Good day, and good morning, ladies and gentlemen, and thank you for joining the Cowen Group, Inc. Conference Call to discuss the financial results for the 2011 second quarter. By now, you should have received copy of the company's earnings release, which can be accessed at the Cowen Group, Inc. Website at www.cowen.com. If you do not have Internet access and would like the copy of the press release, please call Cowen Group, Inc. Investor Relations at (646) 562-1983. Before we begin, the company has asked me to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC. Cowen Group, Inc. has no obligation to update the information presented on the call. A more complete description of these and other risks and uncertainties and assumptions is included in the company's filings with the SEC, which are available on the company's website and on the SEC website at www.sec.gov. Also, on today's call, our speakers will reference certain non-GAAP financial measures, which the company believes will provide useful information for investors. Reconciliation of those measures to GAAP is consistent with the company's reconciliation as presented in today's earnings release. Now I would like to turn the call over to Mr. Peter Cohen, Chairman and Chief Executive Officer. Please proceed.

Thanks, operator. Good morning, everyone, and welcome to our second quarter earnings call. With me today are Jeff Solomon, our Chief Operating Officer and Head of Investor Banking; Stephen Lasota, our CFO; and Pete Poillon, Head of Investor Relations and Corporate Communications. Later in this call, Jeff will take you through some of the operating business detail, more granularly than I will. We tried to put as much as we could in the press release recognizing that this is a Friday in the summer, and it comes on the heels of a pretty ugly day yesterday. But look, in general, I'm pleased to report that this is our third consecutive quarter of positive income, despite what's been fairly difficult market conditions. As we all know, the markets hate uncertainty and the effects of the European debt crisis, and the whole U.S. debt ceiling debate, of course, increased market volatility, which has affected our business of late. Not terribly, but certainly, I think everyone has felt it. Our cash equity business continues to suffer from lower volumes, as investors are reducing risk across the board in equities, and are just really sitting on the hand and think equity volume in the second quarter was down 30% over the same quarter a year ago. But we did considerably better than that. But on the flip side of it, this kind of volatility is going to produce opportunities for us to bring in more talented people and continue to sort of build out our suite of activities. Our asset management business, alternative investment management has been much less affected by these short-term swings. And the kind of a suite of product that we have are -- seems to be in the right spot for our clients. These, right now, and you have in…

Thank you, Peter. I'd like to start by discussing some of the recent developments at Ramius, our Alternative Investment Management group. As compared to the end of the quarter, assets under management increased by 9%, or approximately $900 million. This marks the sixth consecutive quarter of asset increases, as our traditional and recently developed products continue to gain traction in the marketplace. We saw net cash inflows across many of our investment products, including alternative solutions, cash management, Health Care royalties, credit and Starboard Value in opportunity platforms. While some of the increase came in our higher fee-paying products, which would be the credit in the Starboard hedge funds and our Health Care royalty funds, our average annualized management fee remained flat to the first quarter of 2011 at 61 basis points, which is slightly down from 62 basis points in the second quarter of last year. Keep in mind that we're moving the average annualized management fee off of a fairly significant base. But based on our current backlog of mandates that are not yet funded, we expect to see improvement in this measure in the near future. We also reported incentive fees for the quarter, a second quarter of $5.7 million, as compared to the incentive fee loss of $500,000 in the prior-year period. The improved incentive fees resulted in [Audio Gap] a testament to our exceptional portfolio managers, as certain of our funds were able to generate risk-adjusted returns, positive risk-adjusted returns, even during a period when the broader markets declined, as they did in the second quarter. To highlight a couple of our notable fund performance in the second quarter. Our global credit fund was increased by 3.4%. Our equity real estate group increased by 12.1%, following several positive valuation adjustments during the quarter. The Starboard…

Thank you, Jeff. During the second quarter, we reported GAAP net income of $20 million, or $0.26 per diluted share, which included the impact of a $22.2 million bargain purchase gain associated with our acquisition of LaBranche at the end of June. This compares to a GAAP loss of $21.2 million, or $0.29 per share in the prior-year period. In the second quarter, the company recorded a bargain purchase gain upon consummation of the acquisition of LaBranche because the fair value of LaBranche's identifiable assets acquired and liabilities assumed exceeded the fair value of the consideration pay. Based on the purchase price allocation, the fair value of the net identifiable assets acquired and liabilities assumed amounted to $178.3 million, exceeding the fair value of the purchase price of $156.1 million, which was paid in Cowen Class A common shares. This gain does not impact our income results, which aim to provide investors and analysts with a view of common core financial results. For the 6-month period, we reported GAAP net income of $20.1 million, or $0.26 per diluted share, compared to a loss of $34.2 million, or $0.47 per share in the first half of 2010. In addition to our GAAP results, as I just mentioned, management utilizes non-GAAP measures, what we term as economic income, to analyze our core operating segments performance. We believe economic income provides a more accurate view of the business by excluding such items as the impact of one-time gain losses, such as the bargain purchase gain on the acquisition of LaBranche and expenses associated with one-time equity awards in connection with the November 2009 Ramius-Cowen transaction, acquisition-related expenses associated with the acquisition of LaBranche and other reorganization charges within the Alternative Investment Management business. Economic income also excludes the impact of what we view…

Well, at this point, ladies and gentlemen, I don't have any closing remarks. I just like to open it up for questions that you may have. I was just -- I'll have just one comment, which is if you look at the change in the results of the firm over the last year since the acquisition, they're quite dramatic. We said this is going to be a long-term project, and I think that we're very pleased with the progress we've made, we've got a long way to go in terms of getting this to the place where we want it to be. And we're kind of just very well along that track. And despite of the environment, we're actually quite excited about what our prospects are, especially given that we've got this very strong balance sheet. And we are seeing just a tremendous amount of talented people who are attracted to our platform. So we're upbeat. That we're all environment-bound. And we've seen this movie before. And we'll see it again, but out of it comes progress. Though why don't we see, if we have some questions out there we can take?

[Operator Instructions] Your first question comes from the line of Devin Ryan from Sandler O'Neill. Devin Ryan - Sandler O'Neill + Partners, L.P.: So you guys obviously had very strong asset close in the quarter. So I was just wondering and also, I know that the timing of funding might be tough to predict, given that the market volatility. But can you guys give any more detail about the pipeline of mandates and just the level of conversations that you've had? Are those mandates pretty granular? Or are there some other kind of lumpy ones out there, maybe like the ones -- we saw a couple of lumpy ones in the second quarter? Just more detail there would be great.

Yes, it's a good question. Look, all of our mandates are going to be lumpy because our target client base is institutional worldwide, it's a big institutional. So when it comes, and it comes in the chunks. As we sit here today, we believe we've got between $400 million and $500 million of approved mandated fundings coming up, pending the paperwork. And given that these, many of them are governmental institutions in one form or another, whether it's a state pension funds or superannuation fund from Australia or something, they take their time to getting the paperwork done. But it gets done. So there is somewhere between $400 million or $500 million that we feel highly confident it's on its way. Our sort of shadow backlog, those people who we are engaged with in a dialogue with all the time, is a number, kind of, around 2.9 billion right now. Historically, the conversion rate on that is somewhere between 30% and 40%. I guess, depending on the environment, that could change. But the one thing, I think, that we feel really good about is that the suite of products that we've got, the very specific strategies we've got are really responses to people's needs, say, whether its credit, it's the act of this portfolio, get some exciting stuff going on in our trading advisory business that maybe we'll have more to talk about later in the summer. We are embarking on raising our new, would be our fifth real estate lending fund. And I think, given our record there, which is excellent, as will be our equity record that will be very successful in raising that money, that will take time. And our performance in credits has been outstanding. And we don't have quite a 3-year track record there yet, which is an important thing. Well, we're actually coming up on a 2-year track record. And you need at least 2 years to start getting people to pay attention to the fact that you really know what you're doing. After 3 years, maybe they really believe it. But so we're starting a lot of traction there. So it's going to be bumpy, but it's because the nature of the size of these tickets are kind of large. I mean, we're not appealing to the $5 million, $10 million investors. I will tell you that getting on the distribution platforms, like Morgan Stanley and Smith Barney, or eventually, Deutsche Bank, via Bayer or UBS. I mean, we're on Morgan Stanley with the activist. We're building a pipeline there. The number of investment management docs have gone out to people are very substantial. Those will be smaller tickets, and those -- but those will just sort of filter in over time.

Peter, I just -- one thing I think that's really important for everybody to understand, and that's once these things are funded, they really aren't subject to the times that market volatility swings. And these are investors who take their sweet time in making their decisions and then their sweet time in actually funding the mandates once it's been awarded. But once they're awarded, they stay around for a long time. And so, yes, it may be chunky, but this is stuff that doesn't roll off very quickly. I think, when we look at that and as opposed to the platform distribution business, which we're just ramping, we like the fact that their asset flows are a little more diversified. And our goal over time is to have a healthy balance between the 2. But as we talked about in our last call, we just recently got on our first platform, and it's going to take some time to ramp that business up.

And all of that, by the way, is going to also serve the purpose of raising the average fee substantially. So the offsets of that is sort of an anomaly, but our cash management business results have been so good, but that's attracting more money. We've been advised of another of $0.75 billion that will be coming into cash management, and that's very low-yielding business. So it sort of masks what's going on in the higher yielding stuff because the numbers are big. Devin Ryan - Sandler O'Neill + Partners, L.P.: I got you, and the numbers that you throw out there in terms of what the $400 million to $500 million in improved net, that's not cash management?

No, that doesn't include cash management. Devin Ryan - Sandler O'Neill + Partners, L.P.: Got it. Okay, great. And just with LaBranche closed, thinking about the capital, obviously, the marginal capital you're getting from that, how much is already been invested in kind of permanently in terms of you're already putting into the strategies that you want it to be in versus, and then how much is going to go, I guess into the investment portfolio versus deploying it into seeding and growing new funds or building out the investment bank? Do you have kind of targets for how you'd like to allocate that? Or is it more just a function of being opportunistic?

Well, since cash and investments kind of were all fundable. Until we have another better way to use the cash and investing it, it's going to get invested. We're sitting on a lot of cash, I mean, we're still pulling stuff through the accounting pipeline from LaBranche, and you look at our December 30, June 30 balance sheet, it'll show about $110 million of cash on the balance sheet. We have probably, half-deployed on the LaBranche capital at this point in time. And we'll get it all deployed, as we see the opportunity. And if then there's -- I mean, we'll keep certain amount of cash just laying around as working capital. And the commitments we'll make to fund the new businesses, when they come, we'll pull the money back out of the portfolio for those businesses as the need arises. But for instance, you'd take the real estate lending business, we'll make a substantial GP commitment with our GP partner, in the file group, to that fund, maybe as much as $50 million between the 2 of us, to raise $500 million to $700 million. But that money is on call. So we're not really stripping anything out of the portfolio to fund that, until we actually have transactions that need funding. So we're kind of halfway to where we want to be in terms of the LaBranche portfolio, and we're kind of going through a little bit of reassessment process, or sort of, let's just check next week about where we want to have capital in this environment because, I mean, we'll make it some kind of a nice rally today based on the jobs numbers. But if you look at what happened in Washington, that whole circus, really, nothing was accomplished at all. What they did is…

Well, I'm going to let Mr. Solomon answer that question, maybe in more detail. But I'll just say that the people we're hiring, we're hiring people with proven records. We do a tremendous amount of deep diving on these people and their relationships and how real they are and their ability to generate revenue before we bring them in. I mean, this is -- we're not throwing darts at the board. This is very targeted in terms of who we want, where we want them from. And Jeff, why don't you just amplify that?

Yes, I think that's spot on. What we've -- if I take a look at our senior revenue producers across banking and capital markets, over the past 12 months, we've, 50% of that team is new. So you talk about the hiring, we're going after very specific areas around our core competency. We're really going after areas where we have significant research footprint that was currently under-banked on this platform. And so it'd take time for those bankers to ramp up. And this is not like a one-quarter bet, or a 2-quarter bet. This is a fundamental bet that our organization can be well-positioned to take advantage of other people vacating their seats. I think there's a lot of instability, and we hear this, there's a lot of instability in the other places. So if Cowen really suffered from that instability a couple of years ago, and investment banking when clients are making choices, they're making choices to go in stable platforms, Cowen had that problem a couple of years ago. Now we're hearing -- we don't hear that too much about Cowen anymore. Just the buzz in the marketplace that we heard, is people want to come and work here. And I can tell you that the inbound calls that we're getting from people who are at other platforms, who had either heard what we're doing, they know who we've hired, or they see us putting prints up, we've actually had to create a process internally to handle the inbound calls. Now we're being -- that means we can afford to be selective. And as we hire individuals, we're doing our best to try and line up their compensation with what we think their market opportunity is. But we've identified what we think works best in terms of the…

Well, Jeff, we have $240 million of NOLs, approximately 240 million of NOLs. It's not the timing differences that cause us DTA with full valuation allowance. But that's the argument with the accounting firms, right? I mean, if -- when you need to show progression that you'll be able to use those NOLs, before they're going to let you set, take down that valuation allowance. We'll be working on that over the next few quarters. But I -- it could be -- it's going to be some point in the future, it won't be in the next quarter or so.

Yes, they are what they are. I mean, it's sort of a bullshit asset once it gets, it plays you that work, and it looks very nice. But you've got to earn it to make it worth its value on the balance sheet. So it's kind of a nice cosmetic to have. But frankly, I don't really care too much about. And it also has to pull through the income statement. So we'll have some bizarre things continue to improve some bizarre quarter when we booked this enormous, this allowance through the income statement. But it's that cash, so it will happen when it happens.

Your next question comes from the line of Ms. Lauren Smith of KBW. Lauren Smith - Keefe, Bruyette, & Woods, Inc.: I guess, just a couple of questions drilling down the numbers a little bit. So when we look at this comp ratio in the quarter, I mean, is this like a pretty good run rate? Or was it -- I mean, I'm glad it's going in the right direction. But something about the mix of business this quarter that allowed you to bring that down? Or is the 51% kind of range good going forward?

I think, Lauren, the mix is -- I mean, the mix definitely has an impact on it because the better we do, or the more income we produce from capital, the lower the payout is on that. And I mean, if you go back and you will look at sort of Goldman's, kind of, blowout great quarters, 2009, they had, based on restraining -- training profits, the counts of revenue was down to like 40% or something like that. But that's not real. I mean, so frankly, I'd rather see that comp to revenue ratio be a little bit higher just because we're producing so much business in banking and certain other areas of the firm, while we still deploy our capital. So I wouldn't hang my hat on that number. But I don't think it goes up terribly too much from where it is. And if we do really well with our capital, it could go down lower. But no one should believe that, that's kind of where we wanted to be.

Lauren, if you look at where we were 6 months in 2010, 6 months in 2011, we have $7.9 million more of compensation books in the 6 months ending, 2011. So yes, a lot of it is driven by the increase in revenue. We have $51.8 million more of revenue this -- 6 months this year compared to last year. But based on our headcount that we currently have, we're $7.9 million more book to cost this year than last year.

Even if that ratio has come down.

Yes, that's the point. Lauren Smith - Keefe, Bruyette, & Woods, Inc.: Yes, got it. Okay, and what was your headcount at a quarter end? And how many people ultimately are there from the LaBranche franchise?

So it's 573, not including LaBranche. 604, I think including LaBranche.

Sorry, but the important point of this is there's only 2 days of LaBranche included in these 6-month numbers. Lauren Smith - Keefe, Bruyette, & Woods, Inc.: Right, got it. And then just sticking with expenses but on the non-comp or the variable non-comps. So $4.3 million, right, was from the Luxembourg transaction? So that's pretty much non-recurring, right?

Correct. Lauren Smith - Keefe, Bruyette, & Woods, Inc.: So but when this $1.6 million that you were going to buy for syndication and marketing expense, I mean, that's really -- wouldn't that be deemed more recurring? I mean, because you guys are out there, I mean, that's really the cost of doing business as you continue to look to...

Lauren, it's a little erratic because we don't use outside consultants in all of our fundraising activities. So that's going to be -- I mean, it's lumpy, yes, but it's a good news number because the revenue that derives from that is all back-ended. Revenue we're paying upfront but we have the assets first coming in to starting to turn fees. So but that will be lumpy. And frankly, the bigger that number gets over time, the better it is because it needs the asset base just to grow that much faster. Lauren Smith - Keefe, Bruyette, & Woods, Inc.: Okay, just shifting gears, Peter, I know you've spent a lot of time over China and that's an important business for you guys. So maybe just give us an update on trends there? It seems like things have taken a little of pause over there, generally speaking. And then just you guys lost someone, I guess, a couple of weeks ago from your China business, who went to Lazard. I'm just curious how meaningful or not is that individual? And have you -- or are you going to replace him?

Sure. Sol, you want to?

Yes. So I think, first of all, let's just talk about the fact that China was the flavor of the month for the back half of 2010. Anything that had to work China in it or around it was selling like crazy. And someone flipped the switch and beginning in January, suddenly, and we know why. There were obviously a lot of concerns about the validity of a lot of the numbers coming out of China and that is still going. So with the exception of maybe, and a few Internet companies and some TNT companies, the new issue of business has slowed almost to, come to a halt. We have turned our whole business orientation, really, to merger advisory transactions. There's some really interesting things that are happening there, a lot of cross-border transactions. It's still a significant amount of capital that wants to be deployed in China by these CPE firms. And then there's a lot of Chinese companies that are looking at outside of China to do acquisitions. And so we're engaged in a number of dialogues, and in fact have closed a couple of transactions that are in cross-border transactions with Chinese clients. The fact that we had one individual who left, we are -- there's no question that across our investment bank, we are still sub-scale. So I want to be really clear about that. And it goes to Devon's question earlier, we're being careful with the rate of which we bring people on. But we still are a relatively small bank relative to what we can be as we ramp. So we're being very careful about this. The loss of that individual, any time you lose an individual, you don't like to see that happen, but it happens all the time. We're actually in active dialogues with 2 or 3 people that we think can replace that individual. And he made his decisions for reasons that are, I think, highly personal, and maybe just didn't see it to where he was going with his brackets lined up well with us. And so I have a pretty big philosophy about that, and it's the following, if you don't think you can be successful here, you shouldn't be here. And I'm okay with that. Because we really only have a limited number of slots, and we want people who genuinely think they can be successful here. And in doing so, I can say the inbound calls we've had, even for this position, we had calls the next day. So I'm not particularly concerned about it at all.

Also, I would say that our backlog in China is as good today as it's ever been, the mix is different. And we're starting to get traction on the debt capital markets side. I was over there 2 weeks ago. We signed an engagement letter to do a debt financing with what we think is a very creditworthy company. So the China effort, it marches on. And China will go through its own difficulties, but it's so for real that we are committed to make that work for us and getting the LaBranche broker-dealer. Just coincidently, we've got our own license about a week before the LaBranche thing closed, that we applied for. So -- but we've got a sort of core staff people, and now we're engaged with small groups of people saying who do we want to add to it. And then our conversations with the Chinese companies, having that ability to bring them to the HM market is a great value to them because if I had to guess that will continue to be the market of choice for a long time to come from a lot of these Chinese companies. But also, when I was over there, I spoke to the guy who's in charge with turning Shanghai into the next financial center of the world. I spent about 2 hours with him, and I think we're kind of getting ourselves well-positioned. And nobody's got a lock on China yet. It's wide open. And it's different than here because you've got to continue to show up and build bridges with these people, build relationships. You can't be a one-trip wonder over there and get business. And what I continue to hear is that they're looking for these kind of smaller, itchier firms, that relationships with where you actually go and walk around their factory, ask questions about how they make this or that, as opposed to I'm selling so from so and so, and here's my league table standing, you should give me the business. That doesn't sort of weigh that heavily with the Chinese. We should mention, actually, we're having our first like, kind of, China conference in the fall in November. Cowen's never had one. And what do we have now? About 50 companies have signed up, I'd believe it is?

A little more, a little more than that.

Yes.

That concludes the question and answer session. I would now like to turn it to management for closing remarks.

Well, I don't think there's anything that's been left unsaid. And appreciate everybody's tuning in, listening to us. We'll continue to sort of make progress, as we have. Again, the environment is going to affect us, as everyone somewhat. But frankly, we're feeling very good about where we are and the track we're on, and we've got just a lot of irons in the fire, and hope we've been a lot of interesting things to be talking about in the future. So stay tuned. And everybody, have a great weekend.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.