Cowen Inc.

Thank you, operator. Good morning, everyone.

Welcome to our fourth quarter and full year earnings call. With me today are Michael Singer, who joined us in December as CEO of the Asset Management Business, Ramius; Jeff Solomon, who you all have heard from in the past, the CEO of Cowen and Company; Steve Lasota, our CFO; and Owen Littman, our General Counsel.

I will start with an overview of our performance for the quarter, and then Michael will follow with a discussion of what's going to be happening in alternative asset management business. And later in the call, Jeff will provide an update on the broker-dealer business, and Steve will take you through some of the details of our fourth quarter financials.

2012 results reflect considerable progress that was made in transitioning the businesses since we first began our restructuring effort in 2010. We have accomplished a lot in this period, and we continue to drive towards sustained profitability and grow our business intelligently.

But we're not quite there yet, and we still have some work to do, which we'll get to in a few minutes. At Ramius, our asset management business, we have started to see improvement and profitability under Michael, who you will hear from in a few minutes.

You should expect to see an improvement in operating leverage through intelligent cost reductions, as well as a broadened platform of new strategies and teams and an expanded suite of products over time, which will result in more rapid asset growth, we believe. Michael will discuss his strategy further after my remarks.

At Cowen and Company, we have made very substantial strides in better positioning the business. But as you all know, the market environment has not made it easy for any of us, particularly in equities.

As we discussed on the call earlier this month, the acquisition of Dahlman Rose will enhance our overall platform in banking, research and equities by leveraging our fixed cost structure, as well as expanding our industry coverage. And we'll talk more about that when Jeff talks about it.

And that acquisition is going to close very shortly. To give you some highlights on the overall results for the fourth quarter, total revenue for the fourth quarter was $77.2 million.

And for the year, it was $288.6 million. This represents the highest quarterly and annual revenue levels since Cowen and Ramius combination in 2009.

On an Economic Income basis, we reduced our economic loss to $8.5 million versus a loss of $38 million for the prior period last year. The fourth quarter loss for 2012, including $1 million in severance expense, while the prior year included $10.5 million of severance expense.

Excluding certain noncash items in severance expense, the fourth quarter loss narrowed to $1.3 million versus a loss of $19.8 million in the prior year period. For the full year 2012, we reported an economic loss of $17.6 million compared to an economic loss of $71.4 million last year.

Excluding certain noncash and severance expense items, our 2012 economic loss was $10.6 million versus a loss of $57 million last year. Turning to our asset management business.

In the fourth quarter, fees rose 7% sequentially to $14.3 million. After adjusting for cumulative respective management fees and our health care royalty funds, fourth quarter 2012 management fees were essentially unchanged from the prior year period and declined 1% to $56.4 million for the full year.

Total assets under management remained constant at $8.1 billion during the quarter and decreased by 2% for the year after adjusting for the disposition of our cash management assets, which occurred in the fourth quarter. At the broker-dealer, revenue from banking and capital markets was up 90% for the quarter and 41% for the year, driven by our health care equity underwriting and activity and debt capital markets product activity.

While our brokerage business remained soft, revenue declined at a slower pace than the overall decline in U.S. equity volumes, primarily due to several initiatives we took -- undertook in 2012.

As a result, our brokerage business rose 3% in the fourth quarter versus the prior year period despite a 24% decline in U.S. equity volumes.

And for the full year, it was down 6% compared to an 18% decline in U.S. equity volumes, suggesting that we are making progress.

On the expense side, 2012, we reduced comp and non-comp expenses by $30 million, this in the face of increased revenues, increasing by 7%. And headcount was essentially flat year-over-year.

We are continuing to drive our non-comp expenses lower and expect to generate further cost savings in 2013. As we think about our business in the current environment, we recognize that the depth and scale matter, but we also need to maintain our focus on providing top quality ideas for clients, advice and execution of services.

And that means we are seeking to achieve the optimal scale to drive profitability over the long term. But we need to stay tuned to -- stay true to who we are, which is the premier researching and growth-oriented investment bank focused on key verticals, key verticals where we can we can make an impact for clients.

That's why our pending acquisition of Dahlman Rose, which we previously announced on February 1, is so exciting to us. This acquisition marks an important step towards realizing our goal of becoming a premier research and growth-oriented investment bank.

Dahlman specializes in the natural resource supply chain, which adds a key domain expertise to our platform. We see a lot of benefit from this transaction in terms of the revenue opportunity, both in banking and equities and cost savings and franchise value.

It's rare to find a company that is as complementary as Dahlman Rose is with us with corresponding benefits. However, to be clear, success of the acquisition will hinge on our ability to execute.

We have a lot of experience in integrating acquisitions. So I'm fully confident in our ability on this front, but we still have to be very vigilant about getting this execution properly done.

The acquisition is subject to some regulatory approvals, but we anticipate of closing this quarter, which doesn't give us a whole lot of time, so it's in the next few weeks. Turning to our balance sheet.

We remain very well capitalized with over $414 million of invested capital as of December 31, with $3.63 per share of invested capital. 84% of our total equity was invested across our investment strategies.

In the fourth quarter, we generated $11.8 million in investment income for a quarterly return on assets of 2.9%. For the full year, we generated $50.1 million in investment income for a return of 12.3%.

We finished the year with approximately $344 million in cash and liquid securities as compared to $346 million at the end of the prior year. Importantly, our strong balance sheet enables us to take advantage of opportunities that come our way and invest when needed in order to build franchise value for shareholders.

Finally, and as important as anything else, I want to thank everyone at Cowen for their hard work this past year and incredible efforts to get us to where we are today, which is substantially along towards the goals we stated last year of increased revenue, decreased cost, decreased compensation and a broader revenue platform. With that, I'll turn the call over to Mike Singer, who will talk to you about the asset management business.

And then we'll get to Jeff later, and he'll talk about Cowen and Company. So Michael?

Thank you, Peter. As most of you know, I joined Ramius in December of last year.

And a few short months, I can say that I'm truly excited to have the opportunity to lead a group of talented professionals that offer differentiated investment capabilities while partnering with a senior management team that is committed to excellence and innovation. I'll be brief in my comments today and let Steve Lasota handle the historical financial reporting, but I want to just spend a few minutes outlining for you our near-term strategic objectives at Ramius, all which are aimed at making our asset management business more profitable.

We will drive profitability in 2 ways: increasing assets under management and realigning our expense base in a more rational manner will be the method. Over the past few years, Ramius has transformed its product platform.

We currently have 6 investment capabilities: deep value equity activism, health care royalties, long/short credit, real estate, managed futures and alternative solutions. We are extremely fortunate that each of these investments capabilities performed very well in 2012, most of which have strong long-term track records.

And most importantly, all are open to new capital inflows as we speak. Therefore, our primary objective in the coming years is to raise assets for these existing strategies in a meaningful way.

I'm happy to say, we've already begun to do so in 2013. Over the past few weeks, we have been refining the best ways to improve how we bring our investment capabilities to market based on factors, such as product liquidity and fee structures.

Moreover, we are aligning our investment capabilities with the appropriate investor channels as we improve upon how we target our sales and distribution of our products. We have experience in and are able to structure our investment capabilities in various formats, such as hedge funds, PE funds, hybrids, managed accounts, business development companies, CLOs and alternative mutual funds, to better fit the needs of our clients.

We believe our ability to deliver our existing investment capabilities to these different product constructs will be a significant factor in helping us to stratify our investment base and drive AUM growth in P&L. As part of this process, we have begun to reconstitute and reorganize our sales and distribution forces and expand our marketing, IR and market intelligent groups in order to drive AUM growth even as we streamline the cost associated with doing so.

In addition, we'll continue to focus on reducing expenses and have already identified some significant potential cost savings, some of which have already been implemented and some that will be implemented throughout 2013. Our overarching strategy is to continue to making Ramius the go-to place for investment talent and teams by providing them with a strong marketing and distribution platform, an institutional quality operating infrastructure, business know-how and a culture of partnership.

We have already demonstrated an ability to do that with our existing products. And over time, we will look to broaden our products suite in intelligent ways.

But that process takes time, and we will be deliberate and systematic about how and when we onboard investment capabilities as we have so much low-hanging fruit to pick with our existing products in the near term. I look forward to updating you on our progress over the coming quarters.

Thank you.

Thanks, Michael. This is Jeff.

And as Peter discussed earlier in the call, 2012 was certainly a year in which we continue to reshape Cowen and Company, and we're making some very good progress. At Cowen, as we've mentioned, we're dedicated to providing our clients with access to unparalleled domain knowledge, thoughtful advice and practical insights that will enable them to be better investors, business operators and decision makers.

We're confident that by doing this consistently over an extended period of time, we will continue to improve our profitability and create value for shareholders. But it's taking time.

And while we're well aware of the challenges facing our industry in general, which include lower equity volumes and fewer capital markets transactions, our strategy has been to streamline our costs while investing in the business through the downturn so that we're better positioned to gain market share from our competitors even if the markets do not improve materially. In 2012, we continue to enhance our competitive position in an important industry vertical by investing in research capabilities; strengthening our position in banking by leveraging our existing equity capital market capabilities with newer product areas, such as debt capital markets; and investing in new business we think are critical to the long-term success of our franchise, such as electronic trading.

2012 was also a year in which we transitioned key senior management positions in research and equity, which has gone exceedingly well. We've made significant process -- progress as a senior management team, so much so that I keep reminding myself that we've all been working together as a team since last June in its entirety.

Our business continues to gain ground in the investor banking capital markets side, where we began our rebuilding efforts at the end of 2010. Reinvigorating our banking business has been the overriding goal, but our ability to demonstrate consistent growth with revenue generated from all product areas and verticals is a testament to the success of our strategy over the last 2 years.

We recorded $21.2 million in banking revenues for the fourth quarter and $71.8 million for the full year, which were the highest quarterly and annual revenue amounts since the Cowen and Ramius business combination. In terms of the number of transactions, we completed 74 transactions across our product lines in 2012, up from 48 in 2011.

Of the public equity underwritings completed in 2012, 44% were lead managed, up from 34% in 2011. In the fourth quarter of 2012, 64% of our public equity deals were lead managed.

Our health care business continues to be an area of strength. In 2012, we became the #1 ranked non-bolt underwriter in equity financing, which is a far cry from where we were 2 years ago.

Of the public equity health care deals in 2012, we acted as lead manager on 53% of them compared to 44% in 2011. The performance of our debt capital markets group for 2012 was also noteworthy.

In total, we closed on 12 transactions, all of which were either as lead manager, placement agent or sole advisor. These transactions encompass industries, such as industrials, health care, technology and consumer, providing both product and industry diversification.

Much of our success in these areas could be attributed to our ability to provide sound financing advice up and down the capital structure to meet our clients' specific needs while being product agnostic. I also want to highlight that the transaction we've made in banking over the past 2 years is evidence of what can be accomplished in the Cowen platform elsewhere, when we have the right people and the right strategy in place and when all areas of our organization, including banking, capital markets, research and sales trading are aligned.

We intend to take a similar approach with Dahlman Rose, as we see an incredible amount of business to be banked in the natural resource supply chain sectors not only in equities, but in debt, which is a product area that Dahlman does not currently have expertise. On the equity side of our business, similar to what you see across the industry, our high-touch equities business remains challenged, with continued decline in equity volumes.

Having said that, total brokerage revenues was 22.4% for the fourth quarter, which is up from a year ago when it was $21.7 million. Brokerage revenue, in its entirety, was $93.9 million for the full year of 2012 versus $99.6 in 2011.

The 6% decline in revenue for the year was less than the 18% decline in U.S. equity volumes seen by the industry in 2012.

As you know, we've taken several steps to reposition the equity platform. It enhances capabilities by adding growth-oriented products that leverage our position and address our client needs.

A stated objective for us was to offers sophisticated electronic trading platform for our clients. And in April 2012, we acquired ATM to augment our high-touch cash equities business.

The acquisition has already had a positive feedback. We've cut our floor brokerage cost significantly in 2012, and there have been a number of situations where we would be able to reengage customers who had previously gone entirely electronic but where we had no product offering.

Having said that, we still have many customers we need to work through. And we're making progress in getting those customers to install and turn on the product as we enter in 2013.

Last year, we also acquired KDC Securities, a specialized securities lending business. And while this was a modest-sized acquisition for us, we believe that the business can grow profitably and complement our existing equities platform.

The energy and leadership for our new equities management team is being sold across the floor, and there's an enthusiasm among everyone regarding what 2013 can bring. One of the first major products completed under this team was the implementation of the client mapping tool that I talked about in the last call.

This is our first mapping client in many years in which we actually have to coordinate with the research and the equity divisions extensively. The new tool actually gives us phenomenal insight as to where we can press our advantage with clients with whom we already do business and where we should be doing more.

This helps us to focus our efforts on the clients to whom we matter most and who matter most to us. This insight becomes even more critical when we look to integrate Dahlman Rose as we would be working to leverage each other's relationships in our respective account base.

On the research side in 2012 and thus far in 2013, several senior research analysts joined our team. And we've seen opportunities to hire very talented professionals who have very well-developed franchises and sit very well on to a platform like ours.

We've been fortunate to be in a position to have such individuals to come onboard and help us to further elevate what's already an outstanding research platform. And with the addition of the analysts from Dahlman Rose, we will have a team of 39 research analysts covering 700 companies.

Combined, we will be the authoritative research provide on growth equities. This is significant because of the breadth, depth and quality of our research organization are critical to our ability to drive revenue in both banking and equities.

This is all the more important with the Dahlman Rose acquisition. As I mentioned early, we see meaningful opportunity to monetize the natural resources supply chain sectors but only if we are aligned with banking, research and equities.

So you can see, we've had a busy year in 2012, but we're certainly not letting up in anyway. We have a lot more to accomplish as 2013 progresses.

And certainly, we are feeling the pressure to integrate the Dahlman Rose folks as quickly as possible so that we can maximize both the operational synergies, as well as the revenue opportunities. Finally, I want to acknowledge all of our employees at Cowen for their tireless efforts this past year and just echo what Peter said, it's really been fantastic and we appreciate it, so we want to make sure we thank you for all of your hard work.

And with that, I'll turn it over to Steve Lasota, who will give a more detailed update on our financial performance.

Thank you, Jeff. During the fourth quarter of 2012, we reported a GAAP net loss of $9.3 million or $0.08 per share compared to a loss of $79.9 million or $0.70 cents per share in the prior year period.

Fourth quarter of 2011 included an $18.6 million net loss from discontinued operations related to the legacy LaBranche businesses we exited last year. Excluding these losses, our GAAP loss during last year's fourth quarter was $58 million or $0.53 per share.

For the full year 2012, we reported a GAAP net loss of $23.9 million or $0.21 per share compared to a loss of $108 million or $1.13 per share in the comparable 2011 period. The full year of 2011 included the following: a $23.6 million loss from discontinued operations, a $22.2 million bargain purchase gain related to the acquisition of LaBranche, as well as a $21.7 million tax benefit associated with the company's acquisition of 2 Luxembourg captive reinsurance company.

In addition to our GAAP results, management utilizes non-GAAP measures, what we terms as Economic Income, to analyze our core operating segment performance. We believe Economic Income provides a more accurate view of the operating businesses by excluding the impact of expenses associated with onetime equity awards made in connection with the November 2009 Ramius-Cowen transaction; onetime gains and losses from discontinued operations, including our loss in exiting the LaBranche businesses last year; acquisition-related expenses and other reorganization charges; goodwill impairment; and the bargain purchase gain resulted from the LaBranche acquisition.

Economic Income also excludes the impact of accounting rules that require us to consolidate certain of our funds. For the 3 months ended December 31, 2012, the company reported an economic of $8.5 million or $0.07 per share compared to an economic loss of $38.3 million or $0.33 per share in the 2011 fourth quarter.

For the full year 2012, we reported an economic loss of $17.6 million compared to a loss of $71.4 million in 2011. Fourth quarter Economic Income revenues was $77.2 million, an increase of $6.3 million compared to $70.9 million in the 2011 fourth quarter.

The increase in revenues was primarily attributable to an increase in incentive income and investment banking fees, partially offset by a decrease in management fees and investment income. For the 2012 full year, total Economic Income revenue increased by 7% to $288.6 million from $270.2 million in 2011.

The increase was primarily the result of an increase in investment bank revenue, investment income and incentive income, partially offset by a decrease in management fees and brokerage revenues. We generated $11.8 million in investment income during the fourth quarter and $50.1 million for the full year.

We ended the year with $414 million in invested capital. On the alternative investment side of our business, we recorded management fees of $14.3 million during the fourth quarter of 2012, up 7% from the third quarter of 2012.

After adjusting for cumulative retrospective management fees in our health care royalty funds, fourth quarter 2012 management fees were unchanged from the prior year period and declined 1% to $56.4 million for the full year. In 2011, our health care royalty funds had recognized cumulative retrospective management fees as a result of an increase in committed capital during the year.

For the full year 2012 and 2011, management fees were $56.4 million and $67.3 million, respectively. Again, the decline in management fees is primarily attributable to the reduction in onetime fees from our health care royalty funds.

This decrease was partially offset by an increase in management fees relating to our other hedge fund products. Incentive income increased to $6.9 million in the fourth quarter of 2012 from incentive fee income of $149,000 in the comparable prior year period.

For 2012 full year, incentive income rose to $15.2 million from $10.4 million in the prior year. The increase in the fourth quarter and full year 2012 was primarily related to an increase in the performance fees from our hedge fund products and was partially offset by a decrease in performance fees on our real estate funds.

In our broker-dealer segment, fourth quarter investment banking revenues were $21.2 million, an increase of 90% compared to $11.1 million in the prior year period. We completed a total of 22 transactions across all products in the most recent quarter compared to 8 transactions in 2011 fourth quarter.

The full year 2012 investment banking revenue increased 41% to $71.8 million from $51 million in 2011. Transaction activity was up 54%, with 74 transactions completed across all products in 2012 compared to 48 in 2011.

Brokerage revenue was $22.4 million in the fourth quarter, an increase of 3% over the prior year period. The increase in the current quarter was due to an increase in fees earned related to the company's electronic trading business and Cowen Equity Finance group, partially offset by lower commission revenues due to reduction in customer trading volumes.

For the 2012 full year, brokerage revenue was $93.9 million, representing a 6% decrease compared to $99.6 million in 2011. The decline in the full year was primarily attributable to lower commission revenues due to a reduction in customer trading volumes and lower per share average commission.

This decrease was partially offset by an increase in fees earned related to the electronic trading business and our equity finance business. The fourth quarter reported compensation and benefits expense of $56.6 million, a 16% decrease compared to $67.5 million in the fourth quarter of 2011.

This was primarily attributable to lower variable compensation and reduced expenses. For the full year 2012, compensation benefits expense decreased $4.4 million to $190.1 million in 2012 compared to $194.8 million in 2011.

This was primarily attributable to lower variable cost and severance expense, partially offset by investments in new professionals. For the quarter, we reported an aggregate compensation to revenue ratio of 73% for the quarter compared to 95% in the fourth quarter of 2011.

In the quarter, we incurred $1.4 million in comps expense for activities in which the company gets reimbursed and severance expense of $1 million. Excluding these 2 items, the compensation to revenue ratio was 70% compared to 78% in the prior year quarter.

For the full year, excluding $5.5 million of expenses associated with activities for which the company is reimbursed, the comp and benefits ratio was 64%. And excluding $6.9 million of severance expense, the comp and benefits expense ratio was 62%.

Moving to our non-comp expenses. Fixed non-compensation expenses in the current quarter decreased by 13% to $25.7 million as compared to $29.5 million in the comparable prior year quarter.

For the 2012 full year, fixed non-comp expenses decreased by 7% to $95.5 million from $103.2 million in 2011. The decrease was primarily due to reduction in service fees and occupancy and equipment expenses related to our expense reduction efforts.

Variable non-comp expenses were $5.5 million in the fourth quarter 2012, down 45% compared to $10.1 million in the fourth quarter of 2011. For the 2012 full year, variable non-comp expenses decreased 39% to $25.3 million from $41.5 million in 2011.

The decrease in both the quarter and the year are attributable to syndication costs related to capital raising events by an alternative investment asset fund in the 2011, professional fees that were incurred in the prior year relating to the potential acquisitions of Luxembourg reinsurance companies and lower conference and trading execution costs. For the year, expense savings from continued operations totaled $30 million.

Total expense savings from discontinued operations were $12.7 million, of which $8.3 million was compensation-related and $4.4 million was non-compensation-related. In aggregate, total expense savings from continuing and discontinued operations was approximately $43 million, which was in line with what the company had previously stated target.

While Economic Income is a pretax measure, I'd like to briefly touch on our tax situation. After the acquisition of LaBranche, Cowen had significant net operating losses, or NOLs, in the U.S.

that carry forward into the future of $316 million. The associated growth of deferred tax asset currently amounts to $127 million.

There's 100% valuation allowance against that asset but it has significant value to the firm. IRS rules associated with the acquisitions of Cowen and Company in 2009 and LaBranche in 2011 partially limit the amount of NOL that the company will be able to utilize annually, but the significant amounts of future earnings will be shielded from taxes by these assets.

Turning to our balance sheet. Our stockholders' equity amounted to $495 million at December 31, and our book value per share was $4.40 per share.

Tangible book value per share, which is a non-GAAP measure, was $4.04 per share compared to $4.23 per share at the end of 2011. Finally, moving to our share repurchase program.

In the fourth quarter, we repurchased 1.1 million shares in the open market and approximately 542,000 shares as a result of net share settlement related to the vesting of equity awards. Since we announced our original program in July of 2009, we have repurchased 8 million shares in the open market and an additional 2.8 million shares as a result of net share settlement related to the vesting of equity awards.

The total cost of program for the fourth quarter of 2012 was $22.2 million, which represents an average price of $2.78. We also spent an additional $9.5 million on net share settlement.

As of December 31, we have approximately $12.8 million remaining under the grant program. I will now turn the call back over to Peter for closing remarks.

Thanks, Steve, Jeff, Michael, well, everyone. We bombarded you with a lot of information, a lot of detail, and I'm sure it's going to take some time to absorb it.

But I think a simple message is revenues were up; our expenses, down. Our loss was considerably less than last year, economic loss, we think.

Expenses continue to go lower, revenues go higher. Dahlman is an incredible opportunity to sort of leverage the fixed cost base on the investment banking side and similar things that Michael will get going in the investment management side.

We expect to see, I would say, meaningful growth in assets this year for the first time in a while, with the decreased expenses, so increasing margins. So we're all environment bound.

But frankly, we think that we're kind of way past the midpoint of where we've got to get to, to put this place on sustaining profitability going forward. So with that, let me open up to questions, and we'll see who's supposed to appropriately answer them.

Can you give us a sense in terms of the additional cost savings you've talked about going forward and sort of what the magnitude of those could be and potentially what the timing of realizations would be on those?

Sure. Joel, we continue to look at our non-comp expenses.

We have done our budget. We're targeting roughly another $10 million this year.

Although with the acquisition of Dahlman, it will be hard to see, but we'll show those results as we incur them.

Okay. And then just in terms of thinking about Dahlman, I mean, any sense for in terms of our modeling how we should be thinking about potential additional revenues or impact on the bottom line?

I think what we've said, Joel, is we expect it to be neither accretive nor dilutive to our efforts for the remainder of fiscal 2013 just because of the integration. But then, obviously, 2014, it could be pretty significantly meaningful.

We haven't provided any information on the acquisition cost because we don't frankly know it yet, and we won't until closing occurs. But we've said that it's not meaningful.

So I think, as we file our first quarter numbers, we'll have some of the discussions with you about share count and things like that. So it will be a little bit more easy to model once we get to close and we can, I think, discuss it a little bit more definitively.

Yes, and I think, Joel, it will be easier to give you a clearer representation of what we think revenue contribution will look like in the beginning and what the additional expenses are likely. And we have to adjust everything for that because stand-alone x Dahlman, our non-comp expenses, we expect to go down, as Steve said, at least $10 million.

And we think that we can add considerable revenue with that comp expenses going up that materially from where they were this year. They would definitely go up, but we would leverage additional revenue because we still have severance that we have to absorb this year, one in particularly that we inherited from Cowen.

That was very expensive, which I think most of you know about. And then we had both, what I'd say is the last of the big guarantee, nonproducing guaranteed people kind of burn off this year so that we can do more revenue and not have comp go up proportionately.

But I think we're better served after the first quarter to talk about all of that.

Okay, great. And then -- and sort of sticking with comp.

I mean, for the quarter, it came in meaningfully above kind of what we were looking for. Just wondering if -- was there sort of a true-up during the quarter and then sort of how should we think about it going forward maybe from a comp ratio standpoint?

Well, Joel, for the fourth quarter, I mean, it's more the mix of the business.

It wasn't a true-up. It was more just a change in the mix of the business.

Yes. So I think the -- excluding -- when we exclude the reimbursement, we pay compensation that we get reimbursed for.

When we exclude that, we're at a 64% comp-to-rev ratio for the year. As Peter said, we expect revenues to be higher in '13.

And comp should be a little bit lower than that, but I'm not sure how much lower.

So let me just add to that a little bit, Joel. I think, when we look at the revenue mix in terms of where we are at Cowen and Company, there's a couple different items of it.

We don't have a significant advisory business. And certainly that's a stated objective of ours to build out that business.

The vast majority of our revenues are capital markets oriented, and those are the most expensive from a cost of goods sold standpoint because it touches just about every part of the organization. So when we think about budgeting for the year, certainly we budget a certain percentage of advisory.

Those are sort of binary outcomes. They either happen or they don't.

And to the extent they were able to build up that advisory business more meaningfully in 2013, I think we can do be better. As Peter mentioned, we also -- we have made some investments.

And so those businesses we anticipate, you always invest in people and in systems prior to the businesses ramping. And we start to see some of those businesses ramp nicely at the end of 2012 and 2013, but we carried full years' worth of compensation for sometimes businesses that really weren't even producing meaningfully for even a quarter or 2.

And so I think when Peter talks about, as he did, sort of compensation and room to increase revenues, it's because the ramp associated with some of those businesses was really towards the back half of the year. And we had maybe a full year's worth of compensation in 2012.

And in 2013, we'll have a full year's worth of revenue to sort of match off on those expenses.

Okay, great. I appreciate the color on that.

And just sort of lastly for me, in terms of what you're seeing in the fixed-income markets, I mean, in the first quarter, so far, we're kind of seeing it looks like DCM activity down a little bit from the fourth quarter and maybe year-on-year, but sort of secondary market trading being extremely active. I mean, can you guys give us any color on what you're seeing in these markets?

I think what we're seeing and I think we've focused on a very niche part of the marketplace, which is decidedly focused on our -- where are most of our clients are, which is more of a growth equity and value on the smaller end of the scale. I'd say, our pipeline has never been more robust.

The dialogues we're having with clients, where we're looking at financing opportunities or M&A or equity financing opportunities, is pretty significant. And so I think, again, our strategy is to be able to provide clients with a multitude of options up and down the capital structure.

And so the fact that we're engaged in those dialogues, I think is -- we'll have revenue opportunities that come off the back of those. Whether they show up in equities, they show up in debt or they show up at advisory, there's a number of them that are going on.

We're still seeing very active traction from an investment from the institutional accounts that are buying these debt transactions. Certainly, as we look out the growth of the CLO market, the middle-market lending, operations, we see BDCs being extremely engaged as they -- more engaged than they've been in -- since I think the financial crises started.

So whether that's an indication of the shadow lending part of the market is filling the void of what the banks traditionally did, we can make an argument that, that's, in fact, the case since banks really aren't doing anything else other than bank lending. There is a whole part of the mezzanine structure that can really be absorbed by alternative lenders.

And we're tapping into that marketplace on behalf of our clients because it's a very real attractive risk-reward investment.

Jeff, I may have missed this, but could you just comment year-over-year for both Dahlman and Cowen and fourth quarter over third quarter for sales and trading revenues were down what percentage-wise?

So year-over-year, I can't speak to the Dahlman numbers, Buzzy, but I can speak to the Cowen numbers. Year-over-year, Cowen's numbers in the fourth quarter were up.

So we had more revenue in our equities division in 2012 than we did 2011 by maybe $1 million or $2 million, which I think reflects the fact we've built out electronic trading, we've got some other businesses. It's down from the third quarter but not surprisingly.

I mean, I think equity volumes were down pretty significantly between the third quarter and the fourth quarter. What I can say is that we've started this year, we're doing some things -- we're seeing some of the benefits of the acquisitions in electronics trading and some of other areas that are actually kicking in nicely as people think about commission budgets for the year.

And so it makes me feel like the things that we started to put in place during the year are taking hold meaningfully.

You guys don't know what Dahlman's revenues look like year-over-year or quarter-over-quarter?

I know what they look like. But we haven't disclosed them, so I can't.

Well, I think I kind of made them before. Just want to thank everyone for tuning into us, listening, Joel and Buzzy for asking questions.

And we'll be back to you shortly, not too long for the first quarter results. So thank you, all.