SEI INVESTMENTS CO - Quarter Report: 2024 September (Form 10-Q)

Balance, September 30, 2024 $ $ $ $()$

Shares of Common Stock

Common Stock

Capital In Excess of Par Value

Retained Earnings

Accumulated Other Comprehensive Loss

Total Equity

For the Three Months Ended September 30, 2023

Balance, July 1, 2023

()

Net income

—

Other comprehensive loss

—

()

Purchase and retirement of common stock

()

—

()

Issuance of common stock under employee stock purchase plan

—

Issuance of common stock under share-based award plans

—

Stock-based compensation

—

Other

—

Balance, September 30, 2023

()

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

SEI Investments Company

Consolidated Statements of Changes in Equity

(unaudited)

(In thousands)

Shares of Common Stock

Common Stock

Capital In Excess of Par Value

Retained Earnings

Accumulated Other Comprehensive Loss

Total Equity

For the Nine Months Ended September 30, 2024

Balance, January 1, 2024

()

Net income

—

Other comprehensive income

—

Purchase and retirement of common stock

()

—

()

Issuance of common stock under employee stock purchase plan

—

Issuance of common stock under share-based award plans

—

Stock-based compensation

—

Dividends declared ($ per share)

—

()

—

()

Other, net

()

The Company files income tax returns in the United States on a consolidated basis and in many U.S. state and foreign jurisdictions. The Company is subject to examination of income tax returns by the Internal Revenue Service (IRS) and other domestic and foreign tax authorities. The Company is no longer subject to U.S. federal income tax examination for years before 2020 and is no longer subject to state, local or foreign income tax examinations by authorities for years before 2018.

The Company estimates it will recognize $ of gross unrecognized tax benefits. This amount is expected to be paid within one year or to be removed at the expiration of the statute of limitations and resolution of income tax audits and is netted against the current payable account. These unrecognized tax benefits are related to tax positions taken on certain federal, state, and foreign tax returns. However, the timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. While it is reasonably possible that some issues under examination could be resolved in the next twelve months, based upon the current facts and circumstances, the Company cannot reasonably estimate the timing of such resolution or the total range of potential changes as it relates to the current unrecognized tax benefits that are recorded as part of the Company’s financial statements.

The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar Two). Certain aspects of Pillar Two are effective January 1, 2024 and other aspects are effective January 1, 2025. While it is uncertain whether the U.S. will enact legislation to adopt Pillar Two, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar Two. The Company has determined Pillar Two will not have a material impact on the Company's effective tax rate, consolidated results of operation, financial position, or cash flows.

Note 11.

of Rubicon’s clients that had custodial accounts at SPTC filed state civil actions for fraud in the Court of Common Pleas of Montgomery County, Pennsylvania against Rubicon, its founder, Scott Mason, Mr. Mason’s wife, Lynne Mason, and Orchard Park Real Estate Holdings LLC (Orchard Park), a business owned by the Masons. The fraud allegation (the Allegation) is based on the claim that Mr. Mason used Rubicon client funds to invest in Orchard Park, an entity allegedly formed and controlled by Mr. Mason, and that all such invested funds were subsequently withdrawn from Orchard Park by the Masons and were used for their own, extensive personal expenses. It has been reported that the Securities and Exchange Commission and the Federal Bureau of Investigation are currently investigating Mr. Mason and his wife. The Company is also aware of at least other cases filed in other jurisdictions against Rubicon and/or the Masons and Orchard Park, and there may be additional cases filed against Rubicon and/or the Masons of which the Company is unaware.

As of October 17, 2024, separate, but related, suits have been filed against SPTC in its capacity as custodian for the Rubicon accounts of the plaintiffs. These actions were also filed in the Court of Common Pleas of Montgomery County, Pennsylvania and are: Star Sitron vs. SEI Private Trust Company, Case No. 2024-17132 (Sitron); Charles Murray vs. SEI Private Trust Company, Case No. 2024-18391 (Murray); James A. Byrne & Sharon Byrne vs. SEI Private Trust Company, Case No. 2024-20612; Melody Pettinelli & Melody Pettinelli as Trustee of the Donald Pettinelli Trust dated 11/7/1996 vs. SEI Private Trust Company, Case. 2024-21377; Norman Love vs. SEI Private Trust Company, Case No. 2024-21361; Stephen Red & Carla Red vs. SEI Private Trust Company, Case No. 2024-21902; Edward A. Tettemer & Lyn K. Tettemer vs. SEI Private Trust Company, Case No. 2024-21827; and Jonathan Klein & Sara Klein vs. SEI Private Trust Company, Case No. 2024- 23294 (collectively, the Rubicon Actions). Based on the complaints that have thus far been filed in the Rubicon Actions, these actions appear to be based generally on similar theories that include alleged breach of contract, breach of fiduciary duty, negligence, and breach of state consumer protection laws by SPTC in connection with certain transfers of Plaintiffs’ assets from SPTC custodial accounts to Orchard Park bank accounts. SPTC has been served with complaints in of the Rubicon Actions, Sitron and Murray. In the remaining Rubicon Actions, the plaintiffs have commenced suit but have not filed their formal complaints. The Sitron and Murray cases are both in the early stages, with initial motion practice and discovery now occurring.

On August 8, 2024, SPTC filed preliminary objections to the plaintiff’s complaint in Sitron, which remain pending. On September 12, 2024 the Sitron court issued an initial case management order requiring, among other things, fact discovery to be completed within approximately months and dispositive motions to be filed within months from the commencement of the action. On October 16, 2024, SPTC filed preliminary objections to the plaintiff’s claims in Murray, which also remain pending. On October 7, 2024, the Murray court issued an initial case management order requiring, among other things, fact discovery to be completed within and dispositive motions to be filed within months of commencement of the action.

While the Rubicon Actions are in their infancy and the ultimate outcomes of these litigations remain uncertain, SEI and SPTC intend to defend each of the Rubicon Actions. Currently, SPTC estimates that the aggregate amount of Rubicon client assets transferred at the direction of Mr. Mason from SPTC custodial accounts to Orchard Park bank accounts is approximately $. In the event that SPTC is unsuccessful in its defense of the Rubicon Actions, SEI does not currently believe that the losses associated with such unsuccessful defense would exceed the approximately $ of Rubicon client assets that Mr. Mason directed to be transferred to Orchard Park.

United Kingdom Financial Conduct Authority Supervisory Review of SEI Investments (Europe) Limited

On July 31, 2024, SEI Investments (Europe) Limited (SIEL), an indirectly, wholly-owned operating subsidiary of SEI, received a final requirement notice from the Financial Conduct Authority of the United Kingdom (the FCA) under section 166(3)(a) of the Financial Services and Markets Act 2000 (FSMA), requiring SIEL to engage a “Skilled Person” to undertake a two-stage review of SIEL’s governance arrangements and control environment. In the first stage, the Skilled Person will provide SIEL and the FCA with a report setting out the Skilled Person’s view of the effectiveness of the control

Note 12.

$ $ $ Measurement period adjustments Reclassification due to segment reorganization () Foreign currency translation adjustments ()

Balance, September 30, 2024

$ $ $ $

The reclassification of the Company's goodwill by segment during the nine months ended September 30, 2024 reflects the relative fair value allocation of the goodwill related to the businesses that were reclassified into the new segment (See Note 9).

In November 2023, the Company's wholly-owned operating subsidiary in the United Kingdom, SIEL, acquired all of the outstanding equity of XPS Pensions (Nexus) Limited, principal employer and scheme funder of the National Pensions Trust (NPT), from its parent company, XPS Pensions Group PLC (XPS). The total purchase price for XPS Pensions (Nexus) Limited included a contingent consideration payable to the sellers subject to the achievement of certain post-closing performance measurements determined during intervals occurring within immediately following the closing date. During the nine months ended September 30, 2024, the Company made an adjustment of $ which reduced the fair value of the contingent consideration. The fair value adjustment to the contingent consideration is reflected in Facilities, supplies and other costs on the Consolidated Statement of Operations. As of September 30, 2024, the fair value of the contingent consideration of $ is included in Other long-term liabilities on the accompanying Balance Sheet.

The Company recognized $ and $ of amortization expense related to acquired intangible assets during the nine months ended September 30, 2024 and 2023, respectively.

Note 13.

Disaggregation of Revenue

$ $ $()$ $ Investment management fees from investment management agreements Investment operations fees Investment processing fees - PaaS Investment processing fees - SaaS Professional services fees Account fees and other Total revenues$ $ $ $ $ $ Primary Geographic Markets:United States$ $ $ $ $ $ United Kingdom Canada Ireland Luxembourg Total revenues$ $ $ $ $ $

The following tables provide additional information pertaining to our revenues disaggregated by major product line and primary geographic market based on the location of the use of the products or services for each of the Company’s business segments for the nine months ended September 30, 2024 and 2023:

Private
Banks

Investment
Advisors

Institutional
Investors

Investment
Managers

Investments
In New
Businesses

Total

Major Product Lines:

For the Nine Months Ended September 30, 2024

Investment management fees from pooled investment products

Investment management fees from investment management agreements

Investment operations fees

Investment processing fees - PaaS

Investment processing fees - SaaS

Professional services fees

Account fees and other

Total revenues

Primary Geographic Markets:

United States

United Kingdom

Canada

Ireland

Luxembourg

Total revenues

$ $ $ $ $ Investment management fees from investment management agreements Investment operations fees Investment processing fees - PaaS Investment processing fees - SaaS Professional services fees (1) Account fees and other Total revenues$ $ $ $ $ $ Primary Geographic Markets:United States$ $ $ $ $ $ United Kingdom Canada Ireland Luxembourg Total assets under management$204,662 $147,171 39%Client assets under administration (E)1,022,515 871,385 17%Total assets$1,227,177 $1,018,556 20%Investments in New Businesses:Equity and fixed-income programs$2,825 $2,017 40%Liquidity funds246 202 22%Total assets under management$3,071 $2,219 38%Client assets under advisement2,021 1,070 89%Client assets under administration (E)15,110 14,997 1%Total assets$20,202 $18,286 10%LSV:Equity and fixed-income programs (B)$93,855 $83,684 12%


Total:
Equity and fixed-income programs (C)	$	280,858	$	248,038	13%
Collective trust fund programs	204,435		147,001		39%
Liquidity funds	8,046		11,312		(29)%
Total assets under management	$	493,339	$	406,351	21%
Client assets under advisement	10,059		5,155		95%
Client assets under administration (D)	1,045,974		890,781		17%
Platform-only assets	26,948		16,232		66%
Total assets	$	1,576,320	$	1,318,519	20%

(A)Collective trust fund program assets are included in assets under management since SEI is the trustee. Fees earned on this product are less than fees earned on customized asset management programs.

(B) Equity and fixed-income programs include $1.6 billion of assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee (as of September 30, 2024).

(C) Equity and fixed-income programs include $6.4 billion of assets invested in various asset allocation funds at September 30, 2024.

(D) In addition to the assets presented, SEI also administers an additional $8.5 billion in Funds of Funds assets on which SEI does not earn an administration fee (as of September 30, 2024).

(E) Due to the reorganization of business segments, client assets under administration were reclassified from Investment Managers to Investments in New Businesses (See Note 9 to the Consolidated Financial Statements).

Average Asset Balances

(In millions)


	Three Months Ended September 30,						Percent Change		Nine Months Ended September 30,					Percent Change
	2024			2023					2024			2023
Private Banks:
Equity and fixed-income programs	$	25,823		$	23,920		8%		$	25,092		$	23,748	6%
Collective trust fund programs	5			6			(17)%		5			7		(29)%
Liquidity funds	2,858			3,585			(20)%		3,165			3,446		(8)%
Total assets under management	$	28,686		$	27,511		4%		$	28,262		$	27,201	4%
Client assets under administration	8,074			4,221			91%		7,904			4,273		85%
Total assets	$	36,760		$	31,732		16%		$	36,166		$	31,474	15%
Investment Advisors:
Equity and fixed-income programs	$	76,111		$	69,309		10%		$	74,198		$	68,419	8%
Liquidity funds	4,264			4,990			(15)%		4,420			4,931		(10)%
Total Platform assets under management	$	80,375		$	74,299		8%		$	78,618		$	73,350	7%
Platform-only assets	23,194			16,544			40%		21,096			15,635		35%
Platform-only assets-deposit program	1,176			—			NM		970			—		NM
Total Platform assets	$	104,745		$	90,843		15%		$	100,684		$	88,985	13%
Institutional Investors:
Equity and fixed-income programs	$	77,473		$	75,023		3%		$	76,363		$	74,847	2%
Collective trust fund programs	1			4			(75)%		1			4		(75)%
Liquidity funds	2,046			1,611			27%		1,917			1,621		18%
Total assets under management	$	79,520		$	76,638		4%		$	78,281		$	76,472	2%
Client assets under advisement	7,925			4,294			85%		7,310			4,436		65%
Total assets	$	87,445		$	80,932		8%		$	85,591		$	80,908	6%
Investment Managers:
Collective trust fund programs (A)	$	198,839		$	150,379		32%		$	181,820		$	147,612	23%
Liquidity funds	245			237			3%		226			280		(19)%
Other, net	(0.4)			(0.6)			(0.2)		(0.2)
	23.5		%	22.5		%	23.4	%	23.2		%

Stock-Based Compensation

We recognized $37.2 million and $23.5 million in stock-based compensation expense during the nine months ended September 30, 2024 and 2023, respectively. The increase in expense was primarily due to new equity awards granted during the fourth quarter 2023. The amount of stock-based compensation expense recognized is primarily based upon management's estimate of when the financial vesting targets of outstanding stock options may be achieved. Any change in the estimate could result in the amount of stock-based compensation expense to be accelerated, spread out over a longer period, or reversed. This may cause volatility in the recognition of stock-based compensation expense in future periods and could materially affect earnings (See Note 7 to the Consolidated Financial Statements).

We revised our estimate of when some vesting targets are expected to be achieved. This change in estimate resulted in an increase of $3.1 million in stock-based compensation expense during the nine months ended September 30, 2024. We expect to recognize approximately $31.9 million in stock-based compensation expense during the remainder of 2024.

Fair Value Measurements

The fair value of financial assets and liabilities, except for the investment funds sponsored by LSV, is determined in accordance with the fair value hierarchy. The fair value of the investment funds sponsored by LSV is measured using the net asset value per share (NAV) as a practical expedient. The fair value of all other financial assets are determined using Level 1 or Level 2 inputs and consist mainly of investments in equity or fixed-income mutual funds that are quoted daily and Government National Mortgage Association (GNMA) and other U.S. government agency securities that are single issuer pools that are valued based on current market data of similar assets. Level 3 financial liabilities at September 30, 2024 and December 31, 2023 consist entirely of the estimated fair value of the contingent consideration resulting from an acquisition (See Note 12 to the Consolidated Financial Statements).

Regulatory Matters

Like many firms operating within the financial services industry, we are experiencing a complex and changing regulatory environment across our markets. Our current scale and reach as a provider to the financial services industry, the introduction and implementation of new solutions for our financial services industry clients, the increased regulatory oversight of the financial services industry generally, new laws and regulations affecting the financial services industry and ever-changing regulatory interpretations of existing laws and regulations, and a greater propensity of regulators to pursue enforcement actions and other sanctions against regulated entities, have made this an increasingly challenging and costly regulatory environment in which to operate.

SEI and some of our regulated subsidiaries have undergone or been scheduled to undergo a range of periodic or thematic reviews, examinations or investigations by numerous regulatory authorities around the world, including the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the Financial Conduct Authority of the United Kingdom (FCA), the Central Bank of Ireland and others. These regulatory activities typically result in the identification of matters or practices to be addressed by us or our subsidiaries and, in certain circumstances, the regulatory authorities require remediation activities or pursue enforcement proceedings against us or our subsidiaries. From time to time, the regulators in different jurisdictions will elevate their level of scrutiny of our operations as our business expands or is deemed critical to the operations of the relevant financial markets. As described under the caption “Regulatory Considerations” in our Annual Report on Form 10-K, the range of possible sanctions that are available to regulatory authorities include limitations on our ability to engage in business for specified periods of time, the revocation of registration, censures and fines. The direct and indirect costs of responding to these regulatory activities and of complying with new or modified regulations, as well as the potential financial costs and potential reputational impact against us of any enforcement proceedings that might result, is uncertain but could have a material adverse impact on our operating results or financial position.

Liquidity and Capital Resources


	Nine Months Ended September 30,
	2024		2023
Net cash provided by operating activities	$	427,074	$	345,982
Net cash used in investing activities	(57,185)		(48,237)
Net cash used in financing activities	(310,392)		(294,886)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	6,941		(1,474)
Net increase in cash, cash equivalents and restricted cash	66,438		1,385
Cash, cash equivalents and restricted cash, beginning of period	834,998		853,359
Cash, cash equivalents and restricted cash, end of period	$	901,436	$	854,744

Our credit facility provides for borrowings up to $325.0 million and is scheduled to expire in April 2026 (See Note 6 to the Consolidated Financial Statements). As of October 22, 2024, we had outstanding letters of credit of $4.9 million which reduced the amount available under the credit facility. These letters of credit were primarily issued for the expansion of the corporate headquarters and are due to expire in late 2024. As of October 22, 2024, the amount of the credit facility available for corporate purposes was $320.1 million.

The availability of the credit facility is subject to compliance with certain covenants set forth in the agreement. The credit facility contains covenants which restrict our ability to engage in transactions with affiliates other than wholly-owned subsidiaries or to incur liens or certain types of indebtedness as defined in the agreement. In the event of a default under

the credit facility, we would also be restricted from paying dividends on, or repurchasing our common stock. Currently, our ability to borrow from the credit facility is not limited by any covenant of the agreement (See Note 6 to the Consolidated Financial Statements).

The majority of excess cash reserves are primarily placed in accounts located in the United States that invest entirely in SEI-sponsored money market mutual funds denominated in the U.S. dollar. We also utilize demand deposit accounts or money market accounts at several large, well-established financial institutions located in the United States. The institutions we utilize have not indicated any stability issues regarding the ability to honor current or future deposit obligations to their customers. Accounts used to manage these excess cash reserves do not impose any restrictions or limitations that would prevent us from being able to access such cash amounts immediately. As of October 22, 2024, the amount of cash and cash equivalents considered free and immediately accessible for other general corporate purposes was $520.6 million.

Cash and cash equivalents include accounts managed by subsidiaries that are used in their operations or to cover specific business and regulatory requirements. The availability of this cash for other purposes beyond the operations of these subsidiaries may be limited. We therefore do not include accounts of foreign subsidiaries in the calculation of free and immediately accessible cash for other general corporate purposes. A portion of the undistributed earnings of foreign subsidiaries are deemed repatriated. Any subsequent transfer of available cash related to the repatriated earnings of foreign subsidiaries could significantly increase free and immediately accessible cash.

Cash flows from operations increased $81.1 million in the first nine months of 2024 compared to the first nine months of 2023 primarily from the increase in net income. The negative impact from the change in working capital accounts, primarily due to increased client receivables, partially offset the increase in cash flows from operations.

Net cash used in investing activities includes:

•Purchases, sales and maturities of marketable securities. Purchases, sales and maturities of marketable securities in the first nine months of 2024 and 2023 were as follows:


	Nine Months Ended September 30,
	2024		2023
Purchases	$	(134,665)	$	(83,968)
Sales and maturities	121,347		90,245
Net investing activities from marketable securities	$	(13,318)	$	6,277

See Note 5 to the Consolidated Financial Statements for more information related to marketable securities.

•The capitalization of costs incurred in developing computer software. We capitalized $18.4 million of software development costs in the first nine months of 2024 as compared to $26.6 million in the first nine months of 2023. Software development costs are principally related to significant enhancements for the expanded functionality of the SEI Wealth Platform and a new platform for the Investment Managers segment.

•Capital expenditures. Capital expenditures in the first nine months of 2024 were $27.2 million as compared to $23.1 million in the first nine months of 2023. Expenditures in 2024 and 2023 include capital outlays for purchased software and equipment for data center operations. We continue to evaluate improvements to our information technology infrastructure which, if implemented, will result in additional expenditures for purchased software and equipment for data center operations.

•Proceeds from fixed asset dispositions. We received proceeds of $9.9 million after associated costs and expenses from the sale of property located in New York, New York in the third quarter 2024.

•Other investing activities. In February 2024, we made a strategic investment of $10.0 million in an innovation platform for wealth management.

Net cash used in financing activities includes:

•The repurchase of common stock. Our Board of Directors has authorized the repurchase of common stock through multiple authorizations. Currently, there is no expiration date for the common stock repurchase program. We had total capital outlays of $252.9 million during the first nine months of 2024 and $236.9 million during the first nine months of 2023 for the repurchase of common stock.

•Proceeds from the issuance of common stock. We received $62.8 million and $65.7 million in proceeds from the issuance of common stock during the first nine months of 2024 and 2023, respectively. These proceeds were primarily from stock option exercise activity.

•Dividend payments. Cash dividends paid were $120.3 million in the first nine months of 2024 as compared to $114.8 million in the first nine months of 2023.

Cash Requirements

Cash requirements and liquidity needs are primarily funded through cash flow from operations and our capacity for additional borrowing. At September 30, 2024, unused sources of liquidity consisted of cash and cash equivalents and the amount available under our credit facility.

We are obligated to make payments in connection with the credit facility, operating leases, maintenance contracts and other commitments. We believe our operating cash flow, available borrowing capacity, and existing cash and cash equivalents will provide adequate funds for these obligations and ongoing operations. We currently anticipate that our available funds and cash flow from operations will be sufficient to meet our operational cash needs and fund our stock repurchase program for at least the next 12 months and for the foreseeable future.

Forward-Looking Information and Risk Factors

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information contained in this discussion is or may be considered forward-looking. Forward-looking statements relate to future operations, strategies, financial results or other developments. Forward-looking statements are based upon estimates and assumptions that involve certain risks and uncertainties, many of which are beyond our control or are subject to change. Although we believe our assumptions are reasonable, they could be inaccurate. Our actual future revenues and income could differ materially from our expected results. We have no obligation to publicly update or revise any forward-looking statements.

Among the risks and uncertainties which may affect our future operations, strategies, financial results or other developments are those risks described in our latest Annual Report on Form 10-K in Part I, Item 1A. These risks include the following:

•changes in capital markets and significant changes in the value of financial instruments that may affect our revenues and earnings;

•product development risk;

•risk of failure by a third-party service provider;

•pricing pressure from increased competition, disruptive technology and poor investment performance;

•the affect on our earnings and cashflows from the performance of LSV Asset Management;

•consolidation within our target markets;

•external factors affecting the fiduciary management market;

•software defects, development delays or installation difficulties, which would harm our business and reputation and expose us to potential liability;

•data and cyber security risks;

•risk of the disclosure and misuse of personal data;

•risk of outages, data losses, and disruptions of services;

•intellectual property risks;

•third-party service providers in our operations;

•poor investment performance of our investment products or a client preference for products other than those which we offer or for products that generate lower fees;

•investment advisory contracts which may be terminated or may not be renewed on favorable terms;

•the effect of governmental regulation;

•our ability to meet competing and/or conflicting regulatory requirements of the different jurisdictions;

•our ability to address conflicts of interest appropriately;

•fiduciary or other legal liability for client losses from our investment management operations;

•the results of commercial disputes, litigation and regulatory examinations and investigations;

•effective business strategies;

•our ability to capture the expected value from acquisitions, divestitures, joint ventures, minority investments or strategic alliances;

•increased costs and regulatory risks from the growth of our business;

•operational risks associated with the processing of investment transactions;

•disruptions of operations of other participants in the global financial system;

•our ability to hire and retain qualified employees;

•the competence and integrity of our employees and third-parties;

•our ability to receive dividends or other payments in needed amounts from our subsidiaries;

•changes in, or interpretation of, accounting principles or tax rules and regulations;

•fluctuations in foreign currency exchange rates;

•fluctuations in interest rates affecting the value of our fixed-income investment securities;

•financial and non-financial covenants which may restrict our ability to manage liquidity needs;

•stockholder activism efforts;

•retention of executive officers and senior management personnel;

•the effectiveness of our business, risk management and business continuity strategies, models and processes;

•unforeseen or catastrophic events, including the emergence of pandemic, extreme weather events or other natural disasters;

•geopolitical unrest and other events;

•climate change concerns and incidents; and

•environmental, social, and governance (ESG) matters.

We conduct operations through many regulated wholly-owned subsidiaries. These subsidiaries include:

•SEI Investments Distribution Co., or SIDCO, a broker-dealer registered with the SEC under the Securities Exchange Act of 1934 and a member of the Financial Industry Regulatory Authority, Inc., or FINRA;

•SEI Investments Management Corporation, or SIMC, an investment advisor registered with the SEC under the Investment Advisers Act of 1940 and with the Commodity Futures Trading Commission, or CFTC, under the Commodity Exchange Act;

•SEI Private Trust Company, or SPTC, a limited purpose federal thrift chartered and regulated by the Office of the Comptroller of the Currency;

•SEI Trust Company, or STC, a Pennsylvania trust company, regulated by the Pennsylvania Department of Banking and Securities;

•SEI Institutional Transfer Agent, Inc., or SITA, a transfer agent registered with the SEC under the Securities Exchange Act of 1934;

•SEI Investments (Europe) Limited, or SIEL, an investment manager and financial institution subject to regulation by the Financial Conduct Authority of the United Kingdom;

•SEI Investments Canada Company, or SEI Canada, an investment fund manager that has various other capacities that is regulated by the Ontario Securities Commission and various provincial authorities;

•SEI Investments Global, Limited, or SIGL, a management company for Undertakings for Collective Investment in Transferable Securities, or UCITS, and for Alternative Investment Funds, or AIFs, that is regulated primarily by the Central Bank of Ireland, or CBI;

•SEI Investments - Global Fund Services, Ltd., or GFSL, an authorized provider of administration services for Irish and non-Irish collective investment schemes that is regulated by the CBI;

•SEI Investments - Depositary and Custodial Services (Ireland) Limited, or D&C, an authorized provider of depositary and custodial services that is regulated by the CBI;

•SEI Investments - Luxembourg S.A., or SEI Lux, a professional of the specialized financial sector subject to regulation by the Commission de Surveillance du Secteur Financier of the Grand Duchy of Luxembourg;

•SEI Investments Global (Cayman), Ltd., a full mutual fund administrator that is regulated by the Cayman Island Monetary Authority; and

•SEI Investments (South Africa) (PTY) Limited, a Private Company that is a licensed Financial Service Provider regulated by the Financial Sector Conduct Authority.

In addition to the regulatory authorities listed above, our subsidiaries are subject to the jurisdiction of regulatory authorities in other foreign countries. In addition to our wholly-owned subsidiaries, we also own a minority interest of approximately 38.6% in LSV, which is also an investment advisor registered with the SEC.

The Company, its regulated subsidiaries, their regulated services and solutions and their customers are all subject to extensive legislation, regulation, and supervision that recently has been subject to, and continues to experience,

significant change and increased regulatory activity. These changes and regulatory activities could have a material adverse effect on us and our clients.

The various governmental agencies and self-regulatory authorities that regulate or supervise the Company and its subsidiaries have broad administrative powers. In the event of a failure to comply with laws, regulations, and requirements of these agencies and authorities, the possible business process changes required or sanctions that may be imposed include the suspension of individual employees, limitations on our ability to engage in business for specified periods of time, the revocation of applicable registration as a broker-dealer, investment advisor or other regulated entity, and, as the case may be, censures and fines. Additionally, certain securities and banking laws applicable to us and our subsidiaries provide for certain private rights of action that could give rise to civil litigation. Any litigation could have significant financial and non-financial consequences including monetary judgments and the requirement to take action or limit activities that could ultimately affect our business.

Governmental scrutiny from regulators, legislative bodies, and law enforcement agencies with respect to matters relating to our regulated subsidiaries and their activities, services and solutions, our business practices, our past actions and other matters has increased dramatically in the past several years. Responding to these examinations, investigations, actions, and lawsuits, regardless of the ultimate outcome of the proceeding, is time consuming and expensive and can divert the time and effort of our senior management from our business. Penalties, fines and changes to business processes sought by regulatory authorities have increased substantially over the last several years, and certain regulators have been more likely in recent years to commence enforcement actions or to advance or support legislation targeted at the financial services industry. We continue to be subject to inquiries from examinations and investigations by supervisory and enforcement divisions of regulatory authorities and expect this to continue in the future. We believe this is also the case with many of our regulated clients. Governmental scrutiny and legal and enforcement proceedings can also have a negative impact on our reputation, our relationship with clients and prospective clients, and on the morale and performance of our employees, which could adversely affect our businesses and results of operations.

We are subject to U.S. and foreign anti-money laundering and financial transparency laws that require implementation of regulations applicable to financial services companies, including standards for verifying client identification and monitoring client transactions and detecting and reporting suspicious activities. We offer investment and banking solutions that also are subject to regulation by the federal and state securities and banking authorities, as well as foreign regulatory authorities, where applicable. Existing or future regulations that affect these solutions could lead to a reduction in sales of these solutions or require modifications of these solutions.

We must comply with economic sanctions and embargo programs administered by the Office of Foreign Assets Control (OFAC) and similar national and multinational bodies and governmental agencies outside the United States, as well as anti-corruption and anti-money laundering laws and regulations throughout the world. We can incur higher costs and face greater compliance risks in structuring and operating our businesses to comply with these requirements. Furthermore, a violation of a sanction or embargo program or anti-corruption or anti-money laundering laws and regulations could subject us and our subsidiaries, and individual employees, to regulatory enforcement actions as well as significant civil and criminal penalties.

Our businesses are also subject to privacy and data protection information security legal requirements concerning the use and protection of certain personal information. These include those adopted pursuant to the Gramm-Leach-Bliley Act and the Fair and Accurate Credit Transactions Act of 2003 in the United States, the General Data Protection Regulation (GDPR) in the EU, Canada’s Personal Information Protection and Electronic Documents Act, the Cayman Islands' Data Protection Law, and various other laws. Privacy and data security legislation is a priority issue in many states and localities in the United States, as well as foreign jurisdictions outside of the EU. For example, California enacted the California Consumer Privacy Act (CCPA) which broadly regulates the sale of the consumer information of California residents and grants California residents certain rights to, among other things, access and delete data about them in certain circumstances. Other states are considering similar proposals. Such attempts by the states to regulate have the potential to create a patchwork of differing and/or conflicting state regulations. Ensuring compliance under ever-evolving privacy legislation, such as GDPR and CCPA, is an ongoing commitment, which involves substantial costs.

Compliance with existing and future regulations and responding to and complying with recent increased regulatory activity affecting broker-dealers, investment advisors, investment companies, financial institutions, and their service providers could have a significant impact on us. We periodically undergo regulatory examinations and respond to regulatory inquiries and document requests. In addition, recent and continuing legislative activity in the United States and in other jurisdictions (including the European Union and the United Kingdom) have made and continue to make extensive changes to the laws regulating financial services firms. As a result of these examinations, inquiries, and requests, as a result of increased civil litigation activity, and as a result of these new laws and regulations, we engage legal counsel and other subject matter experts, review our compliance procedures, solution and service offerings, and business operations, and

make changes as we deem necessary or as may be required by the applicable authority. These additional activities and required changes may result in increased expense or may reduce revenues.

Our bank clients are subject to supervision by federal, state, and foreign banking and financial services authorities concerning the manner in which such clients purchase and receive our products and services. Our plan sponsor clients and our subsidiaries providing services to those clients are subject to supervision by the Department of Labor and compliance with employee benefit regulations. Investment advisor and broker-dealer clients are regulated by the SEC, state securities authorities, or FINRA. Existing or future regulations applicable to our clients may affect our clients’ purchase of our products and services.

In addition, see the discussion of governmental regulations in Item 1A “Risk Factors” in our latest Annual Report on Form 10-K for a description of the risks that the current regulatory regimes and proposed regulatory changes may present for our business.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Information required by this item is set forth under the captions "Our revenues and earnings are affected by changes in capital markets and significant changes in the value of financial instruments" and "Changes in interest rates may affect the value of our fixed-income investment securities" in Item 1A Risk Factors and under the caption "Sensitivity of our revenues and earnings to capital market fluctuations" in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to this information as it is disclosed in our Annual Report on Form 10-K for 2023.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are effective in ensuring that information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b) Change in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We and certain of our subsidiaries are a party to or have property subject to litigation and other proceedings, examinations and investigations that arise in the ordinary course of our business that we do not believe are material. These types of matters could result in fines, penalties, cost reimbursements or contributions, compensatory or treble damages or non-monetary sanctions or relief. We believe the probability is remote that the outcome of any of these matters will have a material adverse effect on SEI as a whole, notwithstanding that the unfavorable resolution of any matter may have a material effect on our net earnings in any particular interim reporting period. We cannot predict the outcome of legal or other proceedings with certainty. These matters include the proceedings summarized in “Note 11. Commitments and Contingencies” included in our Notes to Consolidated Financial Statements.

Item 1A. Risk Factors.

Information regarding risk factors appears in Part I – Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes in the risk factors from those disclosed in the Annual Report on Form 10-K for 2023.

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

(e) Our Board of Directors has authorized the repurchase of up to $5.828 billion worth of our common stock through multiple authorizations through September 30, 2024. Currently, there is no expiration date for the common stock repurchase program. On October 22, 2024, our Board of Directors approved an increase in the stock repurchase program by an additional $400.0 million, increasing the available authorization to approximately $429.1 million.

Information regarding the repurchase of common stock during the three months ended September 30, 2024 is as follows:


Period	Total Number of Shares Purchased	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
July 2024	125,000	$	67.28	125,000	$	106,504,000
August 2024	623,000	66.02		623,000	65,359,000
September 2024	525,000	67.64		525,000	29,100,000
Total	1,273,000	$	66.81	1,273,000

(1) Average price paid per share does not include excise tax on stock repurchases.

Item 5. Other Information.

During the three months ended September 30, 2024, none of our officers or directors or any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" (as defined in Item 408 (c) of Regulation S-K).

Item 6. Exhibits.

The following is a list of exhibits filed as part of the Form 10-Q.


10.1			Employment Agreement, dated June 6, 2024, between Michael Lane and the Registrant.

31.1			Rule 13a-15(e)/15d-15(e) Certification of Principal Executive Officer.

31.2			Rule 13a-15(e)/15d-15(e) Certification of Principal Financial Officer.

32			Section 1350 Certifications.

101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			XBRL Taxonomy Extension Schema Document

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			XBRL Taxonomy Extension Label Linkbase Document

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

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.

SEI INVESTMENTS COMPANY

Date:

October 25, 2024

By:

/s/ Sean J. Denham

Sean J. Denham

Chief Financial Officer

SEI INVESTMENTS CO - Quarter Report: 2024 September (Form 10-Q)

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