Cowen Profile
Cowen Inc., together with its subsidiaries, operates as a financial services company.
The company provides investment banking, research, sales and trading, prime brokerage, global clearing, securities financing, commission management services and investment management.
Segments
The company operates through two segments, the Operating Company (Op Co) and the Asset Company (Asset Co).
Operating Company
This segment consists of four divisions, including the Cowen Investment Management (CIM) division, the Investment Banking division, the Markets division (which includes sales and trading, prime brokerage, global clearing, securities financing and commission management services) and the Research division.
The company refers to the Investment Banking division, the Markets division and the Research division collectively as its investment banking businesses. Op Co's CIM division includes advisers to investment funds (including private equity structures and privately placed hedge funds), and registered funds. Op Co's investment banking businesses offer industry focused investment banking for growth-oriented companies, including advisory and global capital markets origination, domain knowledge-driven research, sales and trading platforms for institutional investors, global clearing, commission management services and also a comprehensive suite of prime brokerage services.
The CIM division is the company's investment management business, which operates primarily under the Cowen Investment Management name. CIM offers investment products and solutions across the liquidity spectrum to institutional and private clients. The company's investment management business offers investors access to a number of strategies to meet their specific needs, including private healthcare investing, private sustainable investing, healthcare royalties, activism and merger arbitrage. A portion of the company’s capital is invested alongside the company's investment management clients. The company has also invested some of its capital in its reinsurance businesses.
Op Co's investment banking businesses include investment banking, research, sales and trading, prime brokerage, global clearing and commission management services provided primarily to companies and institutional investor clients. Sectors covered by Op Co's investment banking business include healthcare, technology, media and telecommunications, consumer, industrials, information and technology services, and energy. The company provides research and brokerage services to over 6,000 domestic and international clients seeking to trade securities and other financial instruments, principally in its sectors. The investment banking businesses also offer a full-service suite of introduced prime brokerage services targeting emerging private fund managers. The company focuses its investment banking efforts on small to mid-capitalization public companies, as well as private companies. The company invests in private capital raising transactions of its investment banking clients.
Asset Company
The Asset Co segment consists of the company's private investments, private real estate investments and other legacy investment strategies. The focus of Asset Co is to drive the future monetization of the invested capital of the segment.
Principal Business Lines
Investment Banking
The company’s investment banking department provides strategic advisory and capital raising services to the U.S. and international public and private companies in its sectors. Its strategic advisory services include, among other things, acquisitions, divestitures, fairness opinions, spin-offs, and partnerships. The company’s capital markets group consists of two groups, including equity capital markets (including convertible securities), which focuses on raising equity capital in the public markets; and private capital solutions, which focuses on providing alternative sources of capital and balance sheet solutions, including private equity, family offices, alternative lenders and liability management. A significant amount of the company’s investment banking revenue is earned from high-growth small and mid-capitalization companies. The company invests in private capital raising transactions of its clients.
Brokerage
The company’s team of brokerage professionals serves institutional investor clients in the U.S. and internationally. It trades common stocks, listed options, equity-linked securities and other financial instruments on behalf of its clients and offers a full-service suite of introduced prime brokerage services targeting emerging private fund managers. The company provides its clients with an electronic execution suite. It provides global, multi-asset class algorithmic execution trading models to both buy side and sell side clients and also offers execution capabilities relating to these trading models through ATM Execution LLC (ATM Execution). It also provides its clients with commentary on political, economic and market conditions. The company has relationships with over 6,000 institutional investor clients. Its brokerage team includes professionals dedicated to its sectors, which allows it to develop a level of knowledge. The company tailors its account coverage to the needs of its clients.
In connection with the brokerage services that the company provides, its sales professionals also provide its institutional investor clients with corporate access to its investment banking clients outside the context of financing transactions. These meetings are commonly referred to as non-deal road shows.
Research
As of December 31, 2021, the company had a research team of 60 senior analysts covering 965 stocks. Within its equity coverage universe, approximately 36% are healthcare companies, 25% are technology, media and telecom companies, 12% are energy companies, 10% are capital goods, industrial and basic materials companies, and 14% are consumer companies.
The company places significant emphasis on analyst collaboration, both within and between sectors. It sponsors a number of conferences every year that are focused on its sectors and sub-sectors. During these conferences, the company highlights its investment research and provides significant investor access to corporate management teams. The company provides research solely through its broker-dealers in connection with its provision of brokerage services.
Investment Management Strategies
The company's investment management business, within the Op Co segment, focuses on addressing the needs of institutional investors and high net worth individuals to preserve and grow allocated capital. The company and its related investment advisors offer a variety of investment management products that provide access to a number of strategies, including healthcare investing, sustainable investing, healthcare royalties, merger arbitrage and activism.
The company's investment management business, within the Asset Co segment, includes its private investments, private real estate investments and other legacy investment strategies. Certain multi-strategy hedge funds managed by the company are in wind-down. The majority of assets remaining in these hedge funds include investments in private companies.
Regulation and Compliance
As a publicly traded company in the United States, the company is subject to the U.S. federal securities laws and regulation by the United States Securities and Exchange Commission (SEC). Through its investment management and/or investment bank businesses, the company is subject to regulation by the SEC, the U.S. Commodity Futures Trading Commission (CFTC), the Financial Industry Regulatory Authority, Inc. (FINRA) the National Futures Association (NFA), other self-regulatory organizations and exchanges related to the financial services industry and the fifty state securities commissions in the United States (U.S.) and by the United Kingdom (U.K.) Financial Conduct Authority (FCA) and the Securities and Finance Commission (SFC) of Hong Kong.
The company has adopted and implemented disclosure controls and procedures and internal controls over financial reporting, which have been documented, tested and assessed for design and operating effectiveness in compliance with the Sarbanes-Oxley Act of 2002.
The investment advisers responsible for the company's investment management businesses are all registered as investment advisers with the SEC or rely upon the registration of an affiliated adviser, and all are exempt from registration as Commodity Pool Operators and Commodity Trading Advisors.
The investment activities of the company’s investment management businesses are also subject to regulation under the Securities Exchange Act of 1934, as amended, the Securities Act of 1933, as amended, the Investment Company Act of 1940, as amended and various other statutes, as well as the laws of the fifty states and the rules of various United States and non-United States securities exchanges and self-regulatory organizations, including laws governing trading on inside information, market manipulation and various technical requirements (e.g., options and futures position limits, execution requirements and reporting obligations) and market regulation policies in the United States and globally.
Pursuant to systemic risk reporting requirements adopted by the SEC, the company's affiliated registered investment advisers with private investment fund clients are required to report certain information about their investment funds to the SEC. The company’s captive insurance and reinsurance companies are regulated by both the New York State Department of Finance and the Luxembourg Commissariat aux Assurances, respectively.
Cowen and Company, LLC (Cowen and Company); ATM Execution LLC (ATM Execution); and Westminster Research Associates LLC (Westminster) are registered as broker-dealers with the SEC and are members in good standing with FINRA. Cowen and Company, ATM Execution, and Westminster are subject to regulation and oversight by the SEC, the U.S. states and territories in which they are registered, and FINRA and the other self-regulatory organizations of which they are members. Cowen and Company is also registered with the CFTC and is a member of the NFA as an introducing broker and, consequently, is subject to regulation and oversight by them. Additionally, Cowen International Ltd and Cowen Execution Ltd are primarily regulated in the U.K. by the FCA and Cowen and Company Asia is registered with and subject to the financial resource requirements of the SFC of Hong Kong.
In particular, as registered broker-dealers and the members of various self-regulatory organizations, Cowen and Company, ATM Execution, and Westminster are subject to the SEC's uniform net capital rule 15c3-1. In October 2021, Cowen Financial Products LLC became subject to the SEC’s standalone securities-based swap regulatory requirements.
The company must also comply with sanctions programs administered by the U.S. Department of Treasury's Office of Foreign Asset Control, which might include prohibitions on transactions with designated individuals and entities and with individuals and entities from certain countries.
Certain of the company’s businesses are subject to laws and regulations enacted by the U.S. federal and state governments, the European Union or other non-U.S. jurisdictions and/or enacted by various regulatory organizations or exchanges relating to the privacy of the information of clients, employees or others, including the European Union’s General Data Protection Regulation, the California Consumer Privacy Act, and the Gramm-Leach-Bliley Act.
History
Cowen Inc. was founded in 1918.
