other purposes.

The regulatory capital requirements for Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited were $5.4 million and $382,854, respectively, at June 30, 2023. The liquid assets at Oppenheimer Europe Ltd. are primarily comprised of cash deposits in bank accounts.

The liquid assets at Oppenheimer Investments Asia Limited are primarily comprised of investments in U.S. Treasuries and cash deposits in bank accounts. Any transfer of these liquid assets from Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited to the Company or its other subsidiaries would be limited by regulatory capital requirements.

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The Company permanently reinvests eligible earnings of its foreign subsidiaries and, accordingly, does not accrue any U.S. income taxes that would arise if these earnings were repatriated. The unrecognized deferred tax liability associated with the outside basis difference of its foreign subsidiaries is estimated at $3.5 million for those subsidiaries. We have continued to reinvest permanently the excess earnings of Oppenheimer Israel (OPCO) Ltd. in its own business and in the businesses in Europe and Asia to support business initiatives in those regions. We will continue to review our historical treatment of these earnings to determine whether our historical practice will continue or whether a change is warranted.

Senior Secured Notes

On September 22, 2020, in a private offering, we issued $125.0 million aggregate principal amount of 5.50% Senior Secured Notes due 2025 (the "Unregistered Notes") under an indenture at an issue price of 100% of the principal amount. Interest on the Unregistered Notes is payable semi-annually on April 1st and October 1st. We used the net proceeds from the offering of the Unregistered Notes, along with cash on hand, to redeem in full our 6.75% Senior Secured Notes due July 1, 2022 in the principal amount of $150.0 million (the Company held $1.4 million in treasury for a net outstanding amount of $148.6 million), and pay all related fees and expenses related thereto. On November 23, 2020, we completed an exchange offer in which we exchanged 99.8% of our Unregistered Notes for a like principal amount of notes with identical terms (the "Notes"), except that such new Notes have been registered under the Securities Act. We did not receive any proceeds in the exchange offer. See note 11 to the condensed consolidated financial statements appearing in Item 1 for further discussion.

During the fourth quarter of 2022, the Company repurchased and subsequently cancelled $10.95 million of the Notes, recognizing a small extinguishment gain. As of December 31, 2022, $114.05 million aggregate principal amount of the Notes remains outstanding.

During the first quarter of 2023, the Company repurchased and subsequently cancelled $1.0 million of the Notes, recognizing a small extinguishment gain. As of June 30, 2023, $113.05 million aggregate principal amount of the Notes remains outstanding.

The Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by E.A. Viner International Co. and Viner Finance Inc. (together, the "Subsidiary Guarantors"), unless released as described below. Each of the Subsidiary Guarantors is 100% owned by the Parent. The indenture for the Notes contains covenants with restrictions which are discussed in note 11.

The guarantees are senior secured obligations of each Subsidiary Guarantor. The guarantees rank:

•effectively senior in right of payment to all unsecured and unsubordinated obligations of such guarantor, to the extent of the value of the collateral owned by such Subsidiary Guarantor (and, to the extent of any unsecured remainder after payment of the value of the collateral, rank equally in right of payment with such unsecured and unsubordinated indebtedness of such Subsidiary Guarantor);

•senior in right of payment to any subordinated debt of such guarantor; and

•secured on a first-priority basis by the collateral, subject to certain exceptions and permitted liens, and it is intended that pari passu lien indebtedness, if any, will be secured on an equal and ratable basis.

Each subsidiary guarantee is limited so that it does not constitute a fraudulent conveyance under applicable law, which may reduce the subsidiary’s obligations under the guarantee. There are no externally imposed restrictions on transfers of assets between the Company and its subsidiaries.

Each Subsidiary Guarantor will be automatically and unconditionally released and discharged upon the sale, exchange or transfer of the capital stock of a Subsidiary Guarantor and the Subsidiary Guarantor ceasing to be a direct or indirect subsidiary of the Parent if such sale does not constitute an asset sale under the indenture for the Notes or does not constitute an asset sale effected in compliance with the asset sale and merger covenants of the indenture for the Notes; a Subsidiary Guarantor being dissolved or liquidated; a Subsidiary Guarantor being designated unrestricted in compliance with the applicable provisions of the Notes; or the exercise by the Parent of its legal defeasance option or covenant defeasance option or the discharge of the Parent's obligations under the indenture for the Notes in accordance with the terms of such indenture.

The following tables present the results of operations for the six months ended June 30, 2023 and the balance sheet at June 30, 2023 for the Parent and Subsidiary Guarantors.

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(Expressed in thousands)	As of
	June 30, 2023
Total Assets	$	2,044,507
Due From Non-Guarantor Subsidiary	17,554
Total Liabilities	556,574
Due To Non-Guarantor Subsidiary	20,624

	For the Six Months Ended
	June 30, 2023
Total Revenue	$	5,258
Pre-Tax Income (Loss)	(270)
Net Income (Loss)	(642)

On June 17, 2021, S&P upgraded the Company's Corporate Family rating and rating on the Unregistered Notes from 'B+' with a stable outlook to 'BB-' with a stable outlook. On August 23, 2021, Moody’s upgraded the Company's Corporate Family rating and the rating on the Unregistered Notes from “B1” with a stable outlook to “Ba3” with a stable outlook.

Liquidity

For the most part, the Company's assets consist of cash and cash equivalents and assets that it can readily convert into cash. The receivable from brokers, dealers and clearing organizations represents deposits for securities borrowed transactions, margin deposits and current transactions awaiting settlement. The receivable from customers represents margin balances and amounts due on transactions awaiting settlement. Our receivables are, for the most part, collateralized by marketable securities. Our collateral maintenance policies and procedures are designed to limit our exposure to credit risk. Securities owned, with the exception of the ARS, are mainly comprised of actively trading readily marketable securities. We issued $1.5 million in forgivable notes (which are inherently illiquid) to employees for the three months ended June 30, 2023 ($5.1 million for the three months ended June 30, 2022) as upfront or backend inducements to commence or continue employment as the case may be. The amount of funds allocated to such inducements will vary with hiring activity.

We satisfy our need for short-term liquidity from internally generated funds, collateralized and uncollateralized bank borrowings, stock loans and repurchase agreements. Bank borrowings are, in most cases, collateralized by Firm and customer securities.

We obtain short-term borrowings primarily through bank call loans. Bank call loans are generally payable on demand and bear interest at various rates. At June 30, 2023, the Company had $94.4 million of bank call loans (zero at December 31, 2022). The average daily bank loan outstanding for the three and six months ended June 30, 2023 was $77.8 million and $67.7 million, respectively ($111.5 million and $99.4 million for the three and six months ended June 30, 2022). The largest daily bank loans outstanding for the three and six months ended June 30, 2023 was $153.3 million and $167.3 million, respectively ($226.6 million for both the three and six months ended June 30, 2022).

At June 30, 2023, securities loan balances totaled $336.5 0 million ($320.8 million at December 31, 2022 and $281.4 million at June 30, 2022). The average daily securities loan balance outstanding for the three and six months ended June 30, 2023 was $362.9 million and $352.1 million, respectively ($269.6 million and $286.9 for the three and six months ended June 30, 2022). The largest daily stock loan balance for both of the three and six months ended June 30, 2023 were $391.5 million ($302.9 million and $350.1 million for the three and six months ended June 30, 2022).

We finance our government trading operations through the use of securities purchased under reverse repurchase agreements and repurchase agreements. Except as described below, repurchase and reverse repurchase agreements, primarily involving government and agency securities, are carried at amounts at which securities subsequently will be resold or reacquired as specified in the respective agreements and include accrued interest.

Repurchase and reverse repurchase agreements are presented on a net-by-counterparty basis, when the repurchase and reverse repurchase agreements are executed with the same counterparty, have the same explicit settlement date, are executed in accordance with a master netting arrangement, the securities underlying the repurchase and reverse repurchase agreements exist in "book entry" form and certain other requirements are met.

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Certain of our repurchase agreements and reverse repurchase agreements are carried at fair value as a result of the Company's fair value option election. We elected the fair value option for those repurchase agreements and reverse repurchase agreements that do not settle overnight or have an open settlement date. We have elected the fair value option for these instruments to more accurately reflect market and economic events in our earnings and to mitigate a potential imbalance in earnings caused by using different measurement attributes (i.e. fair value versus carrying value) for certain assets and liabilities. At June 30, 2023, we did not have any repurchase agreements and reverse repurchase agreements that did not settle overnight or have an open settlement date.

At June 30, 2023, the gross balances of reverse repurchase agreements and repurchase agreements were $40.1 million and $685.4 million, respectively. The average daily balance of reverse repurchase agreements and repurchase agreements on a gross basis for the three months ended June 30, 2023 was $146.8 million and $501.8 million, respectively ($146.9 million and $291.8 million, respectively, for the three months ended June 30, 2022). The largest amount of reverse repurchase agreements and repurchase agreements outstanding on a gross basis during the three months ended June 30, 2023 was $392.1 million and $782.1 million, respectively ($435.7 million and $540.1 million, respectively, for the three months ended June 30, 2022).

Liquidity Management

We manage our liquidity to meet our current obligations and upcoming liquidity needs as well as to ensure compliance with regulatory requirements. Our liquidity needs may be affected by market conditions, increased inventory positions, business expansion and other unanticipated occurrences. In the event that existing financial resources do not satisfy our liquidity needs, we may have to seek additional external financing. The availability of such additional external financing may depend on market factors outside our control.

We have Company-owned life insurance policies which are utilized to fund certain non-qualified deferred compensation plans. Certain policies which could provide additional liquidity if needed had a cash surrender value of $83.5 million as of June 30, 2023.

We regularly review our sources of liquidity and financing and conduct internal stress analysis to determine the impact on the Company of events that could remove sources of liquidity or financing and to plan actions the Company could take in the case of such an eventuality. Regulators are increasingly focused on Liquidity Management and we anticipate both new rules regarding the management of our day-to-day liquidity as well as increased regulatory scrutiny of the compliance with any such rules. Recent bank failures did not result in reducing the availability of funding or any disruption in the Company’s business. Should such disruption occur in the future, we have plans that we believe would result in a reduction of assets through liquidation that would significantly reduce the Company's need for external financing.

Our primary long-term cash requirements include $112.5 million principal outstanding as of June 30, 2023 under our Senior Secured Notes (due in 2025) and $196.9 million of operating lease obligations. The total cash requirement for interest expense related to the Notes and operating lease obligations is estimated to be approximately $9.8 million for the remainder of 2023.

Funding Risk


(Expressed in thousands)
	For the Six Months Ended June 30,
	2023		2022
Cash used in operating activities	$	(150,811)	$	(231,371)
Cash used in investing activities	(9,179)		(1,116)
Cash provided by financing activities	76,971		55,444
Net decrease in cash, cash equivalents and restricted cash	$	(83,019)	$	(177,043)

Management believes that funds from operations, combined with our capital base and available credit facilities, are sufficient for our liquidity needs for the foreseeable future. Under some circumstances, banks including those on whom we rely may back away from providing funding to the securities industry. Such a development might impact our ability to finance our day-to-day activities or increase the costs to acquire funding. We may or may not be able to pass such increased funding costs on to our clients.

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During periods of high volatility, we have seen increased calls for deposits of collateral to offset perceived risk between the Company's settlement liability to industry clearinghouses such as the Options Clearing Corporation (“OCC”) and National Securities Clearing Corp. (“NSCC”) as well as more stringent collateral arrangements with our bank lenders. All such requirements have been and will be met in the ordinary course with available collateral.

CYBERSECURITY

For many years, we have sought to maintain the security of our clients' data, limit access to our data processing environment, and protect our data processing facilities. See "Risk Factors — Cybersecurity – Security breaches of our technology systems, or those of our clients or other first-party vendors we rely on, could subject us to significant liability and harm our reputation" as further described in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Recent examples of vulnerabilities of other companies and the government that have resulted in loss of client data and fraudulent activities by both domestic and foreign actors have caused us to continuously review our security policies and procedures and to take additional actions to protect our network and our information. The commencement of hostilities between Ukraine and Russia has resulted in increased attacks on the infrastructure of data processing facilities around the world and heightened awareness of potential vulnerabilities including those of the Company.

Given the importance of the protection of client data, regulators have developed increased oversight of cybersecurity planning and protections that broker-dealers and other financial service providers have implemented. Such planning and protection are subject to the SEC's and FINRA's oversight and examination on a periodic or targeted basis. We expect that regulatory oversight will intensify, as a result of publicly announced data breaches by other organizations involving tens of millions of items of personally identifiable information. We continue to implement protections and adopt procedures to address the risks posed by the current information technology environment. The Company has significantly increased the resources dedicated to this effort and believes that further increases may be required in the future, in anticipation of increases in the sophistication and persistency of such attacks. There can be no guarantee that our cybersecurity efforts will be successful in discovering or preventing a security breach.

REGULATORY MATTERS AND DEVELOPMENTS

Regulation Best Interest (U.S.)

On June 5, 2019, the SEC adopted Regulation Best Interest (“Reg BI”) as Rule 15l-1 under the Exchange Act. Reg BI imposes a federal standard of conduct on registered broker-dealers and their associated persons when dealing with retail clients and requires that a broker-dealer and its representatives act in the best interest of clients and not place its own interests ahead of the customer’s interests. Reg BI does not define the term “best interest” but instead sets forth four distinct obligations disclosure, care, conflict of interest and compliance that a broker-dealer must satisfy in each transaction. Compliance with Reg BI became required on June 30, 2020. In addition to adopting Reg BI, the SEC adopted rules (i) requiring broker-dealers and investment advisers to provide a written relationship summary to each client, and (ii) clarifying certain interpretations under the Investment Advisers Act of 1940 including but not limited to when a broker-dealer's activity is considered “solely incidental” to its broker-dealer business and is, therefore, not considered investment advisory activity (collectively, the “Reg BI Rules”).

Reg BI requires enhanced documentation for recommendations of securities transactions to broker-dealer retail clients as well as the cessation of certain practices and limitations on certain kinds of transactions previously conducted in the normal course of business. The rules and processes required under Reg BI limit revenue and involve increased costs, including, but not limited to, compliance costs associated with enhanced technology as well as increased litigation risks. The Company made significant structural, technological and operational changes to our business practices to comply with the requirements of the Reg BI Rules and it is likely that additional changes may be necessary to continue to comply as more experience with the Reg BI Rules is gained. Regulators have commenced in-depth reviews of the industry’s compliance with the requirements of Reg BI, including that of the Company.

On December 18, 2020, the DOL published its final prohibited transaction exemption (“PTE”) addressing investment advice for fiduciaries of ERISA plans and IRAs. Similar to the proposal the DOL released in June of 2020, the final exemption takes a principles-based (rather than a prescriptive) approach to resolving conflicts that arise under ERISA when an investment advice fiduciary, its affiliate or a related party is paid certain types of compensation (such as commissions, trailing fees or revenue-sharing) or engages in certain principal transactions. The final exemption should provide a new and more flexible approach to ERISA compliance for certain types of transactions, which financial institutions may choose to utilize in place of other existing exemptions. Like the proposal (but in contrast to the precursor rule the DOL finalized in April 2016 that the U.S. Court of Appeals for the Fifth Circuit later vacated in June 2018), the

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final exemption does not materially change the scope of fiduciary activities under ERISA, with the exception of including certain rollover-related advice as fiduciary advice. The effective date for compliance with the PTE was February 1, 2022. The Company believes many of the steps taken by the Company to achieve compliance with the Reg BI Rules will enable the Company to comply with the PTE. The Company implemented certain additional processes to accompany the actions taken to comply with the Reg BI Rules in order to ensure full compliance with the PTE.

Regulatory Environment

See the discussion of the regulatory environment in which we operate and the impact on our operations of certain rules and regulations in Item 1 “Business - Regulation” in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 for additional information.

Oppenheimer and many of its affiliates are each subject to various regulatory capital requirements. As of June 30, 2023, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements. See note 15 to the condensed consolidated financial statements in Item 1 for further information on regulatory capital requirements.

Other Regulatory Matters

Since August 2021, Oppenheimer has been responding to information requests from the SEC’s Division of Enforcement relating to a former Oppenheimer financial advisor and his relationship with registered investment adviser, Southport Capital and its affiliates.

On June 30, 2022, the Company received a "Wells Notice" from the SEC requesting that Oppenheimer make a written submission to the SEC to explain why Oppenheimer should not be charged with violations of Section 15c2-12 of the Exchange Act and Rule 15c2-12 thereunder as well as Municipal Securities Rulemaking Board Rules G-17 and G-27 in relation to its sales of municipal notes pursuant to an exemption from continuing disclosure contained in Rule 15c2-12. On September 13, 2022, the SEC filed a complaint against Oppenheimer in the United States District Court for the Southern District of New York (the "Court") alleging that Oppenheimer violated Section 15B(c)(1) of the Exchange Act and Rule 15c2-12 thereunder as well as Municipal Securities Rulemaking Board Rules G-17 and G-27 for not having fully complied with the exemption from the continuing disclosure obligations under Rule 15c2-12. The SEC asked the Court to enter an order enjoining Oppenheimer from violating the above referenced rules and requiring it to disgorge approximately $1.9 million plus interest. The Company believes such claim to be without merit and intends to vigorously defend itself against any such claim.

The SEC has under consideration a number of rules that are believed will change the operation of the equity markets and may disrupt and/or remove liquidity from the markets as well as significant rule proposals relating to cybersecurity, climate change and investment advisory custodial practices. The Company continues to monitor these developments and cannot currently determine what, if any, impact they may have on its business.

FACTORS AFFECTING "FORWARD-LOOKING STATEMENTS"

From time to time, the Company may publish or make oral statements that constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 which provides a safe harbor for forward-looking statements. These forward-looking statements may relate to such matters as anticipated financial performance, future revenues, earnings, liabilities or expenses, business prospects, projected ventures, new products, anticipated market performance, and similar matters. The Company cautions readers that a variety of factors could cause the Company’s actual results to differ materially from the anticipated results or other expectations expressed in the Company’s forward-looking statements. These risks and uncertainties, many of which are beyond the Company’s control, include, but are not limited to: (i) transaction volume in the securities markets, (ii) the volatility of the securities markets, (iii) fluctuations in interest rates, (iv) changes in regulatory requirements that could affect the cost and method of doing business, (v) general economic conditions, both domestic and international, including inflation, recession, and changes in consumer confidence and spending, (vi) competition from existing financial institutions, new entrants and other participants in the securities markets and financial services industry, (vii) potential cybersecurity threats and attacks, (viii) legal developments affecting the litigation experience of the securities industry and the Company, (ix) changes in foreign, federal and state

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tax laws that could affect the popularity of products sold by the Company or impose taxes on securities transactions, (x) the adoption and implementation of the SEC’s “Regulation Best Interest” and other regulations adopted in recent years, (xi) war, terrorist acts and nuclear confrontation as well as political unrest, including events relating to Russia's invasion of Ukraine and related Western sanctions, (xii) the Company’s ability to achieve its business plan, (xiii) the effects of the economy on the Company’s ability to find and maintain financing options and liquidity, (xiv) credit, operational, legal and regulatory risks, (xv) risks related to foreign operations, including those in the United Kingdom which may be affected by Britain’s January 2020 exit from the EU (“Brexit”) and economic uncertainty in the UK, EU and elsewhere, (xvi) the effect of technological innovation on the financial services industry and securities business, (xvii) risks related to election results, Congressional gridlock, political and social unrest, government shutdowns and investigations, trade wars, bank failures, changes in or uncertainty surrounding regulation, and the potential for default by the U.S. government on the nation's debt, (xviii) risks related to changes in capital requirements under international standards that may cause banks to back away from providing funding to the securities industry, and (xix) risks related to the severity and duration of the COVID-19 Pandemic, the COVID-19 Pandemic’s impact on the U.S. and global economies including supply chain disruptions, and Federal, state and local governmental responses to the COVID-19 Pandemic. There can be no assurance that the Company has correctly or completely identified and assessed all of the factors affecting the Company's business. See “Risk Factors” in Part I, Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and Annual Report on Form 10-K for the year ended December 31, 2022.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the six months ended June 30, 2023, there were no material changes to the information contained in Part II, Item 7A of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

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Item 4. CONTROLS AND PROCEDURES

The Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rule 13a–15(e) of the Exchange Act. Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report.

Management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the Company's disclosure controls and procedures or its internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or omission. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost–effective control system, misstatements due to error or fraud may occur and not be detected.

The Company confirms that its management, including its Chief Executive Officer and its Chief Financial Officer, concluded that the Company's disclosure controls and procedures are effective to ensure that the information required to be disclosed by the Company in its reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company's internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the six months ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Beginning on or about August 31, 2021, Oppenheimer was named as a respondent in forty-five arbitrations, many containing multiple claimants, each filed before FINRA, relating to those claimants’ purported investment in Horizon Private Equity, III, LLC (“Horizon”). Horizon is alleged to be a fraudulent scheme involving, among others, a former Oppenheimer employee John Woods. John Woods left Oppenheimer’s employ in 2016 and Oppenheimer never received a complaint or question from any of the investors prior to the SEC bringing a complaint against Woods and his co-conspirators in 2021. Each investor, who was an Oppenheimer client, signed a document acknowledging that Horizon was not an approved Oppenheimer product. Over a protracted period of time, Woods made multiple false statements to Oppenheimer, to regulators and to a state court. The claimants are seeking damages based on a number of legal theories, including, without limitation, violations of various state and federal statutes, breach of fiduciary duty, procurement of breach of fiduciary duty, negligent misrepresentation, aiding and abetting fraud, and unjust enrichment. Claimants do not allege Oppenheimer received any of the funds invested in Horizon, but rather that Oppenheimer’s purported failure to properly supervise its employees allowed the alleged scheme to occur and continue. The fourteen arbitrations still pending that claim specific monetary damages and allege losses of approximately $13.9 million in the aggregate while a few others claim unspecified damages. Oppenheimer believes these claims to be without merit and intends to defend itself vigorously against these claims.

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Oppenheimer has settled, or settled in principle, or an award has been rendered in thirty-one of the Horizon-related arbitrations, with approximately one hundred eight individual complainants. The aggregate payments for those thirty-one arbitrations total approximately $78.5 million.

On June 30, 2022, the Company received a "Wells Notice" from the SEC requesting that Oppenheimer make a written submission to the SEC to explain why Oppenheimer should not be charged with violations of Section 15c2-12 of the Exchange Act, and Rule 15c2-12 thereunder as well as Municipal Securities Rulemaking Board Rules G-17 and G-27 in relation to its sales of municipal notes pursuant to an exemption from continuing disclosure contained in Rule 15c2-12. On September 13, 2022, the SEC filed a complaint against Oppenheimer in the United States District Court for the Southern District of New York (the “Court") alleging that Oppenheimer violated Section 15B(c)(1) of the Exchange Act and Rule 15c2-12 thereunder as well as Municipal Securities Rulemaking Board Rules G-17 and G-27 for not having fully complied with the exemption from the continuing disclosure obligations under Rule 15c2-12. The SEC asked the Court to enter an order enjoining Oppenheimer from violating the above-referenced rules and requiring it to disgorge approximately $1.9 million plus interest. The Company believes such claim to be without merit and intends to vigorously defend itself against such claim.

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Item 1A. RISK FACTORS

During the three months ended June 30, 2023, there were no material changes to the information contained in Part I, Item 1A of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and Annual Report on Form 10-K for the year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) During the second quarter of 2023, the Company issued 4,987 shares of Class A Stock pursuant to the Company's share-based compensation plans to employees of the Company for no cash consideration. Such issuances were exempt

from registration pursuant to Section 4(a)(2) of the Securities Act.

(b) Not applicable.


	(a)	(b)	(c)	(d)
Period	Total number of shares purchased	Average price paid per share	Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs (1)

April 1 - 30, 2023	20,000	$38.65	20,000	571,979
May 1 - 31, 2023	76,135	$37.11	76,135	495,844
June 1 - 30, 2023	—	$—	—	495,844
Q2 2023 Total	96,135	$—	96,135	495,844


(1) None of the foregoing authorizations is subject to expiration.

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Item 6. EXHIBITS


31.1			Certification of Albert G. Lowenthal

31.2			Certification of Brad M. Watkins

32			Certification of Albert G. Lowenthal and Brad M. Watkins

10.12			Third Amendment to Agreement of Lease dated June 13, 2023 between 666 Third Avenue LLC (Landlord) and Viner Finance Inc., Tenant for premises at 45 Rockefeller Plaza, New York, NY.

101			Interactive data files pursuant to Rule 405 of Regulation S-T (unaudited): (i) the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, (ii) the Condensed Consolidated Income Statements for the three and six months ended June 30, 2023 and 2022, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022, (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity and Redeemable Noncontrolling Interests for the three and six months ended June 30, 2023 and 2022, (v) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022, and (vi) the notes to the Condensed Consolidated Financial Statements.*

*			This information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 28th day of July, 2023.


OPPENHEIMER HOLDINGS INC.

BY: /s/ Albert G. Lowenthal
Albert G. Lowenthal, Chairman and Chief Executive Officer
(Principal Executive Officer)

BY: /s/ Brad M. Watkins
Brad M. Watkins, Chief Financial Officer
(Principal Financial and Accounting Officer)