Edgar Filing: COWEN GROUP, INC.

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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-34516

Cowen Group, Inc.
(formerly LexingtonPark Parent Corp.)
(Exact name of registrant as specified in its charter)


Delaware (State or Other Jurisdiction of Incorporation or Organization)		27-0423711 (I.R.S. Employer Identification No.)
599 Lexington Avenue New York, New York (Address of Principal Executive Offices)		10022 (Zip Code)
(212) 845-7900 (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of November 23, 2009, there were 56,397,411 shares of the registrant's common stock outstanding.

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EXPLANATORY NOTE

As of September 30, 2009, LexingtonPark Parent Corp. (n/k/a Cowen Group, Inc., "Cowen Group" or the "Company"), had not conducted any material activities other than those incidental to its formation, the matters contemplated by the Transaction Agreement and the Agreement and Plan of Merger, dated as of June 3, 2009 (which we refer to as the Transaction Agreement), by and among the Company, Ramius LLC (f/k/a Park Exchange LLC, "Ramius"), RCG Holdings LLC (f/k/a Ramius LLC, "RCG"), Lexington Merger Corp. and Cowen Holdings, Inc. (f/k/a Cowen Group, Inc., "Cowen Holdings"), and the submission of certain required regulatory filings. The Company was jointly formed on June 1, 2009 by Cowen Holdings and RCG in connection with the transactions contemplated by the Transaction Agreement (the "Transactions"). Following the completion of the Transactions on November 2, 2009, the Company became the holding company of Cowen Holdings, the former Cowen Group, Inc., and Ramius LLC, which was known at the time as Park Exchange LLC, a holding company formed in connection with the Transactions, which has acquired substantially all the assets of RCG and has assumed substantially all of RCG's liabilities. At that time, the Company changed its name to Cowen Group, Inc., Park Exchange changed its name to Ramius LLC, RCG changed its name to RCG Holdings LLC and Cowen Holdings, the former Cowen Group, Inc., changed its name to Cowen Holdings, Inc.

As a result of the fact that the combination was consummated during the fourth quarter of 2009, in this Form 10-Q for the quarterly period ended September 30, 2009, we are providing standalone results for both the Company and Ramius. Under the acquisition method of accounting, RCG Holdings LLC was treated as the accounting acquirer in the combination. As such, Ramius (the business of which was operated by RCG prior to the consummation of the Transactions) is the predecessor reporting entity of the Company. The results of operations of Cowen Holdings will be included in the Company's consolidated results of operations from November 2, 2009.

The diagram below shows the structure of the Company following completion of the Transactions:

(1): Members of our senior management control the managing member of RCG. RCG members also include BA Alpine Holdings, Inc., an affiliate of HVB.
(2): Of the 37,536,826 shares of our Class A common stock held by RCG, (i) 8,518,685 shares are attributable to BA Alpine Holdings, Inc. and (ii) 9,527,596 are attributable to our directors and executive officers.

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Item No.				Page No.

PART I. FINANCIAL INFORMATION				5
	1. Unaudited Consolidated Financial Statements			5
		Cowen Group, Inc. (formerly LexingtonPark Parent Corp.)		5
			Consolidated Statement of Financial Condition	5
			Notes to Consolidated Financial Statement	6
		Ramius LLC and Subsidiaries		8
			Consolidated Statements of Financial Condition	8
			Consolidated Statements of Operations	9
			Consolidated Statements of Changes in Redeemable Group Equity	10
			Consolidated Statements of Cash Flows	11
			Notes to Consolidated Financial Statements	13
	2. Management's Discussion and Analysis of Financial Condition and Results of Operations			45
	3. Quantitative and Qualitative Disclosures About Market Risk			79
	4. Controls and Procedures			83
PART II. OTHER INFORMATION				84
	1. Legal Proceedings			84
	1A. Risk Factors			85
	2. Unregistered Sales of Equity Securities and Use of Proceeds			109
	3. Defaults Upon Senior Securities			109
	4. Submission of Matters to a Vote of Security Holders			109
	5. Other Information			109
	6. Exhibits			110
SIGNATURES				111
EXHIBIT INDEX				112

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Special Note Regarding Forward-Looking Statements

We have made statements in this Quarterly Report on Form 10-Q (including in "Management's Discussion and Analysis of Financial Condition and Results of Operations") that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking terms such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "intend" or "continue," the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, which in some cases may be based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. In particular, you should consider the risks contained herein.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations.

Unaudited Consolidated Financial Statements are presented for the three and nine months ended September 30, 2009 and 2008. The Consolidated Financial Statements as of December 31, 2008 were audited.

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PART I. FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements

COWEN GROUP, INC. (FORMERLY LEXINGTONPARK PARENT CORP.)

Cowen Group, Inc. (formerly LexingtonPark Parent Corp.)

Consolidated Statement of Financial Condition

(Unaudited)

			As of September 30, 2009

Assets
	Cash		$	0.02

		Total assets	$	0.02

Liabilities and Stockholders' Equity
Commitments and Contingencies
Stockholders' Equity
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized, no shares issued and outstanding			$	—
Class A common stock, par value $0.01 per share; 250,000,000 shares authorized, 2 shares issued and outstanding				0.02
Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, no shares issued and outstanding				—

		Total stockholders' equity		0.02

		Total liabilities and equity	$	0.02

The accompanying notes are an integral part of this financial statement.

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Cowen Group, Inc. (formerly LexingtonPark Parent Corp.)

Notes to the Consolidated Statement of Financial Condition

(Unaudited)

1. Organization and Basis of Presentation

Organization

Cowen Group, Inc. (formerly LexingtonPark Parent Corp.) (the "Company"), a Delaware corporation, was formed on June 1, 2009 in connection with the Transaction Agreement and Agreement and Plan of Merger ("Transaction Agreement"), dated as of June 3, 2009, by and among Cowen Group, Inc., a Delaware corporation ("Cowen Holdings"), Lexington Merger Corp., a Delaware corporation and direct wholly owned subsidiary of LexingtonPark Parent Corp., Park Exchange LLC, a Delaware limited liability company and direct wholly owned subsidiary of LexingtonPark Parent Corp., and Ramius LLC, a Delaware limited liability company ("Ramius").

As of September 30, 2009, LexingtonPark Parent Corp. had not conducted any material activities other than those incident to its formation and the matters contemplated by the Transaction Agreement, such as the formation of Lexington Merger Corp and Park Exchange LLC and the making of certain regulatory filings.

Basis of Presentation

The accompanying financial statement is prepared in accordance with accounting principles generally accepted in the United States of America that require management to make certain estimates and assumptions. Management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates.

As of September 30, 2009, LexingtonPark had not conducted any material activities other than those incidental to its formation and those described above.

2. Subsequent Events

The transactions, as contemplated by the Transaction Agreement, were consummated on November 2, 2009. On that date, LexingtonPark Parent Corp. changed its name to Cowen Group, Inc. ("Cowen Group"), Ramius changed its name to RCG Holdings LLC ("RCG"), Park Exchange LLC changed its name to Ramius LLC and Cowen Group, Inc. changed its name to Cowen Holdings, Inc. ("Cowen Holdings"). Upon the closing of the transactions Park Exchange LLC acquired substantially all of the assets and assumed substantially all of the liabilities of RCG. At the closing of the transactions, 37,536,826 shares of Cowen Group's Class A Common Stock were issued to RCG. Under the terms of the Transaction Agreement each outstanding share of common stock of Cowen was converted into one share of Class A Common Stock of Cowen Group. Cowen Group is the parent of both Cowen Holdings and Park Exchange LLC following the consummation of the transactions.

Concurrently with the completion of the transactions described above, HVB Alternative Advisors LLC ("HVB"), received approximately 2.7 million shares of Class A Common Stock of Cowen Group and approximately $10.4 million in exchange for transferring to Cowen Holdings the 50% interest in Ramius's fund of funds business not already owned by Ramius.

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Cowen Group, Inc. (formerly LexingtonPark Parent Corp.)

Notes to the Consolidated Statement of Financial Condition (Continued)

(Unaudited)

2. Subsequent Events (Continued)

On November 2, 2009, the Company entered into an amended collateralized revolving credit agreement with HVB AG, as lender, administrative agent and issuing bank, providing for a revolving credit facility with a $50.0 million aggregate loan commitment amount available, with a $7.0 million letter of credit sub-limit. At the Company election and discretion, borrowings under the collateralized revolving credit agreement bear interest per annum (based on a 360 day year) equal to either: (a) 1.5% plus the greater of (1) the lender's prime rate, (2) the overnight federal funds rate plus 0.5% and (3) the LIBOR rate plus 1.0% or (b) the LIBOR rate plus 3.5%. The Company is required to pay a quarterly commitment fee on the undrawn portion of the revolving credit facility equal to 1.0% per annum of the undrawn amount. For letters of credit, the Company will pay a fee on the stated amount of the letter of credit at a rate equal to 3.5%. $25.0 million of the collateralized revolving credit agreement will mature on January 4, 2010; the remainder on September 29, 2011.

New guaranty agreements were executed on November 2, 2009 by the Company and Park Exchange LLC to obtain the consent of the lessor of Ramius's leased aircraft to assign the lease to the Company and Park Exchange LLC. The guaranty contains a covenant that the Company must maintain a minimum assets under management of $6.5 billion, based on the combined assets under management of Ramius and Cowen Holdings. If the assets under management falls below $6.5 billion, the lessor would require a cash deposit or letter of credit equal to 12 months of lease payments ($1,759,800).

On November 2, 2009, Ramius's office leases at 599 Lexington Avenue, New York, NY, 666 Third Avenue, New York, NY, and Purchase, NY were assigned to and assumed by Park Exchange LLC. Concurrently, landlord consents for the lease assignments were obtained and guaranty agreements were executed by the Company. The guaranties provide for, among other things, the full and timely payment of rent and the full and prompt observance of other obligations set forth in the leases.

Immediately following the consummation of the transactions, Ramius transferred interests in Ramius Enterprise LP, having a value of approximately $190 million, to the Company.

The business combination between Ramius and Cowen Holdings will be accounted for as an acquisition by Ramius of Cowen Holdings. As a result, the historical financial statements of Ramius will become the historical financial statements of Cowen Group.

The assets and liabilities of Cowen Holdings were, as of November 2, 2009, recorded at their respective fair values and added to those of Ramius. The financial statements of Cowen Group that include periods after November 2, 2009 will reflect such fair values and will not be restated retroactively to reflect the historical financial position or results of operations of Cowen Holdings. For periods after November 2, 2009, the results of operations of Cowen Holdings will be included in the results of operations of Cowen Group.

Initial accounting for the transaction is incomplete as of the date through which subsequent events have been evaluated and therefore additional information on the fair value of consideration transferred and assets and liabilities acquired is not yet available.

The Company has evaluated events that have occurred since September 30, 2009 and through November 25, 2009, and it has determined that except for what is disclosed in this note, there are no other events that have occurred that would require recognition or additional disclosures to prevent them from being misleading.

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Ramius LLC and Subsidiaries

Consolidated Statements of Financial Condition

(Unaudited)

			As of September 30, 2009			As of December 31, 2008

			(dollars in thousands)
Assets
	Cash and cash equivalents		$	5,871		$	46,677
	Cash collateral pledged			6,746			6,948
	Securities owned, at fair value			8,205			15,309
	Other investments			14,754			18,827
	Receivable from brokers			16,814			25,911
	Fees receivable (see Note 14)			12,118			19,330
	Due from related parties (see Note 14)			19,723			25,298
	Fixed assets, net of accumulated depreciation and amortization of $15,160 and $13,789, respectively			25,451			28,449
	Goodwill			20,028			20,028
	Intangible assets, net of accumulated amortization of $3,705 and $3,120, respectively			195			780
	Other assets			4,488			4,984
	Consolidated Ramius Funds
	Cash and cash equivalents			1,563			533
	Other investments, at fair value			544,965			584,462
	Other assets			974			295

		Total Assets	$	681,895		$	797,831

Liabilities and Redeemable Group Equity
	Securities sold under agreement to repurchase		$	—		$	1,425
	Payable to brokers			3,888			3,817
	Compensation payable			29,758			44,450
	Note payable and short-term borrowings			49,746			49,948
	Fees payable (see Note 14)			1,872			7,781
	Due to related parties (see Note 14)			8,776			10,549
	Capital withdrawals payable			—			16,941
	Accounts payable, accrued expenses and other liabilities			18,505			15,715
	Consolidated Ramius Funds
	Note payable and short-term borrowings			—			10,207
	Due to related parties			—			136
	Payable to brokers			—
	Capital withdrawals payable			86			20,622
	Accounts payable, accrued expenses and other liabilities			394			412

		Total Liabilities	$	113,025		$	182,003
Commitments and Contingencies (see Note 11)
Redeemable Group Equity
Redeemable Managing Member			$	—		$	47,390
Redeemable Non-Managing Members				302,312			284,665
Accumulated other comprehensive loss				(684	)		(1,163	)

		Total Redeemable Members' Capital		301,628			330,892

Redeemable Non-controlling interests in consolidated subsidiaries				267,242			284,936

		Total Redeemable Group Equity	$	568,870		$	615,828

Total Liabilities and Redeemable Group Equity			$	681,895		$	797,831

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

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Ramius LLC and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

			Three months ended September 30,						Nine months ended September 30,

			2009			2008			2009			2008
			(dollars in thousands)						(dollars in thousands)
Revenues
	Management fees		$	8,974		$	17,795		$	31,408		$	56,443
	Incentive income/(loss)			177			(862	)		177			—
	Interest and dividends			47			530			225			1,443
	Reimbursement from affiliates			2,342			5,077			7,832			11,675
	Other			577			2,352			2,265			4,737
	Consolidated Ramius Funds
	Interest and dividends			4,319			11,439			12,186			24,479
	Other			26			488			126			1,686

		Total revenues	$	16,462		$	36,819		$	54,219		$	100,463
Expenses
	Employee compensation and benefits		$	22,083		$	15,769		$	50,869		$	67,703
	Interest and dividends			435			441			1,122			1,195
	Professional, advisory and other fees			4,463			3,818			13,633			10,106
	Communications			228			371			755			1,151
	Occupancy and equipment			2,446			2,699			7,519			8,863
	Depreciation and amortization			1,129			1,351			3,563			2,955
	Client services and business development			1,537			3,127			4,850			7,010
	Other			1,375			3,184			6,628			6,649
	Consolidated Ramius Funds
	Interest and dividends			2,286			11,264			6,917			22,937
	Professional, advisory and other fees			2,552			451			4,259			1,513
	Other			473			1,307			655			2,590

		Total expenses	$	39,007		$	43,782		$	100,770		$	132,672
Other income (loss)
	Net gains (losses) on securities, derivatives and other investments		$	1,274		$	(523	)	$	(2,702	)	$	800
	Consolidated Ramius Funds net gains (losses):
	Net realized and unrealized gains (losses) on investments and other transactions			26,891			(109,580	)		59,178			(100,978	)
	Net realized and unrealized gains (losses) on derivatives			(5,972	)		643			(30,870	)		9,553
	Net gains (losses) on foreign currency transactions			(1,563	)		6,001			(3,040	)		5,902

		Total other income (loss)	$	20,630		$	(103,459	)	$	22,566		$	(84,723	)

		Income (loss) before income taxes	$	(1,915	)	$	(110,422	)	$	(23,985	)	$	(116,932	)

Income tax expense (benefit)				(5,929	)		554			(5,978	)		738

		Net income (loss)	$	4,014		$	(110,976	)	$	(18,007	)	$	(117,670	)
	Net income (loss) attributable to non-controlling interests in consolidated subsidiaries		$	9,899		$	(48,787	)	$	13,888		$	(52,176	)
	Special allocation to the Redeemable Managing Members			—			—			—			—

		Net loss attributable to all Redeemable Members	$	(5,885	)	$	(62,189	)	$	(31,895	)	$	(65,494	)

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

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Ramius LLC and Subsidiaries

Consolidated Statements of Changes in Redeemable Group Equity

(Unaudited)

		Redeemable Managing Member			Redeemable Non-Managing Members			Accumulated Other Comprehensive Loss			Total Redeemable Members' Capital			Redeemable Non-Controlling Interests			Total Redeemable Group Equity			Total Comprehensive Income (Loss)

		(dollars in thousands)
Balance at January 1, 2008		$	74,184		$	406,086		$	(290	)	$	479,980		$	203,523		$	683,503		$	—
Contributions			—			12,465			—			12,465			234,242			246,707			—
Withdrawals			—			(1,976	)		—			(1,976	)		(18,654	)		(20,630	)		—
Comprehensive income (loss)
	Net loss (see Note 7)		(9,871	)		(55,623	)		—			(65,494	)		(52,176	)		(117,670	)		(117,670	)
	Special Allocation		—			—			—			—			—			—			—
	Defined benefit plans		—			—			68			68			—			68			68

Balance at September 30, 2008		$	64,313		$	360,952		$	(222	)	$	425,043		$	366,935		$	791,978		$	(117,602	)

Balance at January 1, 2009		$	47,390		$	284,665		$	(1,163	)	$	330,892		$	284,936		$	615,828		$	—
Contributions			—			2,152			—			2,152			490			2,642			—
Withdrawals			—			—			—			—			(32,072	)		(32,072	)		—
Transfer of equity (see Note 7)			(47,390	)		47,390			—			—			—			—			—
Comprehensive income (loss)
	Net loss (see Note 7)		—			(31,895	)		—			(31,895	)		13,888			(18,007	)		(18,007	)
	Special Allocation		—			—			—			—			—			—			—
	Defined benefit plans		—			—			479			479			—			479			479

Balance at September 30, 2009		$	—		$	302,312		$	(684	)	$	301,628		$	267,242		$	568,870		$	(17,528	)

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

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Ramius LLC and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

					Nine months ended September 30,

					2009			2008
					(dollars in thousands)
Cash flows from operating activities:
	Net loss				$	(18,007	)	$	(117,670	)
	Adjustments to reconcile net loss to net cash provided by/(used in) operating activities:
		Depreciation and amortization				3,563			2,955
		Interest, custody and other expenses capitalized on the note payable balance				—			1,312
		Net gains on sale of fixed assets				202			—
		Net gains (losses) on securities, derivatives and other investments				(2,335	)		(2,460	)
		Purchases of securities owned, at fair value				(81,892	)		—
		Proceeds from sales of securities owned, at fair value				95,711			—
		Consolidated Ramius Funds:
			Net realized and unrealized (gains) losses on investments and other transactions			(31,560	)		85,049
			Purchases of other investments			(2,181	)		(233,233	)
			Proceeds from sales of other investments			73,237			63,047
	(Increase) decrease in operating assets:
		Cash collateral pledged				202			9,564
		Securities owned, at fair value, held at broker dealer				(6,619	)		78,100
		Receivable from brokers				9,097			730,241
		Fees receivable				7,212			71,534
		Due from related parties				5,575			(17,864	)
		Other assets				496			295
		Consolidated Ramius Funds:
			Cash and cash equivalents			(1,030	)		3,664
			Receivable from brokers						(121	)
			Other assets			(606	)		4,543
	Increase (decrease) in operating liabilities:
		Compensation payable				(12,061	)		(40,994	)
		Fees payable				(5,909	)		(25,068	)
		Payable to brokers				—			(735,590	)
		Due to related parties				(1,773	)		(7,641	)
		Accounts payable, accrued expenses and other liabilities				2,790			(4,058	)
		Consolidated Ramius Funds:
			Due to related parties			(136	)		—
			Accounts payable, accrued expenses and other liabilities			(18	)		690

				Net cash provided by / (used in) operating activities	$	33,958		$	(133,705	)

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

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Ramius LLC and Subsidiaries

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

				Nine months ended September 30,

				2009			2008
				(dollars in thousands)
Cash flows from investing activities:
	Purchase of fixed assets			$	(312	)	$	(18,124	)
	Sale of fixed assets				130			42
	Purchases of other investments				(215	)		(7,106	)
	Proceeds from sale of other investments				6,527			6,623

			Net cash provided by / (used in) investing activities	$	6,130		$	(18,565	)

Cash flows from financing activities:
	Securities sold under agreement to repurchase			$	(1,425	)	$	(1,860	)
	Borrowings on note payable				—			68,209
	Repayments on note payable				(202	)		(68,254	)
	Capital contributions by members				—			7,512
	Capital withdrawals to members				(16,941	)		(19,083	)
	Capital withdrawals to non-controlling interests in Ramius operating entities				541			—
	Consolidated Ramius Funds:
		Borrowings on note payable			—			14,900
		Repayments on note payable			(10,207	)		(44,020	)
		Capital contributions from non-controlling interests in consolidated Ramius Funds			490			232,921
		Capital withdrawals to non-controlling interests in consolidated Ramius Funds			(53,149	)		(32,345	)

			Net cash (used in) / provided by financing activities	$	(80,893	)	$	157,980

Change in cash and cash equivalents				$	(40,806	)	$	5,710
Cash and cash equivalents at beginning of period					46,677			17,967
Cash and cash equivalents at end of period				$	5,871		$	23,677

Supplemental information:
	Cash paid during the period for interest			$	1,029		$	2,548

	Cash paid during the period for taxes			$	133		$	1,038

Supplemental non-cash information:
	Interest, custody and other expenses capitalized on the note payable balance			$	—		$	1,312

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

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Ramius LLC and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

1. Organization and Business

Ramius LLC ("Ramius"), a limited liability company organized under the laws of Delaware, commenced operations on July 1, 1997 for the purpose of acting as a holding and operating company for financial service activities primarily engaged in providing alternative investment management services. Its investment services and products include hedge funds, fund of funds, real estate and cash management. Ramius's managing member is C4S & Co., L.L.C. ("C4S" or the "Managing Member"), whose managing members are Peter A. Cohen, Jeffrey M. Solomon, Morgan B. Stark and Thomas W. Strauss.

On June 3, 2009, Ramius entered into a Transaction Agreement and Agreement and Plan of Merger (the "Transaction Agreement"), by and among Cowen Group, Inc. ("Cowen Holdings"), LexingtonPark Parent Corp. ("Cowen Group"), Lexington Merger Corp. and Park Exchange LLC. The transactions contemplated by the Transaction Agreement and Asset Exchange Agreement closed on November 2, 2009 (see Note 16).

2. Significant Accounting Policies

The accompanying consolidated financial statements include the accounts of Ramius and its consolidated subsidiaries, which include a broker-dealer, operating companies formed for purposes of serving as the managing members/general partners and/or investment managers to affiliated hedge fund, fund of funds, and real estate investment companies (the "Ramius Funds"), and four Ramius Funds at September 30, 2009 and December 31, 2008. Ramius and its consolidated subsidiaries are collectively referred to hereinafter as the "Group".

In the opinion of management these unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") related to interim financial statements. Results for interim periods should not be considered indicative of results for any other interim period or for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2008 and 2007 and for the years ended December 31, 2008, 2007 and 2006, included in the Form S-4 of Cowen Group as filed with the SEC on October 2, 2009. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are necessary to present fairly the results for the interim periods. All such adjustments are of a normal and recurring nature, except for the presentation of non-controlling interests in consolidated subsidiaries, as described below.

a. Non-controlling interests in consolidated subsidiaries

Non-controlling interests represent the pro rata share of the book value of the financial positions and results of operations attributable to the other owners of the consolidated subsidiaries. Non-controlling interests related to consolidated Ramius Funds are generally subject to annual, semi-annual or quarterly withdrawal or redemption by investors in these funds, sometimes following the expiration of a specified period of time (generally one year), or may only be withdrawn subject to a redemption fee (generally ranging from 1% to 5%). Likewise, non-controlling interests related to certain other consolidated entities are generally subject to withdrawal, redemption, transfer or put/call rights that permit such non-controlling investors to withdraw from the entities on varying terms and

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conditions. Because these non-controlling interests are redeemable at the option of the non-controlling interests, they have been classified as temporary equity in the consolidated statements of financial condition. When redeemed amounts become legally payable to investors on a current basis, they are reclassified as a liability.

In December 2007, the Financial Accounting Standards Board ("FASB") issued a new accounting standard which changes the accounting and reporting of non-controlling interests in the consolidated financial statements and requires that such non-controlling interests be accounted for and presented as equity, rather than as liabilities or mezzanine equity. This standard applies prospectively as of January 1, 2009, except for the presentation and disclosure requirements which are to be applied retrospectively for all periods presented. The Group adopted this standard effective January 1, 2009, and as a result, (a) with respect to the consolidated statements of financial condition, the redeemable non-controlling interests in consolidated subsidiaries was renamed as such and remained classified as mezzanine equity, (b) with respect to the consolidated statements of operations, net income (loss) is now presented before non-controlling interests and the consolidated statements of operations now nets to net income (loss) attributable to all redeemable members, and (c) with respect to the consolidated statements of changes in redeemable group equity, roll forward columns have now been added for each component of non-controlling interests discussed in (a) above. Ramius has revised its prior period presentation as required to conform to this new pronouncement.

b. Recently adopted accounting pronouncements

Effective September 30, 2009, the Group adopted the new FASB Accounting Standards Codification (Codification). The Codification was officially launched on July 1, 2009, and became the primary source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under the authority of Federal securities laws are also sources of authoritative GAAP for SEC registrants. The subsequent issuances of new standards will be in the form of Accounting Standards Updates that will be included in the Codification. As the Codification was not expected nor intended to change GAAP, the Group's adoption of the Codification did not have a material impact on its Consolidated Financial Statements.

The Group adopted a new accounting standard, effective January 1, 2009, which requires changes to the accounting for transaction costs, certain contingent assets and liabilities, and other balances in a business combination. In addition, in partial acquisitions, when control is obtained, the acquiring company must measure and record all of the target's assets and liabilities, including goodwill, at fair value as if the entire target company had been acquired. The Group has applied the provisions of this standard to business combinations occurring after December 15, 2008. Adoption of this standard did not affect the Group's financial condition, results of operations or cash flows, but will have an effect on accounting for business combinations occurring subsequent to the date of adoption, including the transaction as discussed in Note 16.

Effective January 1, 2009, the Group adopted a new accounting standard which is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. Since this standard requires only additional disclosures

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concerning derivatives and hedging activities, the adoption of it did not affect the Group's financial condition, results of operations or cash flows. See Note 3 for further information regarding the Group's investments and fair value measurements.

Effective January 1, 2009, the Group adopted a new accounting standard which requires enhanced disclosures about credit derivatives and guarantees. Since this standard only requires additional disclosures concerning credit derivatives and guarantees, adoption of it does not have an effect on the Group's financial condition, results of operations or cash flows. See Note 3 for further information regarding the Group's investments and fair value measurements.

Effective June 30, 2009, the Group adopted a new accounting standard regarding determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that we have identified as not orderly. This new accounting standard does not change the objective of fair value measurement, which is to identify the price that would be received to exchange an asset or liability in an orderly transaction at the measurement date between market participants. Rather it provides additional guidance related to: (1) estimating fair value when the volume and level of activity for an asset or liability have significantly decreased in relation to normal market activity for the asset or liability, and (2) circumstances that may indicate that a transaction is not orderly (i.e. forced liquidation or distressed sale). This new accounting standard was effective prospectively for interim and annual reporting periods ending after June 15, 2009. The adoption of this new accounting standard did not have a material impact on the Group's financial position and results of operations. See Note 3 for further information regarding the Group's investments and fair value measurements.

Effective June 30, 2009, the Group adopted a new accounting standard regarding interim disclosures about fair value of financial instruments. This new accounting standard requires disclosures in the body or in the accompanying notes of its summarized financial information for interim reporting periods of the fair value of all financial instruments for which it is practicable to estimate fair value, whether recognized or not recognized in the balance sheet. Such disclosures were previously required only in annual financial statements. This new accounting standard also requires entities to disclose the methods and significant assumptions used to estimate the fair value of financial instruments and describe changes in methods and significant assumptions. The Group's adoption of this standard did not have an impact on its financial position or results of operations. See Note 3 for further information regarding the Group's investments and fair value measurements.

Effective June 30, 2009, the Group adopted a new accounting standard regarding subsequent events which established general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. This standard is based on the same principles as those that currently exist in auditing standards with the addition of some new terminology. The standard is effective for interim or annual periods ending after June 15, 2009. Since this standard requires only additional financial statement disclosures, the Group's adoption of it did not have an impact on its financial position or results of operations. See Note 16 for further information.

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c. Future adoption of accounting pronouncements

In June 2009, the FASB issued a new accounting standard which revises the accounting for variable interest entities ("VIEs") introducing a new consolidation model. This new standard changes the approach to determining the primary beneficiary of a VIE and requires companies to more frequently assess whether they must consolidate VIEs. The new model identifies two primary characteristics of a controlling financial interest: (1) the power to direct significant activities of the VIE, and (2) the obligation to absorb losses of and/or provide rights to receive benefits from the VIE. Management had recently begun to evaluate the application of it to the Group and concluded that under this new model Ramius may be required to consolidate an additional number of funds which are VIEs. In November 2009, the FASB proposed an indefinite deferral to the initial adoption of this standard by asset managers such as Ramius.

In August 2009, the FASB issued a new accounting standard which provides guidance in measuring liabilities when a quoted price in an active market for an identical liability is not available and clarifies that a reporting entity should not make an adjustment to fair value for a restriction that prevents the transfer of the liability. This standard is effective for financial statements issued for the first reporting period beginning after issuance of the standard. Because the Group's current fair value measurement policies are consistent with this, adoption will not affect the Group's financial condition, results of operations or cash flows.

In September 2009, the FASB issued a new accounting standard which provides guidance about using net asset value to measure the fair value of interests in certain investment funds and requires additional disclosures about interests in investment funds. This standard is effective for financial statements issued for reporting periods ending after December 15, 2009, with earlier application permitted. Because the Group's current fair value measurement policies are consistent with this standard, the adoption will not affect the Group's financial condition, results of operations or cash flows. The Group will adopt the standard in the fourth quarter of 2009 to comply with the disclosure requirements.

3. Investments and Fair Value Measurements for Ramius Operating Entities and Consolidated Ramius Funds

a. Ramius Operating Entities

Securities owned, at fair value

Securities owned are directly held by Ramius and considered held for trading and carried at fair value. At September 30, 2009, securities owned of $8.2 million consisted of US government securities and corporate bonds with maturities ranging from October 22, 2009 through December 10, 2009 and interest rates ranging between 0.15% and 0.31%. At December 31, 2008, securities owned of $15.3 million consisted of U.S. Government securities with maturities ranging from May 15, 2009 through September 15, 2009 and interest rates ranging between 0.37% and 0.53%.

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Other investments

At September 30, 2009 and December 31, 2008, other investments consist of the following:

	As of September 30, 2009		As of December 31, 2008

	(dollars in thousands)
(1) Portfolio Funds, at fair value	$	5,390	$	5,975
(2) Real estate investments, at fair value		1,483		1,605
(3) Equity method investments		7,672		11,038
(4) Lehman claims, at fair value		209		209

	$	14,754	$	18,827

(1) Portfolio Funds, at fair value

The Portfolio Funds as of September 30, 2009 and December 31, 2008 include the following:

	As of September 30, 2009		As of December 31, 2008

	(dollars in thousands)
Tapestry Investment Co PCC Ltd	$	4,351	$	2,758
Ramius Vintage Multi-Strategy FOF Ltd		—		1,375
Ramius Value and Opportunity Fund LP		612		1,092
RCG Special Opportunities Fund, Ltd		324		555
Other affiliated Ramius Funds		103		195

	$	5,390	$	5,975

(2) Real estate investments, at fair value

Real estate investments at September 30, 2009 and December 31, 2008 are carried at estimated fair value and include real estate equity investments held by RE Manager of $0.6 million and $0.7 million and real estate debt investments held by Ramius of $0.9 million and $0.9 million, respectively.

(3) Equity method investments

Equity method investments include investments held by Ramius and RCG RE Manager, LLC in several operating companies, whose responsibilities include the day to day management of a number of real estate funds, including the portfolio management and administrative services related to the acquisition, disposition, and active monitoring of the real estate fund's underlying debt and equity investments. The Group's ownership interests in these equity method investments range from 30% to 55%. The Group holds a majority of the outstanding ownership interest (i.e., more than 50%) in three of these entities: RCG Longview Debt Fund IV Management, LLC, RCG Longview Debt Fund IV Partners, LLC and RCG Longview Partners II, LLC. The operating agreements that govern the

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management of day to day operations and affairs of each of these three entities stipulate that certain decisions require support and approval from other members in addition to the support and approval of the Group. As a result, all operating decisions made in these three entities require the support of both the Group and an affirmative vote of a majority of the other managing members who are not affiliates of the Group. As the Group does not possess unilateral control over any of these entities, the presumption of consolidation has been overcome pursuant to current accounting standards and the Group accounts for these investments under the equity method of accounting. The following table summarizes equity method investments held by the Group:

	As of September 30, 2009		As of December 31, 2008

	(dollars in thousands)
RCG Longview Debt Fund IV Management, LLC	$	2,060	$	2,624
JT Partners LLC		—		2,346
RCG Longview Partners, LLC		1,189		1,329
RCG Longview Louisiana Manager, LLC		885		1,183
RCG Urban American, LLC		636		691
RCG Urban American Management, LLC		620		729
RCG Longview Equity Management, LLC		1,031		497
Other		1,251		1,639

	$	7,672	$	11,038

As of September 30, 2009, the Group's share of losses in its equity method investment in RCG Longview Partners II, LLC has exceeded the carrying amount recorded in this investee. RCG Longview Partners II, LLC, as general partner to a real estate fund, has reversed previously recorded incentive income allocations and has recorded a current clawback obligation to the limited partners in the fund. This obligation is due to a change in unrealized value of the fund on which there have previously been distributed carried interest realizations; however, the settlement of a potential obligation is not due until the end of the life of the respective fund (See Note 11). As the Group is obligated to return previous distributions it received from RCG Longview Partners II, LLC, it has continued to record its share of losses in the investee including reflecting its share of the clawback obligation in the amount of $6.2 million. All such amounts are included in accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition.

The Group's income (loss) from equity method investees was $1.2 million and $2.5 million for the three months ended September 30, 2009 and 2008, respectively, and ($3.1) million and $4.9 million for the nine months ended September 30, 2009 and 2008, respectively and is included in Net Gains (losses) on securities, derivatives and other investments on the accompanying Consolidated Statements of Operations.

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3. Investments and Fair Value Measurements for Ramius Operating Entities and Consolidated Ramius Funds (Continued)

At September 30, 2009, the Group has a single significant investment in RCG Longview Partners II, LLC that is accounted for using the equity method of accounting. Summarized financial information for the investment assuming a 100% ownership interest is as follows (in thousands):

		Nine months ended September 30, 2009

Income Statement
	Revenues	$	1,286
	Loss from continuing operations before income taxes	$	(9,793	)
	Net loss	$	(9,793	)

For the nine months ended September 30, 2008 the Group's comparable summarized financial information for the investment assuming a 100% ownership interest is as follows (in thousands):

		Nine months ended September 30, 2008

Income Statement
	Revenues	$	2,819
	Income from continuing operations before income taxes	$	1,531
	Net income	$	1,531

(4) Lehman Claims, at fair value

Lehman Brothers International (Europe) ("LBIE"), through certain affiliates, was a prime broker to Ramius, and Ramius held cash and cash equivalent balances with LBIE. On September 15, 2008, LBIE was placed into administration (the "Administration") in the United Kingdom and, as a result, the assets held by Ramius in its LBIE accounts were frozen at LBIE. The status and ultimate resolution of the assets under LBIE's Administration proceedings is uncertain. The assets of Ramius at LBIE at the time of Administration (the "Total Net Equity Claim") consist of $1.0 million. There can be no assurance that the Total Net Equity Claim value, as determined by Ramius, will be accepted by the Administrators, nor does Ramius know the manner and timing in which such claim will be satisfied and the ultimate value that will be received.

Given the great degree of uncertainty as to the status of the assets held at LBIE and the process and prospects of the return of those assets, Ramius has decided to fair value the Total Net Equity Claim at an approximately 80% discount, which represents the Estimated Recoverable Lehman Claim (the "Estimated Recoverable Lehman Claim"), which represents management's best estimate of value that ultimately may be recovered with respect to the Total Net Equity Claim. The estimated recoverable Lehman claim was recorded at fair value considering a number of factors including the status of the assets under UK insolvency laws and the trading levels of Lehman unsecured debt. In determining the estimated value of the Total Net Equity Claim, Ramius was required to use considerable judgment and is based on the facts currently available. As additional information on the LBIE proceeding becomes available, Ramius may need to adjust the valuation of the Estimated Recoverable Lehman Claim. The

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actual loss that may ultimately be incurred by Ramius with respect to the pending LBIE claim is not known and could be materially different from the estimated value assigned by Ramius.

b. Consolidated Ramius Funds

Other investments, at fair value

As of September 30, 2009 and December 31, 2008 other investments consisted of investments in Portfolio Funds of $541.1 million and $580.6 million and Lehman claims of $3.9 million and $3.9 million, respectively.

(1) Investments in Portfolio Funds, at fair value

At September 30, 2009 and December 31, 2008, investments in Portfolio Funds, at fair value, included the following:

	September 30, 2009		December 31, 2008

	(dollars in thousands)
Investments of Enterprise LP	$	443,408	$	423,064
Investments of consolidated fund of funds investment companies		97,676		157,517

	$	541,084	$	580,581

Consolidated investments of Enterprise LP

In January 2008, Enterprise Master began operating under a "master-feeder" structure, whereby its shareholders are Enterprise LP and RCG II Intermediate, LP. In January 2008, the interest that Ramius had in Enterprise Master was transferred to an investment in Enterprise Master's domestic feeder, Enterprise LP. The consolidated investments in Portfolio Funds recorded in other investments on the consolidated statements of financial condition includes Enterprise LP's investment in Enterprise Master as of September 30, 2009 and December 31, 2008. Enterprise Master utilizes certain strategies including merger arbitrage and small-cap value creation, investments in distressed securities, convertible hedging, capital structure arbitrage, equity market neutral, investments in private placements of convertible securities, proprietary mortgages, structured credit investments, investments in mortgage-backed securities and other structured finance products, investments in real estate and real property interests, structured private placements and other relative value strategies. Enterprise Master has broad investment powers and maximum flexibility in seeking to achieve its investment objective. It may invest in equity securities, debt instruments, options, futures, swaps, credit default swaps and other derivatives. See Note 4 for further information on the underlying investments of Enterprise Master.

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3. Investments and Fair Value Measurements for Ramius Operating Entities and Consolidated Ramius Funds (Continued)

Investments of consolidated fund of funds investment companies

The investments of consolidated affiliated fund of funds investment companies include the accounts of Levered FOF, Multi-Strat FOF and Vintage FOF, all of which are investment companies managed by Ramius FOF. Levered FOF's and Multi- Strat FOF's investment objectives are to invest discrete pools of their capital on a leveraged basis among portfolio managers that invest through Portfolio Funds, forming a multi-strategy, diversified investment portfolio designed to achieve returns with low to moderate volatility. Vintage FOF's investment objective is to allocate its capital among portfolio managers that invest through investment pools or managed accounts thereby forming concentrated investments in high conviction portfolio managers designed to achieve attractive risk adjusted returns with moderate relative volatility. The following is a summary of the investments held by the three consolidated affiliated fund of funds, at fair value, as of September 30, 2009 and December 31, 2008:

		As of September 30, 2009

Description	Strategy	Ramius Levered Multi-Strategy FOF LP		Ramius Multi-Strategy FOF LP		Ramius Vintage Multi-Strategy FOF LP		Total
		(dollars in thousands)
Ramius Fixed Income Arbitrage FOF LP*	Fixed Income Arbitrage	$	—	$	—	$	—	$	—
Ramius Multi-Strategy Master FOF LP*	Multi-Strategy		—		43,755		—		43,755
Ramius Vintage Multi-Strategy Master FOF LP*	Multi-Strategy		—		—		46,334		46,334
Tapestry Pooled Account V, LLC*	Credit-Based		1,052		—		—		1,052
Externally Managed Portfolio Funds	Credit-Based		1,835		—		—		1,835
Externally Managed Portfolio Funds	Event Driven		3,019		—		—		3,019
Externally Managed Portfolio Funds	Hedged Equity		28		—		—		28
Externally Managed Portfolio Funds	Multi-Strategy		1,563		—		—		1,563
Externally Managed Portfolio Funds	Fixed Income Arbitrage		60		—		—		60
Externally Managed Portfolio Funds	Others		30		—		—		30

		$	7,587	$	43,755	$	46,334	$	97,676

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3. Investments and Fair Value Measurements for Ramius Operating Entities and Consolidated Ramius Funds (Continued)

Multi-Strat FOF and Vintage FOF operate under a "master-feeder" structure, whereby Multi-Strat FOF and Vintage FOF are feeder funds that make their investments primarily through their master funds, Ramius Multi-Strategy Master FOF LP and Ramius Vintage Multi-Strategy Master FOF LP, respectively. These master funds are not consolidated by the Group. See Note 4 for further information on the underlying investments of Ramius Multi-Strategy Master FOF LP and Ramius Vintage Multi-Strategy Master FOF LP.

With respect to the aforementioned Lehman claims, the Total Net Equity Claim of Enterprise Master consists of $16.7 million. As a result of Enterprise Master and certain of the Ramius Funds having assets they held at LBIE frozen in their LBIE prime brokerage account and the degree of uncertainty as to the status of those assets and the process and prospects of the return of those assets, Enterprise Master and the Ramius Funds decided that only the investors who were invested at the time of the Administration should participate in any profit or loss relating to the Estimated Recoverable Lehman Claim. As a result, Enterprise Master and certain of the Ramius Funds with assets held at

3. Investments and Fair Value Measurements for Ramius Operating Entities and Consolidated Ramius Funds (Continued)

LBIE granted a 100% participation in the Estimated Recoverable Lehman Claims to Special Purpose Vehicles (the "SPVs" or "Lehman Segregated Funds") incorporated under the laws of the Cayman Islands on September 29, 2008, whose shares were distributed to each of their investor funds. Fully redeeming investors of Enterprise LP will not be paid out on the balance invested in the SPV until the claim with LBIE is settled and assets are returned by LBIE.

In addition, Lehman Brothers, Inc. ("LBI") was a prime broker to Enterprise Master and it holds cash balances of $1.7 million. On September 19, 2008, LBI was placed in a Securities Investor Protection Corporation ("SIPC") liquidation proceeding after the filing for bankruptcy of its parent Lehman Brothers Holdings, Inc. The status of the assets under LBI's bankruptcy proceedings has not been determined. The amount that will ultimately be recovered from LBI will depend on the amount of assets available in the fund of customer property to be established by the trustee appointed under the Securities Investor Protection Act (the "SIPA Trustee") as approved by the bankruptcy court as well as the total amount of customer claims that seek recovery from the fund of customer property. Based on recent court filings by the SIPA Trustee, we now understand that the total amount of customer claims exceeds the assets that are likely to be in the fund of customer property. In addition, the court filings also indicate that Barclays plc has submitted a substantial claim against LBI relating to an asset purchase agreement entered into by Barclays with LBI near the time of the SIPC liquidation proceeding that could affect the amount of assets that are included in the fund of customer property. As a result of these uncertainties and the timing of any distributions from LBI in respect of our customer claims, we have estimated our recovery with respect to our LBI exposure at 65%, which represents the present value of the mid point between what we believe are reasonable estimates of the low side and high side potential recovery rates with respect to our LBI exposure. The estimated recoverable amount by the Group may differ from the actual recoverable amount of the pending LBI claim, and the differences may be material.

Indirect Concentration of the Underlying Investments Held by Consolidated Ramius Funds

From time to time, through its investments in the consolidated Ramius Funds, the Group may indirectly maintain exposure to a particular issue or issuer (both long and/or short) which may account for 5% or more of the consolidated Ramius Funds' net assets (on an aggregated basis). Based on information that is available to the Group at September 30, 2009 and December 31, 2008, the Group identified consolidated Ramius Funds that had interests in an issuer, for which the Group's pro-rata share exceeds 5% of the Ramius Funds' net assets (on an aggregated basis). The following table presents such interests which represent the aggregate of (i) the gross amount of exposure that

3. Investments and Fair Value Measurements for Ramius Operating Entities and Consolidated Ramius Funds (Continued)

consolidated Ramius Funds have through their investments held directly and (ii) the gross amount of exposure held indirectly through their investments in any Unconsolidated Master Funds:

3. Investments and Fair Value Measurements for Ramius Operating Entities and Consolidated Ramius Funds (Continued)

The following table presents the financial instruments recorded at fair value on the consolidated statements of financial condition by caption and by level within the valuation hierarchy as of September 30, 2009 and December 31, 2008:

3. Investments and Fair Value Measurements for Ramius Operating Entities and Consolidated Ramius Funds (Continued)

The following table includes a roll forward of the amounts for the three months and nine months ended September 30, 2009 and 2008 for financial instruments classified within level 3. The classification of a financial instrument within level 3 is based upon the significance of the unobservable inputs to the overall fair value measurement.

4. Underlying Investments of Unconsolidated Master Funds Held by Consolidated Ramius Funds

As discussed in Note 3, Enterprise LP's investment in Enterprise Master is equal to Enterprise LP's proportional share of Enterprise Master's net assets; as a result, the investment balances of Enterprise Master reflected below exceed the net investment which Enterprise LP has recorded. The following tables present summarized investment information for the underlying investments and derivatives held by Enterprise Master, at fair value, as of September 30, 2009 and December 31, 2008:

Securities owned and securities sold, but not yet purchased by Enterprise Master

4. Underlying Investments of Unconsolidated Master Funds Held by Consolidated Ramius Funds (Continued)

Ramius Multi-Strategy Master FOF LP and Ramius Vintage Multi-Strategy Master FOF LP

As discussed in Note 3, Multi-Strat FOF and Vintage FOF's investments in their respective master funds are equal to their proportional share of their master funds' net assets; as a result, the investments in Portfolio Funds of the master funds reflected below exceed the net investment which Multi-Strat FOF and Vintage FOF have recorded. The following table presents summarized investment information

4. Underlying Investments of Unconsolidated Master Funds Held by Consolidated Ramius Funds (Continued)

for the underlying Portfolio Funds held by Ramius Multi-Strategy Master FOF LP and Ramius Vintage Multi-Strategy Master FOF LP at fair value, as of September 30, 2009 and December 31, 2008:

All of Ramius's goodwill as of September 30, 2009 and December 31, 2008 resulted from the 2004 business combination with HVB AG. Goodwill is reviewed for possible impairment at least annually, consistent with current accounting valuation methodologies. There were no additions to goodwill and no impairment losses during the nine months ended September 30, 2009.

The non-controlling interests in consolidated subsidiaries on the consolidated statements of financial condition as of September 30, 2009 and December 31, 2008 were $267.2 million and $284.9 million, respectively. The income (loss) attributable to non-controlling interests on the consolidated statements of operations was $9.9 million and ($48.8) million for the three months ended September 30, 2009 and 2008, respectively, and was $13.9 million and ($52.2) million for the nine months ended September 30, 2009 and 2008, respectively.

In accordance with the Ramius operating agreement, the Managing Member is entitled to receive a special allocation equal to 35% of the net profits (the "Special Allocation") in any fiscal year that Ramius has net income. Net income (after Special Allocation) or net loss is allocated pro rata in accordance with the Ramius operating agreement. In general, revenues and expenses are allocated among the members (including the Managing Member) in proportion to each member's capital interest. There was no Special Allocation during the nine months ended September 30, 2009 and 2008 due to Ramius's net loss.

Effective January 1, 2009, the Managing Member transferred the respective ownership interest in the Managing Member to each of the individuals who owned the Managing Member (the "C4S Owners"). As a result, the balance in the Managing Member's capital account of $47.4 million at December 31, 2008 was transferred to the capital accounts of the C4S Owners and is reflected in redeemable non-managing members' capital. The Managing Member retains no economic interest in the Group effective January 1, 2009.

Investors in Ramius commit to a minimum two-year lock-up for each capital contribution made; provided, however, that upon the withdrawal, such capital will be withdrawn and paid to the investor by Ramius over a period of three years. Members' capital is presented as redeemable as any member may withdraw from Ramius on at least 90 days' notice prior to the end of any fiscal year.

The following amounts relate to the defined benefit plans in aggregate for the three months and nine months ended September 30, 2009 and 2008.

Components of net periodic benefit cost included in employee compensation and benefits

During the nine months ended September 30, 2009, the Group made a contribution to its defined benefit plans of $962,000 out of total expected contributions for the year ended December 31, 2009 of approximately $1.0 million. The Group recorded a settlement loss of approximately $28,000 during the nine months ended September 30, 2009 in connection with terminations and related payouts occurring during the period.

The Group is currently in the process of winding down the operations of Ramius GmbH ("GmbH"), and as a result, a defined benefit plan for employees of GmbH (the "GmbH Plan") will cease. During the three months ended September 30, 2009 the Group recorded additional compensation expense of $57,828 related to the GmbH Plan and made payments of $622,342. As of September 30, 2009, Ramius has recorded a liability of $425,375 related to the GmbH Plan for payments it expects to make during the remainder of 2009 to settle its remaining liabilities relating to this plan.

Ramius and certain consolidated subsidiaries are subject to New York City Unincorporated Business Tax ("NYC UBT") on the portion of their operating income (after certain adjustments) and investment income allocated to New York City, at a statutory rate of 4%. Also, certain subsidiaries of Ramius are subject to income tax of the foreign countries in which they conduct business. Taking into account these taxes, Ramius's effective income tax rate was approximately 309.6% and (0.5%) for the three months ended September 30, 2009 and 2008, respectively and 24.9% and (0.6%) for the nine months ended September 30, 2009 and 2008, respectively. The Group's effective tax rate differs from the NYC UBT statutory rate of 4% due to income subject to taxation in foreign jurisdictions and loss carryforwards against which Ramius records a full valuation allowance. Further, Ramius recorded a deferred tax benefit of approximately $6.0 million as a result of deferred tax assets generated against deferred tax liabilities acquired during the third quarter of 2009 as part of a service program that provides reinsurance coverage to Enterprise Master. Under this program, in order to receive reinsurance services for certain of its risks, Enterprise Master acquired reinsurance companies in Luxembourg through a local subsidiary. The reinsurance companies carried deferred tax liabilities and, upon their purchase, the local subsidiary generated deferred tax assets that fully offset these liabilities, resulting in the recognition of a deferred tax benefit.

There were no changes to Ramius's unrecognized tax benefit balance of $0.5 million in the three and nine months ended September 30, 2009.

As of December 31, 2008, Ramius had a $50.0 million line of credit with a major financial institution. As of December 31, 2008, Ramius had borrowings of $49.9 million under this line. The line of credit portion of $43 million accrued interest at the LIBOR rate plus 2.5%. The letter of credit portion of $6.9 million accrued interest at a net rate of 1.25%. Due to the variable interest rate on these borrowings, the carrying value approximates fair value. Ramius also bears a commitment fee of 0.05% of the unfunded loan balance. The loan matured on June 30, 2009. The financial institution had membership interests of $87.9 million as of December 31, 2008 in Ramius which exclude withdrawals of $4.8 million effective January 1, 2009. Ramius also serves as the investment manager to certain accounts managed on behalf of the financial institution.

On June 3, 2009, Ramius entered into a collateralized revolving credit agreement with HVB AG, as lender, administrative agent and issuing bank, providing for a revolving credit facility with a $50.0 million aggregate loan commitment amount available, with a $7.0 million letter of credit sub-limit. As of September 30, 2009, Ramius had borrowings of $43 million under the line of credit portion and $6.7 million under the letter of credit portion. At Ramius's election and discretion, borrowings under the 2009 collateralized revolving credit agreement bear interest per annum (based on a 360 day year) equal to either: (a) 0.5% plus the greater of (1) the lender's prime rate, (2) the overnight federal funds rate plus 0.5% and (3) the LIBOR rate plus 1.0% or (b) the LIBOR rate plus 2.75%. Due to the variable interest rate on these borrowings, their carrying values approximate fair value. Ramius is required to pay a quarterly commitment fee on the undrawn portion of the revolving credit facility equal to 1.0% per annum of the undrawn amount. For letters of credit, Ramius will pay a fee on the stated amount of the letter of credit at a rate equal to 2.75%. The 2009 collateralized revolving credit agreement matured on November 2, 2009 (See note 16). The 2009 collateralized revolving credit agreement contained financial and other restrictive covenants that limited Ramius' ability to incur additional debt and engage in other activities. As of and during the nine months ended September 30, 2009, Ramius was in compliance with these covenants.

Interest incurred on Ramius's line of credit (in combination with the previous line of credit) was $0.4 million and $0.3 million for the three months ended September 30, 2009 and 2008, respectively,

and was $1.1 million and $0.9 million for the nine months ended September 30, 2009 and 2008, respectively.

Cash collateral pledged, on the consolidated statements of financial condition, represents collateral that was required to be posted for obligations or potential obligations under the letter of credit discussed above pursuant to the lease agreement for the Group's premises in New York City. Ramius's investment in Enterprise Master through Enterprise LP has been pledged as collateral under the line of credit portion of the revolving credit agreement discussed above.

Levered FOF had a $100.0 million line of credit with a major financial institution with a minimum borrowing amount of $20.0 million. Levered FOF could borrow on this line of credit up to 72% of the amount of collateral pledged. In accordance with the loan agreement, interest accrued on the loan as well as custodian and other fees incurred by Levered FOF in connection with the loan was capitalized and added to the total outstanding balance of the loan. As of December 31, 2008 the outstanding balance on this line of credit was $10.0 million. This loan bears interest at LIBOR plus 1.35% per annum. Due to the floating rate of interest, its carrying value approximates fair value. As of December 31, 2008, all investments owned by Levered FOF have been pledged as collateral in connection with this line of credit. Interest incurred on Levered FOF's line of credit during the three and nine months ended September 30, 2008 was $.3 million and $1.3 million, respectively. Levered FOF's line of credit was repaid in full as of February 5, 2009 and was discontinued on that date.

The Group has entered into non-cancellable leases for office space. These leases contain escalation clauses for operating expenses and real estate taxes. The Group records rent expense on a straight-line basis over the lease term, including any rent holiday periods. Net rent expense was $2.0 million and $2.2 million for the three months ended September 30, 2009 and 2008, respectively and was $6.4 million and $7.6 million for the nine months ended September 30, 2009 and 2008, respectively. At September 30, 2009, future minimum annual lease payments for Ramius and its affiliates were as follows:

Ramius has entered into agreements to sublease certain of the premises for which the lease commitments are included in the above table. These subleases expire in May 2010. Ramius recorded sublease income related to these leases of $478,692 and $417,331 during the three months ended September 30, 2009 and 2008, respectively and $1.4 million and $620,930 during the nine months ended September 30, 2009 and 2008, respectively.

Ramius has a requirement through the lease contract for the Group's premises in New York City to maintain minimum assets under management of no less than $5 billion. As of, and during, the nine months ended September 30, 2009, Ramius was in compliance with this minimum requirement.

The Group serves as the general partner/managing member and/or investment manager to the Ramius Funds. As such, the Group is contingently liable for obligations for those entities. The Group believes, however, that the assets in the Ramius Funds are sufficient to discharge any liabilities.

As of September 30, 2009, Enterprise Master had unfunded commitments of $43.8 million pertaining to capital commitments in 12 investments held by Enterprise Master. Of such commitments, $30.9 million pertained to related party investments. Ramius LLC had unfunded commitments of $8.4 million pertaining to capital commitments in 3 investments held by Ramius LLC, all of which were related parties. Such commitments can be called at any time, subject to advance notice.

In connection with the Group's investment in the general partner of one of its real estate funds, the general partner is entitled to receive certain carried interest distributions based on the performance of the fund. Amounts received as carried interest are subject to clawback to the extent that the carried interest received to date exceeds the amount due to the general partner based on cumulative results. At September 30, 2009, pursuant to a hypothetical liquidation of the fund at fair value, the amount of carried interest subject to potential clawback would be $6.2 million, on an after-tax basis (see Note 3 (a) (3)). This amount is the maximum obligation associated with this carried interest based on the Group's estimates at September 30, 2009.

The Group has entered into certain side letter agreements with a related party in connection with investments made in the Group's managed real estate funds. In these side letter agreements, the Group has agreed to indemnify and hold harmless from, and reimburse for, any diminution in value resulting from that related party's investment in the general partner of certain real estate funds. Those funds are subject to side letter agreements with a lead investor and require the establishment of holdback accounts, into which distributions from the general partner are to be paid, until such amounts equal 10% of the lead investor's capital contributions. Upon dissolution and final liquidation of the funds, the lead investor is entitled to receive amounts by which their aggregate capital contributions actually paid to the funds exceed the cumulative amount of distributions received over the life of the funds, including all liquidating distributions, but limited to the amounts in the holdback account and the fair value of the general partner's capital account.

On July 13, 2009, FINRA sent written notification to Ramius that it intends to recommend an enforcement action against Ramius Securities's pertaining to finder fees which were paid by another party in connection with certain transactions executed by Ramius Securities's former securities lending business in 2003 and 2004, in violation of marketplace rules. This inquiry is ongoing and Ramius is unable to determine what impact it may have on the Group's business and consolidated financial statements. A loss contingency will be recorded when it is probable and can be reasonably estimated. As Ramius is unable to make this determination at this time, no amount has been accrued related to this inquiry.

Various claims against Ramius may exist in the ordinary course of business. Management of Ramius does not believe that any such matter will have a material adverse effect on Ramius's consolidated statements of financial condition, consolidated statements of operations and consolidated statements of cash flows.

Ramius conducts all of its operations through the Investment Management segment primarily in the United States and substantially all of its revenues are generated domestically. The performance measure for the Investment Management segment is Economic Income, which management uses to evaluate the financial performance of and make operating decisions for the segment including determining appropriate compensation levels.

The chief operating decision maker uses Economic Income to assess the performance of the Investment Management segment. Economic Income is a pre-tax measure that (i) presents the segment's results of operations without the impact resulting from the consolidation of any of the Ramius Funds and (ii) excludes goodwill impairment.

The performance measure for the Investment Management segment is Economic Income, which management uses to evaluate financial performance and to make operating decisions for the segment. As further stated below, one major difference between Economic Income and US GAAP income is that Economic Income presents the segment's results of operations without the impact resulting from the full consolidation of any of the Ramius Funds. Consolidation of these funds results in including in income the pro rata share of the income or loss attributable to other owners of such entities being included in Ramius's income or loss. This pro rata share has no effect on the overall financial performance for the Investment Management segment, as ultimately, this income or loss is not income or loss for the Investment Management segment itself. Included in Economic Income is the actual pro rata share of the income or loss attributable to Ramius as an investor in such entities, which is relevant in management making operating decisions and evaluating financial performance.

The following tables set forth operating results for Ramius's Investment Management segment and other operational and related adjustments necessary to reconcile the Investment Management Economic Income measure to arrive at Ramius's combined GAAP income before income taxes:

The following is a summary of the adjustments made to US GAAP net income (loss) for the segment to arrive at Economic Income:

Funds Consolidation: The impacts of consolidation and the related elimination entries of the Ramius Funds are not included in Economic Income. Adjustments include elimination of incentive income and management fees earned from the consolidated Ramius Funds and addition of fund expenses excluding management fees paid, fund revenues and investment income (loss).

Ramius Securities is subject to the SEC's Uniform Net Capital Rule 15c3-1 (the "Rule"), which requires the maintenance of minimum net capital. Ramius Securities has elected to use the alternative method, permitted by the Rule, which requires that Ramius Securities maintain net capital in an amount not less than $2,500 for each security in which it makes a market based on the average number of such markets made by such broker or dealer during the 30 days immediately preceding the computation date. Since Ramius Securities has elected not to be subject to the Aggregate Indebtedness Standard (a)(1)(i) of the Rule and Ramius Securities has not made a market in any securities since January 2006, Ramius Securities shall not permit its net capital to be less than $250,000. At September 30, 2009, Ramius Securities had net capital of $4.34 million, which was $4.09 million in excess of its required minimum net capital of $250,000. As of December 31, 2008, Ramius Securities had net capital of $8.2 million, which was $7.9 million in excess of its required minimum net capital of $250,000.

Ramius Securities is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934 as Ramius Securities' activities are limited to those set forth in the conditions for exemption appearing in paragraph (k)(2)(ii) of the Rule.

The Group acts as managing member, general partner and/or investment manager to the Ramius Funds and certain managed accounts. Management fees and incentive income are primarily earned from affiliated entities. Fees receivable from related parties represents the management fees and incentive income owed to the Group from these Ramius Funds and certain affiliated managed accounts.

The Group may, at its discretion, waive certain of the fees charged to the Ramius Funds to avoid duplication of fees when such funds have an underlying investment in another affiliated investment fund. The Group reimbursed the Ramius Funds for management fees of $0.8 million and $6.0 million, and incentive income (loss) of $0.3 and ($2.5) million, respectively for the three months ended September 30, 2009 and 2008. The Group reimbursed the Ramius Funds for management fees of

$3.2 million and $20.7 million, and incentive income of $0.3 and $2.5 million for the nine months ended September 30, 2009 and 2008, respectively. During the periods ended September 30, 2009 and 2008, these reimbursements have been recorded net in management fees and incentive income in the consolidated statements of operations, respectively.

Included in due from related parties at September 30, 2009 and December 31, 2008 were approximately $3.3 million and $7.5 million related to principal advances, respectively. These amounts are generally short term in nature and may have various interest rates but no less than the applicable federal rate of interest as required by the Internal Revenue Service. Ramius may also make loans to employees or other affiliates. These loans are interest bearing and settle pursuant to the agreed-upon terms with such employees or affiliates and are included in due from related parties in the consolidated statements of financial condition. As of September 30, 2009 and December 31, 2008, loans to employees were $1.1 million and $0.8 million and were included in due from related parties on the consolidated statements of financial condition. Interest was charged for these loans and advances of $34,467 and $92,268 for the three months ended September 30, 2009 and 2008, respectively and $79,577 and $201,860 for the nine months ended September 30, 2009 and 2008.

As of September 30, 2009 and December 31, 2008, included in payments due to related parties are reimbursement obligations of $4.6 million and $1.8 million, respectively, related to certain letter agreements with a related party due to changes in unrealized value of certain managed real estate funds. The settlement of these potential reimbursement obligations is not due until the end of the life of the respective fund (see Note 11).

Ramius discloses information about its obligations under certain guarantee arrangements. Guarantees are contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying security (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. Guarantees are contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement as well as indirect guarantees of the indebtedness of others.

In the normal course of its operations, the Group enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Group's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Group that have not yet occurred. However, based on experience, the Group expects the risk of loss to be remote.

The Group indemnifies and guarantees certain service providers, such as clearing and custody agents, trustees and administrators, against specified potential losses in connection with their acting as an agent of, or providing services to, the Group or its affiliates. The Group also indemnifies some clients against potential losses incurred in the event specified third-party service providers, including sub-custodians and third-party brokers, improperly execute transactions. The maximum potential amount of future payments that the Group could be required to make under these indemnifications

cannot be estimated. However, the Group believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the consolidated financial statements for these indemnifications.

The Group also provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the breach of those representations and warranties. The Group may also provide standard indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due either to a change in or adverse application of certain tax laws. These indemnifications generally are standard contractual terms and are entered into in the normal course of business. The maximum potential amount of future payments that the Group could be required to make under these indemnifications cannot be estimated. However, the Group believes it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the consolidated financial statements for these indemnifications.

The transactions, as contemplated by the Transaction Agreement (see Note 1), were consummated on November 2, 2009. On that date, Ramius changed its name to RCG Holdings LLC ("RCG"), LexingtonPark Parent Corp. changed its name to Cowen Group, Inc ("Cowen Group"), Park Exchange LLC changed its name to Ramius LLC and Cowen Group, Inc changed its name to Cowen Holdings, Inc ("Cowen Holdings"). Upon the closing of the transactions Park Exchange LLC acquired substantially all of the assets and assumed substantially all of the liabilities of RCG. At the closing of the transactions, 37,536,826 shares of the Cowen Group's Class A Common Stock were issued to RCG Holdings. Under the terms of the Transaction Agreement each outstanding share of common stock of Cowen Holdings was converted into one share of Class A Common Stock of Cowen Group. Cowen Group is the parent of both Cowen Holdings and Park Exchange LLC following the consummation of the transactions.

The business combination between Ramius and Cowen Holdings was accounted for as an acquisition by Ramius of Cowen Holdings. As a result, the historical financial statements of Ramius have become the historical financial statements of Cowen Group. Accordingly, the financial statements of Cowen Group are Ramius's historical financial statements and do not reflect the historical financial position or results of operations of Cowen Holdings.

In connection with the transactions completed on November 2, 2009, as stated in the Transaction Agreement (see Note 1), the Special Allocation to the Managing Member has been discontinued. Additionally, in connection with this transaction Ramius awarded $25.0 million in equity REOP awards

to certain key employees. Such award grants are a one-time award which will vest over a three-year period, with 50% of the awards vesting on each of the second and third anniversaries of the closing of the transactions. The compensation expense related to these award grants will be recognized by Cowen Group over the requisite service period in relation to the services provided by the employees.

On November 2, 2009, Cowen Group entered into an amended collateralized revolving credit agreement with HVB AG, as lender, administrative agent and issuing bank, providing for a revolving credit facility with a $50.0 million aggregate loan commitment amount available, with a $7.0 million letter of credit sub-limit. At Cowen Group's election and discretion, borrowings under the collateralized revolving credit agreement bear interest per annum (based on a 360 day year) equal to either: (a) 1.5% plus the greater of (1) the lender's prime rate, (2) the overnight federal funds rate plus 0.5% and (3) the LIBOR rate plus 1.0% or (b) the LIBOR rate plus 3.5%. Cowen Group is required to pay a quarterly commitment fee on the undrawn portion of the revolving credit facility equal to 1.0% per annum of the undrawn amount. For letters of credit, Cowen Group will pay a fee on the stated amount of the letter of credit at a rate equal to 3.5%. $25.0 million of the collateralized revolving credit agreement will mature on January 4, 2010; the remainder on September 29, 2011.

Immediately following the consummation of the transactions, Ramius transferred interests in Ramius Enterprise LP, having a value of approximately $190 million, to Cowen Group. In addition, Ramius has submitted a redemption request to Ramius Enterprise LP to withdraw up to $75 million from the fund as of December 31, 2009, but has not yet determined the amount of capital that it will actually withdraw.

New guaranty agreements were executed on November 2, 2009 by Cowen Group and Park Exchange LLC to obtain the consent of the lessor of Ramius's leased aircraft to assign the lease to Cowen Group and Park Exchange LLC. Cowen Group's guaranty contains a covenant that the entity must maintain a minimum assets under management of $6.5 billion, based on the combined assets under management of Ramius and Cowen Holdings. If the assets under management at Cowen Group falls below $6.5 billion, the Lessor would require a cash deposit or letter of credit equal to 12 months of lease payments ($1,759,800).

On November 2, 2009, Ramius's office leases at 599 Lexington Avenue, New York, NY, 666 Third Avenue, New York, NY, and Purchase, NY were assigned to and assumed by Park Exchange LLC . Concurrently, landlord consents for the lease assignments were obtained and guaranty agreements were executed by Cowen Group. The guaranties provide for, among other things, the full and timely payment of rent and the full and prompt observance of other obligations set forth in the lease.

During the period from October 1, 2009 to November 25, 2009, there were no capital contributions or withdrawals to/from Ramius LLC. There were no capital contributions or withdrawals to/from the consolidated Ramius Funds for the same period.

The Group has evaluated events that have occurred since September 30, 2009 and through November 25, 2009, and it has determined except for what is disclosed in this note, there are no other events that have occurred that would require recognition or additional disclosures in these interim unaudited consolidated financial statements to prevent them from being misleading.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This discussion contains forward-looking statements, which involve numerous risks and uncertainties, including, but not limited to, those described in the section titled "Risk Factors" in this document. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and related notes of Cowen Group, Inc. (formerly LexingtonPark Parent Corp.) and RCG (formerly Ramius LLC, the Company's accounting predecessor) included elsewhere in this quarterly report. Actual results may differ materially from those contained in any forward-looking statements.

LexingtonPark Parent Corp. ("LexingtonPark", n/k/a Cowen Group, Inc.), a Delaware corporation, was formed on June 1, 2009 in connection with the Transaction Agreement and Agreement and Plan of Merger (the "Transaction Agreement"), dated as of June 3, 2009, by and among Cowen Holdings, Inc. (f/k/a Cowen Group, Inc.), a Delaware corporation, LexingtonPark, Lexington Merger Corp., a Delaware corporation and direct wholly owned subsidiary of Lexington Park, Ramius LLC (formerly Park Exchange LLC), a Delaware limited liability company and direct wholly owned subsidiary of LexingtonPark and RCG Holdings LLC (formerly Ramius LLC, the Company's accounting predeccessor), a Delaware limited liability company (the "Transaction Agreement"). As of September 30, 2009, LexingtonPark had not conducted any material activities other than those incidental to its formation.

Cowen Group, Inc. is a new holding company formed in connection with the business combination of Ramius and Cowen Holdings. On November 2, 2009, the Transactions were consummated including (1) the merger of Lexington Merger Corp. with and into Cowen Holdings, pursuant to which each outstanding share of common stock of Cowen Holdings was converted into one share of Class A common stock of the Company and (2) the transfer by RCG of substantially all of its assets and liabilities to Ramius in exchange for the issuance by the Company to RCG of 37,536,826 shares of Class A common stock of the Company. Following the consummation of the Transactions, Cowen Group is the parent company of both Ramius and Cowen Holdings and RCG held approximately 66.56% of the Company's Class A common stock as of November 2, 2009. RCG's managing member is controlled by certain members of the Company's senior management team. Prior to the consummation of the Transactions, the Company did not conduct any material activities other than those incidental to its formation and the matters contemplated by the Transaction Agreement. Concurrently with the completion of the Transactions described above, HVB received 2,713,882 shares of Class A common stock of the Company and approximately $10.4 million in cash in exchange for transferring to Cowen Holdings the 50% interest in Ramius Alternative Solutions, Ramius's fund of funds business, not already owned by Ramius.

The business combination between Ramius and Cowen Holdings was accounted for as an "acquisition" by Ramius of Cowen Holdings, as that term is used under generally accepted accounting principles in the U.S., for accounting and financial reporting purposes. As a result, the historical financial statements of Ramius (the business of which was operated by RCG, the Company's accounting predecessor, prior to the consummation of the Transactions) have become the historical financial statements of Cowen Group. Accordingly, the financial statements of Cowen Group included in this document as of September 30, 2009 and for the three and nine month periods ending September 30, 2009 are Ramius's historical financial statements and do not reflect the historical financial position or results of operations of Cowen Holdings. Similarly, the discussion in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" relate to Ramius's financial condition and results of operations and do not reflect the financial condition or results of operations of Cowen Holdings.

The assets and liabilities of Cowen Holdings were, as of November 2, 2009, recorded at their respective fair values and added to those of Ramius. The financial statements of the Company that include periods after November 2, 2009 will reflect such fair values and will not be restated retroactively to reflect the historical financial position or results of operations of Cowen Holdings. For periods after November 2, 2009, the results of operations of Cowen Holdings will be included in the results of operations of the Company.

As of September 30, 2009, the Company had not conducted any material activities other than those incidental to its formation and those matters contemplated by the Transaction Agreement.

Under the terms of the Transaction Agreement, on November 2, 2009, each outstanding share of common stock of Cowen Holdings was converted into one share of Class A Common Stock and 37,536,826 shares of the Company's Class A Common Stock were issued to RCG Holdings LLC. The Company is the parent of both Cowen Holdings, Inc. and Ramius LLC following the consummation of the transactions.

As of September 30, 2009, the Company had no outstanding short-term or long-term debt.

Prior to the consummation of the Transactions, the Company conducted its operations through one reportable segment, the alternative investment management segment, which provides management services to its hedge funds, fund of funds, real estate and other investment platforms. After the combination of Ramius and Cowen Holdings, the Company conducts its operations through two segments: an alternative investment management segment and an investment banking segment. The Company's alternative investment management business is conducted primarily through Ramius, its wholly owned subsidiary (the business of which was operated by RCG, the Company's accounting predecessor, prior to the consummation of the Transactions). For purposes of this historical discussion of the business of the Company as of September 30, 2009 and for prior periods, the Company's business is that of Ramius, the business of which was operated by RCG, the Company's accounting predecessor.

We operate our alternative investment management business primarily through Ramius, our wholly owned subsidiary. Our alternative investment management business had approximately $7.9 billion of assets under management as of October 1, 2009, after giving pro forma effect to the consummation of the Transactions. The predecessor to this business was founded in 1994 and, through one of its subsidiaries, has been a registered investment adviser under the Investment Advisers Act since 1997. Our alternative investment management products and services include hedge funds, fund of funds, real estate, health care royalty funds and cash management services. Our institutional investors include pension funds, insurance companies, banks, foundations and endowments, wealth management organizations and family offices.

Ramius's hedge fund and fund of funds platforms have historically sought to deliver consistent, risk-adjusted returns throughout a market cycle (which Ramius generally views as approximately three to five years). In these platforms, Ramius seeks positive performance with minimal correlation to directional market indices. Risk-adjusted returns refer to positive returns with lower volatility as compared to traditional asset classes such as equities.

Our alternative investment management business and results of operations are impacted by the following factors:

In addition, our alternative investment management business and results of operations may be affected by a number of external market factors. These include global asset allocation trends, regulatory developments and overall macroeconomic activity. Due to these and other factors, its operating results may reflect significant volatility from period to period. Ramius was affected by the conditions impacting the global financial markets and the hedge fund industry during 2008, which was characterized by substantial declines in investment performance and unanticipated levels of requested redemptions. Investors sought liquidity wherever it could be obtained, often due to liquidity constraints within their own organizations. As was generally the case on an industry-wide basis, during 2008 Ramius's funds experienced negative investment performance and increased redemptions. Ramius's assets under management declined from $12.9 billion as of December 31, 2007 to $7.1 billion as of October 1, 2009. After a very challenging period during the first quarter of 2009, market conditions subsequently stabilized and then began to improve. While there have been net redemptions in the industry for much

of the year, investors' need for capital has become less acute. Although we remain cautious, we believe the pace of redemptions may be slowing with calendar 2009 coming to a close, as investors adjust their asset allocations looking forward to 2010. The variability of redemptions affects our alternative investment management business, and it is always possible that Ramius could intermittently experience redemptions above historical levels, regardless of fund performance. These conditions will continue to affect our alternative investment management business, and as other alternative investment managers continue to restrict fund investor liquidity, it is possible that we could continue to experience elevated redemptions relative to historic levels, regardless of fund performance. However, we believe the diversity of our alternative investment management products and services as well as the strength of our institutional platform, supported by our own capital, should benefit us throughout this period.

The principal drivers of the results of our alternative investment management business are assets under management and investment performance. Delivering positive fund performance that is consistent with its investors' objectives is the principal determinant of the long-term success of our alternative investment management business as it enables us to grow assets under management organically, generate investment returns on our own invested capital, should enable us to attract new capital and minimize redemptions by our fund investors. Conversely, poor investment performance decreases our assets under management, can result in investor redemptions from its funds, generates losses on our own capital and impairs the marketability of our alternative investment management products and services.

The ability of investors to contribute capital to and redeem capital from Ramius's funds can cause assets under management to fluctuate considerably from period to period. Such fluctuations also result from investment performance due to the retention and reinvestment of fund profits as well as the impact of fund losses. All of these factors impact the revenues we earn from management fees, incentive income and returns on its own capital. The need of Ramius's clients to satisfy their own liquidity requirements (especially if other managers have instituted redemption restrictions) may cause some investors to redeem investments in Ramius's funds for reasons unrelated to Ramius's performance.

Most of the Company's return on its own invested capital is derived from Ramius's investment in the Enterprise Fund, with such income directly dependent on the performance of the Enterprise Fund. As of September 30, 2009, Ramius had $276 million of its own capital invested in the Enterprise Fund. As such, the investment performance of the Enterprise Fund may have a material impact on our performance. Following the consummation of the Transactions, Ramius transferred interests in Enterprise having a value of approximately $190 million to the Company. The discussion in this section does not reflect this transfer.

Our alternative investment management business generates revenue through three principal sources: management fees, incentive income and investment income from our own capital. The amount of revenues earned from those sources is directly related to the amount of its assets under management and the investment performance of its funds. Management fees are directly impacted by any increase or decrease in our assets under management, while incentive income is impacted by its funds' performance and any increase or decrease in assets under management. Investment income from our own capital is impacted by the performance of the funds in which its capital is invested, which is principally the Enterprise Fund.

As of September 30, 2009, Ramius owned 50% of Ramius Alternative Solutions, the Ramius fund of funds business. Although 100% of the revenues from the fund of funds business were included as revenue in Ramius's consolidated financial statements, 50% of the net income was allocated to a non-controlling interest. As described above, following the closing of the Transactions on November 2, 2009, the Company became the sole indirect owner of Ramius Alternative Solutions. Furthermore, the general partners of Ramius's real estate funds are owned jointly by Ramius and third parties with Ramius's ownership interest in the general partners of the real estate funds ranging from 30% to 55%. Accordingly, the management fees, incentive income and investment income generated by the real estate funds are split between us and the other owners of the general partners. We do not possess unilateral control over the general partners. Pursuant to GAAP, the management fees, incentive income and investment income received by the general partners are accounted for under the equity method and are reflected under other income instead of management fees, incentive income and investment income.

The expenses for our alternative investment management business consist of compensation and benefits, interest expense and general, administrative and other expenses. In 2008, Ramius decided to focus on its larger products and rationalize or eliminate those products, strategies and businesses that were less likely to attract significant assets under management or were marginal to its business. This decision has resulted in a reduction in expenses (including a reduction in compensation expenses as a result of headcount reductions of both investment professionals and support staff). Such expense reductions began in the fourth quarter of 2008 and Ramius continues to evaluate its expenses on an ongoing basis.

Ramius's other income (loss) primarily consists of realized and unrealized gains or losses from the investment of its own capital and from its consolidated funds and certain non-wholly owned operating subsidiaries.

Historically, Ramius operated as a limited liability company and was not subject to U.S. federal or state income taxes. However, Ramius is subject to unincorporated business income tax (which we refer to as UBT), on its trade and business activities conducted in New York, New York. The effective UBT rates vary significantly between the effective rate applicable to income from business activities and the effective rate applicable to income from investment activities. Ramius is also subject to foreign taxation on income it generates in certain countries. In the third quarter of 2009, one of the consolidated Ramius funds had an investment in reinsurance companies that generated a significant tax benefit, which is explained in more detail below. See GAAP Quarterly Comparison—Income Taxes."

Non-controlling interests represent the pro rata share of the income or loss of the non-wholly owned consolidated entities attributable to the other owners of such entities.

In accordance with Ramius's operating agreement in effect prior to the consummation of the Transactions, Ramius's managing member was historically entitled to receive a special allocation equal to 35% of Ramius's net profits. Following the closing of the Transactions as of November 2, 2009, Ramius no longer allocates a portion of its profits to its managing member, and the principals of the managing member, in their capacities as officers of Cowen Group, instead receive compensation in the form of salaries and discretionary bonuses.

The changes discussed below occurred as of November 2, 2009 upon the closing of the Transactions. The impact of these changes are not reflected in the results of operations for the third quarter of 2009 discussed in this document as they had not yet occurred.

Prior to November 2, 2009, Ramius Alternative Solutions was operated as a joint venture between Ramius and HVB. As a result, for all periods prior to November 2, 2009 the net income with respect to the fund of funds business was distributed equally to Ramius and HVB. On November 2, 2009, we purchased HVB's interest in Ramius Alternative Solutions in exchange for approximately 2.7 million shares, or 4.9%, of the Company's outstanding Class A common stock and approximately $10.4 million of cash. As a result, Cowen Group is now, indirectly, the sole owner of Ramius Alternative Solutions, the fund of funds business, and HVB will no longer participate directly in the fund of funds net income.

As described above, following the closing of the Transactions as of November 2, 2009, Ramius no longer allocates a portion of its profits to its managing member.

Ramius sponsors an employee ownership plan (which we refer to as the REOP program) for certain key employees at Ramius. The REOP program provides for the granting of equity interests in Ramius to certain participants, or equity REOP. Other participants have been granted non-equity awards which track the returns of an equity interest in Ramius, or phantom REOP. The equity REOP and phantom REOP awards which were awarded prior to the Transactions (other than the transaction REOP grants discussed below) vested upon the closing of the Transactions. More specifically, upon the closing of the Transactions, $3.3 million in outstanding equity and phantom REOP vested, of which $0.8 million will be paid out in cash with respect to equity REOP to fund certain tax withholding requirements, $1.8 million in outstanding equity REOP was converted to ownership interests in Ramius and $0.8 million in outstanding phantom REOP vested, and which was paid out in cash.

Ramius Alternative Solutions also sponsors an employee profit participation plan (which we refer to as the RAPP program) for certain key employees at Ramius Alternative Solutions. The RAPP program provides for the granting of equity interests in related entities with the initial grant values based on a certain percentage of profits of the fund of funds business. In years that awards are granted, one half of the amount granted represents equity units in one of the consolidated fund of funds

products managed by Ramius Alternative Solutions chosen by senior management and the other half of the amount granted represents equity units of Ramius. Upon the closing of the Transactions, $2.8 million in outstanding RAPP awards vested, of which $0.7 million was paid out in cash to fund certain tax withholding requirements, $1.0 million was converted to ownership interests in Ramius and $1.0 million was converted to ownership interests in certain fund of funds platforms.

In connection with the Transactions, Ramius awarded equity REOP (which corresponded to an aggregate of 2,859,426 of the shares of Class A common stock RCG received in the Transactions) to certain key employees, or the "transaction REOP." The transaction REOP is a one-time award which will vest over a three-year period, with 50% of the awards vesting on each of the second and third anniversaries of the closing of the transactions. The Company will recognize the transaction REOP as compensation expense each year in relation to the services received over the requisite service period.

As of the closing of the Transactions, the Company is subject to U.S. federal, state and local income tax on its income. The Company's carrying value of the Ramius business is higher for income tax purposes than for financial reporting purposes. The net deferred tax asset that will be recognized for this difference will be limited to the tax benefit expected to be realized in the foreseeable future. This benefit will be estimated based on a number of factors, especially the amount of unrealized gains in all of the net assets of the combined company existing for tax purposes at the date of the transaction that are actually expected to be realized, for tax purposes, in the foreseeable future. If the unrealized gains at the date of the closing of the Transactions that will be realized in the future increase or decrease, deferred income tax expense or benefit will be recognized accordingly.

Ramius typically accepts new investors and additional investments from existing investors into its funds on a monthly basis. Investors in Ramius's hedge funds and fund of funds, but not cash management or real estate, generally have the right to redeem their interests on a quarterly basis, after providing the required advanced notice which typically ranges from thirty to 120 days. However, depending on the investment strategy, some products have less frequent redemption periods, such as annual or semi-annual. The funds generally have a lock-up period of one year or more from the date of investment during which time redemptions can only be made upon payment of a fee ranging from 1% to 5% of the amount being redeemed. Investors in the Enterprise Fund, however, only have the right to redeem their interests after a two-year period upon providing 120 days' notice. If an investor in the Enterprise Fund does not provide notice, the investor would then be subject to another two-year lock-up period with respect to investments in the Enterprise Fund. Investors in Ramius's real estate funds are required to meet capital calls over a designated investment period to the extent of their previously agreed capital commitments and redemptions are generally not permitted. Investors in Ramius's cash management accounts may freely withdraw capital from such accounts.

The following table sets forth the changes to our alternative investment management business's assets under management, which, since 2007, has included Ramius's investment in the Enterprise Fund:

Assets under management declined substantially during 2008 due primarily to substantial declines in investment performance and unanticipated levels of redemptions related to the unprecedented global financial market conditions, particularly during the second half of 2008. Our alternative investment management business has been adversely affected by these global market conditions. As a result, the investment returns in the funds were adversely affected, most significantly in the second half of 2008.

Assets under management as of October 1, 2009 were $7.09 billion, a decrease of $2.68 billion from December 31, 2008, comprised of investor inflows of $943 billion, investor outflows of $3.89 billion and performance related appreciation of $272 million. Ramius believes the redemptions were investors' response to the continuing global financial crisis and the decline in fund performance. Ramius believes its assets under management will continue to experience net outflows for the near term. As a result, Ramius expects that management fees will be lower in future quarters compared to prior periods until assets under management begin to increase. In addition, due to the high-water marks set in 2008, Ramius may not earn incentive income in 2009 and beyond until the high-water marks are reached with respect to the investments of the fund investors who suffered losses last year.

In 2008, the decrease in assets under management was driven by net outflows of $1.07 billion, comprised of $3.57 billion of inflows and $4.64 billion of outflows, including $1.38 billion in inflows and $1.34 billion in outflows from cash management accounts as well as an $83.0 million inflow from an additional investment made by Ramius into the Enterprise Fund.

Performance information for Ramius's most significant funds is included throughout this discussion and analysis to facilitate an understanding of its results of operations for the periods presented. The performance information reflected in this discussion and analysis is not indicative of the future results of any particular fund. An investment in Cowen Group's shares is not an investment in any of Ramius's funds. There can be no assurance that any of the specified funds or Ramius's other existing or future funds will achieve similar results.

The table below sets forth performance information for the three and nine month periods ending September 30, 2009 and 2008 for Ramius's funds with assets greater than $200 million as well as information with respect to Ramius's largest single-strategy hedge fund. The performance reflected below is representative of the net return of the most recently issued full fee paying class of fund interests offered for the respective fund. The net returns are net of all management and incentive fees, and are calculated monthly based on the change in an investor's current month ending equity as a percentage of their prior month's ending equity, adjusted for the current month's subscriptions and redemptions. Such returns are compounded monthly in calculating the final net year to date return.

As 2009 began, market conditions remained unstable following the events of 2008, and industry-wide investor liquidity issues had yet to be resolved. For the first two months of the year and into early March, Ramius preserved capital in its funds while equity market indices declined substantially. In the second quarter, market conditions began to stabilize and directional markets improved. While the Enterprise Fund was profitable for the second quarter, the portfolio's asset mix is essentially non-directional in nature. When combined with a number of hedges still in place after the sharp market declines of 2008 and early 2009, performance would not be expected to be in line with the major market indices. The performance of Ramius's funds, however, has sequentially improved each quarter, with the third quarter being the year's strongest, as the Enterprise Fund was positive in each of the three months. Performance in the more liquid investment strategies has also continued to improve, not only as general market conditions have become more receptive, but also due to specific investments made in the various strategies in which Ramius engages. The less liquid investments, which have a longer term orientation, had experienced month-to-month variability in pricing which had been a drag on performance during the first half of 2009.

In 2008, the majority of the decline in performance was attributable to unprecedented levels of market volatility, a lack of liquidity in global markets and, beginning in the third quarter, investors' demands for liquidity wherever it could be obtained. These factors resulted in substantial declines in the value of almost every asset class globally. The combination of declining asset values, illiquid markets and redemption demands in turn forced a large part of the hedge fund (and fund of funds) industry to impose restrictions on redemptions (such as gates or outright suspensions), and to create a variety of investor structures (side pockets, liquidating and retention classes) in order to bring portfolio assets and liquidity requirements into a manageable balance.

Lehman Brothers. Certain of the hedge funds managed by Ramius used Lehman Brothers International (Europe) (which we refer to as LBIE) as one of their prime brokers and some of these funds also held assets through accounts at Lehman Brothers, Inc. (which we refer to as LBI). As a result of LBIE being placed into administration on September 15, 2008 by order of the English Court and LBI entering liquidation proceedings under the Securities Investor Protection Act of 1970, as amended, the assets, including securities and cash, held by Ramius and the hedge funds in their LBIE accounts and LBI accounts were frozen at LBIE and LBI, respectively.

The net assets of the Ramius hedge funds held at LBIE at the time of administration, which Ramius refers to as the total net equity claim, were approximately $232.6 million. Given the great degree of uncertainty as to the status of the assets held at LBIE and the process and prospects of the return of those assets, Ramius has valued the total net equity claim at an 80% discount, or approximately $46.5 million, which Ramius believes is a reasonable estimate of value that ultimately may be recovered with respect to the total net equity claim. Since the status and ultimate resolution of the assets under LBIE's administration proceedings is uncertain, Ramius decided that only the investors who were invested at the time of the Administration should participate in any profit/loss relating to the estimated recoverable Lehman claim. As such, Ramius has segregated the Lehman claims for the benefit of such investors for so long as they remained in the funds. These segregated Lehman claims do not earn management fees.

In November 2008, one of the hedge funds managed by Ramius was appointed as a member of the unsecured creditors' committee of LBIE and representatives of Ramius have been attending regular meetings of the creditors' committee and assisting in working on a solution to provide a framework for returning assets to clients.

In addition, Ramius currently estimates that the combined net exposure of the hedge funds to LBI amounts to approximately $18.7 million in cash and securities. On September 19, 2008, LBI was placed in a Securities Investor Protection Corporation ("SIPC") liquidation proceeding after the filing for bankruptcy of its parent Lehman Brothers Holdings, Inc. The status of the assets under LBI's bankruptcy proceedings has not been determined. The amount that will ultimately be recovered from LBI will depend on the amount of assets available in the fund of customer property to be established by the trustee appointed under the Securities Investor Protection Act (the "SIPA Trustee") as approved by the bankruptcy court as well as the total amount of customer claims that seek recovery from the fund of customer property. Based on recent court filings by the SIPA Trustee, the total amount of customer claims exceeds the assets that are likely to be in the fund of customer property. In addition, the court filings also indicate that Barclays plc has submitted a substantial claim against LBI relating to an asset purchase agreement entered into by Barclays with LBIE near the time of the SIPC liquidation proceedings that could affect the amount of assets that are included in the fund of customer property. As a result of these uncertainties and the timing of any distributions from LBI in respect of our customer claims, Ramius has estimated its recovery with respect to our LBI exposure at 65%, which represents the present value of the mid point between what it believes are reasonable estimates of the low side and high side potential recovery rates with respect to its LBI exposure. The estimated recoverable amount by the Ramius hedge funds may differ from the actual recoverable amount of the pending LBI claim, and the differences may be material.

As a result of Ramius being an investor in Enterprise and due to Ramius's additional direct exposure to LBIE, Ramius had a total exposure to LBIE of $1.94 million and a total exposure to LBI of $1.62 million, as of September 30, 2009. At September 30, 2009, the value of Ramius's exposure to LBIE and LBI after the mark downs discussed above, was $3.64 million.

Three Months Ended September 30, 2009 Compared with the Three Months Ended September 30, 2008
Consolidated Statement of Operations

Management fees decreased $8.8 million, or 50%, to $9.0 million for the three months ended September 30, 2009 compared with $17.8 million in the third quarter of 2008. The decrease was primarily due to the lower level of assets under management in the current year period relative to the prior year period.

There was almost no incentive income for the three months ended September 30, 2009 compared with negative incentive fee income of $0.9 million for the third quarter of 2008. As previously discussed, 2008 performance in the funds resulted in losses and the negative incentive fee income in the 2008 period represents a reversal of incentive income that was accrued for the first and second quarters of 2008. In addition, due to the losses in 2008, many of the funds now have high-water marks such that Ramius will not earn incentive income with respect to the assets of the fund investors who suffered such losses last year until these investors recover their losses.

Interest and dividends decreased $0.5 million, or 91%, to $0.05 million for the three months ended September 30, 2009 compared with $0.5 million in the third quarter of 2008. The decrease was primarily attributable to a combination of lower average interest rates and lower average interest bearing assets in the third quarter of 2009 compared with the third quarter of 2008.

Ramius's reimbursements from affiliates decreased $2.7 million, or 54%, to $2.3 million for the three months ended September 30, 2009 compared with $5.1 million in the third quarter of 2008. The decrease was attributable to lower assets under management in the 2009 period as such allocations are largely made based on a percentage of assets under management.

Other revenue decreased $1.8 million, or 76%, to $0.6 million for the three months ended September 30, 2009 compared with $2.4 million in the third quarter of 2008. The decrease was primarily due to placement fee income earned by a non-wholly owned subsidiary of Ramius that engaged in the distribution of interests in the real estate funds in 2008. Ramius exited the placement agent business in the third quarter of 2009.

Consolidated Ramius funds and certain real estate entities revenues decreased $7.6 million, or 64%, to $4.3 million for the three months ended September 30, 2009 compared with $11.9 million in the third quarter of 2008. The decrease was primarily attributable to a decrease in the interest and dividends earned by the Enterprise Fund.

Employee compensation and benefits expenses increased $6.3 million, or 40%, to $22.1 million for the three months ended September 30, 2009 compared with $15.8 million in the third quarter of 2008. The increase was a primarily a result of variable compensation accruals taken in the third quarter of 2009, compared to the reversal, in the prior year period, of variable compensation accruals taken in the first and second quarters of 2008. The reversal in the prior year period was made in order to reduce the aggregate awards for 2008 to an appropriate amount due to negative performance in the third quarter of 2008 that more than offset positive performance in the first and second quarters of that year.

Interest and dividend expense remained substantially unchanged at $0.4 million for the three months ended September 30, 2009 compared to $0.4 million in the third quarter of 2008.

General, administrative and other expenses decreased $3.4 million, or 23%, to $11.2 million for the three months ended September 30, 2009 compared with $14.6 million in the third quarter of 2008. This decrease was primarily attributable to a decrease in client service and business development expenses of $1.6 million and a decrease in expenses associated with the placement agent business of $1.7 million. As stated above, Ramius exited the placement fee business in the third quarter of 2009.

Consolidated Ramius funds and certain real estate entities expenses decreased $7.7 million, or 59%, to $5.3 million for the three months ended September 30, 2009 compared with $13.0 million in the third quarter of 2008. The decrease was primarily attributable to the decrease in interest and dividend expense recognized by the Enterprise Fund.

Other income increased $124.1 million, or 120%, to a gain of $20.6 million for the three months ended September 30, 2009 compared with a loss of $103.5 million in the third quarter of 2008. The increase is a result of positive fund performance in the current year period versus negative performance in the prior year period due to the general unprecedented levels of market volatility, and liquidity constraints, that began in the third quarter of 2008 and affected almost every asset class globally. As previously described, Ramius invests its own capital primarily in the Enterprise Fund with any gains or losses on Ramius's own capital shown under Consolidated Ramius Funds for that period. The gains and losses shown under Consolidated Ramius Funds reflect the consolidated total performance for such funds, and the portion of those gains or losses that are attributable to other investors is allocated to a non-controlling interest.

Income taxes decreased $6.5 million resulting in a tax benefit of $5.9 million for the three months ended September 30, 2009 compared with a provision for taxes of $0.6 million for the three months ended September 30, 2008. This change was primarily due to a tax benefit of $6.0 million representing Ramius's proportionate share of deferred tax benefits generated by reinsurance companies invested in by one of the consolidated Ramius funds. During the third quarter of 2009, the foreign fund acquired reinsurance companies in Luxembourg as part of a service program that provides reinsurance coverage to the foreign fund. In order to obtain reinsurance coverage against certain risks, the foreign fund, through a local subsidiary, acquired reinsurance companies in Luxembourg that had deferred tax liabilities. Upon these purchases, the local subsidiary generated deferred tax assets that fully offset these liabilities, resulting in the recognition of the deferred tax benefit.

Income attributable to non-controlling interests increased $58.7 million, to a gain of $9.9 million for the three months ended September 30, 2009 compared with a loss of $48.8 million in the third quarter of 2008. The increase was the result of positive performance of the Ramius consolidated funds and entities in 2009 compared to negative performance during the prior year period.

Nine Months Ended September 30, 2009 Compared with the Nine Months Ended September 30, 2008
Consolidated Statement of Operations

	As of September 30, 2009

Description	Shares/Principal Amount			Fair Value
	(amounts in thousands)
Common stock, Wyeth		1,214		$	58,971
Common stock, Schering-Plough Corp.		1,653			46,695
Corporate bond, Sprint Nextel Corp. 7.625%-8.375% due January 2011-August 2017		19,088			19,424
Corporate bond, Sprint Nextel Corp. floating rate due June 2010		19,500			18,915
U.S. Treasury notes, 1.0%-4.0%, due September 2011-August 2019		103,880			105,108
U.S. Treasury notes, 1.00%-3.625%, due June 2011-August 2019		(187,363	)		(187,888	)

	As of December 31, 2008

Description	Shares/ Principal/ Contract Amount		Fair Value
	(amounts in thousands)
German treasury notes, 3.75%, due January 2017	€	39,100	$	57,978
U.S. Treasury bills, 0.0%, due June 25, 2009-September 15, 2009	$	137,500		137,187
U.S. Treasury notes, 0.875%-4.125%, due 2010-2015		71,024		71,768
Buoni Poliennali del Tesero, 4.0%, due February 1, 2017	€	41,926		(58,323	)
U.S. Treasury notes, 0.875%-4.75%, due 2010-2018	$	266,720		(269,010	)
February 2009 Puts on S&P 500 Index		13		228
January 2009 Puts on S&P 500 Index		393		9,171
March 2009 Puts on S&P 500 Index		156		5,691
February 2009 Calls on S&P 500 Index		16		505
January 2009 Calls on S&P 500 Index		213		5,690
March 2009 Calls on S&P 500 Index		276		15,014
February 2009 Puts on S&P 500 Index		116		(2,202	)
January 2009 Puts on S&P 500 Index		177		(1,957	)
March 2009 Puts on S&P 500 Index		164		(5,943	)
February 2009 Calls on S&P 500 Index		73		(7,034	)
January 2009 Calls on S&P 500 Index		520		(17,973	)
March 2009 Calls on S&P 500 Index		118		(6,591	)
Fannie Mae, 3.25%-3.875%, due August 2010-July 2013		54,000		57,156
Freddie Mac, 3.25%-4.125%, due July 2010-September 2013		48,000		51,108
Federal Home Loan Mortgage Corporation TBA, 5.5%, due February 2035		24,000		24,510
Federal Home Loan Mortgage Corporation TBA, 4.5%-5.5%, due February 2038-February 2039		76,000		77,064

		Assets at Fair Value as of December 31, 2008

		Level 1		Level 2		Level 3		Total
		(dollars in thousands)
Other investments
	Portfolio Funds	$	—	$	423,068	$	157,513	$	580,581
	Lehman claims		—		—		3,881		3,881

		$	—	$	423,068	$	161,394	$	584,462

	Three months ended,						Nine months ended,

	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008
	(dollars in thousands)						(dollars in thousands)
Beginning Balance	$	3,614		$	4,687		$	3,784		$	3,358
Net purchases and sales		(1,458	)		680			(1,546	)		2,198
Realized gains/(losses)		—			—						7
Unrealized gains/(losses)		(100	)		(395	)		(182	)		(591	)

Ending Balance	$	2,056		$	4,972		$	2,056		$	4,972

	Three months ended,						Nine months ended,

	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008
	(dollars in thousands)						(dollars in thousands)
Beginning Balance	$	129,253		$	243,997		$	161,394		$	276,881
Net purchases and sales		(30,853	)		(23,897	)		(68,169	)		(49,612	)
Realized gains/(losses)		3,595			6,964			4,367			14,074
Unrealized gains/(losses)		(438	)		(22,575	)		3,965			(36,854	)

Ending Balance	$	101,557		$	204,489		$	101,557		$	204,489

	September 30, 2009					December 31, 2008

Description	Securities owned		Securities sold, but not yet purchased			Securities owned		Securities sold, but not yet purchased
	(dollars in thousands)					(dollars in thousands)
Agency Bond	$	10,017	$	—		$	—	$	—
Asset backed securities		31		—
Bank debt		1,646		—			5,853		—
Commercial mortgage backed securities		2,681		—			—		—
Common stock		243,487		(126,252	)		72,473		(37,303	)
Convertible debt		85,003		—			20,393		(223	)
Convertible preferred stock		—		—			—		—
Corporate bonds		275,034		—			107,593		—
Discount note		—		—			—		—
Distressed debt securities		17,736		—			2,501		—
Exchange traded funds		2,398		(4,509	)		33,331		(32,460	)
Government debt		6,090		(6,212	)		57,978		(58,323	)
Government-sponsored enterprise debt		—		—			209,838		—
Loans		827		—			655		—
Municipal bonds		7,762		—			16,538		—
Options—put		3,988		(214	)		24,519		(26,075	)
Options—call		2,760		(2,096	)		40,551		(35,364	)
OTC fx call option		33		(12	)		—		—
Preferred stock		440		(32	)		1,953		(28	)
Restricted stock		6,869		—			4,994		—
Rights		1,775		—			1,640		—
Trade claims		128		—			128		—
US Treasury Bills		—		—			137,187		—
US Treasury Notes		105,108		(187,890	)		71,768		(269,010	)
Warrants		4,103		—			1,185		—

	$	777,916	$	(327,217	)	$	811,078	$	(458,786	)

Description	As of September 30, 2009			As of December 31, 2008

	(dollars in thousands)
Contract for difference—long exposure	$	—		$	9
Contract for difference—short exposure		—			(1	)
Asset swaps		245			—
Credit default swaps—put swaption		38
Credit default swaps—call swaption		(12	)
Credit default swaps—protection purchased		(291	)		(354	)
Credit default swaps—protection sold		407			(9	)
Currency forwards		25			797
Equity swaps—long exposure		(63	)		659
Equity swaps—short exposure		(53	)		199
Futures		(268	)		1,206
Index swaps—long exposure		(5	)		(1,338	)
Index swaps—short exposure		311			—
Interest rate call swaption—long exposure		311			633
Interest rate call swaption—short exposure		(76	)
Interest rate swaps—long exposure		(72	)		1,655
Interest rate swaps—short exposure		—			2,661

	$	497		$	6,117

		As of September 30, 2009				December 31, 2008

Description	Strategy	Ramius Multi-Strategy Master FOF LP		Ramius Vintage Multi-Strategy Master FOF LP		Ramius Multi-Strategy Master FOF LP		Ramius Vintage Multi-Strategy Master FOF LP
		(dollars in thousands)				(dollars in thousands)
Ramius Fixed Income Arbitrage FOF LP*		$	—	$	—	$	5,743	$	—
Ramius Hedged Equity FOF LP*	Hedged Equity		6,600		—		15,772		—
Ramius Vintage Multi-Strategy Master FOF LP*	Multi Strategy		5,261		—		7,243		—
Tapestry Pooled Account I, LLC*	Multi-Strategy		—		—		—		5,708
Tapestry Pooled Account II, LLC*	Hedged Equity		—		—		—		4,152
Tapestry Pooled Account V, LLC*	Credit-Based		2,168		—		3,076		3,281
Externally Managed Funds	Credit-Based		3,991		3,398		5,302		2,233
Externally Managed Funds	Event Driven		9,076		13,076		13,994		26,088
Externally Managed Funds	Fixed Income Arbitrage		87		—		4,096		6,018
Externally Managed Funds	Hedged Equity		393		8,830		436		4,078
Externally Managed Funds	Multi Strategy		13,712		14,033		18,799		10,503
Externally Managed Funds	Other		122		1,544		46		—
Externally Managed Funds	Global Macro		1,075		5,217		—		—
Externally Managed Funds	Opportunistic Equity		—		2,719		—		—

		$	42,485	$	48,817	$	74,507	$	62,061

	Three months ended,						Nine months ended,

	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008
	(dollars in thousands)						(dollars in thousands)
Service cost	$	—		$	52		$	—		$	156
Interest cost		81			111			248			332
Expected return on plan assets		(83	)		(99	)		(245	)		(298	)
Amortization of loss		—			17			—			50
Amortization of prior service cost		5			6			16			19
Settlement		1			—			28			—

Net periodic benefit cost	$	4		$	87		$	47		$	259

Provision for income taxes:	Nine months ended September 30, 2009			Nine months ended September 30, 2008

	(dollars in thousands)			(dollars in thousands)
Local current income tax expense (benefit)	$	(336	)	$	109
Foreign current income tax expense (benefit)		343			629

Total current income tax expense (benefit)		7			738
Local deferred income tax expense (benefit)		—			—
Foreign deferred income tax expense (benefit)		(5,985	)		—

Total deferred income tax expense (benefit)		(5,985	)		—

Total income tax expense (benefit)	$	(5,978	)	$	738

	Minimum Lease Payments

	Equipment Leases		Facility Leases
	(dollars in thousands)
Remainder of 2009	$	440	$	2,411
2010		1,760		8,565
2011		1,760		7,311
2012		1,760		7,292
2013		1,760		7,630
Thereafter		146		66,859

	$	7,626	$	100,068

			Three months ended September 30, 2009

						Adjustments
			Investment Management Economic Income			Adjustments
			Investment Management Economic Income			Funds Consolidation			Other Adjustments			Ramius Group Consolidated
			(dollars in thousands)
Revenues
	Management fees		$	12,035		$	(968	)	$	(2,093	)(a)	$	8,974
	Incentive income			(1,293	)		—			1,470	(a)		177
	Investment Income			13,675			—			(13,675	)(c)		—
	Interest and dividends			—			—			47	(c)		47
	Reimbursement from affiliates			—			(216	)		2,558	(b)		2,342
	Other Revenue			63			—			514	(c)		577
	Consolidated Ramius Funds			—			4,345			—			4,345

		Total revenues		24,480			3,161			(11,179	)		16,462
Expenses
	Employee compensation and benefits			22,083			—			—			22,083
	Interest and dividends			430			—			5	(c)		435
	General, Administrative and Other Expenses			10,322			—			856	(c)		11,178
	Reimbursement from affiliates			(2,558	)		—			2,558	(b)		—
	Consolidated Ramius Funds			—			5,311			—			5,311

		Total expenses		30,277			5,311			3,419			39,007
Other income (loss)
	Net gains (losses) on securities, derivatives and other investments			—			—			1,274	(c)		1,274
	Consolidated Ramius Funds			—			9,728			9,628			19,356

		Total other income (loss)		—			9,728		$	10,902			20,630

		Income (loss) before income taxes and non-controlling interests		(5,797	)		7,578			(3,696	)		(1,915	)

Income taxes				—			(2,289	)		(3,640	)(b)		(5,929	)

		Economic Income (Loss) / Net income (loss) before non-controlling interests		(5,797	)		9,867			(56	)		4,014
	Less: Income (loss) attributable to non-controlling interests			32			9,867			—			9,899

		Economic Income (Loss) / Net income (loss) available to all Members	$	(5,829	)	$	—		$	(56	)	$	(5,885	)

Platform	Total Assets under Management			Primary Strategies

	(dollars in millions)
Hedge Funds	$	1,919	(3)	Multi-Strategy Single Strategy
Fund of Funds(1)		2,017		Ramius Multi-Strategy Ramius Vintage Multi-Strategy Ramius Customized Solutions
Real Estate(2)		1,628	(4)	Debt Equity
Other		1,526		Cash Management Mortgage Advisory
Total	$	7,090

			Performance

			Three months ended September 30,						Nine months ended September 30,
Platform	Strategy	Largest Fund(1)	2009			2008			2009			2008
Hedge Funds	Multi Strategy	Ramius Multi-Strategy Fund Ltd (Inception Jan 1, 1996)		3.98	%		(9.77)	%(2)		5.64	%		(10.97)	%(2)

		Ramius Enterprise LP (Inception Jan 1, 2008)		4.41	%		(11.88	)%(2)		3.94	%		(9.34	)%(2)

	Single Strategy	Ramius Value and Opportunity Overseas Fund Ltd(2) (Inception Mar 1, 2006)		5.70	%		(3.14	)%		12.07	%		(6.68	)%

Fund of Funds	Ramius Multi-Strategy	Ramius Multi-Strategy FOF Ltd. (Inception Jan 1, 1998)		3.35	%		(6.45	)%		8.06	%		(10.25	)%

	Ramius Vintage Multi-Strategy	Ramius Vintage Multi-Strategy FOF Ltd. (Inception Jan 1, 2006)		5.28	%		(8.67	)%		12.59	%		(14.5	)%

	Managed Accounts	Activist Portfolio with Hedging Overlay (Inception Sept 1, 2007)		7.02	%		(3.99	)%		10.54	%		(9.29	)%

		Low Volatility Multi-Strategy Fund (Inception Aug 1, 2005)		2.56	%		(6.25	)%		6.05	%		(9.81	)%

Real Estate	Debt	RCG Longview Debt Fund IV, L.P (Inception Nov 12, 2007)		(3.31	)%		(2.47	)%		(9.09)	%(3)		(1.70	)%
	Equity	RCG Longview Equity Fund, L.P. (Inception Nov 22, 2006)		6.37	%		(0.22	)%		4.75	%(3)		1.20%

Other	Cash management			0.26	%		0.87	%		0.15	%		2.32%

				Three Months Ended Sept 30,						Period-to-Period

				2009			2008			$ Change			% Change
				(dollars in thousands)
Revenues
	Management fees			$	8,974		$	17,795		$	(8,821	)		(49.6	)%
	Incentive income (loss)				177			(862	)		1,039			120.5	%
	Interest and dividends				47			530			(483	)		(91.1	)%
	Reimbursement from affiliates				2,342			5,077			(2,735	)		(53.9	)%
	Other Revenues				577			2,352			(1,775	)		(75.5	)%
	Consolidated Ramius Funds and certain real estate entities revenues				4,345			11,927			(7,582	)		(63.6	)%

			Total revenues		16,462			36,819			(20,357	)		(55.3	)%

Expenses
	Employee compensation and benefits				22,083			15,769			6,314			40.0	%
	Interest and dividends				435			441			(6	)		(1.4	)%
	General, Administrative and Other Expenses				11,178			14,550			(3,372	)		(23.2	)%
	Consolidated Ramius Funds and certain real estate entities expenses				5,311			13,022			(7,711	)		(59.2	)%

		Total expenses			39,007			43,782			(4,775	)		(10.9	)%

Other income (loss)
	Net gain (loss) on securities, derivatives and other investments				1,274			(523	)		1,797			343.6	%
	Consolidated Ramius Funds and certain real estate entities net gains (losses)				19,356			(102,936	)		122,292			118.8	%

		Total other income (loss)			20,630			(103,459	)		124,069			119.9	%

		Income (loss) before income taxes			(1,915	)		(110,422	)		108,507			98.3	%
Income taxes					(5,929	)		554			(6,483	)		(1170.2	)%

		Net income (loss)			4,014			(110,976	)		114,990			103.6	%
	Less: (loss) attributable to non-controlling interests				9,899			(48,787	)		58,686			120.3	%

		Net (loss attributable) to all Redeemable Members		$	(5,885	)	$	(62,189	)	$	56,304			90.5	%