1270436--3/10/2010--COHEN_&_Co

related topics

{stock, price, operating}

{system, service, information}

{loss, insurance, financial}

{competitive, industry, competition}

{stock, price, share}

{financial, litigation, operation}

{tax, income, asset}

{debt, indebtedness, cash}

{acquisition, growth, future}

{condition, economic, financial}

{investment, property, distribution}

{provision, law, control}

{loan, real, estate}

{product, market, service}

{regulation, change, law}

{personnel, key, retain}

{control, financial, internal}

{operation, international, foreign}

Risks Related to Adverse Market Conditions Difficult market conditions, particularly in the securitization markets, have adversely affected our business in many ways and may continue to adversely affect our business in a manner which could materially reduce our revenues. A prolonged economic slowdown, volatility in the markets, a recession, declining real estate values and increasing interest rates could impair our investments and harm our operating results. We may experience further writedowns of financial instruments and other losses related to the volatile and illiquid market conditions. Risks Related to Our Business We have experienced rapid growth in our Capital Markets business segment over the past several quarters, which may be difficult to sustain and may place significant demands on our administrative, operational and financial resources. Future growth may, under some circumstances, require regulatory approval. If we do not retain our senior management and continue to attract and retain qualified personnel, we may not be able to execute our business strategy. Our business will require a significant amount of cash, and if it is not available, our business and financial performance will be significantly harmed. Failure to obtain adequate capital and funding would adversely affect the growth and results of our operations and may, in turn, negatively affect the market price of our Common Stock. The lack of liquidity in certain investments may adversely affect our business, financial condition and results of operations. If we are unable to manage the risks of international operations effectively, our business could be adversely affected. The securities settlement process exposes us to risks that may adversely affect our business, financial condition and results of operations. We have market risk exposure from unmatched principal transactions entered into by our brokerage desks, which could result in substantial losses to us and adversely affect our financial condition and results of operations. Pricing and other competitive pressures may impair the revenues and profitability of our brokerage business. Increase in capital commitments in our trading business increases the potential for significant losses. Our principal trading and investments expose us to risk of loss. We may not realize gains or income from our investments. We expect to make significant investments in expanding our brokerage services, electronic brokerage systems and market data and analytics services; however, such investments may not produce substantial revenue or profit. Increases in interest rates could negatively affect the value of our investments, which could result in reduced earnings or losses and negatively affect cash flow. We could lose management fee income from the CDOs we manage or client assets under management as a result of the triggering of certain structural protections built into such CDOs. We may need to offer new investment strategies and products in order to continue to generate revenue. If our risk management systems for our investment fund business are ineffective, we may be exposed to material unanticipated losses. We are highly dependent on information and communications systems. Systems failures could significantly disrupt our business, which may, in turn, negatively affect our operating results. We depend on third-party software licenses and the loss of any of our key licenses could adversely affect our ability to provide our brokerage services. Our failure to deal appropriately with conflicts of interest could damage our reputation and adversely affect our business. Our ability to comply with the financial covenants in our debt agreements will depend primarily on our ability to generate substantial operating cash flows. Our failure to satisfy the financial covenants could result in a default and acceleration of repayment of the indebtedness under our debt agreements. Our substantial level of indebtedness could adversely affect our financial health and ability to compete. Our ability to use net operating loss carryovers and net capital loss carryovers to reduce our taxable income may be limited. If we fail to maintain effective internal control over financial reporting and disclosure controls and procedures in the future, we may not be able to accurately report our financial results, which could have an adverse effect on our business. Accounting rules for certain of our transactions are highly complex and involve significant judgment and assumptions. Changes in accounting interpretations or assumptions could adversely impact our financial statements. We may change our investment strategy, hedging strategy, asset allocation and operational policies without our stockholders consent, which may result in riskier investments and adversely affect the market value of our Common Stock. Maintenance of our Investment Company Act exemption imposes limits on our operations, and loss of our Investment Company Act exemption would adversely affect our operations. Risks Related to Our Industry We operate in a highly regulated industry and may face restrictions on, and examination of, the way we conduct certain of our operations. Substantial legal liability or significant regulatory action could have material adverse financial effects or cause significant reputational harm, either of which could seriously harm our business. The competitive pressures we face as a result of operating in a highly competitive market could have a material adverse effect on our business, financial condition, liquidity and results of operations. Financial problems experienced by third parties could affect the markets in which we provide brokerage services. In addition, a disruption in the credit derivatives market could affect our net trading revenues. Employee misconduct or error, which can be difficult to detect and deter, could harm us by impairing our ability to attract and retain clients and by subjecting us to significant legal liability and reputational harm. Risks Related to Our Organizational Structure and Ownership of Our Common Stock We are a holding company whose primary asset is membership units in Cohen and we are dependent on distributions from Cohen to pay taxes and other obligations. Our Chairman and Chief Executive Officer may have ownership interests in Cohen Brothers and competing duties to other entities that could create potential conflicts of interest and may result in decisions that are not in the best interests of Cohen Company stockholders. Daniel G. Cohen and other executive officers may exercise significant influence over matters requiring stockholder approval. We do not expect to pay dividends for the foreseeable future, and you must rely on increases in the market prices of our Common Stock for returns on your investment. Future sales of our Common Stock in the public market could lower the price of our Common Stock and impair our ability to raise funds in future securities offerings. The Maryland General Corporation Law (the MGCL ), provisions in our charter and bylaws, and our stockholder rights plan may prevent takeover attempts that could be beneficial to its stockholders. The Cohen Brothers LLC Agreement prevents the Company from undertaking certain actions that may be in the best interest of our stockholders without the affirmative approval of a majority of Cohen Brothers members, other than the Company, having a percentage interest of at least 10% of the Cohen Brothers membership units. The Cohen Brothers LLC Agreement prevents Cohen Brothers from undertaking certain actions that may be in the best interest of Cohen Brothers and Cohen Company without the affirmative approval of Cohen Company and the affirmative approval of a majority of Cohen Brothers members, other than Cohen Company, having a percentage interest of at least 10% of the Cohen Brothers membership units. The market price of our Common Stock may be volatile and may be affected by market conditions beyond our control. If we violate the listing requirements of the NYSE Amex, our Common Stock may be delisted.

Full 10-K form ▸

1270436--3/10/2010--COHEN_&_Co_INC.