1292426--2/29/2008--GFI_Group

related topics

{system, service, information}

{acquisition, growth, future}

{financial, litigation, operation}

{competitive, industry, competition}

{stock, price, operating}

{debt, indebtedness, cash}

{stock, price, share}

{property, intellectual, protect}

{condition, economic, financial}

{product, market, service}

{personnel, key, retain}

{control, financial, internal}

{provision, law, control}

Risks Related to Our Business and Competitive Environments. Economic, political and market factors beyond our control could reduce trading volumes, securities prices and demand for our brokerage services, which could harm our business and our profitability. We operate in a rapidly evolving business and technological environment and we must adapt our business effectively and keep up with rapid technological changes in order to compete effectively. If we are unable to continue to identify and exploit new market opportunities, our ability to maintain and grow our business may be adversely affected. We face substantial competition that could negatively impact our market share and our profitability. Because competition for the services of brokers is intense, we may not be able to attract and retain the highly skilled brokers we need to support our business or we may be required to incur additional expense to do so. Our clients' financial or other problems could adversely affect our business. Financial problems experienced by third parties could affect the markets in which we provide brokerage services. In addition, a disruption in the credit derivative market could affect our brokerage revenues. Risks Related to Our Operations. We operate in a highly regulated industry and we may face restrictions with respect to the way we conduct certain of our operations. Our regulated subsidiaries are subject to risks associated with net capital requirements, and we may not be able to engage in operations that require significant capital. Our investments in expanding our brokerage services, electronic brokerage systems and market data and analytics services may not produce substantial revenue or profit. If we are unable to manage the risks of international operations effectively, our business could be adversely affected. We may have difficulty managing our growth effectively. The securities settlement process exposes us to risks that may impact our liquidity and profitability. In addition, liability for unmatched trades could adversely affect our results of operations and balance sheet. In the event of employee misconduct or error, our business may be harmed. We have market risk exposure from unmatched principal transactions entered into by some of our equity and credit product brokerage desks. Brokerage services involve substantial risks of liability, therefore, we may become subject to risks of litigation. If we acquire other companies or businesses, or if we hire new brokerage personnel, we may have difficulty integrating their operations. Seasonal fluctuations in trading may cause our quarterly operating results to fluctuate. Computer systems failures, capacity constraints and breaches of security could increase our operating costs and cause us to lose clients. We may not be able to protect our intellectual property rights or may be prevented from using intellectual property necessary for our business. If we are unable to adequately protect our intellectual property rights or if we infringe on the rights of others, we could become involved in costly disputes and may be required to pay royalties or enter into license agreements with third parties. We depend on third-party software licenses. The loss of any of our key licenses could adversely affect our ability to provide our brokerage services. Risks Related to Our Liquidity and Financing Needs. We may not be able to obtain additional financing, if needed, on terms that are acceptable. Our credit agreement and our senior notes each contain restrictive covenants which may limit our working capital and corporate activities. Risks Related to Owning Our Stock Jersey Partners has significant voting power and may take actions that may not be in the best interest of our other stockholders. Provisions of our certificate of incorporation and bylaws, agreements to which we are a party, regulations to which we are subject and provisions of our stock option plans could delay or prevent a change in control of our company and entrench current management. If we fail to maintain effective internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act, it may have an adverse effect on our business and stock price. We cannot provide assurance that we will continue to declare and pay dividends at all or in any particular amounts and we may elect not to pay dividends in the future. The market price of our common stock may fluctuate in the future, and future sales of our shares could adversely affect the market price of our common stock.

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1292426--2/29/2008--GFI_Group_Inc.