Good morning, ladies and gentlemen and thank you for joining the Cowen Group, Incorporated conference call to discuss the financial results for the 2011 third quarter. By now, you should have received a copy of the company's earnings release, which can be accessed at the Cowen Group, Incorporated website at www.cowen.com. 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, Incorporated has no obligation to update the information presented on the call. A more complete description of these risks and other 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. A 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.

Thank you, operator. Good morning, everyone, and welcome to Cowen Group's 2011 Third Quarter Earnings Call. With me today are Jeff Solomon, our Chief Executive of the Cowen and Company, subsidiary of Cowen Group; Steve Lasota, our CFO; and some number of other people who are involved in running this firm on a daily basis. I'll start with the general overview, followed by a more detailed discussion on Ramius. And later in the call, after I'm done, Jeff will take over and talk about Cowen and Company. Third quarter was a difficult period in the markets, as everyone knows, driven by what was going on both in the United States and Europe with the debt ceiling crisis and the whole sovereign debt crisis over in Europe resulting in very significant volatility in the capital and credit markets. As a result, we recorded an economic loss for the quarter of $46 million or $0.40 per share. We are obviously very unhappy with these results for the quarter, and we just want to make note of a few things as we take you through it. Performance was adversely impacted to a substantial extent by an unrealized mark-to-market and losses on our investment portfolio, which was mostly affected by spread widening in the global credit markets. In addition to that, a lot of the new initiatives that we've been putting in place did not yield the revenue that we would have expected in the third quarter because of the dislocation in the markets. And in addition, we had ongoing costs from those initiatives and the cost of LaBranche and the winding down of their operations, which closed on the end of the third -- second quarter, as you remember. During the quarter, we had investment losses of about $17 million as compared to…

Thank you, Peter. First, let me say in the past few years, the financial performance of Cowen and Company has been unacceptable. The fact is that the broker-dealer hasn't had a profitable quarter since we acquired it in 2009. I'd like to tell you that's going to change in the fourth quarter. But with the current market volatility in the capital markets, that's unlikely as the implementation of our plans to change the future of Cowen and Company will take some time. So a month ago, we set out to lay out those plans to rectify the situation. Before I start, I want to say -- thank everyone in research and sales and trading, whom I've had the chance to spend a lot of time with over the course of the past month. Your candor and insight has helped me to understand why the Cowen brand remains incredibly strong with our clients, even in a difficult environment. My assessment of the challenges facing the business is twofold. First, the current market environment is one of the most challenging we've seen. And second, the market structure and competitive landscape are undergoing significant change in our business. We need to respond accordingly and align our platform with this new landscape in order to improve our position with clients. We are already making progress on both fronts. First, let me address the market environment and our performance in the third quarter. Even with the current equity and credit market volatility, I'm pleased to report that our equity brokerage revenue was up 2% to $26.5 million in the third quarter. The slight increase was achieved even without any growth in the new products and offerings and options in electronic market making that are launching in the fourth quarter. Frankly, we expect to see some…

Thank you, Jeff. During the third quarter of 2011, we reported a GAAP net loss of $48.2 million or $0.42 per share, which included the impact of a $25 million net loss on securities, derivatives and other instruments. This compares to a GAAP loss of $15.4 million or $0.21 per share in the prior year period. For the 9-month ended period, we reported a GAAP net loss of $28.1 million or $0.32 per share compared to a loss of $49.5 million or $0.68 per share in the first 9 months of 2010. In addition to our GAAP results, 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 businesses by excluding such items as the impact of onetime gains or losses, such as the bargain purchase gain on the acquisition of LaBranche and expenses associated with onetime equity awards made 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 taxes and the impact of accounting rules that require us to consolidate certain of our funds. For the 3 months ended September 30, 2011, the company reported an economic loss of $45.8 million or $0.40 per share compared to economic loss of $12.9 million or $0.18 per share in the prior year period. The year-over-year decrease in economic Income was principally driven by our investment loss, which negatively impacts revenues on an economic income basis, and an increase in non-compensation expenses. For the 2011 9-month period, we reported an economic loss of $38.3 million compared to an economic loss of $42 million in the 2010 9-month period. Third quarter economic income revenues…

Thanks, Steve. Well, I think you know -- you all heard that it was a lousy quarter, one that we're very, very unhappy with. No excuses for what happened, though I think we probably feel better about it than you all do because of what was going on here in terms of transitioning this firm and expenses that were running through the income statement without the corresponding revenue and the cost of LaBranche, et cetera. And we have to do better. We will do better. And why don't I just open it up to questions at this time?

[Operator Instructions] Your first question comes from the line of Devin Ryan, representing Sandler O'Neill. Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division: In terms of -- on the expense initiatives that you guys spoke about, it sounds like they've already been launched. That was my takeaway. So I just wanted to get a sense of timeframe of that $35 million flowing through. Were there reductions there? And then how should we think about the breakdown between how much would come out of compensation and how much would come out of non-compensation expenses?

I’m going to let Jeffrey respond to that.

The -- it's about 50-50 between comp and non-comp. Those are expenses we expect to be fully implemented. We're already actually implementing them. It's an ongoing process. I don't expect that to be -- you to be able to see that in the fourth quarter, particularly around compensation, because we're so late in the year. But those are targeted to be in place full year 2012.

And let me, Devin, add. That's the Cowen and Company side of life in Cowen Group so far. Jeffrey developed a plan with his people over a very short period of time, did an amazing job in identifying a way to reduce expenses where we don't think revenue is going to be impacted. There's more work to do on the Cowen Group -- Cowen and Company side. There's work to do on the rest of the firm, too. And we're not going to be sort of Pollyanna-ish [ph] about the environment. It is as difficult an environment as I've ever lived through in 40-something years now of doing this. And so we're really taking the attitude that we have to size this expense structure of the firm for a very different environment, and let us be surprised that it's better than we think it's going to be.

Yes, but I think what's really important here is what happened at Cowen and Company, near as I can tell in the last downturn, is there was sort of significant cost reductions that really put the company out of position to benefit from the ride [ph] that occurred in '09 and '10. So I think that what we're doing here is isolating businesses and individuals we don't think are long term either going to be contributing or will drive revenues when the market does turn. And we're making what I would say pretty hard calculus decisions around expected ROI on businesses and on individuals and their ability to deliver well on the platform. So this is not a wholesale decision. This is a tactical decision, where we're literally going through individual by individual. And so the -- those kinds of changes have actually already been implemented. So what we're talking about now is just getting at the non-comp structure.

Devin, also, you should -- I mean, you look at what you want to look at, but one of the things that I look at very importantly is economic income after we've added back the non-cash expenses that mostly relate to depreciation but, more so, the legacy equity awards that were made as part of the compensation which vest, as you know, years after you put them and then you have to take the expense as they vest. So I tend to look at economic income with adding back all of the non-cash items. And then, of course, in this quarter, I look at the swing in the investment portfolio, and the actual cash lost to the firm is much smaller than the headline loss. And for the 9 months, it's much, much smaller, almost -- it's almost insignificant. And that's the thing that we focus on as we go through this transition, is to make sure we preserve cash to the extent possible. The vesting of these prior equity awards tend to accumulate. So this year, we've got 2 years' worth of vesting. We've got '09 and '10 running through the income statement. And then whatever we do in terms of deferred compensation, be it in equity awards or some other form of deferred, next year, we'll have 3 years, and then it'll flatten out because we'll be dropping '09 and '13, and we'll be picking up '11 and -- well, '11 and '12 and dropping -- we drop a year. We pick up a year, so it tends to flatten out. So -- but that's been a growing non-cash expense that there's nothing we can do about that. Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division: Got it. Well -- and I guess, ultimately, besides this quarter, you guys have been profitable for a few quarters in a row. So just when you think about the firm today, how do you feel like you're positioned for profitability relative to where you were a couple of quarters ago or a year ago? Is it -- are you still, in terms of the current structure and expense structure, in a better position today than you were 6 to 9 months ago or a year ago?

I think this -- we're in a far better position today than we were a year ago, let alone 2 years ago. There's been a total transition in investment banking in terms of people out who could not be productive to really a fantastic group of people today. I mean, it's a real partnership of talented people up there. And as Jeffrey talked about, this underwriting that we led the other night is kind of indicative of new people and the confidence that issuers have in them.

Actually, if I could spend 2 seconds on that, because I think it's really instructive to give people a sense of what it means to rebuild.

Let me just finish, and then you can be instructive. On the asset management side, we've gone through this transition of returning assets winding down the multi-strategy funds. We still have expenses related to that, but they're getting smaller and smaller as we liquidate those funds and return assets to our clients. But all the new initiatives have real legs and are growing. Our Starboard fund has got mandates out there that are being, basically, paper today. We have, we think, a $1 billion capacity in that fund, where we're not nearly at $1 billion, and we think we're going to be there in a much shorter period of time than we would have thought 6 months ago or 9 months ago. Credit was growing. Of course, the setback -- it probably set them back a few quarters, but the RTS mutual fund, which I talked about, which we can build out our solutions group, which is winning very substantial mandates. So it's a completely different asset management business. Our fee realization is going up, so we feel kind of really good about that. And I think some of the new initiatives in the sales and trading side, while they were delayed in terms of generating revenue, they are starting to bite in the fourth quarter. We're starting to see revenue come from those. We've incurred the expense, built the systems, and now we think that can have a real meaningful impact. And there's -- and there are other things on horizon that we can do on the sales and trading side. But we've got -- we still have some wood to chop across the entire firm to get where we want to get to. And if it had been a better environment, it would have been easier to get there, but it's been a tough environment. Now I'll let Jeff talk about what he wanted to talk about.

Thanks. I just -- when you talk about being able to increase and improve your brand, it takes some time. The deal we did yesterday was for a company called Dynavax. A year ago, we were -- a co-manager took a $250,000 fee on a deal that they did in November last year. We did it with the idea and the expectation that we could trade ourselves into a lead-managed position over the course of the year by doing what we do best, which is non-deal roadshows, an incredible sponsorship inside of the sales organization and, obviously, canvassing the company, significantly paying attention to their needs as the clients in the banking side. And in doing that, you're paying -- we're attention to them at a time when they obviously didn't need to pay a fee, but we expected at some point they would. And when they did, we wanted to be in that pole [ph] position. And this is banking and capital markets and sales and trading 101, but it takes a year. Yesterday, we printed this deal. We were the sole book manager, sole book runner, and we took 70% of the economics -- or 67% of the economics. It's a -- that is one example of a number of the ones that I see in our backlog, where we’ve transitioned from a co-manager position and getting very poor economics to ones in which we are in a joint book run position or a book run position and we're getting much more significant economics. If the markets -- when the markets open back up again, I think you'll see us print those. But if you're looking at what our backlog looks like today, including our shadow backlog, about 50% of the deals that we have in backlog or shadow backlog are joint book run positions versus I think it was 15% a year ago at this time. And so that -- when Peter talks about the transformation, I will tell you, I can see it. I wish that we had a market that would allow us to show everybody what it is. And we will someday, and we'll make significant money as a result of that. Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division: Okay. That's very helpful. And just -- I guess maybe just on that backlog, completely understand that it is going to be market sensitive. But in terms of just the size of that backlog, how do you guys feel about where it is today versus where it was a year ago?

I feel -- I actually feel great about it. I mean, we all have our comfort zones, right? So when the market's not printing, what do I look at? I look at how well we're doing. Are we out on the road? Are we talking to clients? Are we winning mandates? Are we improving our position? That's what I look at, because in the absence of being able to see numbers go up on a scoreboard, I want to see the players playing and playing hard. I will tell you that we have not missed an opportunity to get in front of clients. And what's most interesting to me about this, and I don't want to gild the lily here, the fact that the capital markets are closed means that clients are more willing to spend time and talk with us. It gives us a chance to actually catch up to our competition because we can spend time with these folks at a time when they really are looking for good quality advice on what to do in the capital markets. And so I'm not surprised, given the caliber of people that we’ve brought into the organization, a team that we built, and our distribution reach, that we are moving up significantly in terms of our positioning. Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division: Okay. Great. And then just maybe on the Ramius side for Peter. Just in terms of the flows you guys had were obviously very good. And I think relative to what we saw for many peers in the industry, just even that much better. When we think about the conversations you're having right now and maybe mandate expectations, can you give us a little bit of a help of how we should think about things the next couple of quarters? How optimistic are you about...

I'm going to let my partner, Mr. Strauss, who runs that business, answer that question.

The flows into the business, despite a turbulent market, actually are about in line with our timeframe and our expectations. Things get delayed perhaps a month or 2, but the institutional interest remains quite strong. Bernanke's constant comments about keeping interest rates at 0 for some period of time are clearly encouraging institutions and private clients to look at the alternative space quite constructively. So barring something even worse than what we have seen, we fully expect the flows to continue in the months ahead. Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division: Okay. Great. And just finally here, on the buyback, can you -- do you guys mind running through those numbers again? I just didn't get them all done in terms of what you guys repurchased and how much is remaining on the authorization. And then just some thoughts about the return on that investment here. Obviously, the stock has been beaten up quite a bit, and you guys are very liquid. So how much sense does it make to take -- even maybe get more aggressive on the buyback...

Yes. Well, all right. So we bought back 2.5 million shares in the open market. We bought back just shy of 500,000 shares through net settlement, where people, instead of selling stock in the market to pay the taxes, they sold it back to the firm, and the firm basically paid the taxes on their behalf. So that's roughly 3 million shares of stock. All of that was about $11 million against an authorization last summer of $20 million. So we have $9 million left to spend under the past authorization. And I think what we'll do is we'll spend that money, and our board will then revisit the subject as to whether we should increase it. I mean we’re limited to how much we can buy. So we have to follow the buyback formula, which is I think a max 25% of the trailing 4-week average volume. Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division: Right. I understand that. Great. Okay.

Steve, you want to add anything to that?

Unless we do a 10b5 plan, which is we'll have to discuss with the board.

Right. Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division: Got it. Okay. I mean, that feedback was...

How do we look at it? I mean, we look at it that we're buying -- it's a very high return investment, because believing as we do that we're going to get this firm back to breakeven and then profitability, that we're buying book value at a very big discount, and it's got an implied return of 30% or 40%. I mean, unfortunately, you don't book that through the income statement, but that's the reality of it, it accretes tangible book value. It has book value. Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division: Yes, absolutely. And then just lastly, on the Luxembourg comments, I guess should I take the expenses this quarter to mean that there are some more opportunities there on the near-term horizon? I know you guys have had some pretty big gains related to some of the acquisitions you've done on the Luxembourg captives.

Yes, Devin. We are looking at a couple. And we hope to close a small one in the fourth quarter, and we're working on some other opportunities in the future as well.

Your next question comes from the line of Joel Jeffrey representing KBW. Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division: Just a couple of quick questions. The investment banking number actually came in a little bit better than what we were thinking about, and it looked like it was probably M&A driven. Just wondering, were there any deals that may have closed earlier than you anticipated? I know you said the pipeline looks strong but just trying to get a sense for how to think about the quarters going forward.

There was -- there were deals. Actually, we did one that we didn't disclose here, one significant one in the third quarter that was not disclosed. So I can't really talk about it. The other was we had some activity in China, and it's interesting. This is an environment where it's certainly a target-rich environment for us in M&A. One of the biggest challenges we have is the folks that we have on our platform. Almost half of them senior bankers weren't here last year. M&A is a business, as you know, Joel, that you got to be in your -- you got to be good. You got to be trusted, and you got to be in your seat for a while in order for people to select you as an advisor. I wouldn't read anything into the mix. Last quarter, we just had a couple of transactions that occurred that were meaningful, and we're certainly happy about that. We do have some that could close between now and the end of the year. It's hard to say. Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. Great. And then thinking about your comments about your opportunities in the electronic brokerage space, is there any way to sort of quantify the revenue opportunity there? I know you said a small bit could be meaningful. And then just thinking about, does that in any way cannibalize your more high-touch business?

No. That's a great question, and I think it's actually very insightful. When you think about what we do, that's exactly the things that we're looking at. So let me give you a couple of stats. The size of the electronic trading market in 2012 was about -- sorry, the size of the overall U.S. commission market, both high touch and low touch, is about $12 billion. I’d just like to say to you that, that number is actually up over the last 6 years. So if you look at 2005, that number is about $11 billion. The low was in 2007. It was about $10 billion, but last year was $12 billion. So that's cash equities, both electronic and high touch. So when people say that the cash equities business is over, I beg to differ. I just think the mix has changed significantly. And when I say the mix has changed, obviously, the percentage of that flow that's gone on in the marketplace has changed significantly from high touch to cash -- to electronics. If I look at the numbers that we look at from Grant Associates and from TABB Group, about -- it's about half and half, I mean, give or take a few percentage points. So you can say that about $6 billion is high touch and $6 billion is electronic of some sort. And electronic, I consider that to be DMA, algo, Dark Pools and program. All right? So when I look at that and I see that we really have very little impact there, I'd say there's a great revenue opportunity for us. And if you look at the folks that made that decision to get into that business while they were maintaining their high touch business, their revenues actually haven't gone down. So…

[Operator Instructions] Your next question comes from the line of Louis Margolis, representing Select Advisors.

One of the big competitive advantages you have organizationally is that you can do proprietary trading, and I'm wondering if you're interested in expanding that. That's the first question. The second is, you seem to be very successful at capital raising for proprietary products. I think both of these -- certainly, the first has more variability. The second has very high margins but very low variability. And the third big competitive advantage that we've all acknowledged is you mentioned that if you buy the stock, you make 30% or 40%. I don't quite understand the arithmetic there. But if you're buying stock at $2.70, and it's got a $5 tangible book, that's a big, big number. It would seem to me that exploring how to do something very significant in the stock here under $3 seems very compelling economically.

Well, the unknown is if you show up to do something that's very compelling, how many shares you actually can buy at that level. But that's not falling on deaf ears, so it's obviously something we think about all the time and/or continuing to think about. That may be, in the short run, a very good thing to do. In the long run, in terms of building the business, given that we have a long-term horizon, having the capital to build out further prop trading capability and asset management capability is equally important. So that's kind of a balancing thing that we go through all the time. We are looking at ways of expanding the proprietary -- it's really not a trading platform. It's an investment platform. I mean, we're not market makers against a flow in of big customer activity in a big variety of products on which we can get in front of that flow and make money. Our capital is basically invested where we think we can make equity returns far in excess of what the market will provide over time, and we've done that for a very long period of time, really since 1997. So it's almost 15 years now. And we are looking at ways of expanding on some of the things that we're doing and some new things to build that out. And every time we do explore, we're also looking at how can that be leveraged into a proprietary product for fiduciary money that we can grow a new strategy. So we are doing all those things, and we would hope, maybe not the next call but by sometime next year, we'll be able to talk about some of those new initiatives being in place and up and running.

Just parenthetically, I am not an enthusiast of electronic trading. I think a lot of this high-frequency trading is quite predatory, but this is not a platform for me to articulate my views.

No, no. By the way, I don't disagree with you. But we're not talking about proprietary electronic trading. What we're talking about is electronic execution for customers.

Yes. This is -- there's a big difference between electronic trading and direct market access and then high frequency. This is like I want to put in a program trade or a -- or use an algorithm to execute a basket or a single stock. That is not -- we're not talking about high frequency here.

Your next question comes as a follow-up from the line of Devin Ryan representing Sandler O'Neill. Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division: Yes, guys, I just had one quick follow-up here. Just on the management fee improvement, just wanted to get a sense of what drove that jump from last quarter. Was it just the higher asset level? And what was the mix of the assets that you brought in at a higher fee rate? It looks like, obviously, that the fee yield did go up. So just want to make sure that, that's kind of a sustainable improvement, just want to see if there's anything else going on there.

Well, Devin, it was mainly driven by our healthcare royalty fund, which had an additional close -- it had a closing in the quarter. And as part of that closing, the management fees had a catch-up. And we also -- as you'll see, we closed on the RTS mutual fund, which generated some management fees as well.

It's a combination of both -- the growth is in higher fee-paying assets and the mix of the business. I mean, I suspect the cash management assets are going to kind of level off here. I don't expect them to grow as dramatically as they have in the past. And the asset growth in the future should be from higher fee-paying strategies. And we have to accrete the fee realization up, and that's one of our definite goals on the asset management side. But recognize that fees in general are coming down. Investors have gotten much smarter. Like for instance, all the -- a lot of the big institutional investors now depending on the product want to see -- they're willing to pay performance fees, but they want them indexed. And so it's not even a function of the hurdle. It's a function of if the market's up 20% and you're up 20%, why should I pay you an incentive fee? You just got the beta of the market, but I'll pay you for the alpha. So investors have gotten much smarter and much more diligent about sort of fees, but I -- we think we have a product suite that caters to the discerning view that they have about how we should get compensated. Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division: Got it. And then when I think about the flows or the increase in assets quarter-to-quarter, was that -- was it primarily at the end of the quarter? So I'm just trying to think about how much of the kind of the new assets you actually were able to bill your fees off of.

Well, a lot of the new assets are -- were cash management as well as late in the quarter -- the mutual fund was launched late in the quarter. And as Peter mentioned, there are a lot -- there's a lot in the pipeline that we expect to close fairly quickly.

With no further questions at this time, I would now like to turn the call back to management for closing remarks.

Thank you, operator. Thank all of you who attended and listened to the call. Again, just to reiterate, we're very disappointed in the results, but at the same time, we have a very good understanding of why they were what they were. And they are unacceptable, and we have to get back to work and complete the program, the path we set out to transform this place into something special. And the numbers don't reflect how far along, in my opinion, we are in that process. So if we get decent markets, I think you'll see a different performance out of this company. And I think with that, we're done.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.