Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ 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 1-12043 OPPENHEIMER HOLDINGS INC. (Exact name of registrant as specified in its charter) (State or other jurisdic ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0063 Expires: May 31, 2025 Estimated average burden hours per response . . . 2,255.26 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 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 1-1 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ 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 1-12043 OPPENHEIMER HOLDINGS INC. (Exact name of registrant as specified in its charter) (State or other juri ...

PART I. FINANCIAL INFORMATION This section presents Oppenheimer Holdings Inc.'s unaudited condensed consolidated financial statements, along with management's discussion and analysis, market risk disclosures, and controls and procedures [Item 1. FINANCIAL STATEMENTS (UNAUDITED)](index=4&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section presents Oppenheimer Holdings Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income statements, statements of comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, financial instruments, revenue recognition, and other critical financial information for the periods ended June 30, 2022 and December 31, 2021 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheets (Expressed in thousands) | Item | June 30, 2022 | December 31, 2021 | | :----------------------------------- | :------------ | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $36,606 | $213,759 | | Total assets | $2,920,581 | $3,043,250 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total liabilities | $2,011,448 | $2,090,220 | | Total Stockholders' equity | $781,368 | $825,265 | | Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity | $2,920,581 | $3,043,250 | - Total assets decreased by approximately **$122.7 million** from December 31, 2021, to June 30, 2022, primarily driven by a significant reduction in cash and cash equivalents[9](index=9&type=chunk) - Total stockholders' equity decreased by approximately **$43.9 million**, while total liabilities also saw a reduction of about **$78.8 million** over the same period[9](index=9&type=chunk) [Condensed Consolidated Income Statements](index=5&type=section&id=Condensed%20Consolidated%20Income%20Statements) This section presents the company's financial performance over specific periods, detailing revenues, expenses, and net income or loss Condensed Consolidated Income Statements (Expressed in thousands) | Item | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $237,222 | $340,293 | $503,250 | $713,575 | | Total expenses | $243,391 | $297,125 | $495,206 | $618,280 | | Pre-tax income (loss) | $(6,169) | $43,168 | $8,044 | $95,295 | | Net income (loss) attributable to Oppenheimer Holdings Inc. | $(3,874) | $31,159 | $5,418 | $69,817 | | Basic EPS | $(0.32) | $2.46 | $0.44 | $5.53 | | Diluted EPS | $(0.32) | $2.28 | $0.41 | $5.17 | - For the three months ended June 30, 2022, the company reported a **net loss of $3.874 million**, a significant decline from a **net income of $31.159 million** in the prior year period, primarily due to a **30.3% decrease** in total revenue[12](index=12&type=chunk) - For the six months ended June 30, 2022, net income attributable to Oppenheimer Holdings Inc. decreased by **92.2% to $5.418 million** from **$69.817 million** in the same period last year, with total revenue falling by **29.5%**[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section outlines the company's comprehensive income, including net income and other comprehensive income items like currency translation adjustments Condensed Consolidated Statements of Comprehensive Income (Expressed in thousands) | Item | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(4,720) | $31,159 | $5,058 | $69,817 | | Currency translation adjustment | $(2,038) | $537 | $(2,652) | $(299) | | Comprehensive income (loss) | $(6,758) | $31,696 | $2,406 | $69,518 | | Comprehensive income (loss) attributable to Oppenheimer Holdings Inc. | $(5,912) | $31,696 | $2,766 | $69,518 | - Comprehensive income attributable to Oppenheimer Holdings Inc. for the three months ended June 30, 2022, was a **loss of $5.912 million**, a significant decrease from a **gain of $31.696 million** in the prior year, largely influenced by a negative currency translation adjustment[13](index=13&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details changes in the company's stockholders' equity, including common stock, retained earnings, and other comprehensive income Condensed Consolidated Statements of Changes in Stockholders' Equity (Expressed in thousands) | Item | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Ending Balance (Common stock) | $11 | $13 | $11 | $13 | | Ending Balance (Additional paid-in capital) | $35,461 | $81,152 | $35,461 | $81,152 | | Ending Balance (Retained earnings) | $742,614 | $668,193 | $742,614 | $668,193 | | Ending Balance (Accumulated other comprehensive income) | $1,573 | $3,149 | $1,573 | $3,149 | | Total Oppenheimer Holdings Inc. stockholders' equity | $779,659 | $752,507 | $779,659 | $752,507 | | Dividends paid per share | $0.15 | $0.12 | $0.30 | $0.24 | - Total Oppenheimer Holdings Inc. stockholders' equity increased to **$779.659 million** as of June 30, 2022, from **$752.507 million** in the prior year period, despite a net loss in the current quarter[15](index=15&type=chunk) - The company repurchased Class A non-voting common stock for cancellation, with a significant impact on additional paid-in capital, decreasing it by **$30.217 million** for the three months and **$46.375 million** for the six months ended June 30, 2022[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (Expressed in thousands) for the Six Months Ended June 30 | Item | 2022 | 2021 | | :----------------------------------- | :----------- | :----------- | | Cash flows from operating activities | $(231,371) | $20,140 | | Cash flows from investing activities | $(1,116) | $(5,431) | | Cash flows from financing activities | $55,444 | $(10,335) | | Net (decrease)/increase in cash, cash equivalents and restricted cash | $(177,043) | $4,374 | | Cash, cash equivalents and restricted cash, end of period | $164,481 | $39,798 | - For the six months ended June 30, 2022, the company experienced a **net decrease in cash, cash equivalents, and restricted cash of $177.043 million**, a significant reversal from a **net increase of $4.374 million** in the prior year[19](index=19&type=chunk) - Operating activities used **$231.371 million** in cash in 2022, compared to providing **$20.140 million** in 2021, primarily due to changes in accrued compensation and securities sold but not yet purchased[19](index=19&type=chunk) - Financing activities provided **$55.444 million** in cash in 2022, driven by an increase in bank call loans, offsetting cash used for share repurchases and dividend payments[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the accounting policies, financial instruments, and other critical information supporting the financial statements [1. Organization](index=9&type=section&id=1.%20Organization) This note describes Oppenheimer Holdings Inc.'s business, its principal subsidiaries, and global operational footprint - Oppenheimer Holdings Inc. (OPY) is a leading middle market investment bank and full-service broker-dealer, offering retail securities brokerage, institutional sales and trading, investment banking, equity and fixed income research, market-making, trust services, and investment advisory and asset management services[21](index=21&type=chunk) - The Company operates through principal subsidiaries including Oppenheimer & Co. Inc., Oppenheimer Asset Management Inc., Oppenheimer Trust Company of Delaware, OPY Credit Corp., Oppenheimer Europe Ltd., and Oppenheimer Investments Asia Limited, with offices across the U.S., London, Tel Aviv, and Hong Kong[22](index=22&type=chunk) [2. Summary of significant accounting policies and estimates](index=9&type=section&id=2.%20Summary%20of%20significant%20accounting%20policies%20and%20estimates) This note outlines the key accounting principles and estimates used in preparing the financial statements, including reclassifications and consolidations - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim reporting, requiring management estimates and assumptions that may differ from actual results[24](index=24&type=chunk) - Effective this quarter, the Company reclassified certain stockholders' equity amounts, separating common stock par value and combining share capital with contributed capital into additional paid-in capital, with no impact on total stockholders' equity[25](index=25&type=chunk) - Oppenheimer Acquisition Corp. I (OHAA), a special purpose acquisition company sponsored by the Company's subsidiary, is consolidated in the financial statements, with **$127.8 million** in restricted cash held in a trust account for a potential Business Combination[27](index=27&type=chunk)[28](index=28&type=chunk) - Oppenheimer Principal Investments LLC (OPI) is consolidated to retain and reward talented employees through profit interests in private market investments and non-cash compensation from investment banking, aligning Company, client, and employee interests[32](index=32&type=chunk) [3. Financial Instruments - Credit Losses](index=11&type=section&id=3.%20Financial%20Instruments%20-%20Credit%20Losses) This note details the company's accounting for credit losses on financial instruments, including notes receivable and related allowances - The Company follows ASU 2016-13 for credit losses, electing to measure allowance for credit losses using the fair value of collateral for securities borrowed, margin loans, and reverse repurchase agreements, with no material historical losses reported[36](index=36&type=chunk) - Notes receivable, primarily recruiting and retention payments to financial advisors, totaled **$59.1 million** as of June 30, 2022, amortizing over 3 to 10 years contingent on continued employment[37](index=37&type=chunk) - As of June 30, 2022, the uncollected balance of defaulted notes was **$7.4 million**, with an allowance for uncollectibles of **$5.1 million**, which includes a 100% reserve for notes five years and older and an expected loss rate for newer balances[40](index=40&type=chunk) Allowance for Uncollectibles of Defaulted Notes Activity (Expressed in thousands) | Item | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $5,247 | $4,766 | $4,923 | $4,234 | | Additions and other adjustments | $(141) | $(65) | $183 | $467 | | Ending balance | $5,106 | $4,701 | $5,106 | $4,701 | [4. Leases](index=12&type=section&id=4.%20Leases) This note describes the company's operating lease arrangements for office space and equipment, including related assets and liabilities - The Company has operating leases for office space and equipment expiring through 2034, including its corporate headquarters and 91 retail branch offices, with short-term leases (12 months or less) not recorded on the balance sheet[43](index=43&type=chunk)[45](index=45&type=chunk) - As of June 30, 2022, right-of-use operating lease assets totaled **$146.1 million** (net) and operating lease liabilities were **$187.5 million**, primarily for real estate[48](index=48&type=chunk) Operating Lease Costs (Expressed in thousands) | Item | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Real estate leases - Right-of-use lease asset amortization | $6,189 | $6,062 | $12,346 | $12,118 | | Real estate leases - Interest expense | $3,267 | $3,607 | $6,623 | $7,203 | | Equipment leases - Right-of-use lease asset amortization | $410 | $445 | $824 | $890 | | Equipment leases - Interest expense | $35 | $37 | $67 | $76 | [5. Revenue from contracts with customers](index=14&type=section&id=5.%20Revenue%20from%20contracts%20with%20customers) This note explains the company's revenue recognition policies and disaggregates revenue by key streams and operating segments - Revenue from contracts with customers is recognized when performance obligations are satisfied, either over time or at a point in time, with variable consideration included when probable that a significant reversal will not occur[53](index=53&type=chunk)[54](index=54&type=chunk) - Key revenue streams include commissions (sales and trading, mutual fund income), advisory fees (management and performance fees), investment banking (underwriting, financial advisory), and bank deposit sweep income[55](index=55&type=chunk)[57](index=57&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) Total Revenue by Segment (Expressed in thousands) | Segment | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Private Client | $144,471 | $166,863 | $295,318 | $330,886 | | Asset Management | $24,315 | $25,544 | $51,432 | $49,774 | | Capital Markets | $71,274 | $147,945 | $156,325 | $331,544 | | Corporate/Other | $(2,838) | $(59) | $175 | $1,371 | | **Total Revenue** | **$237,222** | **$340,293** | **$503,250** | **$713,575** | - Total contract assets (receivables) decreased from **$37.192 million** at December 31, 2021, to **$25.108 million** at June 30, 2022, while total deferred revenue increased from **$235,000** to **$2.010 million**[72](index=72&type=chunk) [6. Earnings per share](index=19&type=section&id=6.%20Earnings%20per%20share) This note provides details on the calculation of basic and diluted earnings per share, including the impact of share-based compensation Earnings Per Share Attributable to Oppenheimer Holdings Inc. (Expressed in thousands, except per share amounts) | Item | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(3,874) | $31,159 | $5,418 | $69,817 | | Basic EPS | $(0.32) | $2.46 | $0.44 | $5.53 | | Diluted EPS | $(0.32) | $2.28 | $0.41 | $5.17 | | Basic weighted average shares outstanding | 11,980,115 | 12,689,191 | 12,222,527 | 12,634,464 | | Diluted weighted average shares outstanding | 11,980,115 | 13,681,146 | 13,141,538 | 13,495,589 | - For the three months ended June 30, 2022, basic and diluted EPS were **$(0.32)**, a significant decrease from **$2.46** and **$2.28** respectively in the prior year, reflecting the net loss[76](index=76&type=chunk) - The diluted net loss per share computation for Q2 2022 did not include the anti-dilutive effect of **1,267,733 shares** of Class A Stock granted under share-based compensation arrangements[76](index=76&type=chunk) [7. Receivable from and payable to brokers, dealers and clearing organizations](index=19&type=section&id=7.%20Receivable%20from%20and%20payable%20to%20brokers%2C%20dealers%20and%20clearing%20organizations) This note details the company's balances with brokers, dealers, and clearing organizations, including securities borrowed, loaned, and failed transactions Receivable from Brokers, Dealers and Clearing Organizations (Expressed in thousands) | Item | June 30, 2022 | December 31, 2021 | | :----------------------------------- | :------------ | :---------------- | | Securities borrowed | $79,038 | $99,752 | | Receivable from brokers | $42,255 | $39,716 | | Securities failed to deliver | $26,705 | $9,212 | | Clearing organizations | $19,355 | $19,518 | | Other | $545 | $1,704 | | **Total** | **$167,898** | **$169,902** | Payable to Brokers, Dealers and Clearing Organizations (Expressed in thousands) | Item | June 30, 2022 | December 31, 2021 | | :----------------------------------- | :------------ | :---------------- | | Securities loaned | $281,407 | $244,223 | | Securities failed to receive | $50,028 | $6,457 | | Payable to brokers | $3,357 | $2,077 | | Clearing organizations and other | $53,675 | $169,300 | | **Total** | **$388,467** | **$422,057** | - Receivable from brokers, dealers and clearing organizations remained relatively stable at **$167.898 million** as of June 30, 2022, compared to **$169.902 million** at December 31, 2021, with a notable decrease in securities borrowed offset by an increase in securities failed to deliver[77](index=77&type=chunk) - Payable to brokers, dealers and clearing organizations decreased to **$388.467 million** from **$422.057 million**, primarily due to a significant reduction in amounts owed to clearing organizations and other payables, partially offset by an increase in securities loaned and failed to receive[77](index=77&type=chunk) [8. Fair value measurements](index=20&type=section&id=8.%20Fair%20value%20measurements) This note describes the company's fair value measurement policies for financial instruments, categorizing assets and liabilities by valuation input levels - The Company values securities owned, securities sold but not yet purchased, investments, and derivative contracts at fair value, recognizing changes in earnings each period, using various valuation techniques for different asset classes[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - As of June 30, 2022, the Company owned **$32.0 million** of Auction Rate Securities (ARS), valued at the tender offer price and categorized in Level 3 due to their illiquid nature, with a valuation adjustment of **$5.2 million**[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) Assets Measured at Fair Value (Expressed in thousands) as of June 30, 2022 | Item | Level 1 | Level 2 | Level 3 | Total | | :----------------------------------- | :------ | :------ | :------ | :------ | | Deposits with clearing organizations | $41,189 | $— | $— | $41,189 | | Securities owned, at fair value | $394,752 | $194,543 | $31,977 | $621,272 | | Investments | $— | $9,150 | $— | $9,150 | | **Total Assets** | **$435,941** | **$203,693** | **$31,977** | **$671,611** | Liabilities Measured at Fair Value (Expressed in thousands) as of June 30, 2022 | Item | Level 1 | Level 2 | Level 3 | Total | | :----------------------------------- | :------ | :------ | :------ | :------ | | Securities sold but not yet purchased, at fair value | $243,881 | $10,771 | $— | $254,652 | | Derivative contracts, total | $371 | $3 | $— | $374 | | **Total Liabilities** | **$244,252** | **$10,774** | **$—** | **$255,026** | [9. Collateralized transactions](index=34&type=section&id=9.%20Collateralized%20transactions) This note explains the company's use of collateralized borrowing and lending, including bank call loans and repurchase agreements, and related risk management - The Company uses collateralized borrowing and lending transactions, including bank call loans, securities borrowed, and repurchase/reverse repurchase agreements, to meet customer needs, finance trading inventory, and obtain securities for settlement[138](index=138&type=chunk)[142](index=142&type=chunk) - As of June 30, 2022, outstanding bank call loans were **$177.3 million**, collateralized by Company and customer securities, and the Company had approximately **$1.7 billion** of customer securities under margin loans available to be pledged[139](index=139&type=chunk)[140](index=140&type=chunk) Gross Obligation by Collateral Class (Expressed in thousands) as of June 30, 2022 | Item | Overnight and Open | | :----------------------------------- | :----------------- | | Repurchase agreements: U.S. Government and Agency securities | $411,713 | | Securities loaned: Equity securities | $281,407 | | **Gross amount of recognized liabilities** | **$693,120** | - The Company manages credit exposure and market risk from these transactions through master netting agreements, collateral arrangements, and continuous monitoring of collateral market values[153](index=153&type=chunk)[155](index=155&type=chunk) [10. Variable interest entities ("VIEs")](index=37&type=section&id=10.%20Variable%20interest%20entities%20(%22VIEs%22)) This note outlines the company's consolidation of Variable Interest Entities, including Oppenheimer Acquisition Corp. I, and their financial impact - The Company consolidates subsidiaries where it has a controlling financial interest and Variable Interest Entities (VIEs) where it is the primary beneficiary, having power over economic performance and obligation to absorb significant losses or right to receive significant benefits[157](index=157&type=chunk) - Oppenheimer Acquisition Corp. I (OHAA) and its Sponsor are consolidated VIEs because the Company and its employees control OHAA through the Sponsor's ownership of Class A founder shares[160](index=160&type=chunk)[161](index=161&type=chunk) Total Assets and Liabilities of Consolidated VIEs (Expressed in thousands) as of June 30 | Item | 2022 | 2021 | | :---------------- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1,458 | $— | | Restricted Cash | $127,875 | $— | | Other Assets | $568 | $— | | **Total Assets** | **$129,901** | **$—** | | **Liabilities** | | | | Other Liabilities | $123 | $— | | **Total Liabilities** | **$123** | **$—** | [11. Long-term debt](index=38&type=section&id=11.%20Long-term%20debt) This note details the company's long-term debt, specifically the 5.50% Senior Secured Notes, including terms, guarantees, and covenants Long-term Debt (Expressed in thousands) | Item | June 30, 2022 | December 31, 2021 | | :----------------------------------- | :------------ | :---------------- | | 5.50% Senior Secured Notes | $125,000 | $125,000 | | Unamortized Debt Issuance Cost | $(800) | $(926) | | **Total** | **$124,200** | **$124,074** | - The Company has **$125.0 million** aggregate principal amount of 5.50% Senior Secured Notes due 2025, issued in a private offering in September 2020, with interest payable semi-annually[165](index=165&type=chunk)[166](index=166&type=chunk) - The Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by Subsidiary Guarantors and are secured by a first-priority security interest in substantially all of the Parent's and Subsidiary Guarantors' assets[171](index=171&type=chunk) - The indenture governing the Notes contains covenants restricting indebtedness, dividend payments, equity repurchases, asset sales, and liens, with the Company in compliance as of June 30, 2022[168](index=168&type=chunk)[170](index=170&type=chunk) [12. Income taxes](index=39&type=section&id=12.%20Income%20taxes) This note provides information on the company's effective income tax rates for the reported periods and factors influencing them - The effective income tax rate for the three months ended June 30, 2022, was **23.5%**, compared to **27.8%** in the prior year, negatively impacted by a valuation allowance on foreign operations[173](index=173&type=chunk) - For the six months ended June 30, 2022, the effective income tax rate was **37.1%**, compared to **26.7%** in the prior year, reflecting the Company's annual estimate adjusted for certain discrete items[173](index=173&type=chunk) [13. Stockholder's Equity](index=40&type=section&id=13.%20Stockholder's%20Equity) This note describes the company's authorized and outstanding stock, including details on share repurchase programs and their impact - The Company's authorized shares include **50,000,000 Class A** non-voting common stock and **99,665 Class B** voting common stock, with Class A and Class B shares being equal in all respects except voting rights[176](index=176&type=chunk)[177](index=177&type=chunk) Class A Stock Outstanding | Period | Beginning of Period | Issued (share-based compensation) | Repurchased and Canceled | End of Period | | :----------------------- | :------------------ | :-------------------------------- | :----------------------- | :------------ | | Three Months Ended June 30, 2022 | 12,156,174 | — | (885,230) | 11,270,944 | | Six Months Ended June 30, 2022 | 12,447,036 | 86,451 | (1,262,543) | 11,270,944 | - During the three months ended June 30, 2022, the Company repurchased and canceled **885,230 shares** of Class A Stock for **$30.2 million** (**$34.13 per share**), and **1,262,543 shares** for **$46.4 million** (**$36.73 per share**) during the six months, under its share repurchase program[182](index=182&type=chunk) - As of June 30, 2022, **29,278 shares** remained available for repurchase under the program, which is expected to continue indefinitely[182](index=182&type=chunk)[183](index=183&type=chunk) [14. Contingencies](index=42&type=section&id=14.%20Contingencies) This note addresses the company's exposure to legal actions, arbitrations, and regulatory investigations, including estimated loss ranges - The Company faces substantial liability risks from legal actions, arbitrations, class actions, and governmental/self-regulatory agency investigations related to its securities brokerage, asset management, and investment banking activities[186](index=186&type=chunk) - For legal and regulatory proceedings with at least a reasonable possibility of loss, the Company estimates an aggregate loss range of **$0 to $41.3 million** as of June 30, 2022, acknowledging that actual losses may exceed this estimate[190](index=190&type=chunk) - Oppenheimer is a defendant in a class action and twenty-four FINRA arbitrations related to investments in Horizon Private Equity, III, LLC, with alleged damages of approximately **$41.3 million** in the arbitrations, which the Company intends to vigorously defend[191](index=191&type=chunk)[193](index=193&type=chunk) - The Company received a 'Wells Notice' from the SEC regarding potential violations related to sales of municipal notes, which it believes to be without merit and intends to defend against[194](index=194&type=chunk) [15. Regulatory requirements](index=43&type=section&id=15.%20Regulatory%20requirements) This note outlines the company's compliance with various regulatory capital requirements for its U.S. and international broker-dealer subsidiaries - Oppenheimer's U.S. broker-dealer subsidiary, Oppenheimer & Co. Inc., had net capital of **$435.6 million** as of June 30, 2022, exceeding its minimum requirement by **$404 million** under SEC Rule 15c3-1[195](index=195&type=chunk) - Oppenheimer Europe Ltd. is in compliance with the FCA's Investment Firms' Prudential Regime (IFPR), with a Common Equity Tier 1 ratio of **130%** (required **56.0%**) and a Total Capital ratio of **174%** (required **100.0%**) as of June 30, 2022[196](index=196&type=chunk)[197](index=197&type=chunk) - Oppenheimer Investments Asia Limited also met its regulatory capital requirements, holding **$4.8 million**, which was **$4.4 million** in excess of the required amount as of June 30, 2022[197](index=197&type=chunk) [16. Segment information](index=44&type=section&id=16.%20Segment%20information) This note presents financial data disaggregated by the company's reportable segments and geographic areas, highlighting revenue and profitability - The Company's reportable segments are Private Client, Asset Management, Capital Markets, and Corporate/Other, with performance evaluated based on profitability[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) Revenue by Segment (Expressed in thousands) | Segment | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Private Client | $144,471 | $166,863 | $295,318 | $330,886 | | Asset Management | $24,315 | $25,544 | $51,432 | $49,774 | | Capital Markets | $71,274 | $147,945 | $156,325 | $331,544 | | Corporate/Other | $(2,838) | $(59) | $175 | $1,371 | | **Total Revenue** | **$237,222** | **$340,293** | **$503,250** | **$713,575** | Pre-Tax Income (Loss) by Segment (Expressed in thousands) | Segment | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Private Client | $38,800 | $21,673 | $62,946 | $45,936 | | Asset Management | $8,120 | $8,638 | $17,594 | $16,191 | | Capital Markets | $(17,935) | $39,373 | $(16,769) | $89,364 | | Corporate/Other | $(35,154) | $(26,516) | $(55,727) | $(56,196) | | **Total** | **$(6,169)** | **$43,168** | **$8,044** | **$95,295** | Revenue by Geographic Area (Expressed in thousands) | Region | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Americas | $225,500 | $326,485 | $477,410 | $683,192 | | Europe/Middle East | $10,474 | $12,501 | $22,451 | $27,911 | | Asia | $1,248 | $1,307 | $3,389 | $2,472 | | **Total** | **$237,222** | **$340,293** | **$503,250** | **$713,575** | [17. Subsequent events](index=45&type=section&id=17.%20Subsequent%20events) This note discloses significant events occurring after the reporting period, including dividend declarations and new share repurchase authorizations - On July 29, 2022, the Company announced a quarterly dividend of **$0.15 per share**, payable on August 26, 2022[208](index=208&type=chunk) - On July 28, 2022, the Board of Directors approved a new share repurchase program authorizing the purchase of up to **536,500 shares** of Class A Stock, supplementing the remaining **4,278 shares** from the previous program[209](index=209&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting the impact of macroeconomic factors, segment performance, liquidity, capital resources, and regulatory developments for the periods presented [Background](index=46&type=section&id=BACKGROUND) This section provides an overview of Oppenheimer Holdings Inc.'s business, services, operational footprint, and key statistics - Oppenheimer Holdings Inc. is a leading middle market investment bank and full-service broker-dealer, offering a broad range of financial services including retail brokerage, institutional sales and trading, investment banking, and asset management[211](index=211&type=chunk) - As of June 30, 2022, the Company operated from 91 offices in 25 U.S. states and international locations, with Client Assets Under Administration (CAUA) totaling **$104.0 billion** and Assets Under Management (AUM) at **$37.1 billion**[211](index=211&type=chunk) - The Company employed **2,913 individuals**, including **990 financial advisors**, as of June 30, 2022[211](index=211&type=chunk) [Outlook](index=46&type=section&id=Outlook) This section outlines the company's strategic focus on growing its private client and asset management businesses, expanding capital markets, and investing in technology - The Company is focused on growing its private client and asset management businesses by adding experienced financial advisors and money management personnel, and expanding through targeted acquisitions[212](index=212&type=chunk) - Strategic initiatives include creating and investing in private market opportunities, expanding capital market businesses with experienced personnel, and continuously investing in technology to support client service and compliance[212](index=212&type=chunk)[213](index=213&type=chunk) - Long-term growth plans involve expanding existing offices, acquiring operating branch offices, opening new branches, and pursuing acquisitions that align with corporate goals and provide incremental shareholder value[213](index=213&type=chunk)[214](index=214&type=chunk) [Impact of Interest Rates](index=47&type=section&id=Impact%20of%20Interest%20Rates) This section discusses the effects of rising interest rates on the company's interest-based revenues and potential impacts on economic activity and market valuations - The Federal Reserve increased the FED Funds Rate multiple times in 2022 (25bps in March, 50bps in May, 75bps in June, and 75bps in July), with further increases expected due to high inflation[215](index=215&type=chunk) - Rising interest rates are favorable for the Company's interest-based revenues, increasing fees from FDIC-insured client deposits and rates charged on margin balances, positively impacting earnings[215](index=215&type=chunk) - However, these rate increases may reduce economic activity, increase financial market volatility, and decrease the value of fixed income investments and equity share prices[215](index=215&type=chunk) [Ukraine War](index=47&type=section&id=Ukraine%20War) This section addresses the impact of the Ukraine war on global commodity prices, supply chains, and consumer confidence, and its potential adverse effects on financial markets - The ongoing Ukraine war and associated sanctions against Russia have increased hydrocarbon and agricultural product prices, disrupting supplies and exacerbating global inflationary pressures[216](index=216&type=chunk) - The conflict has indirectly lowered consumer confidence and spending, which could adversely impact financial markets and the Company's business[216](index=216&type=chunk) [CORONAVIRUS DISEASE 2019 ("COVID-19 PANDEMIC")](index=47&type=section&id=CORONAVIRUS%20DISEASE%202019%20(%22COVID-19%20PANDEMIC%22)) This section describes the company's ongoing response to the COVID-19 pandemic, including remote work arrangements and business continuity measures - The Company continues to monitor and respond to the COVID-19 pandemic, maintaining enhanced cleaning practices, limiting business travel, and implementing self-quarantine protocols[217](index=217&type=chunk) - The Business Continuity Plan enabled most employees to work remotely, significantly expanding technology infrastructure use, with no significant business disruptions to date[217](index=217&type=chunk) - While increased workplace attendance is observed due to loosened regulations and vaccinations, the Company anticipates maintaining flexible work arrangements and continues to monitor the situation[217](index=217&type=chunk) [Executive Summary](index=47&type=section&id=EXECUTIVE%20SUMMARY) This section provides a high-level overview of the company's financial performance, highlighting the impact of macroeconomic factors and segment contributions - Macroeconomic factors, including high inflation and rising interest rates, led to significantly higher volatility and lower valuations in equity and fixed income markets, resulting in lower results for Q2 2022[218](index=218&type=chunk) - The downturn in equity capital market issuance, particularly IPOs, secondary offerings, and the SPAC market, dramatically reduced capital markets revenues by **52%** compared to the prior year[218](index=218&type=chunk) - Wealth Management delivered solid results, driven by high assets under management and increased fees from the FDIC program, partially offsetting the impact of lower capital markets revenue and increased operating costs[219](index=219&type=chunk) - The Company maintained a strong balance sheet and capital level, repurchasing **885,230 Class A common shares** for **$30.2 million** in Q2 2022, and achieving record book value and tangible book value per share[220](index=220&type=chunk)[225](index=225&type=chunk) [Results of Operations](index=48&type=section&id=RESULTS%20OF%20OPERATIONS) This section presents a detailed analysis of the company's financial results, including revenue, expenses, net income, and key per-share metrics Key Financial Results (Expressed in thousands, except Per Share Amounts) | Item | 2Q-2022 | 2Q-2021 | Change | % Change | | :----------------------------------- | :------ | :------ | :----- | :------- | | Revenue | $237,222 | $340,293 | $(103,071) | (30.3)% | | Compensation expense | $177,979 | $231,140 | $(53,161) | (23.0)% | | Non-compensation expense | $65,412 | $65,985 | $(573) | (0.9)% | | Pre-Tax Income (Loss) | $(6,169) | $43,168 | $(49,337) | (114.3)% | | Net Income (Loss) attributable to Oppenheimer Holdings Inc. | $(3,874) | $31,159 | $(35,033) | (112.4)% | | Basic EPS | $(0.32) | $2.46 | $(2.78) | (113.0)% | | Diluted EPS | $(0.32) | $2.28 | $(2.60) | (114.0)% | | Book Value Per Share | $68.57 | $59.29 | $9.28 | 15.7% | | Tangible Book Value Per Share | $53.62 | $45.90 | $7.72 | 16.8% | | CAUA ($ billions) | $104.0 | $117.3 | $(13.3) | (11.3)% | | AUM ($ billions) | $37.1 | $43.7 | $(6.6) | (15.1)% | - The Company reported a **net loss of $3.9 million**, or **$(0.32) basic EPS**, for Q2 2022, a **112.4% decrease** from net income of **$31.2 million** in Q2 2021, driven by a **30.3% decline** in revenue[221](index=221&type=chunk) - Book value and tangible book value per share reached record levels at June 30, 2022, largely due to share buybacks[225](index=225&type=chunk) [Business Segments](index=49&type=section&id=BUSINESS%20SEGMENTS) This section analyzes the financial performance of the company's key business segments: Private Client, Asset Management, and Capital Markets [Private Client](index=49&type=section&id=Private%20Client) This section details the Private Client segment's revenue, expenses, and pre-tax income, highlighting trends in commissions, advisory fees, and bank deposit sweep income Private Client Segment Performance (Expressed in thousands, except headcount) | Item | 2Q-2022 | 2Q-2021 | Change | % Change | | :----------------------------------- | :------ | :------ | :----- | :------- | | Revenue | $144,471 | $166,863 | $(22,392) | (13.4)% | | Retail commissions | $45,916 | $53,753 | $(7,837) | (14.6)% | | Advisory fee revenue | $83,085 | $85,598 | $(2,513) | (2.9)% | | Bank deposit sweep income | $14,845 | $3,712 | $11,133 | 300% | | Interest | $10,369 | $7,235 | $3,134 | 43.3% | | Other revenue | $(9,744) | $16,565 | $(26,309) | * | | Total Expenses | $105,671 | $145,190 | $(39,519) | (27.2)% | | Compensation | $77,342 | $117,564 | $(40,222) | (34.2)% | | Non-compensation | $28,329 | $27,626 | $703 | 2.5% | | Pre-tax Income | $38,800 | $21,673 | $17,127 | 79.0% | | Financial advisor headcount | 990 | 1,004 | (14) | (1.4)% | | Client Asset Under Administration (billions) | $104.0 | $117.3 | $(13.3) | (11.3)% | | Cash Sweep Balances (billions) | $7.5 | $7.3 | $0.2 | 26.0% | - Private Client revenue decreased by **13.4% to $144.5 million** in Q2 2022, primarily due to lower commissions and decreases in Company-owned life insurance cash surrender value, partially offset by a **300% increase** in bank deposit sweep income[227](index=227&type=chunk)[232](index=232&type=chunk) - Pre-tax income for Private Client increased by **79.0% to $38.8 million**, driven by a **34.2% decrease** in compensation expenses due to lower production and reduced share-based and deferred compensation costs[227](index=227&type=chunk)[232](index=232&type=chunk) [Asset Management](index=50&type=section&id=Asset%20Management) This section reviews the Asset Management segment's financial performance, focusing on advisory fee revenue, expenses, and changes in Assets Under Management Asset Management Segment Performance (Expressed in thousands, except AUM) | Item | 2Q-2022 | 2Q-2021 | Change | % Change | | :----------------------------------- | :------ | :------ | :----- | :------- | | Revenue | $24,315 | $25,544 | $(1,229) | (4.8)% | | Advisory fee revenue | $24,311 | $25,541 | $(1,230) | (4.8)% | | Total Expenses | $16,195 | $16,906 | $(711) | (4.2)% | | Compensation | $6,697 | $6,261 | $436 | 7.0% | | Non-compensation | $9,498 | $10,645 | $(1,147) | (10.8)% | | Pre-tax Income | $8,120 | $8,638 | $(518) | (6.0)% | | AUM (billions) | $37.1 | $43.7 | $(6.6) | (15.1)% | - Asset Management revenue decreased by **4.8% to $24.3 million** in Q2 2022, primarily due to lower net Assets Under Management (AUM)[230](index=230&type=chunk)[233](index=233&type=chunk) - AUM decreased by **$6.6 billion (15.1%) to $37.1 billion** at June 30, 2022, comprising **$6.0 billion** from lower asset values and **$0.6 billion** from net asset distributions[233](index=233&type=chunk)[234](index=234&type=chunk) - Pre-tax income for Asset Management decreased by **6.0% to $8.1 million**, with compensation expenses up **7.0%** due to fixed compensation increases, while non-compensation expenses decreased by **10.8%**[230](index=230&type=chunk)[233](index=233&type=chunk) [Capital Markets](index=52&type=section&id=Capital%20Markets) This section analyzes the Capital Markets segment's revenue and profitability, distinguishing between investment banking and sales and trading activities Capital Markets Segment Performance (Expressed in thousands) | Item | 2Q-2022 | 2Q-2021 | Change | % Change | | :----------------------------------- | :------ | :------ | :----- | :------- | | Revenues | $71,274 | $147,945 | $(76,671) | (51.8)% | | Investment Banking | $14,699 | $99,045 | $(84,346) | (85.2)% | | Advisory fees | $8,284 | $50,515 | $(42,231) | (83.6)% | | Equities underwriting | $2,751 | $39,371 | $(36,620) | (93.0)% | | Fixed income underwriting | $3,259 | $8,835 | $(5,576) | (63.1)% | | Sales and Trading | $55,978 | $48,630 | $7,348 | 15.1% | | Equities | $37,126 | $30,218 | $6,908 | 22.9% | | Fixed Income | $18,852 | $18,412 | $440 | 2.4% | | Total Expenses | $89,209 | $108,572 | $(19,363) | (17.8)% | | Compensation | $67,172 | $85,663 | $(18,491) | (21.6)% | | Non-compensation | $22,037 | $22,909 | $(872) | (3.8)% | | Pre-tax Income (Loss) | $(17,935) | $39,373 | $(57,308) | * | | Compensation Ratio | 94.2% | 57.9% | 3,630 | 62.7% | | Non-compensation Ratio | 30.9% | 15.5% | 1,540 | 99.4% | | Pre-tax Margin | (25.2)% | 26.6% | (51.8)% | * | - Capital Markets revenue decreased by **51.8% to $71.3 million** in Q2 2022, resulting in a **pre-tax loss of $17.9 million**, a significant decline from a **pre-tax income of $39.4 million** in the prior year[239](index=239&type=chunk) - Investment Banking revenue plummeted by **85.2%**, with advisory fees down **83.6%** and equity underwriting fees down **93.0%** due to a significant decrease in activity, particularly in SPAC issuances[242](index=242&type=chunk) - Sales and Trading revenue increased by **15.1%**, driven by a **22.9% rise** in equities sales and trading due to increased market volatility, partially offsetting the decline in investment banking[242](index=242&type=chunk) [Critical Accounting Policies](index=53&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section confirms the company's adherence to U.S. GAAP and notes no material changes to critical accounting policies during the period - The Company's condensed consolidated financial statements adhere to U.S. GAAP, and no material changes occurred in critical accounting policies during the three months ended June 30, 2022, as discussed in the prior Annual Report on Form 10-K[243](index=243&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's financial position, including asset changes, financing strategies, regulatory capital, and liquidity management - Total assets decreased by **4.0%** from December 31, 2021, to June 30, 2022, with short-term financing met through internally generated funds, collateralized/uncollateralized borrowings, and uncommitted lines of credit[246](index=246&type=chunk) - Bank call loans increased to **$177.3 million** at June 30, 2022, from **$69.5 million** at December 31, 2021, collateralized by Company and customer securities[246](index=246&type=chunk) - Overseas subsidiaries are subject to local regulatory capital requirements, restricting capital utilization, and the Company permanently reinvests eligible foreign earnings, not accruing U.S. income taxes on repatriation[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) - The Company manages liquidity to meet obligations and regulatory requirements, conducting stress analyses to plan for potential liquidity disruptions, and holds Company-owned life insurance policies with a cash surrender value of **$74.4 million** for additional liquidity[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) Cash Flow Summary (Expressed in thousands) for the Six Months Ended June 30 | Item | 2022 | 2021 | | :----------------------------------- | :----------- | :----------- | | Cash (used in)/provided by operating activities | $(231,371) | $20,140 | | Cash used in investing activities | $(1,116) | $(5,431) | | Cash provided by/(used in) financing activities | $55,444 | $(10,335) | | Net (decrease)/increase in cash, cash equivalents and restricted cash | $(177,043) | $4,374 | [Cybersecurity](index=57&type=section&id=CYBERSECURITY) This section highlights the company's ongoing efforts to enhance cybersecurity policies and procedures in response to increasing cybercrime risks and regulatory scrutiny - The Company continuously reviews and enhances its cybersecurity policies and procedures to protect client data and its network, especially given increased cybercrime risks and attacks on data processing infrastructure[272](index=272&type=chunk)[273](index=273&type=chunk) - Regulatory oversight of cybersecurity planning and protections for financial service providers is intensifying, leading the Company to significantly increase resources dedicated to this effort, with potential for further increases[273](index=273&type=chunk) [Regulatory Matters and Developments](index=58&type=section&id=REGULATORY%20MATTERS%20AND%20DEVELOPMENTS) This section outlines the impact of key regulatory changes, including Reg BI and DOL exemptions, and addresses specific regulatory inquiries and notices - The SEC's Regulation Best Interest (Reg BI) imposes a federal standard of conduct for broker-dealers with retail clients, requiring enhanced documentation, cessation of certain practices, and increased compliance costs, which the Company has addressed through structural, technological, and operational changes[275](index=275&type=chunk)[276](index=276&type=chunk) - The DOL's final prohibited transaction exemption (PTE) for investment advice fiduciaries, effective February 1, 2022, provides a flexible approach to resolving conflicts under ERISA, with the Company implementing additional processes to ensure compliance[277](index=277&type=chunk) - Oppenheimer is responding to SEC information requests regarding a former financial advisor and received a 'Wells Notice' concerning potential violations related to municipal note sales, which it intends to vigorously defend against[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) [Factors Affecting "Forward-Looking Statements"](index=59&type=section&id=FACTORS%20AFFECTING%20%22FORWARD-LOOKING%20STATEMENTS%22) This section identifies various risks and uncertainties that could impact forward-looking statements, including market volatility, regulatory changes, and geopolitical events - Forward-looking statements are subject to various risks and uncertainties beyond the Company's control, including securities market volatility, interest rate fluctuations, changes in regulatory requirements, general economic conditions, and competition[283](index=283&type=chunk) - Other significant factors include potential cybersecurity threats, legal developments, changes in tax laws, the impact of Reg BI and other regulations, geopolitical events like the Ukraine war, and risks related to the COVID-19 pandemic[283](index=283&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there were no material changes to the Company's quantitative and qualitative disclosures about market risk during the six months ended June 30, 2022, compared to the information provided in its Annual Report on Form 10-K - No material changes occurred in the Company's quantitative and qualitative disclosures about market risk during the six months ended June 30, 2022[285](index=285&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that the Company's disclosure controls and procedures were effective as of June 30, 2022, and that there were no material changes in internal control over financial reporting during the period - The Company's management, including the CEO and Interim CFO, concluded that disclosure controls and procedures were effective as of June 30, 2022[286](index=286&type=chunk)[288](index=288&type=chunk) - A control system provides only reasonable, not absolute, assurance against error and fraud, acknowledging inherent limitations such as faulty judgments, simple errors, collusion, or management override[287](index=287&type=chunk) - No material changes in internal control over financial reporting occurred during the six months ended June 30, 2022[289](index=289&type=chunk) PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. LEGAL PROCEEDINGS](index=61&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) This section details the Company's involvement in various legal and regulatory proceedings, including customer complaints, lawsuits, and arbitrations, and provides an estimated range of potential losses - The Company is subject to substantial liability risks from routine litigation, regulatory investigations, and customer complaints arising from its financial services activities[291](index=291&type=chunk) - Management believes the resolution of these matters will not have a material adverse effect on the condensed consolidated balance sheet and statement of cash flows, but results of operations could be affected if liabilities differ from estimates[292](index=292&type=chunk) - For legal or regulatory proceedings with a reasonable possibility of loss, the Company estimates an aggregate loss range of **$0 to $41.3 million** as of June 30, 2022, acknowledging that actual losses may be materially higher[295](index=295&type=chunk) - Oppenheimer is defending against a class action and twenty-four FINRA arbitrations related to investments in Horizon Private Equity, III, LLC, with specific monetary damages claimed in arbitrations totaling approximately **$41.3 million**[296](index=296&type=chunk)[297](index=297&type=chunk) [Item 1A. RISK FACTORS](index=62&type=section&id=Item%201A.%20RISK%20FACTORS) This section states that there were no material changes to the Company's risk factors during the six months ended June 30, 2022, compared to those disclosed in its Annual Report on Form 10-K - No material changes occurred in the Company's risk factors during the six months ended June 30, 2022, as compared to the Annual Report on Form 10-K[298](index=298&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's share repurchase activities for Class A non-voting common stock during the second quarter of 2022, including the number of shares purchased, average price, and remaining authorization under its publicly announced plans Issuer Purchases of Equity Securities (Class A Stock) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Shares Purchased as Part of Publicly Announced Plans | Maximum Shares That May Yet Be Purchased Under Plans | | :------------------- | :--------------------- | :--------------------------- | :------------------------------------------------------- | :--------------------------------------------------- | | April 1 - 30, 2022 | 24,518 | $43.83 | 24,518 | 339,990 | | May 1 - 31, 2022 | 346,051 | $32.84 | 346,051 | 543,939 | | June 1 - 30, 2022 | 514,661 | $34.54 | 514,661 | 29,278 | | **Q2 2022 Total** | **885,230** | **$34.13** | **885,230** | **29,278** | - During Q2 2022, the Company repurchased a total of **885,230 shares** of Class A non-voting common stock at an average price of **$34.13 per share**[299](index=299&type=chunk) - As of June 30, 2022, **29,278 shares** remained available for purchase under the Company's share repurchase programs, which do not have an expiration date[299](index=299&type=chunk)[300](index=300&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and interactive data files - Exhibits include certifications from Albert G. Lowenthal and Salvatore F. Agosta (31.1, 31.2, 32) and interactive data files (101) pursuant to Rule 405 of Regulation S-T[303](index=303&type=chunk) [Signatures](index=64&type=section&id=Signatures) This section contains the official signatures of the Company's Chairman and Chief Executive Officer and Interim Chief Financial Officer, affirming the filing of the report - The report was duly signed on July 29, 2022, by Albert G. Lowenthal, Chairman and Chief Executive Officer, and Salvatore F. Agosta, Interim Chief Financial Officer[305](index=305&type=chunk)[306](index=306&type=chunk)

```markdown [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section details the unaudited condensed consolidated financial statements and management's analysis for Q1 2022 [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section provides Oppenheimer Holdings Inc.'s unaudited condensed consolidated financial statements and detailed notes for Q1 2022 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's condensed consolidated balance sheets as of March 31, 2022, and December 31, 2021 Key Balance Sheet Metrics | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $3,019,457 | $3,043,250 | | Total Liabilities | $2,074,746 | $2,090,220 | | Total Stockholders' Equity | $816,946 | $825,265 | - Total assets decreased by **$23.793 million** (**0.78%**) from December 31, 2021, to March 31, 2022. Total liabilities decreased by **$15.474 million** (**0.74%**) over the same period. Total stockholders' equity decreased by **$8.319 million** (**1.01%**) from December 31, 2021, to March 31, 2022[9](index=9&type=chunk) [Condensed Consolidated Income Statements](index=5&type=section&id=Condensed%20Consolidated%20Income%20Statements) This section details the company's income statements for Q1 2022 and Q1 2021, highlighting revenue and net income changes Income Statement Highlights | Metric | Q1 2022 (in thousands) | Q1 2021 (in thousands) | Change (YoY) | % Change (YoY) | | :--------------------------------- | :--------------------- | :--------------------- | :----------- | :------------- | | Total Revenue | $266,028 | $373,282 | $(107,254) | (28.7%) | | Total Expenses | $251,815 | $321,155 | $(69,340) | (21.6%) | | Pre-tax income | $14,213 | $52,127 | $(37,914) | (72.7%) | | Income taxes | $4,435 | $13,469 | $(9,034) | (67.1%) | | Net income attributable to Oppenheimer Holdings Inc. | $9,292 | $38,658 | $(29,366) | (76.0%) | | Basic EPS | $0.75 | $3.07 | $(2.32) | (75.6%) | | Diluted EPS | $0.69 | $2.91 | $(2.22) | (76.3%) | - The company experienced a **significant decline** in financial performance in Q1 2022 compared to Q1 2021, with total revenue decreasing by **28.7%** and net income attributable to Oppenheimer Holdings Inc. falling by **76.0%**. Basic EPS also saw a **substantial drop** of **75.6%**[11](index=11&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents comprehensive income for Q1 2022 and Q1 2021, including currency translation adjustments Comprehensive Income Summary | Metric | Q1 2022 (in thousands) | Q1 2021 (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | | Net income | $9,778 | $38,658 | | Currency translation adjustment | $(614) | $(836) | | Comprehensive income | $9,164 | $37,822 | | Comprehensive income attributable to Oppenheimer Holdings Inc. | $8,678 | $37,822 | - Comprehensive income attributable to Oppenheimer Holdings Inc. decreased significantly from **$37.822 million** in Q1 2021 to **$8.678 million** in Q1 2022, primarily driven by the decrease in net income[13](index=13&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section outlines changes in stockholders' equity for Q1 2022 and Q1 2021, including share capital and dividends Stockholders' Equity Changes | Metric | March 31, 2022 (in thousands) | March 31, 2021 (in thousands) | | :------------------------------------------ | :---------------------------- | :---------------------------- | | Share capital (end of period) | $22,628 | $43,141 | | Contributed capital (end of period) | $39,829 | $35,429 | | Retained earnings (end of period) | $748,323 | $638,558 | | Accumulated other comprehensive income (end of period) | $3,611 | $2,612 | | Total Oppenheimer Holdings Inc. stockholders' equity | $814,391 | $719,740 | | Dividends paid per share | $0.15 | $0.12 | - Total Oppenheimer Holdings Inc. stockholders' equity increased by **$94.651 million** year-over-year. The company repurchased **$16.158 million** of Class A non-voting common stock for cancellation in Q1 2022, compared to no repurchases in Q1 2021. **Dividends paid per share increased from $0.12 to $0.15**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details cash flow activities for Q1 2022 and Q1 2021, covering operating, investing, and financing Cash Flow Activities Summary | Cash Flow Activity | Q1 2022 (in thousands) | Q1 2021 (in thousands) | | :---------------------------------------- | :--------------------- | :--------------------- | | Cash (used in)/provided by operating activities | $(152,146) | $7,268 | | Cash used in investing activities | $(2,490) | $(999) | | Cash used in financing activities | $(11,654) | $(13,148) | | Net decrease in cash, cash equivalents and restricted cash | $(166,290) | $(6,879) | | Cash, cash equivalents and restricted cash, end of period | $175,234 | $28,545 | - The company experienced a **significant shift from cash provided by operating activities in Q1 2021 to cash used in operating activities in Q1 2022**, resulting in a **substantial net decrease in cash, cash equivalents, and restricted cash** for the period[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining the accounting policies and specific financial statement items [1. Organization](index=9&type=section&id=1.%20Organization) This section outlines Oppenheimer Holdings Inc.'s business structure, services, and global operational footprint - Oppenheimer Holdings Inc. is a **leading middle market investment bank and full-service broker-dealer**, offering retail securities brokerage, institutional sales and trading, investment banking, research, market-making, trust services, and investment advisory and asset management services[20](index=20&type=chunk) - The Company operates from its **New York headquarters**, **93 retail branch offices in the U.S.**, and institutional businesses in **London, Tel Aviv, and Hong Kong**, through key subsidiaries like Oppenheimer & Co. Inc., Oppenheimer Asset Management Inc., and Oppenheimer Trust Company of Delaware[21](index=21&type=chunk) [2. Summary of significant accounting policies and estimates](index=9&type=section&id=2.%20Summary%20of%20significant%20accounting%20policies%20and%20estimates) This section summarizes key accounting policies and estimates used in preparing the interim financial statements - The financial statements are prepared under U.S. GAAP for interim reporting, requiring management estimates and assumptions, which may differ from actual results[23](index=23&type=chunk) - The company consolidated Oppenheimer Acquisition Corp. I (OHAA), a special purpose acquisition company, and Oppenheimer Principal Investments LLC (OPI), designed to retain employees and deploy capital into private market investments[27](index=27&type=chunk)[32](index=32&type=chunk) - Restricted cash of **$127.8 million** represents OHAA deposits held in a trust account, classified as temporary equity, with changes in redemption value recognized immediately[28](index=28&type=chunk)[30](index=30&type=chunk)[35](index=35&type=chunk) [3. Financial Instruments - Credit Losses](index=12&type=section&id=3.%20Financial%20Instruments%20-%20Credit%20Losses) This section details the company's financial instruments, particularly notes receivable and credit loss allowances - Notes receivable, primarily recruiting and retention payments to financial advisors, **totaled $57.9 million** as of March 31, 2022, amortizing over 3 to 10 years contingent on continued employment[37](index=37&type=chunk) - The **allowance for uncollectibles for defaulted notes was $5.2 million** as of March 31, 2022, **covering $7.6 million in uncollected defaulted notes**, with **100% reserved for notes five years and older**[40](index=40&type=chunk) Uncollected Defaulted Notes by Year | Year of Default | As of March 31, 2022 (in thousands) | | :---------------- | :---------------------------------- | | 2022 | $598 | | 2021 | $2,334 | | 2020 | $585 | | 2019 | $365 | | 2018 | $138 | | 2017 and prior | $3,567 | | Total | $7,587 | [4. Leases](index=13&type=section&id=4.%20Leases) This section describes the company's operating lease arrangements, including right-of-use assets and liabilities - The Company holds operating leases for office space and equipment, with **right-of-use assets totaling $151.2 million** and corresponding **lease liabilities of $194.1 million** as of March 31, 2022[48](index=48&type=chunk) Weighted Average Lease Terms and Discount Rates | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------- | :---------------- | | Weighted average remaining lease term (in years) | 7.23 | 7.38 | | Weighted average discount rate | 6.79% | 6.89% | Operating Lease Costs | Operating Lease Costs (in thousands) | Q1 2022 | Q1 2021 | | :----------------------------------- | :------ | :------ | | Real estate leases - Right-of-use lease asset amortization | $6,157 | $6,056 | | Real estate leases - Interest expense | $3,356 | $3,596 | | Equipment leases - Right-of-use lease asset amortization | $414 | $445 | | Equipment leases - Interest expense | $32 | $39 | [5. Revenue from contracts with customers](index=15&type=section&id=5.%20Revenue%20from%20contracts%20with%20customers) This section explains the company's revenue recognition policies and details key revenue streams by source - Revenue is recognized when performance obligations are satisfied, either over time or at a point in time, with variable consideration included when probable of no significant reversal[53](index=53&type=chunk)[54](index=54&type=chunk) - Key revenue streams include commissions (sales and trading, mutual fund income), advisory fees (management and performance fees), investment banking (underwriting, financial advisory), and bank deposit sweep income[55](index=55&type=chunk)[58](index=58&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk) Revenue by Source | Revenue Source (in thousands) | Q1 2022 | Q1 2021 | | :-------------------------------- | :------ | :------ | | Commissions from sales and trading | $90,002 | $104,195 | | Mutual fund and insurance income | $8,319 | $9,276 | | Advisory fees | $115,766 | $104,496 | | Investment banking - capital markets | $16,530 | $88,579 | | Investment banking - advisory | $21,940 | $35,922 | | Bank deposit sweep income | $4,354 | $4,008 | | Other | $3,277 | $3,693 | | Total revenue from contracts with customers | $260,188 | $350,169 | [6. Earnings per share](index=19&type=section&id=6.%20Earnings%20per%20share) This section presents the calculation of basic and diluted earnings per share for Q1 2022 and Q1 2021 Earnings Per Share Details | Metric | Q1 2022 | Q1 2021 | | :------------------------------------------ | :------ | :------ | | Basic weighted average number of shares outstanding | 12,467,632 | 12,579,130 | | Diluted weighted average number of shares outstanding | 13,499,334 | 13,299,243 | | Net income attributable to Oppenheimer Holdings Inc. | $9,292 | $38,658 | | Basic EPS | $0.75 | $3.07 | | Diluted EPS | $0.69 | $2.91 | - Basic EPS decreased by **75.6%** and diluted EPS decreased by **76.3%** year-over-year, reflecting the **significant decline** in net income[75](index=75&type=chunk) [7. Receivable from and payable to brokers, dealers and clearing organizations](index=19&type=section&id=7.%20Receivable%20from%20and%20payable%20to%20brokers,%20dealers%20and%20clearing%20organizations) This section details balances with brokers, dealers, and clearing organizations, including securities borrowed and loaned Receivable from Brokers, Dealers, and Clearing Organizations | Receivable from (in thousands) | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Securities borrowed | $98,276 | $99,752 | | Receivable from brokers | $38,165 | $39,716 | | Securities failed to deliver | $37,028 | $9,212 | | Clearing organizations | $19,758 | $19,518 | | Other | $16,210 | $1,704 | | Total | $209,437 | $169,902 | Payable to Brokers, Dealers, and Clearing Organizations | Payable to (in thousands) | March 31, 2022 | December 31, 2021 | | :--------------------------------- | :------------- | :---------------- | | Securities loaned | $300,323 | $244,223 | | Securities failed to receive | $18,614 | $6,457 | | Payable to brokers | $566 | $2,077 | | Clearing organizations and other | $0 | $169,300 | | Total | $319,503 | $422,057 | - Receivable from brokers, dealers and clearing organizations increased by **$39.535 million**, primarily due to a rise in securities failed to deliver and other receivables. Payable to brokers, dealers and clearing organizations decreased by **$102.554 million**, largely due to the absence of a significant balance related to U.S. Government Securities trade/settlement date adjustment present in December 2021[76](index=76&type=chunk) [8. Fair value measurements](index=20&type=section&id=8.%20Fair%20value%20measurements) This section describes the company's fair value measurement practices for financial instruments and assets - The Company values securities owned, securities sold but not yet purchased, investments, and derivative contracts at fair value, recognizing changes in earnings each period[78](index=78&type=chunk) - Valuation techniques vary by instrument, utilizing quoted market prices for U.S. Treasury securities and corporate equities, and model-derived prices or external pricing data for U.S. Agency obligations, corporate debt, and mortgage-backed securities[79](index=79&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[86](index=86&type=chunk) - **As of March 31, 2022, the Company owned $31.8 million of Auction Rate Securities (ARS)**, **valued at the tender offer price and categorized in Level 3 due to illiquidity, with a $5.2 million valuation adjustment**[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) Fair Value Assets by Level | Fair Value Assets (in thousands) | Level 1 | Level 2 | Level 3 | Total | | :--------------------------------- | :------ | :------ | :------ | :------ | | Deposits with clearing organizations | $38,566 | $0 | $0 | $38,566 | | Securities owned | $589,569 | $67,673 | $31,804 | $689,046 | | Investments | $0 | $13,934 | $0 | $13,934 | | Derivative contracts | $0 | $6 | $0 | $6 | | Total Assets | $628,135 | $81,613 | $31,804 | $741,552 | Fair Value Liabilities by Level | Fair Value Liabilities (in thousands) | Level 1 | Level 2 | Level 3 | Total | | :------------------------------------ | :------ | :------ | :------ | :------ | | Securities sold but not yet purchased | $80,649 | $16,722 | $0 | $97,371 | | Derivative contracts | $1,832 | $26 | $0 | $1,858 | | Total Liabilities | $82,481 | $16,748 | $0 | $99,229 | [9. Collateralized transactions](index=34&type=section&id=9.%20Collateralized%20transactions) This section outlines the company's use of collateralized transactions and associated credit risk management - The Company uses collateralized transactions, including bank call loans, securities borrowed/loaned, and repurchase/reverse repurchase agreements, to manage liquidity, meet customer needs, and finance trading positions[133](index=133&type=chunk)[137](index=137&type=chunk) - As of March 31, 2022, **bank call loans totaled $78.2 million**, **collateralized by $26.0 million of Company securities and $65.3 million of customer securities**. The Company also **had $1.8 billion of customer securities available to be pledged under margin loans**[134](index=134&type=chunk)[135](index=135&type=chunk) Gross Collateralized Obligations | Gross Obligation (in thousands) | Overnight and Open | | :------------------------------------------ | :----------------- | | Repurchase agreements: U.S. Government and Agency securities | $525,314 | | Securities loaned: Equity securities | $300,323 | | Total | $825,637 | - The Company manages credit exposure from these transactions through master netting agreements and collateral arrangements, **actively monitoring collateral values and requesting additional collateral when necessary**[150](index=150&type=chunk) [10. Variable interest entities ("VIEs")](index=39&type=section&id=10.%20Variable%20interest%20entities%20(%22VIEs%22)) This section explains the company's consolidation of variable interest entities and their financial impact - The Company consolidates subsidiaries where it has a controlling financial interest and VIEs where it is the primary beneficiary, having power over economic performance and exposure to significant losses or benefits[155](index=155&type=chunk) - **Oppenheimer Acquisition LLC I and Oppenheimer Acquisition Corp. I (OHAA) are consolidated VIEs** because the **Company and its employees control OHAA through the Sponsor's ownership of Class A founder shares**[158](index=158&type=chunk)[159](index=159&type=chunk) Consolidated VIEs Financials | Consolidated VIEs (in thousands) | March 31, 2022 | | :------------------------------- | :------------- | | Total Assets | $130,094 | | Total Liabilities | $63 | [11. Long-term debt](index=40&type=section&id=11.%20Long-term%20debt) This section details the company's long-term debt, including Senior Secured Notes and associated covenants Long-Term Debt Summary | Debt Instrument | Maturity Date | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------- | :------------ | :---------------------------- | :------------------------------- | | 5.50% Senior Secured Notes | 10/1/2025 | $125,000 | $125,000 | | Unamortized Debt Issuance Cost | | $(863) | $(926) | | Net | | $124,137 | $124,074 | - The Company **issued $125.0 million of 5.50% Senior Secured Notes due 2025** in September 2020, using proceeds to redeem prior 6.75% notes. These notes are **guaranteed by subsidiary guarantors and secured by a first-priority interest in assets**[164](index=164&type=chunk)[166](index=166&type=chunk)[171](index=171&type=chunk) - The Indenture for the Notes includes covenants restricting indebtedness, dividends, asset sales, and liens, with specific exceptions for brokerage operations and regulated subsidiaries. The Company was **in compliance with all covenants as of March 31, 2022**[167](index=167&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk) [12. Income taxes](index=41&type=section&id=12.%20Income%20taxes) This section discusses the company's effective income tax rate and factors influencing its quarterly changes - The **effective income tax rate for Q1 2022 was 31.2%**, an **increase from 25.8% in Q1 2021**, primarily due to unfavorable permanent items in the current period and favorable discrete items in the prior year[173](index=173&type=chunk) [13. Share capital](index=41&type=section&id=13.%20Share%20capital) This section describes the company's authorized and outstanding share capital, including repurchase activities - The Company's authorized share capital includes 50 million Class A non-voting common shares and 99,665 Class B voting common shares, with **12,156,174 Class A shares outstanding** as of March 31, 2022[174](index=174&type=chunk)[176](index=176&type=chunk) - During Q1 2022, the Company **repurchased and canceled 377,313 shares of Class A Stock for $16.2 million ($42.82 per share)** under its buy-back program, with **364,508 shares remaining available for repurchase**[180](index=180&type=chunk) [14. Contingencies](index=42&type=section&id=14.%20Contingencies) This section addresses potential liabilities from legal actions, arbitrations, and regulatory investigations - The Company faces **substantial liability risks** from legal actions, arbitrations, and regulatory investigations related to securities brokerage, asset management, and investment banking activities[182](index=182&type=chunk) - As of March 31, 2022, the **estimated aggregate range of possible loss in excess of accrued amounts for legal and regulatory proceedings is $0 to $32.0 million**, though actual losses may exceed this estimate[187](index=187&type=chunk) - **Oppenheimer is a defendant in a class action and twenty FINRA arbitrations related to client investments in Horizon Private Equity, III, LLC**, with **alleged damages of approximately $38.0 million** in aggregate for specific claims[188](index=188&type=chunk)[189](index=189&type=chunk) [15. Regulatory requirements](index=43&type=section&id=15.%20Regulatory%20requirements) This section outlines the company's compliance with net capital and other regulatory requirements for its entities - Oppenheimer & Co. Inc. maintained **net capital of $440.4 million** (**30.40%** of aggregate debit items) as of March 31, 2022, **exceeding the minimum required by $411.4 million** under SEC Rule 15c3-1[190](index=190&type=chunk) - Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited were **in compliance with their respective regulatory capital requirements**, with **capital held significantly above minimums**[192](index=192&type=chunk)[193](index=193&type=chunk) - Oppenheimer Europe Ltd.'s capital ratios as of March 31, 2022, were: **Common Equity Tier 1 ratio 171% (required 56.0%)**, **Tier 1 Capital ratio 171% (required 75.0%)**, and **Total Capital ratio 228% (required 100.0%)**[197](index=197&type=chunk) [16. Segment information](index=44&type=section&id=16.%20Segment%20information) This section provides financial performance data for the company's Private Client, Asset Management, and Capital Markets segments - The Company's reportable segments are Private Client, Asset Management, and Capital Markets, with performance evaluated based on profitability and resources allocated accordingly[195](index=195&type=chunk)[196](index=196&type=chunk) Segment Revenue Performance | Segment Revenue (in thousands) | Q1 2022 | Q1 2021 | % Change | | :----------------------------- | :------ | :------ | :------- | | Private Client | $150,847 | $164,023 | (8.0%) | | Asset Management | $27,117 | $24,230 | 11.9% | | Capital Markets | $85,051 | $183,599 | (53.7%) | | Corporate/Other | $3,013 | $1,430 | 110.7% | | Total | $266,028 | $373,282 | (28.7%) | Segment Pre-Tax Income (Loss) Performance | Segment Pre-Tax Income (Loss) (in thousands) | Q1 2022 | Q1 2021 | % Change | | :------------------------------------------- | :------ | :------ | :------- | | Private Client | $24,146 | $24,263 | (0.5%) | | Asset Management | $9,474 | $7,553 | 25.4% | | Capital Markets | $1,166 | $49,991 | (97.7%) | | Corporate/Other | $(20,573) | $(29,680) | (30.7%) | | Total | $14,213 | $52,127 | (72.7%) | [17. Subsequent events](index=45&type=section&id=17.%20Subsequent%20events) This section reports significant events occurring after the balance sheet date, such as dividend declarations - **On April 29, 2022, the Company announced a quarterly dividend of $0.15 per share**, payable on May 27, 2022[202](index=202&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition and results for Q1 2022 [BACKGROUND](index=46&type=section&id=BACKGROUND) This section provides an overview of Oppenheimer Holdings Inc.'s business, services, and operational scale - Oppenheimer Holdings Inc. is a middle-market investment bank and full-service broker-dealer with 93 U.S. offices and international presence in Tel Aviv, Hong Kong, and Europe[204](index=204&type=chunk) Company Overview Metrics | Metric | As of March 31, 2022 | | :-------------------------------- | :------------------- | | Client assets under administration (CAUA) | $117.2 billion | | Client assets under management (AUM) | $42.7 billion | | Total employees | 2,896 (993 financial advisors) | [Outlook](index=46&type=section&id=Outlook) This section outlines the company's strategic priorities for growth, including advisor recruitment and technology - The Company focuses on growing private client and asset management businesses by adding experienced financial advisors and money management personnel, and expanding through targeted acquisitions[205](index=205&type=chunk) - Strategic initiatives include creating private market opportunities, enhancing capital market businesses with experienced personnel, continuously improving technology platforms, and investing in cybersecurity[205](index=205&type=chunk)[206](index=206&type=chunk) [Impact of Interest Rates](index=47&type=section&id=Impact%20of%20Interest%20Rates) This section discusses the potential effects of changing interest rates on the company's revenues and market conditions - The Federal Reserve's intention to increase the Federal Funds Rate, starting with a **25bps hike in March 2022**, is expected to **increase interest rates across the spectrum**, which will be **favorable to the Company's interest-based revenues**, including fees from FDIC-insured deposits and margin balances[208](index=208&type=chunk) - However, rising interest rates and the FED's balance sheet reduction could lead to **reduced economic activity, increased financial market volatility, decreased fixed income investment values, and impact equity share prices**[208](index=208&type=chunk) [Ukraine War](index=47&type=section&id=Ukraine%20War) This section addresses the indirect impact of the Ukraine war on global economic conditions and the company's business - The ongoing Ukraine war and associated sanctions have increased hydrocarbon and agricultural product prices, exacerbating inflationary pressures in Europe and globally[209](index=209&type=chunk) - The conflict has indirectly lowered consumer confidence and spending, which could adversely impact financial markets and the Company's business[209](index=209&type=chunk) [CORONAVIRUS DISEASE 2019 ("COVID-19 PANDEMIC")](index=47&type=section&id=CORONAVIRUS%20DISEASE%202019%20(%22COVID-19%20PANDEMIC%22)) This section details the company's ongoing response to the COVID-19 pandemic and its operational adjustments - The Company continues to monitor and respond to the COVID-19 pandemic, maintaining enhanced health protocols and remote work arrangements for most employees, with no significant business disruptions to date[210](index=210&type=chunk) - Despite recent improvements in attendance as local regulations loosen and vaccination rates rise, the Company continues to closely monitor the situation, acknowledging that these improvements may not be sustained[210](index=210&type=chunk) [EXECUTIVE SUMMARY](index=47&type=section&id=EXECUTIVE%20SUMMARY) This section provides a high-level overview of Q1 2022 financial performance, highlighting key drivers and challenges - Q1 2022 results were **significantly impacted by a downturn in equity capital market issuance**, particularly IPOs, secondary offerings, and the SPAC market, which **dramatically reduced capital market revenues**[211](index=211&type=chunk) - **Wealth Management delivered solid results with near-record AUM and net investor flows**, partially offsetting the revenue decline. However, **overall firm results were significantly reduced from 2021** due to market concerns over inflation, interest rates, and geopolitical events[212](index=212&type=chunk) [RESULTS OF OPERATIONS](index=48&type=section&id=RESULTS%20OF%20OPERATIONS) This section presents a detailed analysis of the company's consolidated financial results for Q1 2022 versus Q1 2021 Consolidated Financial Performance Summary | Metric | 1Q-2022 | 1Q-2021 | Change | % Change | | :---------------------------------------- | :------ | :------ | :----- | :------- | | Revenue | $266,028 | $373,282 | $(107,254) | (28.7) | | Compensation expense | $186,031 | $255,601 | $(69,570) | (27.2) | | Non-compensation expense | $65,784 | $65,554 | $230 | 0.4 | | Pre-Tax Income | $14,213 | $52,127 | $(37,914) | (72.7) | | Net Income | $9,292 | $38,658 | $(29,366) | (76.0) | | Earnings per share (basic) | $0.75 | $3.07 | $(2.32) | (75.6) | | Book Value Per Share | $66.45 | $56.74 | $9.71 | 17.1 | | Tangible Book Value Per Share | $52.58 | $43.34 | $9.24 | 21.3 | | CAUA ($ billions) | $117.2 | $111.4 | $5.8 | 5.2 | | AUM ($ billions) | $42.7 | $40.2 | $2.5 | 6.2 | - The Company reported a **76.0% decrease in net income** and a **75.6% decrease in basic EPS** for Q1 2022 compared to Q1 2021, driven by a **28.7% decline in revenue**[213](index=213&type=chunk)[214](index=214&type=chunk) - Despite the revenue and earnings decline, **client assets under administration (CAUA) and under management (AUM) reached near-record levels, increasing by 5.2% and 6.2% respectively**, and **book value and tangible book value per share also reached record levels**[214](index=214&type=chunk)[217](index=217&type=chunk) [BUSINESS SEGMENTS](index=49&type=section&id=BUSINESS%20SEGMENTS) This section analyzes the financial performance of the company's Private Client, Asset Management, and Capital Markets segments [Private Client](index=49&type=section&id=Private%20Client) This section details the financial performance of the Private Client segment, including revenue and pre-tax income Private Client Segment Performance | Metric | 1Q-2022 | 1Q-2021 | Change | % Change | | :---------------------------------------- | :------ | :------ | :----- | :------- | | Revenue | $150,847 | $164,023 | $(13,176) | (8.0) | | Retail commissions | $51,677 | $57,596 | $(5,919) | (10.3) | | Advisory fee revenue | $88,527 | $80,254 | $8,273 | 10.3 | | Bank deposit sweep income | $4,354 | $4,008 | $346 | 8.6 | | Interest | $8,147 | $6,476 | $1,671 | 25.8 | | Pre-tax Income | $24,146 | $24,263 | $(117) | (0.5) | | Pre-tax Margin | 16.0 % | 14.8 % | 120 bps | 8.1 | | Financial Advisor Headcount | 993 | 1,000 | (7) | (0.7) | - **Private Client revenue decreased by 8.0%** due to **lower commissions and decreases in Company-owned life insurance cash surrender value**, partially offset by **increased bank deposit sweep income and interest revenue from higher rates and margin balances**[219](index=219&type=chunk)[224](index=224&type=chunk) - **Pre-tax income remained stable with a slight decrease of 0.5%**, resulting in an **improved pre-tax profit margin of 16.0%**, despite a slight reduction in financial advisor headcount[219](index=219&type=chunk)[220](index=220&type=chunk) [Asset Management](index=50&type=section&id=Asset%20Management) This section details the financial performance of the Asset Management segment, including revenue and AUM growth Asset Management Segment Performance | Metric | 1Q-2022 | 1Q-2021 | Change | % Change | | :-------------------------------- | :------ | :------ | :----- | :------- | | Revenue | $27,117 | $24,230 | $2,887 | 11.9 | | Advisory fee revenue | $27,113 | $24,227 | $2,886 | 11.9 | | Pre-tax Income | $9,474 | $7,553 | $1,921 | 25.4 | | Pre-tax Margin | 34.9 % | 31.2 % | 370 bps | 11.9 | | AUM (billions) | $42.7 | $40.2 | $2.5 | 6.2 | - **Asset Management revenue increased by 11.9%** and **pre-tax income rose by 25.4% year-over-year**, driven by **higher assets under management (AUM) and positive net asset flows**[222](index=222&type=chunk)[225](index=225&type=chunk) - **AUM reached a near-record $42.7 billion at March 31, 2022**, reflecting **$1.9 billion in asset value appreciation and $0.6 billion in net contributions**[225](index=225&type=chunk)[226](index=226&type=chunk) [Capital Markets](index=52&type=section&id=Capital%20Markets) This section details the financial performance of the Capital Markets segment, highlighting revenue and income declines Capital Markets Segment Performance | Metric | 1Q-2022 | 1Q-2021 | Change | % Change | | :-------------------------------- | :------ | :------ | :----- | :------- | | Revenues | $85,051 | $183,599 | $(98,548) | (53.7) | | Investment Banking | $32,975 | $116,836 | $(83,861) | (71.8) | | Advisory fees | $21,905 | $35,922 | $(14,017) | (39.0) | | Equities underwriting | $11,236 | $74,582 | $(63,346) | (84.9) | | Fixed income underwriting | $1,987 | $5,487 | $(3,500) | (63.8) | | Sales and Trading | $51,603 | $66,063 | $(14,460) | (21.9) | | Equities | $35,928 | $43,556 | $(7,628) | (17.5) | | Fixed Income | $15,675 | $22,507 | $(6,832) | (30.4) | | Pre-tax Income | $1,166 | $49,991 | $(48,825) | (97.7) | | Pre-tax Margin | 1.4 % | 27.2 % | (2,580 bps) | (94.9) | - **Capital Markets revenue decreased by 53.7%** and **pre-tax income plummeted by 97.7% year-over-year**, primarily due to a **significant decline in investment banking activities, including advisory fees and equity/fixed income underwriting**[231](index=231&type=chunk)[234](index=234&type=chunk) - **Sales and trading revenue also declined, with equities down 17.5% and fixed income down 30.4%**, reflecting **reduced market volumes**[234](index=234&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=53&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section confirms no material changes to critical accounting policies during the first quarter of 2022 - There were **no material changes to the Company's critical accounting policies** during the three months ended March 31, 2022, as discussed in the Annual Report on Form 10-K for December 31, 2021[237](index=237&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=53&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's funding strategies, capital structure, and regulatory capital requirements - The Company finances short-term needs through **internally generated funds, collateralized/uncollateralized borrowings (bank call loans, stock loans), and uncommitted lines of credit**, while longer-term needs are met by **5.50% Senior Secured Notes due 2025**[238](index=238&type=chunk) - Overseas subsidiaries (Oppenheimer Europe Ltd. and Oppenheimer Investments Asia Limited) are **subject to local regulatory capital requirements, restricting capital utilization**, with **liquid assets primarily in cash deposits and U.S. Treasuries**[239](index=239&type=chunk)[240](index=240&type=chunk) - The Company **permanently reinvests eligible earnings of its foreign subsidiaries**, estimating an **unrecognized deferred tax liability of $3.8 million** if these earnings were repatriated[241](index=241&type=chunk) [Liquidity](index=55&type=section&id=Liquidity) This section details the company's liquid assets and short-term funding activities, including bank call loans - The Company's **assets are largely liquid, consisting of cash, cash equivalents, and readily convertible receivables** from brokers, dealers, clearing organizations, and customers, which are **mostly collateralized**[249](index=249&type=chunk) - **Bank call loans increased to $78.2 million at March 31, 2022, from $69.5 million at December 31, 2021**, with an **average daily outstanding balance of $87.1 million for Q1 2022**[251](index=251&type=chunk) - **Securities loan balances increased to $300.3 million at March 31, 2022, from $244.2 million at December 31, 2021**, with an **average daily balance of $304.1 million for Q1 2022**[252](index=252&type=chunk) [Liquidity Management](index=56&type=section&id=Liquidity%20Management) This section describes the company's approach to managing liquidity, including stress testing and long-term obligations - The Company **manages liquidity to meet obligations and regulatory requirements**, conducting **internal stress analyses to plan for potential liquidity disruptions and asset liquidation**[257](index=257&type=chunk)[259](index=259&type=chunk) - **Primary long-term cash requirements include $124.1 million in Senior Secured Notes (due 2025) and $194.1 million in operating lease obligations**, with an **estimated $37.7 million for interest and lease expenses in 2022**[260](index=260&type=chunk) [Funding Risk](index=56&type=section&id=Funding%20Risk) This section addresses potential risks related to funding availability and costs in the securities industry - Management believes current funds from operations, capital base, and credit facilities are **sufficient for foreseeable liquidity needs**, but acknowledges **risks from banks reducing funding to the securities industry or increased funding costs**[261](index=261&type=chunk) - During high volatility, the Company has experienced **increased collateral calls from clearinghouses and more stringent collateral arrangements with bank lenders**, which have been met with available collateral[262](index=262&type=chunk) [CYBERSECURITY](index=56&type=section&id=CYBERSECURITY) This section outlines the company's cybersecurity efforts to protect data and infrastructure from evolving threats - The Company **continuously reviews and enhances its cybersecurity policies and procedures** to **protect client data and infrastructure**, especially given **increased global cyberattacks and heightened regulatory oversight**[263](index=263&type=chunk)[265](index=265&type=chunk) - **Significant resources are dedicated to cybersecurity**, with expectations of further increases due to the growing sophistication of attacks, though **no guarantee of preventing all security breaches exists**[265](index=265&type=chunk) [REGULATORY MATTERS AND DEVELOPMENTS](index=58&type=section&id=REGULATORY%20MATTERS%20AND%20DEVELOPMENTS) This section details the company's compliance with Reg BI and DOL PTE, and responses to regulatory inquiries - The Company has **implemented significant structural, technological, and operational changes to comply with the SEC's Regulation Best Interest (Reg BI) Rules**, which impose a **federal standard of conduct for broker-dealers with retail clients**[267](index=267&type=chunk)[268](index=268&type=chunk) - **Compliance with the DOL's final prohibited transaction exemption (PTE) for investment advice fiduciaries, effective February 1, 2022, was largely achieved through actions taken for Reg BI**, with additional processes implemented[269](index=269&type=chunk) - **Oppenheimer is responding to SEC Division of Enforcement information requests regarding a former financial advisor and his relationship with Southport Capital and its affiliates**[272](index=272&type=chunk) [FACTORS AFFECTING "FORWARD-LOOKING STATEMENTS"](index=59&type=section&id=FACTORS%20AFFECTING%20%22FORWARD-LOOKING%20STATEMENTS%22) This section identifies key risks and uncertainties that could impact the company's forward-looking statements - Forward-looking statements are **subject to various risks and uncertainties, including market volatility, interest rate fluctuations, regulatory changes, economic conditions (inflation, consumer confidence), competition, cybersecurity threats, legal developments, and geopolitical events like the Ukraine war and the COVID-19 pandemic**[273](index=273&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms no material changes to the company's market risk disclosures during the first quarter of 2022 - **No material changes occurred in the Company's market risk disclosures during Q1 2022**[275](index=275&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and no material changes to internal controls in Q1 2022 - **The Company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2022**[276](index=276&type=chunk)[278](index=278&type=chunk) - **No material changes in internal control over financial reporting occurred during the three months ended March 31, 2022**[279](index=279&type=chunk) [PART II. OTHER INFORMATION](index=61&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and exhibits for the first quarter of 2022 [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) This section details ongoing legal actions, arbitrations, and regulatory investigations, including estimated loss ranges - The Company is **subject to substantial liability risks from customer complaints, lawsuits, arbitrations, and governmental/self-regulatory agency investigations**[281](index=281&type=chunk) - As of March 31, 2022, the **estimated aggregate range of possible loss in excess of accrued amounts for legal and regulatory proceedings is $0 to $32.0 million**, though **actual losses could be materially higher**[285](index=285&type=chunk) - **Oppenheimer is a defendant in a class action and twenty FINRA arbitrations concerning investments in Horizon Private Equity, III, LLC**, with **specific monetary damages claimed in arbitrations totaling approximately $38.0 million**[286](index=286&type=chunk)[287](index=287&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to the company's risk factors during the first quarter of 2022 - **No material changes to the Company's risk factors were reported during Q1 2022**[288](index=288&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports the issuance of Class A Stock to employees under share-based compensation plans in Q1 2022 - The Company **issued 86,451 shares of Class A Stock to employees under share-based compensation plans in Q1 2022, without cash consideration, exempt from registration**[290](index=290&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and Interim CFO, and interactive data files for the condensed consolidated financial statements - Exhibits include **certifications from the CEO and Interim CFO (31.1, 31.2, 32) and interactive data files (101) for the condensed consolidated financial statements**[292](index=292&type=chunk) [Signatures](index=64&type=section&id=Signatures) This section contains the duly authorized signatures of Oppenheimer Holdings Inc.'s Chairman and Chief Executive Officer, Albert G. Lowenthal, and Interim Chief Financial Officer, Salvatore F. Agosta, for the quarterly report - The report is **signed by Albert G. Lowenthal, Chairman and CEO, and Salvatore F. Agosta, Interim CFO, on April 29, 2022**[294](index=294&type=chunk)[295](index=295&type=chunk) ```

PART I [Business Overview](index=4&type=section&id=Item%201.%20Business%20Overview) Oppenheimer Holdings Inc. is a global middle-market investment bank and full-service broker-dealer, offering diverse financial services - Oppenheimer Holdings Inc. (OPY) is a middle-market investment bank and full-service broker-dealer with roots tracing back to 1881, offering a broad range of financial services[11](index=11&type=chunk) - The company's legal existence was continued under the Canada Business Corporations Act in 2005 and then changed its jurisdiction of incorporation to Delaware, USA, in 2009[12](index=12&type=chunk) - Oppenheimer Holdings Inc. operates as a leading middle-market investment bank and full-service broker-dealer, engaged in retail securities brokerage, institutional sales and trading, investment banking, equity & fixed income research, market-making, trust services, and investment advisory and asset management services[11](index=11&type=chunk) - The company conducts international businesses through Oppenheimer Europe Ltd. (UK, Isle of Jersey, Germany, Switzerland), Oppenheimer Investments Asia Limited (Hong Kong), and Oppenheimer Israel (OPCO) Ltd. (Israel)[11](index=11&type=chunk) - As of December 31, 2021, the Company employed **2,913 employees** (2,868 full-time and 45 part-time), with **996 financial advisors**, highlighting human capital as a significant resource[58](index=58&type=chunk) [Company Overview](index=4&type=section&id=OVERVIEW) Oppenheimer Holdings Inc. is a long-standing middle-market investment bank and full-service broker-dealer, incorporated in Delaware since 2009 - Oppenheimer Holdings Inc. (OPY) is a middle-market investment bank and full-service broker-dealer with roots tracing back to 1881, offering a broad range of financial services[11](index=11&type=chunk) - The company's legal existence was continued under the Canada Business Corporations Act in 2005 and then changed its jurisdiction of incorporation to Delaware, USA, in 2009[12](index=12&type=chunk) [Private Client Services](index=4&type=section&id=PRIVATE%20CLIENT) The Private Client Division provides comprehensive financial services to high-net-worth individuals, families, and businesses through 996 financial advisors - Oppenheimer's Private Client Division provides comprehensive financial services through **996 financial advisors** in **92 US offices**, serving high-net-worth individuals, families, and businesses[13](index=13&type=chunk) - As of December 31, 2021, the Company held client assets under administration (CAUA) of **$122.1 billion**[13](index=13&type=chunk) - Services include full-service brokerage (transaction-based and fee-based accounts), wealth planning (asset management, retirement solutions, insurance, trust services), and margin lending[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) [Asset Management Services](index=5&type=section&id=ASSET%20MANAGEMENT) Oppenheimer Asset Management Inc. (OAM) manages advisory programs and alternative investments for diverse clients, generating revenue from advisory and transactional fees - Oppenheimer Asset Management Inc. (OAM) manages advisory programs and alternative investments, offering tailored solutions to high-net-worth private clients, institutions, and corporations[16](index=16&type=chunk)[17](index=17&type=chunk) - As of December 31, 2021, the Company had **$46.2 billion** of client assets under management (AUM) in fee-based programs[18](index=18&type=chunk) - Revenue is generated from investment advisory and transactional fees, as well as revenue-sharing arrangements from alternative investment vehicles[18](index=18&type=chunk) [Capital Markets](index=6&type=section&id=CAPITAL%20MARKETS) The Capital Markets division offers investment banking, equities, fixed income, public finance, proprietary trading, repurchase agreements, and securities lending services - The Capital Markets division includes Investment Banking, Equities Division, Taxable Fixed Income, Public Finance and Municipal Trading, Proprietary Trading, Repurchase Agreements, and Securities Lending[26](index=26&type=chunk)[33](index=33&type=chunk)[39](index=39&type=chunk)[42](index=42&type=chunk)[44](index=44&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - Investment Banking provides strategic advisory services and capital markets products to emerging growth and middle-market businesses, focusing on sectors like consumer & retail, energy, healthcare, and technology[26](index=26&type=chunk) - The Equities Division employs **38 senior research analysts** covering almost **700 equity securities** and **75 sales and trading professionals**, offering fundamental research, execution services, and various trading strategies[33](index=33&type=chunk) [Consolidated Subsidiaries](index=9&type=section&id=CONSOLIDATED%20SUBSIDIARIES) Key consolidated subsidiaries provide diverse financial services, including broker-dealer, investment advisory, trust, and discount brokerage operations - Key subsidiaries include Oppenheimer & Co. Inc. (broker-dealer, investment adviser), Oppenheimer Asset Management Inc. (investment adviser), OPY Credit Corp. (leveraged loan transactions), Oppenheimer Trust Company (trust services), and Freedom Investments, Inc. (discount brokerage)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) - Oppenheimer Trust held custodial assets of **$429.7 million** as of December 31, 2021[52](index=52&type=chunk) [Administration and Operations](index=9&type=section&id=ADMINISTRATION%20AND%20OPERATIONS) Administration and operations personnel manage securities transactions, funds, internal controls, and general office services, with the Company clearing its own and correspondents' transactions - Administration and operations personnel are responsible for processing securities transactions, managing funds and securities, maintaining internal financial controls, and providing general office services[54](index=54&type=chunk) - Oppenheimer clears its own and correspondents' securities transactions on US and non-US exchanges, and in the over-the-counter market, utilizing its own facilities and memberships in various clearing corporations[55](index=55&type=chunk) [Human Capital Overview](index=9&type=section&id=HUMAN%20CAPITAL%20OVERVIEW) The Company considers human capital crucial for client services, employing 2,913 individuals, including 996 financial advisors, whose recruitment and retention are vital - The Company views human capital as its total workforce and supporting programs, crucial for providing high-level client services in financial advisory, research, investment banking, sales & trading, and portfolio management[56](index=56&type=chunk)[57](index=57&type=chunk) - As of December 31, 2021, the Company employed **2,913 individuals**, including **996 financial advisors**, whose recruitment, retention, compensation, and productivity are vital to success[58](index=58&type=chunk) Compensation as a Percentage of Revenue by Business Segment (2019-2021) | | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Total Firm | 63.6 % | 64.3 % | 63.6 % | | Private Client | 67.2 % | 64.2 % | 55.5 % | | Asset Management | 26.6 % | 19.3 % | 28.4 % | | Capital Markets | 51.0 % | 59.0 % | 66.7 % | [Competition](index=13&type=section&id=COMPETITION) Oppenheimer faces intense competition from various financial institutions and Fintech companies, primarily based on advisor quality, services, and reputation - Oppenheimer faces intense competition from other securities firms, banks, investment banking boutiques, commercial banks, insurance companies, private equity firms, and Fintech competitors offering online investment services[72](index=72&type=chunk) - Competition is primarily based on the quality of advisors, services, product selection, location, and reputation, with a substantial dependence on attracting, retaining, and motivating qualified professionals[73](index=73&type=chunk)[74](index=74&type=chunk) [Business Continuity Plan](index=13&type=section&id=BUSINESS%20CONTINUITY%20PLAN) The Company maintains a business continuity plan for emergencies, with remote work arrangements successfully implemented during the COVID-19 pandemic - The Company has a business continuity plan to ensure continued operations and client services during emergencies, covering technology, staffing, equipment, and communication[75](index=75&type=chunk) - Since March 2020, the majority of employees have worked remotely due to the COVID-19 pandemic, with no significant business disruptions reported[78](index=78&type=chunk) [Cybersecurity](index=14&type=section&id=CYBERSECURITY) Cybersecurity is a significant challenge, with the Company maintaining vigilance, ongoing planning, and dedicated staff to prevent sophisticated attacks - Cybersecurity is a significant challenge, with increasing sophistication of attacks aimed at stealing data or disrupting operations; the Company maintains vigilance, ongoing planning, and systems to prevent attacks[79](index=79&type=chunk) - A Chief Information Security Officer (CISO) and dedicated staff oversee system development and defenses[79](index=79&type=chunk) [Regulation](index=14&type=section&id=REGULATION) The Company is subject to extensive regulation by various authorities, with compliance requirements impacting corporate governance, trading, and client interactions - The Company is subject to extensive regulation by the SEC, state securities regulators, other governmental authorities, and self-regulatory organizations (SROs) like FINRA and NFA[80](index=80&type=chunk)[81](index=81&type=chunk) - Key regulations include the Sarbanes-Oxley Act, Dodd-Frank Act, Bank Secrecy Act, USA PATRIOT Act, MiFID II, and Reg BI, which impose requirements on corporate governance, trading practices, anti-money laundering, and client interactions[86](index=86&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[94](index=94&type=chunk) - The Consolidated Audit Trail (CAT) program requires reporting of all US securities transactions to a central repository, raising concerns about privacy and potential liabilities for data breaches[102](index=102&type

Table of Contents ☐ 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 1-12043 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR OPPENHEIMER HOLDINGS INC. (Exact name of registrant as specified in its charter) (State or other juri ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ 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 1-12043 OPPENHEIMER HOLDINGS INC. (Exact name of registrant as specified in its charter) (State or other jurisdict ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ 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 1-12043 OPPENHEIMER HOLDINGS INC. (Exact name of registrant as specified in its charter) (State or other jurisdic ...

Table of Contents As filed with the U.S. Securities and Exchange Commission on March 1, 2021 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 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 1-12043 OPPENHEIMER HOLDINGS INC. (Exact na ...