Good morning, ladies and gentlemen, and thank you for joining the Cowen Group, Inc. Conference Call to discuss the financial results for the 2011 fourth quarter and full year. By now, you should have received a copy of the company's earnings release, which can be accessed at the Cowen Group, Inc. 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, Inc. has no obligation to update the information presented on the call. A 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's 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. I would now like to turn the call over to Mr. Peter Cohen, Chairman and Chief Executive Officer. Please proceed.

Thank you, operator. Good morning, everyone, and welcome to Cowen Group's Fourth Quarter and Full Year 2011 Earnings Call. With me here today are Jeff Solomon, CEO of Cowen and Company; and Steve Lasota, CFO of Cowen Group. Before we get into the numbers, I want to express my appreciation to the efforts that our employees put forth in 2011. In an extraordinarily, volatile and challenging environment, Ramius continue to expand, at present, the asset management business. In our broker-dealer, we managed to do it with very difficult restructuring. The fourth quarter results reflect the expenses associated with restructuring efforts and the difficult operating environment. Overall, the broker -- overall, the results were disappointing but we made real progress in positioning the broker-dealer platform to perform in the future. In a minute, we'll speak about Ramius and outline our performance within that business. But first, I want to make sure that existing and new shareholders understand what we're striving to achieve by reshaping Cowen and Company, and what it means to the performance of this organization as a whole. To our advantage, we are well-capitalized compared to our peers at nearly $450 million or approximately $4 per share of invested capital. Our balance sheet included over $345 million in cash and liquid securities at the end of the year, up from approximately $200 million at the end of 2010. We were able to invest when and how we need in order to capitalize opportunities to meet client needs to compete and build value for our shareholders. We have also returned capital to shareholders by purchasing stock. Last year, we bought back a total of 5.4 million shares for approximately $17 million. This includes 3.6 million of shares purchased in the open market, 1.2 million shares acquired under the net settlement…

Thank you, Peter. As Peter mentioned, 2011 was clearly a year of restructuring at Cowen and Company. We made a number of investments in growth-oriented products such as electronic trading, and we enhanced our footprint in several key vertical industries, as well as making some senior management changes in the organization. When Peter appointed me as CEO, we immediately implemented a plan to intelligently reduce expenses at the broker-dealer by $35 million in 2012, which we discussed in our last call. That number has now been revised upward, as we found more opportunities to better manage our expenses. The part of this plan, we reduced Cowen and Company's headcount by about 15% in the fourth quarter by eliminating several businesses not essential to our drive to profitability and not part of our core business objectives. Our aim with these reductions was to reduce -- was to resize the platform, so that it can breakeven on a cash basis even during difficult market. To be very clear with you on this, these reductions are not expected to have a meaningful impact on revenues, and we remain positioned well to serve clients profitably as the markets fully turn. This is evidenced by the strength of our mandate in shadow backlogs in banking and capital markets as we enter 2012. You'll begin to see the impact of these expense initiatives in 2012, as most of the savings realized in the fourth quarter were offset by severance expense. Our 2011 results also include expenses attributable to hires made in certain new businesses that we outlined for you in previous calls. Following a difficult year, we're now in a stronger competitive position to both gain market share and benefit from industry growth trends. One area to highlight is our recent progress in the healthcare vertical,…

Thank you, Jeff. During the fourth quarter of 2011, we reported a GAAP net loss of $79.9 million, up $0.49 per share for continuing operations and $0.21 per share for discontinued operations, compared to net income of $4.1 million or $0.06 per share in the prior-year period. Our fourth quarter GAAP loss included the impact of a $23.6 million loss from discontinued operations related to exiting the businesses operated by the LaBranche subsidiaries. A $7.2 million and $5.2 million impairment of goodwill and intangible assets respectively, related to the broker-dealer segment, a $3.9 million charge related to vacating the remaining portion of leased office space at 1221 Avenue of the Americas, $1.1 million charge related to the termination of service contracts and $10.6 million in severance expense related to our expense reduction plan. We incurred an additional severance expense of $5.1 million related to exiting the LaBranche businesses, which is reflected in our loss from discontinued operations. To give you a little more detail around some of these items, the loss from discontinued operations included a $12 million operating loss for the 6-month period following our mid-year acquisition of LaBranche, a $7 million writeoff of leasehold improvements in fixed assets associated with legacy LaBranche's office space at 33 Whitehall, which has been subleased, and a $4 million writeoff of intangible assets. Excluding the impact of these discontinued operations, our fourth quarter GAAP net loss, including non-controlling interest, was $56.3 million, or $0.49 per share. Goodwill and intangible impairment, the $7.2 million impairment of goodwill and $5.2 million impairment of intangibles in our broker-dealer segment included in our GAAP loss was originally recognized in connection with the November 2009 merger of Ramius and Cowen. The challenges encountered in 2011 related to the domestic and global economy contributed to a decline in…

Thanks, Jeff. Thanks, Steve. Thank you, all, for your patience listening to this excruciating detail and what I'd like to do now is open the call up to questions.

[Operator Instructions] And our first question will come from the line of Joel Jeffrey with KBW. Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division: You guys are in a kind of a unique situation, having a strong presence on both the buy side and the sell side. And over the past few quarters -- in the past few years, actually, we started to see, really, the cash equities volumes continue to decline. I'm just wondering if you guys have any comments on what you're seeing there what you think could possibly sort of turn volumes around?

Well, first, on -- as it relates to us on the sell side, volume has declined, I think the first 2 months for this year is at 82% compared to the same period last year, meaning January, February. And last year was down something in the 20s from 2010. And while that's also been going on, there's been a shift in that volume, much more towards electronic execution away from the high touch. And we definitely sort of experienced that with the supplies brokerage revenue that we experienced last year, of about $12 million. So as it relates to us, just in general, I think that the steps we've taken to have an electronic footprint or feet print, should get us penetration into that electronic place because people want to pay us for our research and we're giving them new ways to pay us. And I think it's a trend that's going to continue so that those firms that don't have some kind of serious electronic footprint are probably going to be at a disadvantage. There are always going to be a split between, I think, the big bullish purveyors, suppliers of that electronic execution capability, and then a handful of middle-market firms like ourselves, because the buy side doesn't want to be basically bound to just doing business measly for the bulge. Anyway -- so, I mean, you had this sort of perfect storm of better things happening that's expecting a lot of people in the industry. I mean, I think frankly, what is going on between the Federal Reserve and the ECB is a very concerted effort to force people into risk assets. And when you look at where they can get yield, it's very -- more growth, it's very, very limited, you can't get it in fixed…

I'm going to let Mr. Solomon address that.

Some of the initiatives we've put in place last year, we're rolling them out, we want to make sure we're testing them on the electronic side, to make sure that they work very well. We're really in the final stages. Actually, we're beyond beta on many of them. Some of them in particular, where we're doing some electronic market making capturing some of that retail order flow from other firms. There, we're just getting ourselves started, good traction, clients are onboard, that's a 3-step process, you got to get clients onboard, then you got to get them to turn on, then you got to get them to actually throw volume, we've actually been holding back, in some cases. Just make sure that when you onboard clients, you're doing it without any hiccups. And so I'm feeling pretty good about where we are in that. Obviously, as it relates to ATM, we're not closed with them, so we haven't -- I want to meet with a managed expectations appropriately, we're not going to be showing any revenues, I don't think in the first quarter, from the ATM acquisition, because I don't think it'll be closed. The good news is we're out talking to clients, at least on a joint basis, and they do have a number of clients already. And so, we're talking about the different things that we can be adding and different things that we could be doing as a collective organization, and we're being met with some very positive feedback on that front. So once that transaction closes -- the integration is going quite well and we're pretty excited about it. On the institutional option side which was our other big initiative last year, volumes from a commission standpoint are up. And as you know, Joel, the volatility…

Sure, Tom Strauss, who is chairman of asset management business is sitting here so I'll let him answer that.

I think without exception, all of our important funds have earned back their high watermark and we're actually starting to earn modest incentive fees so far this year, so that would apply to our credit small value activist funds, small cap activist funds, some of our fund-to-fund assignments. Yes, pretty much across the board.

[Operator Instructions] And our next question will come from the line of Jonathan Shafter with Boston Provident.

So pro forma for the restructuring expense cuts that were made in the fourth quarter, what is the currently estimated run rate expense saves that we should expect to see over 2012?

Well, last year's numbers were distorted or got inflated because of the effect of LaBranche acquisition. So if you compare them to 2010, they went up. And I think, Steve, what, would it be fair to say it was about $100 million?

Well, if we start with economic income, excluding discontinued operations, our non-comps are roughly $145 million, and we feel we've cut in excess of $25 million out of those, out of that from a run rate basis.

That's non-comps.

Non-comps.

And then we believe we've cut a substantial amount of comp. One of the things that hurt us was...

But is there any more precision you can give to a substantial amount?

So what we've said on the call last time was $35 million at the broker-dealer, it's north of that now. But a lot of that depends on where revenues are going to be, higher revenues are obviously -- compensation as a percentage, is variable to some degree. What we did was we announced last quarter, so we gave you some breakdown around a non-comp expense, which is really what we're tracking very specifically, obviously, the headcount reductions helped us out from a compensation standpoint. So we should be able to do better than we had historically. But we've used and said publicly, $35 million. I can tell you that it's better than that. But a lot of that just depends on if we have higher revenues, it won't be $35 million and I'm okay with that.

Right. That's obviously. And I believe that there were some words on a prior call, correct me if I'm wrong, that once you were finished with examining the call structure, the broker-dealer, you would be sort of looking across the rest of the organization. Am I recalling that correctly? And is that still the plan?

Well, yes. I mean, we did it, it was being done simultaneously. And by the way, it's not done. This is an ongoing exercise. We are pushing back on vendors. We continue to find ways to cut expenses. And as you get rid of expenses, it gets easier to see what's left. And it's drill then on those. So we're going to continue to push down on expenses very hard.

I believe you have guaranteed compensation agreements that are rolling off in 2012. Is that -- the impact of that included in the $35 million or will that be potentially additional cost savings above the $35 million?

Let me put it this way. As Steve said, non-comp cost reductions $25 million. Jeff said total cost reductions $35 million, but we actually believe we've achieved more than that. So you can intuit that a lot of that increase from $25 million to say a number north of $40 million is the result of the effect of comp guarantees coming off and changing. Firm-wide, our guaranteed compensation will be down well more than 50% from where it was last year. I would say probably more than 60% down from where it was last year. So -- and that hurt us a lot because if you look at those people on sort of as is basis, we would not have paid them nearly what they're getting paid under the guarantees. And now, people are going to have to produce revenue firm-wide. We're in respective areas to get paid. It's a whole brave new world out there and it's industry-wide. And we got caught in that perfect storm of trying to sort of rebuild the Cowen franchise while the business was, had gone into hibernation. We feel okay about where we are going into the new year. And now, it's about having all those new people drive revenue and they got paid a revenue that they now have to produce. So it's not like they'd get paid again.

Just to be clear, I mean, in terms of the bottom line, you said in your comments that the intent was to restructure expenses so that at the brokerage, the investment bank or asset management, I believe, is already profitable. In a poor environment, those units will at least be breakeven, so that if they're breaking even any money that you're making on your $450 million of invested capital will flow directly to the bottom line. Could you give some comments when you say breakeven in a poor environment, the type of environment that we've been seeing thus far in 2012, is that the type of poor environment that we would expect to be at least at breakeven in all the other units? Outside of the invested capital providing a shareholder return?

Yes, well, first of all, let me try and parse my way through that a little bit. When we talk about breakeven, I mean, our objective would be to economic income breakeven, including everything. What's -- the greatest and most important sort of objective for us is to make sure that because of the compensation expense that is non-cash that we and everyone else has in the industry today, that we are cash flow positive. So we could be in a situation where we are economic income negative slightly but very cash flow positive because of the expense of writing off stock-based compensation. And that's our objective, and I would say the environment we're in today, more than achieved that objective for us based on what we've accomplished. But I don't think that, that makes us very happy, I think that as we look at the repopulation that's gone on here and the new products, the ATM acquisition, some of the electronic footprint stuff that is just starting to bear revenue, that if the environment were the same as last year, we've got to do substantially more revenue in the broker-dealer than we did. And if we don't, we're going to be very disappointed and feel like we have failed.

I mean, obviously, the objective is to make profits across all the lines. I guess my point was if $450 million invested capital and you earned 10% on that, which is a very low number by your historical metrics, we would expect $45 million or so to drop to the bottom line without losing money to the other operations, and thus, if the world gets better, there's additional upside from there? I just want to make sure I'm thinking about this the right way.

That's the way we're thinking about it.

That's how we think about it.

I think it's a multiyear rebuild for us, especially at Cowen and Company. But we're much better positioned this year if market environment where to stay the same as it were in 2011, think about it, our revenues were flat year-over-year. Some of our expenses were up but that's part -- I mean, almost exclusively as a result of severance and investing in new individuals. So we don't expect to have same kind of severance, we're not going to have the same kind of rehire trend that we had in 2011. So we need to do better revenue-wise. Peter is right. And I think what you're hearing from us is our buy side bias, which is that we want to make sure that we're not overpromising. I think we're in a much better shape to take advantage even if the market environment stayed the same as it was 2011, but our goal is to make sure when it's better, that we have enough ways to capture revenue on that growth trajectory, that's what we need to do.

One important thing, we don't really isolate it in our discussion, but happy to answer this. The amount of cash lost last year was about $40 million. Cash that went out the door. Net-net. But overall, cash liquidity in the firm increased by around $140 million, in part, obviously, because of the LaBranche acquisition. If we're right about what we've accomplished then and we continue to work at, we should be cash flow positive in the same environment, substantially cash flow positive going forward. And if the environment improves, I think there's huge amount of operating leverage we've got now in our core structure.

And our next question will come from the line of Don Destino with Harvest Capital.

It's Jonathan, here is my biggest question, let me just make sure I understood the answer there, which is the cost restructuring that you did at the broker-dealer again, my understanding, it sounds like Jonathan's as well, was that it was to breakeven at the broker-dealer, given the kind of second half of 2011 environment. And so have we accomplished that? Is the simple question. Don't need a long answer, you don't need to give the long answer again, but I'm just curious what the short answer to that is?

I wouldn't say that because if you look at the second half of 2011, we had an extraordinarily difficult period, the markets were shut down for a long period of time and volumes declined across all the exchanges. I mean, in that environment, would we be cash flow positive? Yes, we believe so. We have some P&L negativity, economic income, probably. So I don't think that it would -- I wouldn't look at the second half of 2011 in a safe way, if that's a steady-state environment, we're going to be P&L breakeven and cash flow positive, probably not, but we'll be cash flow positive through a great extent and probably have some negative P&L, but we would hope substantially offset by what's going on in the Asset Management business and the firm's capital.

Got it. All right, that's helpful. And then the second question is about...

By the way, do you think that's the scenario? Because if it is, we got to go -- we'll just overhead some more of it.

Yes, I know. If I thought that was there, I would own many shares of Cowen. The second question is on the asset management business. The 2% AUM net of outflows from the cash management business...

In the fourth quarter?

In the fourth quarter. What is that? Could you break that down in terms of inflows, outflows and bonus?

You want to just kind of slowly repeat the question?

Well the net of the cash management outflows, fourth quarter inflows, I mean I could tell you, the healthcare royalties group has seriously closing in the fourth quarter, we took in money in our starboard activist group.

There was $900 million that flowed out from the cash management business. When you net that out to it, pretty good positive inflows from rest of the business.

Yes, and he's trying to figure out where.

Okay. So I'm just -- there's 2% -- I mean, there was any change in your interest income you're not inequities, but I think high yield had a pretty good fourth quarter as well. I'm just trying to isolate appreciation versus net flows?

By the way, our flows are actually a little bit better than if you look on the surface because we continue to return money from our old multi-strategy funds. And those assets which I think started the year about $650 million, something around there. We probably returned about $200-and-something-million of multi-strategy asset, but that's a net in our numbers, so our real inflows where probably a few hundred million dollars kind of net inflows better than might look on the surface.

If you want to call, we'll give you kind of a broader breakdown.

Ladies and gentlemen, this concludes the question-and-answer portion of our call. I would now like to turn the call back over to management for closing remarks.

Operator, thank you and for everyone who stayed on the call and those who asked questions, I appreciate your indulgence. Well, 2011 was an extraordinarily difficult year, and I would say, for me, personally, I can't remember a year more difficult, especially the second half of the year when the world just stopped. But we took a lot of actions to get ourselves positioned for a steady-state environment and to do very well in an improved environment. And we have a strengthened capital position, we're stronger now than we were a year ago. And we've got a lot of interesting things. So we will work at demonstrating that everything we have said to you today and in prior calls comes true. I conclude my remarks there. Thank you, operator.

Thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Good day, everyone.